Whether the State's decision cancelling the Letter of Intent was arbitrary, unreasoned, or violative of the principles of natural justice, thereby warranting interference?

No. The test for arbitrariness under Article 14 of the Constitution of India is whether the decision is uninformed by reason or guided by irrelevant considerations. Repeated efforts to secure compliance, followed by concern about deploying devices not certified for compatibility, were germane and neither whimsical nor pretextual. Lapse of time does not convert a provisional arrangement into a vested right, and administrative deliberation does not amount to duplicity.

Contract — Government tender — Letter of Intent — Whether creates binding or enforceable rights — Cancellation of Letter of Intent — Constitution of India, Art. 14 — Arbitrariness — Post-facto rationalisation — Blacklisting declaration clause — Legitimate expectation — Quantum meruit — Contract — Letter of Intent — Condition precedent — Vested right — Held: An LoI is in the ordinary course a precursor to a contract and not the contract itself, creating no vested right until it passes the threshold of final and unconditional acceptance. Where compatibility testing, live demonstration and cost disclosure were framed as conditions precedent, reliance on the LoI as a source of vested contractual rights is wholly misplaced. (¶15, 18) Constitution of India — Art. 14 — Unreasoned cancellation — Post-facto rationalisation — Held further: 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, but the invention of fresh grounds to retrospectively justify an unreasoned order is impermissible. The correct course is to hold the cancellation vitiated for want of reasoning and remit to the Competent Authority. (¶28, 31) Tender — Blacklisting declaration clause — Subsisting disqualification — Legitimate expectation — Held further: A clause requiring a declaration that the bidder is not blacklisted as on the date of bid submission demands disclosure of subsisting disqualifications, not of past and exhausted ones, and creates no perpetual bar. Legitimate expectation presupposes a clear and unambiguous representation, which conditional terms negate; cancellation upheld, verified costs reimbursable on quantum meruit. (¶40, 55, 59)

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