Tesco and Sainsbury’s are locked in a bitter dispute over a Scottish plot of land on which both want to build stores.

Both grocers already own portions of the land in the border town of Kelso. Each needs the other to sell its stake before development can take place.

Last year Sainsbury’s was granted permission to develop a 40,000 sq ft (3,715 sq m) store on the site and it has been working with Scottish Borders Council to buy the remaining land from it.

However, in the latest round of the battle during December, Tesco was named as preferred bidder for SBC’s plot after it put in the highest offer, despite the grocer not having planning consent to develop on the site.

Sainsbury’s surveyor Paul Miller, who has overseen the retailer’s plans for the land, said: “We don’t know if they [Tesco] are trying to frustrate the whole process or whether they’re doing something behind the scenes. The fact is Sainsbury’s won’t give up the contracts we’ve got. Tesco has put the council in a very difficult position.”

Tesco has defended its bid for the site, claiming that Sainsbury’s speculatively put in its application for the site before it owned the land and only acquired its plots after the dispute arose.

A Tesco spokesman said: “We were selected by SBC as their preferred bidder in December 2008 and we will continue to work closely with the council to explore the various options available to us to allow us to deliver our new store.”