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T Thakur

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Structured Summary of the Opinion

Factual and Procedural Background

Lok Nayak Jai Prakash Hospital (a large Delhi hospital) normally receives surgical equipment and materials from the Central Procurement Agency (CPA). For 2006-2007 the hospital needed surgical bandages and the Purchase Committee initiated procurement. Initially the Purchase Committee set an annual turnover eligibility of Rs. 10 crores; after receiving only two quotations it lowered that requirement to Rs. 5 crores and reissued a tender notice published on 27 July 2007. The tender document could be bought up to 16 August 2007 (2 p.m.) and sealed tenders were to be dropped by 17 August 2007 for opening on the same day.

The petitioner, a manufacturer of surgical dressings who claimed to supply the hospital under limited tenders, filed a writ petition challenging the Rs. 5 crore annual turnover eligibility condition as illogical, irrational, arbitrary and violative of Article 14, seeking certiorari to quash the condition and mandamus to call fresh tenders without that turnover requirement. The respondents filed a counter affidavit defending the turnover stipulation as intended to secure financially sound suppliers and uninterrupted, standard supplies. The respondents also pleaded delay and laches.

Legal Issues Presented

Whether the stipulation in the tender notice requiring manufacturers to have an annual turnover of Rs. 5 crores is arbitrary, irrational, or violative of Article 14 of the Constitution.
Whether the court should intervene in the tender process and set aside the condition of eligibility or ongoing procurement process, given the limited scope of judicial review of tender conditions.
Whether the petition is barred by delay and laches because the petitioner did not purchase the tender document by the stated deadline and did not challenge the condition before the tender process progressed.

Arguments of the Parties

Petitioner's Arguments (as presented in the opinion)

The Rs. 5 crore annual turnover condition is irrelevant to a tenderer's capacity to supply and is therefore wholly illogical, irrational and arbitrary.
The petitioner, despite having a limited turnover, was making supplies to the hospital under limited tenders and thus had the capacity to supply; turnover as a global benchmark is an unreasonable eligibility criterion.
The condition violates the Equality Clause under Article 14 of the Constitution.
The petitioner attempted to rely on a representation submitted during the tender period to explain its inaction, contending it sought reconsideration of the turnover condition.

Respondents' Arguments (as presented in the opinion)

The turnover stipulation is neither arbitrary nor irrational; it ensures participation by manufacturers of good financial standing so that the chosen supplier can make uninterrupted and standard supplies.
The restriction was motivated by prior adverse experience (sub-standard supplies and failure of suppliers to continue), justifying a higher turnover requirement.
The petitioner delayed and failed to purchase the tender document by the deadline, so it lost the right to participate; the petition is therefore barred by unexplained delay and laches.
Judicial review of tender conditions is limited; courts should not interfere unless the conditions are arbitrary, discriminatory, mala fide or actuated by bias. Reliance was placed on the Supreme Court decisions in Directorate of Education v. Educomp Datamatics Ltd. and Global Energy Ltd. v. Adani Exports Ltd.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Directorate of Education and Ors. v. Educomp Datamatics Ltd. and Ors.	Establishes that terms of invitation to tender are generally within the realm of contract and not open to judicial scrutiny; courts should interfere only if terms are arbitrary, discriminatory, mala fide or actuated by bias, and not merely because the court would have preferred different terms.	The court relied on this principle to limit its intervention in the tender process and concluded that it would not strike down the eligibility condition unless it was shown to be arbitrary, discriminatory or mala fide; finding no such defect here, the court refused to interfere.
Global Energy Ltd. and Anr. v. Adani Exports Ltd. and Ors. (2005(4) Scale 551)	Affirms the limited scope of judicial review in challenges to tender conditions, consistent with the position in the Educomp decision.	The court cited this decision as supporting the same restrictive standard of review and treated it as reinforcing the conclusion that interference is warranted only where the tender conditions are arbitrary, discriminatory or mala fide.

