Veerannagari Laxma Reddy vs M/S. Indian Oil Corporation Limited
2025 Latest Caselaw 652 Tel

Telangana High Court

Veerannagari Laxma Reddy vs M/S. Indian Oil Corporation Limited on 29 July, 2025

            * THE HON'BLE SRI JUSTICE N.V.SHRAVAN KUMAR
                     + Writ Petition No.30566 of 2024
%       29.07.2025

#       Between:

Veerannagari Laxma Reddy
                                                                Petitioner
                                     Vs.

M/s.Indian Oil Corporation Limited,
Rep.by its Chairman and Director,
Having its registered office
At Indian Oil Bhavan, G-9, Ali Yavar Jung Marg,
Bandra (East), Mumbai and another.
                                                             Respondents


! Counsel for Petitioner               : Mr.R.N.Hemendranath Reddy,
                                         Sr.counsel
                                         Rep. Mr.Lohit Sannapaneni

^ Counsel for Respondents                  : Mr.Dominic Fernandes
                                             Standing Counsel


<GIST:

> HEAD NOTE:

? Cases referred
    1   (2019) SCC OnLine Pat 1225
    2   (2020) 16 SCC 489
    3   (2023) 19 SCC 1
                                 2



  THE HONOURABLE SRI JUSTICE N.V. SHRAVAN KUMAR

               Writ Petition No.30566 of 2024

ORDER:

The petitioner is aggrieved by the cancellation of his

candidature for award of RO dealership under open category

advertised on 28.06.2023 being communicated by respondent

No.2 vide their communication through e-mail dated 14.10.2023.

A consequential prayer is sought to declare that petitioner is

fully eligible and qualified for appointment as Retail Outlet

Dealer for the location at Sl.No.228 in Indian Oil Corporation

Limited notice for appointment of Regular/Rural Retail Outlet

dealerships in Telangana advertised on 28.06.2023 i.e., "on LHS

from Kallakal to Medchal Bus Stop on NH 44".

2. Heard Mr.Hemendranath Reddy, learned senior counsel

for the petitioners and Mr.Dominic Fernandes, learned standing

counsel for Indian Oil Corporation appearing on behalf of

respondents.

3. The facts giving rise to file the present writ petition are

that on 28.06.2023, respondent No.1 issued a notice inviting

applications for appointment of retail outlet dealerships across

various locations in Telangana, accompanied by a brochure

outlining the eligibility criteria and selection procedure. The

brochure classifies the sites into three categories: Corpus Fund

Scheme Sites (CFS), Corporation Owned Sites (CC), and Dealer

Owned Sites (DC). In respect of DC sites, the Guidelines

mandate that the land offered by the applicant must be either

owned or held under a registered lease valid for a period of 19

years and 11 months, commencing on or after the date of

advertisement but not later than the date of application. In the

present Writ Petition, the issue specifically concerns the

Guidelines applicable to Dealer-Controlled (DC) sites, under the

said category, the Petitioner had submitted his application.

4. The petitioner intending to establish an Indian Oil

Corporation's Retail Outlet on NH-44 in Medchal Malkajgiri

District, had entered into a registered lease deed dated

26.09.2023 for land admeasuring 1,719.65 sq.mts., in

Sy.No.163/2/1/1/1/1, Yellampet Village, for a term of 21 years

and submitted an application dated 07.10.2023, bearing

Application No.IOC16966701753217 to the respondents,

through the prescribed web portal for Retail Outlet Dealership

identifying place situated on the left-hand side from Kallakal to

Medchal Bus Stop on National Highway 44, which is at Serial

No.228 in the Indian Oil Corporation's Notice of Proposal to

appoint Retail Outlet dealers in Telangana, advertised on

28.06.2023, by paying a non-refundable application fee of Rs.

10,000/-. The above said location is classified as DC site, hence

the mode of selection is by way of draw of lots and that the

petitioner was selected by draw of lots. The petitioner was

provisionally selected as the sole eligible applicant and was

communicated vide e-mail dated 12.06.2024 by the Respondent

No.2 and vide another e-mail dated 12.06.2024, respondent No.2

directed the petitioner to remit Rs. 50,000/- towards Initial

Security Deposit and upload specified self-attested documents.

The Petitioner duly complied with the same and uploaded each

and every self-attested document specified therein within the

stipulated period of time. Thereafter, vide an e-mail

dt.29.06.2024, respondent No.2 informed that their Land

Evaluation Committee would visit and inspect the land offered by

the petitioner on 09.07.2024 and requested the petitioner to be

personally present at the location on the said day along with

relevant land documents.

5. On 09.07.2024, respondents' Land Evaluation

Committee carried out the land inspection in the Petitioner's

physical presence and also verified the relevant land documents.

