Gujarat High Court
M/S Brilliant Lifesciences Pvt. Ltd vs Gujarat Medical Service Corporation ... on 8 May, 2025
Author: Umesh A. Trivedi
Bench: Umesh A. Trivedi
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 2235 of 2025
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE UMESH A. TRIVEDI Sd/-
and
HONOURABLE MR. JUSTICE CHEEKATI MANAVENDRANATH ROY
Sd/-
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Approved for Reporting Yes No
✔
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M/S BRILLIANT LIFESCIENCES PVT. LTD.
Versus
GUJARAT MEDICAL SERVICE CORPORATION LTD. & ANR.
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Appearance:
MR. DHARMESH DEVNANI, WITH MAYUR DHOTARE WITH
MR. KAUSTUBH SHRIVASTAV for NANAVATI ASSOCIATES(1375) for the
Petitioner(s) No. 1
MR. G.H.VIRK with MR SIMRANJITSINGH H VIRK with JAGRAT SHAH
(11607) for the Respondent(s) Nos.1 & 2
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CORAM:HONOURABLE MR. JUSTICE UMESH A. TRIVEDI
and
HONOURABLE MR. JUSTICE CHEEKATI
MANAVENDRANATH ROY
Date : 08/05/2025
ORAL JUDGMENT
(PER : HONOURABLE MR. JUSTICE UMESH A. TRIVEDI)
[1] By way of this petition under Article 226 of the
Constitution of India, the petitioner challenges the order dated
04.02.2025, which is at page 20 of the compilation, whereby
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petitioner is debarred from business relation with respondent -
Gujarat Medical Services Corporation Limited (for short
'GMSCL') for the item code No.1013-Amlodipine Tablet IP 5
mg, for a period of 01 (one) year with effect from 02.01.2025, as
also an order dated 05.02.2025 as a consequence of breach of
tender condition rate contract of item code No.1013-Amlodipine
Tablet IP 5 mg, which is valid up to 31.03.2026, is cancelled
with immediate effect and vide order dated 11.02.2025 for non
performance of contractual obligation security deposit
submitted by the petitioner for the rate contract came to be
forfeited .
[2] At the outset, Mr. Dharmesh Devnani learned counsel with
Mr. Mayur Dhotare, learned advocate with Mr. Kaustubh
Shrivastav, learned advocate for M/s Nanavati Associates for
the petitioner, restricted challenge by way of this petition to the
order of debarment only and seeks permission to withdraw the
petition so far as relief of termination of a contract as also
forfeiture of security deposit, with a liberty to avail appropriate
remedy available under the law.
[3] In view thereof, permission, as sought for, is granted. This
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petition stands withdrawn so far as challenge to the order
terminating contract dated 05.02.2025 as also dated
11.02.2025, whereby security deposit came to be forfeited,
permitting the petitioner to avail appropriate remedy before
appropriate forum. Needless to say that before the authority /
Court where challenge is made to those orders may be
determined in accordance with law.
[4] Hence, this petition is restricted qua the challenge to the
order whereby petitioner came to be debarred from business
relation with the respondent authority for the item code
No.1013-Amlodipine Tablet IP 5 mg, for a period of 01 (one)
year with effect from 02.01.2025.
[5] Heard Mr. Dharmesh Devnani learned counsel for M/s
Nanavati Associates for the petitioner along with Mr. Mayur
Dhotare, learned advocate with Mr. Kaustubh Shrivastav,
learned advocate.
[6] Mr. Dharmesh Devnani, learned counsel for the petitioner
vehemently submitted that the order passed by the respondent -
authority debarring the petitioner, that too, for a period of 01
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(one) year for the reasons mentioned in the order impugned
dated 04.02.2025, is illegal and erroneous. He submitted that
the whole substratum based on which order of debarment came
to be passed, has gone with the subsequent event taking place,
the authority could not have passed the order impugned,
debarring the petitioner from business relation with the
respondent. He has further submitted that as per tender
condition B (8) and condition 2 of Annexure - IX of the tender
document, petitioner was under an obligation to inform the
office of respondent about its debarment at Madhya Pradesh
Public Health Services Corporation Limited (for short
'MPPHSCL') for the item Amlodipine Tablet IP 5 mg, petitioner
came to be debarred having not informed the respondent
herein. However, petitioner came to be debarred by
'MPPHSCL', on the ground that Public Analyst vide his opinion
dated 20.03.2024 opined that the sample drawn by Drug
Inspector is not of standard quality as defined under the Drugs
and Cosmetics Act, 1940 (for short 'the Act, 1940') and rules
made thereunder for the reasons given below it which described
that sample does not comply with IP with respect to the test for
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dissolution.
