In Brief
South Eastern Coalfields Ltd., a Government company, floated a tender for equipment hiring and awarded it to the respondent via Letter of Intent (LoI) for Rs. 387.40 lakh. The LoI required the respondent to deposit 5% performance security and sign an Integrity Pact within 28 days, then execute a formal contract. The respondent mobilized equipment and commenced work but failed to deposit the security or execute the Integrity Pact. After work suspension, the company awarded the contract to another contractor at higher cost and sought recovery of the differential amount. The High Court held no concluded contract existed and allowed only forfeiture of bid security. The Supreme Court affirmed that the LoI merely expressed intention to contract, not a binding agreement, and that preconditions like security deposit were conditions precedent, not subsequent. Recovery of additional costs was therefore unavailable; only bid security forfeiture was permissible."
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