M/S Agron Remedies Pvt. Ltd vs The State Of Assam And 4 Ors
2025 Latest Caselaw 8644 Gua

Gauhati High Court

M/S Agron Remedies Pvt. Ltd vs The State Of Assam And 4 Ors on 18 November, 2025

Author: Devashis Baruah

Bench: Devashis Baruah

                                                                Page No.# 1/17

GAHC010090732025




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                      THE GAUHATI HIGH COURT
  (HIGH COURT OF ASSAM, NAGALAND, MIZORAM AND ARUNACHAL PRADESH)

                       Case No. : WP(C)/2556/2025

         M/S AGRON REMEDIES PVT. LTD.
         REPRESENTED BY ONE OF ITS DIRECTOR, SRI MUDIT AGARWAL, S/O SRI
         G K AGARWAL, HAVING ITS REGISTERED OFFICE AT SARVERKHERA,
         MORADABAD ROAD, KASHIPUR, (U.S. NAGAR), UTTARAKHAND, PIN-
         244713



         VERSUS

         THE STATE OF ASSAM AND 4 ORS
         REPRESENTED BY THE COMMISSIONER AND SECRETARY TO THE GOVT.
         OF ASSAM, HEALTH AND FAMILY WELFARE DEPARTMENT, DISPUR,
         GUWAHATI, PIN-781006, ASSAM

         2:THE SECRETARY TO THE GOVT. OF ASSAM
          HEALTH AND FAMILY WELFARE DEPARTMENT
          DISPUR
          GUWAHATI
          PIN-781006
         ASSAM

         3:ASSAM MEDICAL SERVICES CORPORATION LIMITED
          REPRESENTED BY THE MANAGING DIRECTOR
          HAVING ITS REGISTERED ADDRESS AT CENTRAL DRUG WARE HOUSE
         CAMPUS
          PATHERQUERY
          NARENGI
          GUWAHATI
         ASSAM
          PIN-781026

         4:THE MANAGING DIRECTOR
         ASSAM MEDICAL SERVICES CORPORATION LIMITED
                                                                        Page No.# 2/17

           HAVING ITS REGISTERED ADDRESS AT CENTRAL DRUG WARE HOUSE
           CAMPUS
           PATHERQUERY
           NARENGI
           GUWAHATI
           ASSAM
           PIN-781026

           5:THE GENERAL MANAGER
            PROCUREMENT
            QC
            IT
            LOGISTICS
           ASSAM MEDICAL SERVICES CORPORATION LIMITED
           ASSA

                                     BEFORE
           HONOURABLE MR. JUSTICE DEVASHIS BARUAH

Advocate for the petitioner (s) : Mr. G. N. Sahewalla, Sr. Advocate
                                  Mr. H. K. Sarmah, Advocate

Advocate for the respondent (s) : Mr. D. P. Borah, SC, Health Deptt.

    Date on which judgment is reserved          : NA

Date of pronouncement of judgment               : 18.11.2025

Whether the pronouncement is of the
Operative part of the judgment?                 : NA

Whether the full judgment has been
Pronounced?                                     : Yes
                          JUDGMENT AND ORDER (ORAL)

Heard Mr. G. N. Sahewalla, the learned Senior Counsel assisted by Mr. H. K. Sarmah, the learned counsel appearing on behalf of the petitioner and Mr. D. P. Borah, the learned counsel Page No.# 3/17

appearing on behalf of the respondents.

2. The issue involved in the instant writ petition is as to whether the General Manager, Procurement, QC, IT, Logistics, Assam Medical Services Corporation Limited had the authority to issue the impugned communication dated 10.03.2025 whereby the petitioner was blacklisted, and if so, whether the blacklisting order is illegal and arbitrary in the facts of the present case. FACTUAL MATRIX

3. For the purpose of deciding the said issue, it is relevant to take note of the brief facts which led to the filing of the instant writ petition. An e-tender was floated by the respondent Nos.3 & 4 dated 09.02.2023. The petitioner Company submitted its bid along with various other bidders. The bid of the petitioner Company was accepted along with various other bidders and the respondent No.4 on behalf of the respondent No.3, issued the Letter of Intent. In terms with the Letter of Intent dated 28.07.2023, the petitioner Company was empanelled for three years with the respondent No.3 for supply of essential drugs as may be required.

4. Taking into account the issue involved, it is relevant to take note of Clause D of the Letter of Intent dated 28.07.2023 which stipulates that an agreement has to be entered into by and Page No.# 4/17

between the successful bidder with the respondent No.3 within 10 working days from the date of intimation from the Tender Inviting Authority informing that the tender has been accepted. The said agreement is to be drawn up in terms with Annexure- XIII which is to be executed within the stipulated time and failure to execute the agreement would result in forfeiture of EMD and other consequential actions.