Court's Reasoning and Analysis

The court's analysis proceeded in a sequence of discrete points, applying procedural and substantive law as reflected in the record and cited precedents:

Delay and Laches: The court examined the timeline: tender notice published 27 July 2007; tender documents sale closed on 16 August 2007 at 2 p.m.; tender opening on 17 August 2007. The petitioner did not purchase the tender document by the deadline and did not file a challenge until 17 August 2007. A representation relied upon by the petitioner (Annexure P-7) was not filed by the petitioner but by another party; the petitioner could not satisfactorily identify that party. On this basis the court found the petitioner’s explanation for inaction unsatisfactory and held that the petitioner had lost the opportunity to enter the competitive process by its own inaction and indolence.
Scope of Judicial Review: The court reiterated the controlling principle from Supreme Court authority (Educomp and Global Energy) that courts must not ordinarily interfere with tender conditions because these lie in the contractual/administrative domain, and that interference is permissible only where conditions are arbitrary, discriminatory, mala fide or actuated by bias. A tender condition being "a little more stringent" than what a court might consider reasonable is not sufficient for interference.
Application to the Turnover Requirement: The court evaluated whether the Rs. 5 crore turnover stipulation was arbitrary, irrational, perverse or mala fide. It noted the factual backdrop that the hospital's total expected value of supplies over the year was around Rs. 2 crores. Given that figure, the court found a direct nexus between a higher turnover requirement and (a) assurance of continuous, uninterrupted supply and (b) ensuring standard quality of material. Consequently, the court concluded the Rs. 5 crore benchmark could not reasonably be characterized as unreasonably or unfairly high or discriminatory.
Comparison with CPA Standard: The court addressed the argument that the CPA had fixed a lower turnover (Rs. 2 crores) and whether the hospital was bound to follow it. The court held that different procuring agencies could legitimately fix different standards based on their respective assessments; CPA's lower turnover did not compel the hospital to adopt the same threshold, particularly given the hospital's particular need to secure uninterrupted supplies after CPA's failure.
Petitioner's Existing Supplies: The fact that the petitioner supplied the hospital under limited tenders did not invalidate the turnover condition; the petitioner could participate in processes for which it met eligibility, but its limited-tender supplies did not make the Rs. 5 crore condition unreasonable.
Conclusion of Analysis: On the combined bases of the petitioner's delay, the limited scope of judicial review, and the nexus between the turnover requirement and supply reliability, the court found no arbitrariness or perversity in the eligibility condition and declined to interfere with the ongoing procurement process.

Holding and Implications

Holding: The writ petition was DISMISSED.

Direct consequences on the parties (as stated in the opinion):

The petition failed and was dismissed.
The dismissal was made without any order as to costs.
Interim orders previously granted were vacated.
The ongoing procurement process and the conditions of eligibility were left undisturbed.

Broader implications: The court applied existing Supreme Court authority emphasizing a limited scope of judicial review in tender matters; the decision upheld the principle that courts will not substitute their judgment for administrative policy except in cases of arbitrariness, discrimination or mala fides. The opinion does not announce a new precedent beyond applying those established principles to the facts before it.

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Kishan Chand And Sons v. Govt. Of Nct Of Delhi And Anr.

1. Lok Nayak Jai Prakash Hospital in Delhi is one of the largest hospitals in Asia. The number of persons treated in the hospital both as indoor and outdoor patients is, therefore, understandably very large and the requirement of surgical equipments and other materials like bandages proportionately higher. These equipments, in particular, bandages of different types are, in the usual course, procured by the Central Procurement Agency (CPA) and supplied to the hospitals in Delhi. In the event of a shortfall of such supplies by the Central Procurement Agency, the hospital authorities are empowered to make purchases after following the requisite formalities and processing the papers through the Purchase Committee appointed for the purpose.

