Court rules contractual obligations are non-statutory, allowing U.P. State Road Transport Corporation to proceed with the tender.
In a significant decision, the Allahabad High Court on July 17, 2026, dismissed a writ petition filed by M/s Moga Dhaba With Family Hall, challenging an e-tender issued by the U.P. State Road Transport Corporation for establishing a new Yatri Plaza for A.C. buses on the Moradabad-Delhi route near Gajraula. The Division Bench, comprising Justices Atul Sreedharan and Vivek Saran, emphasized that commercial contracts governed by contractual rather than statutory obligations cannot be challenged under Article 226 of the Constitution unless arbitrariness, bias, or mala fides are demonstrated.
Moga Dhaba, currently operating a Yatri Plaza on the same route, contended that the new tender violated the Corporation's policy dated November 26, 2020, which allegedly restricted the opening of additional plazas unless more than 300 buses were operational on the route. The petitioner argued that the new plaza would divide their customer base, resulting in commercial loss.
The court, however, found that the contractual obligations between Moga Dhaba and the Corporation were purely commercial and did not confer statutory rights. The bench noted that the petitioner failed to show any arbitrariness, bias, or mala fides in the issuance of the e-tender. The court also observed that the policy guidelines cited by the petitioner lacked statutory force and thus could not be enforced under writ jurisdiction.
Moreover, the court held that opening a new Yatri Plaza would foster healthy competition among operators, enhancing services for passengers, and thereby serving the public interest. It further stated that no clause in the contract between the petitioner and the Corporation restricted the opening of additional Yatri Plazas.
The court reiterated the limited scope of judicial review in contractual matters, emphasizing that courts should not interfere in tender processes unless clear evidence of arbitrariness or bias is presented. The judgment underscored that protecting private commercial interests at the cost of public interest is not permissible.
Concluding that the petitioner had no enforceable legal right under the contract, the court dismissed the writ petition, vacating any interim orders and ruling out any costs.
Bottom line:-
Commercial contracts governed by contractual obligations and not statutory obligations cannot be challenged under Article 226 of the Constitution unless arbitrariness, bias, or mala fides are proved.
Statutory provision(s): Article 226 of the Constitution of India.
M/s Moga Dhaba With Family Hall v. State of U.P., (Allahabad)(DB) : Law Finder Doc id # 2942385
