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Level 9 Biz Pvt. Ltd. vs. Himachal Pradesh Housing and Urban Development Authority & Anr.

Not available · 2024 INSC 257Decided 2 Apr 2024
Not available
Justice Bela M. Trivedi · Justice Pankaj Mithal

Background

HIMUDA (a Himachal Pradesh government housing authority) invited tenders in 2018 for a commercial complex, and after litigation by rival bidders, a High Court-appointed independent committee found serious irregularities and concluded that neither of the two shortlisted bidders, including Level 9 Biz (the appellant) and Vasu Constructions (respondent no. 2): was actually technically qualified. Acting on this, HIMUDA cancelled the tender and issued a fresh one. However, Vasu Constructions filed a fresh writ petition, and HIMUDA's own Executive Engineer then told the High Court's Division Bench that the authority wanted to withdraw the cancellation and let Vasu Constructions execute the project on the original 2018 terms, without notifying or hearing the other original bidders, including Level 9 Biz, who was not even a party to that petition.

Decision Breakdown

The Supreme Court held that the High Court Division Bench should never have disposed of the case by simply accepting the two parties' convenient statements, when the tender had already been formally cancelled based on an independent committee's finding of gross irregularities and both bidders' technical disqualification. It found that a Letter of Intent (LOI) creates no binding legal right or contract, so Vasu Constructions had no vested right to the project. Concluding that HIMUDA and Vasu Constructions had colluded to bypass the earlier findings and "take the High Court for a ride," the Supreme Court quashed the High Court's order, allowed the appeal, and imposed a cost of ₹5,00,000 on HIMUDA, while permitting it to conduct a fresh, lawful tender process.

Lesson Learnt

A Letter of Intent in a government contract is only a statement of intention, not an enforceable right, and public authorities cannot use consent statements in court to quietly revive a tender process that was cancelled for proven irregularities. Courts must scrutinize such arrangements, especially where affected bidders were never given a hearing.

Official source (sci.gov.in)View Judgment (PDF)

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