Kerala High Court
Bharat Parenterals Limited vs State Of Kerala on 23 July, 2025
Author: N.Nagaresh
Bench: N.Nagaresh
2025:KER:55099
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR.JUSTICE N.NAGARESH
WEDNESDAY, THE 23RD DAY OF JULY 2025 / 1ST SRAVANA, 1947
WP(C) NO. 44799 OF 2024
PETITIONER:
BHARAT PARENTERALS LIMITED
REPRESENTED BY ITS GENERAL MANAGER REGISTERED
OFFICE & WORKS: SURVEY NO. 144-A, JAROD-SAMLAYA
ROAD, VIII, HARIPURA, TA. SAVLI, DIST. VADODARA
(GUJARAT), INDIA, PIN - 391520
BY ADVS.
SMT.M.U.VIJAYALAKSHMI
SRI.K.JAJU BABU (SR.)
SRI.BRIJESH MOHAN
SHRI.SACHIN RAMESH
SHRI.MANIKANTAN S.KANDATHIL
RESPONDENTS:
1 STATE OF KERALA,
REPRESENTED BY SECRETARY TO GOVERNMENT
DEPARTMENT OF HEALTH AND FAMILY WELFARE,
GOVERNMENT SECRETARIAT,
THIRUVANANTHAPURAM, PIN - 695001
2025:KER:55099
W.P.(C) No.44799/2024
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2 THE KERALA MEDICAL SERVICES CORPORATION LTD,
THYCAUD P.O, THIRUVANANTHAPURAM REPRESENTED BY
ITS MANAGING DIRECTOR, PIN - 695014
3 THE MANAGING DIRECTOR
THE KERALA MEDICAL SERVICES CORPORATION LTD,
THYCAUD P.O, THIRUVANANTHAPURAM, PIN - 695014
BY ADV
SHRI.M.AJAY, SC, KERALA MEDICAL SERVICES
CORPORATION LTD.
DHEERAJ A.S., GOVERNMENT PLEADER
THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY
HEARD ON 04.06.2025, THE COURT ON 23.07.2025 DELIVERED
THE FOLLOWING:
2025:KER:55099
W.P.(C) No.44799/2024
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N. NAGARESH, J.
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W.P.(C) No.44799 of 2024
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Dated this the 23rd day of July, 2025
JUDGMENT
~~~~~~~~~ The petitioner, a Pharmaceutical Company, is aggrieved by the cancellation of Letter of Intent and purchase orders granted to them as also the termination of contract.
2. The petitioner participated in Ext.P1 tender floated by the 2nd respondent-Kerala Medical Services Corporation Limited. The petitioner being the lowest bidder was issued with Exts.P3 and P4 Letters of Intent.
3. A notice was issued by the Gujarat Medical Services Corporation Limited (GMSCL) on 23.04.2024 debarring the petitioner for five years with effect from 26.12.2023, as per Ext.P5. The petitioner informed about 2025:KER:55099 W.P.(C) No.44799/2024 :4: Ext.P5 to the 3rd respondent-Managing Director of KMSCL. Pursuant to Exts.P3 and P4, Exts.P7 to P10 purchase orders were issued to the petitioner.
4. However, to the surprise of the petitioner, the 2nd respondent issued Ext.P13 show-cause notice dated 15.06.2024 proposing to cancel the Letter of Intent and purchase orders issued to the petitioner. The petitioner submitted Ext.P14 reply. A hearing was conducted on 23.08.2024. The 2nd respondent thereafter issued Ext.P17 proceedings dated 20.11.2024 cancelling the purchase orders and the Letters of Intent. There was direction to forfeit the EMD submitted by the petitioner for ₹1,49,13,900/- and also to make alternate purchase at the risk and cost of the petitioner.
5. The petitioner states that as per Clause 6.39.1, a bidder/supplier whose contract has been terminated by the tender inviting authority may, within 15 days, appeal to the Government. The petitioner has therefore filed Ext.P20 appeal dated 01.12.2024.
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6. The petitioner states that none of the legal and factual contentions raised by the petitioner are referred to or considered in Ext.P17. Ext.P17 is vitiated by non-application of mind. Ext.P5 order of the GMSCL was not challenged by the petitioner since GMSCL had indicated their intention to review Ext.P5. Ext.P5 debarment order issued by GMSCL cannot be extended to other State Medical Corporations or entities. The petitioner therefore prayed to set aside Exts.P13 and P17.
7. Respondents 2 and 3 filed counter affidavit. Respondents 2 and 3 submitted that even before issuing Letter of Intent by respondents 2 and 3, the GMSCL had blacklisted the petitioner for a period of five years from 26.12.2023. It is true that the petitioner received the letter only on 30.04.2024. The petitioner waited till 17.05.2024 before communicating the debarment by GMSCL to respondents 2 and 3. Ext.P6 letter was received by respondents 2 and 3 only on 29.05.2024.
