Telangana High Court
Veerannagari Laxma Reddy vs M/S. Indian Oil Corporation Limited on 29 July, 2025
* THE HON'BLE SRI JUSTICE N.V.SHRAVAN KUMAR
+ Writ Petition No.30566 of 2024
% 29.07.2025
# Between:
Veerannagari Laxma Reddy
Petitioner
Vs.
M/s.Indian Oil Corporation Limited,
Rep.by its Chairman and Director,
Having its registered office
At Indian Oil Bhavan, G-9, Ali Yavar Jung Marg,
Bandra (East), Mumbai and another.
Respondents
! Counsel for Petitioner : Mr.R.N.Hemendranath Reddy,
Sr.counsel
Rep. Mr.Lohit Sannapaneni
^ Counsel for Respondents : Mr.Dominic Fernandes
Standing Counsel
<GIST:
> HEAD NOTE:
? Cases referred
1 (2019) SCC OnLine Pat 1225
2 (2020) 16 SCC 489
3 (2023) 19 SCC 1
2
THE HONOURABLE SRI JUSTICE N.V. SHRAVAN KUMAR
Writ Petition No.30566 of 2024
ORDER:
The petitioner is aggrieved by the cancellation of his
candidature for award of RO dealership under open category
advertised on 28.06.2023 being communicated by respondent
No.2 vide their communication through e-mail dated 14.10.2023.
A consequential prayer is sought to declare that petitioner is
fully eligible and qualified for appointment as Retail Outlet
Dealer for the location at Sl.No.228 in Indian Oil Corporation
Limited notice for appointment of Regular/Rural Retail Outlet
dealerships in Telangana advertised on 28.06.2023 i.e., “on LHS
from Kallakal to Medchal Bus Stop on NH 44”.
2. Heard Mr.Hemendranath Reddy, learned senior counsel
for the petitioners and Mr.Dominic Fernandes, learned standing
counsel for Indian Oil Corporation appearing on behalf of
respondents.
3. The facts giving rise to file the present writ petition are
that on 28.06.2023, respondent No.1 issued a notice inviting
applications for appointment of retail outlet dealerships across
3
various locations in Telangana, accompanied by a brochure
outlining the eligibility criteria and selection procedure. The
brochure classifies the sites into three categories: Corpus Fund
Scheme Sites (CFS), Corporation Owned Sites (CC), and Dealer
Owned Sites (DC). In respect of DC sites, the Guidelines
mandate that the land offered by the applicant must be either
owned or held under a registered lease valid for a period of 19
years and 11 months, commencing on or after the date of
advertisement but not later than the date of application. In the
present Writ Petition, the issue specifically concerns the
Guidelines applicable to Dealer-Controlled (DC) sites, under the
said category, the Petitioner had submitted his application.
4. The petitioner intending to establish an Indian Oil
Corporation’s Retail Outlet on NH-44 in Medchal Malkajgiri
District, had entered into a registered lease deed dated
26.09.2023 for land admeasuring 1,719.65 sq.mts., in
Sy.No.163/2/1/1/1/1, Yellampet Village, for a term of 21 years
and submitted an application dated 07.10.2023, bearing
Application No.IOC16966701753217 to the respondents,
through the prescribed web portal for Retail Outlet Dealership
identifying place situated on the left-hand side from Kallakal to
4
Medchal Bus Stop on National Highway 44, which is at Serial
No.228 in the Indian Oil Corporation’s Notice of Proposal to
appoint Retail Outlet dealers in Telangana, advertised on
28.06.2023, by paying a non-refundable application fee of Rs.
10,000/-. The above said location is classified as DC site, hence
the mode of selection is by way of draw of lots and that the
petitioner was selected by draw of lots. The petitioner was
provisionally selected as the sole eligible applicant and was
communicated vide e-mail dated 12.06.2024 by the Respondent
No.2 and vide another e-mail dated 12.06.2024, respondent No.2
directed the petitioner to remit Rs. 50,000/- towards Initial
Security Deposit and upload specified self-attested documents.
The Petitioner duly complied with the same and uploaded each
and every self-attested document specified therein within the
stipulated period of time. Thereafter, vide an e-mail
dt.29.06.2024, respondent No.2 informed that their Land
Evaluation Committee would visit and inspect the land offered by
the petitioner on 09.07.2024 and requested the petitioner to be
personally present at the location on the said day along with
relevant land documents.
5
5. On 09.07.2024, respondents’ Land Evaluation
Committee carried out the land inspection in the Petitioner’s
physical presence and also verified the relevant land documents.
Thereafter, respondent No.2 vide communication through e-mail
dt.29.07.2024, informed the petitioner that their officers would
carry out Field Verification of Credentials (FVC), for which the
petitioner was requested to be present personally and produce
the original documents for their verification. Accordingly,
petitioner produced original Lease Deed bearing Doc.No.13847 of
2023 dt.26.09.2023 and other requisite documents for Field
Verification of Credentials.
