No right to supply without purchase order in state tenders: Karnataka HC

Bengaluru: The issuance of a notification does not create a right to supply machines without an accompanying supply order, the Karnataka High Court has observed in a recent judgment.

A division bench comprising Chief Justice N V Anjaria and Justice KV Aravind made this observation while allowing an appeal filed by the Karnataka State Medical Supplies Corporation, a state-owned entity, regarding a 2021 tender for portable X-ray machines to support ventilators treating Covid-19 patients.

On October 27, 2021, the corporation issued a re-tender, inviting bids for 100mA portable X-ray machines and related equipment. Allengers Medical Systems Limited was declared the technically qualified and successful bidder, leading to the contract award notification on March 2, 2022.

Allengers Medical Systems petitioned the single bench, requesting a directive for the purchase order to be issued. On January 25, 2023, the single bench ordered authorities to issue the supply order, reasoning that Rule 14 of the Karnataka Transparency in Public Procurement Rules, 2000, only allows changes up to the notification stage, prohibiting withdrawals once the award is notified and an agreement is in place.

In response, the corporation challenged this order, citing three reasons for withholding the purchase order: incompatibility between the tendered and required X-ray machines, issues with their integration with Covid-19 ventilators, and irregularities in the tender process, which led to departmental action.

The division bench noted that, despite insufficient details on departmental actions, these issues warranted consideration. It found that the single bench’s decision conflicted with the tender conditions.

"In the facts of the case and in view of the conditions incorporated in the notification, mere issuance of notification will not create any right to supply machines unless a supply order is issued,” the court noted.

"The above aspect can be noticed from the notification of award. Neither the tender conditions nor the conditions in notification of award would require Allengers Medical Systems Limited to procure X-ray machines before issue of the supply order.

“The single bench has not noticed the purpose and the timely requirement of X-ray machines,” it further said, adding that Allengers Medical Systems Limited is at liberty to initiate appropriate proceedings before the competent forum claiming damages, which shall be on its own merits.