Jammu & Kashmir High Court - Srinagar Bench
M/S Halcyon Pharmaceuticals Ltd vs Union Territory Of J&K Through ... on 12 September, 2024
HIGH COURT OF JAMMU & KASHMIR AND LADAKH
AT SRINAGAR
WP(C) No. 2597/2021
CM No. 8153/2021
Reserved on: 05.09.2024
Pronounced on: 12.09.2024
M/S Halcyon Pharmaceuticals Ltd.
Through Dr. R.S.Lamba S/O Ishwar Singh Lamba
S.CF 78 Square Market Hisar- 125001.
...Petitioner/Appellant(s)
Through: Mr. N. A.Tabasum, Advocate.
Vs.
1.Union Territory of J&K through Secretary to Govt.,
Health & Medical Education Department,
Kashmir Srinagar/Jammu
2. Director Health Services Kashmir, Srinagar
3. Dy. Director Health Services Kashmir, Srinagar
4. Principal/Chairman (PCC) Govt. Medical College, Srinagar
5. Accounts Officer, Directorate of Health Services, Srinagar
...Respondent(s)
Through: Ms. Rekha Wangnoo, GA.
CORAM:
HON'BLE MR. JUSTICE M. A. CHOWDHARY, JUDGE
JUDGMENT
1. Petitioner had initially filed OWP No. 584/2008, whose record got damaged due to devastating floods of September 2014 and its file had not been located/traced out as maximum record of the High Court was submerged in the flood waters due to unprecedented floods in the year 2014 and this Court while allowing Restoration Application (CM No.2337/2021) vide order dated 10.11.2021 had permitted the applicant to file fresh Page |2 writ petition on the basis of cause of action which was the basis of filing OWP No.584/2008, with further observation that it shall not be available to the respondents to assail the maintainability of the writ petition on delay and laches from the year 2008 till filing of fresh petition. This is how the instant writ petition WP(C) No.2597/2021 came to be filed on the same facts and circumstances.
2. The petitioner, claiming to be the registered supplier of the J&K Health & Medical Education Department, supplying allopathic drugs and I.V. Fluids to the respondent-department for the last two decades asserted that the petitioner-company, was issued supply orders, pursuant to which various allopathic drugs and I.V. fluids including Injection Ampicilline 500/250mg, Tablet Paracetamol 500mg and other drugs were supplied, vide rate contract of the year 2004-05, pursuant to following supply orders:-
i) No. DHSK/PS/SO/Drugs/2004-05/1455-59; dated 21.02.2005;
ii) No. DHSK/PS/SO/Drugs/2005-06/1683-87; dated 07.01.2006;
iii) No. DHSK/PUR/SO/Drugs/2006-07/512-21; dated 08.09.2006;
iv) No. DHSK/PS/SO/Drugs/2006-07/870-74; dated 24.11.2006;
v) No. DHSK/PS/SO/Drugs/2006-07/1338-42; dated 05.02.2007.
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3. The petitioner claimed that the petitioner-company had supplied the drugs and I.V fluids as mentioned in the above quoted supply orders to the respondents, under the terms and conditions of the contract within the stipulated period, however, the petitioner-company, due to some unavoidable circumstances, could not supply one crore fifty lac tablets of Paracetamol 500mg to the respondent-department; that the respondent- department released the bills of the supplied items of drugs and fluids in favour of the petitioner-company and also continued to issue supply orders in favour of the petitioner-company for years together.