6. Thereafter, respondent No.2, vide e-mail dt.14.10.2024,
informed that petitioner’s candidature stood cancelled, as during
the Field Verification of Credentials, petitioner failed to produce
the original documents for verification by the Officers and the
documents produced were varying with the documents
submitted at the time of filling the application. The
communication further enumerated few reasons for the
cancellation of petitioner’s candidature. One of the reasons is
that the lease deed was registered on 26.09.2023, which is
before the date of application dated 07.10.2023 and another
6
reason is that the term of the lease is 21 years, effective from
01.11.2023, which is after the date of application and as per the
guidelines, applicant should offer lease land that is valid on or
before the date of application.
SUBMISSIONS ON BEHALF OF PETITIONER:
7. Mr.Hemendranath Reddy, learned senior counsel for the
petitioner would submit that the impugned communication
dt.14.10.2024 vaguely outlines multiple reasons for cancelling
the petitioner’s candidature, however, the only purported reason
for cancelling the petitioner’s candidature for his appointment as
Retail Outlet Dealer, as clarified in the counter affidavit filed on
behalf of the respondents, is that the petitioner’s lease deed
dt.26.09.2023 is allegedly in violation of Clause 4(vi)(c) of the
Guidelines, as the lease deed comes into effect after the date of
petitioner’s application. Clause 4 (vi) (c) of the Guidelines
provides as follows:
“For Dealer Owned Sites (“B”/ “DC” Sites), the
applicant should ensure that the land arranged by
the applicant is either registered in the applicant’s
name or leased in favour of the applicant for a
minimum period as advertised by respective oil
company, as per terms of Letter of Intent (LOI).
Investment will be made by the OMC towards
7development facilities in the offered land only after
compliance of the aforementioned, by the applicant.
In case land is obtained on long term lease by the
applicant, the lease should be valid till a period of 19
years 11 months from the date or after the date of
advertisement but not later than the date of
application.”
8. It is further submitted that clause 4(vi)(c) provides that
the lease deed shall be valid for a minimum period of 19 years 11
months from the date or after the date of advertisement but not
later than the date of application. Admittedly the petitioner’s
lease deed was registered on 26.09.2023, which is after the date
of advertisement i.e., 28.06.2023 and prior to the date of
petitioner’s application dt.07.10.2023. However, the respondent
authorities cancelled the petitioner’s candidature for
appointment as Retail Outlet Dealer by misplacing their reliance
on Clause 2 of the petitioner’s lease deed dt.26.09.2023 which
provides that the term of the lease shall be for a period of 21
years with effect from 01.11.2023 and contended that as the
lease deed comes into effect on 01.11.2023, which is after the
date of petitioner’s application dt.07.10.2023, the lease deed is
in violation of Clause 4 (vi) (c) of the Guidelines.
8
9. Learned senior counsel would further submit that the
lease deed has to be read harmoniously as a whole and the said
interpretation of respondents is entirely erroneous and
misplaced, as the lease deed shall be read in its entirety and that
Clause 2 of the lease deed shall not be read in isolation. It is
submitted that Clause 7 of the lease deed, which deals with
“Rental Holiday”, categorically provides that the possession of
the scheduled premises was delivered to the petitioner on the
same day i.e., on 26.09.2023 and that the lessor agreed not to
claim any rentals from the date of agreement till the date of
commencement of the lease. When Clause 2 of the lease deed is
read along with Clauses 6 & 7, it is manifestly clear that the
possession of the scheduled premises was handed over to the
petitioner on the date of registration of the lease deed i.e.,
26.09.2023. However, parties mutually agreed that the lessor
shall not claim any rents from the date of registration of lease
deed till 01.11.2023. It is further submitted that the agreement
with respect to rental holiday is an inter se agreement between
the lessor and petitioner. However, the same does not indicate
that the entire lease deed becomes effective only from
01.11.2023, as clause 7 categorically states that possession of
9
the scheduled premises was handed over to the petitioner on the
date of registration of the lease deed itself, i.e., 26.09.2023.
10. Learned senior counsel further contends that when
Clause 4(vi)(a) is read in conjunction with Clause 4(vi)(c), it
becomes very evident that the crucial requirement is that
possession of the offered land must vest with the applicant as on
the date of application. In the present case, possession of the
scheduled land was handed over to the petitioner on 26.09.2023,
which is the date of execution and registration of the lease deed.
Therefore, the lease became effective from that date, which is
prior to the date of application, i.e., 07.10.2023.
11. In support of his submissions, learned senior counsel
would rely on a judgment of the High Court of Bihar at Patna in
Shankar Kumar Bhagat v. Indian Oil Corporation Limited 1,
wherein the petitioner had a lease deed dated 18.12.2018, and
possession of the land was delivered on the same day, although
the lease term was stipulated to commence from the date of
receipt of the petrol pump licence. The respondent/Indian Oil
Corporation therein rejected the petitioner’s candidature on the
1
2019 SCC OnLine Pat 1225
10
ground that the lease was not in accordance with Clause 4(v)(a)
of the applicable guidelines, which required the land to be
available with the applicant as on the date of application and to
have a minimum lease of 19 years and 11 months from the date
or after the date of advertisement, but not later than the date of
application. It was held that that a document must be construed
as a whole, giving effect to all its clauses in order to ascertain the
intention of the parties. Consequently, the Court had set aside
the impugned rejection of candidature by Indian Oil Corporation.
