Allahabad High Court
M/S Kanha Biogentic Thru. Its Partner ... vs U.P. Medical Supplies Corporation Ltd. ... on 14 August, 2024
Author: Sangeeta Chandra
Bench: Sangeeta Chandra
HIGH COURT OF JUDICATURE AT ALLAHABAD, LUCKNOW BENCH ?Neutral Citation No. - 2024:AHC-LKO:56148-DB Court No. - 3 Case :- WRIT - C No. - 6952 of 2024 Petitioner :- M/S Kanha Biogentic Thru. Its Partner Narang Singh Respondent :- U.P. Medical Supplies Corporation Ltd. Thru. Its Managing Director And Another Counsel for Petitioner :- Hari Om Rana Counsel for Respondent :- Abhinav Trivedi,C.S.C. Hon'ble Mrs. Sangeeta Chandra,J.
Hon'ble Shree Prakash Singh,J.
Heard learned counsel for the petitioner and Shri Abhinav Trivedi, learned counsel who appears on behalf of respondent no.1 and learned Standing Counsel who appears on behalf of respondent no.2.
This petition has been filed with the following main prayer :-
"Issue a writ, order or direction in the nature of Certiorari quashing the impugned order dated 12.06.2024, passed by the Uttar Pradesh Medical Supplies Corporation Ltd., blacklisting the Petitioner for a period of three years from the date of receipt of the order."
It is the case of the petitioner that the respondent no.1 is a Government of U.P. undertaking which was set up to provide timely and effective healthcare services to the people of Uttar Pradesh. It was declared as a Central Procurement Agency for all essential and specialized drugs, medical devices and other equipments at a competitive rates for various Departments of State of U.P. involved in healthcare.
The petitioner is a partnership firm manufacturing and marketing drugs and has been supplying such medicines since 2017 to various State Governments.
On 12.01.2022 the respondent no.1 issued a E tender notice for supply of drugs for a period of one year. The integrity pact/ fidelity agreement was signed between the petitioner and respondent no.1. The petitioner being the lowest bidder was asked to supply the medicine. After completion of all formalities contract was signed on 27.12.2022. The purchase orders were issued for supply of Calcium Carbonate with vitamin D3 : 1250 mg + 250 IU tablets.
The petitioner supplied four batches of the aforesaid drug in 2023.
However, a show cause notice was issued on 26.02.2024 in respect of drug supplied by the petitioner saying that they were not of standard quality. In the show cause notice the respondent no.1 alleged that four batches of the drugs that has been supplied by the petitioner was not of standard quality as two of its laboratories, i.e., ITL Lab Private Limited and Shri Bala Ji Test Laboratories Private Limited have declared drug Calcium Carbonate with vitamin D3 as not of standard quality whereas one of its laboratories Shri Krishna Analytical Services Private Limited has declared the drug of standard quality.
The petitioner sent reply in this regard on 02.4.2024 saying that since there was variance in the reason to arrive at the conclusion that the drug was not of standard quality in the test report of all the three laboratories, the respondent no.1 should send the batches concerned to the Central Drug Laboratories, Kolkata for testing and await its report, however, despite such a request made on 02.04.2024, the respondent without sending the petitioner's batches for reanalysis have issued the impugned order blacklisting the petitioner for three years for the drug Calcium Carbonate + vitamin D3 1250 mg + 250 IU tablets. Such blacklisting order has serious civil consequences, hence, this writ petition has been filed.
Learned counsel for the petitioner during the course of argument yesterday had placed reliance upon the judgment rendered by the co-ordinate bench of this Court in Writ Petition No.6091 (MB) of 2020 [M/S Grampus Laboratories through partner Manav Maini Vs. U.P. Medical Supply Corporation Limited] decided on 19.3.2021 wherein the Court had observed that the test report submitted by the Government analyst for the drug supplied by the writ petitioner were in contravention of Section 25 of the Act of 1940 & Rule 45 of the rules of 1945 & Clause 9 of the guidelines issued by the Ministry of Health and Family Welfare dated 26.11.2010, therefore, the respondents should not have treated such report of the Government analyst as a conclusive evidence.
The Court had set aside the impugned order of blacklisting and directed that supply of the drug from the petitioner shall be deferred till testing report from the Central Drugs Laboratory, Kolkata is received. On receipt of such report the Corporation would be free to take a decision regarding supply or blacklisting afresh.
