M/S Jpee Drugs vs State Of Madhya Pradesh
- Court
- Supreme Court
2026 INSC 1143
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO(S). OF 2026
(Arising out of SLP (Civil) No (s). 14499-14500 of 2026)
M/S JPEE DRUGS ….APPELLANT(S)
VERSUS
STATE OF MADHYA
PRADESH AND OTHERS ….RESPONDENT(S)
O R D E R
Mehta, J.
1. Heard.
2. Leave granted.
3. Brief facts essential for disposal of the appeal
are stated below.
4. The appellant is a licenced firm engaged in the
business of manufacturing and supplying medicines
to Government hospitals. It participated in a bidding
1
process pursuant to a Notice Inviting Tender issued
for supply of drugs to various Government district
Signature Not Verified
Digitally signed by
NEETU KHAJURIA
Date: 2026.10.16
17:43:20 IST
Reason:
1
For short, “NIT”.
1
hospitals in the State of Madhya Pradesh by the
Department of Public Health and Family Welfare
through M.P. Public Health Services Corporation
2
Limited, Bhopal . The bid of the appellant-firm was
accepted for supply of drugs, namely, Ascorbic Acid
(Vitamin C) Tablets IP 500 mg and Ethambutol
Hydrochloride Tablets IP 400 mg. Pursuant to the
acceptance of tender, the appellant-firm entered into
an agreement for supply of the aforesaid drugs and
thereafter supplied the same to various Government
hospitals and health centres in the State of Madhya
Pradesh.
rd
5. Subsequently, a show-cause notice dated 23
September, 2024, was issued to the appellant-firm
seeking explanation as to why it should not be
blacklisted on the ground that the drugs supplied by
it pursuant to the work order, had failed the quality
test. The test reports declaring the concerned batches
3
as Not of Standard Quality were also forwarded
along with the show-cause notice.
6. As per the test reports, four batches of the drugs
supplied by the appellant-firm, namely, three
2
For short, “MPPHSCL”.
3
For short, “NSQ”.
2
batches of Ascorbic Acid (Vitamin C) Tablets IP 500
mg and one batch of Ethambutol Hydrochloride
Tablets IP 400 mg, were declared as NSQ. The show-
cause notice also indicated that, as per the tender
document, in case any one batch was found to be
NSQ, the particular product of the firm would be
blacklisted/debarred for a period of not less than two
years. Upon blacklisting/debarment of such three
products or upon three NSQ batches of one or more
products being found under a tender, the firm would
be blacklisted for a period of not less than three
years.
7. The appellant-firm replied to the notice, denying
the allegation that it had supplied non-standard
drugs, and contended that the drugs had failed the
quality test on account of improper storage
conditions and improper handling after their supply,
for which the manufacturer and supplier could not
be held responsible.
8. The Managing Director, MPPHSCL, passed two
th
separate orders dated 30 September, 2024,
observing that no reply to the show-cause notice had
been received from the appellant-firm and
accordingly directed recovery of the value of the
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batches of drugs which had been declared NSQ. By
one of the said orders, the appellant-firm was
debarred for a period of two years from supplying
Ethambutol Hydrochloride Tablets IP 400 mg and
was directed to deposit the batch value of
Rs.3,47,375/-. By the other order, the appellant-firm
was blacklisted for a period of three years and
prohibited from participating in future tenders issued
by MPPHSCL on account of three batches of Ascorbic
Acid (Vitamin C) Tablets IP 500 mg having been
declared NSQ, and was directed to deposit the
aggregate batch value of Rs.6,77,219/.
st
9. Thereafter, another order dated 1 October,
2024, came to be passed, whereby the
reply/representation submitted by the appellant-firm
was considered and rejected, and the blacklisting and
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debarment decisions dated 30 September, 2024
were reiterated.
10. Being aggrieved, the appellant preferred Writ
Petition No.31343 of 2024 before the High Court of
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Madhya Pradesh at Jabalpur . The said writ petition
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came to be disposed of by order dated 27 October,
4
Hereinafter, referred to as the “High Court”.
