Patna High Court – Orders
M/S. Sam Kem vs The State Of Bihar on 13 July, 2026
Author: Rajesh Kumar Verma
Bench: Rajesh Kumar Verma
IN THE HIGH COURT OF JUDICATURE AT PATNA
Civil Writ Jurisdiction Case No.12412 of 2025
======================================================
1. M/s. Sam Kem having its registered office at 15-B, AKVN, Industrial Area,
Rangwasa, Rao, Indore, Madhya Pradesh through its authorised
representative, Rajiv Shukla, aged about 49 yrs., S/o Late Nirmal Shukla,
R/o-At and P.O.-Wari, P.S.-Singhia, District-Samastipur.
2. Rajiv Shukla, S/o Late Nirmal Shukla, R/o-At and P.O.-Wari, P.S.-Singhia,
District-Samastipur authorised representative M/s. Sam Kem having its
registered office at 15-B, AKVN, Industrial Area, Rangwasa, Rao, Indore,
Madhya Pradesh.
... ... Petitioners
Versus
1. The State of Bihar through the Additional Chief Secretary, Health
Department, Govt. of Bihar, Patna.
2. The Additional Chief Secretary, Health Department, Govt. of Bihar, Patna.
3. Bihar Medical Services and Infrastructure Corporation Ltd., Second and
Third Floor, Swasthya Bhawan, behind IGIMS, Sheikhpura, Patna, Bihar
through its Secretary.
4. The Managing Director, Bihar Medical Services and Infrastructure
Corporation Ltd., Second and Third Floor, Swasthya Bhawan, behind
IGIMS, Sheikhpura, Patna, Bihar.
5. The General Manager, Bihar Medical Services and Infrastructure
Corporation Ltd., Second and Third Floor, Swasthya Bhawan, behind
IGIMS, Sheikhpura, Patna, Bihar.
... ... Respondents
======================================================
Appearance :
For the Petitioners : Mr. Rajeev Kumar Singh, Advocate
For the State : Mr. S.D. Sanjay, AG
Mr. Rahul Kumar, AC to AG
For the BMSICL : Mr. Lalit Kishore, Sr. Advocate with
Mr. Ayush Kumar, Advocate
======================================================
CORAM: HONOURABLE THE ACTING CHIEF JUSTICE
and
HONOURABLE MR. JUSTICE RAJESH KUMAR VERMA
ORAL ORDER
(Per: HONOURABLE THE ACTING CHIEF JUSTICE)
5 13-07-2026
Heard learned counsel for the parties.
2. In the present writ petition, the petitioners have
prayed for the following relief(s):-
Patna High Court CWJC No.12412 of 2025(5) dt.13-07-2026
2/17“(i) To quash the order contained in File No.-
BMSIC/40030/141-2024/4001 dated 17.07.2025
issued by the Managing Director, Bihar Medical
Services and Infrastructure Corporation Ltd.,
Sheikhpura, Patna, (herein after referred to as
B.M.S.I.C.L.) whereby and where under the
petitioners’ company has been blacklisted for its
quoted product, Oral Rehydration Salts IP
(herein after referred to as O.R.S.) for a period
of two years from the date of issuance of this
order on the ground that the O.R.S. which were
supplied by petitioners’ company to Patna,
Purnia and Muzaffarpur warehouses of
B.M.S.I.C.L. were declared “Not of Standard
Quality” by BMSICL impanelled quality testing
laboratories. Simultaneously it has also ordered
that all unexecuted purchased order issued
earlier shall also stand cancel. A copy of order
dated 17.07.2025 is annexed as ANNEXURE-
P/1 to this application.
(ii) To direct the respondent B.M.S.I.C.L. to
accept the product namely O.R.S. for which the
agreement dated 25.01.2024 was executed and
the purchases orders were issued forthwith as
several products of the O.R.S. are standing
outside the warehouses and is having its date of
expiry and if the same will not be accepted, the
petitioners’ company will suffer huge monetary
loss because of inaction on the part of
B.M.S.I.C.L.
(iii) To direct the respondents to extend the
tenure of agreement dated 25.01.2024 for a
further period of one month without late
delivery charge so that the remaining product of
O.R.S. as per the purchase order be supplied to
Patna High Court CWJC No.12412 of 2025(5) dt.13-07-2026
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the warehouses of B.M.S.I.C.L.”
