Delhi High Court: In a batch of writ petitions concerning initiation of a fresh tender process for empanelment of authorised local chemists under the Central Government Health Scheme (CGHS) during the subsistence of existing contracts, a Division Bench of Anil Kshetarpal* and Amit Mahajan, JJ., dismissed the petitions and held fresh tender during subsisting contracts valid. The Court held that mere initiation of a tender for a future period does not infringe subsisting contractual rights, so long as existing contracts are permitted to run their full course.
Emphasising the limited scope of judicial review in tender matters, the Court reiterated that no bidder has a vested right in continuation of a particular policy regime or in future government contracts, and that the State is entitled to revise its procurement policies in public interest. The Court further held that the challenge was premature and based on mere apprehension, in the absence of any concrete action affecting the petitioners’ existing contractual rights.
Background
The controversy arises in the backdrop of empanelment of authorised local chemists (ALC) under the CGHS framework for supply of indented medicines to wellness centres in Delhi. Respondent 2 issued an E-tender dated 4 January 2023 for the Financial Years 2023—2026, envisaging selection of bidders on the basis of the highest uniform discount on MRP, the ALC mechanism operating as a supplementary channel where bulk procurement was unavailable. Pursuant thereto, the petitioners participated and were declared successful bidders, resulting in their empanelment for various wellness centres across different zones. In W.P.(C) 4058 of 2026, apart from empanelments under the 2023 tender, the petitioner was further empanelled for an additional centre pursuant to a subsequent E-tender dated 4 March 2024, with contracts extending variably up to December 2026 and, in one case, up to 9 June 2027. Similarly, in W.P.(C) 3960 of 2026, the petitioner was empanelled for 16 wellness centres for a period from 1 August 2023 to 31 July 2026, with individual contract periods in certain cases extending up to May, July and December 2026. It is not in dispute that the petitioners have been supplying medicines under these subsisting and operative contracts. While these contracts were still in force, Respondent 2 issued a fresh impugned tender for the Financial Years 2026—2028 through the Government e-Marketplace (GeM) portal, inviting bids for several of the same wellness centres. The impugned tender has been issued pursuant to the revised Central Government Health Scheme (CGHS) Drug Procurement Policy, 2026 and SOP dated 6 February 2026, introducing changes in procurement modalities, compliance conditions, and digital integration, thereby marking a shift from the earlier tender regime.
Analysis
The Court held that the issue for consideration lay in a narrow compass, i.e., whether initiation of a fresh tender process during the subsistence of earlier contracts is impermissible, and answered the same in the negative. Reiterating the settled principles governing judicial review in tender matters, the Court observed that interference under Article 226 is limited to the decision-making process and warranted only in cases of arbitrariness, mala fides or illegality. It emphasised that the State enjoys latitude in matters of public procurement, subject to the mandate of Article 14, and cannot be restrained from revising its policies in public interest. In this backdrop, the Court noted that the impugned tender dated 18 March 2026 was issued pursuant to the revised CGHS Drug Procurement Policy, 2026 read with SOP dated 6 February 2026, which itself contemplated initiation of empanelment processes sufficiently in advance to ensure continuity in supply of essential medicines. It was further reiterated that no bidder has a vested right in continuation of a particular policy regime or in future government contracts.
On merits, the Court rejected the petitioners’ contention that a fresh tender could not be initiated during the subsistence of existing contracts. It held that mere initiation of a tender process for a future period does not amount to interference with subsisting contractual rights, so long as the existing contracts are permitted to run their full course in accordance with their terms. The plea of “overlapping” was found to be speculative and unsupported by any material, there being no indication that the Respondents had either terminated the existing contracts or proposed parallel operation thereof. The Court further observed that empanelment under the CGHS framework is an indent-based, contingent arrangement, which does not guarantee any assured volume of business, and therefore no vested or enforceable right accrues in favour of the petitioners. The doctrine of legitimate expectation was held to be inapplicable to fetter policy changes, and no violation of Article 14 or Article 19(1)(g) was made out, the tender being open, competitive and uniformly applicable, with the Petitioners themselves being eligible to participate.
The Court also held that the writ petitions were premature, as the challenge was directed against the initiation of the tender process at a stage where no action had been taken affecting the petitioners’ subsisting contractual rights, and the grievance was founded on mere apprehension of future injury. In the absence of any concrete infringement of a legal right, no cause of action arose for invocation of writ jurisdiction.
Decision
Accordingly, finding no arbitrariness or illegality in the impugned action, the Court declined to interfere and dismissed the petitions, while leaving it open to the petitioners to avail appropriate remedies in the event of any future action contrary to law or the terms of the contract.
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[Kaushik Medical Store v. Union of India, W.P.(C) 3960 of 2026, decided on 21-4-2026]
Judgment authored by: Justice Anil Kshetarpal
Advocates who appeared in this case:
For the Petitioner: Samrat Nigam, Senior Advocate with Kunal Mittal, Arpita Rawat and Shiv Dutt Kaushik, Advocates
For the Respondent: Nishant Gautam CGSC, Pooja kumari GP, Shashank Bajpai CGSC with Kavya Shukla, Vineet Negi, Vibhav V. Nath, Theresa, Aashna Mehra, Vatsal Tripathi, Govind Singh Chauhan, Shweta Bharti, Tejaswini Chandrasekhar, Sidharth Sharma, Jatin Chaddha, Sanskruti Jinwal & Bushra Alam, Advocates