On November 24, 2025, the Honourable Supreme Court of India upheld the Himachal Pradesh High Court’s decision to restore the Letter of Intent (LoI) given to M/s. OASYS Cybernetics Pvt. Ltd. for supplying, installing, and maintaining upgraded electronic Point-of-Sale (e-PoS) devices for the State’s Aadhaar-enabled Public Distribution System. The ruling came in response to the State’s appeal against the High Court order dated May 30, 2024, which had overturned the cancellation of the LoI and directed the State to fulfil its procurement commitments.
The disagreement originated from the State’s multi-stage tender process that began in 2021 and 2022 to improve its Public Distribution System using biometric and iris-enabled devices combined with weighing systems. After several rounds of bidding, OASYS Cybernetics won in the fourth round. On September 2, 2022, the Department issued a conditional LoI requiring the company to show technical compliance and complete pre-contract tasks before the agreement could be finalised. In the following months, OASYS fulfilled requirements for device testing, field demonstrations, technical clarifications, and planning for deployment. Correspondence between the parties showed ongoing communication and active encouragement from the State to move forward with the project.
However, the Department unexpectedly cancelled the LoI on June 6, 2023, citing vague issues and launching a new tender. The Supreme Court pointed out that the cancellation letter provided no clear reasons and that the company had never been informed of any serious shortcomings. A complaint about an earlier blacklisting, which the State used as a basis for cancellation, was found to be unverified and not relevant, especially since the State had still allowed technical evaluations and demonstrations to proceed. Therefore, the High Court deemed the cancellation arbitrary, and the Supreme Court has now confirmed that finding.
In its ruling, the Hon’ble Supreme Court of India noted that while an LoI does not automatically create a contract, it can become an enforceable commitment if the bidder meets all required conditions and if the State’s actions encourage reliance and spending. In this case, the Court found that the State’s communications, directions, and approvals prompted OASYS to make considerable preparations. After allowing the company to move forward with implementation, the State could not later invalidate the LoI without valid reasons. This behaviour was deemed to violate the constitutional principles of fairness and non-arbitrariness in public procurement.
The Court also stated that the High Court had acted appropriately within the bounds of judicial review. Although courts typically exercise caution in tender matters, they must intervene when State actions are unreasonable or violate Article 14. The Supreme Court emphasized that government authorities cannot undermine legitimate expectations created by their own commitments, particularly in areas affecting welfare schemes like the Public Distribution System.
As a result, the Supreme Court rejected the appeal, reinstated the LoI from September 2, 2022, and instructed the State of Himachal Pradesh to quickly finish all contract formalities. The Court highlighted that modernizing the Aadhaar-enabled PDS is very important for the public and should not be disrupted by arbitrary government decisions.
This ruling reinforces the need for fairness in public procurement. It emphasizes that once the State encourages reliance and confirms technical compliance, it cannot reverse its actions without solid reasons. It also highlights the judiciary’s role in ensuring that contractual and welfare-related obligations are met according to constitutional standards.