Firm debarment is a punitive measure that can only be initiated after product debarment (cancellation of rate contract for specific items) has occurred, as product debarment is a prerequisite for firm debarment under the bidding guidelines.

ORDER

Issue notice making it returnable on 22.05.2026.

Mr. D.P. Borah, the learned Standing Counsel, Health Department appears on behalf of all the respondents and accepts notice.

Extra copies of the writ petition be served upon him during the course of the day.

The petitioner herein who is a manufacturer and exporter of injections and other pharmaceutical products is aggrieved by the Debarment Order No. 582884/20068 dated 14.11.2025 as well as by the rejection of its representation dated 17.02.2026.

The learned Senior Counsel appearing on behalf of the petitioner submitted that the issue involved in the present proceeding is squarely covered by the judgment and order passed by this Court in Nestor Pharmaceuticals Limited & Another Vs. State of Assam & Others reported in (2025) SCC OnLine GAU 5168, wherein this Court has categorically held that without there being a product debarment upon cancellation of the rate contract for the item, the question of going into the firm debarment is not envisaged on a conjoint reading of Clause 5H(i) and Clause 5H(ii) of the Bidding Document. The learned Senior Counsel referred to paragraph Nos. 39 to 47 of the said judgment. Taking into account that the issue involved in the present proceeding is similar to the issue involved in Nestor Pharmaceuticals Limited (supra), this Court finds it pertinent to reproduce paragraph Nos. 39 to 47 of the said judgment hereinbelow:

39. In the backdrop of the above, let this Court further analyze Clause 5H(i) of the Bidding document which would show that upon issuance of a purchase order to the L1 bidder or to any other bidder who agrees to supply at the L1 rate and if there is a failure to supply or there is a incomplete supply to the extent of less than 90% of the total ordered quantity, the rate contract for the essential drug would be cancelled and upon such cancellation, the manufacturer/importer firm shall be debarred from participating in any bid called by the authority for five years from the date of debarment for that essential drug/item. The cancellation of the rate contract would be qua the L1 bidder or the parallel rate contract qua the bidders who matches the L1 rate. It may not be out of place to observe herein that in a circumstance, where there is no parallel rate contract but only one rate contract and the said rate contract being cancelled, it would lead to a fresh procurement process for the purpose of ascertaining the lowest price for the item in question. It is under such circumstances, Clause 5H(i) of the Bidding document imposes a penalty of Product Debarment in respect to the item for a period of 5 years. Such penalty is in a form of deterrent so that the supplier does not fail to supply or supplies less than 90% of the total ordered quantity.

40. Clause 5H(ii) of the Bidding document pertains to 'Firm Debarment' i.e. the manufacturer or the importer with whom a rate contract has been entered into for less than three items when debarred for all the items or when the manufacturer/supplier is debarred at least for three items where it holds rate contract for more than or equal to three items. It is to be kept in mind that Firm Debarment is a more punitive action than a Product Debarment inasmuch as upon Product Debarment, only one item is debarred whereas in the case of Firm Debarment, the manufacturer as a whole is debarred irrespective of how many items it had a Rate Contract.

41. This Court finds it pertinent to observe that the recourse to Firm Debarment can only take place when a manufacturer is debarred for all items where it has a rate contract for less than three items and a manufacturer would be debarred when the manufacturer has a rate contract of more or equal to three items and three items have been debarred. It is apposite to observe that the items first have to be debarred by cancellation of the rate contract or in other words, Product Debarment precedes Firm Debarment.

42. It is therefore the opinion of this Court that