12. Further learned senior counsel would rely on a
judgment of Madras High Court in M. Arun Kumar v. General
Manager, Indian Oil Corporation Ltd., and would submit that
while dealing with similar set of facts and interpreting analogous
Guidelines, held that the terms of the brochure cannot be
construed as if they are statutory provisions. The Court observed
that a holistic reading of Clause 4 of the brochure leads to the
clear conclusion that the essential requirement is for the
applicant to have the land “available” as on the date of the
application.
11
13. Learned senior counsel would submit that the
impugned communication dated 14.10.2024 issued by
respondent No.2 is in blatant violation of the principles of
natural justice and no prior notice was issued, and no
opportunity to offer explanation was afforded to the petitioner,
despite his provisional selection for the Retail Outlet Dealership
and that vide e-mail dated 12.06.2024, the petitioner was
informed that he was the lone remaining eligible applicant and
was accordingly provisionally selected for the dealership.
Learned senior counsel further submits that this Court, in
W.P.No.17536 of 2012, categorically held that valuable rights
accrue to a person upon provisional selection and that any
proposed cancellation must be preceded by notice and
opportunity to respond, regardless of the strength of the
grounds.
14. In the present case, no such notice was served,
rendering the impugned communication dt.14.10.2024 as
arbitrary and violative of the Principles of natural justice. It is
further submitted that the lessor/Original Owner has executed a
Rectification Deed dated 13.09.2024 in favour of the
petitioner/lessee, whereby the commencement date of the lease
12
deed dated 26.09.2023 has been rectified to 01.10.2023 in lieu
of the originally stated date i.e., 01.11.2023. This rectification
places the petitioner in a more favourable position with respect
to the eligibility criteria for consideration of his candidature as
Retail Outlet Dealer. It is reiterated that the original
commencement date of 01.11.2023, as reflected in the lease deed
dated 26.09.2023, was specified solely for the limited purpose of
rent collection. The rectification of the commencement date to
01.10.2023 is an inter se arrangement between the petitioner
and the lessor, and does not alter the fact that possession was
delivered, and the lease came into effect, on 26.09.2023. It is
further submitted that even as per the e-mail communication
dated 12.06.2024, there are no other eligible candidates for the
subject location and the cancellation of the petitioner’s
candidature on a hyper-technical, erroneous, and illegal ground
has caused irreparable loss and hardship to the petitioner for
the purpose of establishment of a retail outlet. Questioning the
same, the present writ petition is filed.
COUNTER OF RESPONDENTS:
15. A counter affidavit has been filed by respondent Nos.1
and 2 stating that on 12-06-2024 a selection e-mail was sent to
13the petitioner and on 29.06.2024 an e-mail communication
regarding Land Evaluation Committee (LEC) inspection was sent
to the petitioner that the land would be inspected by the said
committee on 09.07.2024 and accordingly LEC was completed.
After successful completion of LEC on 29.07.2024, the petitioner
was informed vide email, to attend Field Verification Credentials
(FVC) along with original documents. During the scrutiny of
documents, it was found that the petitioner’s leased land was
with effect from a date post the application date and accordingly
an email informing the cancellation of candidature was sent to
the petitioner on 14.10.2024. It is further submitted that the
lease deed was registered on 26.09.2023 which is before the date
of application i.e. 07-10-2023 while the lease term is 21 years
effective from 01-11-2023 which is after the date of application.
As per the dealership guidelines the applicant applying under
group 1 category should have a valid lease deed as on the date of
application. Therefore the petitioner’s candidature was rejected
on 14.10.2024. It is relevant to submit that the dealer ‘chayan’
portal has a standard template for any email communication
with the applicant. As per the standard template, any applicant
that gets rejected at FVC stage the below said lines will be
generated in mail.
14
“this is to inform that during the FVC, you failed
to produce the original documents for verification by
the officer/ the documents produced by you were at
variance with the documents submitted/information
given in the application”
This standardization is intended to ensure uniform
communication and does not imply a lack of reasoning or
application of mind by the Respondent in the decision-making
process. Further specific reasons were also given in the very
same email.
16. It is further submitted that respondent No.2, through
their email dated 14.10.2024, duly informed the petitioner of the
cancellation of their candidature, citing specific discrepancies as
outlined in the said email. The reasoning outlined by respondent
No.2 in their email dated 14.10.2024, stipulated the grounds for
the cancellation of the petitioner’s candidature:
(i) In the email dated 14-10-2024, the first reason provided
was that the petitioner had failed to produce the original
documents for verification by the Officers/the documents
produced by the Petitioner were at variance with the documents
submitted/information given in the application.
