Roche Diagnostics India Private Limited v. Delhi State Health Mission

(6) time which will be taken to deliver the goods or services; and often (7) the ability of the tenderer to take follow-up action, rectify defects or to give post-contract services. Even when the State or a public body enters into a commercial transaction, considerations which would prevail in its decision to award the contract to a given party would be the same. However, because the State or a public body or an agency of the State enters into such a contract, there could be, in a given case, an element of public law or public interest involved even in such a commercial transaction.” Michigan Rubber (supra):-

made by the authority is mala fide or intended to favour someone; or whether the process adopted or decision made is so arbitrary and irrational that the court can say: “the decision is such that no responsible authority acting reasonably and in accordance with relevant law could have reached”? and

(ii) Whether the public interest is affected?

13. Learned counsel stated that in the subject tender too, DSHM acted in its best interests as also in the interest of the public by awarding the contract to the respondent no.2 whose rates were found to be lower of the two. He candidly submitted that the overall difference in cost worked out only to Rs.50,000/which indicates that there is no substantial benefit that the State may have obtained by awarding the contract to the petitioner. He would also contend that the petitioner has neither challenged the capability nor other merits of respondent no.2 in terms of performance or equipment etc. In which case, according to him, it was the prerogative of the State to choose the best bidder. He contended that the price variation not being substantial, this Court would not interdict the tender process merely because the petitioner too could have offered the same services.

14. So far as the allegation of partisan or pre-determined decision to award the contract to respondent no.2 is concerned, he vehemently opposed the same. He would contend that the only issue canvassed by the petitioner is in respect of the GST payable and as to whether the rates quoted by respondent no.2 were or were not inclusive of GST. He had a very precise and concise reply to that. He contended that whether GST is payable or not or what were the binding terms of the subject tender are not predicated only on the details sought in Annexure 9 but Clause II of the tender. He stated that though in the said annexure details were sought from the bidder regarding prices of CPRT with and without GST, yet, the tender conditions governing the said issue in Clause II are crystal clear brooking no ambiguity. The same read thus:

“II. Taxes & Duties:i. xxx xxx xxx ii. The prices shall be inclusive of all taxes & duties leviable including GST and Entry tax etc. and the Purchaser shall not be liable for the same. iii. xxx xxx xxx iv. If any rates of tax are increased or decreased, a new tax is introduced, a existing tax is abolished, or any change in interpretation or application of any occurs in the course of the discharge of contract, which was or will be assessed on the bidder in connection with discharge of the contract, an equitable adjustment of the contract price shall be made to fully take into account any such change by addition to the contract price or deduction the reform as the case maybe.”

15. Referring to the aforesaid clauses, learned counsel contended that the intention of DSHM, i.e., the tender issuing authority, was unambiguous, in that the bidders were required to quote their prices inclusive of all taxes and levies including GST and simultaneously a demurrer in the nature of DSHM not being liable to such taxes, which would obviously include GST, was provided. In order to buttress the contention he also read clause (iv) to submit that the intention that DSHM would not be liable to offset or pay GST was made clear to the bidders irrespective of whether there is an increase or decrease in the tax component and that only equitable adjustment of the contract would be made. Thus, according to him, if the petitioner did not understand the terms of the tender, DSHM cannot be faulted.

16. That apart, learned counsel also referred to clause (xvi) of the General Conditions of Contract regarding Price Negotiation to submit that the DSHM had the right to negotiate the price further, if required, to enter into the rate contract with the L-1 bidder. Thus, it is not open to the petitioner to contend that DSHM could not have negotiated the CPRT offered by respondent no.2 to also include GST within Rs.945/-. According to him, assuming without admitting the contention of the petitioner on this score, keeping in mind Rs.945/- as exclusive of GST, nothing prevented DSHM from negotiating with respondent no.2 to include GST within that price. He contended that though this was not required, however, this aspect is being urged only to demonstrate the hollowness of the contention of the petitioner.