Thereafter, respondent No.2 vide communication through e-mail

dt.29.07.2024, informed the petitioner that their officers would

carry out Field Verification of Credentials (FVC), for which the

petitioner was requested to be present personally and produce

the original documents for their verification. Accordingly,

petitioner produced original Lease Deed bearing Doc.No.13847 of

2023 dt.26.09.2023 and other requisite documents for Field

Verification of Credentials.

6. Thereafter, respondent No.2, vide e-mail dt.14.10.2024,

informed that petitioner's candidature stood cancelled, as during

the Field Verification of Credentials, petitioner failed to produce

the original documents for verification by the Officers and the

documents produced were varying with the documents

submitted at the time of filling the application. The

communication further enumerated few reasons for the

cancellation of petitioner's candidature. One of the reasons is

that the lease deed was registered on 26.09.2023, which is

before the date of application dated 07.10.2023 and another

reason is that the term of the lease is 21 years, effective from

01.11.2023, which is after the date of application and as per the

guidelines, applicant should offer lease land that is valid on or

before the date of application.

SUBMISSIONS ON BEHALF OF PETITIONER:

7. Mr.Hemendranath Reddy, learned senior counsel for the

petitioner would submit that the impugned communication

dt.14.10.2024 vaguely outlines multiple reasons for cancelling

the petitioner's candidature, however, the only purported reason

for cancelling the petitioner's candidature for his appointment as

Retail Outlet Dealer, as clarified in the counter affidavit filed on

behalf of the respondents, is that the petitioner's lease deed

dt.26.09.2023 is allegedly in violation of Clause 4(vi)(c) of the

Guidelines, as the lease deed comes into effect after the date of

petitioner's application. Clause 4 (vi) (c) of the Guidelines

provides as follows:

"For Dealer Owned Sites ("B"/ "DC" Sites), the applicant should ensure that the land arranged by the applicant is either registered in the applicant's name or leased in favour of the applicant for a minimum period as advertised by respective oil company, as per terms of Letter of Intent (LOI). Investment will be made by the OMC towards

development facilities in the offered land only after compliance of the aforementioned, by the applicant. In case land is obtained on long term lease by the applicant, the lease should be valid till a period of 19 years 11 months from the date or after the date of advertisement but not later than the date of application."

8. It is further submitted that clause 4(vi)(c) provides that

the lease deed shall be valid for a minimum period of 19 years 11

months from the date or after the date of advertisement but not

later than the date of application. Admittedly the petitioner's

lease deed was registered on 26.09.2023, which is after the date

of advertisement i.e., 28.06.2023 and prior to the date of

petitioner's application dt.07.10.2023. However, the respondent

authorities cancelled the petitioner's candidature for

appointment as Retail Outlet Dealer by misplacing their reliance

on Clause 2 of the petitioner's lease deed dt.26.09.2023 which

provides that the term of the lease shall be for a period of 21

years with effect from 01.11.2023 and contended that as the

lease deed comes into effect on 01.11.2023, which is after the

date of petitioner's application dt.07.10.2023, the lease deed is

in violation of Clause 4 (vi) (c) of the Guidelines.

9. Learned senior counsel would further submit that the

lease deed has to be read harmoniously as a whole and the said

interpretation of respondents is entirely erroneous and

misplaced, as the lease deed shall be read in its entirety and that

Clause 2 of the lease deed shall not be read in isolation. It is

submitted that Clause 7 of the lease deed, which deals with

"Rental Holiday", categorically provides that the possession of

the scheduled premises was delivered to the petitioner on the

same day i.e., on 26.09.2023 and that the lessor agreed not to

claim any rentals from the date of agreement till the date of

commencement of the lease. When Clause 2 of the lease deed is

read along with Clauses 6 & 7, it is manifestly clear that the

possession of the scheduled premises was handed over to the

petitioner on the date of registration of the lease deed i.e.,

26.09.2023. However, parties mutually agreed that the lessor

shall not claim any rents from the date of registration of lease

deed till 01.11.2023. It is further submitted that the agreement

with respect to rental holiday is an inter se agreement between

the lessor and petitioner. However, the same does not indicate

that the entire lease deed becomes effective only from

01.11.2023, as clause 7 categorically states that possession of

the scheduled premises was handed over to the petitioner on the

date of registration of the lease deed itself, i.e., 26.09.2023.

10. Learned senior counsel further contends that when

Clause 4(vi)(a) is read in conjunction with Clause 4(vi)(c), it

becomes very evident that the crucial requirement is that

possession of the offered land must vest with the applicant as on

the date of application. In the present case, possession of the

scheduled land was handed over to the petitioner on 26.09.2023,

which is the date of execution and registration of the lease deed.

Therefore, the lease became effective from that date, which is

prior to the date of application, i.e., 07.10.2023.

