Gujarat High Court
Allied Medical Ltd vs Gujarat Medical Services Corporation ... on 26 November, 2025
Author: Bhargav D. Karia
Bench: Bhargav D. Karia
NEUTRAL CITATION
C/SCA/12386/2025 JUDGMENT DATED: 26/11/2025
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 12386 of 2025
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE BHARGAV D. KARIA
and
HONOURABLE MR.JUSTICE L. S. PIRZADA
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Approved for Reporting Yes No
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ALLIED MEDICAL LTD. & ANR.
Versus
GUJARAT MEDICAL SERVICES CORPORATION LTD.
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Appearance:
MR DARSHAN M PARIKH(572) for the Petitioner(s) No. 1,2
MR UTKARSH R SHARMA(6157) for the Respondent(s) No. 1
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CORAM:HONOURABLE MR. JUSTICE BHARGAV D. KARIA
and
HONOURABLE MR.JUSTICE L. S. PIRZADA
Date : 26/11/2025
ORAL JUDGMENT
(PER : HONOURABLE MR. JUSTICE BHARGAV D. KARIA)
1. Heard learned advocate Mr. Darshan Parikh for the petitioner and learned advocate Mr. Utkarsh Sharma for the respondent.
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2. Having regard to the controversy which is involved in narrow compass, with the consent of learned advocates for the parties, the matter is taken up for hearing.
3. Rule returnable forthwith. Learned advocate Mr. Utkarsh Sharma waives service of notice of rule on behalf of respondent.
4. By this petition under Article 226 of the Constitution of India, the petitioner has prayed for the following relief:
"8(B) Be further pleased to quash and set aside the order dated 19.07.2025 (Annexure P-1) be the respondent debarring the Page 2 of 74 Uploaded by JYOTI V. JANI(HC00213) on Thu Dec 11 2025 Downloaded on : Fri Dec 12 22:22:48 IST 2025 NEUTRAL CITATION C/SCA/12386/2025 JUDGMENT DATED: 26/11/2025 undefined Petitioner No.1 Company from business relations with the Respondent for Neonatal Ventilator for a period of three years with effect from dated 16.07.2025."
FACTS:
5. Brief facts of the case are as under:
5.1 The petitioner is engaged in the business of manufacturing and trading of medical equipments for last more than 43 years. The respondent invited Bid on 28.06.2021 for supply of 214 Neonatal Ventilators which was revised to 234 Ventilators. The bid was required to be submitted by 05.07.2021.
5.2 It is the case of the petitioner that before opening the price bid, the Technical Evaluation and Demo of the Page 3 of 74 Uploaded by JYOTI V. JANI(HC00213) on Thu Dec 11 2025 Downloaded on : Fri Dec 12 22:22:48 IST 2025 NEUTRAL CITATION C/SCA/12386/2025 JUDGMENT DATED: 26/11/2025 undefined Machine/Negotiations/Receipt of Acceptance Letter, Technical Evaluation was to be made at three hospitals wherein, equipments to be kept for use for number of days. Accordingly, the equipments were kept for use on trial basis for number of days in GMERS Medical College and Hospital at Sola, Ahmedabad, SSG Hospital, Vadodara and GMERS Medical College and General Hospital at Rajpipla.
5.3 Thereafter, negotiations were made and following the evaluation, the acceptance letter against the Bid of the petitioner for supply of Neonatal Ventilators was issued on 09.02.2022 followed by execution of contract dated Page 4 of 74 Uploaded by JYOTI V. JANI(HC00213) on Thu Dec 11 2025 Downloaded on : Fri Dec 12 22:22:48 IST 2025 NEUTRAL CITATION C/SCA/12386/2025 JUDGMENT DATED: 26/11/2025 undefined 09.03.2022 for deployment and installation of the ventilators.
5.4 It is the case of the petitioner that all 234 Neonatal Ventilators were installed and put to use satisfactorily across 79 consignee hospitals in Gujarat in the month of April, 2022 which, according to the petitioner, were working satisfactorily with installation reports from each of the consignee hospitals.
5.5 It is also the case of the petitioner that during the said period, it had supplied 2231 similar machines to various Government and Private Hospitals in about 24 States of the Page 5 of 74 Uploaded by JYOTI V. JANI(HC00213) on Thu Dec 11 2025 Downloaded on : Fri Dec 12 22:22:48 IST 2025 NEUTRAL CITATION C/SCA/12386/2025 JUDGMENT DATED: 26/11/2025 undefined Country including the supply through tender to the State of Gujarat. After the lifting of the export ban which was imposed due to Corona-19 Pandemic, the petitioner Company also exported 97 Units.
5.6 It is the case of the petitioner that letter dated 06.02.2023 was received from the respondent after about 10 months from the installation of the equipments stating that machine supplied at GMERS Medical College and Hospital at Sola, Ahmedabad was not functioning properly for the past six months. According to the petitioner, prior to the said letter, no complaint was made or received by the petitioner Page 6 of 74 Uploaded by JYOTI V. JANI(HC00213) on Thu Dec 11 2025 Downloaded on : Fri Dec 12 22:22:48 IST 2025 NEUTRAL CITATION C/SCA/12386/2025 JUDGMENT DATED: 26/11/2025 undefined regarding deficiency in respect of Neonatal Ventilators supplied by the petitioner and, the machines supplied by the petitioners were in continuous operation and were duly serviced and maintained as part of the comprehensive warranty and after-sales support obligations as per the terms and conditions of the contract.
5.7 It is the case of the petitioner that in response to the complaint received by the petitioner, Application Manager of the petitioner visited GMERS Medical College and Hospital, Sola, Ahmedabad from 13.02.2023 to 17.02.2023 and provided service and resolved the complaints made on 06.02.2023 as per Page 7 of 74 Uploaded by JYOTI V. JANI(HC00213) on Thu Dec 11 2025 Downloaded on : Fri Dec 12 22:22:48 IST 2025 NEUTRAL CITATION C/SCA/12386/2025 JUDGMENT DATED: 26/11/2025 undefined the confirmation letter dated 20.02.2023.
5.8 Thereafter, it appears that an Email dated 19.03.2024 was received from the respondent regarding issue arising in Neonatal Ventilators installed at GMERS Medical College and Hospital, Sola, Ahmedabad which was also resolved.
5.9 The petitioner was called for personal negotiations on 25.02.2025 to discuss various issues related to the functioning of the equipments allegedly faced by the consignee hospitals of the respondent.Page 8 of 74 Uploaded by JYOTI V. JANI(HC00213) on Thu Dec 11 2025 Downloaded on : Fri Dec 12 22:22:48 IST 2025
NEUTRAL CITATION C/SCA/12386/2025 JUDGMENT DATED: 26/11/2025 undefined 5.10 It is the case of the petitioner that the petitioner provided the Installation/Maintenance Service Report on 21.03.2025. However, the respondent issued show-cause notice dated 21.03.2025 calling upon the petitioner to explain in detail why action should not be taken as per the contract terms and conditions and existing policy of the respondent. The petitioner filed reply on 25.03.2025 providing clarification with regard to the issues with the Neonatal Ventilators installed at SSG Hospital, Vadodara, GMERS Medical College and General Hospital, Rajpipla and GMERS Medical College and Hospital, Sola Page 9 of 74 Uploaded by JYOTI V. JANI(HC00213) on Thu Dec 11 2025 Downloaded on : Fri Dec 12 22:22:48 IST 2025 NEUTRAL CITATION C/SCA/12386/2025 JUDGMENT DATED: 26/11/2025 undefined along with copy of the maintenance service reports.
