IN THE HIGH COURT AT CALCUTTA

(Constitutional Writ Jurisdiction)

APPELLATE SIDE

Present:

The Hon’ble Justice Krishna Rao

WPA No. 26004 of 2025

With

WPA No. 5195 of 2026

M/s. P.P. Industries Private Limited & Anr.

Versus

The Union of India & Ors.

Mr. Pranit Bag

Ms. Rita Mukherjee

Mr. Ghanashyam Jha

Mr. Ridhiman Mukherjee

Mr. Rowsan Kr. Jha

Ms. Anwesha Chakraborty

.....For the petitioners.

Mr. Kumaresh Dalal

Mr. Amal Kr. Datta

…...For the UOI.

Mr. Abhratosh Majumder, Sr. Adv

Dr. Madhusudhan Saha Ray

Ms. Debangana Dey

2

Mr. Debanjan Chatterjee

Mr. Kausheyo Roy

….For the W.B.S.E.D.C.L.

Hearing Concluded On : 22.07.2026

Judgment Delivered On : 12.08.2026

Judgment Uploaded On : 12.08.2026

Krishna Rao, J.:

1. The petitioners have filed the present writ petitions challenging the

Office Order No. 2518 dated 8

th

September, 2025, wherein Clause

No.14 in the revised purchase policy of WBSEDCL is introduced and

the respondents have inserted the conditions that “The bidder should

submit the declaration in prescribed format under the Form Folder (Form

XI) in their letterhead regarding no legal litigation against WBSEDCL is

pending in any Court/ Forum against / by the bidder or its Sister

Concern/ Director/Partner/ Proprietor. If any type of legal litigation/

arbitration against WBSEDCL is pending in any Court/ Forum against/

by the bidder or its Sister Concern/Director/Partner/ Proprietor, then

purchaser reserves the right to reject their bid/ termination of the

contract”.

2. By an Office Order No. 2518 dated 8

th

September, 2025, Form-XI is

prescribed by which the bidder is to declare that “We hereby declare

that, no legal litigation/arbitration is pending/ ongoing against

WBSEDCL in any Court/ Forum against/ by the bidder or its sister

concern/ Director/ Partner/ Proprietor. If it is found at any stage of

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tendering, our offer will be rejected and I/We don’t have any objection on

the same”.

3. Mr. Pranit Bag, Learned Advocate representing the petitioners submits

that the impugned office orders violate Sections 10, 23 and 28 of the

Indian Contract Act, 1872. He submits that the tender conditions,

which deters bidders from enforcing their contractual and statutory

rights in Courts or in arbitration proceedings, is opposed to public

policy, and is an attempt to insulate a State entity from lawful scrutiny,

which renders that the consideration and object of the agreement,

being forbidden by law, unlawful. He submits that if the said condition

is permitted to be continued, the same would defeat the provisions of

Section 41 of the Specific Relief Act, 1963.

4. Mr. Bag submits that the said clause is penal in nature being restraint

on legal proceedings, which is contrary to the spirit of Section 28 of the

Indian Contract Act, 1872 and public policy. He submits that the

restrictions imposed by the WBSEDCL do not have any rational nexus

with the object of procurement, nor would they be necessary for

promoting competition and protection of public exchequer.

5. Mr. Bag submits that a blanket exclusion from participating in tenders

issued by the WBSEDCL significantly impairs the rights of the

petitioners to conduct business, and the restriction cannot be justified

as a reasonable restriction under Article 19(1)(g) of the Constitution of

India.

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6. Mr. Bag in support of his submissions, has relied upon the judgment in

the case of Vinishma Technologies Pvt. Ltd. Vs. State of

Chhattisgarh and Anr. reported in 2025 SCC OnLine SC 2119 and

submits that in the said case, the Hon’ble Supreme Court struck down

the tender condition which allowed only bidders who had supplied

sports goods to Chhattisgarh government agencies in the preceding

three financial years to participate, and held that the same is arbitrary,

unreasonable and discriminatory.

