A Real Example Of Arbitrariness, Bias & Favouritism: Jammu & Kashmir & Ladakh High Court Sets Aside Rate Contracts In Favour Of Johnson & Johnson, S.R. Technomed

The Jammu and Kashmir and Ladakh High Court has set aside the rate contracts in favour of M/S Johnson and Johnson Pvt. Ltd. and M/S S.R. Technomed (Medtronic Inc. USA).

The Court was hearing a Writ Petition filed by Healthium Medtech Ltd., seeking to quash the Tender Summary Reports issued by the Jammu and Kashmir Medical Supplies Corporation Limited (JKMSCL) to the extent that it rejected the technical bid in response to the Notice Inviting Bid.

A Single Bench of Justice Moksha Khajuria Kazmi remarked, “This Court is mindful of the fact that it is not supposed to delve into every new detail, but the instant case is a real example of arbitrariness, bias, and favouritism on the part of respondents no.2 to 4 as well as the technical committee towards respondents no. 5 &6. The petitioner has challenged the decision of the committee and has stated in para no.12 of the petition that committee is biased and its decision reflects mala fide intentions. It is pertinent to note that the rate contracts were issued in favour of the respondents no.5&6 after the filing of the present writ petition, but till date, no purchase order has been placed. If the decision of the Technical Committee is found to be arbitrary, then all the consequential decisions, including the LOIs and Rate Contracts issued in favour of respondents No. 5 and 6 are also to be held unsustainable in law.”

The Bench reiterated that judicial review applies to examine the decision-making process for any signs of arbitrariness or favouritism.

Senior Advocate Rahul Pant appeared for the Petitioner while AAG Raman Sharma, Senior Advocates Pranav Kohli, and C.M. Koul appeared for the Respondents.

Case Background

The Petitioner sought a Writ of Certiorari quashing the Tender Summary Reports issued by the JKMSCL and quashing the communication-cum-Minutes of Meeting to the extent that JKMSCL has approval of the opening of financial bids of only Johnson and Johnson and S.R. Technomed. The Petitioner was a leading independent medical device company in India, particularly in the field of surgical consumables, and gained significant credentials to its name. It participated in numerous tender process and successfully executed various rate contracts across several States. It operates a state-of the-art manufacturing facilities in Karnataka, equipped with cutting-edge technology, capable of producing and supplying high-quality suture materials. It was awarded various rate contracts and supply orders by the reputed hospitals.

The JKMSCL, a nodal agency responsible for the procurement, supply, and distribution of drugs, medicines, medical equipment, surgical and suture items to all Government health institutions, had issued a notice inviting tender for procurement of suture materials. The tender invited e-bids from original manufacturers, direct importers, and SSI units of Jammu and Kashmir for supply of various categories of suture materials. It was alleged that Johnson and Johnson was approved for opening of financial bid for supply of Group A-II (surgical gut/synthetic polyglytone sutures), when it did not even submit its technical bid for the said category. Similarly, S.R. Technomed was approved for opening of financial bid for supply of Group C, Haemostatic Materials, when it also did not submit the bid for the said category.

Reasoning

The High Court in the above context of the case, noted, “… while the Government has the freedom of contract, such freedom must not be exercised with malafide intentions or bias, and that actions of the Government must reflect application of mind, keeping in view public interest and rights of the parties. Any deviation reflects arbitrariness and non-transparency.”

The Court said that the Respondents neither followed the bid document conditions, nor the Technical Committee was constituted, strictly in accordance with rules.

“The reasons assigned by the Technical Evaluation Committee are primarily based on the past performance of respondent No.5, who is being allotted contracts from last more than three decades. Respondent No.6, S.R Technomed, has also continued to receive contracts despite having lost litigation in the year 2010. Since the inception of JKMSCL, respondent no.6 has been suitably accommodated on the same reasoning i.e continued use of their products by medical experts without any independent evaluation as to why their products have been preferred over others”, it added.

The Court further observed that the Petitioner and nine other bidders who were shortlisted by the subcommittee have not even been assessed by the Technical Evaluation Committee.

“After 2010, it is for the first time some bidder has challenged the monopoly of respondents no.5 & 6. The credentials of the petitioner company clearly highlights the competency and durability of its suture materials on the basis of the contracts which have been allotted to the petitioner company in the various States in the country, but respondents No. 2 to 4 as well as the Technical Evaluation Committee has blindly accepted the bid of the respondents no 5 &6 with the same reasoning, which they are providing from the last so many years without even calling for the samples of the other bidders”, it also said.

The Court was of the view that the validity of rate contract, as per the bid document, is for a period of two years from the date of issuance of the letter of Intent and may be extended for further 90 days with mutual consent of JKMSCL and the firms.

The Court, therefore, ordered 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.

Accordingly, the High Court disposed of the Petition.

Cause Title- Healthium Medtech Ltd. v. UT of Jammu and Kashmir and others (Case Number: WP(C) No. 2808/2024)

Appearance:

Petitioner: Senior Advocate Rahul Pant, Advocates Varut Kumar Gupta, Savita Sarna, Anisha Mathur, Umar Javed, Rajeev Chargotra, Mubasher Manhas, and Druv Pant.

Respondents: AAG Raman Sharma, Senior Advocates Pranav Kohli, C.M. Koul, Advocates Ashwin Sapra, Avantika Sharma, Amjid Maqbool, Farhan Mirza, Pratyaksh Deoria, and A.R. Bhat.

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