4. It has been further pleaded that all the bills of the supplied items had been released by the respondents in favour of the petitioner- company except (i) bill No. 492 dated 01.03.2007 amounting to Rs.4,47,504/-, (ii) bill no. 511 dated 14.03.2007 amounting to Rs.7,97,722/-, (total amounting to Rs.12,45,226/-); that the petitioner, vide notice/communication dated 30.07.2007, requested respondent No.3 to release the amount of Rs.12,45,226/- on account of pending payment of aforesaid bills, however, respondents acknowledging the receipt of the notice on 30.07.2007 informed the petitioner-company vide communication No.DHSK/PUR/Halcyon/2007-08/702-06 dated 23.08.2007 that the payments were kept withheld because of the following facts:
"That this Office placed Supply Order issued under No. DHSK/PS/SO/drugs/2004-05/1445-59 dated 21-02-2005 and No. DHSK/PUR/SO/Drugs/2006- Page |4 07/517-21 dated 08-09-2006 with your firm on approved rates of Central Purchase Committee, Health & Medical Education Department, J&K in your favor for the year 2004-05 vice rate ontract No. JMC/PS/Drugs/2855-64 dated 02-03-2005 for various Drugs and Medicines for the year 2004-05 and 2006-07 including one crore and fifty lakh Tablets of Paracetamol 500 mg each respectively; Your firm failed to execute the Supply of the drug against both the supply Orders within stipulated period and this Office make alternate arrangement vide Supply Order No. Acctt/DHSK/2004-05-565- 68 dated 27-05-2005 and No. DHSK/PS/SO/Drugs/2006-07/98690 dated 27-11-
2006 favoring M/s Bengal Chemicals and Pharmaceuticals Ltd. (A Government of India Enterprise) New Delhi for which an amount of Rs.
11,77,220/- and Rs. 8,50,000/- (Total Rs.
20,27,200/-) have been paid extra by the
Department".
5. The petitioner has alleged that the respondent-department had refused to release unpaid amount of Rs.12,45,226/- on account of pending payment of bill No. 492 dated 01.03.2007 and bill No. 511 dated 14.03.2007 in favour of the petitioner-company on flimsy grounds; that as is evident from para-2 of the communication made by respondent No.3, two supply orders dated 27.05.2005 and 27.11.2006 had been made in favour of Page |5 M/S Bengal Chemicals and Pharmaceuticals Ltd. New Delhi, for supply of Paracetamol 500mg, however, no prior notice was issued to the petitioner-company in this behalf nor any fresh tenders were invited by the respondent-department in terms of condition 17 of the terms and conditions of Group-I (Allopathic drugs and IV fluids) issued by Central Purchase Committee, Health & Medical Education Department J&K Srinagar; that the respondent-department was duty bound to issue prior notice to the petitioner-company before arranging supplies either through re-tender or otherwise and had the respondents given prior notice to the petitioner-company before issuing supply orders in favour of another company i.e., M/S Bengal Chemicals and Pharmaceuticals Ltd., the petitioner company would have negotiated with respondent-department and the validity period and delivery period as provided under condition No.17 could have been extended by the respondent-department and if still the petitioner-company would fail then the punitive action, as envisaged under condition No.17 could have been taken against the petitioner-company but neither notice was given to the petitioner-company nor any fresh tenders were invited and everything was done by the respondent-department at the back of the petitioner-company without affording any chance of being heard as such, petitioner-company is not responsible for any loss incurred by the respondent-department in purchasing the Paracetamol tablets from other company on higher rates.
6. It was next pleaded that respondent No.3 had issued supply orders in favour of M/S Bengal Chemicals and Pharmaceuticals Page |6 Ltd., without informing Central Purchase Committee, whileas, before arranging supplies from other companies, respondent No.3 was duty bound to either re-tender the supply of the items or arrange the supplies otherwise, after consultation with the Central Purchase Committee about the rates to be approved and ironically after complete two years vide communication No. DHSK/PUR/SO/Drugs/2006-07/1421-22 dated 06.02.2007, respondent No.3 had informed the Member Secretary Central Purchase Committee that the petitioner-company had failed to supply the Paracetamol tablets 500mg for which risk purchases were made in the year 2005-06 and it appears that for oblique motives, respondent No.3 had issued supply orders in favour of M/S Bengal Chemicals and Pharmaceuticals Ltd., without issuance of notice or without prior information to the petitioner- company and without informing the Central Purchase Committee.
