M/s Kewal Canteen vs Union Of India & Ors

V. Kameswar Rao, J

The captioned two petitions have been filed by the respective petitioners challenging a tender bearing No. Esta-11/10/2023-Estate Section- Dr. RMLH dated 19.01.2026 and a tender bearing No.Esta-11/10/2023- Estate  Section-Dr.  RMLH  dated  20.01.2026  along  with  corrigendum  dated 14.02.2026, floated by the respondents, for three kiosks/shops in the premises of the A.B.V.I.M.S. & Dr. Ram Manohar Lohia Hospital, New Delhi (the respondent hospital).

W.P (C) 2103/2026

The petitioner has been operating a round the clock kiosk/canteen which known as Kewal’sCanteen in the premises of the respondent hospital since 28.10.1988 by the permission of the then president of Resident Doctors Association of the hospital vide its letter dated 26.10.1988 which was further extended till the year 1990 by the management of the respondent hospital against rent worth Rs.600/- per month. Thereafter, vide allotment letter No.13-83/DC/RMLH/Canteen/New Delhi/18464 dated 06.12.1990 the said  kiosk  was  allotted  to  the  petitioner  for  sale  of  hot  and  cold  beverages, snacks and packed food items.

On 06.03.2025, the petitioner requested the respondent No. 2 for extension  of  the  said  allotment.  The  respondent  No.  2  vide  letter  No.  Esta-11/2/2022-Estate Section-Dr. RMLH/360 dated 19.11.2025 granted extension of the allotment of space from 01.04.2024 to 31.03.2026 on payment of Rs.7181/- per month from 01.04.2025 to 31.12.2025 and Rs.7637/- per month from 01.01.2026 to 31.03.2026 towards license fee including all other charges.

On  19.01.2026,  the  respondent  No.  2  issued  a  notice  bearing  Tender No. Esta-11/10/2023-Estate Section-Dr. RMLH for “Operating Kiosks-03 Nos.” in the respondent hospital.

The averment of the petitioner is that paragraph 7 (1) of the tender is in violation of Article 19 (1)(g) and Article 21 of the Constitution of India, as  it  restricts applicants  like  the petitioner from participating in the bidding process due to it requiring a specific average annual turnover. The said eligibility condition is reproduced as under:-

“7.Eligibility Criteria:

Average Annual Turnover of Rs. 50,00,000/- (Rs.Fifty Lac Only) or more during last three (3) financial years (2022-23, 2023-24 & 2024-25)

Minimum 3 years experience in running canteen/kiosk in a Corporate or Government Organization.

Valid registration with GST, PAN, EPF, ESI.

MSEs/Start-ups are exempted as per prevailing rules (subject to submission of valid proof/certificates).”

The learned counsel for the petitioner stated that despite possessing all necessary registrations, technical capabilities, and willingness to comply with  Government  guidelines,  the  petitioner  has  been  rendered  ineligible  to participate in the tender/bidding process solely due to requirement of the above criteria mandating prospective bidders to have a turnover of Rs.50,000,00/- or more during the last three financial years (2022-23, 2023- 24 & 2024-25).

That apart, it is stated that clause 3 of paragraph No.8 of the impugned tender, containing the selection process prescribes that the tender shall be awarded will be given to the highest license fee quoted (H-1 Bidder), subject to minimum reserved license fee of Rs. 450/- per square foot per month. At present, the petitioner is paying Rs. 7200/- to the respondents as rent. By Paragraph 8 of the tender dated 19.01.2026, the respondent hospital also proposes to increase the monthly rent to Rs.45,000/-, representing more than sevenfold enhancement from the current rate  of  Rs.7200/-  for  a  small  kiosk  with  area  of  10”x10”.  No  justification, valuation report or policy rationale has been provided for such an exorbitant hike. This demand is particularly egregious considering that similarly situated shops within the same compound which were excluded from the tender continue to pay rent in the range of Rs.5,000/- to Rs.9,000/-. This disparity further underscores the unequal and discriminatory treatment meted out to the petitioner.