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8. As per the terms of agreement, respondents 2 and 3 are entitled to terminate the contract with the petitioner and to take consequential steps. The writ petition is therefore without any merit and is liable to be dismissed.
9. I have heard the learned counsel for the petitioner and the learned Standing Counsel appearing for respondents 2 and 3. I have also heard the learned Government Pleader representing the 1st respondent.
10. The petitioner was awarded with Letter of Intent for supply of drugs in the month of May, 2024 as per Exts.P3 and P4. By the time, the GMSCL had issued letter dated 23.04.2024 debarring the petitioner for five years with effect from 26.12.2023 as per Ext.P5. The petitioner received that letter only on 30.04.2024. It was obligatory on the part of the petitioner to communicate such penal actions to respondents 2 and 3. The petitioner therefore submitted Ext.P6 intimation dated 17.05.2024 to the 3rd respondent. By the time, respondents 2 and 3 had issued Exts.P7 to P10 purchase 2025:KER:55099 W.P.(C) No.44799/2024 :7: orders.
11. On coming to know of Ext.P5, the 2nd respondent has issued Ext.P17 deciding to terminate the contract and to cancel the purchase orders. The contention of the petitioner is that the validity of Ext.P5 is being reconsidered by GMSCL and it is ignoring this fact that the 3rd respondent has issued Ext.P17. The petitioner would submit that Ext.P5 itself was issued without notice and therefore it cannot stand the scrutiny of law.
12. The petitioner's contract has been terminated with risk and cost. As per Clause 5.2.9 of the tender document and Clauses 6.22.4 and 6.40.3, a tender issuing authority is not empowered to forfeit the EMD or realise any risk and cost when there is no mistake committed by the contractor.
13. As far as respondents 2 and 3 are concerned, the petitioner has not violated any agreement conditions. However, EMD of the petitioner is ordered to be forfeited. When this writ petition came up for admission, this Court had passed an interim order dated 16.12.2024 directing 2025:KER:55099 W.P.(C) No.44799/2024 :8: respondents 2 and 3 not to encash the EMD for the purpose of recovering any amount towards the terminated contract.
14. If the petitioner has been blacklisted by GMSCL without notice and without grant of an opportunity of hearing, there is every likelihood that the GMSCL may withdraw/cancel the blacklisting. If in the meanwhile the petitioner is proceeded against by the KMSCL forfeiting the EMD and recovering the loss invoking the risk and cost clause, the petitioner will be put to untold hardship.
15. The petitioner has preferred Ext.P20 appeal before the Government. In the facts of the case, I am of the view that the 1st respondent shall consider the appeal and take appropriate decision, till which time coercive recovery proceedings can be deferred.
The writ petition is disposed of directing the 1st respondent to consider Ext.P20 appeal and take appropriate decision thereon as early as possible and at any rate within a period of two months from the date of receipt of a copy of this judgment. Coercive proceedings against the petitioner for 2025:KER:55099 W.P.(C) No.44799/2024 :9: recovery of risk and cost element shall stand deferred till the 1st respondent takes a decision on Ext.P20 appeal. The benefit of the interim order passed by this Court on 16.12.2024 will continue to enure to the benefit of the petitioner till the 1st respondent takes a decision on Ext.P20.
Sd/-
N. NAGARESH, JUDGE aks/21.07.2025 2025:KER:55099 W.P.(C) No.44799/2024 : 10 : APPENDIX OF WP(C) 44799/2024 PETITIONER'S EXHIBITS Exhibit P1 TRUE COPY OF THE RELEVANT EXTRACT OF THE TENDER NOTIFICATION VIDE NO.
NO.KMSCL/ED/I&II/RC/2023/020 PUBLISHED ON 23.12.2023 BY THE 2ND RESPONDENT Exhibit P2 TRUE COPY OF THE BID ACKNOWLEDGEMENT NOTIFIED IN THE E-TENDERING SYSTEM IN THE NAME OF PETITIONER ON 16.01.2024 Exhibit P3 TRUE COPY OF LETTER OF INTENT KMSCL/ED/40/2023 DATED 13.05.2024 ISSUED BY THE 2ND RESPONDENT TO THE PETITIONER Exhibit P4 TRUE COPY OF THE LETTER OF INTENT KMSCL/ED/40/2023 DATED 17.05.2024 ISSUED BY THE 2ND RESPONDENT TO THE PETITIONER Exhibit P5 TRUE COPY OF THE DEBARMENT NOTICE VIDE REF.NO.GMSCL/DRUGS/DEBAR/2024-25 DATED 23.04.2024 FORWARDED BY THE GUJARAT MEDICAL SERVICES CORPORATION LIMITED Exhibit P6 TRUE COPY OF THE INTIMATION DATED 17.05.2024 GIVEN BY THE PETITIONER TO THE 3RD RESPONDENT Exhibit P7 TRUE COPY OF THE PURCHASE ORDER NO.KMSCL/D-I/00171/24-25 DATED 16.05.2024 FORWARDED BY THE 2ND RESPONDENT TO THE PETITIONER.