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2025. Thereafter, the appellant-firm preferred Review
Petition No.2223 of 2025, while respondents Nos.2
and 3 preferred Review Petition No.2101 of 2025.
Both review petitions came to be dismissed by a
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common order dated 12 February, 2026. The orders
th th
dated 27 October, 2025, and 12 February, 2026,
are under challenge in the present appeals by special
leave.
Submissions on behalf of the parties: -
11. Learned senior counsel, Shri Siddharth
Bhatnagar, representing the appellant-firm, urged
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that notice was issued to the appellant-firm on 23
September, 2024 and seven days’ time was granted
to file the reply. The reply was, as a matter of fact,
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submitted on 30 September, 2024 within the time
specified, but without even waiting for the reply, the
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impugned orders were passed in hot haste on 30
September, 2024, blacklisting the appellant-firm for
three years and the products of the firm for two years.
12. It was submitted that, in terms of the provisions
contained in Section 25(3) and (4) of the Drugs and
Cosmetics Act, 1940, the report of the Government
Analyst is not rendered conclusive where the person
from whom the sample was taken, within the
5
prescribed period, notifies his intention to adduce
evidence in controversion thereof, in which event, the
sample may be subjected to further examination by
the Central Drugs Laboratory. It was, therefore,
urged that the appellant-firm could not have been
proceeded against solely on the basis of the first
laboratory report without affording it the opportunity
contemplated under law to controvert/dispute the
same.
13. Shri Bhatnagar further submitted that, in any
event, the High Court, in the impugned judgment,
has taken note of Clause 6 of Annexure IX appended
to the Tender Document, which specifically mandates
that where a sample fails the quality test and is
reported to be NSQ, one more sample from the same
batch shall be drawn and sent to another laboratory
for quality testing and that blacklisting can follow
only upon confirmation of the test result by the
second laboratory. Clause 6 of Annexure IX reads as
under: -
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“ANNEXURE – IX
“PROCEDURE FOR BLACKLISTING OF
PRODUCT/TENDER”
BLACKLSITING FOR QUALITY FAILURE.
(6) If the sample fails in quality test and 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 other laboratory for
quality testing. On confirmation of the test result by
the second laboratory, firm will be black listed as per
terms. In case when the second report is
contradictory to the first report, the Govt. lab or
third laboratories report will be final and if the
sample has been tested by the Govt. Lab at any
stage, its report will be conclusive & final.
”
14. He urged that, admittedly, the show-cause
notice was issued immediately after the first analysis
report was received from the laboratory and no effort
was made to draw a second sample and for
examination by another laboratory.
15. It was submitted that the contention of the
respondents that no request had been made on
behalf of the supplier for drawing a second sample
and sending the same to another laboratory was
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immaterial, as Clause 6 of Annexure IX to the Tender
Document mandatorily required the procuring entity
to draw a second sample from the same batch and
send it to another laboratory for quality testing.
16.
Shri Bhatnagar urged that the High Court, in
the impugned order, had itself noted that the
supplied medicines had not yet expired and could,
therefore, be subjected to testing by another
laboratory. However, despite issuing directions for
fresh testing of the samples at the Central
Government Laboratory, the High Court declined to
quash the blacklisting orders and instead made their
fate contingent upon the outcome of the said testing.
17. It was submitted that the decision to blacklist
the appellant-firm and debar the two products was
punitive in nature and tantamounts to civil death
and, having been taken without following the
procedure prescribed under the Tender Document
and the principles of natural justice, the impugned
orders deserve to be quashed, with costs imposed
upon the respondents.