11. In support of his submissions, learned senior counsel

would rely on a judgment of the High Court of Bihar at Patna in

Shankar Kumar Bhagat v. Indian Oil Corporation Limited 1,

wherein the petitioner had a lease deed dated 18.12.2018, and

possession of the land was delivered on the same day, although

the lease term was stipulated to commence from the date of

receipt of the petrol pump licence. The respondent/Indian Oil

Corporation therein rejected the petitioner's candidature on the

2019 SCC OnLine Pat 1225

ground that the lease was not in accordance with Clause 4(v)(a)

of the applicable guidelines, which required the land to be

available with the applicant as on the date of application and to

have a minimum lease of 19 years and 11 months from the date

or after the date of advertisement, but not later than the date of

application. It was held that that a document must be construed

as a whole, giving effect to all its clauses in order to ascertain the

intention of the parties. Consequently, the Court had set aside

the impugned rejection of candidature by Indian Oil Corporation.

12. Further learned senior counsel would rely on a

judgment of Madras High Court in M. Arun Kumar v. General

Manager, Indian Oil Corporation Ltd., and would submit that

while dealing with similar set of facts and interpreting analogous

Guidelines, held that the terms of the brochure cannot be

construed as if they are statutory provisions. The Court observed

that a holistic reading of Clause 4 of the brochure leads to the

clear conclusion that the essential requirement is for the

applicant to have the land "available" as on the date of the

application.

13. Learned senior counsel would submit that the

impugned communication dated 14.10.2024 issued by

respondent No.2 is in blatant violation of the principles of

natural justice and no prior notice was issued, and no

opportunity to offer explanation was afforded to the petitioner,

despite his provisional selection for the Retail Outlet Dealership

and that vide e-mail dated 12.06.2024, the petitioner was

informed that he was the lone remaining eligible applicant and

was accordingly provisionally selected for the dealership.

Learned senior counsel further submits that this Court, in

W.P.No.17536 of 2012, categorically held that valuable rights

accrue to a person upon provisional selection and that any

proposed cancellation must be preceded by notice and

opportunity to respond, regardless of the strength of the

grounds.

14. In the present case, no such notice was served,

rendering the impugned communication dt.14.10.2024 as

arbitrary and violative of the Principles of natural justice. It is

further submitted that the lessor/Original Owner has executed a

Rectification Deed dated 13.09.2024 in favour of the

petitioner/lessee, whereby the commencement date of the lease

deed dated 26.09.2023 has been rectified to 01.10.2023 in lieu

of the originally stated date i.e., 01.11.2023. This rectification

places the petitioner in a more favourable position with respect

to the eligibility criteria for consideration of his candidature as

Retail Outlet Dealer. It is reiterated that the original

commencement date of 01.11.2023, as reflected in the lease deed

dated 26.09.2023, was specified solely for the limited purpose of

rent collection. The rectification of the commencement date to

01.10.2023 is an inter se arrangement between the petitioner

and the lessor, and does not alter the fact that possession was

delivered, and the lease came into effect, on 26.09.2023. It is

further submitted that even as per the e-mail communication

dated 12.06.2024, there are no other eligible candidates for the

subject location and the cancellation of the petitioner's

candidature on a hyper-technical, erroneous, and illegal ground

has caused irreparable loss and hardship to the petitioner for

the purpose of establishment of a retail outlet. Questioning the

same, the present writ petition is filed.

COUNTER OF RESPONDENTS:

15. A counter affidavit has been filed by respondent Nos.1

and 2 stating that on 12-06-2024 a selection e-mail was sent to

the petitioner and on 29.06.2024 an e-mail communication

regarding Land Evaluation Committee (LEC) inspection was sent

to the petitioner that the land would be inspected by the said

committee on 09.07.2024 and accordingly LEC was completed.

After successful completion of LEC on 29.07.2024, the petitioner

was informed vide email, to attend Field Verification Credentials

(FVC) along with original documents. During the scrutiny of

documents, it was found that the petitioner's leased land was

with effect from a date post the application date and accordingly

an email informing the cancellation of candidature was sent to

the petitioner on 14.10.2024. It is further submitted that the

lease deed was registered on 26.09.2023 which is before the date

of application i.e. 07-10-2023 while the lease term is 21 years

effective from 01-11-2023 which is after the date of application.

As per the dealership guidelines the applicant applying under

group 1 category should have a valid lease deed as on the date of

application. Therefore the petitioner's candidature was rejected

on 14.10.2024. It is relevant to submit that the dealer 'chayan'

portal has a standard template for any email communication

with the applicant. As per the standard template, any applicant

that gets rejected at FVC stage the below said lines will be

generated in mail.

"this is to inform that during the FVC, you failed to produce the original documents for verification by the officer/ the documents produced by you were at variance with the documents submitted/information given in the application"

This standardization is intended to ensure uniform

communication and does not imply a lack of reasoning or

application of mind by the Respondent in the decision-making

process. Further specific reasons were also given in the very

same email.