7. Mr. Bag has relied upon the judgment in the case of M/s. Erusian

Equipment & Chemicals Ltd. vs. State of West Bengal And

Another reported in (1975) 1 SCC 70 and submits that an exclusion

from dealing with the government must follow a fair procedure and

cannot be arbitrary.

8. Mr. Bag further relied upon the judgment in the case of Kimberley

Club Pvt. Ltd. Vs. Krishi Utpadan Mandi Parishad and Others.

reported in 2025 SCC OnLine SC 2323 and submits that tendering

authorities cannot Import unwritten conditions to disqualify bids and

stressed adherence to fairness and transparency in disqualification

criteria.

9. Mr. Abhratosh Majumder, Learned Senior Advocate representing the

WBSEDCL submits that the Clause 14 has been inserted in the

purchase policy to examine and assess the litigation history of the

participants in the tender process and arrived at a conclusion at the

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stage of evaluating technical bids as to whether the award of contract to

such bidders would facilitate the execution of works or supply of goods

or would impede rendition of essential services. He submits that the

said policy is an economic decision of WBSEDCL which is neither

arbitrary nor discriminatory so as to offend Article 14 and Article

19(1)(g) of the Constitution of India. In support of his submissions, he

has relied upon the judgment in the case of Manohar Lal Sharma Vs.

Union of India and Another reported in (2013) 6 SCC 616 and

submits that unless the policy is unconstitutional or contrary to the

statutory provisions or arbitrary or irrational or in abuse of power, the

Court does not interfere with the policy.

10. Mr. Majumder has relied upon the judgment in the case of

Bhagyanagar Energy & Telecom Ltd. and Anr. Vs. Bharat

Sanchar Nigam Limited and Anr. reported in 2003 (2) A.P.L.J. 431

(HC), it is not for the Court to go into the wisdom of the policy decision

and judge its pros and cons and say whether it is beneficial or equitable

and it shall not interfere with the policy decision unless it is

demonstrated and shown that the policy decision taken is capricious or

arbitrary.

11. Mr. Majumder has relied upon the judgment in the case of Bajaj

Hindustan Limited Vs. Sir Shadi Lal Enterprises Limited and

Another reported in (2011) 1 SCC 640 and submits that the Court can

invalidate an executive policy only when it is clearly violative of some

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provisions of the statute or Constitution or is shockingly arbitrary but

not otherwise.

12. Mr. Majumder submits that as per the record of WBSEDCL at present

altogether 137 MSMEs are participating in different tenders but none of

the tenderers have challenged the said clause except the petitioners

and the petitioners have a long history of litigation against many power

utilities in India. He submits that identical provisions regarding

declaration of litigation history have been introduced by different power

utilities.

13. Mr. Mazumder submits that Sections 10, 23 and 28 of the Indian

Contract Act, 1872, is not applicable before formation of the contract.

He submits that there is no contract between the petitioners and the

WBSEDCL and thus, the said sections are not applicable in the present

case. He has relied upon the judgment in the case of Anil Kumar

Srivastava vs. State of UP and Another reported in (2004) 8 SCC

671 and submits that an invitation to tender is not an offer. It is an

attempt to ascertain whether an offer can be obtained with a margin.

14. The issue in the present proceeding whether the condition imposed by

the WBSEDCL that the bidder should submit declaration in prescribed

format under Form–XI by declaring that no legal litigation/arbitration is

pending against the WBSEDCL in any Court or forum is bad or illegal.

15. Section 10 of the Indian Contract Act, 1872, reads as follows:

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“10. What agreements are contracts.— All

agreements are contracts if they are made by the

free consent of parties competent to contract, for a

lawful consideration and with a lawful object, and

are not hereby expressly declared to be void.

Nothing herein contained shall affect any law

in force in [India] and not hereby expressly

repealed by which any contract is required to be

made in writing or in the presence of witnesses, or

any law relating to the registration of documents.”

Essential elements of a valid contract under Section 10 of the

Indian Contract Act, 1872, is when there are at least two parties, one of

whom makes an offer, and the other accepts it, a contract can develop.