17. Primarily, Mr. Vashisht would contend that price to be quoted being inclusive of GST, the issue of CPRT being inclusive of GST or not as per Annexure 9, was not a mandatory consideration for DSHM, while finalising the tender process. In that, the price of petitioner even after seeking clarification was quoted as Rs.802/- + 18% GST = Rs.946.13 on its assumption that 18% GST was chargeable, while respondent no.2 in its clarification stated that no GST is payable and its quote still remains at Rs. 945/-. Though, DSHM received the reply of the GST department that GST is chargeable, yet, respondent no.2 having quoted a lower price, was found suitable and since it offered the Indemnity Bond to indemnify DSHM from levy of GST, DSHM found the price suitable and awarded the contract. According to him, the entire process was not only fair and transparent but also in alignment with the procedure prescribed in the tender.

18. Learned counsel further submitted that the allegation that there has been arbitrariness or perversity in the tender process is belied by the fact that there were four committees which were constituted for the purpose of evaluation of the bids, namely, a) pre bid clarification committee, b) prequalification bid evaluation committee, c) technical bid evaluation committee and d) price bid evaluation committee. He would contend that once the bid evaluation process was evaluated by four separate committees, the question of such process being arbitrary or perverse is ruled out. Thus, the contention without anything more, should be rejected.

19. By pointing out to the reply dated 27.02.2025 of the petitioner and dated 26.02.2025 of respondent no.2 in response to the clarification sought by DSHM vide the letter dated 25.02.2025, learned counsel contended that the openness and objectivity employed by DSHM is writ large. He would contend that in case any bias or partiality existed in favour of respondent no.2, there was no requirement for DSHM to call for any clarification from either of the parties. Moreover, according to him, DSHM also sought clarification from the department of GST vide letter dated 21.03.2025 which was responded to by the GST Department on 25.03.2025 informing that 18% indeed is chargeable. Since respondent no.2 had furnished an indemnity bond indemnifying the DSHM from the liability of payment of GST, by the letter dated 30.03.2025, respondent no.2 was awarded the contract. In support thereof he referred to Annexure R-15, which contains the file noting indicating the reasons as to why the department awarded the contract to respondent no.2. He thus submitted that the DSHM being the tendering authority, and also as a prudent business entity entering into commercial transactions, chose the best possible bid to suit its requirement keeping the paramount need of the public at large. He prays the petition be therefore dismissed.

CONTENTIONS OF RESPONDENT NO.2

20. Mr. Sandeep Chilana, learned counsel appearing for respondent no.2, at the outset contended that the present petition is based on a limited knowledge of the GST procedure and a misunderstanding of the same. While relying on notification no.12/2017 dated 28.06.2017, particularly entry at Sl. No. 74, he forcefully contended that the services offered to be provided by respondent no.2 squarely fell within the exemption of GST attracted to the said entry. He would contend that it was on that basis that respondent no.2 offered a CPRT of Rs. 945/-. According to him, the entire confusion arose purely on the basis of the petitioner’s misunderstanding of the applicability of GST to the services sought for by DSHM. He would contend that if the petitioner had understood the terms of the subject tender correctly, there would be no occasion for filing the present writ petition.

21. He fairly conceded that respondent no.2 had indeed furnished the indemnity bond, however, the same was furnished as an abundant precaution to save itself from any purported infraction of GST procedures as also that DSHM would not find fault with respondent no.2 on that count. He would contend that as to whether GST would have to be eventually paid by respondent no.2 or not is a question which may arise in future if the GST Department deems it fit. He also contended that respondent no.2, though is depositing the GST, would at a future date possibly seek refund of such amount inasmuch as according to respondent no.2 the same is otherwise not payable. All this has nothing to do with the petitioner or the present writ petition.