16. It is further submitted that respondent No.2, through

their email dated 14.10.2024, duly informed the petitioner of the

cancellation of their candidature, citing specific discrepancies as

outlined in the said email. The reasoning outlined by respondent

No.2 in their email dated 14.10.2024, stipulated the grounds for

the cancellation of the petitioner's candidature:

(i) In the email dated 14-10-2024, the first reason provided

was that the petitioner had failed to produce the original

documents for verification by the Officers/the documents

produced by the Petitioner were at variance with the documents

submitted/information given in the application.

(ii) Another reason cited for the cancellation of the

Petitioner's candidature was that the lease deed was registered

on 26-09-2023, which is before the application date of 07-10-

2023, while the term of the lease, being for a period of 21 years,

is effective only from 01-11-2023 which is after the application

date as per Clause 2 of the Lease Deed dated 26-09-2023 i.e.

Exhibit-5. The relevant portion of Clause No.2 of the Lease Deed

is extracted hereunder:

"TERM"

The Term of Lease for the Schedule Premises shall be initially for a period of 21 (twenty one) years with effect from 01-11-2023 unless the lease is terminated earlier than such date pursuant to any of the provisions of this Agreement."

17. The petitioner's interpretation on Clause 4(vi)(c) of the

guidelines provided in respondent No.1/Corporation's Brochure

for DC Sites is misplaced, as the language of the clause

unequivocally mandates that the lease deed must be effective

prior to the application date, leaving no room for deviation. The

relevant portion of Clause 4(vi)(c) is extracted hereunder:

"For Dealer owned sites ("B"/ "DC" sites), the applicant should ensure that the land arranged by the applicant is either registered in the applicant's

name or leased in favour of the applicant for a minimum period as advertised by respective oil company, as per terms of Letter of Intent (LOI). Investment will be made by the OMC towards development of facilities in the offered land only after compliance of the aforementioned, by the applicant. In case land is obtained on long term lease by the applicant, the lease should be valid till a period of 19 years 11 months from the date or after the date of advertisement but not later than the date of application." (emphasis added)

18. It is further submitted that as per the lease agreement

under the head called "TERM" the clause stipulates that "the term

of lease for schedule premises shall be initially for a period of 21

years with effect from 01.11.2023 unless the lease is terminated

earlier than such date pursuant to any of the provisions of this

agreement". Therefore it is clear that the lease is not effective

before 01.11.2023 whereas application date is on 07.10.2023. It

is further submitted that rejection of the candidature is as per

dealership selection guidelines 4(vi)(a) which states that "the land

should be available with the applicant as on date of application

and should be minimum lease of 19 years 11 months from the

date of advertisement but not later than the date of application".

19. This Court on 18.03.2025 has passed the following

order:

"Learned counsel appearing for the petitioner would submit that the petitioner herein is provisionally selected for Retail Outlet Dealership and has remitted an amount of Rs.50,000/- towards initial security deposit. Now, the petitioner is aggrieved by the communication dated 14.10.2024 for cancellation of his candidature for Retail Outlet Dealership. He would further submit that they have entered into a registered lease deed dated 26.09.2023, which is before filing of application dated 07.10.2023 and the term of the lease is 21 years effecting from 01.11.2023, which is after the date of application.

Learned counsel appearing for the petitioner would submit that his date of application is 07.10.2023 and the date of lease is 26.09.2023, which is prior to the application. As such, there is no cogent reason for the respondents to cancel the petitioner's candidature for Retail Outlet Dealership.

In support of his contentions learned counsel appearing for the relied upon the decisions of Hon'ble Apex Court reported in Shankar Kumar Bhagat v. Indian Oil Corporation Limited (2019 SCC Online Pat 1225) and M. Arun Kumar v. General Manager, Indian Oil Corporation Limited (2020 SCC Online Mad 14940) and also the judgment of this Court in P.

Srinivasa Rao and others v. Indian Oil Corporation Limited and others (MANU/AP/0488/ 2016).

After arguing at length, learned senior counsel appearing for the petitioner requests to direct the respondents to verify whether the lease deed dated 26.09.2023 is subsisting as on today and that the petitioner is in physical possession of the subject land, which is technically feasible for the Retail Outlet Dealership.

In view of the said request and since the petitioner has already provisionally selected and that he has already paid an amount of Rs.50,000/- towards security deposit, which is still with the respondents, respondents shall conduct a field enquiry and by the next date of hearing make further submissions. It is made clear that respondent shall consider the lease agreement / entire documents in true spirit and verify with regard to the physical possession of the petitioner for the purpose of granting Retail Outlet Dealership.

List this matter on 25.03.2025 in the caption 'for orders'.