To proceed, one side must make an offer, and the other party must

accept it. When the offer is accepted, a contract is formed. The offeror is

the one who makes the offer, and the offeree is the party to whom offer

is made. The parties entering into the contract must agree upon the

same item in the same sense, or they cannot enter into the deal. It

implies that there must be agreement in that regard. A contract must

be intended to create a legal relationship between the parties. It only

becomes a problem when both parties are aware that if one of them

breaks his commitment, the other would be held responsible for the

contract’s failure. There is no contract between the parties if there is no

desire to establish a formal relationship. Because they do not consider

or give birth to a legal relationship, agreements of a social or domestic

character are not regarded as contract.

16. Section 23 of the Indian Contract Act, 1872, reads as follows:

8

“23. What considerations and objects are

lawful, and what not.— The consideration or

object of an agreement is lawful, unless—

it is forbidden by law; or

is of such a nature that, if permitted, it

would defeat the provisions of any law; or is

fraudulent; or

involves or implies injury to the person or

property of another; or

the Court regards it as immoral, or

opposed to public policy.

In each of these cases, the consideration or

object of an agreement is said to be unlawful.

Every agreement of which the object or

consideration is unlawful is void.”

This Section lays down five specific heads under which an

agreement may be rendered void due to the unlawfulness of its

consideration or object. These categories are pivotal in maintaining the

sanctity of contractual relations and ensuring that they operate within

the framework of law and public good. An agreement is void, if its

consideration or object is expressly or implicitly forbidden by any

statute or legal rule. This limb applies when the law directly prohibits

the act or transaction contemplated by the agreement.

17. Section 28 of the Indian Contract Act, 1872, reads as follows:

28. Agreements in restraint of legal

proceedings, void.— [Every agreement,—

(a) by which any party thereto is restricted

absolutely from enforcing his rights under or in

respect of any contract, by the usual legal

proceedings in the ordinary tribunals, or which

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limits the time within which he may thus enforce

his rights; or

(b) which extinguishes the rights of any party

thereto, or discharges any party thereto, from any

liability, under or in respect of any contract on the

expiry of a specified period so as to restrict any

party from enforcing his rights,

is void to the extent.]

Exception 1.— Saving of contract to refer

to arbitration dispute that may arise. —This

section shall not render illegal a contract, by which

two or more persons agree that any dispute which

may arise between them in respect of any subject

or class of subjects shall be referred to arbitration,

and that only the amount awarded in such

arbitration shall be recoverable in respect of the

dispute so referred.

[*****]

Exception 2.—Saving of contract to refer

questions that have already arisen.— Nor shall

this section render illegal any contract in writing,

by which two or more persons agree to refer to

arbitration any question between them which has

already arisen, or affect any provision of any law

in force for the time being as to references to

arbitration.

[Exception 3.—Saving of a guarantee

agreement of a bank or a financial

institution.— This section shall not render illegal

a contract in writing by which any bank or

financial institution stipulate a term in a guarantee

or any agreement making a provision for guarantee

for extinguishment of the rights or discharge of any

party thereto from any liability under or in respect

of such guarantee or agreement on the expiry of a

specified period which is not less than one year

from the date of occurring or non-occurring of a

specified event for extinguishment or discharge of

such party from the said liability.

Explanation.—

(i) In Exception 3, the expression “bank” means—

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(a) a “banking company” as defined in clause

(c) of section 5 of the Banking Regulation

Act, 1949 (10 of 1949);

(b) “a corresponding new bank” as defined in

clause (da) of section 5 of the Banking

Regulation Act, 1949 (10 of 1949);

(c) “State Bank of India” constituted under

section 3 of the State Bank of India Act,

1955 (23 of 1955);

(d) “a subsidiary bank” as defined in clause

(k) of section 2 of the State Bank of India

(Subsidiary Banks) Act, 1959 (38 of

1959);

(e) “a Regional Rural Bank” established under

section 3 of the Regional Rural Banks

Act, 1976 (21 of 1976);

(f) “a Co-operative Bank” as defined in clause

(cci) of section 5 of the Banking

Regulation Act, 1949 (10 of 1949);

(g) “a multi-State co-operative bank” as

defined in clause (cciiia) of section 5 of

the Banking Regulation Act, 1949 (10 of

1949); and

(ii) In Exception 3, the expression “a financial

institution” means any public financial institution

within the meaning of section 4A of the Companies

Act, 1956(1 of 1956).]