15
(ii) Another reason cited for the cancellation of the
Petitioner’s candidature was that the lease deed was registered
on 26-09-2023, which is before the application date of 07-10-
2023, while the term of the lease, being for a period of 21 years,
is effective only from 01-11-2023 which is after the application
date as per Clause 2 of the Lease Deed dated 26-09-2023 i.e.
Exhibit-5. The relevant portion of Clause No.2 of the Lease Deed
is extracted hereunder:
“TERM”
The Term of Lease for the Schedule Premises
shall be initially for a period of 21 (twenty one) years
with effect from 01-11-2023 unless the lease is
terminated earlier than such date pursuant to any of
the provisions of this Agreement.”
17. The petitioner’s interpretation on Clause 4(vi)(c) of the
guidelines provided in respondent No.1/Corporation’s Brochure
for DC Sites is misplaced, as the language of the clause
unequivocally mandates that the lease deed must be effective
prior to the application date, leaving no room for deviation. The
relevant portion of Clause 4(vi)(c) is extracted hereunder:
“For Dealer owned sites (“B”/ “DC” sites), the
applicant should ensure that the land arranged by
the applicant is either registered in the applicant’s
16name or leased in favour of the applicant for a
minimum period as advertised by respective oil
company, as per terms of Letter of Intent (LOI).
Investment will be made by the OMC towards
development of facilities in the offered land only after
compliance of the aforementioned, by the applicant.
In case land is obtained on long term lease by the
applicant, the lease should be valid till a period of 19
years 11 months from the date or after the date of
advertisement but not later than the date of
application.” (emphasis added)
18. It is further submitted that as per the lease agreement
under the head called “TERM” the clause stipulates that “the term
of lease for schedule premises shall be initially for a period of 21
years with effect from 01.11.2023 unless the lease is terminated
earlier than such date pursuant to any of the provisions of this
agreement”. Therefore it is clear that the lease is not effective
before 01.11.2023 whereas application date is on 07.10.2023. It
is further submitted that rejection of the candidature is as per
dealership selection guidelines 4(vi)(a) which states that “the land
should be available with the applicant as on date of application
and should be minimum lease of 19 years 11 months from the
date of advertisement but not later than the date of application”.
17
19. This Court on 18.03.2025 has passed the following
order:
“Learned counsel appearing for the petitioner
would submit that the petitioner herein is
provisionally selected for Retail Outlet Dealership
and has remitted an amount of Rs.50,000/- towards
initial security deposit. Now, the petitioner is
aggrieved by the communication dated 14.10.2024
for cancellation of his candidature for Retail Outlet
Dealership. He would further submit that they have
entered into a registered lease deed dated
26.09.2023, which is before filing of application
dated 07.10.2023 and the term of the lease is 21
years effecting from 01.11.2023, which is after the
date of application.
Learned counsel appearing for the petitioner
would submit that his date of application is
07.10.2023 and the date of lease is 26.09.2023,
which is prior to the application. As such, there is no
cogent reason for the respondents to cancel the
petitioner’s candidature for Retail Outlet Dealership.
In support of his contentions learned counsel
appearing for the relied upon the decisions of Hon’ble
Apex Court reported in Shankar Kumar Bhagat v.
Indian Oil Corporation Limited (2019 SCC Online Pat
1225) and M. Arun Kumar v. General Manager,
Indian Oil Corporation Limited (2020 SCC Online
Mad 14940) and also the judgment of this Court in P.
18Srinivasa Rao and others v. Indian Oil Corporation
Limited and others (MANU/AP/0488/ 2016).
After arguing at length, learned senior counsel
appearing for the petitioner requests to direct the
respondents to verify whether the lease deed dated
26.09.2023 is subsisting as on today and that the
petitioner is in physical possession of the subject
land, which is technically feasible for the Retail
Outlet Dealership.
In view of the said request and since the
petitioner has already provisionally selected and that
he has already paid an amount of Rs.50,000/-
towards security deposit, which is still with the
respondents, respondents shall conduct a field
enquiry and by the next date of hearing make further
submissions. It is made clear that respondent shall
consider the lease agreement / entire documents in
true spirit and verify with regard to the physical
possession of the petitioner for the purpose of
granting Retail Outlet Dealership.
List this matter on 25.03.2025 in the caption
‘for orders’.
20. Thereafter, an affidavit has been filed by Senior
Manager (RS), Secunderabad DO on behalf of respondent Nos.1
and 2 stating that as per directions of this Court, on 01.04.2025
a field enquiry was conducted and the committee report dated
19
01.04.2025 is enclosed along with the said affidavit. On
01.04.2025 i.e. on the date of the field enquiry, the petitioner had
submitted a Rectification Deed dated 30.09.2024. The said
Rectification Deed inter-alia rectified the lease commencing
period from 01.11.2023 to 01.10.2023 and that rectifications of
lease are only permitted as per Clause 4(vi)(b). However the
petitioner’s case does not fall under the said scenario and the
said clause 4(iv)(b) is reproduced below:
“4(vi)(a)…
b) If the offered land is on long term lease, then
the Lease agreement should have a provision to sub-
lease the offered land wherever the locations are
advertised under Corpus Fund Scheme (CFS) and
other Corporation Owned Sites (“A”/ “CC” sites)
In case it is observed that the lease agreement
for the land offered by the provisionally selected
candidate does not have a provision to sub-lease the
land, in such cases the provisionally selected
candidate would be provided 21 days’ time from the
date of intimation through SMS/e-mail to make
suitable amendment/addendum to the lease
agreement and submit the same to the concerned
OMC.”
