[ad_1]
Telangana High Court
M/S. Sai Parenterals Limited vs The State Of Telangana on 16 July, 2025
THE HON'BLE SRI JUSTICE PULLA KARTHIK
WRIT PETITION No.31615 of 2024
ORDER:
This Writ Petition, under Article 226 of Constitution of India, is
filed seeking the following relief:
“…to issue an appropriate Writ, Order, or Direction, particularly in the
nature of Writ of Mandamus:
i. To set aside the impugned Proceedings No.19/ph3/ NSQ/Sai
Parentrals/2024-25 dated 06-10-2024, issued by 2nd
Respondent, blacklisting the petitioner’s product “Ceftriaxone
Injection 1gm [1360] [U],” for a period of three i.e. from 23-10-
2024 to 22-10-2027, as being illegal, arbitrary, and in violation
of the principles of natural justice, as well as the procedures
prescribed under the Drugs and Cosmetics Act, 1940, apart
from being in violation of the Tender conditions contemplated
in 10 of 2023,…”
2. The case of the petitioner is that respondent No.2 issued Tender
No.10/2022/MW/TSMSIDC dated 10.11.2022, for procurement of
medicines under a rate contract, valid for a period of one year. In
pursuance thereof, the petitioner Company participated in the tender
process and was successfully declared as L1 bidder, later, executed
the agreement, which was valid until 08.12.2023. While so, on
08.12.2023, respondent No.2 issued a purchase order No.1360/2K23-
Q3-212/759 (10282304663) for the supply of 9,14,832 units of
Ceftriaxone Injection 1gm, totaling an amount of Rs.1,51,13,074.20.
Thereafter, the petitioner Company, first obtained certification from
2
PK, J
W.P.No.31615 of 2024
Sterile India Private Limited and supplied the medicines as requested
by respondent No.2. However, the Drug Inspector, who collected the
samples of the medicines, alleged that they were of substandard
quality and sent them for testing by the CDSCO. Thereafter, the
sample was forwarded to the Central Drugs Laboratory, Kolkata, on
19.06.2024, and after testing the sample between 05.07.2024 and
18.07.2024, the Government Analyst submitted his report dated
23.07.2024, in Form 13, under Section 25(1) of the Drugs and
Cosmetics Act, 1940, which confirmed that the medicine was ‘not of
standard quality’.
3. Thereafter, the petitioner immediately sent the allegedly affected
batch of medicines for testing to UMED Pharma Lab, and also
conducted an internal analysis themselves, wherein, no deviations, as
alleged by the CDSCO and the report dated 23.07.2024, were found.
However, while the things stood thus, the CDSCO sent a letter to the
petitioner on 05.08.2024, directing to re-call the disputed batch of
medicine from the market. Thereafter, on 08.08.2024, a show-cause
notice was issued, calling the petitioner to provide an explanation as
to why the disputed medicine of the petitioner Company shall not be
blacklisted, in accordance with the tender conditions. In response,
the petitioner submitted its reply dated 23.08.2024, through e-mail,
3
PK, J
W.P.No.31615 of 2024
on 26.08.2024, stating that the product has been previously tested
and approved by the empanelled laboratory; indicated their intention
to challenge the report in Form-13 dated 23.07.2024, and requested
not to take further action until the appellate report is received.
However, since the said explanation and request was not considered,
the petitioner was constrained to file W.P.No.26757 of 2024, before
this Court, challenging the very show-cause notice dated 08.08.2024.
This Court, on 15.10.2024, granted an interim order, directing the
respondents to consider the petitioner’s reply dated 23.08.2024,
submitted on 26.08.2024, and to pass appropriate orders, in
conformity with the principles of natural justice. The respondents
were also directed not to take any coercive steps till then. However,
without conducting an enquiry and without affording the petitioner an
opportunity of hearing, respondent No.2 has passed the present
impugned order dated 06.10.2024, blacklisting the petitioner’s
product for a period of three years. Hence, the present writ petition.
4. Heard Sri Anup Koushik Karavadi, learned counsel appearing
for the petitioner, learned Government Pleader for Medical and
Health, on behalf of respondent No.1 and Sri J. Ramachandra Reddy,
learned counsel, representing Sri G. Rama Rao, learned Standing
Counsel for respondent No.2.