20. Thereafter, an affidavit has been filed by Senior

Manager (RS), Secunderabad DO on behalf of respondent Nos.1

and 2 stating that as per directions of this Court, on 01.04.2025

a field enquiry was conducted and the committee report dated

01.04.2025 is enclosed along with the said affidavit. On

01.04.2025 i.e. on the date of the field enquiry, the petitioner had

submitted a Rectification Deed dated 30.09.2024. The said

Rectification Deed inter-alia rectified the lease commencing

period from 01.11.2023 to 01.10.2023 and that rectifications of

lease are only permitted as per Clause 4(vi)(b). However the

petitioner's case does not fall under the said scenario and the

said clause 4(iv)(b) is reproduced below:

"4(vi)(a)...

b) If the offered land is on long term lease, then the Lease agreement should have a provision to sub-

lease the offered land wherever the locations are advertised under Corpus Fund Scheme (CFS) and other Corporation Owned Sites ("A"/ "CC" sites) In case it is observed that the lease agreement for the land offered by the provisionally selected candidate does not have a provision to sub-lease the land, in such cases the provisionally selected candidate would be provided 21 days' time from the date of intimation through SMS/e-mail to make suitable amendment/addendum to the lease agreement and submit the same to the concerned OMC."

21. It is further submitted that as seen from the above, the

applicant is required only in case of not having a sub-lease

clause which is primarily applicable for A-site/Corpus Funds

Scheme sites, however, the applicant has applied for 'B

Site/Dealer owned site'. A copy of committee report dated

01.04.2025 was filed along with the said affidavit wherein it is

submitted that to carryout the full enquiry, the competent

authority has nominated the committee and the members of the

committee has proposed RO site at Sl.No.228 viz., ON LHS

FROM KALLAKAL TO MEDCHAL BUS STOP ON NH 44 in

advertisement dated 28.06.2023. In the report, it is observed

with respect to the land documents including that of the lease

deed No.13847 of 2024 dated 26.09.2023, rectification deed

bearing No.11764 of 2024 dated 13.09.2024 and Encumbrance

Certificate bearing statement No.192971485.

22. It was also noted that the said rectification deed was

submitted on the date of visit i.e., on 01.04.2025 and that the

committee has visited the site as mentioned in the lease deed

No.13847 of 2024 dated 26.09.2023 and rectification deed

bearing No.11764 of 2024 dated 13.09.2024 falling under

Sy.No.163/2/1/1/1/1, Yellampet Village, Medchal Mandal,

Medchal Malkajgiri District, Telangana State. The minimum plot

dimensions required as per the advertisement are 35x35 meters

with area 1225 sq.mtrs. and the petitioner has offered the land

with dimensions 40x38 meters with area 1520 sq.mtrs. Other

than the terms of the lease deed dated 26.09.2023 for the other

parameters like land in advertised area/stretch, the land

dimensions as per the advertisement and the said land meeting

NHAI norms and no median as per NH norms and other norms

are found to be remarked as Yes. It was also observed in the said

report that in the principal lease deed, lease commencing period

was wrongly mentioned as 01.11.2023 instead of mentioning as

01.10.2023 as typographical error at the time of preparing

document and the lessee requested the lessor herein to rectify

the said error in the principal lease deed. The lessor has rectified

the said error and both lessor and lessee declare that the

commencing period of lease shall be from 01.10.2023 for a

period of 21 years and monthly rental amount of Rs.45,000/-

from 01.10.2023, Rs.47,250/- from 01.10.2026, Rs.49,650/-

from 01.10.2029, Rs.52,150/- from 01.10.2032, Rs.54,800/-

from 01.10.2035, Rs.57,500/- from 01.10.2038 and Rs.60,400/-

from 01.10.2042 wherever it occurs in the principal lease deed

and the rectifications has been carried out on 01.10.2024. The

committee also referred to the rectification clause in 4(vi)(b) in

the brochure which deals with rectification and under what

circumstances the rectification can be accepted. The committee

therefore concluded that they have verified the documents

submitted with the application and found that the petitioner is

in possession of the site as has been offered through the

application dated 07.10.2023 more particularly as shown under

the lease as well as the rectification deed in

Sy.No.163/2/1/1/1/1, Yellampet Village, Medchal Mandal,

Medchal-Malkajgiri District, Telangana State.

SUBMISSIONS OF LEARNED STANDING COUNSEL:

23. Mr.Dominic Fernandes, learned standing counsel

submits that the petitioner has made an online application

bearing No.IOC16966701753217 on 07.10.2023 for retail outlet

dealership and the registered lease deed dated 26.09.2023 of the

petitioner is only effective from 01.11.2023. The candidature of

the petitioner is rejected vide e-mail dated 14.10.2024 on the

ground that the lease deed was effective from 01.11.2023 which

is after the date of application. Learned standing counsel further

submits that the lease deed submitted by the petitioner is in

violation of Clause 4(vi)(a) and 4(vi)(c) for regular and rural retail

outlet and the rectification deed dated 13.09.2024 was

submitted by the petitioner on the date of Field Verification in

which the lease commencing period was rectified from

01.11.2023 to 01.10.2023 and the petitioner has suppressed the

said fact in the writ affidavit. It is further submitted that

rectifications are only permitted as per clause 4(vi)(b) and that

the offered land is on long term lease, then the lease agreement

should have a provision to sub-lease the offered land wherever

the locations are advertised under Corpus Fund Scheme (CFS)

and other Corporation Owned Sites (CC sites). In case, it is

observed that the lease agreement for the land offered by the

provisionally selected candidate does not have a provision to

sub-lease the land, in such cases the provisionally selected

candidate would be provided 21 days time from the date of

intimation through SMS/e-mail to make suitable

amendment/addendum to the lease agreement and submit that

same to the concerned OMC. As such the petitioner is required

to submit amended lease only in case of not having a sub-lease

clause in the lease which is primarily applicable for 'A

Site/Corpus Funds Scheme Sites', however, the applicant has

applied for 'B Site/Dealer owned site'.

