### Contractual Extension Clause Subject to Authority's Discretion Does Not Confer a Vested Right to Renewal

The petitioners are authorized parking contractors for the Municipal Corporation of Delhi (MCD) under a 2022 tender (NIT No. 907).

The tender terms stipulated a tenure of three years, "further extendable for another two years subject to satisfactory performance and as decided by the Competent Authority".

As the initial three-year term neared completion, the petitioners requested extensions, asserting they had maintained satisfactory performance and no dues.

However, the MCD issued a fresh tender (NIT No. 1419) on 15.01.2026 for the same sites.

The petitioners challenged this re-tendering, arguing that "satisfactory performance" created a contractual right to extension and that the MCD’s silence on their requests followed by re-tendering was arbitrary.

Whether the contractual clause providing for a 3+2 year tenure creates a vested right to extension for the contractor upon "satisfactory performance".

Whether the MCD's decision to re-tender sites to maximize revenue, rather than extending existing contracts, is arbitrary or violates Article 14 of the Constitution.

The court applied the principle of contractual interpretation regarding discretionary clauses, noting that the word "and" between "satisfactory performance" and "as decided by the Competent Authority" creates independent, disjunctive conditions.

It relied on the precedent in Himalayan Flora and Aromas Pvt. Ltd. v. MCD (LPA 351/2025), which established that such clauses grant "large discretion" to the Commissioner to consider factors beyond mere performance, such as financial prudence.

Furthermore, the court referred to the fiduciary responsibility of statutory bodies to maximize public revenue under the Delhi Municipal Corporation Act, 1957.

The Court reasoned that Clause 10 of the NIT does not facilitate automatic renewal.

The inclusion of the phrase "as decided by the Competent Authority" indicates that satisfactory performance is a condition precedent but not the sole determinant for extension.

The Court distinguished the petitioners' reliance on S.K. Associates v. MCD, noting that the clause in the present case specifically reserved administrative discretion, whereas the clause in S.K. Associates lacked such limiting language.

The Court found the MCD’s justification for re-tendering—specifically "price discovery" to address "financial stress" and "market alignment"—to be a valid exercise of financial prudence.

It further held that since the initial three-year term had expired by efflux of time, re-tendering did not constitute "constructive termination".

The MCD’s decision to prioritize revenue optimization through fresh bidding was held to be reasonable and non-arbitrary.

Consequently, the High Court dismissed all four writ petitions and pending applications.