Mere Initiation Of Tender Process For Subsequent Period Not Interference With Subsisting Contractual Rights If Existing Contracts Can Run Full Course: Delhi High Court
The Delhi High Court was considering the Petitions whereby two empanelled chemists sought the quashing of a Tender
While dismissing the petitions filed by two empanelled chemists, the Delhi High Court has held that the mere initiation of a tender process for a subsequent period does not, in itself, amount to an interference with, or curtailment of, subsisting contractual rights, so long as the existing contracts are permitted to run their full course in accordance with their terms.
The High Court was considering the Petitions whereby the existing empanelled chemists who were the successful bidders sought quashing of the Impugned Tender issued by the second respondent- Central Government Health Scheme (CGHS) through the Government eMarketplace (GeM) portal.
The Division Bench of Justice Anil Kshetarpal and Justice Amit Mahajan held, “The mere initiation of a tender process for a subsequent period does not, in itself, amount to an interference with, or curtailment of, subsisting contractual rights, so long as the existing contracts are permitted to run their full course in accordance with their terms. Unless it is demonstrated that the Respondents have taken steps to prematurely terminate, truncate or otherwise alter the subsisting contracts in breach of their stipulations, no actionable infringement of a legal right can be said to arise.”
Senior Advocate Samrat Nigam represented the Petitioner while Central Govt. Standing Counsel Nishant Gautam represented the Respondent.
Factual Background
An E-tender was floated for the empanelment of authorised local chemists for the supply/procurement of indented drugs and medicines for CGHS Wellness Centres in Delhi for the Financial Years 2023-2026. The said tender envisaged the selection of bidders on the basis of the highest uniform discount offered on the Maximum Retail Price (MRP) of medicines. Pursuant to the aforesaid tender, the Petitioners participated in the bidding process and were declared successful bidders for certain Wellness Centres in different zones. Consequent upon their selection, the Petitioners were empanelled as authorised local chemists for the respective centres. The Petitioners in both the Writ Petitions had been supplying medicines under the aforesaid empanelments.
While the aforesaid contracts were in operation, the second Respondent issued the Impugned Tender through the GeM portal for empanelment of local chemists for supply/procurement of indented drugs and medicines for CGHS Wellness Centres in Delhi for the Financial Years 2026-2028. The Impugned Tender contemplated a fresh process of empanelment for the forthcoming period and invited bids in respect of various Wellness Centres, including certain centres where the Petitioners were presently operating under their existing contracts. The Impugned Tender was issued pursuant to a revised procurement framework under the CGHS Drug Procurement Policy, 2026, read with the Standard Operating Procedure for supply of branded medicines and surgical consumables. The Impugned Tender formed part of a modified policy framework governing procurement.
Reasoning
The Bench reaffirmed that the State, even in contractual dealings, is bound by the mandate of Article 14 of the Constitution and must act in a fair, transparent and non-arbitrary manner. “However, this requirement does not denude the State of its authority to frame or revise policies, restructure procurement mechanisms, or initiate tender processes in a manner it deems appropriate to serve public interest”, it stated while also adding, “Thus, unless the impugned action is demonstrated to be manifestly arbitrary, actuated by mala fides, or in clear violation of law, this Court would be slow in interfering with a tender process, particularly at a pre-award stage.”
Considering that the initiation of the impugned Tender coulnot be viewed as an isolated or arbitrary act, but as a step taken in furtherance of a revised policy framework governing public procurement in the CGHS system, the Bench mentioned, “The State is entitled, within the bounds of law, to modify its procurement.”
“It is well-settled that no bidder or contractor has a vested right in the continuance of a particular policy regime. The mere fact that earlier tenders operated under a different framework does not preclude the Respondents from introducing a revised policy and initiating steps for its implementation. No vested right accrues in favour of a bidder in matters of future government contracts”, it added.
The Bench was of the view that the initiation of the Impugned Tender for the Financial Years 2026-2028, even during the subsistence of certain existing contracts, couldnot by itself, be held to be arbitrary or legally impermissible. The Bench also clarified, “It is equally well-settled that no contractor has a vested right in the continuance of a particular policy. The State is entitled to modify its procurement policies in public interest, and such policy decisions cannot ordinarily be interdicted unless shown to be arbitrary or unconstitutional.”
The Bench further held that the Petitioners had failed to establish any violation of the doctrine of legitimate expectation or infringement of their rights under Articles 14 or 19(1)(g) of the Constitution. Thus, finding no ground warranting interference in exercise of jurisdiction under Article 226 of the Constitution, the Bench dismissed the Petition.
Cause Title: M/s Kaushik Medical Store v. Union of India (Neutral Citation: 2026:DHC:3263-DB)
Appearance
Petitioner: Senior Advocate Samrat Nigam, Advocates Kunal Mittal, Arpita Rawat, Shiv Dutt Kaushik
Respondent: Central Govt. Standing Counsel Nishant Gautam ,Advocates Kavya Shukla, Vineet Negi,Vibhav V. Nath,Theresa