Varasi Oxygen Vs the State of Andhra Pradesh — Writ and Judicial Review | Andhra Pradesh HC (2025)

Varasi Oxygen Vs the State of Andhra Pradesh — Writ and Judicial Review | Andhra Pradesh HC (2025)

What the court decided

AI extract

Outcome

None; no order as to costs; all pending miscellaneous applications were directed to stand closed.

Issue for consideration

Whether the Proceedings Rc.No.2841202/LMO/SP/DME/2025 dated 04.06.2025 issued by respondent No. 2, instructing procurement of Liquid Medical Oxygen exclusively from respondent Nos. 7 and 8 without a fair, transparent and competitive bidding process, are arbitrary, opaque and violative of Articles 14, 19 and 21 of the Constitution. +2 more

Court's answer

The impugned proceedings are in line with the agreement entered into by respondent No. 2 with respondent Nos. 7 and 8, which is in valid operation and force; termination Clause No. 5 of that agreement is exercisable at the option of the purchaser (respondent No. 2), and the petitioner, being a stranger to that agreement, cannot rely on that clause to contend that respondent No. 2 is acting arbitrarily and in an opaque manner.

Ratio / Principle

The petitioner's contention that the tripartite agreement dated 30.08.2018 stood terminated because respondent No. 7 failed to honour its commitment does not merit consideration: the agreement concerns all teaching hospitals in the State and respondent No. 7 has been making supplies to other hospitals under it, and the termination clause (Clause 5) does not contemplate termination of contract as contended on the facts prevailing in the instant case.

Key takeaways

Civil works for installation of the oxygen plant were not completed and respondent No. 7 was not provided facilities to supply; to meet the emergency the petitioner was required to supply oxygen, its services having been brought in only to meet the dire exigencies of the time; the contract awarded to the petitioner was not through a tender process, and therefore the petitioner's claim that the impugned proceedings are arbitrary is unfounded.ratio¶157
In the absence of any privity of contract between the petitioner and respondent No. 2, the petitioner has no locus standi to challenge the acts of respondent No. 2 done in furtherance of the agreement entered into between respondent Nos. 2, 7 and 8; consequently the petitioner's contentions do not merit consideration.ratio¶159

Detailed headnote1 paragraphs

Andhra Pradesh High Court (Single Bench, Kiranmayee Mandava, J.) — W.P. No. 14358 of 2025, decided 18-09-2025 — Procurement of Liquid Medical Oxygen (LMO) for Government General Hospital, Anantapuramu — Petitioner supplier, whose COVID-era agreement (20-06-2020 to 19-06-2025) had expired, challenged the Director of Medical Education's Proceedings Rc.No.2841202/LMO/SP/DME/2025 dated 04.06.2025 directing exclusive procurement of LMO from respondent Nos. 7 and 8 under the 2018 tripartite agreement without fresh tendering, alleging violation of Articles 14, 19 and 21. HELD dismissing the petition: (i) the parent tripartite agreement between respondent Nos. 2, 7 and 8 remains in valid operation and force; respondent No. 7 has been supplying other teaching hospitals thereunder, and Clause 5 (termination) does not contemplate termination as contended, being exercisable only at the option of the purchaser (respondent No. 2); (ii) the petitioner's own contract was not awarded through a tender process and was engaged merely to meet the emergency/dire exigencies when civil works for the liquid oxygen plant remained incomplete, rendering the arbitrariness plea unfounded; (iii) the petitioner, being a stranger to the tripartite agreement and lacking privity of contract with respondent No. 2, has no locus standi to challenge acts of respondent No. 2 in furtherance of that agreement. No order as to costs; all pending miscellaneous applications closed.

