Delhi High Court Refuses to Cancel Ongoing Hospital Security Contract Despite Expired Bid Validity and Initial Shortage of Supervisors After Subsequent Statutory Compliance
Facts
Lady Hardinge Medical College and Smt. Sucheta Kriplani Hospital issued a GeM tender on 16 July 2024 for outsourcing security manpower services for one year.
The tender contemplated deployment of 449 personnel comprising:
- 18 security supervisors;
- 369 male unarmed security guards; and
- 62 female unarmed security guards.
The bid-offer validity period was 180 days from the bid end date and, according to the official respondents, remained valid until 25 January 2025.
The technical bids were opened on 31 July 2024. Out of 190 participating bidders, 16 were found technically qualified.
The financial bids were opened on 2 January 2025. All 16 technically qualified bidders, including Gaurav Enterprises and Respondent No. 3, M/s Isha Protectional Security Guard Pvt. Ltd., quoted the same total value of approximately ₹20.21 crore and were treated as L-1 bidders.
The GeM Auto Run L-1 selection mechanism was used, through which Respondent No. 3 was selected on 2 January 2025, within the original bid-validity period.
Since the procurement value exceeded ₹20 crore, approval of the Ministry of Health and Family Welfare was required. The proposal was forwarded on 29 January 2025, and approval was granted only on 24 October 2025.
The GeM contract was thereafter generated and accepted by Respondent No. 3 on 3 November 2025. A Letter of Award was issued on 8 November 2025, and the contract was made operational from 1 December 2025 to 30 November 2026.
Gaurav Enterprises challenged the tender, contract and Letter of Award principally on two grounds:
- the contract was awarded after expiry of the original bid-offer validity period; and
- the tender provided an inadequate number of supervisors under Rule 10 of the Delhi Private Security Agencies (Regulation) Rules, 2023.
During the pendency of the writ petition, the authorities issued a work order dated 11 May 2026 redistributing the manpower. The revised deployment provided 35 supervisors for 524 security guards, thereby satisfying, at least, the ratio prescribed under Rule 10(1).
Issues
- Whether the contract was liable to be set aside because it was formally generated after expiry of the original bid-offer validity period.
- Whether selection of Respondent No. 3 through the GeM Auto Run L-1 mechanism during the validity period could justify the subsequent award of the contract.
- Whether the tender and contract violated Rule 10 of the Delhi Private Security Agencies (Regulation) Rules, 2023 by providing an insufficient number of supervisors.
- Whether the later redistribution of manpower could cure the initial statutory deficiency.
- Whether quashing an ongoing hospital-security contract would serve the larger public interest.
- Whether disputed allegations concerning Respondent No. 3 and its alleged agents could justify cancellation of the contract.
Petitioner’s Arguments
Gaurav Enterprises argued that the bid-offer validity expired on 25 January 2025, whereas the contract was generated only on 3 November 2025 and the Letter of Award was issued on 8 November 2025.
It submitted that an offer remains capable of acceptance only during the period of its validity. Once the validity period expired, the tendering authority could not revive the offer or award the contract without a proper extension.
The petitioner contended that selection through the GeM Auto Run mechanism on 2 January 2025 was not equivalent to an award or acceptance of the bid. According to it, the contract came into existence only in November 2025, long after expiry of the offer.
Reliance was placed on a GeM Helpdesk clarification dated 1 December 2025 stating that the buyer was required to award the order within the bid-validity period.
Regarding the manpower requirement, the petitioner argued that 18 supervisors for 431 guards did not satisfy Rule 10(1), which requires one supervisor for not more than 15 security guards.
It further submitted that the stricter ratio under Rule 10(2)—one supervisor for every six guards—was applicable because the guards were deployed across different units or premises of the hospital establishment.
The petitioner contended that the subsequent work order dated 11 May 2026 amounted to an admission that the original tender and contract were statutorily defective. According to it, later correction could not retrospectively validate an illegal tender or contract.