7. The petitioner-company has finally prayed that the respondents be directed to clear the admitted liability of Rs. 12,45,226/- on account of two bills bearing No. 492 dated 01.03.2007 and 511 dated 14.03.2007 along-with interest @ 18% per annum retrospectively from 01.03.2007 in favour of the petitioner- company, and prohibiting the respondents from stopping any bill of the petitioner-company or making any deductions or retaining any payments of the petitioner's bills on account of failure of the petitioner-company in supplying the orders made vide supply Order No. DHSK/PS/SO/DRUGS/2004-05/1455-59 Page |7 dated 21.02.2005 and Order No. DHSK/PUR/SO/Drugs/2006- 07/517-21 dated 08.09.2006.
8. The instant petition was admitted to hearing on 14.12.2021.
9. Pursuant to notice, respondents appeared in the case from time to time through M/S Rais ud din Ganai GA, Irfan Andleeb Dy.AG, Faheem Shah GA, Sajad Ashraf GA and Ms. Rekha Wangnoo GA, however, neither any reply nor counter affidavit to the petition was filed till it came up for final consideration/hearing today.
10. Learned counsel for the petitioner has vehemently argued that the petitioner-company is a reputed supplier of allopathic medicines and had been supplying drugs to the respondent- department for almost two decades. He further argued that the petitioner-company had supplied the medicines as per every supply orders and payments were also made to the petitioner- company by the respondent-department. He, however, submits that two bills in the amount of Rs.4,47,504 and Rs.7,97,722/-, (total Rs.12,45,226/-) were not paid despite issuance of notice to the respondents on 30.07.2007.
11. Learned counsel further argued that the respondent No.3 vide his communication dated 23.08.2007, while replying to the notice issued by the petitioner-company, had taken a stand that payment with regard to these bills had been withheld for the reason that the respondent-department had placed the supply orders vide No. DHSK/PS/SO/DRUGS/2004-05/1455-59 dated 21.02.2005 and Order No. DHSK/PUR/SO/Drugs/2006-07/517- 21 dated 08.09.2006 with the petitioner-company on approved Page |8 rates of Central Purchase Committee, Health & Medical Education Department J&K in its favour for the year 2004-05 vide rate contract No. JMC/PC/DRUGS/2855-64 dated 02.03.2005, for various drugs and medicines for the year 2004- 05 and 2006-07 including one crore fifty lac tablets of Paracetamol 500mg; that the petitioner-company had failed to execute the supply of the drugs against both the supply orders within stipulated period and the respondents on being constrained, had made alternate arrangement vide supply orders No. Accct/DHSK/2004-05/565-68 dated 27.04.2005 and No.DHSK/PS/SO/DRUGS/2006-07/986-90 dated 27.11.2006, in favour of M/S Bengal Chemicals and Pharmaceuticals Ltd.( A Government of India Enterprise) New Delhi, for which an amount of Rs.11,77,200/- and Rs.8,50,000, (total Rs. 20,27,200/-) had been paid extra by the department, and the petitioner-company was directed to remit the aforesaid amount in Government Exchequer, so as to get the withheld amount released in its favour.
12. Learned Government counsel for the respondents, on the other hand, vehemently, argued that the petitioner-company despite bagging contract of supplying drugs, had failed to execute the supplies, and respondent No.3, due to this failure on part of the petitioner-company, had to place order to another supplier i.e., M/S Bengal Chemicals and Pharmaceuticals Ltd., for supply of drugs, and for this purpose, the respondent-department had to pay the extra amount of Rs.20,27,200/-, as such, this extra amount, for the failure on part of the petitioner-company to Page |9 execute the contract, is liable to be recovered from the petitioner-company, as it had besides creating impediment in the health care services of the State/UT also caused loss to the Government exchequer, therefore, the petitioner-company's bills, which have been made subject matter of this petition, cannot be allowed to be released in favour of the petitioner- company, unless the loss suffered by the respondent-department is compensated by the petitioner-company. Learned Government counsel further argued that the petitioner-company in case of any dispute could resort to the remedy, in terms of the Contract Agreement and is not entitled to be granted relief by invoking writ jurisdiction of this Court and prayed that the writ petition be dismissed.