Section 28 strictly deals with agreements in restraint of legal

proceedings. It renders a contract void only if the clauses absolutely

restrict a party from enforcing their contractual rights through ordinary

Courts or Tribunal. Limits the time period within which a party can

enforce their legal rights. Extinguishes the rights or releases any party

from liability after specific period. A mandatory declaration clause does

not stop a bidder from suing WBSEDCL, nor does it limit their

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timeframe to approach Court. It is merely a transparency and eligibility

evaluation requirement.

18. The petitioner has challenged Clause 14 of the revised purchase policy

of WBSEDCL wherein respondents have inserted the conditions that

“The bidder should submit the declaration in prescribed format under the

Form Folder (Form XI) in their letterhead regarding no legal litigation

against WBSEDCL is pending in any Court/ Forum against / by the

bidder or its Sister Concern/ Director/ Partner/ Proprietor. If any type of

legal litigation / arbitration against WBSEDCL is pending in any Court/

Forum against/ by the bidder or its Sister Concern/ Director/ Partner/

Proprietor, then purchaser reserves the right to reject their bid/

termination of the contract”.

As of now there is no contract between the parties. The petitioners

have challenged the condition of the purchase policy. The WBSEDCL

has invited tender by introducing the new clause. Unless the bidder

accepts the conditions, no agreement can be executed. It is the choice

of bidder either to accept the condition or not. In the case of Anil

Kumar Srivastava (supra), the Hon’ble Supreme Court held that an

invitation to tender is not an offer. It is an attempt to ascertain whether

an offer can be obtained with a margin. Considering the above, this

Court finds that none of the Sections relied by the petitioners is

applicable in the present case.

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19. It is the specific case of the WBSEDCL that the respondents have

inserted the said clause to examine and assess the litigation history of

the participants in the tender process and the said policy is an

economic decision. In the case of Manohar Lal Sharma (supra), the

Hon’ble Supreme Court held that:

“14. On matters affecting policy, this Court

does not interfere unless the policy is

unconstitutional or contrary to the statutory

provisions or arbitrary or irrational or in abuse of

power. The impugned Policy that allows FDI up to

51% in multi-brand retail trading does not appear

to suffer from any of these vices.”

20. In the case of Bhagyanagar Energy & Telecom Ltd. (supra), the

Hon’ble Andhra Pradesh High Court held that:

“12. From the aforesaid decisions, it is clear

that it is not for the Court to go into the wisdom of

the policy decision and judge its pros and cons and

say whether it is beneficial or equitable, and it

shall not interfere with the policy decision unless it

is demonstrated and shown that the policy decision

taken is capricious or arbitrary or is not informed

by any reason or if it suffers from the vice of

discrimination or infringes any provisions of the

statute or the Constitution. Even if the policy

favours a particular class of persons or individuals,

the Court shall not interfere, if the policy seeks to

protect the vital interests of the community and

does not affect the economy of the country.”

21. In the case of Bajaj Hindustan Ltd. (supra), the Hon’ble Supreme

Court held that:

“39. We should not be understood to have

meant that the judiciary should never interfere with

administrative decisions. However, such

interference should be only within narrow limits

e.g. when there is clear violation of the statute or a

constitutional provision, or there is arbitrariness in

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the Wednesbury sense. It is the administrators and

legislators who are entitled to frame policies and

take such administrative decisions as they think

necessary in the public interest. The Court should

not ordinarily interfere with policy decisions, unless

clearly illegal.

40. Economic and fiscal regulatory measures

are a field where Judges should encroach upon

very warily as Judges are not experts in these

matters. The impugned policy parameters were

fixed by experts in the Central Government, and it

is not ordinarily open to this Court to sit in appeal

over the decisions of these experts. We have not

been shown any violation of law in the impugned

notification or press note.