5.11 Thereafter, the respondent issued another notice dated 28.04.2025 calling upon the petitioner to show cause why the petitioner-Firm should not be debarred and security deposit submitted should not be forfeited on the allegation that the petitioner has failed to resolve the issues and the equipments are not repaired and made functional at SSG Hospital, Vadodara, GMERS Medical College and General Hospital, Rajpipala and GMERS Medical College and Hospital, Sola, Ahemdabad. 5.12 By reply dated 05.05.2025, the petitioner provided clarification Page 10 of 74 Uploaded by JYOTI V. JANI(HC00213) on Thu Dec 11 2025 Downloaded on : Fri Dec 12 22:22:48 IST 2025 NEUTRAL CITATION C/SCA/12386/2025 JUDGMENT DATED: 26/11/2025 undefined in response to the show-cause notice dated 28.04.2025 along with service reports with visit details and prior written communications and replies. 5.13 It appears that the respondent passed the impugned order of debarring the petitioner on 19.07.2025, on the basis of the decision taken by the Board Level Committee in its meeting dated 16.07.2025 on the ground of unsatisfactory performance and breach of Condition No. 21(ii)(c) of the General Terms and Conditions (GTC) on GeM 3.0 (Version 1.21) of the contract, for three years w.e.f. 16.07.2025.
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6. This Court passed the order dated 08.09.2025 directing the petitioner to place on record General Terms and Conditions of the contract by way of an additional affidavit.
7. The petitioner, by the additional affidavit dated 10.09.2025, has placed on record General Terms and Conditions of Tender along with excerpts of debarring order published at the web site of the respondent. The petitioner has also filed further additional affidavit placing on record various satisfactory functioning reports from various hospitals and the decision of the Haryana Medical College Services Corporation Limited rejecting the bid Page 12 of 74 Uploaded by JYOTI V. JANI(HC00213) on Thu Dec 11 2025 Downloaded on : Fri Dec 12 22:22:48 IST 2025 NEUTRAL CITATION C/SCA/12386/2025 JUDGMENT DATED: 26/11/2025 undefined of the petitioner for supply of Syringe Infusion Pump citing the debarment order passed by the respondent which is challenged.
8. Thereafter, the matter was heard on 11.11.2025 and the learned advocate Mr. Utkarsh Sharma appearing for the respondent sought time to place on record the decision taken by the Board Level Committee in its meeting dated 16.07.2025. Thereafter, the matter was heard on 18.11.2025 wherein, following order was passed:
"In compliance with the order dated 11.11.2025, learned advocate Mr. Utkarsh Sharma has filed an affidavit in sur-rejoinder on behalf of the respondent, placing on record the documents showing the agenda of the Board-level Committee and the minutes which Page 13 of 74 Uploaded by JYOTI V. JANI(HC00213) on Thu Dec 11 2025 Downloaded on : Fri Dec 12 22:22:48 IST 2025 NEUTRAL CITATION C/SCA/12386/2025 JUDGMENT DATED: 26/11/2025 undefined refer to the debarment policy as per the 13th Board of Directors Meeting - Agenda No. 30, 22nd Board of Directors Meeting - Agenda No. 23, 29th Board of Directors Meeting - Agenda No. 16 and 34th Board of Directors Meeting - Agenda No. 33 concerning the debarment policy, which are annexed at Annexure-F (page nos. 46 to 61). The minutes of the Board-level Committee dated 02.04.2025 and the minutes of the agenda of the Board-level Committee for the meeting scheduled on 16.07.2025 and the minutes thereof are also placed on record.
After arguing the matter for some time, learned advocate Mr. Sharma prays for time to place on record the Board of Directors Meeting Debarment Policy as referred to in Annexure-1 to the affidavit in sur-rejoinder.
Learned advocate Mr. Sharma to call for the original file for perusal of the Court.
Stand over to 20.11.2025."Page 14 of 74 Uploaded by JYOTI V. JANI(HC00213) on Thu Dec 11 2025 Downloaded on : Fri Dec 12 22:22:48 IST 2025
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9. In compliance of the aforesaid direction, learned advocate Mr. Utkarsh Sharma has placed the original file for perusal of the Court and has also additionally supplied the minutes containing debarment policy as referred into the aforesaid order.
SUBMISSIONS OF THE PETITIONERS:
10. Learned advocate Mr. Darshan Parikh for the petitioner submitted that the respondent has passed the impugned order without taking into consideration the detailed reply filed by the petitioner on 05.05.2025 wherein, the petitioner has explained in detail, the service and maintenance provided to each of the hospitals from where the Page 15 of 74 Uploaded by JYOTI V. JANI(HC00213) on Thu Dec 11 2025 Downloaded on : Fri Dec 12 22:22:48 IST 2025 NEUTRAL CITATION C/SCA/12386/2025 JUDGMENT DATED: 26/11/2025 undefined complaints were received regarding malfunctioning of the Neonatal Ventilators supplied by the petitioner- Company.
10.1 Learned advocate Mr. Darshan Parikh also referred to the service reports placed on record along with the reply and submitted that the same were ignored by the respondent while passing the impugned order referring to the decision of the Board Level Committee dated 16.07.2025.
10.2 It was further submitted that Condition No. 21 of the General Terms and Conditions refers to the administrative action to be taken by the GeM [Government E-Marketplace] Page 16 of 74 Uploaded by JYOTI V. JANI(HC00213) on Thu Dec 11 2025 Downloaded on : Fri Dec 12 22:22:48 IST 2025 NEUTRAL CITATION C/SCA/12386/2025 JUDGMENT DATED: 26/11/2025 undefined against the Buyer or the Seller either suo motu on the basis of the platform mechanisms identified through analytics or on the basis of a complaint or report made to GeM by any stakeholder. It was submitted that clause (2)(ii) of Condition No. 21 refers to the administrative action to be taken by the GeM such as suspension/debarment/removal from GeM, if the seller i.e. the petitioner supplies the goods of inferior/substandard quality. It was submitted that the Condition No. 21(ii)(c) of GeM -GTC could not have been invoked by the respondent for passing debarment order. Page 17 of 74 Uploaded by JYOTI V. JANI(HC00213) on Thu Dec 11 2025 Downloaded on : Fri Dec 12 22:22:48 IST 2025
NEUTRAL CITATION C/SCA/12386/2025 JUDGMENT DATED: 26/11/2025 undefined 10.3 Reference was also made to the Terms and Conditions of the Contract, more particularly, Condition No. 3.15 which refers to timely servicing/rectification of the defects during warranty period. It was submitted that as per Condition No. 3.15, the petitioner was required Three days' time to remove the defects/service requirements during the warranty period.
10.4 It was pointed out that as per Condition No. 3.19, the warranty period is for Five Years and the petitioner was duty bound to remove the defects and provide the service to the hospitals after installation of the Page 18 of 74 Uploaded by JYOTI V. JANI(HC00213) on Thu Dec 11 2025 Downloaded on : Fri Dec 12 22:22:48 IST 2025 NEUTRAL CITATION C/SCA/12386/2025 JUDGMENT DATED: 26/11/2025 undefined machines in the Year 2022. It was submitted that Condition No. 3.19 also refers to the penalty of 0.5% of Unit Price of the product to be charged for each week of delay from the petitioner and also refers to the revocation of the Performance Security/Bank Guarantee given by the petitioner at the time of allocation of the contract. 10.5 It was therefore, submitted that without any rhyme or reason, the petitioner is debarred by the respondent contrary to the contract conditions as well as General Terms and Conditions of the GeM 3.0 (Version 1.21).