It is further stated that there are eight authorized kiosks including the petitioner‟s  shop currently operating within the hospital premises providing various essential services. On 20.01.2026, the respondent No. 2 and 3 floated the impugned tender bearing No. Esta-11/10/2023-Estate Section-Dr. RMLH  dated  20.01.2026 for re-allotment of  three  of  the said  eight kiosks without disclosing any intelligible differentia, rationale or objective for excluding the remaining five shops from the tendering process. The impugned tender selectively targets only three  shops for re-allotment, while the rest of the said five shops continue to operate under their existing arrangements. This selective tendering process constitutes hostile discrimination and a patent violation of the principles of equality enshrined under Article 14 of the Constitution of India.

Aggrieved by the above, the petitioner made a representation dated 30.01.2026 to the respondent No. 2 and requested to review the said clauses of the tender and the upload the amended tender notice on official website of the respondents to make eligible such vendors like the petitioner to participate in the bidding process. However no reply or response was received from the respondent No. 2 to the representation.

It is submitted that the petitioner runs canteen/kiosk within the premises of the respondent hospital on subsidised rates and earns his livelihood without huge profits, as would be clear from its Income Tax Returns filed during the last three financial years (2022-23, 2023-24 & 2024-25) which is less than Rs.6,00,000/-.

The case of the petitioner is that the said conditions contradict the principles of open and fair competition, inasmuch as they restrict the petitioner and other potential bidders, with experience of more than 35 years in  running  kiosks  within  the  premises  of  the  respondent  hospital.  As  such, paragraph 7 (1) of the impugned tender dated 19.01.2026 is discriminatory, arbitrary and contrary to the principles of natural justice, and is in violation of Articles 14, 19 (1)(g) and Article 21 of the Constitution of India.

It is contended that the impugned eligibility criteria is arbitrary as such high threshold creates a monopoly for large companies, violating Articles  14  and  Article  19(1)(g)  of  the  Constitution  of  India.  The  turnover criteria of Rs.50,000,00/- or more during last three financial years is unusually high for the vendors like the petitioner who have run government canteens for a long time  at  the respondent hospital on subsidised rates.  The actions of the respondents go against  Article 14 of the Constitution of India mandates that the State shall not deny equality before law or equal protection of laws.

In any case, such eligibility criteria has no rational nexus with the nature of the work, as specialised experience in food safety is more relevant than excessive annual turnover. Hence the said condition is absolutely arbitrary, unreasonable and suffers from the vice of mala fide and accordingly deserves to be quashed.

W.P.(C) 2779/2026

The petitioner herein is the operator of Parida Photocopier and STD/PCO booth, a small utility kiosk providing photocopying, printing and document  services  primarily to  the  patients,  attendants  and  medical staff  of the respondent hospital. The kiosk constitutes his sole source of income. The petitioner has been operating the said kiosk for almost ten years, pursuant to the permissions granted by the competent authorities of the respondent hospital.

The last extension for the petitioner‟s occupation was granted by a letter  dated  19.11.2025,  permitting  the  petitioner  to  continue  the  operations till 31.03.2026 at a monthly license fee of Rs.4,144/-.

On 20.01.2026, the respondents no.2 & 3 arbitrarily floated the impugned tender No.Esta-11/10/2023-Estate Section-Dr. RMLH for re- allotment of three out of said eight kiosks without disclosing any intelligible differentia or objective for excluding the remaining five kiosks from the tender, which continue to operate under the existing arrangements.