21. It is further submitted that as seen from the above, the
applicant is required only in case of not having a sub-lease
20
clause which is primarily applicable for A-site/Corpus Funds
Scheme sites, however, the applicant has applied for ‘B
Site/Dealer owned site’. A copy of committee report dated
01.04.2025 was filed along with the said affidavit wherein it is
submitted that to carryout the full enquiry, the competent
authority has nominated the committee and the members of the
committee has proposed RO site at Sl.No.228 viz., ON LHS
FROM KALLAKAL TO MEDCHAL BUS STOP ON NH 44 in
advertisement dated 28.06.2023. In the report, it is observed
with respect to the land documents including that of the lease
deed No.13847 of 2024 dated 26.09.2023, rectification deed
bearing No.11764 of 2024 dated 13.09.2024 and Encumbrance
Certificate bearing statement No.192971485.
22. It was also noted that the said rectification deed was
submitted on the date of visit i.e., on 01.04.2025 and that the
committee has visited the site as mentioned in the lease deed
No.13847 of 2024 dated 26.09.2023 and rectification deed
bearing No.11764 of 2024 dated 13.09.2024 falling under
Sy.No.163/2/1/1/1/1, Yellampet Village, Medchal Mandal,
Medchal Malkajgiri District, Telangana State. The minimum plot
dimensions required as per the advertisement are 35×35 meters
21
with area 1225 sq.mtrs. and the petitioner has offered the land
with dimensions 40×38 meters with area 1520 sq.mtrs. Other
than the terms of the lease deed dated 26.09.2023 for the other
parameters like land in advertised area/stretch, the land
dimensions as per the advertisement and the said land meeting
NHAI norms and no median as per NH norms and other norms
are found to be remarked as Yes. It was also observed in the said
report that in the principal lease deed, lease commencing period
was wrongly mentioned as 01.11.2023 instead of mentioning as
01.10.2023 as typographical error at the time of preparing
document and the lessee requested the lessor herein to rectify
the said error in the principal lease deed. The lessor has rectified
the said error and both lessor and lessee declare that the
commencing period of lease shall be from 01.10.2023 for a
period of 21 years and monthly rental amount of Rs.45,000/-
from 01.10.2023, Rs.47,250/- from 01.10.2026, Rs.49,650/-
from 01.10.2029, Rs.52,150/- from 01.10.2032, Rs.54,800/-
from 01.10.2035, Rs.57,500/- from 01.10.2038 and Rs.60,400/-
from 01.10.2042 wherever it occurs in the principal lease deed
and the rectifications has been carried out on 01.10.2024. The
committee also referred to the rectification clause in 4(vi)(b) in
the brochure which deals with rectification and under what
22
circumstances the rectification can be accepted. The committee
therefore concluded that they have verified the documents
submitted with the application and found that the petitioner is
in possession of the site as has been offered through the
application dated 07.10.2023 more particularly as shown under
the lease as well as the rectification deed in
Sy.No.163/2/1/1/1/1, Yellampet Village, Medchal Mandal,
Medchal-Malkajgiri District, Telangana State.
SUBMISSIONS OF LEARNED STANDING COUNSEL:
23. Mr.Dominic Fernandes, learned standing counsel
submits that the petitioner has made an online application
bearing No.IOC16966701753217 on 07.10.2023 for retail outlet
dealership and the registered lease deed dated 26.09.2023 of the
petitioner is only effective from 01.11.2023. The candidature of
the petitioner is rejected vide e-mail dated 14.10.2024 on the
ground that the lease deed was effective from 01.11.2023 which
is after the date of application. Learned standing counsel further
submits that the lease deed submitted by the petitioner is in
violation of Clause 4(vi)(a) and 4(vi)(c) for regular and rural retail
outlet and the rectification deed dated 13.09.2024 was
submitted by the petitioner on the date of Field Verification in
23which the lease commencing period was rectified from
01.11.2023 to 01.10.2023 and the petitioner has suppressed the
said fact in the writ affidavit. It is further submitted that
rectifications are only permitted as per clause 4(vi)(b) and that
the offered land is on long term lease, then the lease agreement
should have a provision to sub-lease the offered land wherever
the locations are advertised under Corpus Fund Scheme (CFS)
and other Corporation Owned Sites (CC sites). In case, it is
observed that the lease agreement for the land offered by the
provisionally selected candidate does not have a provision to
sub-lease the land, in such cases the provisionally selected
candidate would be provided 21 days time from the date of
intimation through SMS/e-mail to make suitable
amendment/addendum to the lease agreement and submit that
same to the concerned OMC. As such the petitioner is required
to submit amended lease only in case of not having a sub-lease
clause in the lease which is primarily applicable for ‘A
Site/Corpus Funds Scheme Sites’, however, the applicant has
applied for ‘B Site/Dealer owned site’.
