Introduction:
The Calcutta High Court recently addressed an important dispute concerning public tender processes, contractual obligations, and the legal consequences of failing to comply with mandatory tender conditions. In the case of Masibul Hassan v. State of West Bengal & Ors., the Court examined whether a bidder who had emerged as the highest participant in an e-auction for the settlement of a ferry ghat could claim the existence of a concluded three-year contract despite failing to fulfill one of the key requirements of the tender. The case arose after the Murshidabad Zilla Parishad issued a fresh e-auction notice for the settlement of the Balia Shyampur Ferry Ghat. The petitioner, Masibul Hassan, challenged this decision before the High Court, asserting that he had already been granted settlement rights for three years under a previous auction process. According to the petitioner, the new auction notice issued on January 6, 2026 was illegal and arbitrary because the earlier settlement period was supposed to run from December 19, 2024 to December 18, 2027. Justice Kausik Chanda of the Calcutta High Court, however, examined the tender documents, the actions of both parties, and the relevant legal principles governing contracts and public tenders. The Court ultimately concluded that no binding contract had ever come into existence because the petitioner had failed to comply with a mandatory condition requiring submission of a bank guarantee. The judgment offers valuable insights into how conditional acceptance operates under the Indian Contract Act, 1872 and clarifies that a bidder cannot claim contractual rights unless all preconditions specified in the tender are fulfilled. The Court also highlighted the limited scope of judicial intervention in government contractual matters under Article 226 of the Constitution, reaffirming that courts generally refrain from interfering unless there is clear arbitrariness, mala fide intent, or violation of statutory provisions.
Arguments Presented by the Petitioner:
The petitioner, Masibul Hassan, approached the High Court by filing a writ petition challenging the validity of the fresh e-auction notice issued by the Murshidabad Zilla Parishad. According to him, the issuance of a new auction was unlawful because the ferry ghat had already been settled in his favour for a period of three years through an earlier e-auction conducted on October 3, 2024. During that auction process, the petitioner had emerged as the highest bidder by quoting ₹26.74 lakh as the lease rent for the first year. Based on this result, the Zilla Parishad issued a Letter of Acceptance on November 18, 2024 indicating that his bid had been accepted. The petitioner argued that this acceptance effectively created a binding contractual relationship between him and the authority. As per his understanding, the settlement of the ferry ghat was valid for three years starting from December 19, 2024 and ending on December 18, 2027. He contended that the issuance of a fresh auction notice during the subsistence of this period was completely unjustified.
The petitioner further stated that he had complied with the major requirements of the tender by depositing the lease rent for the first year. According to him, this act demonstrated his bona fide intention to honour the contract and commence ferry operations. He claimed that the authorities had permitted him to operate the ferry ghat during the first year, which further confirmed that the settlement had already taken effect. Therefore, the sudden decision of the Zilla Parishad to curtail the tenure and initiate a new auction process amounted to a breach of the agreement and an abuse of administrative power.
Another argument raised by the petitioner related to the conduct of the Zilla Parishad in granting repeated extensions for the submission of the bank guarantee. The tender conditions had required the successful bidder to furnish a bank guarantee of ₹32.36 lakh corresponding to the third year’s lease rent. The petitioner admitted that he could not immediately submit this guarantee but emphasized that he had repeatedly requested the authority to grant additional time. According to him, the fact that the authority had allowed such extensions indicated that it had effectively waived strict compliance with the requirement. The petitioner argued that once the authority granted extensions instead of cancelling the settlement immediately, it could no longer treat the bank guarantee requirement as a rigid precondition.
The petitioner also argued that the authority had accepted the benefits arising from the contract by allowing him to operate the ferry services and collect revenue during the first year. He maintained that this conduct showed that the Zilla Parishad itself had treated the contract as valid and operational. Consequently, the authority could not later turn around and claim that no binding contract had been formed. According to the petitioner, the doctrine of fairness in administrative actions required the authority to honour its commitment for the full three-year term.
Additionally, the petitioner contended that the issuance of the fresh auction notice was arbitrary and contrary to public interest. He argued that sudden termination of the settlement could disrupt ferry services, which were essential for transportation and livelihood in the region. By replacing an already functioning operator with a new auction process, the authority risked creating instability and uncertainty. On these grounds, the petitioner requested the High Court to quash the fresh e-auction notice and declare that the original three-year settlement remained valid and enforceable.
Arguments Presented by the Respondents:
The respondents, including the State authorities and the Murshidabad Zilla Parishad, strongly opposed the writ petition and defended the decision to issue a fresh auction notice. They argued that the petitioner’s claim of a concluded three-year contract was legally unsustainable because he had failed to comply with a crucial condition specified in the tender documents. According to the respondents, the Letter of Acceptance issued on November 18, 2024 was not an unconditional confirmation of the contract but merely a conditional acceptance subject to fulfilment of several mandatory requirements. These conditions included payment of the first year’s lease rent, execution of a formal agreement, and submission of a bank guarantee equivalent to the lease rent of the third year.
The respondents acknowledged that the petitioner had deposited the lease rent for the first year, but they emphasized that he had never submitted the required bank guarantee of ₹32.36 lakh. This guarantee was an essential financial safeguard intended to protect the revenue interests of the Zilla Parishad in case the operator failed to continue ferry services or defaulted in future payments. According to the authorities, the requirement was clearly stated in the tender conditions and applied equally to all bidders. Therefore, failure to furnish the guarantee meant that the petitioner had not satisfied the conditions necessary for the contract to become effective.
