Supreme Court – Tender acceptance & Letter of Intent Cannot Trigger Arbitration

judgment dated 9.4.2026 of the Supreme Court of India in SLP (Civil) No.36889 of 2025 of Maharashtra State Electricity Distribution Company Limited (MSEDCL) and others Vs. R Z Malpani

Section 11 and the Arbitration Agreement

Supreme Court – Tender acceptance or Letter of Intent Cannot Trigger Arbitration

SC – Letter of Intent for a tender work Cannot Create Arbitration Agreement or Arbitral Rights

SC – Arbitration Agreement does not exist in case of cancellation of tender before issuance of work order

In this case, the tender work of the appellant was given to the respondent. The respondent furnished the bank guarantee. However, the work order in terms of LoI was not issued.

The respondent terminated the contract for failure to hand over the site and invoked arbitration clause for compensation
of Rs.4,89,85,500/-.

The appellant formally cancelled the tender and refunded the security deposit. The respondent did not challenge the cancellation but again invoked arbitration.

The respondent took the stand that the tender documents and LoI do not form a valid contract or arbitration agreement.

The High Court held that the LOI was concluded contract and the existence of arbitration agreement can be discerned from the correspondence of the parties. Letter of Intent (LoI) does not amount to a binding contract or arbitration agreement unless a concluded contract exists. The Court set aside the High Court’s appointment of an arbitrator, clarifying that arbitration cannot be invoked merely on the basis of a tender or LoI