22. In order to buttress his contentions above, he relies upon the judgment of Hon’ble Supreme Court in Union of India and Ors. vs. Bharat Forge Ltd & Anr.: (2022) 17 SCC 188. The relevant paragraphs are extracted hereunder:- “40. It is clear that the GST, be it under the Central Act and the State Goods and Services Act, are indirect taxes imposed on the supply of goods and services or both. Except in a case falling under the reverse tax mechanism, it is the supplier of the goods and services, who would remain liable to pay the tax. The supplier is obliged to file the returns which includes monthly returns and annual return. He is to self-assess and pay the tax in accordance with the provisions. There is provision for provisional assessment of tax in Section 60. It becomes the duty of the taxing authority to assess and recover the tax due. No doubt, under the reverse tax mechanism, in regard to the specified transactions and persons covered thereunder, it would be the recipient of the goods and services or both, which would be liable to pay the tax due on the supply of goods or services or both, to it. Having borne in mind the above brief overview of the tax regime under the Central Act and the State Act, we may not proceed to consider the case in greater detail.

41. What is involved before the Court is not a direct challenge to the terms of the tender. The writ petitioner did not choose to challenge the terms of the NIT dated 9-4-2019 despite admitted understanding of the working of similar tender notification leading to some of the bidders showing the GST rate at 5% and even writing about it. The writ petitioner chose to participate in it and filed its bid, showing the tax rate at 18%. The entities, which were shown as entitled to rank as L-1 to L-3, have shown the tax GST liability as 5% on the product. It is thereafter that the writ petition was filed seeking the reliefs, we have already noticed.

42. The appellants stand in the shoes of a purchaser of goods and services. By the global tender floated by the appellants, the appellants called for e-tenders from intending suppliers of the goods. The terms of the tender were well-known to the tenderers. Under Clause 2.7.6, undoubtedly, the bidders and the tenderers, while quoting the rates, were to clearly indicate the rate of applicable duties and taxes included in the price quoted by them. Let us pause for a moment and analyse its true meaning. Under the said clause, the bidders were to quote the rate of applicable duties and taxes, which were included in the price quoted by them. This clause must be read in conjunction with Clause 2.8.6, which provides that the purchaser (appellants) will not be responsible for the payment of taxes and duties paid by the supplier, on the basis of the misclassification or a misapprehension of law. This would mean that the appellants as purchaser was making it clear that it will have no liability to shoulder, in the payment of tax if it is found that, while indicating the rate of applicable duty or tax by the tenderer, it has wrongly quoted a rate which is lower than the rate, which it was liable to pay in law. The quoting of the rate, in other words, by the tenderer, within the meaning of Clause 2.7.6, would bind the tenderer and he would not be heard to say that he had arrived at the rate and made the bid and which stood accepted, on the basis of misapprehension of law or misclassification. On the one hand, Clause 2.7.[6] gives the impression that all the bidders/tenderers should clearly indicate the rate of the applicable duty and tax in the price quoted by them.

43. We must however read it in conjunction with Clause 2.9.2. The said clause provides for a clear duty with the tenderer to acquaint themselves with all the applicable taxes and duties. It further provides that in a case, where the taxes and duties are not indicated explicitly in their offer, the same will be considered, which means, the offer will be considered as inclusive. The meaning of this clause can only be that while ordinarily the tenderer would and should include in the tender not only the base price but the taxes and the rate of tax and arrive at the global sum at which he is making the bid, Clause 2.9.[2] provides for the contingency of the tenderer not indicating about the applicable taxes and duties. In other words, he merely quotes a sum without specifically mentioning about the taxes and duties or the rates. This is pointed out by the learned ASG to contend that the fallacy committed by the High Court lies in it, not giving full meaning to the said clause.

44. We would understand that the working of the statutory variation clause would be as follows:

44.1. The successful tenderer must clearly indicate the rate of tax/duty in his offer. There must be a variation in the tax and duty, which takes place after the submission of the bid. There cannot be any claim for such statutory variation on account of misclassification by successful tenderer. If these conditions are met, then, the purchaser, under the statutory variation clause, would appear to undertake the liability, to pay to the successful tenderer, the differential tax or duty.

