Shaji P.Chaly, J. - This writ petition is filed by the petitioner a company registered under the Indian Companies Act, 1956, engaged in manufacture and supply of pharmaceutical products, challenging Ext.P12 order passed by the Kerala Medical Services Corporation Ltd., blacklisting the petitioner for a period of three years and Ext.P14 order passed by the State Government in the appeal preferred by the company, affirming the order of the 2nd respondent. Material facts for the disposal of the writ petition are as follows:
2. Petitioner was a successful bidder for the supply of pharmaceutical products to the 2nd respondent for 30 drugs for the year 2016-17. In terms of Clause 6.22 and Clause 6.23 of the tender document, petitioner had furnished required security deposit and entered into agreement with the 2nd respondent, evident from Ext.P2. It is the case of the petitioner that, it had been supplying pharmaceutical drugs as per the purchase orders issued by the 2nd respondent, promptly. While so, 2nd respondent as per Ext.P3 letter dated 20.03.2017 informed the petitioner that purchase orders in respect of Fluphenazine Decanoate ING IP 25 mgl ML Amp, Haloperidol ING IP 5mg/1 ML Amp, Phenytoin Sodium ING USP 50 mg/ML 2ML Amp, Promethazine Inj IP 25 mg/ML 2ML Amp and Vitamin B12/Cyanocobal amin Inj IP 100 mg/ml 2ML Amp were cancelled and 10% penalty was levied from the petitioner as per Clauses 5.1.4 and 6.31.3 read with clauses 6.26.21 and 6.31.7 of the Tender document.
3. While so, on 06.04.2017, the 2nd respondent issued Ext.P4 show cause notice to the petitioner requiring the petitioner to show cause as to why blacklisting action as contemplated under clause 6.26.24 of the tender document should not be taken against the petitioner for failure to execute supply of the drugs for which purchase order had been issued. In Ext.P4 show cause notice, 5 drugs were alleged to be not supplied. In Ext.P4, the 2nd respondent required the petitioner to submit its written statement within 15 days from the date of receipt of the communication. Accordingly, Ext.P5 reply was submitted, explaining the circumstances under which the drugs could not be supplied by the petitioner. Anyhow, thereafter petitioner was directed to appear for a personal hearing on 24.05.2017 at the Head Office of the 2nd respondent. Petitioner has also submitted Ext.P7 letter dated 24.05.2017, after the personal hearing enclosing invoices dated 14.03.2017 and the Courier dockets dated 20.03.2017. However, according to the petitioner, without considering any of the aspects put forth by the petitioner, as per Ext.P8 order, petitioner was blacklisted, consequent to the default in the supply of the following products:
"i. Lorezapam injection as per purchase order dated 28.03.2016.
ii. Haloperidol Injection as per purchase order dated 10.11.2016.
iii. Promethazine Injection as per purchase order dated 13.12.2016".
4. As per letter dated 07.07.2017, petitioner pointed out that there was apparent error in the blacklisting order in as much as the actual quantity for e-token in respect of Haloperidol injection, consequent to which, 2nd respondent was convinced that there was an error in calculation of the quantity for which e-token for the aforesaid drug was requested. Thereupon, Ext.P8 order was revoked as per Ext.P9 dated 15.07.2017. On the basis of Ext.P9, petitioner was served with Ext.P10 show cause notice to which petitioner has submitted Ext.P11 reply, and a personal hearing was conducted on 02.08.2017. Thereafter, petitioner was blacklisted as per Ext.P12 order and being aggrieved by the same, an appeal was preferred before the State Government in accordance with the tender conditions. The State Government later considered the appeal filed by the petitioner and has passed Ext.P14 order, affirming Ext.P12 order of blacklisting. It is thus challenging the aforesaid orders, the writ petition is filed.
5. The 2nd respondent has filed a very detailed counter affidavit, justifying its action and also contending that no manner of interference is warranted to Exts.P12 and P14, since the authorities have passed the orders taking into account the factual as well as legal circumstances put forth by the petitioner, and there is no manner of arbitrariness or illegality, especially due to the fact that sufficient opportunity was provided to the petitioner before passing the orders by the respective authorities.