18. Learned senior counsel for the respondents,
Shri S.K. Gangele, on the other hand, urged that the
High Court had already intervened in the matter and
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directed that fresh samples of each batch be drawn
and sent to the Central Government Laboratory for
testing. He submitted that, under the directions
issued by the High Court, if the samples upon fresh
analysis were confirmed to be NSQ, the blacklisting
orders would remain in force, whereas, if the samples
were found to conform to the prescribed standards,
the said orders would stand quashed. Hence, until
and unless the second sample is tested, the
appellant-firm cannot be allowed to participate in any
tender or to sell the drugs which have been found to
be sub-standard. However, he was not in a position
to dispute the fact that the show-cause notice had
been issued without complying with the mandatory
requirement prescribed under Clause 6 of Annexure
IX to the Tender Document, referred to supra .
Discussion and Analysis: -
19. It is evident that the High Court itself found the
action of the authorities to be flawed, inasmuch as
the blacklisting orders were passed without
complying with the mandatory requirement under
Clause 6 of Annexure IX to the Tender Document,
namely, drawing a second sample from the concerned
batch and sending it to another laboratory for quality
9
testing. Having held so, we are of the view that it was
not justified for the High Court to defer quashing the
blacklisting orders contingent upon the fresh quality
test reports being received.
20.
In any event, the direction issued by the High
Court required fresh samples of the medicines to be
drawn and sent for analysis to the Central
Government Laboratory within 15 days from the date
of the order. It is pertinent to note that, even by the
time the review petitions were considered by the High
Court, the fresh samples had not been drawn and no
report from the second laboratory had been obtained.
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This is evident from the common order dated 12
February, 2026, passed in the review petitions
wherein MPPHSCL contended that the medicines
directed to be re-tested were not in its custody but
were in the possession of the State Government,
being the recipient of the supply, whereupon the High
Court reiterated its earlier direction and required the
State Government to facilitate compliance therewith.
21. The appellant-firm thereafter assailed both the
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order dated 27 October, 2025, and the common
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review order dated 12 February, 2026, before this
Court. Significantly, even by the time this Court, vide
10
th
order dated 26 May, 2026, this Court stayed the
operation of the impugned orders to the extent of the
blacklisting of the appellant-firm, the re-testing
exercise had not been undertaken.
22.
The period of fifteen days stipulated in the
original order passed by the High Court for drawing
fresh samples and sending them for analysis
remained uncomplied for over six months by the time
this Court stayed the operation of the impugned
orders to the extent of blacklisting the appellant-firm.
It is also to be noted that even the rate contracts
under Tender T-279, pertaining to Ascorbic Acid
(Vitamin C) Tablets IP 500 mg, and Tender T-528,
pertaining to Ethambutol Hydrochloride Tablets IP
th th
400 mg, had expired on 11 April, 2024 and 11
October, 2025, respectively.
23. The batch-wise particulars available on record
further reveal that Batch No. JDT-7744 of Ascorbic
Acid (Vitamin C) Tablets IP 500 mg was due to expire
in January, 2026; Batch No. JDT-8316 of the same
drug was due to expire in July, 2026; and Batch No.
JDT-8054 of Ethambutol Hydrochloride Tablets IP
400 mg was due to expire in April, 2026. As regards
Batch No. JDT-8007 of Ascorbic Acid (Vitamin C)
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Tablets IP 500 mg, the batch-specific laboratory
material records the expiry date as January, 2026,
whereas the show-cause notice indicates March,
2026 as the expiry date. Even proceeding on the
latter date, the last date of all four batches has since
expired. The direction for re-testing, which was
intended to facilitate an independent determination
of the quality of the drugs in question, has, in these
circumstances, lost its purpose and stands
frustrated by efflux of time.
24. The aforesaid circumstances assume
significance when considered in conjunction with the
mandatory procedure prescribed under Clause 6 of
Annexure IX to the Tender Document. The said
clause expressly contemplated the drawal of a second
sample from the same batch and its transmission to
another laboratory for testing, upon receipt of an
adverse report declaring the drug to be not of
standard quality. Admittedly, this procedure was not
followed before the impugned orders of blacklisting
and debarment came to be passed.
