J&K High Court Quashes Arbitrary Tender Awards in Healthium Medtech Case

In a significant ruling examining irregularities in public procurement, the High Court of Jammu and Kashmir and Ladakh, in the case of Healthium Medtech Ltd. vs. UT of Jammu and Kashmir and others (2025 SCC OnLine J&K 559), dated June 2, 2025, has set aside the rate contracts awarded by the Jammu and Kashmir Medical Supplies Corporation Limited (JKMSCL) for the supply of suture materials, citing ‘clear arbitrariness, procedural violations, and institutional favoritism.’ The court found that the evaluation and selection process did not adhere to the terms of the tender or applicable procurement procedures, thereby necessitating judicial intervention.

The writ petition, filed by the petitioner, Healthium Medtech Ltd., challenged the rejection of its technical bid for the procurement of suture materials for supply to various government health institutions across the Union Territory of Jammu and Kashmir. The petitioner alleged that despite meeting all eligibility and technical criteria, its bid was arbitrarily excluded from consideration. It further contended that respondent 2, JKMSCL, approved only select bidders for the opening of financial bids, including categories that they had not even bid for, while ignoring the petitioner and nine other shortlisted bidders without evaluation or reason. The petitioner also alleged that the Technical Evaluation Committee (TEC) was improperly constituted, failed to call for or assess samples as required under Clauses 15 and 16 of the bid document, and relied solely on past usage preferences of the selected vendors, thereby perpetuating a 30-year pattern of favouritism and exclusion of other qualified manufacturers.

In a detailed examination of procedural irregularities, the court concluded that the actions of respondents 2 to 4 and the Technical Evaluation Committee (TEC) constituted a fundamental subversion of the tender process. The court noted that the repeated extension of the bid timeline strongly suggested an intent to favour certain bidders. It further held that the TEC was improperly constituted, in contravention of the applicable guidelines, and therefore lacked legal validity. The technical evaluation process was found to be arbitrary and non-compliant with the prescribed norms, with no proper assessment of bidders’ submissions conducted at the appropriate stage. Instead of objective evaluation criteria, the TEC relied on subjective and vague considerations such as ‘past performance’ and ‘user familiarity’, which the Court found indicative of bias. Additionally, a subsequent sample collection exercise conducted after the rejection of technical bids and post the opening of financial bids was a mere formality that lacked any substantive value, as no expert review or end-user feedback was ever obtained. The court also found a clear breach of transparency requirements under the Standard Procurement Procedure, as objections raised by bidders and the relevant meeting minutes were not published as mandated.

The Court emphasized that while the State retains the freedom to contract, such discretion must be exercised in a fair, non-arbitrary manner, in consonance with Article 14 of the Indian Constitution, 1950. It was further noted that the petitioner’s credentials were impeccable and that its quoted financial bid, opened before the court, was significantly more competitive than those accepted by JKMSCL. The court concluded that the TEC’s reliance on generic reasoning and refusal to assess eligible bidders’ submissions reflected a closed, biased approach designed to maintain the status quo.

Accordingly, the court directed respondents 2 to 4 to immediately initiate a fresh tender process. Until such time that the new process is concluded, the respondents may undertake interim procurement through transparent and lawful means to meet the current shortage of suture materials.

This decision marks a crucial reaffirmation of constitutional principles in public procurement, asserting that procedural fairness, transparency, and equal opportunity cannot be sacrificed at the altar of administrative convenience or legacy vendor preferences.