Reliance was also placed on an earlier judgment involving the same petitioner, in which the Court directed a procuring authority to ensure compliance with Rule 10 before awarding a security-services contract.
Respondent’s Arguments
The official respondents argued that Gaurav Enterprises had participated in the tender process and was itself one of the 16 L-1 bidders. It could not challenge the tender terms merely because the contract was ultimately awarded to another bidder.
They submitted that Respondent No. 3 was not manually chosen by the authorities. All qualified bidders had quoted the same amount, and Respondent No. 3 was selected automatically through the GeM system on 2 January 2025, within the original bid-validity period.
The respondents relied upon Clause 4(xiii)(f) of the GeM General Terms and Conditions, which permits extension of bid validity through mutual consent between the buyer and the seller.
It was contended that the delay was caused by the requirement of obtaining approval from the Ministry of Health and Family Welfare because the value of the procurement exceeded ₹20 crore. There was no favouritism, mala fide intention or manipulation of the tender process.
On the issue of supervisors, the respondents argued that the personnel were deployed within the same hospital premises and, therefore, Rule 10(1), rather than Rule 10(2), applied.
They further submitted that the manpower had been redistributed during the pendency of the petition, resulting in deployment of 35 supervisors for 524 guards. The statutory ratio under Rule 10(1) had therefore been satisfied.
Respondent No. 3 also pointed out that it had been performing the contract since 1 December 2025 and had deployed substantial manpower and resources. Cancellation midway would disrupt security services at a public medical college and hospital.
Analysis of the Law
Bid validity under the GeM framework
Clause 4(xiii)(f) of the GeM General Terms and Conditions provides that a bid remains valid for the stipulated period and that validity may be extended with the mutual consent of the buyer and seller.
The clause also contemplates deemed extension where:
- there is a technical problem in extending validity on the portal; and
- the buyer has, before expiry of the validity period, communicated its intention to award the contract or awarded it outside the portal.
The Court acknowledged that bid validity is not an empty procedural formality. It represents the period during which the seller’s offer remains open for acceptance.
Ordinarily, the procuring authority must:
- complete the award within the validity period; or
- obtain a proper extension before expiry.
However, judicial review in tender matters does not require automatic cancellation for every procedural irregularity. The Court must examine:
- the nature of the defect;
- whether the process was manipulated;
- existence of mala fides or favouritism;
- stage of contractual performance; and
- consequences of interference on public interest.
Requirement of supervisors
Rule 10(1) of the Delhi Private Security Agencies (Regulation) Rules, 2023 requires one supervisor for not more than 15 security guards.
Rule 10(2) prescribes the stricter requirement of one supervisor for every six guards where guards are deployed in different premises and practical supervision by one supervisor is not possible.
The Court held that statutory requirements prevail over inconsistent tender or contractual provisions.
Even if Rule 10(1) alone applied, the original deployment of 18 supervisors for 431 guards was deficient.
The deficiency became greater after manpower was increased under the tolerance clause, resulting at one stage in 18 supervisors for 543 guards.
The subsequent redistribution to 35 supervisors for 524 guards, however, brought the deployment into compliance with Rule 10(1).
Moulding relief in writ jurisdiction
The Court held that under Article 226 it could consider subsequent developments and mould relief accordingly.
Where:
- the deficiency is operational;
- compliance has subsequently been achieved;
- the contract is already being performed; and
- cancellation would create greater public disruption,
the Court is not required to quash the entire tender or contract merely because the original deployment was defective.
Precedent Analysis
Tata Motors Ltd. v. Brihan Mumbai Electric Supply and Transport Undertaking
The Supreme Court reiterated that courts must exercise restraint in tender and contractual matters.
Interference is justified only where the process suffers from arbitrariness, mala fides, bias, irrationality or serious procedural impropriety.
The Court must also consider whether cancellation of an ongoing contract would cause public loss, delay or disruption.
Agmatel India Pvt. Ltd. v. Resoursys Telecom
The Supreme Court held that the tendering authority is ordinarily the best judge of its technical and commercial requirements.