44.2. A perusal of Clause 2.7.7, which is the result of the first amendment would appear to indicate that for the tenders opening after roll out of GST, all the bidders, tenderers must ensure that they are GST compliant and their quoted tax structure/rates are as per the GST norms. This clause again must be read in conjunction with Clause 2.9.2, which makes it clear that a tenderer may quote a rate without including any tax component.

45. It is clear that the clauses read together will yield the following result, bearing in mind also the GST regime. The liability to pay tax under the GST regime is on the supplier. He must make inquires and make an informed decision as to what would be the relevant HSN Code applicable to the items and the rate of tax applicable. Thereafter, when he makes the bid, the issue of competition for winning the bid, would come into clear focus. The goal of the bidder ordinarily is to emerge successful and bag the contract. The extent of profit that he would earn, is a matter, which is essentially a matter to be decided by him. He may, for germane reasons, wish to bag a contract, with situations ranging from one extreme end of the spectrum viz. even when the prospect of a loss stares at him, or a slightly brighter outcome viz. the contract working on a break-even basis or moving on to an even more optimistic possibility, namely, of the contract earning him profit, which he is willing to take at a modest rate or a rate which he considers as reasonable in his understanding and circumstances. This is a matter to be left to the commercial expediency of the bidder. Now, when the matter is viewed from the perspective of the purchaser, the purchaser seeks to buy goods and services or both by awarding the contract to the lowest bidder. When the purchaser happens to be the State, it would be not fair or reasonable to not expect it to accept the bid of the lowest bidder unless it decides to not accept the bid of the lowest bidder for reasons which are fair and legal. No doubt, it is not the law that the Government is bound to accept the lowest bid. It is always open to the Government for relevant, valid and fair reasons, to not accept even the lowest bid. xxx xxx xxx

51. The argument of the writ petitioner, which has found favour with the High Court and reiterated before us by Shri Amar Dave, learned counsel for the writ petitioner is that since the tender conditions contemplate the adding of the tax to the base price for the purpose of arriving at the ranking, which, in turn, will determine, as to who will be the successful bidder, there is the unfair trade practice indulged in by some of the bidders to understate the rate of tax. There is an eminent need for the State (appellants) to indicate the HSN Code. Once it is indicated, it becomes a panacea, as it were, to the evil, which has been perceived and successfully pressed by the writ petitioner. Is that so? The answer to this question, has both legal and factual dimensions.

52. As far as the legal aspects are concerned, the fundamental question, we must pose is, whether there exists any public duty with the appellants to indicate the HSN Code when they float a public tender. Here the learned ASG is correct, when he points out that there is no statutory duty cast on the appellants to indicate the HSN Code in a tender of the kind we are concerned with. Proceeding on the basis that a public duty may emerge, not merely from a statute but in various other ways, which has been touched upon, in Andi Mukta [Andi Mukta Sadguru Shree Muktajee Vandas Swami Suvarna Jayanti Mahotsav Smarak Trust v. V.R. Rudani, (1989) 2 SCC 691] as also, in Mansukhlal [Mansukhlal Vithaldas Chauhan v. State of Gujarat, (1997) 7 SCC 622: 1997 SCC (Cri) 1120: 1997 SCC (L&S) 1784] and even on an expansive exploration, does such a duty flow from any other legitimate source?”