3. The brief facts of the present case are that
BMSICL issued a tender dated 20.09.2023 inviting bids for
procurement and supply of various drugs to healthcare facilities
across the State of Bihar. The petitioner participated in the
tender process for supply of O.R.S. and, upon being declared
successful, was issued a Letter of Intent dated 15.01.2024. The
petitioner thereafter furnished the requisite performance
security, pursuant to which an agreement dated 25.01.2024 was
executed between the parties. Thereafter, purchase orders were
issued from time to time and the petitioner supplied O.R.S. to
various warehouses of BMSICL.
4. During the period of the contract, samples drawn
from certain batches of the supplied O.R.S. were tested in
laboratories empanelled by BMSICL. On the basis of the test
reports, which allegedly found seven batches to be not of
standard quality, a show cause notice dated 03.12.2024 was
issued to the petitioner. The petitioner submitted its reply
disputing the laboratory findings and requesting retesting of the
samples. Thereafter, upon retesting, a second show cause notice
dated 21.02.2025 was issued, to which the petitioner again
submitted its response disputing the conclusions recorded in the
test reports.
5. Ultimately, by the impugned order dated
Patna High Court CWJC No.12412 of 2025(5) dt.13-07-2026
4/17
17.07.2025, the respondent-Corporation blacklisted the
petitioner’s quoted product for a period of two years and further
directed cancellation of all unexecuted purchase orders.
Aggrieved thereby, the petitioner has preferred the present writ
application.
6. Learned counsel for the petitioner submits that
although two show cause notices were issued with respect to the
alleged failure of certain batches of O.R.S. in quality testing,
neither of the notices proposed or put the petitioner to notice
regarding the proposed action of blacklisting under Clause 27 of
the Tender Conditions. It is only in the impugned order that
Clauses 27B(1), 27B(3) and 27C have been invoked for the first
time. Consequently, the order of blacklisting has been passed
without affording the petitioner any opportunity to show cause
against the proposed penalty, rendering the same unsustainable
in law.
7. It is further submitted that the cancellation of all
unexecuted purchase orders is contrary to Clause 27C(ii) of the
Tender Document, which expressly provides that purchase
orders already issued prior to the order of blacklisting shall not
be affected and only strict quality checks would be undertaken
in respect of future supplies. It is, therefore, submitted that the
respondents have acted in direct contravention of the contractual
stipulations governing the parties.
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8. Per contra, learned counsel appearing for the
respondent-BMSICL submits that the impugned order has been
passed strictly in accordance with terms of the tender document
and after affording the petitioner adequate opportunity of
hearing. It is submitted that after issuance of the Letter of Intent,
execution of the agreement and issuance of purchase orders, the
petitioner supplied O.R.S. under various batch numbers. In this
regard, reliance has been placed upon paragraph 8 of the counter
affidavit, which reads as under:
“8. That after due completion of formalities
including issuances of LOI dated 15.01.2024
(marked as Annex-P/3 to the Writ Petition)
ABD’s execution of Agreement dated 25.01.2024
(marked as Annex-P/4 to the Writ Petition),
purchase order dated 02.05.2024 issued by the
BMSICL, petitioner firm supplied O.R.S.
bearing Batch No.P24/0651, P24/0654,
P24/0657, P24/0664, P24/0665, P24/0671 &
P24/0684, which were declared “Not of
Standard Quality” with respect to seal test
parameters conducted by BMSICL Empanelled
quality testing laboratory.”
9. Learned counsel submits that BMSICL, being the
nodal procurement agency for drugs in the State, follows a
stringent quality assurance mechanism under the Standard Bid
Document (SBD), the terms whereof were accepted by the
petitioner. The empanelled laboratories conduct testing in
accordance with the standards prescribed under the Indian
Patna High Court CWJC No.12412 of 2025(5) dt.13-07-2026
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Pharmacopoeia, and Clause 24(c) of the SBD specifically
contemplates post-shipment random sampling and testing of
supplied batches to ensure compliance with the prescribed
quality standards.
10. It is further submitted that the petitioner was
issued two show cause notices, dated 03.12.2024 and
21.02.2025, and replies were duly considered. However, as the
batches again failed upon retesting and the petitioner’s
explanation was found unsatisfactory, the competent authority
proceeded to pass the impugned order.
11. Learned counsel further submits that the seal test
is a critical quality parameter in the case of O.R.S., as an
impaired seal may result in moisture ingress, contamination,
loss of dosage accuracy and deterioration of the drug, thereby
rendering it unsafe for human consumption. It is, therefore,
contended that failure of the seal test alone is sufficient to
classify the batches as “Not of Standard Quality”, and
acceptance of such products would compromise public health.