41. The power to lay policy by executive

decisions or by legislation includes power to

withdraw the same unless it is by mala fide

exercise of power, or the decision or action taken is

in abuse of power. The doctrine of legitimate

expectation plays no role when the appropriate

authority is empowered to take a decision by an

executive policy or under law. The court leaves the

authority to decide its full range of choice within

the executive or legislative power. In matters of

economic policy, it is settled law that the court

gives a large leeway to the executive and the

legislature. Granting licences for import or export is

an executive or legislative policy. The Government

would take diverse factors for formulating the

policy in the overall larger interest of the economy

of the country. When the Government is satisfied

that change in the policy was necessary in the

public interest it would be entitled to revise the

policy and lay down a new policy.

44. In the words of Chief Justice Neely:

“I have very few illusions about my

own limitations as a Judge. I am not an

accountant, electrical engineer, financer,

banker, stockbroker or system

management analyst. It is the height of

folly to expect Judges intelligently to

review 5000 page record addressing the

intricacies of a public utility operation. It is

not the function of a Judge to act as a

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super board, or with the zeal of a pedantic

school master substituting its judgment for

that of the administrator.”

45. In our opinion there should be judicial

restraint in fiscal and economic regulatory

measures. The State should not be hampered by

the Court in such measures unless they are clearly

illegal or unconstitutional. All administrative

decisions in the economic and social spheres are

essentially ad hoc and experimental. Since

economic matters are extremely complicated this

inevitably entails special treatment for distinct

social phenomena. The State must therefore be left

with wide latitude in devising ways and means of

imposing fiscal regulatory measures, and the Court

should not, unless compelled by the statute or by

the Constitution, encroach into this field.

46. In our opinion, it will make no difference

whether the policy has been framed by the

legislature or the executive and in either case there

should be judicial restraint. The Court can

invalidate an executive policy only when it is

clearly violative of some provisions of the statute or

Constitution or is shockingly arbitrary but not

otherwise.”

22. In the case of Federation Haj PTOS of India vs. Union of India

reported in (2020) 18 SCC 527, the Hon’ble Supreme Court held that :

“18. Going by the aforesaid considerations,

the respondent has carved out the categories of

HGOs on the parameters of experience as well as

financial strength of HGOs. Such a decision is

based on policy considerations. It cannot be said

that this decision is manifestly arbitrary or

unreasonable. It is settled law that policy decisions

of the executive are best left to it and a court cannot

be propelled into the unchartered ocean of

government policy. Public authorities must have

liberty and freedom in framing the policies. It is

well-accepted principle that in complex social,

economic and commercial matters, decisions have

to be taken by governmental authorities keeping in

view several factors and it is not possible for the

15

courts to consider competing claims and to

conclude which way the balance tilts. Courts are ill-

equipped to substitute their decisions. It is not

within the realm of the courts to go into the issue as

to whether there could have been a better policy

and on that parameters direct the executive to

formulate, change, vary and/or modify the policy

which appears better to the court. Such an exercise

is impermissible in policy matters. In Bennett

Coleman case, the Court explained this principle in

the following manner :

“125. … The argument of the petitioners

that Government should have accorded

greater priority to the import of newsprint to

supply the need of all newspaper proprietor to

the maximum extent is a matter relating to the

policy of import and this Court cannot be

propelled into the unchartered ocean of

governmental policy.”