24. Learned standing counsel would further submit that in

contractual matters, the scope of writ jurisdiction is very narrow

and this does not fall under the narrow compass to make the

writ maintainable and that the author of the tender document is

the best person to understand and appreciate its requirements.

Learned standing counsel, in support of his submissions, would

rely on M/s.Agmatel India Pvt.Ltd., v. M/s.Resoursys Telecom

and others. The relevant paragraph Nos.17 and 24 are extracted

hereunder:

"17. The above-mentioned statements of law make it amply clear that the author of the tender document is taken to be the best person to understand and appreciate its requirements; and if its interpretation is manifestly in consonance with the language of the tender document or subserving the purchase of the tender, the Court would prefer to keep restraint. Further to that, the technical evaluation or comparison by the Court is impermissible; and even if the interpretation given to the tender document by the person inviting offers is not as such acceptable to the Constitutional Court, that, by itself, would not be a reason for interfering with the interpretation given.

24. The High Court, while supporting its process of reasoning, has referred to such principles which, with respect, we find entirely inapposite and beyond the periphery of the question involved in the present case. As noticed, in such matter of contracts,

the process of interpretation of terms and conditions is essentially left to the author of the tender document and the occasion for interference by the Court would arise only if the questioned decision fails on the salutary tests laid down and settled by this Court in consistent decisions, namely, irrationality or unreasonableness or bias or procedural impropriety.

24.1. In the case of Nabha Power Limited (supra), as referred by the High Court, this Court, while referring to the concept of 'Penta test' for 'business efficacy', made it clear that such a test and thereby reading an "implied term", would come in play only when the five conditions are satisfied.

Even in that case, the Court, while dealing with the question of reimbursement of cost incurred by the successful bidder/power supplier towards washing of coal in a power procurement project, analysed as to what charges would be payable by interpretation of all the terms of the contract and held the appellant entitled to certain charges as the formula for energy charges was clear. In the present case too, neither the High Court was reading any "implied term" in the past performance criterion nor NVS had done so. It is difficult to find any correlation of the decision in Nabha Power Limited (supra) to the case at hand or even to the analysis by the High Court.

24.2. The same aspects apply to the observations regarding 'contra proferentem rule' as

referred by the High Court with reference to the case of United India Insurance Company Limited (supra). The said rule was referred by this Court while not accepting the argument made on behalf of the insured and while observing that the said rule had no application, when the language of the relevant clauses was plain, clear and unambiguous. We may, however, observe that even from the extracted part of the principles related with the 'contra proferentem rule', as reproduced by this Court from the Halsbury's Laws of England, it is clear that the said rule was applied in the case of ambiguity in the insurance policy because the policies are made by the insurer and its ambiguity cannot be allowed to operate against the insured. This rule, in our view, cannot be applied to lay down that in case of any ambiguity in a tender document, it has to be construed in favour of a particular person who projects a particular view point. The obvious inapplicability of this doctrine to the eligibility conditions in a notice inviting tender could be visualised from a simple fact that in case of ambiguity, if two different tenderers suggest two different interpretations, the question would always remain as to which of the two interpretation is to be accepted? Obviously, to avoid such unworkable scenarios, the principle is that the author of the tender document is the best person to interpret its documents and requirements. The only requirement

of law, for such process of decision making by the tender inviting authority, is that it should not be suffering from illegality, irrationality, mala fide, perversity, or procedural impropriety. No such case being made out, the decision of the tender inviting authority (NVS) in the present case was not required to be interfered with on the reasoning that according to the writ Court, the product "Smart Phone" ought to be taken as being of similar category as the product 'Tablet'."

By making the aforesaid submissions, learned standing

counsel eventually prayed to dismiss the writ petition.

ANALYSIS AND CONCLUSION

25. In the case on hand, the respondent authorities are the

best judge of its own requirement in interpreting the documents.

The respondent authorities in order to address the dealers at

large in their 'chayan' portal has formulated a standard template

in communicating with the dealers and accordingly the petitioner

was informed as per the standard template which would be

advertised by way of e-mail. In the counter affidavit, the said e-

mail was reproduced which is extracted hereunder for sake of

reference:

"this is to inform that during the FVC, you failed to produce the original documents for verification by the officer/the documents produced by you were at variance with the documents submitted/information given in the application."