5. Clause K of the Letter of Intent stipulates the penalty for delay in service delivery. In terms of the said Clause K of the Letter of Intent, if there is a delay in delivery, there shall be penal deduction at the rate of 2.5% of the value of the delayed goods per week of delay or part thereof subject to a maximum of 10% of the total order value. It is also mentioned that once the maximum price reduction is reached, termination of the purchase order would be considered. Apart from that, on the basis of the said Clause K of the Letter of Intent, purchase can also be made at the risk and cost of the defaulting bidder. The said Clause K of the Letter of Intent conceives of two types of debarments. The first is Product Debarment and the second is the Firm Debarment. Sub-Clauses (i) & (ii) of Clause K of the Letter of Intent being relevant, is reproduced here in under:-

"i. Product Debarment: In case of non-supply or incomplete supply

(i.e. less than 90% of the total ordered quantity) by the approved Page No.# 5/17

manufacturer/importer (Firm) within agreed delivery period including the delay penalty period or any such extended delivery period then the concerned rate contract shall be cancelled and the manufacturer/importer (Firm) shall be debarred for participating in any bid called by the Authority for 5 years from the date of debarment for that item. In case the manufacturer/importer (Firm) supply 90% or more of the ordered quantity but fails to supply the entire quantity within the allowed delivery period then the firm shall be levied a penalty @ 10% of the value of the short supplied item and same shall be adjusted against the payment for supply.

ii. Firm Debarment: The firm shall be blacklisted and debarred from participating in any tender by the TIA or procuring agency for 3 (three) years if the company is debarred for all the items (where it has RC-"Rate Contract" for less than 3 items) or at least 3 items (where it holds RC-"Rate Contract" for more than equal to 3 items)."

6. Before further dilating the facts, it is relevant to take note of the agreement which was entered into by and between the petitioner and the respondent No.3 on 07.08.2023 in terms of Clause D of the Letter of Intent.

7. The said agreement entered into by and between the petitioner and the respondent No.3 is enclosed to the affidavit-in- opposition filed by the respondent Nos.3 & 4. Clause 8 of the said agreement, being relevant, is reproduced herein under:

"8. And it is hereby agreed and declared between the parties hereto Page No.# 6/17

that in case any question of dispute arises touching the construction or wording of any of clause herein contained on the rights, duties, liabilities of the parties hereto or any other way, touching or arising out of the presents, the decision of the Managing Director, AMSCL, Assam in the matter shall be final and binding."

8. In the backdrop of the above, let this Court proceed with the detailing of the relevant facts. It is seen that on 17.02.2025, the respondent No.4 issued a show cause notice upon the petitioner for default in supply of items placed at Annexure-A to the said show cause notice. It was categorically mentioned in the said show cause notice that there were certain lapses on the part of the petitioner in making the required supply within the contractual period, and even after granting additional time, the petitioner Company failed to complete the supply of essential items. Under such circumstances, the Managing Director of the respondent No.3 issued a show cause notice seeking reply as to why the products of the petitioner should not be debarred as per Clause 5 "Terms and Conditions" Sub-Clause-H "Debarment/Blacklisting for failure in execution of the supply/non-supply/default in supply" for Product Debarment; Firm Debarment as well as Forfeiture of Performance Security. The petitioner was also informed that alternative purchases would also be resorted to in terms with the Terms and Conditions Page No.# 7/17

of the contract. The petitioner was therefore asked to show cause as to why the products of the petitioner should not be debarred as per the penal Clauses of the tender and to submit the reply within three working days, (from the date of intimation) and upon non-submission of the reply, administrative as well as financial penalties would be levied as per the relevant tender Clause.

9. The petitioner, on receipt of the said show cause notice dated 17.02.2025, submitted a reply on 19.02.2025 stating inter alia that there has been a successful completion of 80% of the required supply to the respondent No.3 and the remaining goods are currently in Guwahati, but due to closure of relevant purchase orders, the delivery was pending at that time. The petitioner also emphasized that if another 15 days period is being given, the dispatch of the goods would be completed.

10. The respondent No.5 thereupon passed the impugned order whereby the petitioner Company was blacklisted and debarred from participating in any tender for three years as per the tender Clause No.5. This impugned communication dated 10.03.2025 has been put to challenge before this Court.

11. It is seen that the writ petition upon being filed on 03.06.2025, the learned Coordinate Bench of this Court though Page No.# 8/17

issued notice, but did not pass any interim directions. A Writ Appeal there against was filed which was registered and numbered as WA No.304/2025. The learned Division Bench of this Court vide an order dated 29.10.2025 modified the order of the learned Coordinate Bench dated 03.06.2025 to the extent that the petitioner herein would be permitted to participate in the tender for rate contract barring the drugs which would not be supplied by the petitioner for any reason whatsoever.

