Bombay High Court Dismisses Petitions Challenging Award of Pharmacy Contract to Private Entity — Upholds Government's Right to Outsource Services in Public Interest. The court held that no person has a vested right to a government contract and that the decision to outsource was a policy choice not subject to judicial interference under Article 226.

High Court: Bombay High Court Bench: GOA In Favour of Prosecution
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Case Note & Summary

The judgment concerns two writ petitions filed before the Bombay High Court at Goa challenging the decision of the State of Goa and the Dean of Goa Medical College to award a contract for running a pharmacy at the college to M/s. Wellness Forever Medicare Pvt. Ltd., a private entity. The first petitioner, Mr. Jitesh Ghewarchand Jain, a pharmacist who had been running the pharmacy for several years, sought to quash the tender process and the award. The second petitioner, Goa Trade & Commercial Workers' Union, representing employees, also challenged the decision. The petitioners argued that the pharmacy was a public service and should not be privatized, and that the tender process was flawed. The respondents, including the State and the private company, defended the decision as a policy matter in public interest. The court, after hearing arguments, held that the government has the right to outsource services and that no person has a vested right to a contract. The court found no arbitrariness or illegality in the decision and dismissed both petitions, upholding the award of the contract to the private entity.

Headnote

A) Constitutional Law - Writ Jurisdiction - Article 226 of the Constitution of India - Scope of Judicial Review - The court held that in matters of policy and contract, the High Court under Article 226 does not sit as an appellate authority and will not interfere unless the decision is arbitrary, irrational, or mala fide. The court found no such infirmity in the government's decision to award the pharmacy contract to a private entity. (Paras 2-10)

B) Contract Law - Vested Right - No Vested Right to Contract - The court held that no person has a vested right to obtain a government contract. The petitioner, a pharmacist, had no legal right to continue running the pharmacy at the hospital. The government's decision to outsource was a policy choice. (Paras 5-8)

C) Administrative Law - Legitimate Expectation - Doctrine of Legitimate Expectation - The court held that the doctrine of legitimate expectation cannot be invoked to compel the government to continue a contract or policy. The petitioner's expectation of renewal was not legitimate as there was no promise or established practice. (Paras 9-10)

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Issue of Consideration

Whether the State Government's decision to award a contract for running a pharmacy at Goa Medical College to a private entity is arbitrary, illegal, or violative of any legal rights of the petitioners.

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Final Decision

Both writ petitions are dismissed. The court upheld the decision of the State of Goa and the Dean of Goa Medical College to award the contract for running the pharmacy to M/s. Wellness Forever Medicare Pvt. Ltd. No order as to costs.

Law Points

  • Government's right to outsource services
  • public interest
  • non-interference in policy decisions
  • no vested right to contract
  • legitimate expectation
  • Article 226 of Constitution of India
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Case Details

2019 LawText (BOM) (09) 231

Writ Petition Nos. 170 and 483 of 2018

2019-09-16

M. S. Sonak, Nutan D. Sardessai

2019:BHC-GOA:2616-DB

Mr. Gaurish N. Agni, Mr. T. Gawas, Mr. Ravi Gawas, Mr. D.J. Pangam, Mr. Pravin N. Faldessai, Mr. Pankaj Pai Vernekar, Mr. A.D. Bhobe, Ms. K. Govekar

Mr. Jitesh Ghewarchand Jain (WP 170/2018); Goa Trade & Commercial Workers' Union (WP 483/2018)

State of Goa, Dean of Goa Medical College, M/s. Wellness Forever Medicare Pvt. Ltd., Goa Antibiotics Pharmaceutics Ltd.

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Nature of Litigation

Writ petitions under Article 226 of the Constitution of India challenging the award of a contract for running a pharmacy at Goa Medical College to a private entity.

Remedy Sought

Petitioners sought to quash the tender process and the award of the contract to M/s. Wellness Forever Medicare Pvt. Ltd., and to direct the respondents to continue the pharmacy as a public service.

Filing Reason

Petitioners alleged that the decision to outsource the pharmacy was arbitrary, illegal, and against public interest, and that the tender process was flawed.

Issues

Whether the State Government's decision to award a contract for running a pharmacy at Goa Medical College to a private entity is arbitrary, illegal, or violative of any legal rights of the petitioners. Whether the petitioners have a vested right to continue running the pharmacy or a legitimate expectation that the contract would be renewed.

Submissions/Arguments

Petitioners argued that the pharmacy is a public service and should not be privatized; the tender process was flawed; and the decision was arbitrary. Respondents argued that the government has the right to outsource services in public interest; no person has a vested right to a contract; and the decision was a policy matter not subject to judicial review.

Ratio Decidendi

The court held that the government has the right to outsource services and that no person has a vested right to a government contract. The decision to award the contract was a policy choice in public interest, and the court under Article 226 will not interfere unless the decision is arbitrary, irrational, or mala fide. No such infirmity was found.

Judgment Excerpts

Heard Mr. Gaurish N. Agni, learned Advocate for the petitioner... Rule in both petitions is discharged.

Procedural History

The petitions were filed in 2018. After hearing all parties, the court delivered the judgment on 16th September 2019, dismissing both petitions.

Acts & Sections

  • Constitution of India: Article 226
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