Extension Of Public Tender Via Supplementary Agreement Allowed If Contract Permits, Non-Parties Can't Raise Challenge: Telangana High Court

The Telangana High Court has dismissed a writ petition challenging supplementary agreements extending time for execution of a public tender, holding that non-participating bidders lack locus and that contractual extension of time is allowed if it is permitted under the tender conditions.

A Single Judge Bench of Justice Surepalli Nanda observed:

"A bare perusal of the tender document, in particular point No.4 of the bid document clearly indicates that the validity of tender period is five (5) years and 45 days and clause 25 and 26 of the tender document, dated 26.04.2025 (referred to and extracted above) refers to delays and extension of time and clause 26 provides for levy of liquidated damages and therefore, it is settled law that when there is an extension clause and liquidated damages, time will not be the essence of the contract as held at Para 11, 32 and 35 of the Judgment of the Apex Court reported in (2022) 2 SCC 382 in Welspun Speciality Solutions Limited v. ONGC".

The court further opined that the petition was not maintainable as the petitioners had challenged the action of the state in entering into Supplementary Agreements with Respondents Nos. 6 and 7, observing that "Petitioners are not party to the said supplementary agreements and cannot challenge the same". It further referred to various Supreme Court judgments where it had been held that a person who did not participate in the tender cannot challenge the tender. 

"Seeking to set aside the supplementary agreements which is contractual in nature is not permissible in a Writ Petition. The Petitioners are only challenging the Supplementary Agreements dated 29.11.2025 and not challenging the initial agreements dated 29.05.2025 and 10.06.2025. Admittedly the initial agreements are pursuant to awarding the contract to Respondent No. 6 and Respondent No.7 and supplementary agreements are only for extension of time for supply of bunker beds. This Court opines that the Petitioners without laying any challenge to the 1st agreement or initial act of awarding the contract to Respondent Nos. 6 to 8 cannot challenge the supplementary agreements," the court said. 

“This Court opines that there is no arbitrariness, irrationality, bias, mala fides or perversity in the action of the official respondents… since the action… is in consonance with the language of the subject tender document," it added. The Court consequently held that the writ petition was “devoid of merits” and dismissed the same.

The petitioners, an association of small-scale manufacturers, challenged the action of the State authorities in entering into supplementary agreements dated 29.11.2025 extending the time for supply of bunker beds under a government tender.

It was contended that the original contract mandated completion within 120 days and that extension of time without fresh tendering was illegal and arbitrary.

The petitioners contended that the impugned extension of time beyond the stipulated 120 days was contrary to the terms of the tender and therefore arbitrary and illegal. It was further argued that the successful bidders were ineligible, as they did not satisfy the prescribed requirement of seven years' existence. The petitioners also alleged that the process was vitiated by favouritism, resulting in inflated pricing and undue benefit to select bidders.

In response, the State and the successful bidders raised a preliminary objection as to maintainability, contending that the petitioners lacked locus standi since they had not participated in the tender process and were not party to the agreements being challenged. On merits, it was submitted that the tender conditions expressly permitted extension of time, along with levy of liquidated damages, and therefore the impugned action was in accordance with the contractual framework. It was further contended that the delay was attributable to administrative factors, including approval of specifications and related inquiries, and could not be used to invalidate the process.

At the outset, the Court held that the writ petition itself was not maintainable, noting that a party which “did not participate in the tender cannot challenge the same” and that contractual disputes cannot ordinarily be agitated under Article 226.

On merits, the Court rejected the contention that extension of time was impermissible, observing that clauses relating to extension and liquidated damages indicate that “time is not the essence of the contract.”

The Court further found that the delay was attributable to the authorities themselves, particularly in approving specifications, and therefore the extension could not be faulted.

Addressing eligibility, the Court held that the tender permitted participation through OEM-authorised dealers, and therefore the requirement of 7-year existence stood satisfied through the OEM.

On allegations of mala fides and favouritism, the Court noted absence of any supporting material, holding such claims to be “without any basis.”

Relying on settled principles governing judicial review of tenders, including Tata Cellular, Afcons Infrastructure and Jagdish Mandal, the Court reiterated that interference is warranted only in cases of “arbitrariness, mala fides or perversity,” none of which were made out.

Holding that the challenge sought to unsettle a concluded contractual process and lacked merit, the Court dismissed the writ petition and vacated interim orders.

Case Title: Telangana Small Scale Industries Steel and Wooden Furniture Manufacturers Association & Ors. v. State of Telangana & Ors.

Case No.: Writ Petition No. 38140 of 2025

Appearance: Sri D. Prakash Reddy, Senior Counsel for the Petitioners; Sri T. Rajinikant Reddy, Additional Advocate General for Respondent Nos.1 to 3; Smt. B. Kavita Yadav for Respondent Nos.4 and 5; Sri B. Chandrasen Reddy, Senior Counsel for Respondent Nos.6 to 8.

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