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NEUTRAL CITATION C/SCA/12386/2025 JUDGMENT DATED: 26/11/2025 undefined 10.6 Referring to the minutes of the meeting of the Board Level Committee held on 16.07.2025 which is placed on record by the respondent pursuant to the order passed by this Court along with affidavit in sur-rejoinder filed on behalf of the respondent, it was submitted that the Board Level Committee in the minutes has only referred to the final notice dated 28.04.2025 and thereafter, only mentioned about reply of the petitioner dated 07.05.2025 which in fact, was filed on 05.05.2025 without referring to details mentioned therein. It was pointed out that after receipt of the reply, the Board Level Committee has sought explanation from 03 hospitals Page 20 of 74 Uploaded by JYOTI V. JANI(HC00213) on Thu Dec 11 2025 Downloaded on : Fri Dec 12 22:22:48 IST 2025 NEUTRAL CITATION C/SCA/12386/2025 JUDGMENT DATED: 26/11/2025 undefined i.e. GMERS Medical College and Hospital, Sola, GMERS Medical College and General Hospital at Rajpipla and SSG Hospital, Vadodara and has further mentioned that still there are technical defects in the machines.
10.7 It was submitted by learned
advocate Mr. Darshan
Parikh that none of such Email was
provided to the petitioner nor any
further explanation was sought which
has resulted into violation of the
principles of natural justice. Learned advocate Mr. Parikh also relied upon minutes which refers to Email sent to other hospitals on 05.05.2025 by the Committee and it is further mentioned Page 21 of 74 Uploaded by JYOTI V. JANI(HC00213) on Thu Dec 11 2025 Downloaded on : Fri Dec 12 22:22:48 IST 2025 NEUTRAL CITATION C/SCA/12386/2025 JUDGMENT DATED: 26/11/2025 undefined that seven Hospitals have reported defects in the machines whereas, eight hospitals have informed that the machines were working satisfactorily. It was submitted that except recording such facts in the minutes and without providing any of such communication received by the Board Level Committee to the petitioner to respond, the Board Level Committee has jumped to the conclusion that the petitioner is required to be debarred for three years w.e.f. 16.07.2025.
10.8 Referring to the minutes of the meetings held on 18.09.2015 and 23.08.2017 of the Board of Directors of the respondent, wherein Comprehensive Page 22 of 74 Uploaded by JYOTI V. JANI(HC00213) on Thu Dec 11 2025 Downloaded on : Fri Dec 12 22:22:48 IST 2025 NEUTRAL CITATION C/SCA/12386/2025 JUDGMENT DATED: 26/11/2025 undefined Policy for Debarment of Firms from business relations with the respondent is formulated, it was pointed out that as per the said Policy, disqualification from participating for the same equipment for the period of three years with forfeiting of Security Deposit can happen only when supply of equipment does not confirm to tender specifications or due to supply of non- genuine spares. It was pointed out that in the facts of the case, only allegation against the petitioner is with regard to failure in providing services for the machines supplied by the petitioner.
10.9 It was pointed out that in the resolution passed by the respondent Page 23 of 74 Uploaded by JYOTI V. JANI(HC00213) on Thu Dec 11 2025 Downloaded on : Fri Dec 12 22:22:48 IST 2025 NEUTRAL CITATION C/SCA/12386/2025 JUDGMENT DATED: 26/11/2025 undefined in the meeting held on 18.09.2015 in Agenda Item No. 13/30 regarding Debarment of Firms From Business Relations with Non-Standard Comprehensive Maintenance is concerned, none of the clauses mentioned therein are applicable in the facts of the case so as to debar the petitioner. SUBMISSIONS OF THE RESPONDENT:
11. Per contra, learned advocate Mr. Utkarsh Sharma submitted that it is the prerogative of the respondent to take a policy decision to debar the petitioner from doing business with the respondent. It was submitted that the facts of the case clearly shows that the petitioner has failed to provide Page 24 of 74 Uploaded by JYOTI V. JANI(HC00213) on Thu Dec 11 2025 Downloaded on : Fri Dec 12 22:22:48 IST 2025 NEUTRAL CITATION C/SCA/12386/2025 JUDGMENT DATED: 26/11/2025 undefined services to the hospitals where Neonatal Ventilators were supplied by the petitioner pursuant to the contract awarded by the respondent. 11.1 Learned advocate Mr. Sharma referred to the details of the complaints received from GMERS Medical College and Hospital, Sola, Ahmedabad and other hospitals facing issues placed on record along with affidavit- in-reply at Annexure R2 and the communications received from GMERS Medical College and Hospital at Sola, Ahmedabad at Annexure R4 to point out that in spite of the repeated requests, the machines were not made functional by the petitioner which has resulted Page 25 of 74 Uploaded by JYOTI V. JANI(HC00213) on Thu Dec 11 2025 Downloaded on : Fri Dec 12 22:22:48 IST 2025 NEUTRAL CITATION C/SCA/12386/2025 JUDGMENT DATED: 26/11/2025 undefined into the impugned decision of debarment for three years by the Board Level Committee in the meeting held on 16.07.2025.
11.2 It was submitted that reference to Condition No. 21(ii)(c) of the General Terms and Conditions of Gem is referred to in the impugned order as the said conditions specifically deal with supplies of goods of inferior and substandard quality and therefore, such debarment decision taken by the Board Level Committee was also to be informed to the Government E-marketplace Portal so as to take action under Condition No. 21(ii)(c) of the General Terms and Conditions on GeM 3.0 (Version 1.21). Page 26 of 74 Uploaded by JYOTI V. JANI(HC00213) on Thu Dec 11 2025 Downloaded on : Fri Dec 12 22:22:48 IST 2025
NEUTRAL CITATION C/SCA/12386/2025 JUDGMENT DATED: 26/11/2025 undefined 11.3 Learned advocate Mr.Utkarsh Sharma referred to and relied upon the following averments made in the affidavit-in-reply regarding mentioning of the said condition in the impugned order:
"7. The petitioner has placed on record the general terms and conditions of Gem and also the contract dated 09.03.2022, however, the petitioner has missed the sight of CMC agreement i.e. Comprehensive Maintenance Contract entered between the parties on 17.06.2022. The said contract comprehensively covers numerous terms and conditions between the parties with regards to maintenance, quality, service, etc. It is pertinent to note that clause 2.19 in the said contract Page 27 of 74 Uploaded by JYOTI V. JANI(HC00213) on Thu Dec 11 2025 Downloaded on : Fri Dec 12 22:22:48 IST 2025 NEUTRAL CITATION C/SCA/12386/2025 JUDGMENT DATED: 26/11/2025 undefined is with regards to obligation on part of the present petitioner for the purpose of maintenance, service job etc. The said clause clearly stipulates that "If the supplier fails to fulfill his contractual obligation of CMC, and repair/equipment operational within 30 days of lodging the complaints, the entire security deposit plus GST as applicable will be forfeited, and the supplier would be debarred from future business with GMSCL."
Therefore, the powers with regards to order under challenge dated 19.07.2025 at annexure-P1, page 27 to the petition flows from the said CMC agreement, read with GeM general terms and conditions as well as the contract entered between the parties on 09.03.2022. The copy of the CMC agreement is placed on record is annexed Page 28 of 74 Uploaded by JYOTI V. JANI(HC00213) on Thu Dec 11 2025 Downloaded on : Fri Dec 12 22:22:48 IST 2025 NEUTRAL CITATION C/SCA/12386/2025 JUDGMENT DATED: 26/11/2025 undefined herewith and marked as ANNEXURE- R1.