25. The significance of ensuring an effective
opportunity for further analysis of a drug sample was
considered by this Court in Medipol
12
Pharmaceutical India Pvt. Ltd. v. Post Graduate
5
Institute of Medical Education & Research . In
doing so, this Court considered, inter alia , the
decisions in Medicamen Biotech Ltd. v. Rubina
6
Bose, Drug Inspector Laborate
, and
Pharmaceuticals India Ltd. v. State of Tamil
7
Nadu , which underscore the importance of
preserving an effective opportunity to have a disputed
drug sample tested by a superior laboratory. The
underlying principle finds expression in the
safeguards contemplated under Section 25(3) and (4)
of the Drugs and Cosmetics Act, 1940. The Court
held that where delay predominantly attributable to
the State or its instrumentalities results in the loss of
an effective opportunity to have a sample retested by
a superior laboratory, the adverse action founded
upon the disputed analysis cannot be sustained. The
principle is relevant to the present controversy,
having regard to the express procedure prescribed
under Clause 6 of Annexure IX and the subsequent
loss of an effective opportunity for re-testing. The
5
(2021) 11 SCC 339.
6
(2008) 7 SCC 196
7
(2018) 15 SCC 93.
13
relevant extract from the judgment in Medipol
(supra) is reproduced hereinbelow for ready
reference: -
“12) Though the aforesaid judgments pertain to
criminal prosecutions under the Drugs and
Cosmetics Act, Prevention of Food Adulteration Act
and Insecticides Act, yet, they lay down that a
valuable right is granted to a person who is sought
to be penalized under these Acts to have a sample
tested by the Government Analyst that is found
against such person, to be tested by a superior or
appellate authority, namely, the Central Drugs
Laboratory. These judgments lay down that if owing
to delay which is predominantly attributable to the
State or any of its entities, owing to which an article
which deteriorates with time is tested as not
containing the requisite standard, any prosecution
or penalty inflictable by virtue of such sample being
tested cannot then be sustained. We have seen that
on the facts of this case, the sample drawn and
analyzed by the Government Analyst was delayed
for a considerable period, resulting in the sample
being drawn towards the end of its shelf life.
Even insofar as the samples sent to the Central
Drugs Laboratory, there was a considerable delay
which resulted in the sample being sent and
tested 8 months beyond the shelf life of the
product in this case. It is thus clear that the
valuable right granted by Section 25 of the Drugs
and Cosmetics Act kicks in on the facts of this
case, which would necessarily render any penalty
based upon the said analysis of the sample as
void. ”
[Emphasis supplied]
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26. The aforesaid principle fully applies to the
controversy at hand. Though the present proceedings
arise from administrative and contractual action and
not from a prosecution under the Act, the appellant-
firm was subjected to serious civil consequences of
blacklisting and debarment on the basis of the
Government Analyst’s reports. The failure to follow
the procedure expressly stipulated in Clause 6,
followed by the non-compliance with the High Court’s
direction for re-testing within the stipulated period,
has deprived the appellant-firm of an effective
opportunity to challenge the very reports forming the
foundation of the impugned action. The subsequent
expiry of the batches has rendered that opportunity
nugatory. In these circumstances, the respondents
cannot be permitted to sustain the impugned
punitive action on the strength of reports which the
appellant-firm was denied an effective opportunity to
controvert despite its entitlement under the Tender
document. The procedural infirmity, coupled with the
irretrievable deprivation of the opportunity for re-
testing, renders the orders of blacklisting and
debarment unsustainable in law.
15
th
27. As a consequence, the orders dated 30
st
September, 2024, and 1 October, 2024, passed by
the competent authority are hereby quashed.
28. Concomitantly, the impugned judgment and
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order dated 27 October, 2025, and the common
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review order dated 12 February, 2026, passed by
the High Court, are set aside to the extent that they
declined to quash the impugned orders and made
their continuance contingent upon the outcome of re-
testing.
29. The appeals are allowed accordingly.
30. Pending application(s), if any, shall stand
disposed of.
….……………………J.
(VIKRAM NATH)
….……………………J.
(AUGUSTINE GEORGE MASIH)
...…………………….J.
(SANDEEP MEHTA)
NEW DELHI;
OCTOBER 06, 2026.
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