26. At this juncture, it is also necessary to extract the

conclusive portion of the committee report dated 01.04.2025

which is filed along with the affidavit of the respondents. The

conclusion of the report reads as under:

"In view of the above background and the field visit, the committee concludes as follows:

"a. The committee has verified from the documents submitted with the application and found that the Applicant is in possession of the site as has been offered through the application dated 07.10.2023 more particularly as shown under the Lease as well as the rectification deed in survey number: 163/2/1/1/1/1, Yellampet Village, Medchal Mandal, Medchal Malkajgiri District, Telangana State.

b. It is observed that the Applicant has executed a Rectification Deed before the date of cancellation.

c. It is further observed that the Applicant has submitted an Encumbrance Certificate bearing statement no. 192971485 as on 01.04.2025 which

has a due mention of the Lease Deed as well as the rectification Deed on survey no. 163/2/1/1/1/1, Yellampet Village, Medchal Mandal. It has further been found that the land is unencumbered.

d. From the aforesaid, it can be observed that the physical possession of the land belongs to the applicant as on the date of field enquiry."

27. In Silppi Constructions Contractors v. Union of

India and another 2, the Hon'ble Supreme Court held that

scope of judicial review should be minimal in the matters

relating to tenders and also held that authority floating the

tender is the best judge of its requirements and, therefore, the

court's interference should be minimal. The relevant paragraph

Nos.7, 8, 13, 16, 20 and 25 is extracted hereunder for better

understanding:

"7. In Tata Cellular vs. Union of India1, it was held that judicial review of government contracts was permissible in order to prevent arbitrariness or favouritism. The principles enunciated in this case are :

"94. .......

(1) The modern trend points to judicial restraint in administrative action.

(2020) 16 SCC 489

(2) The Court does not sit as a court of appeal but merely reviews the manner in which the decision was made.

(3) The Court does not have the expertise to correct the administrative decision. If a review of the administrative decision is permitted it will be substituting its own decision, without the necessary expertise which itself may be fallible. (4) The terms of the invitation to tender cannot be open to judicial scrutiny because the invitation to tender is in the realm of contract.

Normally speaking, the decision to accept the tender or award the contract is reached by process of negotiations through several tiers. More often than not, such decisions are made qualitatively by experts.

(5) The Government must have freedom of contract. In other words, a fair play in the joints is a necessary concomitant for an administrative body functioning in an administrative sphere or quasiadministrative sphere. However, the decision must not only be tested by the application of Wednesbury principle of reasonableness (including its other facts pointed out above) but must be free from arbitrariness not affected by bias or actuated by mala fides.

            (6)   Quashing        decisions   may        impose
     heavy        administrative       burden       on      the
     administration and lead to increased and
     unbudgeted expenditure."

     8. In Raunaq      International     Ltd.      vs.    I.V.R.

Construction Ltd.2, this Court held that superior courts should not interfere in matters of tenders unless substantial public interest was involved or the transaction was mala fide.

13. In Jagdish Mandal vs. State of Orissa7 it was held:

"22. Judicial review of administrative action is intended to prevent arbitrariness, irrationality, unreasonableness, bias and mala fides. Its purpose is to check whether choice or decision is made "lawfully" and not to check whether choice or decision is "sound". When the power of judicial review is invoked in matters relating to tenders or award of contracts, certain special features should be borne in mind. A contract is a commercial transaction. Evaluating tenders and awarding contracts are essentially commercial functions. Principles of equity and natural justice stay at a distance. If the decision relating to award of contract is bona fide and is in public interest, courts will not, in exercise of power of judicial

review, interfere even if a procedural aberration or error in assessment or prejudice to a tenderer, is made out. The power of judicial review will not be permitted to be invoked to protect private interest at the cost of public interest, or to decide contractual disputes. The tenderer or contractor with a grievance can always seek damages in a civil court. Attempts by unsuccessful tenderers with imaginary grievances, wounded pride and business rivalry, to make mountains out of molehills of some technical/procedural violation or some prejudice to self, and persuade courts to interfere by exercising power of judicial review, should be resisted. Such interferences, either interim or final, may hold up public works for years, or delay relief and succour to thousands and millions and may increase the project cost manifold........"

16. In Montecarlo vs. NTPC Ltd., it was held that where a decision is taken that is manifestly in consonance with the language of the tender document or subserves the purpose for which the tender is floated, the court should follow the principle of restraint. Technical evaluation or comparison by the court would be impermissible. The principle that is applied to scan and understand an ordinary instrument relatable to contract in other spheres has

to be treated differently than interpreting and appreciating tender documents relating to technical works and projects requiring special skills. The owner should be allowed to carry out the purpose and there has to be allowance of free play in the joints.

