Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2026 Supreme(Guj) 1047

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
Hemant M. Prachchhak, J.
Stallion Laboratories Private Limited – Petitioner
Versus
Gujarat Medical Services Corporation Limited - Respondent
Special Civil Application No. 12266 of 2025
Decided On : 17-04-2026

Advocates Appeared:
For the Petitioner: Mr Mitul Shelat For Mr Hitesh M Sabhnani
For the Respondent: Mr D G Shukla, Mr Harsheel D Shukla

State administrative actions in public procurement, specifically concerning debarment and financial recovery based on product quality testing, must be backed by conclusive evidence. Failure to allow statutory retesting when initial internal results are disputed renders punitive orders arbitrary, unreasonable, and liable to be set aside upon judicial review.

Headnote:(A) Constitution of India - Articles 14, 19(1)(g) and 226 - Public procurement - Quality testing - Arbitrary action of debarment and recovery - Statutory sampling vs. pre-dispatch testing - Principles of natural justice.

(B) Judicial Review - State action in administrative contracts must be fair and reasonable. Non-application of mind in passing orders based on disputed test reports, especially when result of subsequent testing confirms the quality of goods, renders such administrative orders unsustainable in law. (Paras 6, 8, 9, 12, 13)

Facts of the case:
The petitioner, a successful bidder for supplying pharmaceutical products, faced recovery and debarment after pre-dispatch samples were declared not of standard quality. The petitioner challenged the procedure and requested statutory retesting of the products. During the pendency of the matter, the court directed the authorities to conduct retesting, which confirmed that the supplies met the prescribed quality standards.

Findings of Court:
Administrative authorities must act fairly and impartially in procurement matters. The court found that because later statutory tests confirmed the products met the necessary standards, the initial basis for recovery and debarment was legally invalid. The authority acted without due justification, exhibited non-application of mind, and ignored the rights of the supplier to verify quality standards.

Issues: Whether the administrative decision to debar a supplier and enforce financial recovery based solely on non-indicative pre-dispatch sampling, while refusing statutory retesting, is legally sustainable.

Ratio Decidendi: Administrative actions in public procurement must be founded on objective and verified data. When a contradictory report from a competent authority confirms the standard of the products, any punitive measures based on initial rejected samples without allowing for comprehensive verification are arbitrary, violative of fairness, and subject to being quashed.

Result: Petition allowed. The recovery and debarment orders are quashed and set aside with directions to refund the recovered amounts and security deposits with 6% interest.

Table of Content
1. factual history of tender, supply, testing, and subsequent dispute. (Para 1 , 2)
2. parties' contentions regarding statutory testing compliance and arbitrary debarment. (Para 3 , 4)
3. judicial assessment of evidence and non-standard quality allegations. (Para 5 , 6 , 7 , 8 , 9)
4. redressal through order to refund and quashing of arbitrary debarment. (Para 10 , 11 , 12 , 13)

JUDGMENT :

Hemant M. Prachchhak, J.

1. Present petition is filed by the petitioner under Articles 14, 19(1)(g) and 226 of the Constitution of India r/w the provision of the Drugs and Cosmetics Act, 1940 seeking below mentioned relief/s:-

“10. (A) This Hon'ble Court be pleased to issue a writ of mandamus or a writ, order or direction in nature of mandamus and be pleased to direct the Respondent to conduct sampling and testing of the drug Ascorbic Acid Tablets 500 mg (Chewable) having Item code no. 1021 and Batch no. T3528 under Drugs & Cosmetics Act, 1940 by notified Drugs Inspector & Government Analyst and to take any action solely on the basis of the Report pursuant to the said sampling:

(B) This Hon'ble Court be pleased to issue a writ of certiorari or a writ, order or direction in nature of certiorari and be pleased to quash and set aside recovery order numbered GMSCL/SDI/4757-66/2024-25 dated 27.02.2025 passed by the Respondent herein annexed at Annexure P-14:

(C) This Hon'ble Court be pleased to issue a writ of mandamus or a writ, order or direction in nature of mandamus and be pleased to direct the Respondent to refund an amount of Rs. 15,27,483/-deducted in pursuance to recovery order dated 27.02.2025;

(D) Pending the admission and final hearing of this writ petition, the Hon'ble Court be pleased to restrain the respondent from taking any further coercive action against the petitioner;

(E) Pending the admission and final hearing of the writ petition, the Hon'ble Court be pleased to stay the recovery order numbered GMSCL/SDI/4757-66/2024-25 dated 27.02.2025 passed by the Respondent herein annexed at Annexure P-14;

(F) Pending the admission and final hearing of the writ petition, the Hon'ble Court be pleased to direct the Respondent to conduct sampling and testing of the drug Ascorbic Acid Tablets 500 mg (Chewable) having Item code no. 1021 and Batch no. T3528 under Drugs & Cosmetics Act, 1940 by notified Drugs Inspector & Government Analyst;

(G) This Hon'ble Court be pleased to grant any other and further orders as may be deemed fit in the interest of justice

(H) This Hon'ble Court be pleased to issue a writ of mandamus or writ, order or direction in nature of mandamus and be pleased to quash and set aside the decision dated 11.11.2025 passed by the Respondent annexed at Annexure P-23

(I). This Hon'ble Court be pleased to issue a writ of certiorari or a writ, order or direction in nature of certiorari and be pleased to quash and set aside debarment order dated 20.12.2025 annexed at Annexure P-25

(J). Pending the admission and final hearing of this writ petition, the Hon'ble Court be pleased to stay the decision dated 11.11.2025 passed by the Respondent annexed at Annexure P-23 and debarment order dated 20.12.2025 annexed at Annexure P-25 and further be pleased to restrain the respondent from taking any further coercive action against the petitioner;”

2. The facts giving rise to present petition are that the Petitioner is constrained to approach this Hon’ble Court being aggrieved by the arbitrary and illegal action of the Respondent in failing to conduct statutory sampling and testing of the products supplied by the Petitioner in accordance with the provisions of the Drugs and Cosmetics Act, 1940, and in treating the said products as “Not of Standard Quality”, followed by issuance of show cause notice for debarment and passing of a recovery order.

2.1 It is the case of the petitioner that in the financial year 2020–2021, the Respondent floated a tender bearing T.E. No. GMSCL/D-669/RC/2020-21 for supply of pharmaceutical products including “Ascorbic

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2026 Supreme(Guj) 1047

IN THE HIGH COURT OF GUJARAT AT AHMEDABADHemant M. Prachchhak, J.Stallion Laboratories Private Limited – PetitionerVersusGujarat Medical Services Corporation Limited - RespondentSpecial Civil Application No. 12266 of 2025Decided On : 17-04-2026

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
Hemant M. Prachchhak, J.
Stallion Laboratories Private Limited – Petitioner
Versus
Gujarat Medical Services Corporation Limited - Respondent
Special Civil Application No. 12266 of 2025
Decided On : 17-04-2026