12. The limited issue which arises for consideration
before this Court is as to whether the impugned order dated
17.07.2025 blacklisting the petitioner’s quoted product and
cancelling the unexecuted purchase orders suffers from any
illegality, arbitrariness or violation of the principles of natural
justice warranting interference by this Court.
Patna High Court CWJC No.12412 of 2025(5) dt.13-07-2026
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13. At the outset, it is not in dispute that the petitioner
voluntarily participated in the tender process floated by the
respondent-BMSICL and, upon being declared successful,
accepted the terms and conditions contained in the Standard Bid
Document (SBD), furnished the requisite affidavit accepting the
tender conditions and thereafter entered into the agreement
dated 25.01.2024. Consequently, the petitioner is bound by the
contractual stipulations governing quality assurance, post-
supply testing and the consequences of failure of the supplied
product to satisfy the prescribed standards.
14. The contractual scheme itself demonstrates that
maintenance of quality is the foundation of the procurement
process. Clause 20(a) obligates the successful bidder to supply
drugs of standard quality conforming to the provisions of the
Drugs and Cosmetics Act, 1940, the Rules framed thereunder
and the terms of the tender. Clause 24(c) authorises BMSICL to
undertake post-shipment random sampling of supplied batches
through its empanelled laboratories. Clauses 24(e), 24(f) and
24(g) prescribe the consequences where a supplied batch is
declared “Not of Standard Quality”, including rejection of the
batch, replacement by the supplier at its own cost and initiation
of appropriate action under the tender conditions. Clause 27B
further provides for blacklisting where supplied batches fail the
prescribed quality parameters. The relevant Clauses of the SBD
Patna High Court CWJC No.12412 of 2025(5) dt.13-07-2026
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reads as follows:
“20(a). The drugs supplied by the successful
bidder shall be of the Standard Quality and
shall comply with the specifications, stipulations
and conditions specified under Drugs and
Cosmetics Act and Rules there under and also
should confirm to Terms and Conditions laid
down in NIT and Rate Contract/agreement.
24(c). Random samples of each supplied batch
will be chosen at the point of supply or
distribution/storage points for testing. The
samples will be sent to different BMSICL
empanelled laboratories.
24(e). The drugs shall be of standard quality
throughout the shelf-life period of the item.
Samples can be drawn for quality testing
periodically throughout the shelf-life period. If
the sample is declared to be “NOT OF
STANDARD QUALITY” or spurious or
adulterated or misbranded, such batch / batches
will be deemed to be rejected goods and action
will be taken as per tender clause.
(f). If the product / sample fails in quality test,
every failed batch shall be taken back by the
supplier at their own cost and BMSICL shall not
be responsible for any damage during this
period.
(g). If a sample is found as not of standard
quality by the Tender Inviting Authority, the
distribution of NSQ batch will be frozen. The
bidder will be liable for appropriate action as
per the tender conditions and also for other
legal actions under the Drugs & Cosmetics Act
& Rules. The Tender Inviting Authority, at his
discretion may terminate the Contract and in
Patna High Court CWJC No.12412 of 2025(5) dt.13-07-2026
9/17case of such termination, the supplier shall be
liable for all losses sustained by the Tender
Inviting Authority, which may be recovered from
the Security Deposit made by the Supplier and /
or any other money due or becoming due to him.
In the event of such amounts being insufficient,
the balance may be recovered from the Supplier
as per the provisions of Law.
27B(1). Each and every batch of
drugs/medicines supplied by the supplier shall
be subjected to quality test by the Empanelled
laboratories as per the procedure adopted by
BMSICL.
(3). If 3 batches of a particular item supplied by
the supplier is reported to be failing in ASSAY
content (above 50% but below prescribed limit)
and/or other parameters, then the particular
item of the firm shall be blacklisted for minimum
of two years besides forfeiture of Security
Deposit of that particular product(s).”
15. A conjoint reading of the aforesaid clauses leaves
little room for doubt that post-supply quality testing through
BMSICL empanelled laboratories is an integral part of the
contractual mechanism and the consequences flowing from
failure of such quality tests were expressly accepted by every
participating bidder, including the petitioner.
16. From the records, it further emerges that samples
drawn from the batches supplied by the petitioner were tested by
the empanelled laboratories of BMSICL and were found to be
“Not of Standard Quality” on the seal test parameters.