[6.1] However, he has vehemently submitted that the
order of debarment came to be passed by the 'MPPHSCL' on
21.06.2024 but in view of subsection (3) of Section 25 of 'the
Act, 1940', petitioner notified in writing, the Inspector that it
intends to adduce evidence in controversion of the report and
therefore, the Drug Inspector moved the competent Court under
subsection 4 of Section 25 of 'the Act, 1940', for sending
another sample for test or analysis to the Central Drugs
Laboratory, Kolkata which was ordered by the competent
Magistrate and in view of the provisions thereof, report in
writing signed by or under the authority of, the Director of
Central Drugs Laboratory, Kolkata, the result thereof and such
report shall be conclusive evidence of the facts stated therein.
Drawing attention of the Court, he has vehemently submitted
that the Director in charge Central Drugs Laboratory, Kolkata
vide its report dated 13.12.2014 opined that sample confirms to
IP with respect to the test for dissolution. Therefore, according
to his submission, since petitioner could adduce the evidence in
controversion of the report submitted by the government
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analyst and when report of Central Drugs Laboratory, Kolkata is
said to be conclusive evidence of the facts stated therein, even
the 'MPPHSCL' revoked the order of debarment, which was
passed by it based on report of government analyst vide its
order dated 03.04.2025. Therefore, he has submitted that whole
basis to blacklist the petitioner so far as drug item in question
having gone, it is imperative for the respondent to revoke the
impugned order dated 04.02.2025 debarring the petitioner from
business relation with the respondent for the item code No.
1013-Amlodipine Tablet IP 5 mg for a period of 01(one) year
with effect from 02.01.2025 is required to be quashed and set
aside.
[6.2] He has vehemently submitted that it is nothing but a
sheer mistake in not informing the respondent herein the order
of debarment passed by the 'MPPHSCL' and for such a trivial
mistake, no order of debarment for the item code could have
been passed by the respondent authority which brings about
civil death of the petitioner for the said drug.
[6.3] Relying on the decision in the case of Blue Dreamz
Advertising Pvt. Ltd and Anr. Versus Kolkata Municipal
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Corporation and Ors. reported in 2024 SCC Online SC
1896, learned advocate for the petitioner submitted that
blacklisting will not only debar the person concerned from
dealing with the concerned employer, but because of the
disqualification, that dealing with other entities also is
proscribed. Relying on another decision in the case of M/s
Techno Prints Vs. Chhattisgarh Textbook Corporation &
Anr. rendered in Civil Appeal No.236 of 2025 arising out of SLP
(C) No.10042 of 2023, more particularly paragraphs 25 to 30 &
34, it is submitted that even a show cause notice pertaining to
blacklisting came to be quashed by the Supreme Court as the
authority, with pre-judge mind, issued such show cause notice,
with a view to pass an order of blacklisting and therefore,
seeking explanation by issuance of such notice is a mere ritual.
Therefore, he has submitted that this petition be admitted and
allowed.
[7] As against that, respondent herein filed Affidavit-In-
Reply opposing the admission and allowing the petition bringing
on record certain material facts which would be dealt with here
later on.
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[8] Mr. G.H.Virk, learned advocate for the respondent
submitted that petitioner is a supplier of a drug under a rate
contract with the State which in turn supplied to the various
Government Hospitals throughout the State. Therefore, high
standard of quality as also high standard of morality from the
petitioner is expected. He has further submitted that under a
tender condition, petitioner is supposed to file Annexure-IX on
oath, which he has filed, obligating petitioner to disclose even
during the currency of rate contract with the respondent -
corporation if it is debarred / blacklisted by respondent or for
failure in supply of quality drugs in future by any State / Central
Government / undertaking / organization. The proforma
Annexure-IX is at page 59 of the petition. Reading paragraph
2 thereof, it is submitted that petitioner filed such undertaking
on oath before the authority undertaking responsibility to bring
attention of the Managing Director of 'GMSCL' if tenderer will
be debarred / blacklisted by the Corporation itself or for failure
in supply of the quality drugs in future by any State / Central
Government / undertaking / organization.