4
PK, J
W.P.No.31615 of 2024
5. Learned counsel appearing for the petitioner contended that the
impugned proceedings dated 06.10.2024 issued by respondent No.2,
are in utter violation of the principles of natural justice, as the
petitioner was never afforded an opportunity of personal hearing to
present its case nor was its detailed explanation dated 26.08.2024
was duly considered. Further, respondent No.2 committed a grave
error in not conducting an enquiry before issuing the impugned
proceedings, in complete disregard of the interim order of this Court
dated 15.10.2024 in W.P.No.26757 of 2024. As such, the impugned
order dated 06.10.2024 is illegal and arbitrary. It was further
contended that the impugned order is not barred by jurisdiction, but
also is in violation of the Tender Conditions stipulated at Clauses 12.7
(a) and (d). Further, the impugned proceedings were issued without
adhering to the mandatory procedures prescribed under the Drugs
and Cosmetics Act, 1940, more particularly, Sections 25 (3) and (4),
which provides the petitioner the right to appeal against the report of
the Central Drugs Laboratory, Kolkata. However, the action of the
respondents in prematurely blacklisting the product infringes the
aforesaid statutory right of the petitioner and undermines due
process. It was further contended that the decision to blacklist the
product for three years is solely based on the report of the Central
5
PK, J
W.P.No.31615 of 2024
Drugs Laboratory, and without an independent verification or
consideration of the petitioner’s internal assessment. As such, the
said unilateral reliance on a single report is illegal, arbitrary, unfair
and in violation of Articles 14 and 19(1)(g) of the Constitution of India.
Further, respondent No.3 failed to adhere to the procedure and
established legal protocols while collecting and forwarding the
samples to the Central Drugs Laboratory, Kolkata, which raises
serious concerns about the reliability of the report of the Laboratory,
on the basis of which, the present impugned proceedings are issued.
It was further contended that the arbitrary blacklisting causes a
significant harm to the petitioner’s reputation and business,
jeopardizing its contracts, partnerships and longstanding
relationships with its clients and healthcare providers, both
domestically and internationally. Therefore, learned counsel
appearing for the petitioner prayed this Court to allow the present
writ petition by setting aside the impugned proceedings dated
06.10.2024. In support of his contentions, learned counsel for the
petitioner relied on the decisions of the Hon’ble Apex Court in Harish
Kumar Sikka v. Union of India 1, J.K. Cotton Spinning and
1 2007 SCC OnLine Del 1339
6
PK, J
W.P.No.31615 of 2024
Weaving Mills Co. Ltd., 2 and V.S. Achuthanandan v.
R. Balakrishna Pillai 3.
6. Per contra, learned counsel appearing on behalf of respondent
No.2 submitted that the respondents have initiated action against the
petitioner by issuing a show-cause notice dated 08.08.2024, in
accordance with the terms and conditions of the tender dated
10.11.2022, and also pursuant to the report issued by the
Government Analyst, Central Drugs Laboratory, Kolkata, vide Report
No.6-2(1)/HZ/2024-25 dated 23.07.2024, wherein, it was declared
that the Ceftriaxone Injection 1gm (Batch No.S24015; Manufacturing
Date: 02.2024; Expiry Date: 01.2026) manufactured by the petitioner,
is ‘Not of Standard Quality’, in terms of the Indian Pharmpacopeia
2022. It was further submitted that the injection in question,
Ceftriaxone Injection 1gm, falls under the category of parental
preparations, which are required to be sterile and safe for direct
administration into blood-stream, muscles or tissues, and as per
Condition 12.7 read with Condition 2.8 of the tender dated
10.11.2022, even if one batch of such parental preparation category
drugs is declared as ‘Not of Standard Quality’, that product of the firm
2 1960 SCC OnLine Sc 16
3 (2011) 3 SCC 317
7
PK, J
W.P.No.31615 of 2024
will be blacklisted. As such, the subject product was rightly
blacklisted by respondent No.2, irrespective of its assay content, vide
impugned order dated 06.10.2024. It was further submitted that till
date, respondent No.2 has not received any directions from the
appellate authorities or the Central Drugs Standard Control
Organization (CDSCO), either to stay or withhold any action against
the petitioner. Further, this Court, in W.P.No.26757 of 2024, has
directed to conduct an enquiry or grant an opportunity of personal
hearing to the petitioner, followed by an independent verification or
consideration of the petitioner’s subsequent quality control
assessment. However, the respondents are not authorized to re-send
the sample to any other laboratories, as the sample was analyzed by
the Drugs Inspector, CDCSO, Hyderabad Zone, S.R. Nagar, and the
report was issued in Form-13, declaring the subject drug as ‘not of
standard quality’. Therefore, it was prayed to dismiss the present writ
petition.