2. For the year 2006-2007, the hospital felt the need for purchasing surgical bandages and accordingly initiated the process of procuring the same through the Purchase Committee constituted for the purpose. The Purchase Committee appears to have initially fixed an annual turnover of Rs. 10 crores as a condition of eligibility for any manufacturer of such bandages to submit a tender. It is common ground that in response to the tenders invited on that condition of eligibility, only two quotations were received thereby forcing the purchase committee to reduce the turnover from Rs. 10 crores to Rs. 5 crores. A fresh tender notice was on that basis floated by the Medical Superintendent of the hospital which was published in four leading newspapers in their issue dated 27th July, 2007. The notice invited sealed tenders for the purchase of the equipment mentioned in the same including surgical dressing in the prescribed format of a tender document which, according to the tender notice, could be purchased on a cash payment of Rs. 500/- from the procurement Section of the hospital between 27th July, 2007 and 16th August, 2007 up to 2 p.m. The tender notice required sealed tender to be dropped in the box prescribed for the same placed in the purchase section of the Procurement Cell up to 2 p.m. on 17th August, 2007 which would then be opened on 17th August, 2007 at 3 p.m. in presence of the tenderers

3. The petitioner is a manufacturer of surgical dressings and claims to be making some supplies to the hospital mentioned above on the basis of a limited tender floated for that purpose. It has, in the present writ petition, challenged the stipulation contained in the tender notice requiring the manufacturers to have a turnover of Rs. 5 crores as a condition of eligibility on the ground that the same is totally illogical, irrational and arbitrary. A writ of certiorari quashing the tender notice and the condition of annual turnover with a mandamus to respondent No. 2 to call fresh tenders without the mandatory condition of turnover has, therefore, been prayed for in the present petition.

4. In response to the show cause notice issued by this Court, the respondents have appeared and contested the writ petition by filing a counter affidavit. According to the respondents, the stipulation regarding annual turnover of the manufacturer is neither arbitrary nor irrational as alleged by the petitioner. It is, on the contrary, intended to ensure that only manufacturers of good financial standing stay as players in the ongoing process and that the person eventually emerging successful as the lowest tenderer is in a position, on account of his large turnover, to make uninterrupted supply of the material required by the hospital. According to the respondents, the need for fixing a higher turnover had been felt by the Purchase Committee on the basis of the past experience in which sub-standard and spurious materials had been supplied and the supplies eventually given up by the chosen contractor on account of his inability to meet the demands. The respondents argue that the present is not a case where this Court could interfere in exercise of its powers of judicial review with either the conditions of the tender notice or the ongoing process of issue of a supply order in favor of the successful tenderer.

5. Appearing for the petitioner, Mr. Singhal strenuously argued that the conditions regarding annual turnover of Rs. 5 crores was wholly irrelevant to the question of the capacity of the tenderer to make the supplies. He urged that the petitioner was, even with a limited turnover, making supplies to the hospital on the basis of limited tenders issued by it on account of the failure of the supplies from the Central Procurement Agency and the contractors chosen for making the supply. The ability of the petitioner to make the supplies did not depend, argued Mr. Singhal, upon his total annual turnover fixing an irrationally and unreasonably higher benchmark as a condition of eligibility. The condition was, according to the learned Counsel, arbitrary and violative of the Equality Clause contained in Article 14 of the Constitution.

6. Mr. Singhal further contended that the Central Procurement Agency which is the main procuring agency for supplying equipment including surgical bandages to Government Hospitals in Delhi had itself fixed a lower turnover of Rs. 2 crores which clearly showed that the higher limit of Rs. 5 crores fixed by the Purchase Committee in the instant case was unjustified.