REJOINDER ON BEHALF OF PETITIONER:-

23. Mr. Rao, learned senior counsel, in rejoinder, while inviting attention to para 19 of the para-wise reply of the counter affidavit of respondent no.2 submitted that the respondent no.2 has now changed its stand from what it had originally stated in the tender document. In that, originally in Annexure 9 of the tender document, the respondent no.2 had indicated the CPRT of Rs.945/without any GST, while in para 19, respondent no.2 has twisted the facts to now say that Rs.945/- is inclusive of GST and the original price of CPRT quoted ought to be reckoned at Rs.800.85/-. He vehemently contended that this would amount to alteration of its original bid and consequentially the award of contract dated 30.03.2025 indicating the price at Rs.945/- inclusive of GST, is a material variation of the tender terms and cannot be allowed. If that be so, according to learned senior counsel, both DSHM as well as respondent no.2 had violated the mandatory conditions and resultantly the award of contract dated 30.03.2025 ought to be quashed and set aside. Resultantly, the petitioner ought to be awarded the contract.

ANALYSIS & CONCLUSIONS:-

24. We have heard Mr. Rao, learned senior counsel for the petitioner, Mr. Sameer Vashisht, Standing Counsel for DSHM and Mr. Mr. Sandeep Chilana, learned counsel for respondent no.2, perused the records including the tender document.

25. According to us, from the arguments addressed, the moot question to be considered in the present case is as to whether GST is applicable for the services sought by DSHM and as to whether DSHM had infracted or violated any condition of the subject tender by awarding the contract to respondent no.2 ignoring the mandate provided in Annexure 9 read with Clause 6 and the “Method of Tender Evaluation and Price Comparison” of the tender document.

26. So far as the issue regarding applicability or otherwise of GST is concerned, that may strictly not be within the zone of consideration so far as the factual matrix of the present case is concerned. The applicability or otherwise of GST to the present tender conditions, in our opinion, has been clarified beyond doubt by the GST department itself vide the letter dated 25.03.2025 which is extracted hereunder:- “GOVERNMENT OF NCT OF DELHI DEPARTMENT OF TRADE AND TAXES POLICY & RESEARCH BRANCH, VYAPAR BHAWAN, IP ESTATE NEW DELHI – 110002 No.F.3(620)/P&R/DST/2025/ Dated: 25.05.2025 To The Special Secretary (H&FW)& MD(DSHM), GNCTD Health & Family Welfare Department, Govt. of NCT of Delhi, Room No.902, 9th level, A-Wing, Delhi Sectt, I.P. Estate, New Delhi – 110002. Sub.: Clarification w.r.t. applicability of GST. Respected Sir, With reference to your office Letter No.SSHFW1/235 dated 21st March, 2025 on the above cited subject, I am directed to inform that in terms of Notification No.11/2017 (Central Tax Rate) dated 28.06.2017, 18% GST is chargeable on Human Health & Social Care Services Yours faithfully, sd/- (Anita Kumari) GSTO (P&R)” Since a pointed query was sent to the GST Department by DSHM, it is apparent that the response thereto by the said department puts the controversy beyond the pale of doubt. In that, 18% GST is indeed chargeable on Human Health and Social Care Services. Undoubtedly, the services sought by DSHM and offered by both the petitioner as also the respondent no.2 are squarely covered under the “Human Health and Social Care Services” on which 18% GST appears to be chargeable. In that context, so far as the Notification No.12/2017 – Central Tax (Rate) dated 28.06.2017 issued by the Department of Revenue, Ministry of Finance and relied upon by the respondent no.2 is concerned, having regard to the latest clarification tendered by the GST Department itself affirming 18% GST chargeable on the services sought, we are impelled to rely on the said clarification being “contemporanea expositio”. Moreover, we are not called upon to decide the correctness of the Notification or the clarificatory letter issued by the same department. Ergo, the issue as to whether the 18% GST is chargeable or not is answered in the affirmative. That said, we now need to consider as to whether for the purposes of selecting the L-1 bidder, the CPRT without GST is essential or whether price with GST inclusive would be relevant.

27. Having reached the aforesaid conclusion, so far as the 1st issue is concerned, we would now advert to the 2nd issue as to whether the DSHM has award the contract to respondent no.2 vide letter dated 30.03.2025 without violating the terms of the subject tender.