Issues for consideration

3 issues framed by the court

AI extract

1.
Whether the Proceedings Rc.No.2841202/LMO/SP/DME/2025 dated 04.06.2025 issued by respondent No. 2, instructing procurement of Liquid Medical Oxygen exclusively from respondent Nos. 7 and 8 without a fair, transparent and competitive bidding process, are arbitrary, opaque and violative of Articles 14, 19 and 21 of the Constitution.¶22
The court held
The impugned proceedings are in line with the agreement entered into by respondent No. 2 with respondent Nos. 7 and 8, which is in valid operation and force; termination Clause No. 5 of that agreement is exercisable at the option of the purchaser (respondent No. 2), and the petitioner, being a stranger to that agreement, cannot rely on that clause to contend that respondent No. 2 is acting arbitrarily and in an opaque manner.ratio¶156
2.
Whether the tripartite agreement dated 30.08.2018 between respondent Nos. 2, 7 and 8 stood terminated under its termination clause because respondent No. 7 did not honour its commitment, so as to displace the impugned direction and support the petitioner's claim.¶151
The court held
The petitioner's contention that the tripartite agreement dated 30.08.2018 stood terminated because respondent No. 7 failed to honour its commitment does not merit consideration: the agreement concerns all teaching hospitals in the State and respondent No. 7 has been making supplies to other hospitals under it, and the termination clause (Clause 5) does not contemplate termination of contract as contended on the facts prevailing in the instant case.ratio¶151
3.
Whether the petitioner, being a stranger to the tripartite agreement and lacking privity of contract with respondent No. 2, has locus standi to challenge the acts of respondent No. 2 taken in furtherance of that agreement.¶159
The court held
In the absence of any privity of contract between the petitioner and respondent No. 2, the petitioner has no locus standi to challenge the acts of respondent No. 2 done in furtherance of the agreement entered into between respondent Nos. 2, 7 and 8; consequently the petitioner's contentions do not merit consideration.ratio¶159

Procedural history

How this case reached the court

AI extract

Order under challenge
Proceedings Rc.No.2841202/LMO/SP/DME/2025 dated 04.06.2025 issued by respondent No. 2 (Director of Medical Education) directing the 5th respondent to procure Liquid Medical Oxygen (LMO) exclusively from respondent Nos. 7 and 8 without a fresh tender process.¶137
Director of Medical Education, Andhra Pradesh (Respondent No. 2) · 2025-06-04
Prior proceeding
In 2018 a tripartite agreement was entered into between respondent Nos. 2, 7 and 8 for supply of Liquid Medical Oxygen; each hospital was to enter a separate agreement with respondent No. 7; vide proceedings dated 27-09-2018 respondent No. 2 directed all hospital Superintendents to enter into such tripartite agreements.¶138
Prior proceeding
Pursuant thereto, respondent Nos. 7 and 8 entered into a tripartite agreement with the 5th respondent hospital on 05.11.2018, intended to commence supply operations from 20.11.2018, subject to completion of civil and incidental works for installation of the liquid oxygen plant.¶146
Prior proceeding
Since the civil/incidental works for the oxygen plant were not completed within the stipulated period, M/s. R.S. Gas Products was allowed to supply oxygen to the hospital in the interim.¶146
Prior proceeding
During the COVID-19 pandemic the 3rd respondent sought quotations from the petitioner and M/s. R.S. Gas Products; the petitioner's price was approved (communicated vide proceedings dated 14-05-2020) and an agreement was entered into for five years, from 20-06-2020 to 19-06-2025.¶141
Prior proceeding
On expiry of the petitioner's term on 19-06-2025 the petitioner sought extension at Rs.22/- per cubic meter; the 4th respondent decided to call for new tenders permitting the petitioner to participate, but the 2nd respondent, resting on the old tripartite agreement, required the hospital to enter into agreement with respondent No. 7, prompting the writ petition.¶142
Prior proceeding
Interim orders were passed on 18.06.2025 in I.A.Nos. 1 and 2 of 2025 in this writ petition; respondent No. 7 filed I.A.Nos. 3 and 4 seeking their vacatur and dismissal of the writ petition, and respondent No. 2 filed I.A.No. 7 similarly; the petitioner filed I.A.Nos. 5 and 6 seeking extension of the interim orders.¶42