7. On behalf of the respondents Ms. Zubeda Begum, on the other hand, argued that the writ petition was liable to be dismissed on the ground of unexplained delay and latches. She contended that the last date for the purchase of the tender document was 16th August, 2007 up to 2 p.m.. The petitioner had not, according to the learned Counsel, purchased any tender document till 16th August, 2007 which, according to her, meant that he had lost the right to compete for the allotment of the supplies in question not by reason of any arbitrary or unreasonable stipulation in the same but by his own inaction and indolence. She further submitted that the scope of judicial review did not extend to finding fault with the conditions of the tender notice unless the conditions were found by the Court to be totally arbitrary or discriminatory in nature. There was, however, neither any arbitrariness nor any irrationality or perversity in the conditions of eligibility stipulated by the respondents for the supply in question. On the contrary, the higher turnover of Rs. 5 crores per annum was intended to achieve the object of standard material being supplied and the supplies remaining uninterrupted. There was, in that view, a direct nexus between the turnover of the manufacturers and their ability to make the supplies. Reliance was placed by Ms. Zubeda Begum upon the decisions of the Supreme Court in Directorate of Education and Ors. v. Educomp Datamatics Ltd. and Ors. and Global Energy Ltd. and Anr. v. Adani Exports Ltd. and Ors. 2005(4) Scale 551.

8. We have given our careful consideration to the submissions made at the bar and perused the record. The Writ petition filed by the petitioner is indeed belated. As rightly pointed out by Mrs. Zubeda Begum, the tender notice was issued as early as on 27th July, 2007 with a specific stipulation to the effect that intended tenderers could purchase the tender document up to 16th August, 2007 till 2p.m. It is not in dispute that the petitioner neither approached the authorities for the purchase of the tender document nor did the petitioner file any petition challenging the condition of eligibility as stipulated in the tender notice till 17th August, 2007 by which time the last date for purchase of the tender document had already expired. Mr. Singhal's argument that the petitioner had, during the intervening period, submitted a representation to the Medical Superintendent of the hospital for reconsideration of the stipulation regarding annual turnover of the manufacturer has not impressed us. A reading of the said representation produced as annexure P-7 to the writ petition would show that the representation was not filed by the petitioner but by one of the parties intending to participate in the tender process. That is evident even from the petitioners assertion made in para 13 of the writ petition which reads as under:

That in the above said circumstances the petitioner and other similarly situated persons brought this fact to the notice of the respondent No. 2 and requested him to amend the condition, but to no avail. One of the participants has even written a letter to the Medical Superintendent and the copy of such letter is annexed as ANNEXURE P-7 to the present writ petition, but the Medical Superintendent neither replied the said letter nor amended the said condition and is bent upon opening the tender on 17th August, 2007 at 3:30 p.m. The Schedule of the tender is as below:

Sale of the tender from 27.07.2007 to 16.08.2007 up to to 2PM.

Tender Box sealing on 17.08.2007 at 2PM.

Tender box opening on 17.08.2007 at 3PM Main envelope and prequalification BI opening on 17.08.2007 at 3:30 PM.

Cost of Tender: Rs. 300 (Five hundred only)

9. It is evident from the above that the representation upon which the petitioner has sought to place reliance in order to explain his inaction in the matter was not filed by the petitioner but by some other party.

10. Mr. Singhal next argued that the representation was filed by one of his distributors. It is interesting to note that the representation, Annexure P-7, does not indicate the name of the party who has filed the same, it is signed by one Mr. Daksh Khulbe as proprietor but the name of the concern of which Mr. Khulbe claims to be the proprietor is not available either in the representation or anywhere else on the record. Even Mr. Singhal was unable to give us the name of the concern which according to him was the distributor of the petitioner. Suffice it to say that the explanation sought to be advanced on behalf of the petitioner for its inaction between 27th July, 2007 till 17th August, 2007 when he filed the present petition does not inspire confidence. The petitioner appears to have remained on the fence, lost the opportunity to enter the competitive process by his own inaction and indolence thereby dis-entitling him to make any grievance against the condition of eligibility stipulated in the tender document.