19. The scope of judicial review is very limited

in such matters. It is only when a particular policy

decision is found to be against a statute or it

offends any of the provisions of the Constitution or

it is manifestly arbitrary, capricious or mala fide,

the Court would interfere with such policy

decisions. No such case is made out. On the

contrary, views of the petitioners have not only

been considered but accommodated to the extent

possible and permissible. We may, at this junction,

recall the following observations from the judgment

in Maharashtra State Board of Secondary & Higher

Secondary Education v. Paritosh Bhupeshkumar

Sheth

“16. … The Court cannot sit in judgment

over the wisdom of the policy evolved by the

legislature and the subordinate regulation-

making body. It may be a wise policy which

will fully effectuate the purpose of the

enactment or it may be lacking in effectiveness

and hence calling for revision and

improvement. But any drawbacks in the policy

incorporated in a rule or regulation will not

render it ultra vires and the Court cannot

strike it down on the ground that, in its

opinion, it is not a wise or prudent policy, but

is even a foolish one, and that it will not really

16

serve to effectuate the purposes of the Act. The

legislature and its delegate are the sole

repositories of the power to decide what policy

should be pursued in relation to matters

covered by the Act and there is no scope for

interference by the Court unless the particular

provision impugned before it can be said to

suffer from any legal infirmity, in the sense of

its being wholly beyond the scope of the

regulation-making power or its being

inconsistent with any of the provisions of the

parent enactment or in violation of any of the

limitation imposed by the Constitution.”

23. WBSEDCL requires vendors, contractors and bidders to submit a

declaration confirming that no legal litigation or arbitration is pending

against the utility to mitigate commercial risk, ensure seamless project

execution, and prevent conflicts of interest. The mandatory clause

serves several distinct functional and legal purposes. A company

cannot effectively act as a trusted partner or contractor for WBSEDCL

while simultaneously suing them in Court. If an active dispute involves

financial claims for damages, it creates an unstable financial

relationship between the two parties.

24. Pending litigation can lead to sudden stay orders, gridlocks or frozen

funds. WBSEDCL enforces this Clause to prevent to protect public

infrastructure projects from delays caused by judicial interventions

involving the contractor. The undertaking forces bidders to legally

declare their historical compliance and corporate governance track

record.

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25. The judgment relied by the petitioners in the case of Vinishma

Technologies Pvt. Ltd. (supra) is distinguishable. In the said case, the

State of Chhattisgarh stipulated the condition that the bidders must

have supplied sports goods worth of Rs. 6.00 crores to the State

Government agencies of Chhattisgarh but the Hon’ble Supreme Court

held that the said object can be achieved by the requiring bidders to

demonstrate financial capacity, technical experience and past

performance in contracts of similar nature, regardless of place or

performance of the contract. Thus, the facts of this case are

distinguishable from the facts of the case referred to by the petitioners.

26. The judgment relied by the petitioners in the case of Kimberly Club

(supra), the Hon’ble Supreme Court held that only in cases where such

decision is dehors the terms of the NIT or is patently arbitrary would

the Court exercise powers of judicial review and set aside such a

decision but in the present case, this Court did not find any

arbitrariness on the part of the WBSEDCL.

27. In the case of M/s Erusian Equipment & Chemicals Ltd. (supra), the

Hon’ble Supreme Court held that :

“19. Where the State is dealing with

individuals in transactions of sales and purchase

of goods, the two important factors are that an

individual is entitled to trade with the Government

and an individual is entitled to a fair and equal

treatment with others. A duty to act fairly can be

interpreted as meaning a duty to observe certain

aspects of rules of natural justice. A body may be

under a duty to give fair consideration to the facts

and to consider the representations but not to

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disclose to those persons details of information in

its possession. Sometimes duty to act fairly can

also be sustained without providing opportunity for

an oral hearing. It will depend upon the nature of

the interest to be affected, the circumstances in

which a power is exercised and the nature of

sanctions involved therein.”

It is not the case of the petitioners that the condition is

incorporated only for the petitioners. The said conditions apply to all

contractors or bidders who proposed to participate in the bid process.

As per condition, the bidders should declare that no legal litigation/

arbitration is pending against the WBSEDCL.

28. This Court did not find any arbitrary action on the part of the

WBESEDCL by incorporating Clause-14 in Form–XI in the purchase

policy or the said clause is unconstitutional or contrary to the statutory

provisions.

29. In view of the above, WPA No. 26004 of 2025 and WPA No. 5195 of

2026 are accordingly dismissed.

Parties shall be entitled to act on the basis of a server copy of the

Judgment placed on the official website of the Court.

Urgent Xerox certified photocopies of this judgment, if applied for,

be given to the parties upon compliance of the requisite formalities.

(Krishna Rao, J.)