[8.1] He has further submitted that despite the petitioner
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is blacklisted by an order dated 21.06.2024 because of the
sample drawn from the bulk supplied by the petitioner to
'MPPHSCL', which is found to be not of standard quality, as
defined under 'the Act, 1940' and rules thereunder, and does
not comply with IP with regard to test for dissolution, therefore,
according to his submission, the petitioner was under a legal
obligation to bring it to the attention of the Managing Director
about order of blacklisting being passed for failure in supply of
quality drugs to 'MPPHSCL'. Immediately, said order of
blacklisting was communicated through E-mail to the petitioner
on that very day, which is not being denied by the learned
advocate for the petitioner.
[8.2] Mr. G.H.Virk, learned advocate for the respondent
submitted that petitioner failed to make said disclosure for a
period of more than three months (91 days). During this period
of 91 days, 'GMSCL' placed two purchase orders and amount of
those purchase orders is referred to in the affidavit in reply at
para-12 thereof. Therefore, according to his submission, by that
time petitioner supplied 93,13,200 tablets, amounting to
Rs.10,01,355.26 ps. as per the rate contract. Therefore,
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according to his submission, a blacklisted petitioner supplied to
'GMSCL' more than 93 lakhs tablets valued at more than Rs.10
lakhs and in doing so, defrauded the 'GMSCL'. He has further
submitted that even examination of the very said sample of drug
by Central Drugs Laboratory, Kolkata which has said that
sample confirms to IP with respect to the test for dissolution, is
of no consequence because the said report is dated 13.12.2024
whereas order of blacklisting passed by 'MPPHSCL' on
21.06.2024 which was supposed to be intimated or brought to
the attention of Managing Director, as undertaken on oath as a
part of tender condition which petitioner failed. Thus, the
obligation to bring to the attention of Managing Director of
'GMSCL' consequently as per tender condition mentioned in
clauses B(8)&(9) provided different penal actions, over and
above that debarment for one year for non-disclosure of
blacklisting / debarment in tender as per format Annexure-IX, is
also provided for. He has further submitted that presuming that
forfeiture / recovery of EMD or SD or risk purchase or any other
penal actions, though provided for debarment of the petitioner
as a consequence of failure to bring it to the notice of the
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Managing Director of 'GMSCL', an order of debarment is
provided for and which is passed by the authority, which
requires no interference by this Court as it is not penal in
nature but it is because of deliberate failure to obey their own
undertaking not intimating the respondent herein which led to
passing of an order of debarment.
[8.3] He has further submitted that based on report of
Central Drugs Laboratory, Kolkata, even if 'MPPHSCL' revoked
their order of debarment vide order dated 03.04.2025, is also
inconsequential as order of debarment passed by the
respondent authority is not based on only order of debarment
passed by 'MPPHSCL'. It is because of failure to intimate as per
the terms of tender and an undertaking on oath given by the
petitioner, as a consequence order of debarment which was
provided in the terms of tender, order came to be passed.
Therefore, he has submitted that the only challenge now
restricted by the petitioner should also fail on these grounds.
Therefore, he has submitted that this petition be also rejected.
[9] Having heard the learned advocates for the
appearing parties and going through the memo of petition,
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further / additional affidavit filed by the petitioner as also
affidavit in reply filed by the respondent herein, though 3
different prayers were made challenging 3 different orders,
since petitioner has restricted in this petition only challenge to
the debarment order, we propose to deal with the said issue
here as under based on material before us in this petition.