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Thereafter, a show cause notice dated 03.12.2024 was issued to
the petitioner. Instead of proceeding straightaway against the
petitioner, the respondents subjected the products to retesting
and, upon the batches again being found “Not of Standard
Quality”, issued a second show cause notice dated 21.02.2025.
The replies submitted by the petitioner to both the show cause
notices were considered by the competent authority before
passing the impugned order. Thus, the material available on
record demonstrates that the petitioner was afforded adequate
opportunity to present its defence and the respondents did not
act in a mechanical or arbitrary manner.
17. This Court also cannot lose sight of the fact that
the procurement in question pertains to Oral Rehydration Salts
(O.R.S.), a drug intended for public healthcare. The respondents
have consistently maintained that the seal test is a critical
quality parameter as compromise of packaging integrity may
result in contamination, moisture ingress, deterioration of the
product and consequent risk to public health. In matters
involving procurement of medicines for public distribution, the
procuring agency is under a heightened obligation to ensure that
only products satisfying the prescribed quality standards reach
the beneficiaries. Once the agreed contractual quality assurance
mechanism has been followed, this Court, while exercising
judicial review under Article 226 of the Constitution, cannot
Patna High Court CWJC No.12412 of 2025(5) dt.13-07-2026
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substitute its own opinion for that of the technical experts
entrusted with such evaluation.
18. Significantly, Clause 27B(3) itself contemplates
blacklisting where three batches of a particular product fail the
prescribed quality parameters. In the present case, the
respondents have proceeded on the basis that seven batches
supplied by the petitioner failed the quality test. Prima facie,
therefore, the action of blacklisting cannot be said to be dehors
the contractual framework but is one traceable to the express
stipulations accepted by the petitioner.
19. The scope of judicial review in contractual matters
is well settled. The Court is concerned with the decision-making
process and not with the merits of the decision itself. Unless the
action of the authority is shown to be arbitrary, mala fide or in
violation of statutory or contractual provisions, interference
under Article 226 is unwarranted. In Michigan Rubber (India)
Ltd. v. State of Karnataka, reported in (2012) 8 SCC 216, the
Hon’ble Supreme Court observed that the author of the tender
document is the best judge of its requirements and the Court
should exercise restraint while reviewing decisions taken in
contractual matters. The relevant part of the said order reads as
follows:
“23. From the above decisions, the following
principles emerge:
(a) The basic requirement of Article 14 is
Patna High Court CWJC No.12412 of 2025(5) dt.13-07-2026
12/17fairness in action by the State, and non-
arbitrariness in essence and substance is the
heartbeat of fair play. These actions are
amenable to the judicial review only to the
extent that the State must act validly for a
discernible reason and not whimsically for
any ulterior purpose. If the State acts within
the bounds of reasonableness, it would be
legitimate to take into consideration the
national priorities;
(b) Fixation of a value of the tender is
entirely within the purview of the executive
and the courts hardly have any role to play
in this process except for striking down such
action of the executive as is proved to be
arbitrary or unreasonable. If the
Government acts in conformity with certain
healthy standards and norms such as
awarding of contracts by inviting tenders, in
those circumstances, the interference by
courts is very limited;
(c) In the matter of formulating conditions of
a tender document and awarding a contract,
greater latitude is required to be conceded to
the State authorities unless the action of the
tendering authority is found to be malicious
and a misuse of its statutory powers,
interference by courts is not warranted;
(d) Certain preconditions or qualifications
for tenders have to be laid down to ensure
that the contractor has the capacity and the
resources to successfully execute the work;
Patna High Court CWJC No.12412 of 2025(5) dt.13-07-2026
13/17
and
(e) If the State or its instrumentalities act
reasonably, fairly and in public interest in
awarding contract, here again, interference
by court is very restrictive since no person
can claim a fundamental right to carry on
business with the Government.
24. Therefore, a court before interfering in
tender or contractual matters, in exercise of
power of judicial review, should pose to
itself the following questions:
(i) Whether the process adopted or decision
made by the authority is mala fide or
intended to favour someone; or whether the
process adopted or decision made is so
arbitrary and irrational that the court can
say: “the decision is such that no
responsible authority acting reasonably and
in accordance with relevant law could have
reached”? And
(ii) Whether the public interest is affected?
If the answers to the above questions are in
the negative, then there should be no
interference under Article 226.”