9. It is submitted that Now I may deal with the order impugned and its operative portion, which have been tried to be technically interpreted by the present petitioner, i.e. to say the condition no.21(ii)(C), which is placed on record at page-31 of the petition and the complete terms have been placed on record by a subsequent affidavit by the petitioner. The condition reads in its title, 'Grounds for administrative action'. In the 1st clause, it reads with regards to actions which may be taken by the GeM against the buyer or the seller, which pertains to non- adherence of GeM website policies including terms and conditions, and incident management policy Page 29 of 74 Uploaded by JYOTI V. JANI(HC00213) on Thu Dec 11 2025 Downloaded on : Fri Dec 12 22:22:48 IST 2025 NEUTRAL CITATION C/SCA/12386/2025 JUDGMENT DATED: 26/11/2025 undefined published on the GEM website. However, the 2nd clause also covers the liability on part of seller with regards to any action as cited in clause 2.19 of this comprehensive maintenance contract and actions such as suspension/debarment/ removal from GeM, if they failed to abide by any of the website policies, including the terms and conditions stipulated in this document and/or on any one or more of the following grounds, more particularly (c) specifically deals with supplies goods of inferior and substandard quality. Therefore, while reading 21(ii)
(c), it becomes apparently clear that any debarment with regards to failure on part of the petitioner to maintain quality would be purely the prerogative of the department of the deponent and Page 30 of 74 Uploaded by JYOTI V. JANI(HC00213) on Thu Dec 11 2025 Downloaded on : Fri Dec 12 22:22:48 IST 2025 NEUTRAL CITATION C/SCA/12386/2025 JUDGMENT DATED: 26/11/2025 undefined therefore, the debarment order dated 19.07.2025 at page 27, is just and proper. It is further submitted that assuming even if for the time being it is considered that the said clause pertains to GeM only, even in such an eventuality, the debarment order is just and proper in view of the clause 2.19 of the CMC Agreement, which the petitioner has failed to place on record." 11.4 Referring to the above averments, it was submitted that the decision taken by the Board Level Committee is not affected by the said condition but as per Clause 2.19 of the Agreement, the petitioner has failed to comply with the same and as such, there is no fault on part of the respondent Page 31 of 74 Uploaded by JYOTI V. JANI(HC00213) on Thu Dec 11 2025 Downloaded on : Fri Dec 12 22:22:48 IST 2025 NEUTRAL CITATION C/SCA/12386/2025 JUDGMENT DATED: 26/11/2025 undefined to debar the petitioner. Referring to the debarment policy as per the resolution passed by the respondent in the meetings held on 18.09.2015 and 23.08.2017 referred in the agenda of the meeting of the Board Level Committee held on 16.07.2025, it was submitted that as per the Resolution passed pursuant to the Agenda No. 13/30, the petitioner is liable to be debarred for sub-standard comprehensive maintenance and the case of the petitioner would fall in Clause (1) which stipulates that in case the equipment/item supplied by a Firm/Company is not working as per the standard specification and clause (4) which provides that in case equipment Page 32 of 74 Uploaded by JYOTI V. JANI(HC00213) on Thu Dec 11 2025 Downloaded on : Fri Dec 12 22:22:48 IST 2025 NEUTRAL CITATION C/SCA/12386/2025 JUDGMENT DATED: 26/11/2025 undefined or its part thereof is not repaired within the prescribed time period, the debarment is permissible. 11.5 It was submitted that in the facts of the case, various hospitals, to which the petitioner has supplied the Neonatal Ventilators, have written repeated reminders, letters and sent Emails for malfunctiong as functioning of the Neonatal Ventilators is very crucial to save life of the children and non-functioning thereof in the hospital is fatal to the pediatric patients. It was therefore submitted that the debarment policy of the Agenda 13th Board Directors Meeting-Agenda No.30, 22nd Board of Directors Meeting- Page 33 of 74 Uploaded by JYOTI V. JANI(HC00213) on Thu Dec 11 2025 Downloaded on : Fri Dec 12 22:22:48 IST 2025
NEUTRAL CITATION C/SCA/12386/2025 JUDGMENT DATED: 26/11/2025 undefined Agenda No.23, 29th Board of Directors Meeting-Agenda No.16 and 34th Board of Directors Meeting Agenda No. 33 etc are taken into consideration to arrive at a conclusion by the Board Level Committee to debar the petitioner.
11.6 It was therefore, submitted that in such policy decision no interference may be made while exercising extraordinary jurisdiction under Article 226 of the Constitution of India. In support of his submissions, reliance was placed on the decision of the Hon'ble Apex Court in case of Patel Engineering Ltd vs. Union of India reported in (2012) 11 SCC 257. Referring to the said decision it was Page 34 of 74 Uploaded by JYOTI V. JANI(HC00213) on Thu Dec 11 2025 Downloaded on : Fri Dec 12 22:22:48 IST 2025 NEUTRAL CITATION C/SCA/12386/2025 JUDGMENT DATED: 26/11/2025 undefined submitted that the Hon'ble Apex Court in the facts of the said case has held that the blacklisting of the petitioner after forfeiting the bid security was a matter which required examination as the issue is one of the proportionality of the action taken by the 2nd respondent in the said case. It was submitted that the Hon'ble Apex Court after considering the facts of the said case held that there was no illegality or irrationality in the conclusion reached by the 2nd respondent that the petitioner was not commercially reliable and trustworthy in the light of its conduct in the context of transaction in question. Page 35 of 74 Uploaded by JYOTI V. JANI(HC00213) on Thu Dec 11 2025 Downloaded on : Fri Dec 12 22:22:48 IST 2025
NEUTRAL CITATION C/SCA/12386/2025 JUDGMENT DATED: 26/11/2025 undefined 11.7 It was submitted in the facts of the case also the Board Level Committee has found the petitioner not commercially reliable and trustworthy in view of the complaints received from the various hospitals for not repairing and maintaining Neonatal Ventilators which are very crucial to save the life of the pediatric patients so that the respondent was justified in debarment of the petitioner for three years by passing the impugned order. It was therefore submitted that no interference be made and the petitioner is not entitled to any relief as prayed for.
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NEUTRAL CITATION C/SCA/12386/2025 JUDGMENT DATED: 26/11/2025 undefined ANALYSIS:
12. Having heard learned advocates for the respective parties and considering the facts of the case it is not in dispute that the petitioner was awarded the contract in the Year 2022 for supply of 234 Neonatal Ventilators to the various hospitals through respondent-Gujarat Medical Services Corporation Limited as per the bid for procurement floated on the Government E-marketplace for Neonatal Ventilators. Accordingly, the petitioner supplied 234 Neonatal Ventilators to various hospitals in Gujarat. It is also not in dispute that till 2023 there was no complaint received by the respondent for the non Page 37 of 74 Uploaded by JYOTI V. JANI(HC00213) on Thu Dec 11 2025 Downloaded on : Fri Dec 12 22:22:48 IST 2025 NEUTRAL CITATION C/SCA/12386/2025 JUDGMENT DATED: 26/11/2025 undefined functioning of the machines supplied by the petitioner.