[10] There is no dispute that pursuant to Tender Notice
No.GMSCL/D-10/2022-23, petitioner filed its bid for item code
No.1013 Amlodipine Tablets IP 5 mg. The bid for the said item
of the petitioner accepted by the respondent No.1 and
acceptance letter dated 11.03.2024 came to be issued. Pursuant
thereto, petitioner signed an agreement with the respondent -
corporation on 18.03.2024 and accepted the contract on the
terms and conditions set out in the said tender document. In
furtherance thereof, petitioner also signed and submitted
guarantee bond dated 19.03.2024 (security deposit) which is a
bank guarantee for Rs.3,46,000/-. Pursuant thereto, respondent
- corporation placed an order for supply of item code No.1013
Amlodipine Tablets IP 5 mg from time to time and the petitioner
has supplied the same. While filing bid, petitioner was aware
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about terms and conditions mentioned in a tender document,
more particularly, clauses B (8) & (9), which provides for
eligibility criteria along with certain obligations on the bidders
as they are supposed to file undertaking on oath as per format
Annexure-IX to bring it to the notice of the Managing Director of
'GMSCL' about tenderer being debarred or blacklisted due to
failure in supply of quality of quoted drugs during the tender
validity or during validity of the rate contract by any State /
Central Government or its Drug's Procurement Agency, which
petitioner miserably failed. There is also no dispute that based
on report of Public Analyst for the very same drug, for which
petitioner is having rate contract with the respondent -
corporation, 'MPPHSCL' passed an order dated 21.06.2024
debarring the petitioner as sample was found to be not of
standard quality, as defined under 'the Act, 1940' and the Rules
thereunder. Not only he failed to intimate as per his own
undertaking on oath given to the respondent -corporation, it
continued to supply the very same drug to the respondent -
corporation, which were distributed in Government Hospitals
throughout the State. If such prompt intimation, as obligated
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upon the petitioner, is made, respondent -corporation could
have stopped procuring such drug for the time being. Non-
disclosure / non-intimation has earned petitioner nearly Rs.10
lakhs which otherwise it would not have and that appears to be
the reason for not intimating as soon as he came to know about
order of blacklisting by 'MPPHSCL', despite its undertaking on
oath to the respondent -corporation in format Annexure-IX. For
failure to fulfill that obligation, consequence is provided in the
tender condition itself to which petitioner is aware and with
open eye, filed that Annexure-IX on oath, debarring it for a
period of 1 year for such failure. The action of debarment is
taken against the petitioner not for supplying drug, not
confirming to the standard prescribed under 'the Act, 1940', but
its failure to intimate or bring it to the notice of the Managing
Director of 'GMSCL' about passing of an order of debarment by
'MPPHSCL' as per its undertaking as one of the tender
condition. Therefore, even if sample is again sent to the Central
Drugs Laboratory, Kolkata, as provided under the provisions of
'the Act 1940' and the Rules, and its outcome is diametrically
opposite to that of conclusion of Public Analyst, Indore, it will
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make no difference so far as passing an order of debarment by
the respondent - corporation as it was for failure to intimate
passing of such debarment order by any other corporation
during the validity or continuance of rate contract with the
respondent. Thus, revocation of the order of blacklisting passed
by 'MPPHSCL' based on report of Central Drugs Laboratory,
Kolkata as it had passed order of debarment only on the ground
that Drug was not of standard quality as reported by Public
Analyst and it was found to be of standard quality by report of
Central Drugs Laboratory, Kolkata on a sample again being sent
by the petitioner intending to adduce evidence in controversion
of the report of the Public Analyst. Thus, revocation of order of
blacklisting by 'MPPHSCL' has nothing to do with either the
order passed by the respondent - authority or it is out of
question to revoke the said order based on such eventuality.
