Conditional Acceptance In Tender Does Not Create Concluded Contract Until Conditions Are Fulfilled: Calcutta High Court

The Calcutta High Court recently dismissed a writ petition challenging a fresh e-auction notice issued by the Murshidabad Zilla Parishad for the settlement of the Balia Shyampur Ferry Ghat, holding that no concluded contract had come into existence as the successful bidder failed to comply with a mandatory tender condition requiring submission of a bank guarantee.Justice Kausik Chanda held that conditional acceptance of a bid does not result in a binding contract unless the bidder fulfils the stipulated conditions precedent. The Court further clarified that the extension of time to comply with such conditions cannot be construed as a waiver by the authority.The petitioner challenged an e-auction notice dated January 6, 2026, contending that he had already secured a three-year settlement of the ferry ghat from December 19, 2024 to December 18, 2027 pursuant to an earlier auction process conducted on October 3, 2024.He had emerged as the highest bidder by quoting ₹26.74 lakh for the first year. Through a Letter of Acceptance dated November 18, 2024, the Zilla Parishad accepted his bid subject to certain conditions. These included deposit of the first year's lease rent, execution of a formal agreement, and submission of a bank guarantee of ₹32.36 lakh corresponding to the third year's lease rent.While the petitioner deposited the first year's rent, he failed to furnish the bank guarantee and repeatedly sought extensions of time. The authority eventually curtailed the tenure to one year, which expired on December 18, 2025. Thereafter, a temporary extension was granted to maintain ferry services until January 31, 2026, following which the impugned fresh auction notice was issued.The Court held that the requirement of furnishing a bank guarantee was a mandatory financial safeguard embedded in the tender conditions. Since the petitioner failed to comply with this requirement even within the extended timeline, the alleged three-year contract never crystallised.The Court noted that acceptance of a tender must be “absolute and unqualified” under the Indian Contract Act, 1872, and where acceptance is conditional, the contract remains incomplete until the stipulated conditions are fulfilled.Justice Chanda also rejected the petitioner's argument that the Zilla Parishad had waived the requirement by extending time for submission of the bank guarantee. The Court observed that waiver by a public authority must be clear and intentional, and mere extension of time cannot amount to relinquishment of a contractual safeguard meant to protect public revenue.The Court further held that the petitioner's conduct in repeatedly seeking extensions demonstrated that he himself recognised the obligation to submit the bank guarantee.Emphasising the limits of judicial review under Article 226 of the Constitution, the Court reiterated that decisions in contractual matters involving government bodies are ordinarily not interfered with unless they are shown to be arbitrary, mala fide, or violative of statutory provisions.In the present case, the Court found no such illegality in the decision of the Zilla Parishad to issue a fresh auction notice.Holding that no concluded three-year contract ever came into existence, the Court dismissed the writ petition and upheld the fresh auction process. The interim order earlier granted in the matter was also vacated.Case Title: Masibul Hassan v. State of West Bengal & Ors.Case No.: WPA 1134 of 2026.Click here to read order

Conditional Acceptance In Tender Does Not Create Concluded Contract Until Conditions Are Fulfilled: Calcutta High Court

Srinjoy Das

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