The counsel for the respondent no.1 has pointed out that the case of the petitioner is different from that of Grampus Laboratories. He has produced before this Court copy of the order dated 07.10.2019 by which Grampus Laboratories were blacklisted and which was challenged in Writ Petition No.6091 (MB ) of 2020.
He has pointed out that there were certain drugs that were supplied by the Firm M/S Grampus Laboratories for which samples were collected by the Drug Inspector CDSCO which is a national regulatory authority of North Zone and sent to the Government Analyst RDTL, Chandigarh for testing.
Drugs were found to be not of standard quality by the Government analyst RDTL, Chandigarh against which the writ petitioner Grampus Laboratories has filed an appeal under Section 25 (3) which was pending and during the pendency of such an appeal without waiting for any conclusive report the order dated 07.10.2019 was issued blacklisting Grampus Laboratories for three years from supplying the three drugs which were not found to be of standard quality by the respondents.
In the case of the petitioner, however, the counsel for the respondent no.1 has submitted on the basis of quality policy guidelines of the U.P. Medical supply Corporation Limited that as per Clause 5 of the quality policy approved on 03.3.2022 by the Board of the respondent no.1 the supply has initially to be sent to NABL accredited laboratories. In case there is no empanelled lab for testing of any drug or there are not more than two empanelled labs for confirmatory test in case of a quality failure or in other suitable cases, there is a requirement then a sample can be sent to any Government lab for testing. Result provided by the Government analyst of the Government Laboratory will be considered as "final".
The counsel for the respondent no.1 has also pointed out clause no.9 of the Modified Quality Policy and sub clauses a, b, c thereof which are being quoted hereinbelow :-
a. Manager (Quality Control) of UPMSCL shall review the Certificate of Analysis (COA) uploaded over DVDMS portal by the empanelled lab for completeness and correctness of the COA and will acknowledge the report. If acknowledged test report is as of "Standard Quality" then the corresponding drug batch will be released from quarantine to issuable stock automatically through DVDMS portal.
b. In case the sample of the batch is declared not of standard quality by the empanelled lab then samples from the retained portion of the batch shall be sent to two other labs for confirmatory testing. If the sample is declared Not of Standard Quality by any one of the two laboratories. Then batch shall be concluded to be "Not of Standard Quality" (NSQ). In case there is only one or two empanelled lab and the drug is cleared NSQ by first lab, the confirmatory test shall be done at Government analyst laboratory. The opinion of Government Analyst shall be considered as "Final" in later cases.
c. In case the batch is finally considered to be "Not of Standard Quality" then the supplier shall be intimated to take back the product of NSQ batch and intimation will be given to UPFDA & Penal action in view of supplying NSQ drugs shall be taken as per "Quality Policy" and Tender Condition.
In the case of the petitioner it has been submitted that the sample in question was sent to three empanelled laboratories out of which two have found such sample to be not of standard quality (NSQ).
The counsel for the respondent has also pointed out relevant clause of the contract signed between the parties, copy of which has been filed as Annexure to the petition. In Clause 21 which relates to the resolution of the disputes, it has been stated that if there is any dispute or any difference of any kind which shall arise between the purchaser and the successful bidder/ supplier in connection with or relating to the contract, the parties shall make an effort to resolve the same amicably by mutual consultation. If after 30 days from the commencement of such informal negotiations the purchaser and supplier have not been able to resolve the dispute amicably then either of the parties may give notice to other party of its intention to commence arbitration. The arbitration procedure shall be as per Arbitration and Conciliation Act, 1996.
It has been submitted that the order impugned in this writ petition is with regard to the blacklisting and it arises out of a dispute in the contract conditions and, therefore, the petitioner should be relegated to the remedy available under clause 21 of the contract.
This Court having considered the arguments raised by the parties is of the considered opinion that the judgment rendered in Writ petition no. 6091 (MB) of 2020 [M/S Grampus Laboratories vs. U.P. Medical Supply Corporation Limited] is not applicable in the case of the petitioner.
This writ petition is disposed of leaving it open to the petitioner to approach the respondent no.1 under Clause 21 of the contract signed between the parties.
Order Date :- 14.8.2024 mks