13. On perusal of the Terms and Conditions of the contract it would be germane to refer to the relevant conditions governing repairs and maintenance after supply of the machines by the petitioner pursuant to the contract awarded which reads as under:
"3.15 Over and above the normal Warranty terms as per GeM GTC, the successful bidder / OEM shall have to provide Comprehensive Warranty during the entire Standard warranty period as per contract. The comprehensive warranty shall be covering the following scope Include four free services Page 38 of 74 Uploaded by JYOTI V. JANI(HC00213) on Thu Dec 11 2025 Downloaded on : Fri Dec 12 22:22:48 IST 2025 NEUTRAL CITATION C/SCA/12386/2025 JUDGMENT DATED: 26/11/2025 undefined yearly to attend breakdown call within 48 hours, and free replacement of parts. (Upload an undertaking with the bid confirming compliance by the bidder if Bidder is taking onus of this compliance. In case OEM is taking onus of this compliance, OEM undertaking is to be uploaded along with Bidder undertaking).
3.19 Timely Servicing / rectification of defects during warranty period: After having been notified of the defects / service requirement during warranty period, Seller has to complete the required Service / Rectification within 3 days time limit. If the Seller falls to complete service /rectification with defined time limit, a penalty of 0.5% of Unit Price of the product shall be charged as penalty for each week of Page 39 of 74 Uploaded by JYOTI V. JANI(HC00213) on Thu Dec 11 2025 Downloaded on : Fri Dec 12 22:22:48 IST 2025 NEUTRAL CITATION C/SCA/12386/2025 JUDGMENT DATED: 26/11/2025 undefined delay from the seller. Seller can deposit the penalty with the Buyer directly else the Buyer shall have a right to recover all such penalty amount from the Performance Security (PBG). Cumulative Penalty cannot exceed more than 10% of the total contract value after which the Buyer shall have the right to get the service / rectification done from alternate sources at the risk and cost of the Seller besides forfeiture of PBG. Seller shall be liable to re-imberse the cost of such service / rectification to the Buyer.)"
14. As per Condition No. 3.15, a Comprehensive Warranty during the entire Standard Warranty Period as per contract, is stipulated. The present warranty covers four free services Page 40 of 74 Uploaded by JYOTI V. JANI(HC00213) on Thu Dec 11 2025 Downloaded on : Fri Dec 12 22:22:48 IST 2025 NEUTRAL CITATION C/SCA/12386/2025 JUDGMENT DATED: 26/11/2025 undefined yearly to attend breakdown calls within 48 hours and free replacement of parts.
15. Condition No. 3.19 provides for timely servicing/rectification of defects during the warranty period and provides that after having been notified of the defects/service requirement during the warranty period, the seller has to complete the required Service/Rectification within three days' time limit and if such service is not provided within the defined time limit, a penalty of 0.5% of Unit Price of the product shall be charged as penalty for each week of delay from the seller.
Page 41 of 74 Uploaded by JYOTI V. JANI(HC00213) on Thu Dec 11 2025 Downloaded on : Fri Dec 12 22:22:48 IST 2025
NEUTRAL CITATION C/SCA/12386/2025 JUDGMENT DATED: 26/11/2025 undefined
16. From the impugned order it appears that the petitioner Board Level Committee in its meeting dated 16.07.2025 has taken into consideration the complaints received by the various hospitals for not resolving the issues with regard to Neonatal Ventilators supplied by the petitioner and after considering such complaints, it was concluded by the Board Level Committee that the conduct of the petitioner has violated the Terms and Conditions of the contract without referring to the specific terms and conditions in the minutes. Except the above two conditions no other condition provides for resolution of the issues faced by the hospitals which Page 42 of 74 Uploaded by JYOTI V. JANI(HC00213) on Thu Dec 11 2025 Downloaded on : Fri Dec 12 22:22:48 IST 2025 NEUTRAL CITATION C/SCA/12386/2025 JUDGMENT DATED: 26/11/2025 undefined is referred to as "consignees" in the impugned order.
17. On perusal of the minutes of the meeting of the Board Level Committee dated 16.07.2025 which is placed on record along with affidavit in sur- rejoinder filed on behalf of respondent, it is discernible that on 02.04.2025 it was reported to the Board Level Committee that the petitioner did not resolve the issues faced by hospitals at Sola and Rajpipla and thereafter, a final show-cause notice was issued on 28.04.2025 which was replied by the petitioner on 05/07.05.2025. It is also recorded in the minutes that in response to the Page 43 of 74 Uploaded by JYOTI V. JANI(HC00213) on Thu Dec 11 2025 Downloaded on : Fri Dec 12 22:22:48 IST 2025 NEUTRAL CITATION C/SCA/12386/2025 JUDGMENT DATED: 26/11/2025 undefined reply filed by the petitioner again clarification was sought on 08.05.2025 from the hospitals at Sola and Rajpipla and it was reported that the machines are still not functioning as the issues were not resolved. In the minutes it is also recorded that on 15.05.2025, other hospitals were also called upon to inform the respondent for technical issues in the machines supplied by the petitioner and seven hospitals situated at Petlad, Mahuva, Mansa, Dharmpur, Gandhidham and Dediapada reported that there were issues in the machines whereas, Eight hospitals situated at Mandvi, Surat, Devgadh Baria, Amreli, Jetpur, Halvad, Godhra, Siddhpur and Kheda reported that the machines were Page 44 of 74 Uploaded by JYOTI V. JANI(HC00213) on Thu Dec 11 2025 Downloaded on : Fri Dec 12 22:22:48 IST 2025 NEUTRAL CITATION C/SCA/12386/2025 JUDGMENT DATED: 26/11/2025 undefined working satisfactorily. It is shocking that neither the details gathered by the Board Level Committee pursuant to the Email dated 08.05.2025 and 15.05.2025 were shared with the petitioner nor any reason is assigned for taking decision for debarring the petitioner for three years and to inform GeM as per the general terms and conditions for administrative action. It is also pertinent to note that reply of the petitioner though referred in the minutes of the meeting, none of the contention thereof is considered and discussed in the minutes of the meeting held on 16.07.2025.
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NEUTRAL CITATION C/SCA/12386/2025 JUDGMENT DATED: 26/11/2025 undefined
18. Moreover, only reference is made in the agenda to the policy of debarment framed by the Board of Directors in the 13th, 22nd, 29th and 34th Meetings. It appears that reference to the debarment policy was made in the agenda of the Board Level Committee Meeting to be held on 02.04.2025 and it appears that during the meeting held on 02.04.2025, it appears to have been decided by the Board Level Committee to debar the petitioner and therefore the final show cause notice was issued. However, it appears that on receipt of the reply of the petitioner placing on record the details of the services provided by the petitioner at various hospitals as per the Terms and Conditions of the Page 46 of 74 Uploaded by JYOTI V. JANI(HC00213) on Thu Dec 11 2025 Downloaded on : Fri Dec 12 22:22:48 IST 2025 NEUTRAL CITATION C/SCA/12386/2025 JUDGMENT DATED: 26/11/2025 undefined contract, further inquiry was made by the Board Level Committee which was never disclosed to the petitioner and such facts has emerged on record in the Annexure R2 to containing the minutes of the Board of Meeting along with affidavit- in-sur-rejoinder filed on behalf of the respondent No.2 pursuant to the order passed by this Court on 11.11.2025. Even on perusal of the original file, it reveals that except exchange of Emails between the petitioners and hospitals regarding issues in Neonatal ventilators installed at various places which have been resolved by the petitioner, there is no other material available regarding action to be taken for Page 47 of 74 Uploaded by JYOTI V. JANI(HC00213) on Thu Dec 11 2025 Downloaded on : Fri Dec 12 22:22:48 IST 2025 NEUTRAL CITATION C/SCA/12386/2025 JUDGMENT DATED: 26/11/2025 undefined debarment as per the Debarment Policy of the respondent.
