State of Himachal Pradesh v. M/s OASYS Cybernatics Pvt. Ltd.; 2025 INSC 1355 - Administrative orders - LoI - Tender

Administrative orders - Administrative orders must be read in light of the concomitant record, and that reasons need not be stated in haec verba in the communication, so long as they can be discerned from the file and are not post-hoc justifications. (Para 27) Cautioned against the practice of postfacto rationalisation, whereby authorities attempt to supplement or fabricate reasons after the decision has already been taken : Such afterthoughts cannot cure an inherently arbitrary action. The legitimacy of administrative reasoning must be tested with reference to the material that existed at the time the decision was made, not by subsequent embellishment- What is permissible is elucidation of contemporaneous reasoning already traceable on record; what is impermissible is the invention of fresh grounds to retrospectively justify an otherwise unreasoned order. (Para 28)

Letter of Intent (LOI) - LoI is, in the ordinary course, a precursor to a contract and not the contract itself- An LoI creates no vested right until it passes the threshold of final and unconditional acceptance. It is but a “promise in embryo,” capable of maturing into a contract only upon the satisfaction of stipulated preconditions or upon the issue of an LoA. A bidder’s expectation that such a contract will follow may be commercially genuine, but it is not a juridical entitlement. (Para 13-15)

Contract Law- The law of contract distinguishes between a promise to make a promise and a promise performed. The former is not legally binding until its contingencies are fulfilled. (Para 14)

Constitution of India - Article 226 - Tender Matters- Even when contractual rights are absent, the State’s administrative discretion in rescinding or cancelling an LoI is not unfettered. It remains subject to constitutional discipline, particularly the requirement that State action must not be arbitrary, unreasonable, or actuated by mala fides. (Para 20) The exercise of judicial power over administrative action in tenders is directed not at correcting the decision, but the decision-making process- the scope of review is confined to testing administrative action against the touchstones of illegality, irrationality, mala fides, and procedural impropriety- Judicial review in contract matters operates only where the action is “palpably unreasonable or absolutely irrational and bereft of any principle.” (Para 21-26)

State - The State, as a continuing juristic entity, is bound by its own representations in prior proceedings; its legal stance cannot oscillate with changes in political leadership. (Para 38)

Tender - State’s decision to cancel a tender or restart the process is itself an aspect of public interest. (Para 54)

Doctrine of legitimate expectation - This doctrine presupposes a clear and unambiguous representation by the State, followed by reliance and detriment.To invoke legitimate expectation against an explicit disclaimer would be to transform the doctrine from a shield against arbitrariness into a sword against caution — a proposition no Court can endorse. (Para 55)

Public Distribution System - Public Distribution System remains, for millions, the thin line between sustenance and deprivation. When projects of such public importance are delayed or derailed by procedural lapses, the ultimate cost is borne not by the contracting parties but by those at the last mile of governance.- It is therefore incumbent upon every stakeholder—the Government, its technical partners, and private participants—to treat such undertakings with the seriousness their human impact demands. Administrative caution and technological innovation must work hand in hand to ensure that reform does not lose sight of its moral anchor: service to the poorest. Future exercises in public procurement, particularly those that underpin welfare delivery, must thus be executed with greater institutional coherence, foresight, and accountability—so that legality, efficiency, and compassion operate in concert, and the constitutional promise of equitable distribution finds tangible expression. (Para 57-58)