24. Learned standing counsel would further submit that in
contractual matters, the scope of writ jurisdiction is very narrow
24and this does not fall under the narrow compass to make the
writ maintainable and that the author of the tender document is
the best person to understand and appreciate its requirements.
Learned standing counsel, in support of his submissions, would
rely on M/s.Agmatel India Pvt.Ltd., v. M/s.Resoursys Telecom
and others. The relevant paragraph Nos.17 and 24 are extracted
hereunder:
“17. The above-mentioned statements of law
make it amply clear that the author of the tender
document is taken to be the best person to
understand and appreciate its requirements; and if
its interpretation is manifestly in consonance with
the language of the tender document or subserving
the purchase of the tender, the Court would prefer to
keep restraint. Further to that, the technical
evaluation or comparison by the Court is
impermissible; and even if the interpretation given to
the tender document by the person inviting offers is
not as such acceptable to the Constitutional Court,
that, by itself, would not be a reason for interfering
with the interpretation given.
24. The High Court, while supporting its
process of reasoning, has referred to such principles
which, with respect, we find entirely inapposite and
beyond the periphery of the question involved in the
present case. As noticed, in such matter of contracts,
25the process of interpretation of terms and conditions
is essentially left to the author of the tender
document and the occasion for interference by the
Court would arise only if the questioned decision
fails on the salutary tests laid down and settled by
this Court in consistent decisions, namely,
irrationality or unreasonableness or bias or
procedural impropriety.
24.1. In the case of Nabha Power Limited
(supra), as referred by the High Court, this Court,
while referring to the concept of ‘Penta test’ for
‘business efficacy’, made it clear that such a test and
thereby reading an “implied term”, would come in
play only when the five conditions are satisfied.
Even in that case, the Court, while dealing with the
question of reimbursement of cost incurred by the
successful bidder/power supplier towards washing
of coal in a power procurement project, analysed as
to what charges would be payable by interpretation
of all the terms of the contract and held the appellant
entitled to certain charges as the formula for energy
charges was clear. In the present case too, neither
the High Court was reading any “implied term” in the
past performance criterion nor NVS had done so. It is
difficult to find any correlation of the decision in
Nabha Power Limited (supra) to the case at hand or
even to the analysis by the High Court.
24.2. The same aspects apply to the
observations regarding ‘contra proferentem rule’ as
26
referred by the High Court with reference to the case
of United India Insurance Company Limited (supra).
The said rule was referred by this Court while not
accepting the argument made on behalf of the
insured and while observing that the said rule had
no application, when the language of the relevant
clauses was plain, clear and unambiguous. We may,
however, observe that even from the extracted part of
the principles related with the ‘contra proferentem
rule’, as reproduced by this Court from the
Halsbury’s Laws of England, it is clear that the said
rule was applied in the case of ambiguity in the
insurance policy because the policies are made by
the insurer and its ambiguity cannot be allowed to
operate against the insured. This rule, in our view,
cannot be applied to lay down that in case of any
ambiguity in a tender document, it has to be
construed in favour of a particular person who
projects a particular view point. The obvious
inapplicability of this doctrine to the eligibility
conditions in a notice inviting tender could be
visualised from a simple fact that in case of
ambiguity, if two different tenderers suggest two
different interpretations, the question would always
remain as to which of the two interpretation is to be
accepted? Obviously, to avoid such unworkable
scenarios, the principle is that the author of the
tender document is the best person to interpret its
documents and requirements. The only requirement
27
of law, for such process of decision making by the
tender inviting authority, is that it should not be
suffering from illegality, irrationality, mala fide,
perversity, or procedural impropriety. No such case
being made out, the decision of the tender inviting
authority (NVS) in the present case was not required
to be interfered with on the reasoning that according
to the writ Court, the product “Smart Phone” ought to
be taken as being of similar category as the product
‘Tablet’.”
By making the aforesaid submissions, learned standing
counsel eventually prayed to dismiss the writ petition.
ANALYSIS AND CONCLUSION
25. In the case on hand, the respondent authorities are the
best judge of its own requirement in interpreting the documents.
The respondent authorities in order to address the dealers at
large in their ‘chayan’ portal has formulated a standard template
in communicating with the dealers and accordingly the petitioner
was informed as per the standard template which would be
advertised by way of e-mail. In the counter affidavit, the said e-
mail was reproduced which is extracted hereunder for sake of
reference:
28
“this is to inform that during the FVC, you
failed to produce the original documents for
verification by the officer/the documents produced
by you were at variance with the documents
submitted/information given in the application.”
