The main legal point established in the judgment is the importance of compliance with tender conditions and the principles of natural justice in the blacklisting process, especially in matters concerning public health.

JUDGMENT :

Senthilkumar Ramamoorthy, J.

(Prayer: Writ Appeal is filed under Clause 15 of Letters Patent, to set aside the order dated 28.02.2020 in W.P.No.25770 of 2019 and allow this appeal.)

1. The subject matter of this writ appeal is the order of black listing dated 12.12.2017 whereby the first Respondent herein was black listed for a period of five years from 05.12.2017 to 04.12.2022 for the supply of a spurious drug, namely, specific batches of Carbimazole tablets I.P. 5 mg. The Appellant is the Tamil Nadu Medical Services Corporation Limited which issued the blacklisting order.

2. The facts and circumstances related to the filing of this appeal are as follows. The Appellants are a Government of Tamil Nadu undertaking which is engaged in the procurement and supply of drugs and medical equipment to Government Hospitals in the State of Tamil Nadu. Pursuant to purchase orders issued to the first Respondent herein, the first Respondent supplied Carbimazole Tablets I.P. 5 mg. during the period 2016-2017. Upon testing, the Appellants found that specific batches of the aforesaid tablets were not of standard quality. Therefore, a show cause notice dated 02.08.2017 was issued to the first Respondent. By the show cause notice, the first Respondent was informed that, as regards Batch No.T-12701, a survey sample was drawn by the Central Drugs Inspector and by testing the said survey sample, it was reported that the drug is of spurious quality by the Central Drugs Testing Laboratory. Consequently, a statutory sample was taken from the same batch and the report thereon was awaited as of the date of the show cause notice. The first Respondent was informed that, as per Clause 20.2.1(e)(iii) and 20.2.1(f) of the tender condition 2016-17, if the sample fails in the quality test for ASSAY content of less than 50% as per the Government Analyst report and if three batches of a particular drug that are supplied by the supplier are reported to fail in the ASSAY content test, the product of the tendered would be blacklisted for two years. Accordingly, in terms of clause 20.2.4(i) of tender 2016-17, the first Respondent was called upon to show cause as to why action should not be initiated to blacklist the product as being not of 'standard quality'.

3. In addition, by the same show cause notice, the first Respondent was informed that upon receipt of the report from the Central Drug Testing Laboratory, if it is found that the drug is reported to be a spurious quality, the first Respondent would be liable to be blacklisted as per clause 20.2.1(f) & 20.2.2(c) of the tender conditions for a period of five years. Therefore, the first Respondent was called upon to provide an explanation within 7 days. By reply dated 18.08.2017, the first Respondent stated that the Joint Investigation Report shows that it is of standard quality. The Appellants were informed that these drugs were tested before acceptance and found to be of standard quality, and that it may have deteriorated later because it is a sensitive drug, which is required to be stored at a temperature below 30 degrees Celsius, and, consequently, if the said temperature is not maintained, the drug would deteriorate. The Appellants were requested to decide the case on merits by considering this explanation and also provide a personal hearing.

4. Thereafter, the analytical report dated 11.08.2017 was received from the Central Drugs Laboratory, Kolkatta, stating that the sample does not conform to I.P. with respect to identification and Assay of Carbimazole and that the sample is deemed to be spurious under Section 17B of the Drugs and Cosmetics Act, 1940 (the Drugs Act). By relying upon the aforesaid analytical report, the Appellants issued orders dated 07.12.2017 and 12.12.2017 whereby it was communicated that the first Respondent is blacklisted for a period of five years namely, from 05.08.2017 to 04.08.2022 for the supply of the spurious drug Carbimazole Tablets IP 5 mg (D.Code:270) as per the tender c