Case Note & Summary
The appellant, Vetindia Pharmaceuticals Limited, a licensed drug manufacturer, was blacklisted indefinitely by the State of Uttar Pradesh on 08.09.2009 for allegedly supplying misbranded veterinary medicine (Oxytetracycline injection) under a tender of 2006-07. The appellant contended that it had not directly supplied the medicine to the respondent; rather, M/s Palak Pharmaceuticals had obtained supplies from the appellant and then supplied to the respondent. The misbranding was due to an inadvertent printing error on the label, and the product was not substandard or spurious. The appellant was served with a show cause notice on 21.10.2008, which did not mention blacklisting as a proposed action. The appellant replied on 15.11.2008 explaining the error, but the respondents did not consider the reply and issued the blacklisting order. The appellant made several representations over the years, including in 2011 and 2019, but the respondents did not revoke the order. The appellant was also debarred by the State of Rajasthan on 05.07.2019 due to the blacklisting. The appellant filed a writ petition in the High Court, which was dismissed in limine on the ground of delay of ten years. The Supreme Court granted leave and allowed the appeal. The Court held that the blacklisting order was vitiated from the inception because: (i) the show cause notice did not expressly propose blacklisting, violating principles of natural justice; (ii) the appellant was not the direct supplier under the tender, and the order invoked tender clauses that were inapplicable; (iii) the order was indefinite, which is impermissible. The Court set aside the blacklisting order and directed the respondents to allow the appellant to participate in future tenders. The Court also held that delay is not an absolute bar when the order is void ab initio and the cause of action is continuing.
Headnote
A) Administrative Law - Blacklisting - Show Cause Notice - Principles of Natural Justice - The show cause notice must expressly state that blacklisting is proposed or under contemplation; a vague reference to 'other action as deemed fit' does not satisfy the requirement of natural justice. The Court held that the show cause notice dated 21.10.2008 did not indicate that blacklisting was contemplated, and therefore the subsequent blacklisting order was vitiated. (Paras 9-12) B) Administrative Law - Blacklisting - Duration - Indefinite Blacklisting - An indefinite order of blacklisting is impermissible as it operates as a civil death and must be for a specified period. The Court held that the order of blacklisting dated 08.09.2009 specifying no duration was liable to be set aside. (Paras 13-14) C) Administrative Law - Delay and Laches - Void Order - Delay is not an absolute bar when the impugned order is void ab initio and the cause of action is continuing. The Court held that the High Court erred in dismissing the writ petition solely on the ground of delay, as the blacklisting order was fundamentally flawed and the appellant had made representations. (Paras 2, 8, 14)
Issue of Consideration
Whether an order of blacklisting passed without a proper show cause notice and without the appellant being a direct supplier can be sustained, and whether the High Court was justified in dismissing the writ petition solely on the ground of delay.
Final Decision
The Supreme Court allowed the appeal, set aside the order of blacklisting dated 08.09.2009, and directed the respondents to allow the appellant to participate in future tenders. The Court held that the blacklisting order was vitiated from inception due to lack of proper show cause notice, non-application of mind, and indefinite duration.
Law Points
- Blacklisting must be preceded by a show cause notice that expressly proposes blacklisting
- principles of natural justice
- delay is not an absolute bar when order is void ab initio
- indefinite blacklisting is impermissible