28. Great emphasis was laid by the petitioner upon the details to be indicated and entered in Annexure 9 of the tender document which according to it, was mandatory. In order to appreciate the said contention, it would be apposite to extract the same hereunder: “ANNEXURE-9 PRICE BID Tender’s Name-Entering into Rate Contract for Providing NAT Testing Facility (ID-NAT) on turnkey/reagent rental basis for 02 sites (1 for LNH & 1 for DU). Qty.:-As and when required during Rate Contract period (Bidders should quote “destination price” i.e. at consignee(s), New Delhi inclusive of all statutory taxes i.e. GST, Insurance, forwarding charges, packaging and handling charges, third party expenses and all other charges etc. in the prescribed format only.) S.No. Description of Tests Appropriate Number of tests to be conducted during the initial 1 year Rate Per reportable test (without GST) in Rs %GST Final reportable test (including GST) in Rs. Total amount during contract (including GST) A B C D E F G=C x F 1 NAT Testing Reportable Test (CPRT) Note: L[1] bidder will be selected on the basis of grand total of price quoted in column G.”

29. A perusal of the said Annexure makes it clear that what was required from the bidders was CPRT, firstly without GST in Column ‘D’, followed by the percentage of GST if applicable in Column ‘E’, thereafter the final rate of CPRT inclusive of GST in Column ‘F’ and the total amount during contract inclusive of GST in Column ‘G’. The total amount in Column ‘G’ was to be arrived at after multiplying the approximate number of tests i.e. 38,000 in column ‘C’ with the final rate of CPRT inclusive of GST in Column ‘F’.

30. At the stage of notification of the tender document, it appears that the DSHM was not aware as to the extent to which GST would be chargeable on such services as sought. It is only subsequently when it had two bidders, i.e., the petitioner quoting its CPRT with and without GST while respondent no.2 quoted its price indicating that no GST is chargeable at all, that the conundrum arose. Both parties were completely at variance with each other in so far as chargeability of GST is concerned. On the one hand, petitioner was of the opinion that 18% GST is chargeable on such services while respondent no.2, relying upon the Notification No.12/2017 – Central Tax (Rate) dated 28/6/2017 was clearly of the opinion that no GST is applicable at all for the same services. It was this controversy which led the DSHM to seek clarification from the GST Department. As observed above, by the letter dated 25.03.2025, the GST Department clarified that for the services sought under the tender document, 18% GST was chargeable.

31. In the above backdrop, we have to consider what were the options available to DSHM to take an informed decision. In that context, it would be significant to consider the relevant clauses of the tender document. Sub-clauses (ii) & (iv) of Clause II of tender document are extracted hereunder:

“II. Taxes & Duties:i. xxx xxx xxx ii. The prices shall be inclusive of all taxes & duties leviable including GST and Entry tax etc. and the Purchaser shall not be liable for the same. iii. xxx xxx xxx iv. If any rates of tax are increased or decreased, a new tax is introduced, a existing tax is abolished, or any change in interpretation or application of any occurs in the course of the discharge of contract, which was or will be assessed on the bidder in connection with discharge of the contract, an equitable adjustment of the contract price shall be made to fully take into account any such change by addition to the contract price or deduction the reform as the case maybe.”

32. A perusal of clauses (i) to (iv) clarifies the intention of the DSHM while authoring the tender conditions. In that, (1) as per clause (ii) the prices were to be inclusive of all taxes and duties leviable including the GST and the purchaser i.e. the DSHM was not to be made liable for the same; and (2) as per clause (iv) if there is any increase or decrease in rate of taxes etc., during the period of execution of the contract, an equitable adjustment of the contract price is to be taken as per the situation.

