Telangana High Court
Sk Enterprises And Traders vs Union Of India on 21 April, 2026
Author: Nagesh Bheemapaka
Bench: Nagesh Bheemapaka
IN THE HIGH COURT OF JUDICATURE FOR THE STATE OF
TELANGANA
HON'BLE SRI JUSTICE NAGESH BHEEMAPAKA
WRIT PETITION No. 2891 OF 2026
21.04.2026
Between:
SK Enterprises & Traders,
A registered partnership Firm
Rep. by its Partner Mr. Kranthi Kumar Perelli
..... Petitioner
And
Union of India,
Represented by its Secretary,
Ministry of Petroleum and Natural Gas,
New Delhi & another
..... Respondents
O R D E R:
Petitioner is a partnership firm incorporated on 21.10.2017 and has since then been engaged in the business of transportation, including transportation of petroleum, oil, lubricants and other related products. They participated in the tender floated on 14-05-2025 by Respondent No.2, a public sector undertaking and subsidiary of Oil and Natural Gas Corporation, for 'Transportation of Bulk POL products MS HSD and branded fuels by road ex HPCL Secunderabad Terminal'. Petitioner participated in the said tender under the Scheduled 2 Caste (SC) category and all the partners of the Petitioner firm belong to the SC category. The bid submitted by them was accepted by Respondent No.2 after due verification and a provisional Letter of Acceptance dated 21-08-2025 was issued in their favour for 11 Tank Trucks. Pursuant thereto, Petitioner deposited Rs.1,85,000/- towards security deposit and the said Tank Trucks were inducted in October, 2025 and were utilized by Respondent No.2 for transportation work. Petitioner also made substantial investment in modifying the Tank Trucks to suit the requirements of Respondent No.2.
1.1. The contention of petitioner is that on 24-11-2025, Respondent No.2 addressed an e mail to Petitioner stating that it had received a communication from Bharat Petroleum Corporation Limited to the effect that Tank Truck bearing No. AP39VB3863 belonging to Petitioner was under contract with BPCL at Krishnapatnam and called upon them to furnish an unconditional 'No Objection Certificate' in respect of the said vehicle, failing which action would be taken as per the tender terms and conditions. Petitioner, on the very same day ie. 24-11-2025, responded to the said communication requesting for two weeks to resolve the issue, explaining that the vehicle 3 owner was facing issues relating to loan closure and RC name transfer which were expected to be resolved shortly. 1.2. Thereafter, Respondent No.2 issued a show cause notice dated 12-12-2025 alleging that Petitioner had submitted false information and failed to submit the required declaration regarding Tank Truck bearing No. AP39VB3863 being engaged in the service of another Oil Marketing Company. Petitioner submitted a detailed reply dated 16-12-2025 to the said show cause notice informing Respondent No.2 that they had obtained 'No Objection Certificate' from BPCL and that the same had been submitted along with the tender documents, and further stating that efforts were being made to replace the said vehicle in the BPCL terminal.
1.3. In the meanwhile, BPCL had issued a show cause notice dated 12-11-2025 alleging non-reporting of Tank Truck No. AP39VB3863, and in response, Petitioner arranged for a replacement vehicle of 20 KL capacity, which was not accepted by BPCL as it was of higher capacity, and thereafter arranged another replacement vehicle of 14 KL capacity bearing No. TG08US341, which was ready and only final formalities were pending. Petitioner had also obtained a conditional No Objection Certificate dated 26-03-2025 from BPCL and sent reply dated 4 28-11-2025 through its partner Mr. N. Siddhaiah to BPCL in response to the show cause notice issued by BPCL. 1.4. It is stated, one of the partners of Petitioner firm, namely Mr. N. Siddhaiah, filed Writ Petition No. 36211 of 2025 before the High Court of Andhra Pradesh challenging the show cause notice issued by HPCL and seeking issuance of a clear 'No Objection Certificate' or in the alternative, cancellation of the contract insofar as Tank Truck No. AP39VB3863 is concerned, and by order dated 26-12-2025, the Court directed BPCL to pass appropriate orders after considering the replies within four weeks. Thereafter, Petitioner submitted another reply dated 05-01-2026 to Respondent No.2 informing about the order passed by the High Court of Andhra Pradesh and reiterating the contents of the earlier reply, while requesting time to resolve the issue. Despite the aforesaid facts and circumstances, Respondent No.2 issued letter dated 21-01-2026 cancelling the provisional Letter of Acceptance dated 21-08-2025 by invoking Clauses 45(1), Clause 21(h), Clause 19(c) and Clause 16 of the General Terms and Conditions and Clause 4 of the LOA, on the ground that Petitioner failed to disclose details of Tank Truck No. AP39VB3863 and had failed to submit an unconditional 'No Objection Certificate'.
