No Concluded Contract Without Meeting Mandatory Tender Conditions

The Hon’ble High Court of Calcutta in Masibul Hassan v. State of West Bengal & Ors. (W.P.A. No. 1134 of 2026), decided on March 5, 2026, held that no concluded contract arises in a tender process where acceptance is conditional and the bidder fails to fulfil mandatory conditions precedent, and that such non-compliance disentitles the bidder from asserting vested contractual rights.

The dispute arose from an e-auction conducted by the Murshidabad Zilla Parishad for settlement of the Balia Shyampur Ferry Ghat for a period of three years. The petitioner emerged as the highest bidder and received a Letter of Acceptance (LoA) dated November 18, 2024, which required him to deposit the first year’s lease rent, execute a formal agreement, and furnish a Bank Guarantee (BG) equivalent to the third year’s lease rent. While the petitioner deposited the first year’s lease rent, he failed to furnish the BG despite repeated extensions of time. The authority subsequently curtailed the tenure to one year, which expired on December 18, 2025, and thereafter issued a fresh e-auction notice on January 1, 2026.

The petitioner contended that a concluded contract for three years had come into existence upon issuance of the LoA and subsequent communication confirming settlement and that the fresh auction during the subsisting tenure was arbitrary and violative of his vested contractual rights. It was further argued that failure to furnish the BG could not be treated as a ground for curtailment in the absence of an express stipulation to that effect.

The respondents contended that the acceptance of the bid was conditional upon the fulfillment of mandatory requirements, including the submission of the BG, and that non-compliance with such conditions prevented the formation of a binding contract. It was further submitted that extension of time did not amount to waiver and that the authority was justified in curtailing the tenure and issuing a fresh tender in the interest of public revenue and administration.

The High Court of Calcutta held that an auction notice is merely an invitation to offer and that a binding contract arises only upon absolute and unqualified acceptance in terms of Section 7 of the Indian Contract Act, 1872 which requires acceptance to be absolute and unqualified for a contract to be formed. It observed that the LoA clearly imposed conditions precedent, including furnishing of the BG and execution of the agreement, and that the settlement remained conditional until such requirements were fulfilled. The High Court of Calcutta further held that repeated extensions of time did not amount to waiver of the condition, particularly in the context of public contracts involving fiscal safeguards.

The High Court of Calcutta also noted that the petitioner had acquiesced in the curtailment of tenure to one year and continued to operate during the reduced period, which subsequently expired by efflux of time. It held that in the absence of a concluded contract, no vested right accrued in favour of the petitioner and that the fresh e-auction notice could not be interfered with in the absence of arbitrariness or mala fides in the exercise of writ jurisdiction.