J&K High Court Holds Tender Process Arbitrary And Unconstitutional | Finds Award To Johnson And Johnson A Result Of Favouritism And Abuse Of Discretion
Sanchayita Lahkar
The High Court of Jammu and Kashmir and Ladakh Single Bench of Justice Moksha Khajuria Kazmi quashed the finalization of a government tender for surgical sutures after finding the procurement process marred by favouritism and monopolistic practices. The court set aside approvals granted to only two entities and directed the respondents to re-evaluate the technical bids submitted by all participants, including those previously excluded without reason. The Court observed that continued awarding of contracts to a single multinational manufacturer without fair competition undermines public interest and transparency. It held that arbitrary exclusion of qualified bidders, in violation of the prescribed bid procedures, necessitated judicial intervention to ensure equal opportunity and fair play.
The petitioner, a leading Indian medical device manufacturer, challenged the tender process initiated through Notice Inviting Bid No. JKMSCL/SUTURE MATERIAL/604 dated 16.10.2023, issued by Jammu and Kashmir Medical Supplies Corporation Limited (JKMSCL). The tender involved the procurement of surgical sutures categorized into Groups A to D, with further subcategories such as A-I to A-X. The eligibility criteria included valid licenses and a minimum annual turnover of Rs. 20 crores over three years.
The petitioner alleged that despite fulfilling all eligibility conditions and submitting the technical bid on 26.02.2024, its bid was arbitrarily rejected without a defensible reason. In contrast, the bids of Johnson & Johnson Pvt. Ltd. and SR Technomed (representing Medtronic Inc., USA) were approved and their financial bids opened. The petitioner submitted representations protesting the exclusion and stating that Johnson & Johnson had been awarded tenders by the government for more than three decades, establishing a monopoly with the government's aid.
Respondents No. 2 to 4 defended the process by citing the unanimous recommendation of the Technical Evaluation Committee, comprising expert surgeons from both Jammu and Kashmir, who approved only the two aforementioned companies. They stated considerations of surgical safety, patient care, and familiarity with the suture materials used. The committee claimed that the selected companies had a proven track record with no post-operative complications.
However, the petitioner pointed out inconsistencies. For instance, Johnson & Johnson was approved for categories where it had not even submitted bids. The petitioner was excluded from financial bid consideration in categories where it had successfully supplied materials across premier institutions in India. Moreover, sample evaluation, a requirement under Clause 16 of the bid document, was not conducted prior to technical approval. Samples were called for only after the conclusion of the bidding process, allegedly for future use.
In response, respondents contended that the technical evaluation was valid and within their discretionary domain, citing reliance on expert medical opinions. They also noted that similar evaluations had taken place in 2021, where only the same two companies had been approved.
The petitioner argued that such selective application of the tender criteria and exclusion from sample evaluation amounted to a clear violation of Articles 14 and 19(1)(g) of the Constitution of India. Additionally, the constitution of the Technical Committee itself was questioned for not complying with the official mandate that required the presence of a Deputy Drug Controller.
The court was also informed that the rate contract had been finalized, but no purchase orders had yet been placed, and the case remained at a pre-execution stage.
The Court stated in clear terms: "The purpose of the tendering process is to promote competition among bidders, which can lead to lower prices while ensuring high quality of goods. It is intended to ensure transparency, accountability, and efficiency in procurement decisions."
It further recorded: "When a single company completely controls the market for a particular product or service, without letting any company entering into the arena of competition for decades and the Government acts as a shield for such practices, this amounts to favouritism, monopoly and destruction of competition, at the cost of public exchequer."
The Court noted that since 1999, only Johnson & Johnson has been awarded contracts for suture materials by the Government of J&K. "There is no competition, but the supply of the suture materials have been monopolized by the Government, thereby providing same excuses by the technical experts that they have used only products of respondents No. 5 and 6."
In examining the bid process, the Court stated: "The Technical Evaluation/Advisory Committee has not delved into the assessment of suture material of the petitioner. The process appears to be designed only to favour respondents No. 5 and 6 which clearly reflects arbitrariness, discrimination and a colourable exercise of power."
On the issue of samples, the Court quoted the tender clause: "Samples of all the quoted items [must be sent] within ten days, IF, WHEN AND WHERE desired by the committee... In the event of non-submission of samples within the prescribed period, the tender shall not be considered and Earnest Money shall be forfeited." It found that this procedure was not followed and that samples were sought only after the technical bids were finalized.
The Court also criticized the constitution of the Technical Committee: "In the present case, the Technical Committee comprised of an officer, namely Tejveer Singh Sodhi, DCO (District Control Officer) whose status is equivalent to a Drug Inspector, and not of a Deputy Drug Controller... The constitution of the Committee was not as per the mandate."
Reflecting on long-standing monopolistic practices, the Court observed: "The domination of a single entity, M/S Johnson and Johnson Pvt. Ltd along with S.R.Technomed since 1999 till date has had severe negative consequences, including higher prices and reduced innovation."
In rejecting the argument that the petition only challenges the decision and not the decision-making process, the Court clarified: "The petitioner has challenged the decision-making process of the Technical Committee in his prayer B, whereby the validity of the Minutes of the Meeting dated 02.09.2024, has been questioned."
The Court stated that procedural fairness in procurement must not only exist but be evident: "The Government is stifling competition, limiting economic growth, and promoting selective allocation of resources. Competition forces the companies to do their best, whereas a monopoly, renders, people satisfied with the product being supplied by a single entity."
In view of the above, this Court deems it appropriate to order as follows:
(i) The Minutes of Meeting dated 02.09.2024, and all the consequent decisions made by respondents no. 2 to 4, which include the rejection of bids, finalization of the contract after opening of financial bids, issuance of Letters of Intent, and the execution of rate contracts in favour of respondents no.5 & 6, are set aside;
(ii) Respondent no 2 to 4 are directed to initiate a fresh tender process immediately upon pronouncement of this judgment. They shall also rectify all the ambiguities in the existing tender documents.
(iii) Respondents no. 2 to 4 are directed to invite samples of suture materials from all the interested companies/bidders. The samples shall be evaluated by the experts who are the end-users in the relevant departments.
(iv) The experts shall submit their reports after proper evaluation to respondents No.2 and 4.
(v) Till such time the samples are evaluated by the experts and fresh tenders are finalized, respondents no. 2 to 4 are free to make appropriate interim arrangements for the procurement of suture materials, as per requirement in accordance with transparent and lawful procedures.
The petition is disposed of accordingly. The original record, if any, shall be returned to the concerned.
Advocates Representing the Parties:
For the Petitioners: Mr. Rahul Pant, Senior Advocate with Mr. Varut Kumar Gupta, Ms. Savita Sarna, Ms. Anisha Mathur, Mr. Umar Javed, Mr. Rajeev Chargotra, Mr. Mubasher Manhas, and Mr. Dhruv Pant
For the Respondents: Mr. Raman Sharma, AAG; Mr. Pranav Kohli, Senior Advocate with Mr. Ashwin Sapra, Ms. Avantika Sharma, Mr. Amjid Maqbool, Mr. C.M. Koul, Senior Advocate with Mr. Farhan Mirza, Mr. Pratyaksh Deoria, and Mr. A.R. Bhat
Case Title: Healthium Medtech Ltd. vs Union Territory of Jammu and Kashmir and Others
Case Number: WP(C) No. 2808/2024
Bench: Justice Moksha Khajuria Kazmi
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