51.5. Respondent No.2 acted arbitrarily, unjustly and unreasonably in cancelling the LOA after having awarded the same on 21-08-2025 upon being satisfied with the documents submitted by Petitioner and having verified that Petitioner was qualified in all respects. Respondent No.2 erred in cancelling the LOA after inducting all the Tank Trucks in October, 2025 and utilizing their services for transportation, including Tank Truck No. AP39VB3863, and despite such utilization, no payment has been made to the Petitioner till date. Respondent No.2 also erred in cancelling the entire LOA in respect of all 11 Tank Trucks, even though, according to Respondent No.2 itself, 10 out of the 11 Tank Trucks were fully compliant with the terms and conditions of the tender.
1.6. It is stated, petitioner did not violate the terms and conditions of the tender and had not suppressed any material facts. Respondent No.2 failed to consider that Petitioner had submitted a conditional 'No Objection Certificate' dated 26-03-2025 in respect of Tank Truck No. AP39VB3863 along with the tender documents. Respondent No.2 failed to consider that Petitioner, through its partner Mr.N. Siddhaiah, had provided a replacement Tank Truck of 20 KL capacity to BPCL as early as on 20-09-2025, which was not accepted by BPCL, 6 and thereafter offered a replacement Tank Truck of 14 KL capacity bearing No. TG08US341, and had requested one month's time by reply dated 05-01-2026 to complete the formalities relating to replacement.
1.7. Mr. N. Siddhaiah addressed letter dated 27-01-2026 to BPCL requesting withdrawal of Tank Truck No. AP39VB3863 from the contract and seeking issuance of 'No Objection Certificate' at the earliest to enable deployment of the vehicle elsewhere, and Petitioner undertook to submit the unconditional 'No Objection Certificate' to Respondent No.2 upon its issuance. Petitioner, through its partner, had been continuously making efforts to obtain an unconditional 'No Objection Certificate' from BPCL. There was no mala fide intent on the part of Petitioner and there was no attempt to suppress information or mislead Respondent No.2.
1.8. It is also stated, the action of Respondent No.2 is violative of the doctrine of proportionality, as cancellation of the entire LOA and forfeiture of Earnest Money Deposit is wholly disproportionate to the alleged violation, which pertains only to non-submission of an unconditional No Objection Certificate in respect of one Tank Truck out of 11 Tank Trucks. Petitioner will suffer serious prejudice and irreparable loss if the LOA is 7 cancelled, particularly when 10 out of the 11 Tank Trucks are fully compliant and no complaints have been raised in respect thereof, and insofar as the remaining Tank Truck is concerned, Petitioner has been making all possible efforts to obtain the requisite unconditional No Objection Certificate, including seeking withdrawal from the BPCL contract.
1.9. Subsequently, by letter dated 24-03-2026, Bharat Petroleum Corporation Limited terminated the contract in respect of Tank Truck No. AP39VB3863, and thereafter, by letter dated 02-04-2026 issued 'No Objection Certificate' releasing the said Tank Truck from all contractual obligations and permitting its use in any manner. In view of the aforesaid subsequent developments, the very basis on which Respondent No.2 cancelled the LOA, namely the subsistence of BPCL contract and absence of No Objection Certificate, no longer survives. Respondent No.2, being a public sector undertaking and falling within the definition of 'State' under Article 12 of the Constitution, is obligated to act in a fair, just and reasonable manner, and the impugned action of cancellation of LOA and forfeiture of Earnest Money Deposit is arbitrary, irrational and violative of Article 14 of the Constitution.