[11] Even respondent - authority has not passed an order
of debarment immediately on having come to know about
passing of such order passed by 'MPPHSCL' which was
suppressed by the petitioner but a show cause notice was issued
to the petitioner providing him an opportunity before passing an
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order of debarment even as provided under the terms of tender
condition. It was also provided personal hearing on 22.10.2024
where representative of the petitioner, who is none other than
General Manager (Finance & Accounts) of petitioner company,
who affirmed the petition vide reply dated 22.10.2024 in a
hearing in writing, informed the respondent corporation that
due to oversight they had not informed 'GMSCL' about the
debarment order passed by 'MPPHSCL'. On the contrary, in a
reply to the debarment notice issued by the respondent, it was
claimed that they have already challenged the report of Central
Drugs Laboratory, Kolkata producing the document for
reference. However, fact remains that there is an admission by
the authorized person who affirmed the petition and who
remained present and submitted in writing reply to the show
cause notice during the course of hearing, admitted that due to
oversight respondent -corporation was not informed about the
debarment order passed by other authority. Therefore,
impugned order of debarment passed by the respondent
authority based on failure of the petitioner to intimate about
debarment order passed by other authority which is admitted by
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the person who affirmed this petition has also in writing
submitted reply during the course of personal hearing afforded
to the petitioner before passing an order of debarment,
admitted such lapses. Thus, fact remains that as a consequence
of the terms of tender for failure to fulfill their obligations
undertaken by the petitioner on oath by Annexure-IX annexed
with the bid, intimating the respondent herein about order of
debarment passed by other authority, has led to passing of the
impugned order of debarment for item code No.1013-
Amlodipine Tablet IP 5 mg.
[12] Reliance placed on the decision in the case of Blue
Dreamz Advertising Pvt. Ltd and Anr. (supra) is of no help
to the petitioner as action of blacklisting in that case was
initiated for breach of terms of contract where even penalty is
even provided for. There were disputes / issues between the
parties to be resolved by the Arbitrator and that clause was
invoked by the appellant therein and therefore, authority could
not have initiated order of blacklisting based on that issue when
it was pending adjudication before the Arbitrator. Not only that,
as noticed by the Supreme Court, in that case, the day on which
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appeal before it was determined, the Arbitrator had already
declared its award which went in favour of the appellant
therein. In that circumstances, the decision was rendered by
the Supreme Court which is not available in the present case.
[12.1] Therefore, here in the present case blacklisting is
not resorted to for a bonafide dispute for ordinary breach of
contract. But it is resorted to for the failure of fulfilling the
obligation on oath accepted by the petitioner to intimate about
order of blacklisting for non-supply of quality drug by other
corporation to the Managing Director, 'GMSCL', as term of
tender condition itself.
[13] Another decision of the Supreme Court in the case
of M/s Techno Prints (supra) where show cause notice issued
for blacklisting came to be quashed on the facts stated therein
and no such facts obtained in the present case as it was and it is
not even at the stage of show cause notice, for anything to be
explained, an opportunity was available to the petitioner which
he admitted to explain but in view of his own admission, it
incurred an order of blacklisting. Therefore, decision in the case
of M/s Techno Prints (supra) cannot be pressed into service
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by the petitioner.
[14] We have not gone into the issue whether on
intimation about the report of Public Analyst holding that the
drug to be not of standard quality, whether intention is
disclosed by the petitioner, as provided under 'the Act, 1940' to
adduce evidence in controversion of the report of Public Analyst
by sending the sample to the Central Drugs Laboratory, Kolkata,
within time or not? At the same time, proceedings filed before
the Magistrate for undertaking that exercise, whether would be
permissible as there is no prosecution for the same either
contemplated by that authority which may require the proposed
accused to adduce evidence in controversion of the report of the
Public Analyst. Be that as it may, since report of Central Drugs
Laboratory, Kolkata which is the conclusive evidence about
quality of drugs supplied to 'MPPHSCL' has nothing to do with
the order of debarment passed by the respondent -corporation,
even if we don't doubt the exercise undertaken by the petitioner
before Madhya Pradesh Court for sending the sample as it did
not bear the proceedings number in each and every orders,
even presuming it to be correct and it may be correct, it pales
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into insignificance. Thus, we see no reason to interfere with the
order of debarment passed by the respondent - authority as
high standard of moral is expected from a manufacturer of a
drug which is used in treating patient with blood pressure /
hyper tension and it has not intimated despite obligated because
of an undertaking submitted while filing its bid for loss of few
lakhs of rupees.
[15] Hence, this petition fails and it is hereby rejected
with no order as to costs.
(UMESH A. TRIVEDI, J.)
(CHEEKATI MANAVENDRANATH ROY, J.)
Lalji Desai
