Case Note & Summary
The dispute arose from the procurement of Ayurvedic medicines by the Uttar Pradesh State AYUSH Society, which had been purchasing exclusively from Indian Medicines Pharmaceutical Corporation Limited (IMPCL) without inviting tenders. The Kerala Ayurvedic Co-operative Society challenged this practice in the High Court, which ruled that the procurement process was illegal and directed the State to invite tenders. The State and IMPCL appealed to the Supreme Court, questioning the necessity of a tender process. The Supreme Court analyzed the Operational Guidelines of the National AYUSH Mission, particularly paragraph 4(vi)(b), which stipulates that at least 50% of the grant-in-aid must be used for procuring medicines from IMPCL or other eligible entities. The court emphasized the importance of transparency and competition in government procurement, affirming that the absence of a tender process violated the principles of fairness under Article 14 of the Constitution. The court upheld the High Court's decision, reinforcing the need for a competitive bidding process to ensure quality and cost-effectiveness in the procurement of Ayurvedic medicines. The judgment underscored that government contracts must not only be economically sound but also adhere to principles of fairness and transparency, thereby protecting public interest.
Headnote
A) Administrative Law - Judicial Review of Government Contracts - Non-arbitrariness in State Action - Constitution of India, Article 14 - The court held that government actions must conform to Article 14, ensuring fairness and non-arbitrariness in awarding contracts. The High Court's direction to invite tenders for procurement was upheld to foster competition and transparency (Paras 7-22). B) Procurement Guidelines - Tender Process Requirement - Operational Guidelines of National AYUSH Mission - The court interpreted paragraph 4(vi)(b) to mandate that at least 50% of the grant-in-aid must be used for procuring medicines through a tender process, ensuring equal opportunity for all eligible suppliers (Paras 23-26).
Issue of Consideration
Whether the appellant could procure Ayurvedic drugs solely from IMPCL without inviting tenders as per the Operational Guidelines.
Final Decision
The Supreme Court upheld the High Court's ruling, directing the State to invite tenders for the procurement of Ayurvedic medicines, emphasizing adherence to Article 14 and the Operational Guidelines.
Law Points
- Judicial review of government contracts
- Article 14 non-arbitrariness standard
- procurement guidelines
- tender process requirement
- government largesse principles