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2. By order dated 02.02.2026, this Court granted interim suspension as prayed for.
3. Respondent No.2 - Hindustan Petroleum Corporation Limited, filed counter affidavit contending that the present Writ Petition is not maintainable in law or on facts, as Petitioner, while participating in Tender No. 2500020541-HD- 09050 (5100020541) floated by Respondent No.2 for transportation of Bulk POL products, namely Motor Spirit (MS), High Speed Diesel (HSD) and Branded Fuels from its Secunderabad POL Terminal for the period 2025-2030, has suppressed material facts, particularly the admitted subsisting transportation agreement with Bharat Petroleum Corporation Limited in respect of Tank Truck bearing No. AP39VB3863, which contract, according to Respondent No.2, was valid up to the year 2028, and such suppression disentitles the Petitioner from invoking the discretionary jurisdiction under Article 226 of the Constitution of India.
3.1. It is stated, Petitioner failed to submit the mandatory unconditional No Objection Certificate from BPCL at the time of bidding as well as at the stage of induction of the Tank Trucks, which is in clear violation of Clause 2, Clause 4 and Clause 7 of Attachment-7, as well as Clause 16, Clause 9 19(c), Clause 21(h) and Clause 45(i) of the General Terms and Conditions governing the tender and the Letter of Acceptance, thereby attracting the consequences of cancellation of the LOA and forfeiture of the Security Deposit. Petitioner also failed to submit the mandatory declaration under Attachment-11 titled "Declaration regarding contract with other OMCs", thereby falsely representing that Tank Truck bearing No. AP39VB3863 was not engaged with any other Oil Marketing Company, which amounts to misrepresentation and suppression of material facts at the time of submission of the bid.
3.2. It is further stated, the alleged conditional No Objection Certificate dated 26-03-2025 from BPCL, was never submitted along with the tender documents at the time of bidding, and the same was furnished for the first time only on 28-11-2025 through email, which is subsequent to the induction of the Tank Trucks, and in any event, a conditional NOC is not in compliance with the tender conditions, which mandatorily require submission of an unconditional No Objection Certificate. As per the express terms and conditions of the tender as well as the Letter of Acceptance, submission of an unconditional No Objection Certificate in respect of any Tank Truck under contract with another Oil Marketing Company is 10 mandatory, and failure to submit such unconditional NOC renders the LOA liable to be cancelled, and therefore, the impugned action is strictly in accordance with the contractual stipulations.
3.3. As per Clause 4 of the Letter of Acceptance and Clause 19(c) of the General Terms and Conditions, placement of Tank Trucks less than the number mentioned in the LOA is not permissible, and therefore, partial performance by deploying fewer Tank Trucks, as sought to be suggested by the Petitioner, is impermissible and contrary to the binding terms of the contract. The action of cancellation of the LOA vide letter dated 21-01-2026 has been taken strictly in accordance with Clause 45(1), Clause 21(h), Clause 19(c) and Clause 16 of the General Terms and Conditions and Clause 4 of the LOA, and therefore, the same does not suffer from any arbitrariness, illegality or procedural impropriety.
3.4. It is also stated, it was only on 14-11-2025 Respondent No.2 received e mail from BPCL. Krishnapatnam Coastal Installation, informing that Tank Truck No. AP39VB3863 belonging to Petitioner was already under an active contract with BPCL, and the said Tank Truck was inducted by Respondent No.2 without prior intimation and 11 without submission of an unconditional NOC, and immediately thereafter, the issue was taken up with the Petitioner. On 24-11-2025, Respondent No.2 addressed e mail to Petitioner calling upon them to submit an unconditional NOC, and in response, Petitioner, on the same day, admitted the subsisting contract with BPCL and further admitted that it had not obtained an unconditional No Objection Certificate prior to induction, while seeking two weeks' time to resolve the issue, which admissions clearly establish suppression of material facts and non-compliance with tender conditions.