26. At this juncture, it is also necessary to extract the
conclusive portion of the committee report dated 01.04.2025
which is filed along with the affidavit of the respondents. The
conclusion of the report reads as under:
“In view of the above background and the field
visit, the committee concludes as follows:
“a. The committee has verified from the
documents submitted with the application and found
that the Applicant is in possession of the site as has
been offered through the application dated
07.10.2023 more particularly as shown under the
Lease as well as the rectification deed in survey
number: 163/2/1/1/1/1, Yellampet Village,
Medchal Mandal, Medchal Malkajgiri District,
Telangana State.
b. It is observed that the Applicant has
executed a Rectification Deed before the date of
cancellation.
c. It is further observed that the Applicant has
submitted an Encumbrance Certificate bearing
statement no. 192971485 as on 01.04.2025 which
29has a due mention of the Lease Deed as well as the
rectification Deed on survey no. 163/2/1/1/1/1,
Yellampet Village, Medchal Mandal. It has further
been found that the land is unencumbered.
d. From the aforesaid, it can be observed that
the physical possession of the land belongs to the
applicant as on the date of field enquiry.”
27. In Silppi Constructions Contractors v. Union of
India and another 2, the Hon’ble Supreme Court held that
scope of judicial review should be minimal in the matters
relating to tenders and also held that authority floating the
tender is the best judge of its requirements and, therefore, the
court’s interference should be minimal. The relevant paragraph
Nos.7, 8, 13, 16, 20 and 25 is extracted hereunder for better
understanding:
“7. In Tata Cellular vs. Union of India1, it was
held that judicial review of government contracts
was permissible in order to prevent arbitrariness or
favouritism. The principles enunciated in this case
are :
“94. …….
(1) The modern trend points to judicial
restraint in administrative action.
2
(2020) 16 SCC 489
30(2) The Court does not sit as a court of
appeal but merely reviews the manner in
which the decision was made.
(3) The Court does not have the expertise
to correct the administrative decision. If a
review of the administrative decision is
permitted it will be substituting its own
decision, without the necessary expertise
which itself may be fallible. (4) The terms of the
invitation to tender cannot be open to judicial
scrutiny because the invitation to tender is in
the realm of contract.
Normally speaking, the decision to accept
the tender or award the contract is reached by
process of negotiations through several tiers.
More often than not, such decisions are made
qualitatively by experts.
(5) The Government must have freedom of
contract. In other words, a fair play in the
joints is a necessary concomitant for an
administrative body functioning in an
administrative sphere or quasiadministrative
sphere. However, the decision must not only be
tested by the application of Wednesbury
principle of reasonableness (including its other
facts pointed out above) but must be free from
arbitrariness not affected by bias or actuated
by mala fides.
31
(6) Quashing decisions may impose
heavy administrative burden on the
administration and lead to increased and
unbudgeted expenditure."
8. In Raunaq International Ltd. vs. I.V.R.
Construction Ltd.2, this Court held that superior
courts should not interfere in matters of tenders
unless substantial public interest was involved or the
transaction was mala fide.
13. In Jagdish Mandal vs. State of Orissa7 it
was held:
“22. Judicial review of administrative
action is intended to prevent arbitrariness,
irrationality, unreasonableness, bias and mala
fides. Its purpose is to check whether choice or
decision is made “lawfully” and not to check
whether choice or decision is “sound”. When
the power of judicial review is invoked in
matters relating to tenders or award of
contracts, certain special features should be
borne in mind. A contract is a commercial
transaction. Evaluating tenders and awarding
contracts are essentially commercial functions.
Principles of equity and natural justice stay at
a distance. If the decision relating to award of
contract is bona fide and is in public interest,
courts will not, in exercise of power of judicial
32review, interfere even if a procedural
aberration or error in assessment or prejudice
to a tenderer, is made out. The power of
judicial review will not be permitted to be
invoked to protect private interest at the cost of
public interest, or to decide contractual
disputes. The tenderer or contractor with a
grievance can always seek damages in a civil
court. Attempts by unsuccessful tenderers with
imaginary grievances, wounded pride and
business rivalry, to make mountains out of
molehills of some technical/procedural
violation or some prejudice to self, and
persuade courts to interfere by exercising
power of judicial review, should be resisted.
Such interferences, either interim or final, may
hold up public works for years, or delay relief
and succour to thousands and millions and
may increase the project cost manifold……..”
16. In Montecarlo vs. NTPC Ltd., it was held
that where a decision is taken that is manifestly in
consonance with the language of the tender
document or subserves the purpose for which the
tender is floated, the court should follow the principle
of restraint. Technical evaluation or comparison by
the court would be impermissible. The principle that
is applied to scan and understand an ordinary
instrument relatable to contract in other spheres has
33
to be treated differently than interpreting and
appreciating tender documents relating to technical
works and projects requiring special skills. The
owner should be allowed to carry out the purpose
and there has to be allowance of free play in the
joints.
