'Life-Saving Medical Device': Jharkhand HC Emphasizes Quality Over Price In Tender For Defibrillators, Says Pricing Can't Be Sole Criterion For Successful Bid

In a recent ruling, the Jharkhand High Court dismissed a writ petition filed by Hosco Pvt. Ltd. while firmly emphasizing that price alone cannot be the determining factor in awarding a contract. Furthermore, it was ruled that a tenderer lacking technical qualifications does not have standing to challenge the tender process.

The Court also held that judgments made by expert committees must not be subject to scrutiny by courts and in cases involving tenders, the focus should solely be on the decision-making process rather than the perceived validity of the decision itself.

A division bench comprising Justices Rongon Mukhopadhyay and Deepak Roshan observed, “The Expert Committee had based its findings on presentation and evidence produced by the Bidders and since the Committee comprise of persons having expertise in the field which has been accepted by the respondent no. 1 and such observations by the Committee cannot be interfered with more so when appropriate reasons have been furnished by the Committee while coming to a conclusion regarding the eligibility/ineligibility of the Bidders. This Court cannot substitute its own view on the observation of the Expert Committee.”

The bench asserted, “Mere pricing of a product cannot be the sole criteria for declaring a Bidder successful as quality of the product, while meeting the specifications as per the Tender Documents would be the predominant features governing such selection.”

Hosco Pvt. Ltd., the petitioner, is a company established under the Companies Act, 1956. The primary respondent, Jharkhand Medical & Health Infrastructure Development & Procurement Corporation Ltd., is a governmental body in Jharkhand. The corporation issued a tender seeking bids for the supply of PICU equipment.

It was stated that Hosco Pvt. Ltd. submitted a bid specifically for supplying Defibrillators. Subsequently, the second respondent invited three bidders, including the petitioner, for a demonstration of their proposed products before an Expert Committee to verify technical specifications. During this demonstration, Hosco Pvt. Ltd. showcased the 'Mediana Defibrillator D700,' while another bidder, respondent no. 3, presented the 'Zoll Defibrillator R-series.'

It was argued that during the demonstration, Hosco Pvt. Ltd. raised concerns about respondent no. 3's Defibrillator not meeting technical specifications. Consequently, another demonstration was arranged, during which Hosco Pvt. Ltd. demonstrated the capabilities of the Defibrillator it intended to supply.

Despite these efforts, it was argued that Hosco Pvt. Ltd.'s bid was rejected, and respondent no. 3's technical bid was accepted. Initially, Hosco Pvt. Ltd. filed a writ petition challenging this decision but later withdrew it upon assurance that authorities would reevaluate the rejection of their technical bid.

Subsequently, Hosco Pvt. Ltd. received a notice from the respondent authorities containing excerpts of the decision made by the Tender Committee. Dissatisfied, the petitioner filed a writ petition, seeking redress.

The petitioner prayed for the issuance of a directive to nullify the decision made by the Tender Committee. It was stated that this prayer specifically pertained to the arbitrary rejection of the Petitioner's Technical Bid for the supply of Defibrillators, allegedly done to favor Respondent No. 3 – M/s. Kailash Surgical Pvt. Ltd. despite the fact that Respondent No. 3's bid did not meet the technical specifications as outlined in the tender. The petitioner alleged bias in their favor.

Additionally, the petitioner sought a directive to annul the decision of the Tender Committee, particularly in declaring Respondent No. 3 as technically qualified for the supply of Defibrillators, despite their bid not adhering to the tender specifications. It was highlighted that the Defibrillator intended for supply by Respondent No. 3, belonging to Zoll Medical Corporation, U.S.A., does not possess a Reusable CPR Feedback Sensor, a crucial requirement specified in the tender.

Contentions of the Petitioner

The petitioner contended that they have met all necessary criteria and that their proposed supply of defibrillators surpasses that of respondent no. 3 in technical superiority.

Additionally, it was argued that respondent no. 3 has quoted an exorbitant price for the defibrillators intended for supply. With a requirement of 118 units, the price difference between the petitioner and respondent no. 3's quotes amounts to Rs. 14,20,56,466/-.

Furthermore, the petitioner asserted that the decision of the tender committee should be overturned due to the evident unreasonableness and arbitrariness in the entire process conducted by the Corporation.

Contentions of the Respondent

The Respondent contended that the Petitioner failed to disclose crucial information regarding a corrigendum mandating the integration of chest compression rate and depth feedback facility with the Defibrillators. This requirement was absent from the Tender Clause Description. Consequently, the defibrillators proposed by the Petitioner were deemed ineligible.

Moreover, it was argued that considering the corrigendum's stipulation, the Defibrillators offered by the Petitioner were disqualified. The Respondent emphasized the superiority of their proposed Defibrillators, supported by the expert committee's decision. These Defibrillators boast advanced features, including compatibility with neonatal and paediatric patients and cutting-edge technology, justifying their higher price compared to the Mediana D700 Defibrillator demonstrated by the Petitioner, it was stated.

Observations of the court

The Court emphasized the critical role of a Defibrillator as a life-saving medical device, noting its ability to restore normal heart rhythm in cases of arrhythmia or ventricular abnormalities through electric shock.

Referring to the case of "Vinod Kumar Jain and Others" (2022), the Court underscored the limited scope of judicial review in contractual matters, emphasizing intervention only when the decision-making process is flawed, arbitrary, or unreasonable.

Citing "Silppi Constructions Contractors versus Union of India and Another" (2020) the Court highlighted, "Expert Committee had evaluated the features of Mediana defibrillator and Zoll R-series defibrillator and based on sound reasonings qua the specifications mentioned in the Tender Document and the corrigendum dated 18.08.2023 disqualified the Bid of the petitioner on technical grounds."

Accordingly, the court dismissed the petitioner's arguments, noting the absence of arbitrariness or unreasonableness in the respondent corporation's decision-making process. It concluded that the decision was in line with the tender conditions and corrigendum, supported by sound reasoning.

Appearance:

For the Petitioner : M/s. Sumeet Gadodia, Shilpi, Sandil Gadodia, Shruti Shekhar,

Nillohit Choubey, Ritesh Kumar, Gupta, Advocates

For the Resp. Nos. 1 & 2. : Mr. Piyush Chitresh, A.C to A.G.

For the Resp. No. 3 : Mr. M.S. Mittal, Sr. Advocate, Mr. Salona Mittal, Ms. Ishika Tulsyan, Mrs. Lavanya Gadodia Mittal, Advocates

Case No.: W.P.(C) No. 518 of 2024

Case Title: Hosco Pvt. Ltd. vs Jharkhand Medical & Health Infrastructure Development & Procurement Corporation Ltd and Ors

LL Citation: 2024 LiveLaw (Jha) 41

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