The  case of the petitioner  herein  is  similar to that of the petitioner in W.P (C) 2103/2026, inasmuch as, the selective tendering process constitutes hostile discrimination and a patent violation of the principles of equality under Article 14 of the Constitution of India. A challenge is made to paragraph 7.1 of the tender dated 20.01.2026, which prescribes an eligibility condition that the average annual turnover of the bidder should be Rs.50,00,000/- or more during the last three financial years. The said requirement is stated  to  be unusually  high for petitioner who  runs a  small photocopy  shop  at  subsidised  rates,  and  is  arbitrary  and  in  violation  of  the Articles 14 and 19(1)(g) of the Constitution of India.

The learned counsel for the petitioner stated that during the pendency of the W.P.(C) 2103/2026, the respondents issued an amendment by way of corrigendum dated 14.02.2026 whereby the aforesaid annual income criteria has been reduced from Rs.50,00,000/- to Rs.20,00,000/-. However, even this amended criterion is impracticable and unreasonable, as the shop in question is a small10”x10”kiosk providing limited photocopy and printing services primarily for medical documents and identity proofs. By no stretch of imagination can a micro utility generate the mandated revenue.

Similar to W.P.(C) No.2103/2026, a challenge is also made to the selection process prescribed in paragraph no.8 of the tender, which proposes to increase the monthly rent from Rs.4144/- to Rs.45,000/-.

It is additionally submitted that the petitioner has a legitimate expectations of  continued occupation and extension  of  the license based  on the past practice of the  respondents in granting extensions.  The sudden  and unreasoned departure from this established practice without issuing notice or affording the petitioner an opportunity to be heard violates the principles of legitimate expectation and the natural justice.

SUBMISSIONS ON BEHALF OF THE RESPONDENTS

The learned counsel for the respondents submitted that the allegation of  discrimination  and  violation  of  Article  14  of  the  Constitution  of  India  is unmerited as the eight kiosks have been categorized into two distinct classes based on intelligible differentia. Class A (5 kiosks) are operated by cooperative societies/state PSUs to ensure the availability of quality products  at  reasonable  and  regulated  prices  for  thousands of  patients.  Class B (3  kiosks)  are  „unreserved  units‟  intended  for  the  open  market  to  ensure transparency and fair competition, allotted through public tenders. The petitioner being a private operator cannot claim parity with cooperative societies/state PSUs.

It is also submitted that the determination of turnover criteria and minimum reserved license fee is within the exclusive domain of the tendering authority. The court does not sit in appeal over the commercial wisdom, unless the decision is found to be patently arbitrary or malicious.

It is stated that though the initial turnover criteria was Rs.50,00,000/-, following a representation from a prospective bidder, the competent authority reduced the same to Rs.20,00,000/- by way of a corrigendum dated 14.02.2026 to encourage wider participation. This requirement is reasonable given the high daily footfall and the necessity of maintaining statutory compliances like, GST, EPF and FSSAI.

With regard to the license fee of Rs.450/- per square foot, it is submitted that the same is reasonable, and the New Delhi Municipal Council (NDMC) has allotted similar shops along the adjoining boundary wall to private vendors at a monthly rate of Rs.76,170/- which is significantly higher than the base price fixed in the impugned tender. The petitioners‟current rates being subsidised legacy rent rates do not reflect the current market values, and as such the petitioners cannot insist on a right to continue with the same.

The learned counsel for the respondents have also contested the submission  of  the  petitioner  with  regard  to  having  a  legitimate  expectation by stating that  every extension granted to the petitioners carried the explicit caveat that they were valid till “the finalization of new tender”. The petitioners having accepted these terms were fully aware that the nomination-based arrangement was temporary.

It is also stated that five Memorandum of Understanding (MoU) have been signed and entered into with certain cooperative societies namely, Mother  Dairy,  Jaipur  Dairy,  IIPMC  Juice  Corner,  and  Amul  Milk  Parlour, for allotment of Class A kiosks.