Exhibit P8 TRUE COPY OF THE PURCHASE ORDER NO.KMSCL/D-I/00185/24-25 DATED 18.05.2024 FORWARDED BY THE 2ND RESPONDENT TO THE PETITIONER Exhibit P9 TRUE COPY OF THE PURCHASE ORDER NO.KMSCL/D-I/00317/24-25 DATED 20.05.2024 FORWARDED BY THE 2ND RESPONDENT TO THE PETITIONER Exhibit P10 TRUE COPY OF THE PURCHASE ORDER NO.KMSCL/D-I/00303/24-25 DATED 20.05.2024 FORWARDED BY THE 2ND RESPONDENT TO THE PETITIONER 2025:KER:55099 W.P.(C) No.44799/2024 : 11 : Exhibit P11 TRUE COPY OF THE LETTER VIDE REF.NO.BPL/KMSCL/24-25/0253 DATED 27.05.2024 FORWARDED BY THE PETITIONER TO THE 3RD RESPONDENT Exhibit P12 TRUE COPY OF THE LETTER DATED 03.06.2024 FORWARDED BY THE PETITIONER TO THE 3RD RESPONDENT.
Exhibit P13 TRUE COPY OF THE SHOWCAUSE NOTICE NO.KMSCL/ED/I&II/38-BPL/2024 DATED 15.06.2024 ISSUED BY THE 2ND RESPONDENT TO THE PETITIONER Exhibit P14 TRUE COPY OF THE REPLY DATED 27.06.2024 SUBMITTED BY THE PETITIONER BEFORE THE 3RD RESPONDENT Exhibit P15 TRUE COPY OF THE HEARING NOTICE DATED 17.08.2024 VIDE NO.KMSCL/ED/I&II/38-
BPL/2024 FORWARDED BY THE 3RD RESPONDENT TO THE PETITIONER.
Exhibit P16 TRUE COPY OF THE HEARING NOTE SUBMITTED BY THE COUNSEL FOR THE PETITIONER BEFORE THE 3RD RESPONDENT ON 23.08.2024 Exhibit P17 TRUE COPY OF THE PROCEEDINGS/ORDER NO.KMSCL/I&II/38-BPL/2024 DATED 20.11.2024 OF THE 2ND RESPONDENT Exhibit P18 TRUE COPY OF THE LETTER VIDE REF.BPL/23-24 DATED 11.01.2024 FORWARDED BY THE PETITIONER TO THE 3RD RESPONDENT Exhibit P19 TRUE COPY OF THE EARNEST MONEY DEPOSIT VIDE REF.NO.00130100010415 DATED 05.01.2024 INFAVOUR OF THE PETITIONER FORWARDED TO THE 2ND RESPONDENT.
Exhibit P20 TRUE COPY OF THE APPEAL MEMORANDUM DATED 01.12.2024 SUBMITTED BY THE PETITIONER BEFORE THE 1ST RESPONDENT RESPONDENT'S EXHIBITS EXHIBIT R3(a) The true copy of the email dated 17.12.2024.
EXHIBIT- R3(b) The true copy of the email received from the KMSCL dated 17.12.2024 2025:KER:55099 W.P.(C) No.44799/2024 : 12 : EXHIBIT- R3(c) The true copy of this letter invoking the BG to Axis Bank, Vadodhara dated 7.12.2024 EXHIBIT- R3(d) The true copy of the letter forwarded by the KMSCL to Axis Bank, Vadodhara by email on 11.12.2024.
EXHIBIT- R3(e) The true copy of the Email dated13.12.2024 from Axis Bank, sent to KMSCL.
EXHIBIT- R3(f) The true copy of the email send to the Axis Bank Vadodara at 3.27 PM on 16- 12-2024 EXHIBIT- R3(g) A true copy of tracking receipt from the website of India Post for consignment No. RL972128054IN PETITIONER'S EXHIBITS Exhibit P21 true copy of the email received after the transfer specifically saying that same is done as requested by the respondents 2 and 3 on 16.12.2024 Exhibit P22 true copy of the order dated 2.1.2025 in Civil Application No. 17570/2024 of the Honble High Court of Gujarat at Ahmedabad