19. In compliance of the order dated 18.11.2025, learned advocate Mr. Utkarsh Sharma has provided minutes of the meeting of the Board of Directors wherein, Debarment Policy is framed viz. the minutes of 13th Meeting held on 18.09.2015 and minutes of 22nd Meeting held on 23.08.2017. On perusal of Agenda No. 13/30 wherein, Submission of Comprehensive Debarment Policy for Debarment of Firm from Business Relation with GMSCL was proposed and the following Resolution was passed for Debarment Policy "Non Standard Comprehensive Maintenance" as under: Page 48 of 74 Uploaded by JYOTI V. JANI(HC00213) on Thu Dec 11 2025 Downloaded on : Fri Dec 12 22:22:48 IST 2025
NEUTRAL CITATION C/SCA/12386/2025 JUDGMENT DATED: 26/11/2025 undefined "DEBARMENT DE POLICY FOR "NON STANDARD COMPREHENSIVE MAINTENANCE"
"RESOLVED FURTHER THAT Comprehensive Debarment Policy for, "Non Standard Comprehensive Maintenance" for debarment to the Firms from business relations with GMSCL be and is hereby approved as under
1. In case equipment/item supplied by a firm/company is not working as per the standard specification
2. In case firm/company is not carrying out periodical maintenance and up-keepments as per the contact.
3. In case where spare part/consumables supplied by a firm/company is declared as not of standard quality
4. In case where equipment or its part thereof is not repaired within prescribed time period.
5. In case of Submission of fabricated documents by a firm, the action of debarment for three years is undertaken against the said firm/company for all the equipment/items.Page 49 of 74 Uploaded by JYOTI V. JANI(HC00213) on Thu Dec 11 2025 Downloaded on : Fri Dec 12 22:22:48 IST 2025
NEUTRAL CITATION C/SCA/12386/2025 JUDGMENT DATED: 26/11/2025 undefined Replacement/Repairing/Maintenance of that particular equipment/item is also undertaken at the risk and cost of the supplier."
20. On perusal of the above Resolution, it appears that it is resolved by the Board of Directors that in Five eventualities referred to in the said Resolution, the replacement /repairing /maintenance of that particular equipment/item is to be undertaken at the risk and cost of the supplier i.e. the petitioner in the facts of the case and there is no Resolution for Debarment for Non-Standard Comprehensive Maintenance. With regard to minutes of the 22nd Meeting dated 23.08.2017 placed on record refers to Agenda Item No. 22/23 regarding Page 50 of 74 Uploaded by JYOTI V. JANI(HC00213) on Thu Dec 11 2025 Downloaded on : Fri Dec 12 22:22:48 IST 2025 NEUTRAL CITATION C/SCA/12386/2025 JUDGMENT DATED: 26/11/2025 undefined Comprehensive Policy for Removal, Suspension and Debarment of Bidder in Procurement of Medical Equipment, Instruments, Surgical items, Furniture and miscellaneous items, following resolution is passed:
"RESOLVED THAT an approval be and hereby accorded for comprehensive policy for removal, suspension and debarment of bidder in procurement of medical equipment, instruments, surgical items, furniture and misc. items as per annexure 22/23/A following part of this minutes;
RESOLVED FURTHER THAT the Managing Director, GMSCL is authorized to take all further necessary action for the purpose of implementation of this resolution."Page 51 of 74 Uploaded by JYOTI V. JANI(HC00213) on Thu Dec 11 2025 Downloaded on : Fri Dec 12 22:22:48 IST 2025
NEUTRAL CITATION C/SCA/12386/2025 JUDGMENT DATED: 26/11/2025 undefined
21. Annexure 22/23/A annexed with the said Resolution refers to Item No. 5 regarding Supply of equipment not confirming to tender specifications/supply of non-genuine spares only result in disqualification from participating for same equipment for the period of three years with forfeiting of Security Deposit which reads as under:
5 Supply of Disqualification equipment not from participating conforming to for same equipment tender for the period of specifications/su 3 years with pply of non- forfeiting of SD.
genuine spares The other eventualities refer to case of submission of fabricated documents by a Firm or submission of misleading information or in case of non- Page 52 of 74 Uploaded by JYOTI V. JANI(HC00213) on Thu Dec 11 2025 Downloaded on : Fri Dec 12 22:22:48 IST 2025
NEUTRAL CITATION C/SCA/12386/2025 JUDGMENT DATED: 26/11/2025 undefined compliance of the eligibility criteria or back-out from the tender etc. which is not relevant in the facts of the case.
22. It is also pertinent to note that the impugned order refers to Condition No. 21(ii)(c) of the General Terms and Conditions on GeM, which is reproduced herein-above, and it would be relevant to re-visit the same so as to appreciate as to whether such reference is required in the impugned order or not? On perusal of the Condition No. 21(ii)(c) of the General Terms and Conditions on GeM, it appears that it is for the GeM to take administrative action against either the buyer or the Page 53 of 74 Uploaded by JYOTI V. JANI(HC00213) on Thu Dec 11 2025 Downloaded on : Fri Dec 12 22:22:48 IST 2025 NEUTRAL CITATION C/SCA/12386/2025 JUDGMENT DATED: 26/11/2025 undefined seller on the E-marketing Platform if found violating Condition No. 21(ii)
(c). In the facts of the case, Condition No. 21(ii)(c) refers to supplies goods of inferior/ sub- standard quality. It is pertinent to note that the respondent has not made any effort to come to the conclusion that the goods supplied by the petitioner is of inferior/sub-standard quality and without conducting any inquiry or obtaining any report from any 3rd party Agency, a unilateral decision is arrived at by the Board Level Committee without recording any reason in support of such decision by ignoring the contents of the reply filed by the petitioner. Such decision Page 54 of 74 Uploaded by JYOTI V. JANI(HC00213) on Thu Dec 11 2025 Downloaded on : Fri Dec 12 22:22:48 IST 2025 NEUTRAL CITATION C/SCA/12386/2025 JUDGMENT DATED: 26/11/2025 undefined is taken to inform the GeM to take administrative act as per the alleged violation of the Condition No. 21(ii)
(c) of the General Terms and Condition on GeM which would ultimately result in affecting the business of the petitioner is clearly in violation of principles of natural justice.
23. Reliance placed on behalf of the respondent on the decision of the Hon'ble Apex Court in case of Patel Engineering Limited (supra) at first blush appears to be in support of the respondent but if the same is perused in the facts of the case in our opinion the same would apply in support of the petitioner in absence of any allegation Page 55 of 74 Uploaded by JYOTI V. JANI(HC00213) on Thu Dec 11 2025 Downloaded on : Fri Dec 12 22:22:48 IST 2025 NEUTRAL CITATION C/SCA/12386/2025 JUDGMENT DATED: 26/11/2025 undefined of corrupt practice or fraudulent practice by the respondent. It would be germane to refer to the decision of the Apex Court in case of Erusian Equipment and Chemicals Ltd vs. State of West Bengal and anr reported in (1975) 1 SCC 70 in which concept of blacklisting is explained as under:
" The blacklisting order does not pertain to any particular contract. The blacklisting order involves civil consequences. It casts a slur. It creates a barrier between the persons blacklisted and the Government in the matter of transactions. The blacklists are "instruments of coercion".