20. The essence of the law laid down
in the judgments referred to above is the exercise of
restraint and caution; the need for overwhelming
public interest to justify judicial intervention in
matters of contract involving the state
instrumentalities; the courts should give way to the
opinion of the experts unless the decision is totally
arbitrary or unreasonable; the court does not sit like
a court of appeal over the appropriate authority; the
court must realise that the authority floating the
tender is the best judge of its requirements and,
therefore, the court’s interference should be minimal.
The authority which floats the contract or tender, and
has authored the tender documents is the best judge
as to how the documents have to be interpreted. If
two interpretations are possible then the
interpretation of the author must be accepted. The
courts will only interfere to prevent arbitrariness,
irrationality, bias, mala fides or perversity. With this
approach in mind we shall deal with the present
case.
25. That brings us to the most contentious
issue as to whether the learned single judge of the
34
High Court was right in holding that the appellate
orders were bad since they were without reasons.
We must remember that we are dealing with purely
administrative decisions. These are in the realm of
contract. While rejecting the tender the person or
authority inviting the tenders is not required to give
reasons even if it be a state within the meaning
of Article 12 of the Constitution. These decisions are
neither judicial nor quasijudicial. If reasons are to be
given at every stage, then the commercial activities of
the State would come to a grinding halt. The State
must be given sufficient leeway in this regard. The
Respondent nos. 1 and 2 were entitled to give
reasons in the counter to the writ petition which they
have done.”
28. In Tata Motors Limited v. Brihan Mumbai Electric
Supply and Transport Undertaking (BEST) and others 3 the
Hon’ble Supreme Court reiterated the principles as to whether
the Courts should and should not interfere in contractual
matters. The relevant paragraph No.50 reads as under:
“50. This Court being the guardian of
fundamental rights is duty-bound to interfere
when there is arbitrariness, irrationality, mala
fides and bias. However, this Court has
cautioned time and again that courts should
exercise a lot of restraint while exercising their
powers of judicial review in contractual or
3
(2023) 19 SCC 1
35commercial matters. This Court is normally
loathe to interfere in contractual matters unless
a clear-cut case of arbitrariness or mala fides
or bias or irrationality is made out. One must
remember that today many public sector
undertakings compete with the private
industry. The contracts entered into between
private parties are not subject to scrutiny under
writ jurisdiction. No doubt, the bodies which
are State within the meaning of Article 12 of
the Constitution are bound to act fairly and are
amenable to the writ jurisdiction of superior
courts but this discretionary power must be
exercised with a great deal of restraint and
caution. The courts must realise their
limitations and the havoc which needless
interference in commercial matters can cause.
In contracts involving technical issues the
courts should be even more reluctant because
most of us in Judges’ robes do not have the
necessary expertise to adjudicate upon
technical issues beyond our domain. The courts
should not use a magnifying glass while
scanning the tenders and make every small
mistake appear like a big blunder. In fact, the
courts must give “fair play in the joints” to the
government and public sector undertakings in
matters of contract. Courts must also not
interfere where such interference will cause
unnecessary loss to the public exchequer.”
29. It is to be noted that petitioner was informed by
respondent No.2 by communication dated 12.06.2024 stating
that petitioner was held as lone applicant/lone remaining eligible
applicant in the location under Group-I and has been
provisionally selected and the award of dealership was subject to
compliance of terms and conditions of the Corporation. It is
36
further to be noted that the petitioner has entered into a long
term lease with his lessor only with a sole intention to setup
retail outlet of Indian Oil Corporation in the proposed location.
Learned standing counsel has not made any submissions with
respect to the observations made in the committee report dated
01.04.2025. It is also pertinent to note that since the petitioner
is provisionally selected and his candidature for award of RO
dealership wherein lease deed document submitted by the
petitioner was registered on 26.09.2023 which is before the date
of application i.e., 07.10.2023 mentioning that the lease term is
21 years effective from 01.11.2023 which is after the date of
application and that as per the guidelines, the applicant should
offer land for lease on or before the date of application and
accordingly petitioner’s candidature was cancelled as such there
is no case of arbitrariness, bias, irrationality and malafides in
the cancellation of the petitioner’s candidature for setting up of
retail outlet.
30. Applying the law laid down in Silppi Constructions
(supra 2) and Tata Motors Limited (supra 3), this Court is of
the considered opinion that no mandamus can be issued to the
respondent authorities and the e-mail communication dated
37
14.10.2024 cancelling the candidature of the parties for Award of
Retail Outlet Dealership under open category advertised on
28.06.2023 warrants no interference. Accordingly, this writ
petition stands dismissed.
31. However, the interpretation of terms and conditions in
the lease agreement dated 26.09.2023 and rectification deed
dated 13.09.2024 is essentially left open to the respondents to
take a decision afresh in the light of the committee report dated
01.04.2025 submitted by the nominated committee members.
32. In view of the above cited judicial pronouncements and
considering the facts and circumstances of the case, this writ
petition stands dismissed with the above observations.
As a sequel, miscellaneous applications, if any pending,
shall stand closed. There shall be no order as to costs.
________________________________
JUSTICE N.V. SHRAVAN KUMAR
Date: 29.07.2025
Note: LR Copy to be marked.
mrm