11. Even otherwise the scope of judicial review in matters involving challenge to the tender conditions is very limited. The nature and scope of judicial review has been the subject matter of a long line of decisions rendered by the Supreme Court including the two decisions referred by Ms. Zubeda Begum. In Directorate of Education and Ors. v. Educomp Datamatics Ltd. and Ors. the Apex Court has unequivocally ruled out any interference with the terms of tender notice unless it is shown that the same are either arbitrary or discriminatory or actuated by malice. Just because the tender conditions may appear to the Court to be a little more stringent than what would in its opinion be reasonable is not a ground for the Court to interfere with the same. The following passage from the said decision sets the entire controversy to rest as to the scope of judicial review.

12. It has clearly been held in these decisions that the terms of the invitation to tender are not open to judicial scrutiny the same being in the realm of contract. That the government must have a free hand in setting the terms of the tender. It must have reasonable play in its joints as a necessary concomitant for an administrative body in an administrative sphere. The courts would interefere with the administrative policy decision only if it is arbitrary, discriminatory, mala fide or actuated by bias. It is entitiled to pragmatic adjustments which may be called for by the particular circumstances. The courts cannot strike down the terms of the tender prescribed by the government because it feels that some other terms in the tender would have been fair, wiser or logical. The courts can interefere only if the policy decision is arbitrary, discriminatory or mala fide.

12. To the same effect is the decision of the Supreme Court in Global Energys Case (Supra).

13. Coming then to the facts of the instant case, we do not think that the stipulation that the manufacturer must have a turnover of Rs. 5 crores per annum in order to make him eligible to submit his tender can be said to be arbitrary, irrational, perverse or malafide. The said condition has a direct nexus with the standard of the material to be supplied as also the ability of the supplier to maintain supplies on a continuous uninterrupted basis. It is common ground that the total value of the supplies which the hospital proposes to receive over the year is around Rs. 2 crores. Under the circumstances, the requirement that the tenderer must have a turnover of Rs. 5 crores annually cannot be said to be unreasonably or unfairly high so as to be described as discriminatory, arbitrary or malafide.

14. So also the question whether the Purchase Committee was justified in fixing a higher turnover as a condition of eligibility in comparison to the one fixed by the CPA, we need only say that the two agencies are entitled to stipulate two different standards depending upon their own perceptions. Just because CPA has fixed a lower turnover as a condition of eligibility may not necessarily imply that the hospital must follow suit and fix a similar lower turnover. As a matter of fact, while the CPA may be justified in fixing a lower turnover, the hospital may not be. We say so because after the CPAs failure to provide the required material to the hospital, the hospital had no option but to arrange the essentials from a private source by floating tenders on its own. If the supply from the private source also for any reason failed, there would be utter chaos in the hospital to the grave detriment of the patients admitted to the same. The hospital was, therefore, entitled to act on the safer side by fixing a higher turnover as a condition of eligibility to make sure that the supplier chosen by it does not fail in making the supply and that the supplies are of standard quality.

15. Similarly the fact that the petitioner is making certain supplies to the hospital on the basis of limited tenders does not lend any support to the challenge to the validity of the conditions of eligibility. The petitioner, if found eligible and entrusted with the supply on the basis of limited tender, is perfectly within its rights to do so just as it may be entitled to participate in any other tender process where it is eligible to do so in accordance with the condition of eligibility fixed for the same.

16. In the result, we see no reason to interfere with the ongoing process aimed at fixing a proper contract for supply of the required material. The conditions of eligibility prescribed do not, in our opinion, suffer from any arbitrariness or perversity. There is no merit in this petition which fails and is hereby dismissed but in the circumstances without any order as to costs. Interim orders shall stand vacated.

Kishan Chand And Sons v. Govt. Of Nct Of Delhi And Anr.

Structured Summary of the Opinion

Factual and Procedural Background

Legal Issues Presented

Arguments of the Parties

Petitioner's Arguments (as presented in the opinion)

Respondents' Arguments (as presented in the opinion)

Table of Precedents Cited

Court's Reasoning and Analysis

Holding and Implications

Kishan Chand And Sons v. Govt. Of Nct Of Delhi And Anr.

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