33. Eloquent arguments were addressed on behalf of the petitioner to convince us that details entered in Annexure 9 of the tender document were not only mandatory, but also that the final decision thereof, on the financial bid, was to be fairly evaluated on the prices quoted therein. For that purpose, learned senior counsel had drawn attention to the Clause (vi) of the tender document and the clause respecting “Method of Tender Evaluation and Price Comparison” mentioned in the said document. According to learned senior counsel the price per unit i.e. CPRT was the deciding factor so far as the financial bids were concerned and GST was to be added thereon only for the purpose of reckoning the final cost of the tender. He laid great emphasis on the aspect that neither clause (vi) nor “Method of Tender Evaluation and Price Comparison” referred to any tax muchless any reference to GST at all. In his opinion, the financial evaluation ought to have been considered only on CPRT in which case had DSHM followed the correct procedure, petitioner which had quoted Rs.802/would have been far lower than respondent no.2 which quoted Rs.945/-. The petitioner was held ineligible only for the reason that the final rate in column ‘G’ so far as petitioner is concerned, per CPRT inclusive of GST would be Rs.946.13. As against this, he contended that, if GST is made applicable to the rate quoted by respondent no.2 then the final rate of respondent no.2 would be Rs.945 + 18% GST, which would be way above the petitioner’s quote inclusive of GST at Rs.946.13. In such situation, awarding contract to the respondent no.2 is in violation of the tender conditions so specified in Annexure 9.

34. Though the aforesaid argument of the petitioner appears to be attractive at the first blush, however, on a closer examination of the tender conditions particularly sub clauses (ii) and (iv) of Clause II of the tender document, it would not be sustainable so far as DSHM is concerned. This is for the reason that though Annexure 9 definitely requires the bidders to give CPRT with and without GST, yet the final rate is reckoned inclusive of GST. Sub Clause (ii) has to be given its plain and natural reading and therefore, the DSHM is to consider a price inclusive of all taxes with no corresponding liability upon itself to set off or reimburse the same to any successful bidder. If the said sub clause (ii) is not read in the above manner, the same would be rendered otiose and nugatory. This surely cannot be the manner in which a particular term or a condition of a contract can be interpreted. It is trite that the tender conditions or conditions of any particular document have to be read harmoniously so as to further the cause or benefit arising to a party in the said document. In the present case clearly the DSHM is not only the tendering authority but also is entering into a commercial transaction with private entities and would be at liberty to choose what is best to suit its requirement. The fact that sub clause (ii) of Clause II has been engrafted in the tender document itself would suffice the proposition that DSHM could consider the prices quoted by respondent no.2 as inclusive of GST.

35. In all probability it appears that the indemnity bond was asked to be furnished by respondent no.2 in the above context. Thus, the argument that the financial bid in the subject tender ought to have been considered only on the basis of CPRT, though may be a relevant consideration, yet the overriding power of the DSHM to consider the prices inclusive of GST and requiring a bidder to furnish an indemnity bond in that context cannot be said to be a perverse or an arbitrary exercise. In that view of the matter, we are of the considered opinion that the award of contract to respondent no.2 by DSHM considering the same as inclusive of GST @ 18% may not be amenable to interference or interdiction.

36. Having observed as above, yet we find a disturbing feature in the tender process. Annexure 9 is undoubtedly a relevant part of the tender document. As a corollary it is obvious that all the fields which were required to be entered in Annexure 9 would also be a relevant consideration. It is also not disputed that respondent no.2 did not specify as to whether its quote of Rs. 945/- was or was not inclusive of GST as required in Annexure 9. Though, respondent no.2 contended that according to it GST was not chargeable, the same is belied by the letter dated 25.03.2025 of the GST Department which in no uncertain terms clarified that 18% GST is chargeable on Human Health and Social Care Services. If that be so, when the DSHM was in receipt of such information, it was incumbent upon it to call both the parties for further clarification or negotiations before finalising the award of contract. This provision of price negotiation is provided in the tender document at sub clause (xvi) of Clause IV of the General Terms and Conditions of the subject tender. The same is extracted hereunder: “xvi Price Negotiation:- In exceptional circumstances negotiations can be undertaken but only with the prior approval of the Competent Authority, e.g., where there is no competition or where there is shortage of capacity or where the items/ stores required are known to be manufactured only by two or three firms. Such negotiations shall be conducted by Committee consisting of representatives of Indenter, Purchase, Finance and such other members Competent Authority may like to nominate. The lowest quoted technically qualified bidder/ bidders will be considered as L[1] and called for negotiation, if required, to enter into the rate contract.”

