PGIMER’s 20-Year Medical-Gas Contractors Lose Challenge As P&H HC Upholds 300-Bed Experience Criterion To Widen Competition

The petitioners, contractors providing repair and maintenance services for the Medical Gas Pipeline System (MGPS) at PGIMER, challenged the cancellation of an earlier tender and the issuance of a fresh tender with revised eligibility conditions.

The earlier tender required at least five years’ experience in hospitals with a minimum of 500 beds.

Following the petitioners’ challenge to respondent no. 6’s eligibility, the authorities cancelled that tender, citing ambiguity in the experience criteria, and issued a fresh tender reducing the hospital threshold to 300 beds, specifying qualifying works and requiring manufacturer authorisation from Ingersoll Rand and Trident Pneumatics.

The petitioners alleged that the revisions diluted technical requirements and favoured respondent no. 6.

The authorities maintained that the changes clarified the criteria, widened competition and reflected the equipment installed at PGIMER.

A bidder acquires no vested right to the award of a contract before acceptance of its bid or formation of a concluded contract; a tendering authority may cancel a tender for valid and cogent reasons.

In judicial review of tender decisions, courts do not substitute their view for that of the procuring authority unless mala fides, favouritism, arbitrariness, irrationality or perversity is established; the authority that framed the tender is generally best placed to interpret its requirements (Afcons Infrastructure Ltd. v. Nagpur Metro Rail Corporation Ltd., as discussed at para. 23).

The Court also relied on State of Jharkhand v. M/s CWE-Soma Consortium concerning an authority’s power not to proceed with a tender where effective competition is lacking.

The judgment additionally referred to Rule 173(xix) of the General Financial Rules, 2017, on rejecting bids where effective competition is lacking, and Section 4 of the Competition Act, 2002, concerning abuse of a dominant position.

The Court accepted the Committee’s finding that the original criteria did not clearly require five years’ experience in each individual MGPS component and were open to competing interpretations; cancellation and re-tendering to clarify the criteria therefore had a bona fide basis.

It held that experience in a 300-bed hospital could demonstrate relevant capability because the technical and safety requirements of MGPS maintenance were substantially similar to those in a 500-bed hospital, and that the revised threshold broadened competition without removing the requirement for relevant experience.

The Court also accepted the manufacturer-authorisation condition in light of the respondents’ position that the specified manufacturers supplied much of the critical equipment, and relied on an earlier PGIMER case recognising the relevance of OEM authorisation.

The petitioners had no concluded contract or vested right, and the Court found no established mala fides, arbitrariness or preferential treatment warranting intervention.

It found no basis for judicial interference and dismissed the writ petition; pending civil miscellaneous applications, if any, were also disposed of.