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. 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 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 (1978) 3 SCC
36 : [1978] 3 SCR 514; Gorkha Security Services v. Government (NCT of Delhi) & Ors. (2014) 9 SCC 105: [2014] 13 SCR 617 – relied on.
2.1 There is no doubt that the High Court in its discretionary jurisdiction may decline to exercise the discretionary writ jurisdiction on ground of delay in approaching the court. But it is only a rule of discretion by exercise of self-restraint evolved by the court in exercise of the discretionary equitable jurisdiction and not a mandatory requirement that every delayed petition must be dismissed on the ground of delay. The Limitation Act stricto sensu does not apply to the writ jurisdiction. The discretion vested in the court under Article 226 of the Constitution therefore has to be a judicious exercise of the discretion after considering all pros and cons of the matter, including the nature of the dispute, the explanation for the delay, whether any third-party rights have intervened etc. The jurisdiction under Article 226 being equitable in nature, questions of proportionality in considering whether the impugned order merits interference or not in exercise of the discretionary jurisdiction will also arise. [Para 14][616-H; 617A-C]
Basanti Prasad v. Bihar School Examination Board and Others (2009) 6 SCC 791 : [2009] 9 SCR 367; Moon Mills Ltd. v. Industrial Court AIR 1967 SC 1450; Maharashtra SRTC v. Balwant Regular Motor Service AIR 1969 SC 329: [1969] 1 SCR 808; State of M.P. and Others v. Nandlal Jaiswal and Others, (1986) 4 SCC 566 : [1987] 1 SCR 1 – relied on.
2.2 The contention of the respondents that they have acted in accordance with the provisions of the Drugs Act pursuant to the report of the analyst for misbranded product under Section 9 is devoid of substance and merits no consideration. It is not the case of the respondents that the procedure prescribed under Sections 23, 25 and 26 of the Drug Act has been followed. The feeble attempt to show compliance with provisions of the Drugs Act by alleged purchase of the samples under Form 14A at Annexure R-5 to the counter affidavit dated 21.07.2008 from an unknown source and date must be rejected outright as an attempt to create evidence where none exists. [Para 15][617-G-H; 618A]
2.3 The writ petition was not barred by unexplained delay as the appellant had been pursuing the matter with the authorities and it is they who sat over it, triggering rejection of appellants tender by the Rajasthan Government on 05.07.2019 leading to the institution of the writ petition on 24.07.2019. The High Court therefore erred in dismissing the writ petition on grounds of delay. The illegality and the disproportionate nature of the order dated 08.09.2009, with no third party rights affected, never engaged the attention of the High Court in judicious exercise of the discretionary equitable jurisdiction. Consequently, the impugned order of the High Court as well as order dated 08.09.2009 of the respondents are set aside. [Para 16][618-B-D]
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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