Kerala High Court
Bharat Parenterals Limited vs State Of Kerala on 23 July, 2025
Author: N.Nagaresh
Bench: N.Nagaresh
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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
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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:
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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
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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
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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
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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
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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
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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
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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
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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
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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
