COURT REFUSES WRIT INTERVENTION IN TENDER PROCESS DESPITE VENDOR VERIFICATION ERRORS DUE TO THIRD-PARTY RIGHTS AND NON-CHALLENGE

The Petitioner, proprietor of M/S Kaziranga Medicos, sought to participate in an online E-Tender (dated 04.10.2024) issued by the Additional Director of CGHS for the supply of allopathic medicines

While uploading the bid on the Government E-Marketplace (GeM) portal, Respondent No. 5 (GeM) and its verification agency (RITES Ltd.) rejected the Petitioner’s catalogue, citing that his drug licenses appeared "expired" and could not be validated via the issuing authority's database

The Petitioner contended that his licenses were valid perpetually under the Drugs Rules, 1945, and requested an extension of the technical bid deadline, which was denied by Respondent No. 4

During the pendency of the writ, the court's interim status quo order was vacated, and other entities were empanelled for the contract

1. Whether the GeM Authority (Respondent No. 5) and its verification agency (RITES Ltd.) erred in law by rejecting the Petitioner’s drug licenses on the grounds of expiry

2. Whether the Court should exercise its discretionary jurisdiction under Article 226 to extend the bid timeline and allow the Petitioner’s participation after third-party rights have been created

The Court primarily applied Rule 61 of the Drugs Rules, 1945, read with Government Notification No. GSR 1337(E) dated 27.10.2017, which amended Forms 20, 21, and 21A to establish that drug licenses remain valid perpetually unless suspended or cancelled

The Court referenced the General Terms and Conditions of the GeM portal (Clause 3), which places exclusive responsibility on the seller/service provider for the accuracy and defect-free nature of uploaded documents

The Court found that Respondent No. 5 and RITES Ltd. committed a fundamental error in evaluating the Petitioner’s credentials. By failing to recognize the 2017 statutory amendment which rendered drug licenses "perpetual," the verification agency mistakenly deemed valid documents as "expired"

The Court observed that the Petitioner had notably failed to formally challenge the GeM Authority’s specific action of non-processing his bid, focusing instead only on seeking an extension of time

Respondent No. 4 justified the refusal to extend the timeline by citing administrative pressure to complete the tender by 16.12.2024 and the risk of opening "floodgates" for similar applications

Since the tender process had concluded and third-party chemists had already been empanelled, the Court determined that granting relief at this stage would cause "enormous chaos" and prejudice the rights of successfully empanelled entities

While the Court acknowledged the mistake made by the GeM Authority regarding the drug license validity, it held that Article 226 relief was not feasible at this stage

The Court clarified that this dismissal shall not bar the Petitioner from pursuing a separate civil suit for damages against the Respondent Authorities for their failure to properly verify his bid documents