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2022 Supreme(Ori) 375

IN THE HIGH COURT OF ORISSA AT CUTTACK
B.R.SARANGI, SANJAY KUMAR MISHRA, JJ.
M/s Kamala Agencies – Appellant
Versus
State of Odisha and another – Respondents
W.P.(C) No. 17471 of 2022
Decided on : 11-08-2022

Advocate Appeared:
For the Appellant :Mr. Pitambar Acharya, Mr. S.S. Tripathy, Advocate
For the Respondent:Mr. P.P. Mohanty, Mr. A.K. Parija, M/s P.K. Muduli, C.K. Rout and S.C. Choudhury, Advocates

Headnote:(A) Constitution of India - Articles 14, 19(1)(g), 21, and 300-A - Tender exclusion of distributors - Petitioner, a registered distributor, challenged clause barring distributors from bidding on grounds of arbitrariness and violation of public interest - Previous successful tenders included distributors, but new policy restricts competition to manufacturers only, creating potential monopoly - Court found exclusion unjustified and arbitrary, harming public interest - Quashed the exclusion clause, allowing all eligible bidders to participate in future tenders. (Paras 1, 44, 82)

(B) Administrative Law - Judicial review of contract - Government action must be reasonable, fair, and free from bias - Exclusion of bidders must have a rational basis to ensure fair competition in public tenders. (Para 78)

(C) Public Procurement - Principles of fairness and transparency - Any clauses that restrict competition without justifiable reasons violate constitutional rights. (Para 72)

Facts of the case:
The petitioner, a registered firm supplying veterinary drugs, challenged the exclusion of distributors in tender documents issued by the Odisha State Medical Corporation, arguing the clause was arbitrary and created monopoly for manufacturers.

Findings of Court:
The exclusion clause was found arbitrary, unfair, and detrimental to public interest, warranting judicial intervention.

Issues: Whether the exclusion of distributors from the tender process was justified and in compliance with constitutional provisions.

Ratio Decidendi: The court ruled that excluding distributors lacked justification and violated principles of fairness and equality, emphasizing the right to participate in public tenders.

Result: Writ Petition allowed; Clause-5.2.4 quashed, instructing fresh tenders to include all eligible participants.

Table of Content
1. background of petitioner and the tender process (Para 1 , 2)
2. petitioner's arguments against exclusion (Para 3 , 4)
3. court's observations and reasoning (Para 5 , 6 , 7 , 8 , 9 , 10 , 11 , 12 , 13 , 14 , 15 , 16 , 17 , 18 , 19 , 20 , 21 , 22 , 23 , 24 , 25 , 27 , 28 , 29 , 30 , 31 , 32 , 33 , 34 , 35 , 36 , 37 , 38 , 39 , 40 , 41 , 42)
4. judicial principles and legal reasoning applied (Para 43 , 44 , 45 , 46 , 47 , 48 , 49 , 50 , 51 , 52 , 53 , 54 , 55 , 56 , 57 , 58 , 59 , 60 , 61 , 62 , 63 , 64 , 65 , 66 , 67 , 68 , 69 , 70 , 71 , 72 , 73 , 74 , 75 , 76 , 77 , 78 , 79 , 80 , 81)
5. final order of the court (Para 82 , 83)

JUDGMENT :

B.R. SARANGI, J.

The Petitioner, which is a registered Proprietorship Firm, by means of this Writ Petition seeks to quash Clause-5.2 of the Tender Call Notice bearing Bid Reference No.OSMCL/2022-23/DRUGS-VETERINARY/14 dated 20.06.2022 under Annexure-7, and to issue direction to the Opposite Parties to allow it to participate in the tender process for the year 2022-23.

2. The factual matrix of the case, in a nutshell, is that Petitioner, being a registered Dealer, Whole-seller, Supplier and Distributor of veterinary drugs, medicines, vaccines, chemicals, veterinary instruments and equipments having valid registration and permission from the State as well as Central Government Authorities, has been supplying the items, as mentioned above, to various Government/Semi-Government Organizations as well as PSUs for the last 15 years at a highly competitive price. The Petitioner is the prime Distributor of veterinary items of reputed international companies like Cadila Healthcare Limited, Zydus and Boehringer Ingelheim etc.

2.1 The Director, Animal Husbandry and Veterinary Services, issued Tender Call Notice for supply of veterinary drugs/medicines and vaccines for the years 2015-16, 2017-18 and 2019-20 fixing the eligibility criteria that the tenderer should be a Manufacturer or authorized Distributor or authorized Dealer having valid registration of the product, along with three years experience in supplying veterinary drugs/medicines, vaccines, instruments and equipments of its own manufacturing or of reputed Manufacturers of national level to Government/Semi-Government, PSUs, UNO agencies. In the Tender Call Notice for the years 2017-18 and 2019-20, mention had been made that tenderer’s annual business turn-over in supplying veterinary drugs/medicines, vaccines, instruments and equipments should be Rs.5 crores for preceding three years. The Petitioner, having satisfied the condition stipulated in the tender documents, participated in the tender process and came out successful for the year 2015-16, 2017-18 and 2019-20 and consequentially bilateral agreements were duly executed with the Petitioner and on the basis of purchase orders issued, it had carried on supplying the required items.

2.2 The Director, Animal Husbandry and Veterinary Services, invited tender for supply of veterinary drugs/medicines and vaccines for the year 2020-21, vide Bid Reference No. DAHVS/2020-21/Veterinary Drugs/01 dated 04.12.2020. But the Distributors, like the Petitioner, who were otherwise allowed to participate in the process of bid in the preceding years, were restricted from participating in the tender process. Subsequently, vide letter dated 24.03.2021, the tender for the year 202021 was cancelled on the ground that certain procedural lapses were observed in the said tender process by the Departmental Tender Committee. As a consequence thereof, for the year 2020-21, as the agreement with the Petitioner for the year 2019-20 was still subsisting, vide letter dated 05.07.2021, indent for supply of medicines, vaccines, instruments and equipments was placed by the Directorate of Animal Husbandry and Veterinary Services.

2.3 Deviation to the earlier practice, the tender for supply of veterinary items like vete

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