7. This Court has taken note of the rival submissions/contentions
urged by the respective parties and perused the material on record.
8. As can be gathered from the record, in response to the tender
issued by respondent No.2 vide Tender No.10/2022/MW/TSMSIDC,
8
PK, J
W.P.No.31615 of 2024
dated 10.11.2022 for procurement of medicines under a rate contract
valid for one year, the petitioner has participated in the tender
process, emerged as the lowest bidder (L1) and executed agreement
and consequently supplied medicines based on the purchase orders
placed by respondent No.2 and the agreement was valid till
08.12.2023. While so, on 08.12.2023 (i.e. on the last day of the
agreement) respondent No.2 has issued Purchase Order
No.1360/2K23-Q3/212/759 (10282304663) for supply of 914835
units of Ceftriaxone Injection 1 gm totaling Rs.15,113,074.20/-. In
pursuance thereof, the petitioner Company has supplied the
medicines as required by respondent No.2 after obtaining certification
from Sterile India Private Limited. However, alleging that the
medicines supplied were of substandard quality, the Drug Inspector
has collected samples of the medicines and sent them for testing to
Central Drug Laboratory, Kolkata, on 19.06.2024. After testing the
samples between 05.07.2024 and 18.07.2024, the Central Drug
Laboratory, Kolkata, vide its report/Form-13 Certification dated
23.07.2024, has confirmed that the medicines are not of standard
quality with respect to clarity of solution, particulate matter,
appearance of solution. Further, the Directorate General of Health
Services, Central Drugs Standard Control Organization, Enforcement
9
PK, J
W.P.No.31615 of 2024
Division, also issued a letter dated 05.08.2024 directing the petitioner
Company to immediately recall the disputed batch of drugs from the
market. Thereafter, based on the report dated 23.07.2024, respondent
No.2 issued a show cause notice dated 08.08.2024 to petitioner
Company to submit its explanation as to why the subject medicine
should not be blacklisted for supply of substandard quality product,
as per tender conditions. As the explanation of the petitioner dated
23.08.2024 submitted through e mail dated 26.08.2024, was not
satisfactory, respondent No.2 has issued the present impugned order
dated 06.10.2024 blacklisting petitioner’s product viz., Cetriaxone
Injection 1 gm [1360] [U] for a period of three years from 23.10.2024
till 22.10.2027, as per tender conditions.
9. In this context, this Court deems it apt to refer clause 12.7 of
the Tender Document dated 10.11.2022, which deals with
‘Blacklisting Of Item’ and the same reads as under:
S.No. Formulation No. of Batches
that fail the
(A) test
1 Tablets/Capsules or Other formulations 02
2 Liquid preparations/syrups/suspensions 01
3 Parenteral preparations 01
4 Sera/Vaccines 01
10
PK, J
W.P.No.31615 of 2024
5 Opththalmic preparation 01
6 Powders 01
Quality Test by the Empanelled Laboratories of TSMSIDC
(a) Each and every batch of Drug/Medicines supplied by the supplier shall
be subjected to quality tests by the Empanelled laboratories.
(b) The samples are collected from the Warehouses from each batch of
supply of the same drugs and after eliminating the common batch, samples
shall be taken in random, decoded and will be sent to the empanelled
testing laboratories for testing the quality of drugs.
