Patna High Court Dismisses Plea Against Blacklisting Of Supplier For Quality Deficient Oral Medicines

The High Court of Judicature at Patna has upheld the decision to blacklist a pharmaceutical supplier following the discovery of multiple batches of "Not of Standard Quality" (NSQ) medication. A bench comprising Hon'ble Acting Chief Justice Sudhir Singh and Hon'ble Mr. Justice Rajesh Kumar Verma dismissed the writ petition, reinforcing that procurement entities must prioritize public health over the interests of individual contractors.

Case Background

The dispute arose between the Bihar Medical Services and Infrastructure Corporation Ltd. (BMSICL) and M/s. Sam Kem. Following a tender process, the supplier was contracted to provide Oral Rehydration Salts (O.R.S.) for distribution across various healthcare facilities in Bihar. During routine post-shipment quality verification, seven batches of the product were declared non-compliant with standard quality requirements based on seal test parameters. Following two separate show-cause notices and the supplier's failure to demonstrate compliance upon retesting, the Corporation proceeded to blacklist the company for a period of two years and cancelled all pending purchase orders.

Arguments Presented

The petitioner contended that the initial show-cause notices failed to explicitly mention the proposed blacklisting penalty, claiming a violation of the principles of natural justice. They further argued that the summary cancellation of unexecuted purchase orders ran counter to tender conditions, which suggested that future supplies should merely be subject to heightened scrutiny.

Conversely, the respondents maintained that the procurement process followed a strictly defined quality assurance mechanism—a framework voluntarily accepted by the petitioner upon signing the agreement. Counsel argued that the "seal test" is a critical parameter for O.R.S., as moisture ingress can compromise the drug’s effectiveness and pose significant risks to public health.

Legal Analysis

The Court’s analysis centered on the contractual obligations accepted by the supplier. Relying on established precedents such as Michigan Rubber (India) Ltd. v. State of Karnataka and Afcons Infrastructure Ltd. v. Nagpur Metro Rail Corporation Ltd. , the bench emphasized that courts must show restraint in commercial matters. The judiciary, the Court noted, should not sit as an appellate body over technical experts unless the decision-making process is fundamentally arbitrary, biased, or irrational. The Court observed that in matters of public health, the government entity’s interpretation of its own technical tender requirements is entitled to significant deference.

Key Observations

  • "In matters involving procurement of medicines for public distribution, the procuring agency is under a heightened obligation to ensure that only products satisfying the prescribed quality standards reach the beneficiaries."
  • "The Court is concerned with the decision-making process and not with the merits of the decision itself."
  • "The author of the tender document is the best judge of its requirements and the Court should exercise restraint while reviewing decisions taken in contractual matters."

Court's Decision

Finding no evidence of mala fides or procedural arbitrariness, the Patna High Court dismissed the petition. The ruling establishes that state-run procurement agencies, when following established contractual protocols, are empowered to take strict action—including blacklisting—against suppliers whose products fail critical quality tests. The verdict signals a firm judicial stance on upholding the integrity of public healthcare supply chains.