Much reliance is placed by the learned counsel for the respondents on the  judgments  in  Axis  Energy  Ventures  India  (P)  Ltd.  v.  Union  of  India: 2022 SCC OnLine Del 4677, Directorate of Education v. Educomp Datamatics Ltd.: (2004) 4 SCC 19, Balaji Ventures (P) Ltd. V. Maharashtra State Power Generation Co. Ltd.: 2022 SCC OnLine SC 1967  and  Uflex Limited v. Government of Tamil Nadu &  Others: (2022)1 SCC 165  to contend that interference of courts in tender/contract matters is only warranted when the decision of the tendering authority is arbitrary, unreasonable or actuated by mala fide, which is not the case herein.

CONCLUSION

Having heard the learned counsel for the parties, the short issue which arises for the consideration is whether the respondents are justified in prescribing an annual turnover of Rs. 50,00,000/- (later reduced to Rs.20,00,000/-) as the eligibility condition for bidding in the tenders and also  whether  the  respondents  are  justified  in  including  only  three  kiosks in the tender, while reserving five kiosks to various cooperative societies.

At the outset, we may state that it is well settled that the tendering authority is best placed to judge its requirements and to interpret the terms of the tender. When a challenge is made to the conditions of a tender, it is incumbent upon the bidder/stakeholder  raising the challenge to demonstrate that  arbitrariness,  unreasonableness,  or  mala  fide  is  writ  large  in  the  action or decision of the tendering authority.  The court does not sit in appeal over the commercial wisdom of the tendering authority. It is only when the action or decision is manifestly perverse by reason of discrimination, Wednesbury unreasonableness  or  mala  fide  that  the  court  will  interfere  with  the  tender. The Supreme Court in Directorate of Education (supra), while deliberating the issue of judicial review in government tenders, observed as under:

“10. In Air India Limited v. Cochin International Airport Limited [2000 (2) SCC 617], this Court observed:

"The award of a contract, whether it is by a private party or by a public body or the State, is essentially a commercial transaction. In arriving at a commercial decision considerations which are paramount are commercial considerations. The State can choose its own method to arrive at a decision. It can fix its own terms of invitation to tender and that is not open to judicial scrutiny. It can enter into negotiations before finally deciding to accept one of the offers made to it. Price need not always be the sole criterion for awarding a contract.  It  is  free to grant any  relaxation,  for  bona fide reasons, if the tender conditions permit such a relaxation. It may not accept the offer even though it happens to be the highest or the lowest. But the State, its corporations, instrumentalities and agencies are bound to adhere to the norms, standards and procedures laid down  by  them  and  cannot  depart  from  them  arbitrarily. Though that decision is not amenable to judicial review, the  court  can  examine  the  decision-making  process  and interfere if it is found vitiated by mala fides, unreasonableness and arbitrariness."

(Emphasis supplied)

This principle was again re-stated by this Court in Monarch Infrastructure (P) Ltd. vs. Commissioner, Ulhasnagar Municipal Corporation and Others [2000 (5) SCC 287]. It was held that the terms and conditions in the tender are prescribed by  the  government  bearing  in  mind  the  nature  of  contract  and in  such  matters  the  authority  calling  for  the  tender  is  the  best judge  to  prescribe  the  terms  and  conditions  of  the  tender.  It  is not  for  the  courts  to  say  whether  the  conditions  prescribed  in the tender under consideration were better than the one prescribed in the earlier tender invitations.

It has clearly been held in these decisions that the terms of the invitation to tender are not open to judicial scrutiny the same being in the realm of contract. That the government must have a free hand in setting the terms of the tender. It must have reasonable play in its joints as a necessary concomitant for an administrative body in an administrative sphere. The courts would interfere with the administrative policy decision only if it is arbitrary, discriminatory, mala fide or actuated by bias. It is entitled to pragmatic adjustments which may be called for by the particular circumstances. The courts cannot strike down the terms of the tender prescribed by the government because it feels that some other terms in the tender would have been fair, wiser or logical. The courts can interfere only if the policy decision is arbitrary, discriminatory or mala fide.”