12. The records reveal that the respondents filed an affidavit-in- opposition wherein the copy of the agreement entered into by and between the petitioner and the respondent No.3 was enclosed. The Respondent Authorities in the said affidavit stated that various opportunities were given to the petitioner to supply the essential medicines and in that regard have enclosed various documents. It is the case of the respondents that the petitioner failed to supply resulting in great inconvenience to the Respondent Authorities. Under such circumstances, the show cause notice was issued. It was mentioned that the petitioner Company vide a letter dated 10.02.2025 prayed for extension. But the said plea of the petitioner did not contain details like P.O., Date, Medicine Names etc., and as such, an opportunity was also given to submit the details, but in the said email, it was nowhere mentioned that their extension request would be Page No.# 9/17

considered. In addition to that, the respondents provided justification as to why the action of the respondents to blacklist/debar the petitioner Company for the three years was justified.

13. The petitioner thereupon submitted a reply reiterating and reaffirming the statement made in the writ petition and further justifying that the delay was beyond the control of the petitioner and the petitioner had all intention to deliver the goods if any extension was granted for a period of 15 days.

14. An additional affidavit-in-opposition was filed by the respondent Nod.3 & 4 whereby the framework agreement with manufacturers for supply of essential drugs (national competitive bidding) (framework agreement for a period of three years) issued by the office of the respondent No.4 was enclosed. CONTENTIONS MADE BY THE LEARNED COUNSELS ON BEHALF OF THE PARTIES

15. Mr. G. N. Sahewalla, the learned Senior Counsel appearing on behalf of the petitioner submitted that in terms with the Notice Inviting Tender, the Letter of Intent, the Agreement, it is only the respondent No.4 who has the authority to pass the impugned order. The General Manager had no authority to do so, and more particularly when it is a contractual dispute. Therefore, when the Page No.# 10/17

impugned order was passed by an Authority having no competence, the said order is nonest in law.

Mr. G. N. Sahewalla, the learned Senior Counsel appearing on behalf of the petitioner further submitted that the action on the part of the Respondent Authorities to debar the petitioner Company for the period of 3 years is absolutely arbitrary and unreasonable taking into consideration that the petitioner has duly made supply to the extent of 80% and for the remaining supply, the petitioner had sought for extension on 10.02.2025. Instead of granting the extension, the Respondent Authorities had issued the show cause notice. He further submitted drawing the attention of this Court to the reply sent by the official of the respondent No.3 to the request dated 10.02.2025 submitted by the petitioner wherein further details were sought for from the petitioner. The petitioner immediately submitted such details. Thereupon, instead of considering the petitioner's request, the respondents had issued the show cause notice dated 17.02.2025. Reply there against was also submitted within time, but instead of considering the reply and giving the petitioner the opportunity of supplying within the period of 15 days as sought for, the Respondent Authorities most arbitrarily and unreasonably debarred the petitioner Company, that too, through a person who was not authorized. He further submitted that the impugned Page No.# 11/17

order was passed on 10.03.2025 and instead of passing the said order, the petitioner ought to have been given the opportunity to supply as would be apparent from the materials on record, and this very aspect shows the vindictive nature on the part of the Respondent Authorities.

16. Mr. D. P. Borah, the learned counsel appearing on behalf of the Respondent Authorities submitted that the e-tender which was issued was for essential medical supplies. The Letter of Intent dated 28.07.2023, further stipulated the period within which the supply has to be made and the consequences for not making the supply. In the instant case, various opportunities were given to the petitioner to supply as would be apparent from the materials on record, but the petitioner did not supply the essential quantities of medicines resulting in great difficulties for the purpose of running the hospitals of the Government. He further submitted that though the petitioner sought for extension on 10.02.2025, but this extension application was vague and did not contain material particulars for the Respondent Authorities even to consider. He, therefore, submitted that no case for interference is made out taking into consideration that the petitioner had violated the terms of supply.

17. On the aspect pertaining to the jurisdiction of the General Manager, Procurement, QC, IT, Logistics, Assam Medical Services Page No.# 12/17

Corporation Limited for issuance of the impugned order dated 10.03.2025, Mr. D. P. Borah, the learned counsel for the respondents submitted that though the Managing Director is the authority, but the said power was delegated to the General Manager, Procurement, QC, IT, Logistics, Assam Medical Services Corporation Limited of the respondent No.3 and in that regard had placed before this Court the Note Sheet and more particularly Note No.149 dated 10.03.2025 wherein authority was delegated to the General Manager, Procurement, QC, IT, Logistics, Assam Medical Services Corporation Limited for taking necessary action in supply related issue.

