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IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JAIPUR
MAHENDAR KUMAR GOYAL, J.
The Pharmaceutical Corporation (Indian Medicines) Kerala Ltd. – Petitioner
Versus
State of Rajasthan – Respondent
S.B. Civil Writ Petition No. 18372 of 2019
Decided On : 23-01-2023
PUBLIC PROCUREMENT - BLACKLISTING - VALIDITY - PRINCIPLES OF NATURAL JUSTICE - SHOW CAUSE NOTICE - SUPPLY OF SUBSTANDARD MEDICINE - SHORT SUPPLY OF MEDICINES - PENALTY - INTERPRETATION OF TENDER CONDITIONS - JUDICIAL REVIEW.
Fact of the Case:
The petitioner, a pharmaceutical company, challenged the blacklisting order issued by the respondents for supplying substandard medicine and short supply of certain medicines. The petitioner contended that the blacklisting order was illegal and void as it was passed without providing a copy of the test reports along with the show cause notice, not considering the petitioner's reply to the show cause notice, and imposing a disproportionate penalty.
Finding of the Court:
The court held that the blacklisting order was illegal and void for the following reasons: 1. The respondents failed to provide a copy of the test reports along with the show cause notice, which prejudiced the petitioner's ability to defend the allegations. 2. The respondents did not consider the petitioner's reply to the show cause notice, which violated the principles of natural justice. 3. The penalty of blacklisting was disproportionate to the error found, as the petitioner had already returned the entire lot of the substandard medicine to the respondents. 4. The show cause notice for short supply of medicines did not specify the penalty of blacklisting, which was required under the tender conditions.
Issues: 1. Whether the blacklisting order was illegal and void for non-compliance with the principles of natural justice? 2. Whether the penalty of blacklisting was disproportionate to the error found? 3. Whether the show cause notice for short supply of medicines was valid?
Ratio Decidendi: 1. The principles of natural justice require that a party be given a fair opportunity to defend itself against allegations made against it. This includes the right to receive a copy of the evidence against it and to respond to the allegations. 2. The penalty imposed must be proportionate to the error found. In this case, the petitioner had already returned the entire lot of the substandard medicine to the respondents, and therefore, the penalty of blacklisting was disproportionate. 3. A show cause notice must specify the penalty that may be imposed if the allegations are proven. In this case, the show cause notice for short supply of medicines did not specify the penalty of blacklisting, and therefore, the blacklisting order was illegal.
Final Decision: The court allowed the writ petition and quashed the blacklisting order.
ORDER :
1. This writ petition is filed with following prayer:
(b) Direct that directs the respondents to permit the petitioner to participate in all future tenders floated by them subject to their qualification.
(c) Costs of the writ petition may kindly be awarded to the petitioners.
(d) Any other appropriate order or direction, which this Hon’ble Court considers just and proper in the facts and circumstances of this case, may kindly be passed in favour of the petitioner.”
2. At the outset, learned Senior Counsel for the petitioner confines his prayer to the legality and validity of the aforesaid orders to the extent whereby, it has been blacklisted and not qua imposition of penalty for short supply.
3. The relevant facts in brief are that on remaining successful in the NIT dated 22.11.2016 floated by the respondents for supply of Ayurvedic medicines, an agreement dated 20.03.2017 was entered in between the petitioner and the respondents. Vide purchase order dated 24.03.2017, the petitioner was required to supply 14 Ayurvedic medicines including Eladi Gutika. Present dispute confines to supply of medicine Eladi Gutika. Considering the technical problem being faced by the petitioner in manufacturing of medicine ‘Eladi Gutika’ the respondents, vide letter dated 27.04.2018, cancelled its purchase order with immediate effect. Vide its Notice No. 1195-97 dated 17.06.2019, proposing a penalty under Clause 49 (5) of the tender conditions, an explanation of the petitioner was called for supply of substandard ‘Eladi Gutika’ medicine based upon a Government recognized laboratory report as also subsequent report of the Govt. Ayurveda Laboratory, Ajmer dated 07.03.2018. Vide another show cause notice No. 1192-94 dated 17.06.2019, explanation of the petitioner was called for short supply of certain medicines failing which action under Clause 16 of the tender conditions was proposed. Vide office order No. 1684-94 dated 02.08.2019 referring to the two reports wherein, the medicine ‘Eladi Gutika’ was found to be substandard, the petitioner was blacklisted for a period of three years. Vide another office order No. 1662-72 dated 02.08.2019, along with penalty of Rs. 1,44,015/- the petitioner was also blacklisted for a period of three years for short supply of medicines. The office order dated 02.08.2019 qua blacklisting for a period of three years was revised by the respondents vide office order No. 2164-74 dated 09.10.2019 whereby, the period of blacklisting was reduced to three months subject to deposition of the amount of penalty imposed upon the petitioner for short supply. The penalty imposed vide order No. 1662-72 dated 02.08.2019 was also revised and reduced vide office dated 09.10.2019 to Rs. 46,053/- with modification in period of blacklisting for three years to three months. It is admitted case of the parties that the aforesaid penalty was deposited by the petitioner within the prescribed time as also that the lot of medicine ‘Eladi Gutika’ supplied before cancellation of its purchase order, was returned back to the petitioner by the respondents without consumption.
4. Assailing the order, learned Senior Counsel for the petitioner submitted that once the supply order for medicine ‘Eladi Gutika’ was cancelled by the respondents vide order dated 27.04.2018, there was no occasion for them to have issued the petitioner a show cause notice more than one year thereafter proposing a penalty of blacklisting alleging the medicine to be substandard.
The principles of natural justice require that a party be given a fair opportunity to defend itself against allegations made against it. This includes the right to receive a copy of the evidence agai....
The impugned order violated principles of natural justice and tender conditions, leading to its setting aside by the court.
The court emphasized the necessity of a specific show cause notice before blacklisting, ensuring compliance with natural justice principles.
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