6. I have heard Sri. P. Chandrasekhar, learned counsel for the petitioner, Smt. Princy Xavier, learned Government Pleader and Sri. M. Ajay, learned Standing Counsel appearing for the 2nd respondent, and perused the pleadings and the documents on record.
7. The sole question to be considered is, whether any manner of interference is warranted to the orders impugned. The facts and circumstances put forth by the petitioner and the 2nd respondent would make it clear that there was a contract entered into by and between the petitioner company and the 2nd respondent for supply of 30 items of drugs. According to the 2nd respondent, the drugs were not supplied in accordance with the schedule prescribed as per Clause 5.1.2 of the tender document, by which it is stipulated that within 45 days from the date of purchase order, 50% of the ordered quantity shall be supplied, and within 60 days from the date of purchase order, 100% of the ordered quantity was to be supplied. It is virtually an admitted fact that the company has failed to execute the supply of drugs for which purchase order was issued, in spite of reminder notices dated 19.05.2016, 03.06.2016 and 06.02.2017, in respect of the three drugs mentioned above. Therefore, as per clause 5.1.4 of the tender 2016-17, if the supplied quantity is less than 50% of the ordered quantity on the stipulated day, the remaining un-executed portion of the order and the remaining part of LOI are liable to be cancelled without notice and the contract with respect to the product(s) is liable to be terminated, and alternate purchase will be made at the risk and cost of the supplier.
8. As per clause 6.31.3, the purchase orders will be cancelled as per the conditions mentioned in Sec.V after levying penalties at the rates mentioned therein and such penalty is recoverable from any amount payable to the supplier. Since the petitioner did not supply in accordance with the orders, the purchase orders were cancelled as per clauses 5.1.4 and 6.31.3 of the tender conditions. As per Clause 6.26.24 in respect of the firm supplying more than one item during the contract period, if three or more than 50% of the ordered items, whichever is less are defaulted, then the firm is liable to be blacklisted as per clause 6.39 in addition to other penalties applicable. It was thereupon that the firm was required to show cause as to why blacklisting action as contemplated under law should not be taken against the petitioner. In reply to the show cause notice, various reasons are assigned by the petitioner including that raw materials were not available for supply of the drugs in question. That apart, the online orders placed by the 2nd respondent was not taken note of by the petitioner company, and further that, the Manager of the company who is looking after the affairs of the company in the matter of supply of products died all on a sudden and, therefore, the supply was disrupted.
9. Anyhow, taking into account all the contentions put forth by the petitioner, the 2nd respondent after providing an opportunity of hearing to the petitioner, assimilated the situations and has found that in violation of the conditions as per the tender documents, petitioner has failed to supply the drugs in accordance with the schedule and, therefore, petitioner was liable to be blacklisted. In the appeal filed by the petitioner, the entire aspects put forth by the petitioner were re-appreciated and has found that as per clause 5.1.4 of the tender 2016-17, if the supplied quantity is less than 50% of the ordered quantity on the stipulated day, the remaining unexecuted portion of the order and the remaining part of the LOI are liable to be cancelled without notice and the contract with respect to the product(s) is liable to be terminated. It was accordingly that the contract was terminated and the proceedings were initiated to blacklist the petitioner as per Clause 6.26.24 read with Clause 6.39 of the tender document. It is also evident from Ext.P14 order that sufficient opportunity was provided to the petitioner for contesting the proceedings and the crucial and material points put forth by the petitioner were taken into account by the appellate authority while passing Ext.P14 order.
