The court emphasized the importance of public health and the need for circumspection in granting interim relief, considering the balance of convenience between financial interest and human life.

JUDGMENT :

NEENA BANSAL KRISHNA, J.

1. An appeal under Section 37 (2) of Arbitration and Conciliation Act, 1996 (hereinafter referred to as the Act, 1996) has been preferred against the impugned Order dated 12.7.2022 of the learned sole Arbitrator declining to grant interim stay of the Office Memorandum dated 04.08.2021, de-registering/de-barring the appellant for supply of all drugs/products to MSO/GMSDs for a period of 5 years w.e.f 24.10.2019 due to repeated failure of drugs under Category “A” defect by testing laboratories supplied/manufactured by the firm within a period of one year under Section 17 of the Arbitration and Conciliation Act, 1996.

2. The appellant herein had moved an application under Section 9 of the Act for interim relief before this Court in which with the consent of the parties, the sole Arbitrator was appointed, with the directions that the application under Section 9 of the Act be treated and heard by the learned sole Arbitrator so appointed as an application under Section 17 of the Act. Accordingly, the application was considered by the sole Arbitrator and dismissed vide impugned Order dated 12.07.2022.

3. The factual background is that the appellant is a manufacturer of medicines since 1992 and has been supplying generic medicines to Central Government, Ministry of Defence as well as to the State Governments through participation in tenders. During the period of three years i.e., 2019, 2020 and 2021, it has manufactured and supplied 5752 batches of medicines all over India. The appellant bided in Tender No. GMSD/HYD/EQ/2015-2016/A/245 & 274 and was awarded the rate contract for 64 items of generic medicines by the Directorate General of Health Services, Ministry of Health and Family Welfare, R.K. Puram, New Delhi. As per the procedure of procurement by the respondent, the appellant on being awarded the Tender, was required to manufacture and supply certain generic medicines like Alprazolam Tab 0.25 mg, Pheniramine Maleate 25 mg, Aspirin 150 mg, Clopidogrel 75 mg, Amitriptyline tab 25 mg and Lorazepam 1 mg, to various depots of the respondents, GMSD at Delhi, Kolkata, Karnal, Chennai, Guwahati, Mumbai and Hyderabad. Before distribution of the medicines to various indentors, the medicines are tested in two laboratories registered with the respondent.

4. The appellant has asserted that while all the medicines supplied were found to be of standard quality by the two laboratories at the time of supply, the same were found to be not of standard quality when the same were tested again by some of the Depots. The appellant has asserted that these tests were done by the depots after a long period of time ranging from 9 to 24 months from the date of supply, which reflects that it is the storage conditions of the medicines which was not conducive and it is not the standard quality of the medicines which was inferior or not according to the specifications.

5. The respondent no. 4 issued a Office Memorandum dated 01.12.2020 de-barring the appellant from manufacturing Alprazolam 0.25 and Pheniramine Maleate IP 25 mg to the appellant after issuing a Show Cause Notice dated 23.09.2019. Further respondent No. 4 issued Office Memorandum No. PS/D-/Regn/Medipol/2020-2021/2795 dated 04.12.2020 modifying the previous Office Memorandum dated 01.12.2020, debarring/de-registering the appellant from supply of all drugs to MSO/GMSDs for a period of five years w.e.f 24.10.2019 on the ground that the two drugs under category ‘A’ supplied by the appellant were not of standard quality within a period of one year.

6. The appellant approached the High Court of Bombay vide Writ Petition (L) No. 9289 of 2020, which set aside the debarment order issued against the appellant directing the respondents that a Show Cause Notice be first issued to the appellant. In compliance of the directions of the Bombay High Court, four Show Cause Notices dated 19.02.2021, 03.03.2021, 09.03.2021 and 25.03.2021 were issued asking the appellant to explain its po