The respondents also clarified that the extensions granted to the petitioner were not intended to waive the requirement but were merely temporary concessions provided in the hope that he would eventually comply with the obligation. The authorities maintained that granting additional time did not alter the legal nature of the condition itself. They argued that a waiver by a public authority must be explicit, intentional, and clearly communicated. Since no such explicit waiver had been issued, the requirement remained valid and enforceable throughout the process.
Another key argument presented by the respondents was that the petitioner’s conduct demonstrated his own awareness that the bank guarantee was mandatory. The fact that he repeatedly sought extensions for submitting the guarantee showed that he recognised the obligation and had not treated it as waived. If the petitioner truly believed that the requirement had been waived, he would not have continued requesting additional time. This behaviour, according to the respondents, clearly indicated that the petitioner understood that the contract could not be finalized without fulfilling the stipulated condition.
The respondents further explained that due to the petitioner’s continued non-compliance, the Zilla Parishad had eventually curtailed the tenure of the settlement to one year, which ended on December 18, 2025. After the expiry of this period, the authorities granted a temporary extension until January 31, 2026 solely to ensure that ferry services were not disrupted while a new auction process was being arranged. The fresh e-auction notice issued on January 6, 2026 was therefore a lawful administrative step taken to secure a new operator through a transparent competitive process.
Finally, the respondents argued that the High Court should not interfere with such contractual decisions under its writ jurisdiction unless there was clear evidence of arbitrariness or mala fide intention. They maintained that the entire process had been conducted strictly in accordance with the tender conditions and relevant legal principles. Since the petitioner himself had failed to fulfil a mandatory requirement, he could not seek relief from the Court.
Court’s Analysis and Judgment:
After considering the submissions made by both parties, Justice Kausik Chanda undertook a detailed examination of the tender conditions, the sequence of events, and the relevant provisions of the Indian Contract Act, 1872. The Court began by addressing the fundamental question at the heart of the dispute: whether a concluded contract had come into existence between the petitioner and the Murshidabad Zilla Parishad for the settlement of the ferry ghat.
The Court observed that the Letter of Acceptance issued by the Zilla Parishad was not unconditional. Instead, it clearly stated that the acceptance of the bid was subject to certain preconditions. These included deposit of the first year’s lease rent, submission of the bank guarantee for the third year’s lease rent, and execution of a formal agreement. The Court noted that such conditional acceptance is common in public tender processes where authorities seek to ensure financial security and administrative clarity before finalizing a contract.
Referring to principles under the Indian Contract Act, the Court explained that acceptance of an offer must be “absolute and unqualified” in order to create a binding agreement. When acceptance is made conditional upon fulfilment of certain requirements, the contract remains incomplete until those conditions are satisfied. Therefore, a bidder cannot claim that a binding contract exists if he has not complied with the conditions attached to the acceptance.
Applying this principle to the present case, the Court found that the petitioner had indeed failed to fulfil the requirement of submitting the bank guarantee. This guarantee was not a minor procedural formality but a substantive financial safeguard built into the tender conditions. Its purpose was to secure the interests of the Zilla Parishad and ensure that the operator remained financially accountable for the entire duration of the settlement. Since the petitioner had not provided this guarantee even after multiple extensions, the Court concluded that the conditions necessary for the formation of a binding contract had never been fulfilled.
The Court also addressed the petitioner’s argument that the requirement had been waived by the authority through repeated extensions. Justice Chanda rejected this contention, explaining that waiver by a public authority must be clear, deliberate, and intentional. Simply granting additional time for compliance does not amount to abandoning the requirement altogether. In the absence of an explicit statement indicating that the authority had permanently waived the bank guarantee condition, it could not be assumed that such waiver had taken place.
Furthermore, the Court pointed out that the petitioner’s own conduct contradicted his claim of waiver. By repeatedly requesting extensions for submitting the bank guarantee, the petitioner had effectively acknowledged that the requirement remained valid and binding. This behaviour demonstrated that he himself understood that the contract could not be finalized without fulfilling the condition.
Justice Chanda also discussed the scope of judicial review in contractual matters involving government authorities. The Court reiterated that under Article 226 of the Constitution, courts generally refrain from interfering in such matters unless there is clear evidence of arbitrariness, mala fide action, or violation of statutory provisions. Public tenders involve administrative and financial considerations that are best evaluated by the concerned authorities. Judicial intervention is therefore limited to ensuring fairness and legality, not substituting the Court’s judgment for that of the administrative body.
In the present case, the Court found no indication that the Zilla Parishad had acted arbitrarily or in bad faith. The authority had followed the tender conditions and had even granted the petitioner several opportunities to comply with the bank guarantee requirement. When the petitioner failed to do so, the authority was justified in treating the contract as incomplete and initiating a fresh auction process to ensure proper management of the ferry ghat.
Based on this reasoning, the Court held that no concluded three-year contract had ever come into existence between the petitioner and the Zilla Parishad. Consequently, the issuance of the fresh e-auction notice dated January 6, 2026 was lawful and valid. The writ petition was therefore dismissed, and the interim order previously granted in favour of the petitioner was vacated.