Court affirms BMSICL's decision to blacklist M/s. Sam Kem for substandard ORS batches, emphasizes limited judicial review in tender matters.
In a significant ruling, the Patna High Court has upheld the decision of the Bihar Medical Services and Infrastructure Corporation Ltd. (BMSICL) to blacklist the product of M/s. Sam Kem, a supplier of Oral Rehydration Salts (ORS), for a period of two years. The decision came after multiple batches of the product were declared "Not of Standard Quality" by empanelled laboratories following rigorous quality tests.
The judgment, delivered by a division bench comprising Acting Chief Justice Sudhir Singh and Justice Rajesh Kumar Verma, emphasized the importance of maintaining high quality standards in drug procurement, particularly given the critical role of ORS in public healthcare.
The court examined the process leading to the blacklisting, noting that BMSICL had adhered to the stipulations of the tender document, including the issuance of two show cause notices to the supplier, M/s. Sam Kem. Despite the supplier's contestation of the quality test results and requests for retesting, the batches consistently failed to meet the required standards, particularly in the seal test, which is a critical quality parameter ensuring the product's safety and efficacy.
The bench reiterated the limited scope of judicial review in contractual matters, underscoring that the court's role is confined to assessing the decision-making process rather than substituting its own judgment for that of technical experts. It found no arbitrariness or violation of principles of natural justice in BMSICL's decision-making process, which was grounded in the contractual terms agreed upon by M/s. Sam Kem.
Highlighting the legal framework, the court referred to key precedents from the Supreme Court that guide judicial intervention in tender processes, such as Afcons Infrastructure Ltd. v. Nagpur Metro Rail Corporation Ltd., Michigan Rubber (India) Ltd. v. State of Karnataka, and Silppi Constructions Contractors v. Union of India. These cases affirm that courts should defer to the expertise of tendering authorities unless there is clear evidence of mala fides or irrationality.
The ruling underscores the judiciary's recognition of the importance of stringent quality controls in public healthcare procurements and the necessity for suppliers to adhere strictly to contractual obligations to safeguard public health.
Bottom line:-
Blacklisting of a supplier's product based on failure in quality testing is permissible under contractual stipulations, provided due process, including issuance of show cause notices and consideration of replies, is followed. Judicial review in tender matters is limited to examining the decision-making process and does not extend to substituting the Court's opinion for that of technical experts.
Statutory provision(s):
- Clause 27 of the Tender Document
- Article 226 of the Constitution of India
- Drugs and Cosmetics Act, 1940
- Relevant Supreme Court judgments in Afcons Infrastructure Ltd. v. Nagpur Metro Rail Corporation Ltd., Michigan Rubber (India) Ltd. v. State of Karnataka, and Silppi Constructions Contractors v. Union of India
M/s. Sam Kem v. State of Bihar, (Patna)(DB) : Law Finder Doc id # 2948522
