Supreme Court quashes Madhya Pradesh drug supplier blacklisting over denied retesting

The core issue is whether the blacklisting orders were valid given that the mandatory procedure for re-testing samples by a second laboratory was not followed before the penalties were imposed.

Who it concerns: Appellant: M/s Jpee Drugs; Respondents: State of Madhya Pradesh and others (including M.P. Public Health Services Corporation Limited); Bench: Justice Mehta.

What the court decided

• The Court held that the High Court was not justified in deferring the quashing of blacklisting orders contingent upon fresh quality test reports.
• The Court noted that the mandatory requirement under Clause 6 of Annexure IX to the Tender Document (drawing a second sample for testing by another laboratory) was not followed before the impugned orders were passed.
• The Court observed that the direction for re-testing had lost its purpose and was frustrated by the efflux of time, as the batches had expired or were nearing expiry.
• The Court applied the principle from Medipol Pharmaceutical India Pvt. Ltd. v. Post Graduate Institute of Medical Education & Research, holding that adverse action cannot be sustained if delay attributable to the State results in the loss of an effective opportunity to have a sample retested.

Also in the document

• The Court noted that the 15-day deadline for drawing fresh samples set by the High Court remained uncomplied with for over six months.
• The rate contracts for the specific tenders involved had expired prior to the Supreme Court's stay order.
• The Court found that the blacklisting orders were passed without complying with the mandatory tender procedure for second-sample testing.