In passing an order of blacklisting the Government department acts under what is described as a standardised Code. This is a Code for Page 56 of 74 Uploaded by JYOTI V. JANI(HC00213) on Thu Dec 11 2025 Downloaded on : Fri Dec 12 22:22:48 IST 2025 NEUTRAL CITATION C/SCA/12386/2025 JUDGMENT DATED: 26/11/2025 undefined internal instruction. The Government departments make regular purchases. They maintain list of approved suppliers after takings into account the financial standard of the firm, their capacity and their past performance. The removal from the list is made for various reasons. The grounds on which blacklisting may be ordered are if the proprietor of the firm is convicted by court of law or security considerations so warrant or if there is strong justification for believing that the proprietor or employee of the firm, has been guilty of malpractices such as bribery, corruption, fraud. or if the firm continuously refuses to return Government dues or if the firm employs a Government servant, dismissed or removed on account of corruption in a position where he could corrupt Government servant. The petitioner was blacklisted on the ground of justification for believing that the firm has Page 57 of 74 Uploaded by JYOTI V. JANI(HC00213) on Thu Dec 11 2025 Downloaded on : Fri Dec 12 22:22:48 IST 2025 NEUTRAL CITATION C/SCA/12386/2025 JUDGMENT DATED: 26/11/2025 undefined been guilty of malpractices such as bribery, corruption, fraud. The petitioners were blacklisted on the ground that there were proceedings pending against the petitioners for alleged violation of provisions under the Foreign Exchange Regulations Act. The Government is a government of laws and not of men. It is true that neither the petitioner nor the respondent has any right to enter into a contract but they are entitled to equal treatment with others who offer tender or quotations for the purchase of the goods. This privilege arises because it is the Government which is trading with the public and the democratic form of Government demands equality and absence of arbitrariness and discrimination in such transactions. Hohfeld treats privileges as a form of liberty as opposed to a duty. The activities of the Government have a public element and, therefore, there should be Page 58 of 74 Uploaded by JYOTI V. JANI(HC00213) on Thu Dec 11 2025 Downloaded on : Fri Dec 12 22:22:48 IST 2025 NEUTRAL CITATION C/SCA/12386/2025 JUDGMENT DATED: 26/11/2025 undefined fairness and equality. The State need not enter into any contract with any one but 'if it does so, it must do as fairly without discrimination and without unfair procedure.
Reputation is a part of
person's character and
personality. Blacklisting
tarnishes one's reputation.
Exclusion of. a member of the public from dealing with a State in sales transactions has the effect of preventing him from purchasing and doing a lawful trade in the goods by discriminating against him in favour of other people. The State can impose reasonable conditions regarding rejection and acceptance of bids or qualifications of bidders. Just as exclusion of the lowest tender will be arbitrary similarly exclusion of a person who offers the highest price from participating at a public auction would also have, the same aspect of arbitrariness. Page 59 of 74 Uploaded by JYOTI V. JANI(HC00213) on Thu Dec 11 2025 Downloaded on : Fri Dec 12 22:22:48 IST 2025
NEUTRAL CITATION C/SCA/12386/2025 JUDGMENT DATED: 26/11/2025 undefined Where the State is dealing with individuals in transactions of sales and purchase of goods, the two important factors are that an individual is entitled to trade with the Government and an individual is entitled to a fair and equal treatment with others. A duty to act fairly can be interpreted as meaning a duty to observe certain aspects of rules of natural justice. A body may 'be under a duty to give fair consideration to the facts and to consider the representations but not to disclose to those persons details of information in its possession. Sometimes duty to act fairly can also be sustained without providing opportunity for an oral hearing. It win depend upon the nature of the interest to be affected, the circumstances in which a power is exercised the nature of sanctions involved therein. Blacklisting has the effect of preventing a person from the privilege and advantage of entering into Page 60 of 74 Uploaded by JYOTI V. JANI(HC00213) on Thu Dec 11 2025 Downloaded on : Fri Dec 12 22:22:48 IST 2025 NEUTRAL CITATION C/SCA/12386/2025 JUDGMENT DATED: 26/11/2025 undefined lawful relationship with the Government for purposes of gains. The fact that a disability is created by the order of blacklisting indicates that the relevant authority is to have an objective satisfaction. Fundamentals of fair play require that the person concerned should be given an opportunity to represent.his case before he is put on the blacklist. With regard to the case of the petitioners, it is made clear that the authorities will give an opportunity to the petitioners to represent their case, and the authorities will hear the petitioners as to whether their name should be put on the blacklist or not. This is made clear that the decision on this question will not have any effect on the proceedings pending in Calcutta High Court where the peti- tioner has challenged the adjudication proceedings under the Foreign Exchange Regulations Act. Any decision Page 61 of 74 Uploaded by JYOTI V. JANI(HC00213) on Thu Dec 11 2025 Downloaded on : Fri Dec 12 22:22:48 IST 2025 NEUTRAL CITATION C/SCA/12386/2025 JUDGMENT DATED: 26/11/2025 undefined of the authorities on the blacklisting will have no effect on the correctness of any of the facts involved in those proceedings."
24. The Hon'ble Apex Court in case of Patel Engineering Ltd (supra) has further observed as under:
"12. It follows from the above Judgment that the decision of State or its instrumentalities not to deal with certain persons or class of persons on account of the undesirability of entering into contractual relationship with such persons is called blacklisting. State can decline to enter into a contractual relationship with a person or a class of persons for a legitimate purpose. The authority of State to blacklist Page 62 of 74 Uploaded by JYOTI V. JANI(HC00213) on Thu Dec 11 2025 Downloaded on : Fri Dec 12 22:22:48 IST 2025 NEUTRAL CITATION C/SCA/12386/2025 JUDGMENT DATED: 26/11/2025 undefined a person is a necessary concomitant to the executive power of the State to carry on the trade or the business and making of contracts for any purpose, etc. There need not be any statutory grant of such power. The only legal limitation upon the exercise of such an authority is that State is to act fairly and rationally without in any way being arbitrary - thereby such a decision can be taken for some legitimate purpose. What is the legitimate purpose that is sought to be achieved by the State in a given case can vary depending upon various factors."
25. In the facts of the case before the Hon'ble Apex Court where the petitioner had challenged the blacklisting by the Page 63 of 74 Uploaded by JYOTI V. JANI(HC00213) on Thu Dec 11 2025 Downloaded on : Fri Dec 12 22:22:48 IST 2025 NEUTRAL CITATION C/SCA/12386/2025 JUDGMENT DATED: 26/11/2025 undefined National Highway Authority by declining to enter into the contractual relationship for a legitimate purpose on the ground that when it was found that act of non-acceptance of LOA has resulted in huge financial lose to the tune of Rs. 3077 Crore as assessed over the life of concession period, in terms of lower premium, apart from the cost of time and effort to NHAI. The Hon'ble Apex Court, after considering such facts which has emerged from the record, has examined the following issues:
"22. Tested in the light of the abovementioned principle, we are required to examine; (1) the purpose sought to be achieved by Page 64 of 74 Uploaded by JYOTI V. JANI(HC00213) on Thu Dec 11 2025 Downloaded on : Fri Dec 12 22:22:48 IST 2025 NEUTRAL CITATION C/SCA/12386/2025 JUDGMENT DATED: 26/11/2025 undefined the impugned decision of the 2nd respondent to blacklist the petitioner; and (2) the adverse effects, the impugned action may have on the rights of the petitioner.