A writ court should not substitute its own assessment unless the authority’s decision is illegal, irrational, perverse, biased or mala fide.
Well Protect Manpower Services Pvt. Ltd. v. Baba Sahab Ambedkar Hospital
In that case, the tender had also provided fewer supervisors than required under Rule 10.
The Court recognised that statutory requirements prevail over the tender conditions. However, since the awarded contract had been brought into compliance, the Court declined to interfere with the ongoing arrangement.
The present Bench followed a similar approach.
Gaurav Enterprises v. Municipal Corporation of Delhi
The petitioner relied upon this earlier decision concerning compliance with Rule 10.
The Court observed that the earlier judgment directed the procuring authority to ensure the requisite number of supervisors before awarding the contract. However, the tender itself was not quashed.
The precedent established the mandatory nature of Rule 10 but did not support automatic cancellation where compliance had subsequently been achieved.
Court’s Reasoning
The Court accepted that the formal GeM contract was generated after expiry of the original bid-validity period and stated that the procedure followed should not be treated as a model procurement practice.
Procurement authorities are expected to act promptly and must ordinarily ensure that contracts are awarded within the validity period or that the validity is extended at the appropriate stage.
However, the Court found several circumstances against cancellation:
- Respondent No. 3 was selected through the GeM Auto Run mechanism on 2 January 2025, during the original validity period.
- There was no manual selection or preference exercised by the authorities.
- The delay arose from the requirement of obtaining ministerial approval for a procurement exceeding ₹20 crore.
- No mala fide intention, bias or favouritism was established.
- Respondent No. 3 accepted the contract and had been performing it since 1 December 2025.
- The contract related to security services at a public medical college and hospital.
- Cancellation midway would disrupt essential security arrangements.
- There was no allegation that manpower rates had fallen or that continuation of the contract would cause financial loss to the public exchequer.
The Court therefore declined to annul the contract merely because it had been formally generated after expiry of the original validity period.
It expressly clarified that it was not laying down a general rule that expired bids can ordinarily be revived after a prolonged interval.
Regarding Rule 10, the Court found that the original contract was unquestionably deficient even on the respondents’ own interpretation that Rule 10(1) applied.
Nevertheless, the work order dated 11 May 2026 corrected the ratio by deploying 35 supervisors for 524 guards.
Since compliance had been achieved and the contract was already substantially under performance, quashing the contract would cause greater public inconvenience than the initial defect warranted.
The Court also rejected the challenge based on bonus and ESI entries. The authorities explained that the wages exceeded the applicable threshold, and the contract independently required compliance with all relevant labour laws.
Disputed allegations that certain persons had collected money from job-seekers in the name of Respondent No. 3 were also rejected as a basis for cancellation. No blacklisting, disqualification, licence cancellation or established tender violation had been shown against the successful bidder.
Conclusion
The Delhi High Court held that although the contract was formally generated after expiry of the original bid-validity period, cancellation was not warranted in the peculiar circumstances.
Respondent No. 3 had been selected automatically through the GeM system within the validity period, no mala fides or favouritism were established, and the delay arose from the approval process.
The Court further held that the original supervisor deployment violated Rule 10(1) of the Delhi Private Security Agencies (Regulation) Rules, 2023. However, the deficiency had subsequently been corrected by deploying 35 supervisors for 524 guards.
Considering the ongoing performance of the hospital-security contract and the importance of uninterrupted security services, the Court declined to quash the tender or contract.
The writ petition was dismissed.
Case: Gaurav Enterprises v. Lady Hardinge Medical College and Others
Court: Delhi High Court
Case Number: W.P. (C) No. 18124 of 2025 with CM Application No. 74988 of 2025
Judge: Justice Anil Kshetrapal and Justice Amit Mahajan
Date: 1 July 2026
Result: Writ petition dismissed; ongoing security-services contract upheld despite expiry of original bid validity and initial supervisor shortfall, after subsequent compliance with Rule 10(1).
