VETINDIA PHARMACEUTICALS LIMITED versus STATE OF UTTAR PRADESH AND ANOTHER

Citation: [2020] 9 S.C.R. 607 · Decided: 06-11-2020 · Supreme Court of India · Bench: R.F. NARIMAN · Disposal: Appeal(s) allowed

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Judgment (excerpt)

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VETINDIA PHARMACEUTICALS LIMITED
v.
STATE OF UTTAR PRADESH AND ANOTHER
(Civil Appeal No. 3647 of 2020)
NOVEMBER 06, 2020
[R. F. NARIMAN, NAVIN SINHA AND
KRISHNA MURARI, JJ.]
Drugs:
Blacklisting of drug – Propriety of – Drug in question
manufactured by appellant-company  (a valid licence-holder) –
Supplied to respondent-State – By a supplier as per a Tender –
Order of Blacklisting of the drug was served by the State to the
manufacturing company, in terms of Tender clauses – Writ petition
– Dismissed in limine  on the ground of 10 years delay in filing the
petition – Appeal to Supreme Court – Held: In absence of any supply
by the manufacturing company, the order of blacklisting invoking
Tender clauses is a fundamental flaw and hence not sustainable –
An order of blacklisting beyond 3 years or maximum 5 years is not
justified – As the manufacturing company had been pursuing the
matter with the Authorities, the Writ Petition was not barred by
unexplained delay – Delay.
Limitation:
Limitation period – For filing writ petition – Held: High Court
may decline to exercise its discretionary writ jurisdiction, on the
ground of delay – But it is only a rule of discretion and not a
mandatory requirement – Limitation Act stricto sensu does not apply
to writ jurisdiction – Therefore, such discretion has to be judicious
exercised – Constitution of India – Art. 226 – Limitation Act, 1963
– Delay.
Allowing the appeal, the Court
HELD: 1.1 There is no dispute that the injection was not
supplied to the respondents by the appellant. Yet the show cause
notice dated 21.10.2008 referred to further action in terms of the
Tender for supplying misbranded medicine to the respondent.
[2020] 9 S.C.R. 607
607
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SUPREME COURT REPORTS
[2020] 9 S.C.R.
Furthermore, the show cause notice did not state that action by
blacklisting was to be taken, or was under contemplation. It only
mentioned appropriate action in accordance with the rules of the
Tender. The fact that the terms of the tender may have provided
for blacklisting is irrelevant in the facts of the case. In absence of
any supply by the appellant, the order of blacklisting dated
08.09.2009 invoking Clauses 8.12 and 8.23 of the Tender is a
fundamental flaw, vitiating the impugned order on the face of it
reflecting non application of mind to the issues involved. Even
after the appellant brought this fact to the attention of the
respondents, they refused to pay any heed to it. Further, it
specifies no duration for the same. [Para 9][613-C-E]
1.2 An order of permanent debarment is unjustified. An
order of blacklisting beyond 3 years or maximum 5 years is
disproportionate. An order of blacklisting operates to the
prejudice of a commercial person not only in praesenti but also
puts a taint which attaches far beyond and may well spell the death
knell of the organisation/institution for all times to come described
as a civil death. The repercussions on the appellant were clearly
spelt out by it in the representations as also in the writ petition,
including the consequences under the Rajasthan tender, where
it stood debarred expressly because of the present impugned
order. The possibility always remains that if a proper show cause
notice had been given and the reply furnished would have been
considered in accordance with law, even if the respondents
decided to blacklist the appellant, entirely different considerations
may have prevailed in their minds especially with regard to the
duration. [Para 13][616-A-C]
Kulja Industries Limited v. Chief General Manager,
Western Telecom Project Bharat Sanchar Nigam Limited
and Others (2014) 14 SCC 731 : [2013] 14 SCR 430;
M/s Daffodills Pharmaceuticals Ltd. & Anr. v. State of
U.P. & Anr. 2019 (17) SCALE 758 – relied on.
1.3 If the respondents had expressed their mind in the show
cause notice to blacklist, the appellant could have filed an
appropriate response to the same. The insistence of the
respondents to support the impugned order by reference to the
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terms of the tender cannot cure the illegality in absence of the
appellant being a successful tenderer and supplier. Therefore
the order of blacklisting dated 08.09.2009 stands vitiated from
the very inception on more than one ground and merits
interference. [Para 12][615-F-G]
M/s. Erusian Equipment & Chemicals Ltd. v. State of
West Bengal and Another (1975) 1 SCC 70 : [1975] 2
SCR 674; Joseph Vilangandan v. The Executive
Engineer, (PWD), Ernakulam and Others

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