ANALYSIS AND DETERMINATION

18. From the materials on record and after taking into account the submissions so made by the learned counsels for the parties, two points for consideration arises, i.e.:-

(i) Whether the General Manager, Procurement, QC, IT, Logistics, Assam Medical Services Corporation Limited of the respondent No.3 had the authority to issue the impugned communication dated 10.03.2025 thereby debarring the petitioner Company?

(ii) Whether the debarment of the petitioner Company vide the impugned communication dated 10.03.2025 is Page No.# 13/17

arbitrary and unreasonable and calls for any interference in exercise of the powers of judicial review?

19. It is the opinion of this Court that if the point for consideration No.(i) is decided against the respondents, it is not necessary for this Court to go into the second point for consideration for the reason to be analyzed in the later part of the present judgment.

20. Let this Court first takes up the first point for consideration.

21. In the foregoing paragraphs of the instant judgment, this Court has quoted Clause 8 of the agreement dated 23.07.2023 which was entered into by and between the petitioner as well as the respondent No.3 through the respondent No.4. A reading of the said Clause would reveal that it is the Managing Director of the respondent No.3 who has been empowered by the contract to decide disputes pertaining to any question which arises touching on the construction or wording of any Clause contained in the agreement as well as on the rights, duties, liabilities of the parties in any other way touching or arising out of the terms of the agreement. Therefore, in terms with Clause 8 of the Agreement, it is the respondent No.4, i.e. the Managing Director of the respondent No.3 who has been empowered to take a Page No.# 14/17

decision in respect to the rights, duties, liabilities inter se between the parties to the contract. This power so conferred, in the opinion of this Court, includes the power to debar or blacklist the petitioner.

22. Nothing could be shown before this Court as to how the Managing Director of the respondent No.3 could delegate such functions as contractually agreed by and between the petitioner and the respondent No.3 to be decided by the General Manager, Procurement, QC, IT, Logistics, Assam Medical Services Corporation Limited.

23. During the course of the hearing, Mr. D. P. Borah the learned Standing Counsel of the respondents had placed before this Court the Note Sheet and more particularly referred to Note No.149. The contents of the Note No.149 reads as under:-

"Authority was delegated to GM Procurement, for taking necessary action, in supply related issues".

24. From the said Note, it therefore appears that the Managing Director of the respondent No.3 had delegated the Authority to the General Manager, Procurement, QC, IT, Logistics, Assam Medical Services Corporation Limited for deciding the dispute between the petitioner as well as the respondent No.3 in relation to the delay in supply of the medicines as well as the Page No.# 15/17

consequential penal actions to ensure upon the petitioner. In the opinion of this Court, such delegation is not permissible unless and until the terms and conditions of the contract permit such delegation. In that view of the matter, it is therefore the opinion of this Court that the impugned communication dated 10.03.2025 by which the petitioner had been debarred for a period of three years was issued by an Authority having no competence.

25. Additionally, this Court also finds it very shocking that on one hand, the respondent No.4 had issued the show cause notice on 17.02.2025, but on the other hand, the respondent No.4 had delegated the authority on 10.03.2025 to the General Manager, Procurement, QC, IT, Logistics, Assam Medical Services Corporation Limited for taking a decision. It is also further surprising to take note of that the show cause reply was submitted to the Managing Director who instead of deciding the same have delegated on 10.03.2025 to the General Manager, Procurement. It is further surprising that on 10.03.2025, the power was delegated on the same date the impugned communication was issued.

26. Under such circumstances, this Court therefore is of the opinion that the first point for consideration is to be decided against the Respondent Authorities thereby holding that the Page No.# 16/17

impugned communication dated 10.03.2025 had been issued by an authority having no competence.

27. Taking into account the decision of this Court in respect to the first point for consideration, this Court would not like to go into the second point for consideration in as much as any decision in respect to the second point for consideration at this stage may impact the rights of the respondent No.4 to take further action in pursuance to the show cause notice dated 17.02.2025. CONCLUSIONS

28. Accordingly, the instant writ petition therefore stands disposed of with the following observations and directions:-

(i) The impugned communication dated 10.03.2025 is set aside and quashed on the ground that the General Manager, Procurement, QC, IT, Logistics, Assam Medical Services Corporation Limited did not have the authority to issue the impugned communication.

(ii) The setting aside and quashing of the impugned communication dated 10.03.2025 herein above shall not preclude the respondent No.4 to take a fresh decision on the show cause proceedings initiated vide the notice dated 17.02.2025, if so advised.

(iii) It is also observed and directed that the respondent No.4 Page No.# 17/17

shall provide the petitioner an opportunity of hearing before deciding the show cause proceedings.

(iv) There shall be no costs.

JUDGE

Pradip Kumar Kalita Kalita Date: 2025.11.20 19:00:07 +05'30' Comparing Assistant