PGIMER Tender Cancellation: Punjab and Haryana High Court Upholds Revised Eligibility Criteria and Dismisses Contractors’ Petition

Introduction

The Punjab and Haryana High Court has dismissed a petition challenging the cancellation of an earlier tender and issuance of a fresh tender by the Post Graduate Institute of Medical Education and Research (PGIMER), Chandigarh, for the repair and maintenance of its Medical Gas Pipeline System (MGPS).

A Division Bench comprising Justice Suvir Sehgal and Justice Rajesh Gaur upheld the revised eligibility conditions introduced by PGIMER, observing that the changes were intended to broaden the pool of eligible bidders, promote healthy competition and prevent monopolistic pricing without compromising the technical standards or experience required for executing the contract.

The judgment reiterates an important principle of tender jurisprudence: the tendering authority has considerable discretion to modify eligibility conditions in public interest, provided such changes are rational, reasonable and do not compromise essential technical requirements.

Background of the Case

PGIMER, Chandigarh, had invited tenders for the repair and maintenance of its Medical Gas Pipeline System.

The earlier tender was issued on January 16, 2026. Under its eligibility conditions, bidders were required to possess:

– At least five years of experience in providing repair and maintenance services for manifold systems and medical gas pipeline systems.
– Experience in government hospitals or reputed private hospitals having a minimum capacity of 500 beds.

Subsequently, PGIMER cancelled the earlier tender and issued a fresh tender on June 17, 2026, introducing revised eligibility criteria.

The revised conditions reduced the minimum hospital capacity requirement from 500 beds to 300 beds and modified the experience requirement to include experience in any part of medical gas pipeline systems.

The fresh tender also introduced a requirement that bidders possess valid service authorisation from the specified manufacturers, namely Ingersoll Rand and Trident Pneumatics.

Aggrieved by these changes, contractors engaged in the repair and maintenance of manifold systems and medical gas pipeline services challenged the cancellation of the earlier tender and issuance of the fresh tender before the High Court.

Grounds of Challenge by the Petitioners

The petitioners primarily challenged the revised eligibility conditions on the following grounds:

1. Reduction in Hospital Capacity Requirement

It was argued that reducing the minimum hospital capacity requirement from 500 beds to 300 beds diluted the eligibility standards and permitted contractors with comparatively limited experience to participate.

2. Modification of Experience Criteria

The petitioners contended that replacing the earlier requirement of experience in providing repair and maintenance services for manifold systems and medical gas pipeline systems with experience in any part of medical gas pipeline systems diluted the technical qualifications.

3. Manufacturer Authorisation Requirement

The petitioners also challenged the newly introduced requirement of valid service authorisation from Ingersoll Rand and Trident Pneumatics.

It was argued that this condition was restrictive and conferred an unfair advantage upon a particular bidder while excluding other technically qualified contractors.

Stand of PGIMER and the Respondents

Opposing the petition, PGIMER and the other respondents submitted that the petitioners had been providing annual maintenance contract services for the Medical Gas Pipeline System at PGIMER for approximately 20 years.

However, there had been no competing bidder during this period.

The respondents argued that the fresh tender conditions were introduced to:

– Ensure wider participation by eligible bidders.
– Promote healthy competition.
– Reduce the possibility of monopolistic pricing.
– Expand the scope of participation without compromising essential technical standards.

They further justified the manufacturer authorisation requirement by submitting that most of the critical equipment installed in PGIMER belonged to the two specified manufacturers.

Accordingly, obtaining authorisation from the respective manufacturers was considered necessary for ensuring proper maintenance and servicing of the critical equipment.

Key Findings and Observations of the High Court

The Division Bench examined the revised tender conditions and rejected the petitioners’ objections.

The following observations are particularly significant:

1. Tender Conditions Can Be Modified to Promote Competition

The High Court observed that the modifications were intended to broaden the pool of eligible bidders and promote healthy competition.

The objective was to prevent monopolistic pricing without compromising the technical competence or experience necessary for execution of the contract.

The Court recognised that the tendering authority could revise eligibility conditions to encourage greater participation, provided the essential technical standards were maintained.

2. Reduction of Minimum Hospital Capacity Was Justified

The Court rejected the contention that reducing the minimum hospital capacity requirement from 500 beds to 300 beds necessarily diluted the eligibility criteria.

It observed that the revised requirement widened the scope of participation while retaining the experience requirement in handling multiple medical gas services.

The modification was therefore not considered arbitrary or unreasonable.

3. Revised Experience Criteria Did Not Compromise Technical Standards

The High Court accepted the rationale behind modifying the experience requirement.

It observed that the revised conditions were designed to expand participation without compromising the technical competence or experience required for the execution of the contract.

The Court also noted that the petitioners’ interpretation of the earlier experience requirement as necessarily requiring a narrow and restrictive qualification was not justified.

4. Manufacturer Authorisation Requirement Was Reasonable

The Court upheld the requirement of valid service authorisation from Ingersoll Rand and Trident Pneumatics.

It observed that the requirement had a rational basis because the majority of the critical equipment installed in the medical gas manifold system was manufactured by these two companies.

Therefore, requiring manufacturer authorisation was considered a legitimate technical requirement rather than an arbitrary restriction favouring a particular bidder.

5. No Vested Right in Favour of the Petitioners

The High Court rejected the challenge to cancellation of the earlier tender, observing that no vested right had accrued in favour of the petitioners.

The Court noted that the earlier tender had not culminated in a concluded contract.

Until a bid is accepted and a binding contractual relationship comes into existence, bidders cannot claim an absolute right to insist that the tendering authority must proceed under the original tender conditions.

Consequently, PGIMER was legally entitled to cancel the earlier tender and invite fresh bids.

Final Decision

The Punjab and Haryana High Court dismissed the contractors’ petition and upheld PGIMER’s decision to cancel the earlier tender and issue a fresh tender with revised eligibility conditions.

The Court found no sufficient ground for interference with the tendering authority’s decision.

All pending applications were also disposed of.

Legal Significance of the Judgment

This judgment is important in the field of tender and government contract jurisprudence.

It highlights the following principles:

1. Tendering authority’s discretion: Public authorities have the discretion to modify tender conditions in accordance with administrative requirements and public interest.

2. Promotion of competition: Eligibility conditions can be relaxed or modified to encourage wider participation and prevent monopolistic pricing.

3. Technical standards must be protected: Broadening eligibility criteria does not necessarily amount to dilution of technical standards, provided essential qualifications and experience requirements remain intact.

4. Rational manufacturer-specific conditions: Requiring manufacturer authorisation may be justified where critical equipment is manufactured by specified companies and specialised technical support is necessary.

5. No vested right before contract formation: A bidder does not acquire an absolute vested right merely by participating in a tender, particularly where the tender has not culminated in a concluded contract.

6. Limited judicial interference: Courts generally examine whether tender conditions are arbitrary, discriminatory, irrational or contrary to public interest rather than substituting their own assessment for that of the tendering authority.

Conclusion

The Punjab and Haryana High Court’s ruling reinforces the principle that public authorities are entitled to revise tender conditions to promote competition, improve participation and secure better contractual outcomes.

The judgment also clarifies that a modification in eligibility criteria cannot automatically be treated as arbitrary merely because it changes the competitive position of existing contractors.

So long as the revised conditions have a rational basis, serve a legitimate public purpose and preserve essential technical standards, judicial interference with the tendering authority’s decision may not be warranted.

The decision is particularly relevant for contractors, government departments, public sector institutions and legal practitioners dealing with tender cancellation, eligibility conditions and judicial review of government contracts.

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