23. From the impugned order it appears that the 2nd respondent came to the conclusion that; (1) the petitioner is not reliable and trustworthy in the context of a commercial transaction; (2) by virtue of the dereliction of the petitioner, the 2nd respondent suffered a huge financial loss; and (3) the dereliction on the part of the petitioner warrants exemplary action to "curb any practice of 'pooling' and 'mala fide' in future".Page 65 of 74 Uploaded by JYOTI V. JANI(HC00213) on Thu Dec 11 2025 Downloaded on : Fri Dec 12 22:22:48 IST 2025
NEUTRAL CITATION C/SCA/12386/2025 JUDGMENT DATED: 26/11/2025 undefined
26. After considering the same, following conclusion has been recorded by the Apex Court:
"24. We do not find any illegality or irrationality in the conclusion reached by the 2nd respondent that the petitioner is not (commercially) reliable and trustworthy in the light of its conduct in the context of the transaction in question. We cannot find fault with the 2nd respondent's conclusion because the petitioner chose to go back on its offer of paying a premium of Rs.190.53 crores per annum, after realising that the next bidder quoted a much lower amount. Whether the decision of the petitioner is bona fide or mala fide, requires a further probe into the matter, but, the Page 66 of 74 Uploaded by JYOTI V. JANI(HC00213) on Thu Dec 11 2025 Downloaded on : Fri Dec 12 22:22:48 IST 2025 NEUTRAL CITATION C/SCA/12386/2025 JUDGMENT DATED: 26/11/2025 undefined explanation offered by the petitioner does not appear to be a rational explanation. The 2nd respondent in the impugned order, while rejecting the explanation offered by the petitioner, recorded as follows:
"Further the fact remains that clarification / amendments communicated by NHAI were 'minor' and cannot be attributed as a cause for occurrence of an 'error' of 'major' nature and magnitude.
With project facilities clearly spelt out in the RFP document, the project cost gets frozen well in advance and similarly traffic assessment & projections, which largely impact the financial assessment, are also not expected to be left for last few days of bid submission. Therefore stating that an 'error' of this nature and magnitude occurred is neither correct nor justified......... " (Emphasis supplied) Page 67 of 74 Uploaded by JYOTI V. JANI(HC00213) on Thu Dec 11 2025 Downloaded on : Fri Dec 12 22:22:48 IST 2025 NEUTRAL CITATION C/SCA/12386/2025 JUDGMENT DATED: 26/11/2025 undefined
25. We cannot say the reasoning adopted by the 2nd respondent either irrational or perverse. The dereliction, such as the one indulged in by the petitioner, if not handled firmly, is likely to result in recurrence of such activity not only on the part of the petitioner, but others also, who deal with public bodies, such as the 2nd respondent giving scope for unwholesome practices.
No doubt, the fact that the
petitioner is blacklisted (for
some period) by the 2nd
respondent is likely to have some adverse effect on its business prospects, but, as pointed out by this Court in Jagdish Mandal v. State of Orissa and others, (2007) 14 SCC 517:
"Power of judicial review will not be invoked to protect private interest at the cost Page 68 of 74 Uploaded by JYOTI V. JANI(HC00213) on Thu Dec 11 2025 Downloaded on : Fri Dec 12 22:22:48 IST 2025 NEUTRAL CITATION C/SCA/12386/2025 JUDGMENT DATED: 26/11/2025 undefined of public interest, or to decide contractual disputes."
The prejudice to the commercial interests of the petitioner, as pointed out by the High Court, is brought about by his own making. Therefore, it cannot be said that the impugned decision of R-2 lacks proportionality. "
27. Reliance placed by the respondent on the aforesaid decision of the Apex Court rendered in the facts of the case before it clearly depicts that the Apex Court, after considering the facts of the case, has come to the conclusion that the reasoning adopted by the respondent was neither irrational nor perverse and held as under: Page 69 of 74 Uploaded by JYOTI V. JANI(HC00213) on Thu Dec 11 2025 Downloaded on : Fri Dec 12 22:22:48 IST 2025
NEUTRAL CITATION C/SCA/12386/2025 JUDGMENT DATED: 26/11/2025 undefined "19. The reason given by the 2nd respondent in its show-cause notice dated 24-02-2011 for proposing to blacklist the petitioner is as follows:
"It needs to be appreciated that the projects being undertaking by NHAI are of huge magnitude and both in terms of manpower and finance besides being of utmost National importance, striking at the root of economic development and prosperity and general public and a nation as a whole, the NHAI cannot afford to deal with entities who fail to perform their obligations as in your case."
And in the impugned order dated 24-02-2011, the 2nd respondent gave the following reasons:
"It is to be noted that your act of non-acceptance of LOA has resulted in huge Page 70 of 74 Uploaded by JYOTI V. JANI(HC00213) on Thu Dec 11 2025 Downloaded on : Fri Dec 12 22:22:48 IST 2025 NEUTRAL CITATION C/SCA/12386/2025 JUDGMENT DATED: 26/11/2025 undefined financial loss to the tune of Rs.3077 crores, as assessed over the life of the concession period, in terms of lower premium, apart from cost of the time and effort, to NHAI. It is further noted that this is the first case where a bidder has not accepted the LOA, and warrants exemplary action, to curb any practice of 'pooling', and 'malafide' in future.
After considering all material
facts, and your reply in
response to the Show Cause
Notice, NHAI is of the
considered view that no
justifiable grounds have been
made out in support of your
action of non-acceptance of LOA. Keeping in view the conduct of the addressees, NHAI find that they are not reliable and trustworthy and have caused huge financial loss to NHAI."Page 71 of 74 Uploaded by JYOTI V. JANI(HC00213) on Thu Dec 11 2025 Downloaded on : Fri Dec 12 22:22:48 IST 2025
NEUTRAL CITATION C/SCA/12386/2025 JUDGMENT DATED: 26/11/2025 undefined
28. Reference made by the Apex Court in case of Union of India and ors vs. M/s. Jesus Sales Corporation reported in (1996) 4 SCC 69 wherein, it is held that even in the context of quasi judicial decision, a personal hearing of the affected party must precede every decision of the State. It is pertinent to note that in the facts of the case, there is no inviolable rule that a personal hearing must precede every decision, however, it is incumbent upon the Board Level Committee to record reason to arrive at a conclusion for debarment of the petitioner for three years from procurement of the machines supplied by it which has affected the petitioner of Page 72 of 74 Uploaded by JYOTI V. JANI(HC00213) on Thu Dec 11 2025 Downloaded on : Fri Dec 12 22:22:48 IST 2025 NEUTRAL CITATION C/SCA/12386/2025 JUDGMENT DATED: 26/11/2025 undefined privilege and advantage of entering into lawful relationship with government which has also been demonstrated as the petitioner was not permitted to participate in the contract issued by Haryana Medical Service Corporation Limited due to the debarment order passed by the respondent. In the facts of the present case , the Board Level Committee has not provided the opportunity to the petitioners to meet with further inquiry and has not dealt with any contention of the petitioner from its reply nor has recorded any reason to arrive at decision to debar the petitioner company. Hence, in our opinion such decision in flagrant Page 73 of 74 Uploaded by JYOTI V. JANI(HC00213) on Thu Dec 11 2025 Downloaded on : Fri Dec 12 22:22:48 IST 2025 NEUTRAL CITATION C/SCA/12386/2025 JUDGMENT DATED: 26/11/2025 undefined breach of principles of natural justice, is not tenable in the eyes of law.
29. In view of the foregoing reasons, the impugned order dated 19.07.2025 as well as the decision taken by the Board Level Committee in the meeting held on 16.07.2025 are hereby quashed and set aside. Rule is made absolute to the aforesaid extent. No order as to costs.
(BHARGAV D. KARIA, J) (L. S. PIRZADA, J) JYOTI V. JANI Page 74 of 74 Uploaded by JYOTI V. JANI(HC00213) on Thu Dec 11 2025 Downloaded on : Fri Dec 12 22:22:48 IST 2025