37. Though the provision appears to be in respect of L-1 bidders, in such peculiar and exceptional circumstances as have occurred in the present case, due diligence and care on the part of the officials of DSHM ought to have been taken. Fairness and transparency in the process and procedure involved in tenders and that too while evaluation by a State or its authority, are the minimum basic and paramount underlying principles not only expected from such public authorities, but are binding. When such expectations are not met by public authorities, it ordinarily brings disrepute to the tender procedure. Due care ought to be taken to avoid such affliction.

38. A controversy was also brought forth by the petitioner by referring to the order dated 09.04.2025, wherein it was noted that a written statement was tendered on behalf of DSHM that respondent no.2 had already commenced its operations in both the hospitals, namely, Lok Nayak Hospital, Delhi and Deen Dayal Hospital, Delhi on and from 30.03.2025, whereas in the counter affidavit of respondent no.2 it was candidly admitted that so far as Lok Nayak Hospital is concerned the NAT equipment was installed on 29.04.2025 and services commenced from 30.04.2025. We are appalled and disturbed to note that such incorrect instructions were furnished to the learned counsel for DSHM which tend to interfere with the fair appreciation of the facts. We deprecate such practices. Keeping in view the seriousness in such matters, we would have issued notices of contempt to such officers yet we limit ourselves to admonishment of such behaviour. The incorrect instructions clearly fall within the doctrine “suppressio veri suggestio falsi”. We choose to leave it at that.

39. We have been informed that services sought under the tender are being executed by respondent no.2 since April 2025 and the award of contract is for a period of 1 year and would be over in March-April 2026. Having regard thereto, we are not interdicting the tender or the contract issued in favour of respondent no.2 at this belated stage lest it may cause significant disruptions to the services being offered and would surely disturb the public services, which are paramount to any tender.

40. So far as the judgements of the Hon’ble Supreme Court in Raunaq International (supra) and Michigan Rubber (supra) are concerned, there is no quarrel with the ratio laid down. However, fairness, transparency and impartiality are the underlying principles which need to be adopted. It is not only to be done but also seen to be applied. It has been observed consistently by the Hon’ble Supreme Court in several judgments that the Court may interfere in an administrative decision, if and only if the same is arbitrary, irrational, unreasonable, mala fide or biased. (See: Tata Cellular vs. Union of India: (1994) 6 SCC 651 and Subodh Kumar Singh Rathore vs. Chief Executive Officers & Ors.: 2024 SCC OnLine SC 1682). Thus, the exercise of powers of judicial review, though circumscribed, are not completely prohibited.

41. So far as the judgement Bharat Forge (supra) relied upon by respondent no.2 is concerned, the Hon’ble Supreme Court has held that it is not the law that the Government is bound to accept the lowest bid. It is always open to the government for relevant, valid and fair reasons, to not accept even the lowest bid. The Hon’ble Supreme Court insofar as the issue regarding the appellant (State) therein having failed to indicate the HSN Code is concerned, held that there is no statutory duty cast on the appellants to indicate the HSN Code in a tender since, the appellant (State) therein, can protect its best interest as a player in the commercial field. The same has been applied here too.

42. In view of the above, the writ petition is dismissed with pending applications if any, without any order as to costs.

TUSHAR RAO GEDELA (JUDGE)

DEVENDRA KUMAR UPADHYAYA (CHIEF JUSTICE) NOVEMBER 26, 2025/rl/yrj