LPA/796/2017 of M/S VINS BIOPRODUCTS LTD & ANR Vs DIRECTOR GENERAL ARMED FORCES MEDICAL SERVICES & ANR

IN THE HIGH COURT OF DELHI AT NEW DELHI+LPA 796/2017

M/S VINS BIOPRODUCTS LTD & ANR

..... Appellants

Through :Mr Sunil Fernandes, Mr Arnav,Mr Vidyarth, Ms Anju Thomas andMs Nupur Kumar, Advocates.Mr Vidyarth, Ms Anju Thomas andMs Nupur Kumar, Advocates.

versus

DIRECTOR GENERAL ARMED FORCES MEDICAL SERVICES

& ANR..... Respondents

Through :Mr Rajesh Kumar Gogna withMs Vipra Bhardwaj, Advocates forR-1 & 2.Ms Vipra Bhardwaj, Advocates forR-1 & 2.

Lt Colonel Naveen Agrawal,Advocate for Ministry of Defence.Advocate for Ministry of Defence.

CORAM:HON'BLE MR. JUSTICE S. RAVINDRA BHATHON'BLE MR. JUSTICE A.K.CHAWLAO R R%18.12.2017

CM No.46033/2017(exemption)

Allowed, subject to all just exceptions.

LPA 796/2017 & CM No.46032/2017(stay)

1.Issue notice.Mr Rajesh Kumar Gogna, Advocate acceptsnotice on behalf of the respondent Nos.1 & 2.

2.The Appellant’s/Writ Petitioner’s grievance is with respect toan order dated 23.11.2017, which it complains has the effect ofblacklisting.

3.The Appellant concededly is supplying Anti-Snake VenomSerum to the Respondent under various Contracts and has been

consistently doing so for some time.

4.The Respondent, i.e. Directorate of Quality Assurance of theMinistryofDefence(MoD)(hereafterreferredtoas‘theDirectorate’), was of the opinion that two of the batches suppliedwere not of the contracted standard and quality and apparentlyreferred them for testing.

5.On 23.11.2017, in the second order - later by the impugnedjudgment in the Writ Petition, it was stated as follows:-

“....4. The subject drug of M/s. Vins Bioproducts Ltd.has been banned for one year from the last rejection ofthe batch. Please ensure that further orders for thesubject item are not placed onM/s. Vins BioproductLtd. till the completion of ban period or recovery of theentire cost of the defective batches, whichever islater.....”

6.It was contended that the action is nothing short ofblacklisting and per se illegal on account of non-compliance withthe principles of natural justice. Learned counsel emphasizes thatthe Authorities have consistently ruled that in such circumstances,a banning order or blacklisting which is not preceded by theminimum opportunity or fair hearing will be adverse.

7.Learned counsel for the Directorate urges that the effect ofthe impugned order is not punitive and all that it clarifies is that tillthe completion of bank period or recovery of the cost of thedefective batches, no Contract would be awarded.

8.This Court is of the opinion that facially the order – portionof which has been quoted above – amounts to blacklisting and is

plainly adverse.

9.The Authorities relied upon by the Appellant i.e. ErusianEquipment & Chemicals Limited versus State of West Bengal,1975 (1) SCC 70, Raghunath Thakur versus State of Bihar, 1989(1) SCC 229 etc. have clearly spelt out the standards which thePublic Agency has to comply with before issuing such orders.

10.In the present case, there was no effort on the part of theRespondent to do so.

11.This Court is of the opinion that the Directorate shouldclearly spell out in show-cause notice, the allegations which arerequiredtobecontestedortraversedbytheWritPetitioner/Appellant. In this regard, notice may be issued, withina week. The Appellant shall reply or represent against the noticewithin week of its receipt.12.The respondents shall pass reasoned order, which shallclearly analyze the show-cause notice and reply.

13.All rights and contentions of the parties are reserved.

14.Learned counsel seeks liberty to withdraw the Writ PetitionNo.11011/2017.In the light of the above order, the same isaccordingly disposed of as withdrawn.No.11011/2017.In the light of the above order, the same isaccordingly disposed of as withdrawn.

15.The impugned order dated 23.11.2017 is hereby set aside.

16.LPA 796/2017 is disposed of in the above terms.

S. RAVINDRA BHAT, J

DECEMBER 18, 2017/’Sn’

A.K.CHAWLA, J