20. The essence of the law laid down in the judgments referred to above is the exercise of restraint and caution; the need for overwhelming public interest to justify judicial intervention in matters of contract involving the state instrumentalities; the courts should give way to the opinion of the experts unless the decision is totally arbitrary or unreasonable; the court does not sit like a court of appeal over the appropriate authority; the court must realise that the authority floating the tender is the best judge of its requirements and, therefore, the court's interference should be minimal. The authority which floats the contract or tender, and has authored the tender documents is the best judge as to how the documents have to be interpreted. If two interpretations are possible then the interpretation of the author must be accepted. The courts will only interfere to prevent arbitrariness, irrationality, bias, mala fides or perversity. With this approach in mind we shall deal with the present case.

25. That brings us to the most contentious issue as to whether the learned single judge of the

High Court was right in holding that the appellate orders were bad since they were without reasons. We must remember that we are dealing with purely administrative decisions. These are in the realm of contract. While rejecting the tender the person or authority inviting the tenders is not required to give reasons even if it be a state within the meaning of Article 12 of the Constitution. These decisions are neither judicial nor quasijudicial. If reasons are to be given at every stage, then the commercial activities of the State would come to a grinding halt. The State must be given sufficient leeway in this regard. The Respondent nos. 1 and 2 were entitled to give reasons in the counter to the writ petition which they have done."

28. In Tata Motors Limited v. Brihan Mumbai Electric

Supply and Transport Undertaking (BEST) and others 3 the

Hon'ble Supreme Court reiterated the principles as to whether

the Courts should and should not interfere in contractual

matters. The relevant paragraph No.50 reads as under:

"50. This Court being the guardian of fundamental rights is duty-bound to interfere when there is arbitrariness, irrationality, mala fides and bias. However, this Court has cautioned time and again that courts should exercise a lot of restraint while exercising their powers of judicial review in contractual or

(2023) 19 SCC 1

commercial matters. This Court is normally loathe to interfere in contractual matters unless a clear-cut case of arbitrariness or mala fides or bias or irrationality is made out. One must remember that today many public sector undertakings compete with the private industry. The contracts entered into between private parties are not subject to scrutiny under writ jurisdiction. No doubt, the bodies which are State within the meaning of Article 12 of the Constitution are bound to act fairly and are amenable to the writ jurisdiction of superior courts but this discretionary power must be exercised with a great deal of restraint and caution. The courts must realise their limitations and the havoc which needless interference in commercial matters can cause.

In contracts involving technical issues the courts should be even more reluctant because most of us in Judges' robes do not have the necessary expertise to adjudicate upon technical issues beyond our domain. The courts should not use a magnifying glass while scanning the tenders and make every small mistake appear like a big blunder. In fact, the courts must give "fair play in the joints" to the government and public sector undertakings in matters of contract. Courts must also not interfere where such interference will cause unnecessary loss to the public exchequer."

29. It is to be noted that petitioner was informed by

respondent No.2 by communication dated 12.06.2024 stating

that petitioner was held as lone applicant/lone remaining eligible

applicant in the location under Group-I and has been

provisionally selected and the award of dealership was subject to

compliance of terms and conditions of the Corporation. It is

further to be noted that the petitioner has entered into a long

term lease with his lessor only with a sole intention to setup

retail outlet of Indian Oil Corporation in the proposed location.

Learned standing counsel has not made any submissions with

respect to the observations made in the committee report dated

01.04.2025. It is also pertinent to note that since the petitioner

is provisionally selected and his candidature for award of RO

dealership wherein lease deed document submitted by the

petitioner was registered on 26.09.2023 which is before the date

of application i.e., 07.10.2023 mentioning that the lease term is

21 years effective from 01.11.2023 which is after the date of

application and that as per the guidelines, the applicant should

offer land for lease on or before the date of application and

accordingly petitioner's candidature was cancelled as such there

is no case of arbitrariness, bias, irrationality and malafides in

the cancellation of the petitioner's candidature for setting up of

retail outlet.

30. Applying the law laid down in Silppi Constructions

(supra 2) and Tata Motors Limited (supra 3), this Court is of

the considered opinion that no mandamus can be issued to the

respondent authorities and the e-mail communication dated

14.10.2024 cancelling the candidature of the parties for Award of

Retail Outlet Dealership under open category advertised on

28.06.2023 warrants no interference. Accordingly, this writ

petition stands dismissed.

31. However, the interpretation of terms and conditions in

the lease agreement dated 26.09.2023 and rectification deed

dated 13.09.2024 is essentially left open to the respondents to

take a decision afresh in the light of the committee report dated

01.04.2025 submitted by the nominated committee members.

32. In view of the above cited judicial pronouncements and

considering the facts and circumstances of the case, this writ

petition stands dismissed with the above observations.

As a sequel, miscellaneous applications, if any pending,

shall stand closed. There shall be no order as to costs.

________________________________ JUSTICE N.V. SHRAVAN KUMAR Date: 29.07.2025 Note: LR Copy to be marked.

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