10. However, learned counsel for the petitioner has a case that under similar circumstances, the Government have allowed the appeal filed by yet another company M/s. Vivek Pharmachem (India) Ltd., Jaipur, and therefore, petitioner was also entitled to get similar treatment. Moreover, it is contended that, there is no wilful negligence or laches on the part of the petitioner in supplying products and, therefore, the action of the 2nd respondent initiating proceedings for blacklisting cannot be sustained. So also, it is submitted, Clause 5.1.4 can be invoked by the 2nd respondent only if the quantity supplied is less than 50% of the ordered quantity on the stipulated day, and since the petitioner has supplied more than 50% of the products, the action initiated for blacklisting cannot be sustained under law. But, it is clearly found out by the 2nd respondent that petitioner has supplied the drugs anywhere near 50% of the ordered quantity, and the following are the supplies made, and that too, much after the schedule time period prescribed as per the tender document and, therefore, the action initiated to blacklist the petitioner was in order:
Sl N o.
Drug Code
Drug Name
PO No.
PO Date
Order Qty
Recei ved Qty.
Balance Qty.
% Suppl ied
No. of days from PO when cancelled
1
D17034
LORAZEP AM INJ IP 2mg/ml 2ml Amp
KMSCL/D - 1/00266/16 -17
28.03.16
34,000
8,600
25,400
25.29
180
2
D05009
PROMETH AZINE INJ IP 25 mg/ml 2ml Amp
KMSCL/D -3/01913/ 16-17
13.12.16
1,42,700
0
1,42,700
0
97
3
D04001
KETAMIN E INJ IP 50 mg/ml 10 ml Vial
KMSCL/D - 1/02222/16 -17
23.01.17
3,050
0
3,050
0
127
11. Having evaluated the situation, I am of the considered opinion that, since a schedule was fixed for supply of products taking into account the requirements of the Corporation, the petitioner was duty bound to discharge their obligations in accordance with the agreement conditions as well as the tender documents. It is an admitted fact that three vital and important drugs required for sedation to cancer and such other patients were not supplied by the petitioner. Petitioner may have their own reasons for not supplying the products. It is an admitted fact that orders were placed by the 2nd respondent and reminders were sent to the petitioner to forward the drugs, however, the case projected by the petitioner is that, the online order placed had not come to the notice of the petitioner. However, that is not a reason for justifying the action on the part of the petitioner in not supplying the drugs in accordance with the tender conditions. In my considered opinion, since the subject contract was relating to supply of drugs to the 2nd respondent Corporation, which is procuring drugs for the purpose of supply to Government Hospitals, Government Medical Colleges and such other hospitals in order to take care of the need and requirements of mainly the low income group of the public, if the drugs are not supplied, such people will not get the services of the hospitals as are required, consequent to which, they may have to approach other medical shops in order to purchase the medicines with heavy and unbearable expenses. It was taking into account all these aspects, the 2nd respondent as well as the appellate authority has found that petitioner has not complied with the specific and firm conditions under the agreement and other terms and conditions of the tender document.
12. It is very vivid and clear from the tender conditions that, the terms and conditions are firm and imperative, to ensure that the drugs are supplied without any delay so as to make the availability of the same to the beneficiary medical institutions. Moreover, petitioner was very well aware that, if the supplies are not made in accordance with the schedule, the letter of intent is liable to be terminated and alternate purchase will be made at the risk and cost of the petitioner, apart from being proceeded for blacklisting. The facts and circumstances clearly establish that, the action of the 2nd respondent was in order and in accordance with law, and full opportunity was provided to the petitioner to contest the proceedings. So much so, once it was found that, petitioner was liable to be blacklisted, in accordance with clause 6.39.1, it shall be for a maximum period of three years from the date of order of the statutory authority. Though petitioner has a contention that, under similar circumstances, as per Ext.P15, the State Government had allowed the appeal of another company, I am of the view, that situation cannot be brought out as a ground, to secure any advantage in a proceeding under Article 226 of the Constitution of India, since this Court need only consider as to whether in the case on hand any manifest injustice or illegality or arbitrariness has taken place.
13. Therefore, I am of the considered opinion that, there is no illegality, arbitrariness or any other legal infirmity, justifying interference under Article 226 of the Constitution of India.
Resultantly, the writ petition fails, accordingly it is dismissed.