3.5. Despite granting sufficient opportunity, Petitioner failed to submit an unconditional No Objection Certificate even after the expiry of the two-week period sought by it, therefore, a show cause notice dated 12-12-2025 was issued alleging suppression of material facts at the induction stage and non- submission of unconditional NOC. In terms of Clauses 2 and 4 of Attachment-7, the bidder is required to ensure that the Tank Trucks offered are not under contract with other Oil Marketing Companies, and in case they are, an unconditional NOC must be obtained before induction, failing which the LOA is liable to be cancelled, and in the present case, Petitioner failed to comply with the said mandatory conditions.
123.6. In terms of Clause 7 of Attachment-7, if any information submitted by the bidder is found to be false or incorrect after award of the contract, the contract is liable to be cancelled and the Security Deposit is liable to be forfeited, and the bidder is also liable to indemnify the Oil Company against any losses, which squarely applies to the present case. As per Clause 21(h) of the General Terms and Conditions, if any information submitted by the tenderer is found to be incorrect at any time, including during the currency of the contract, the Oil Company reserves the right to terminate the contract, and as per Clause 45(i), any discrepancy or misrepresentation in documents entitles the Respondent to cancel the LOA and take further action.
3.7. Petitioner's request for operation of only 10 Tank Trucks, as made in its reply dated 05-01-2026, is impermissible in view of the express prohibition under Clause 4 of the LOA and Clause 19(c) of the General Terms and Conditions, which mandate that the full complement of Tank Trucks as per LOA must be deployed. It is also stated, no payments were made to Petitioner as the matter was under suspension due to the ongoing issue relating to non-compliance and suppression, and upon resolution of the issue and completion of all requisite 13 formalities, the matter would be considered in accordance with applicable terms. Petitioner, by failing to submit an unconditional No Objection Certificate despite the existence of an active BPCL contract and by not submitting the mandatory declaration under Attachment-11, has clearly suppressed material facts and misled Respondent No.2, thereby justifying the action of cancellation. Respondent No.2, though a public sector undertaking falling within the ambit of Article 12 of the Constitution, has acted strictly in accordance with the tender terms and conditions and the Letter of Acceptance, therefore, the impugned action is fair, reasonable and non-arbitrary.
4. Heard Sri Ch. Pushyam Kiran, learned counsel for petitioner, who in support of his contentions, has relied on the judgments of the Hon'ble Supreme Court in Omsairam Steels & Alloys Pvt. Ltd. v. Director of Mines and Geology, BBSR1 and Banshidhar Construction Pvt. Ltd. v. Bharat Coking Coal Limited 2.
5. Heard Sri N. Bhujanga Rao, learned Deputy Solicitor General and Sri Thoom Srinivas, learned Standing Counsel for Respondent No.2.
1 AIR 2024 SC 3410 2 AIR 2024 SC 5314 14
6. The facts which are not in dispute are that Petitioner was awarded Provisional Letter of Acceptance dated 21-08-2025 for 11 Tank Trucks after due verification by Respondent No.2; all the Tank Trucks were inducted in October, 2025 and were utilized for transportation of POL products; a dispute arose only in respect of one Tank Truck bearing No. AP39VB3863 on the ground that it was under contract with Bharat Petroleum Corporation Limited; Petitioner sought time and submitted replies explaining the circumstances and the steps taken to obtain the requisite 'No Objection Certificate'. Provisional Letter of Acceptance was cancelled by Respondent No.2 by letter dated 21-01-2026 on the ground of non- submission of unconditional No Objection Certificate and alleged suppression; and subsequently, BPCL terminated its contract on 24-03-2026 and issued an unconditional No Objection Certificate on 02-04-2026 releasing the said Tank Truck from all contractual obligations.