(c) If such sample passes quality test in all respects, TSMSIDC, will instruct
its Warehouses to issue such drugs to various hospitals/Institutions
(d) Such quality passed batches if received after declaration of result of the
earlier supply, the same will be again subjected to testing and the latest
report of that particular batch will prevails upon the earlier results and
binding on the entire quantity of the batch supplied and recovery will be
made for the entire quantity of that batch irrespective of purchase order
date or date of supply etc.
(e) if the sample fails in a quality test and a report is received certifying that
sample is “NOT OF STANDARD QUALITY”, one more sample shall be drawn
from the same batch and to be sent to Government Laboratory for quality
testing.
(i) If such a sample passes the quality test as per the report of Government
Laboratory, the drugs representing the sample shall be qualified for issue to
various Institutions.
(ii) If such sample fails in the quality test, as per the report of the Government
Laboratory, the drugs of the batch are not qualified for issue and the supplier
11
PK, J
W.P.No.31615 of 2024
shall take back the drugs supplied in that batch, besides taking other actions
as per the Tender conditions by TSMSIDC,
(iii) If such Sample fails in a quality test for ASSAY content of less than 50% as
per the Government Analyst report, such product of the tenderer will be
blacklisted for two years.
(iv) However, TSMSIDC, reserves the right to reject the drugs based on reports
from empanelled laboratories with the applicable penal provisions.
(f) if 3 patches of a particular drug supplied by the supplier is reported to
be failing in ASSAY content (above 50% but below prescribed
limit)/Sterility/BET/Toxicity/and or other parameters, then the particular
drug of the firm shall be blacklisted after observing procedure laid down in
Procedure for Blacklisting besides forfeiture of Performance Security of that
particular product(s).
(g) In all the cases the reports received from the Government Drug Testing
Laboratory/decision of TSMSIDC Ltd will be conclusive and final and
binding on the suppliers.
(h) The amount for that batch (even if it is already consumed) will be
deducted from the performance security or amount payable to the bidder.
No purchase orders will be placed for the blacklisted item of the firm.
10. From the above, it is thus clear that at the initial stage, the
samples collected from the warehouses shall be sent to the
empanelled testing laboratories for testing the quality of drugs and if
the sample fails in such quality test, then the authorities shall draw
one more sample from the same batch and send the same to the
Government Laboratory for quality testing.
12
PK, J
W.P.No.31615 of 2024
11. But, in the instant case, the respondents have forwarded the
sample directly to the Central Drug Laboratory, Kolkata, on
19.06.2024 for testing, in deviation of the procedure prescribed,
stated supra. If the respondents have forwarded the sample initially
to the empanelled testing laboratory and found the drug to be of
substandard quality, then the petitioner would have had the chance
to get the sample tested for the second time, but due to forwarding of
sample directly to the Central Drug Laboratory, the petitioner is
deprived of his valuable right of getting the drug tested for the second
time, in terms of clause 12.7 (e) of the tender document dated
10.11.2022. The respondents having failed to follow the procedure
prescribed under clause 12.7 (e) of the tender document dated
10.11.2022 cannot resort to penal provision of blacklisting provided
under said clause.
12. Be that as it may. Even though there is a specific direction to
respondent No.2 in I.A. No.3 of 2024 dated 31.12.2024 to send the
controlled drug sample of the subject drug of the concerned batch to
an empanelled testing laboratory of respondent No.2, till date, no
steps are taken in that regard and respondents cannot shirk off their
duty simply stating that the sample is available with Drug Inspector
concerned and direction be given to said authority, who is not even a
13
PK, J
W.P.No.31615 of 2024
party to the present writ petition, for sending the sample for testing to
the empanelled testing laboratory and it is for respondent No.2 to
undertake such exercise by making necessary correspondence with
Drug Inspector concerned.
13. For the reasons elicited supra, this Court is of the view that the
impugned proceedings No.19/ph3/NSQ/Sai Parenterals/2024-25
dated 06.10.2024 issued by respondent No.2 are liable to be set aside
and are accordingly set aside.
14. Accordingly, the Writ Petition is allowed.
Miscellaneous applications, if any, pending in this writ petition,
shall stand closed. No costs.
_________________________________
JUSTICE PULLA KARTHIK
Date: 16.7 .2025.
GSP/sur
[ad_2]
Source link