13. Admittedly the petitioner-company had failed to supply medicines as per supply orders dated 21.02.2005 and 08.09.2006, whereby the petitioner-company had to supply 1.50 crores of Paracetamol tablets 500mg and it is also an admitted case that respondent No.3 had withheld the payment, which was due to the petitioner-company for other two supply orders amounting to Rs.12,45,226/-.
14. It will be relevant to advert to the terms and conditions of Group-1 (Allopathic Drugs & I.V.Fluids), as settled by the Central Purchase Committee of Health & Medical Department J&K, in the relevant period, which provides that the tenders for supply of drugs have to be made by the companies, having certificate of minimum turnover of Rs.5.00 crores and while filing tenders the earnest money deposits in the shape of P a g e | 10 CDR/FDR for Rs.50,000/- is to be deposited and the balance amount of earnest money @ 2% of the total value of supply order shall have to be deposited by the successful tenderer before drawl of agreement for supplies.
15. Clause-9 of these terms and conditions provides that the successful tenderer shall be responsible for execution of the contract in full and shall not in any case assign or sublet the approved items or part thereof to any other party and that the suitable penalty upto 10% of the total value of the contract shall be imposed for any deviation from contractual obligation on merits of each case which can be recovered from earnest money/security deposits and it can even entail black listing of the supplier/firm/dealer.
16. Clause-17 is more specific to the subject matter of this writ petition, which provides that if approved suppliers fail either to supply the goods of the prescribed specification or to deliver the goods within the specified period, the Purchasing Officer shall be at liberty to arrange supplies either through re-tender or otherwise after giving notice to the approved supplier, the earnest money deposits and other deposits, if any, available with the department, shall be retained to make good, any loss or extra cost incurred by the department in procurement of those supplies. The validity period and delivery period can be extended as mutually agreed to, and that the jurisdiction for any legal proceedings shall be J&K Courts at Jammu or Srinagar only, is also provided in Clause-21 of the aforementioned terms and conditions.
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17. From the terms and conditions stated hereinabove, it is evidently clear that when the supplier fails to deliver the supplies, as per order, within specified period, the Purchasing Officer shall be at liberty to arrange supplies either through re- tender or otherwise after giving notice to the approved supplier, and that to make good any loss or extra cost incurred by the department in procurement of supplies, earnest money deposits and other deposits shall be retained, if any, available with the department.
18. It is admitted case of the petitioner-company that it had failed to supply 1.50 crore Paracetamol tablets 500 mg to the respondent-department, which the department was compelled to purchase from another supplier on higher rates. The petitioner- company has not stated in its writ petition that as to what was the amount of earnest money deposited or any other deposited money from which this loss of extra cost, incurred by the respondent-department, has to be made good. The petitioner's case is that its amount withheld for another two supply orders cannot be withheld for this reason. In absence of pleading by the petitioner-company as to whether it had deposited earnest money or if there was any other deposit as security with regard to these two supply orders, which it had not executed as drugs were not supplied to the respondent-department, therefore, it cannot be said that the respondent-department was not within its rights to withhold these payments of other two supply orders, as clause-17 of the terms and conditions which has been relied upon by the petitioner-company is explicitly clear that any loss P a g e | 12 or extra cost incurred by the department in procurement of those supplies, which the supplier failed to deliver has to be made good from the earnest money deposits and other deposits.
19. In the considered opinion of this Court, the word "other deposits" shall include any other liability towards the respondent-department, therefore, respondent-department is justified in withholding the payment of those two bills amounting to Rs.12,45,226/-, to be adjusted against the loss/extra-cost incurred by the respondent-department, amounting to Rs.20,27,200/-, for purchase of 1.50 crores of Paracetamol tablets 500 mg, for which the supply orders dated 21.02.2005 and dated 08.09.2006 were not executed by the petitioner-company.
20. Viewed thus, the petition on hand for lack of merit and substance is found liable to be dismissed. As a result the writ petition, in the afore-stated position is dismissed. No order as to costs.
( M. A. CHOWDHARY ) JUDGE Srinagar 12.09.2024 Muzammil. Q Whether the Judgment/Order is Reportable: Yes / No