7. In the light of the above admitted position, the principal question that arises for consideration is whether the action of Respondent No.2 in cancelling the entire Provisional Letter of Acceptance dated 21-08-2025 in respect of all 11 Tank Trucks is sustainable in law.
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8. It is, no doubt, true that tender conditions mandate submission of an unconditional No Objection Certificate in respect of any Tank Truck under contract with another Oil Marketing Company and prohibit induction of such vehicles without compliance of the said requirement. It is also not in dispute that Respondent No.2 is entitled to enforce the contractual terms governing the tender and the Letter of Acceptance. However, it is equally well-settled that Respondent No.2, being a public sector undertaking and an instrumentality of the State within the meaning of Article 12 of the Constitution of India, is required to act in a fair, reasonable and non- arbitrary manner. The existence of contractual obligations does not absolve a State instrumentality from complying with the mandate of Article 14.
9. In the present case, the record discloses that Petitioner was awarded Letter of Acceptance after due verification of its eligibility and documents. The contract was acted upon, Tank Trucks were inducted in October, 2025, and Respondent No.2 utilized the services of Petitioner for transportation work. The alleged default pertains only to one Tank Truck out of the total 11 Tank Trucks, and even according 16 to Respondent No.2, the remaining Tank Trucks were compliant with the tender conditions.
10. The material on record further demonstrates that Petitioner did not remain passive or indifferent. Immediately upon receipt of the communication dated 24-11-2025, they responded on the same day seeking time to resolve the issue and explaining the practical difficulties. Petitioner thereafter submitted replies dated 16-12-2025 and 05-01-2026, and also initiated proceedings before the High Court of Andhra Pradesh in relation to the issue with BPCL. The record also reflects that Petitioner made continuous efforts to arrange replacement vehicles and to obtain the necessary No Objection Certificate.
11. The subsequent developments are of considerable significance. It is not disputed that contract between Petitioner and BPCL in respect of Tank Truck No. AP39VB3863 stood terminated on 24-03-2026 and that an unconditional No Objection Certificate was issued on 02-04-2026 releasing the said Tank Truck from all contractual obligations. Consequently, the very basis on which Respondent No.2 proceeded to cancel the Provisional Letter of Acceptance, namely the subsistence of BPCL contract and absence of an unconditional No Objection Certificate, ceased to exist.
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12. In such circumstances, the action of Respondent No.2 in cancelling the entire Provisional Letter of Acceptance for all 11 Tank Trucks on account of a dispute relating to one Tank Truck cannot be sustained. The decision suffers from the vice of disproportionality, as the consequence imposed is excessive in relation to the alleged default. The doctrine of proportionality requires that administrative action must be commensurate with the nature and extent of the breach, and in the present case, cancellation of the entire contract, despite substantial compliance and ongoing efforts to cure the defect, is clearly disproportionate.
13. The fact that Respondent No.2 utilized the services of Petitioner's Tank Trucks after induction and has not made payment for such utilization also lends support to the conclusion that the impugned action operates in an inequitable and unfair manner. While Respondent No.2 is justified in insisting upon compliance with tender conditions, such insistence cannot be applied in a rigid manner so as to ignore subsequent developments which effectively cure the alleged defect. This Court is therefore, of the considered view that the impugned action is arbitrary, unreasonable and violative of Article 14 of the Constitution of India. The cancellation of the 18 Provisional Letter of Acceptance dated 21-08-2025 by letter dated 21-01-2026 is liable to be set aside, particularly in view of the fact that the very foundation for such cancellation no longer subsists.
14. The impugned letter dated 21-01-2026 issued by Respondent No.2 cancelling the Provisional Letter of Acceptance dated 21-08-2025 is hereby set aside. Respondent No.2 is directed to restore the Provisional Letter of Acceptance dated 21-08-2025 and permit Petitioner to operate the Tank Trucks in terms thereof, subject to compliance with all other applicable terms and conditions.
15. Accordingly, the Writ Petition is allowed. No costs.
16. Consequently, the miscellaneous Applications, if any shall stand closed.
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NAGESH BHEEMAPAKA, J 21st April 2026 ksld