We shall proceed to decide the present controversy within the contours of law, as enunciated above.

The respondents in paragraph no.7 of the counter affidavit filed in W.P.(C) No.2103/2016, have submitted that a representation was received from the petitioner dated 30.01.2026 seeking review and suitable amendment/relaxation of the turnover eligibility condition in the tender document, which was examined and considered by the concerned officials of the respondent hospital. In view of the request made by the petitioner, and to encourage  wider  participation  and  enhance  competition,  the  requirement  of average annual turnover during the last three financial years was reduced from Rs. 50,00,000/- to Rs.20,00,000/- and the dates of opening of the bids were also extended.

The reasoning provided by the respondents for justifying the eligibility  criteria  is  that  the  reduced  criteria  of  Rs.  20,00,000/-  per  annum translates to around 1.6 lakh per month, which is a standard figure for a high-footfall hospital kiosk. Further, the decision has been taken in view of the  requirement  of statutory  compliances  like,  GST,  EPF  and  FSSAI. It  is contended that the state has the autonomy to set procurement standards and revise turnover requirements based on administrative experience to ensure service quality.

Be that as it may, during the course of the hearing, the learned counsel for  the  petitioners  objected  to  the  amended  turnover  criteria  by  stating  that even the reduced turnover requirement of Rs. 20,00,000/- is unreasonably high for the petitioners. Though we put a specific query to the learned counsel for the petitioners, if not Rs.20,00,000/-, then what should be the appropriate amount to be prescribed as the annual turnover as per the petitioners,  no  answer  was  forthcoming.  In  other  words,  it  appears  that  the petitioners may not be in a position to meet the annual turnover criteria, even if, it can be further reduced. A perusal of the Income Tax Returns filed by the petitioner in W.P.(C) No.2103  shows that the total annual income of the petitioner  therein  during  each of  the  last three financial years  (2022-23, 2023-24 & 2024-25) was less than Rs.6,00,000/-, which hardly meets the threshold  of  the  annual  license  fee.  As  such,  even  if  the  prescribed  annual turnover of Rs.20,00,000/- is further reduced, the petitioners may not be able meet the same.

A related issue raised is that paragraph 8 of the impugned tender fixes the  license  fee  at  Rs.450/-  per  square  foot,  which  for  the  kiosks  measuring 10”x10”will  come  to  Rs.45,000/-  per  month  and  Rs.5,40,000/-  per  annum. The respondents have attempted to justify the same by stating that the current license fee granted to the petitioners is on a subsidised basis, and they do not have any right to claim such rates in perpetuity.  It is also stated that  the  prescribed  rate  of  Rs.  450  per  square  foot  is  lower  than  the  license fee being charged by the NDMC for the shops adjoining the boundary walls of the kiosks in question.

Insofar as the challenge to the decision of the respondents to not include  5  other  kiosks  in  the  tender  is  concerned,  the  contention  is  that  the said 5 kiosks constitute a separate class, inasmuch as they have been reserved to be allotted to state PSUs/co-operative societies. The respondents have  placed  before  us  the  note  sheet  wherein  a decision  has  been  taken by the  competent authority to allot the  said five  kiosks  to certain  cooperative societies. The MoUs arrived at between the respondent hospital and Mother Dairy, Jaipur Dairy, IIPMC Juice Corner, and Amul Milk Parlour have also been placed on record. Such allotment of the five reserved kiosks to cooperative  societies  is  a  policy  decision  of  the  respondents  and  cannot  be faulted.

Suffice it to state, prescription of terms and conditions of a tender document  falls  within  the  domain  of  the  tendering  authority,  and  since  the petitioners have not shown any arbitrariness, unreasonableness or  mala fide on  part  of  the  respondent  hospital,  the  prayers sought  for  in  these  petitions cannot be granted.

We are of the view that the present petitions lacks merit and the same are liable to be dismissed. We order so accordingly.

The pending applications are also dismissed.