GROSONS PHARMACEUTICALS (P) LTD. AND ANR. versus THE STATE OF UTTAR PRADESH AND ORS.

Citation: [2001] SUPP. 2 S.C.R. 567 · Decided: 05-09-2001 · Supreme Court of India · Bench: V.N. KHARE · Disposal: Dismissed

Judgment (excerpt)

GROSONS PHARMACEUTICALS (P) LTD. AND ANR. 
A 
V. 
THE STATE OF UTTAR PRADESH AND ORS. 
SEPTEMBER 5, 2001 
[V.N. KHARE AND B.N. AGRAWAL, JJ.] 
B 
Administrative Law-Approved Contractor-Supply of drugs 
Irregularities-Show Cause notice issued-Blacklisting ordered-Validity of-
Held: Valid, since sufficient opportunity given-No violation of principles of C 
audi alterem partem. 
The appellant was an approved Contractor for supply of drugs to the 
respondent, the State of U.P. On noticing certain irregularities in supplying 
of drugs. Vigilance inquiry was set up and criminal prosecution was launched 
against appellant under provision of Prevention of Corruption Act read with D 
Sec. 120, l.P.C. A Show Cause notice was issued to the appellant. Thereafter, 
Respondent ordered blacklisting the appellant till final disposal of the pending 
matter and also final decision in the investigation of proceeding initiated 
against appellant. 
The appellant challenged the order of the respondent by way of a writ E 
petition, which was dismissed by the High Court. The appellant filed S.L.P 
before this Court. The Court gave direction to respondent to reconsider the 
matter considering the explanation submitted by the appellant, keeping the 
impugned order intact. The respondent reconsidered the matter and affirmed 
its earlier order. 
The appellant again challenged the order before the High Court by filing 
a writ petition which was dismissed on the ground that detailed reasons were 
recorded by the respondent before passing impugned order. Hence this appeal. 
F 
The appellant contended that the respondent ought to have supplied all 
the materials on the basis of which charges contained in the show cause notice G 
were based. 
Dismissing the appeal, the Court 
HELD: The appellant has only contractual relationship with the H 
567 
568 
SUPREME COURT REPORTS [2001] SUPP. 2 S.C.R. 
A respondent-State Government of U.P. and the said relationship is not governed 
by any statutory rules to make it obligatory on the respondent to issue show 
cause notice before passing order blacklisting the appellant. However, since 
the order blacklisting the appellant has Civil consequences, principle of audi-
alteram partem, one of the principles of Natural Justice need to be followed. 
B However, supplying of materials on the basis of which charges against 
appellant were based was not the requirement of the -said principle. An 
opportunity to show cause was sufficient. Hence procedure adopted by the 
respondent was in conformity with the principle of Natural Justice. [569-E, F) 
c 
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 708 of 
1993. 
From the Judgment and Order dated 24.8.91 of the Allahabad High 
Court in W .. P No. 2746 (M/B) of 1991. 
Ravi P Mehrotra, M.P.S. Tomar, Ms. Deepti R Mehrotra and Ms. 
D Sandhya Goswami for the Appellants. 
R.B. Mehrotra, and A.K. Srivastava for the Respondents. 
The Judgment of the Court was delivered by 
V. N. KHARE, J. The appellant herein is a small scale industry engaged 
E in manufacture and sale of drugs and was registered with the Directorate of 
Industry (Stores Purchase Section), Kanpur, U.P. As a result of the aforesaid 
registration, the appellant was an approved contractor for supply of drugs to 
the government departments. The appellant, in pursuance thereof, had been 
supplying drugs to the U.P. government. It appears that that certain 
F irregularities came to the notice of the government in purchase of medicines 
and, therefore, a vigilance 111quiry was set up as a result of which the record 
and product of the appellant were seized. Further, criminal prosecution was 
also launched against the appellant under provisions of Prevention of 
Corruption Act read with Section 120 !PC. Under such circumstances, the 
State government served a notice on the appellant to show cause why it 
G should not be blacklisted in its dealing with the government. It appears that 
the appellant sent a reply to the show cause notice. The State Government on 
expiry of the period for reply by the appellant passed an order blacklisting 
the appellant. The order indicated that the period of blacklisting will be till 
the disposal of the case pending in the Court as well as till the final decision 
H is arrived at in the investigation of proceedings instituted against the firm on 
• 
GROSONS PHARMACEUTICALS (P) LTD. v. STATE [V.N. KHARE, J.] 569 
various accounts. The appellant challenged the aforesaid order by means of A 

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