20. Likewise, in Afcons Infrastructure Ltd. v.
Nagpur Metro Rail Corporation Ltd., reported in (2016) 16
SCC 818, the Hon’ble Supreme Court held that the
interpretation placed by the tendering authority on the terms of
the tender deserves deference unless shown to be arbitrary,
Patna High Court CWJC No.12412 of 2025(5) dt.13-07-2026
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irrational or actuated by mala fides. The relevant part of the said
order reads as follows:
“15. We may add that the owner or the employer
of a project, having authored the tender
documents, is the best person to understand and
appreciate its requirements and interpret its
documents. The constitutional courts must defer
to this understanding and appreciation of the
tender documents, unless there is mala fide or
perversity in the understanding or appreciation
or in the application of the terms of the tender
conditions. It is possible that the owner or
employer of a project may give an interpretation
to the tender documents that is not acceptable to
the constitutional courts but that by itself is not
a reason for interfering with the interpretation
given.”
21. The principle has been reiterated in Silppi
Constructions Contractors v. Union of India, reported in
(2020) 16 SCC 489, wherein the Hon’ble Supreme Court held
that constitutional courts should refrain from interfering in
tender matters unless the decision is palpably arbitrary,
discriminatory or mala fide. The relevant part of the said order
reads as follows:
“19. This Court being the guardian of
fundamental rights is duty-bound to interfere
when there is arbitrariness, irrationality, mala
fides and bias. However, this Court in all the
aforesaid decisions has cautioned time and
again that courts should exercise a lot of
Patna High Court CWJC No.12412 of 2025(5) dt.13-07-2026
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judicial review in contractual or commercial
matters. This Court is normally loathe to
interfere in contractual matters unless a clear-
cut case of arbitrariness or mala fides or bias or
irrationality is made out. One must remember
that today many public sector undertakings
compete with the private industry. The contracts
entered into between private parties are not
subject to scrutiny under writ jurisdiction. No
doubt, the bodies which are State within the
meaning of Article 12 of the Constitution are
bound to act fairly and are amenable to the writ
jurisdiction of superior courts but this
discretionary power must be exercised with a
great deal of restraint and caution. The courts
must realise their limitations and the havoc
which needless interference in commercial
matters can cause. In contracts involving
technical issues the courts should be even more
reluctant because most of us in Judges’ robes do
not have the necessary expertise to adjudicate
upon technical issues beyond our domain. As
laid down in the judgments cited above the
courts should not use a magnifying glass while
scanning the tenders and make every small
mistake appear like a big blunder. In fact, the
courts must give “fair play in the joints” to the
government and public sector undertakings in
matters of contract. Courts must also not
interfere where such interference will cause
unnecessary loss to the public exchequer.
20. The essence of the law laid down in the
judgments referred to above is the exercise of
restraint and caution; the need for
Patna High Court CWJC No.12412 of 2025(5) dt.13-07-2026
16/17overwhelming public interest to justify judicial
intervention in matters of contract involving the
State instrumentalities; the courts should give
way to the opinion of the experts unless the
decision is totally arbitrary or unreasonable;
the court does not sit like a court of appeal over
the appropriate authority; the court must realise
that the authority floating the tender is the best
judge of its requirements and, therefore, the
court’s interference should be minimal. The
authority which floats the contract or tender,
and has authored the tender documents is the
best judge as to how the documents have to be
interpreted. If two interpretations are possible
then the interpretation of the author must be
accepted. The courts will only interfere to
prevent arbitrariness, irrationality, bias, mala
fides or perversity. With this approach in mind
we shall deal with the present case.”
22. Applying the aforesaid principles to the facts of
the present case, this Court finds that the impugned action is
founded upon the contractual stipulations accepted by the
petitioner, preceded by quality testing, retesting and issuance of
two show cause notices, and has been taken keeping in view the
paramount consideration of ensuring supply of quality
medicines in public interest. No material has been placed before
this Court to demonstrate that the decision-making process
suffers from arbitrariness, mala fides or violation of the
principles of natural justice so as to warrant interference under
Patna High Court CWJC No.12412 of 2025(5) dt.13-07-2026
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Article 226 of the Constitution.
23. In view of the aforesaid discussion, the issue is
answered against the petitioner.
24. Accordingly, the present writ application stands
dismissed.
25. Pending application(s), if any, shall also stand
disposed of.
(Sudhir Singh, ACJ)
(Rajesh Kumar Verma, J.)
Gaurav Kumar,
Ibrar/-
U
A.F.R.
