SC UPHOLDS CANCELLATION OF LOI IN HIMACHAL PRADESH EPOS TENDER CASE
CASE SUMMARY – The Supreme Court held that the Letter of Intent issued to OASYS Cybernetics for supplying upgraded ePoS devices in Himachal Pradesh’s PDS was purely conditional and created no enforceable contractual rights. Despite the High Court’s view, the Court found the LoI required mandatory preconditions—compatibility testing, demo approval, and cost disclosures—which the Respondent had not completed. While the blacklisting allegation could not justify cancellation, the Respondent’s non-fulfilment of technical prerequisites rendered the cancellation lawful and non-arbitrary. The Court set aside the High Court’s order, upheld cancellation, ordered fresh tendering, and directed limited reimbursement on quantum meruit.
| ASPECTS | DETAILS |
| Case Title | State of Himachal Pradesh & Anr. vs. M/s OASYS Cybernetics Pvt. Ltd., 2025 INSC 1355 |
| Introduction | Appeal against the Himachal Pradesh High Court judgment quashing cancellation of a Letter of Intent issued for ePoS device supply under PDS modernization. The Supreme Court examined arbitrariness, tender law principles, and the nature of Letters of Intent. |
| Factual Background | Four rounds of tendering (2021–2022); Respondent became sole qualified bidder; a conditional LoI was issued; later cancelled due to alleged non-compliance and blacklisting concerns. High Court reinstated LoI; State appealed to the Supreme Court. |
| Legal Issues |
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| Applicable Law |
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| Analysis | Supreme Court held that the LoI was conditional and not a binding contract. Non-compliance with preconditions was proven. Blacklisting was not a valid ground, but non-fulfilment of mandatory steps justified cancellation. High Court’s approach was flawed. |
| Conclusion | Appeal allowed; cancellation upheld; fresh tender permitted; quantum meruit reimbursement ordered; no damages for loss of profit. |
| Current Scenario | State directed to issue a fresh tender; Respondent allowed to participate; factual cost-recovery inquiry to be completed within three months. |
“Administrative discretion must remain fair, rational, and grounded in public interest—yet cannot be bound by expectations arising from an incomplete and conditional Letter of Intent.”
SOURCE – SUPREME COURT OF INDIA
READ ALSO – Article 14 of Constitution
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