Tender Blacklisting Can Stand Outside Rule 26A

The Karnataka High Court dismissed a writ petition challenging a three-year blacklisting order issued by the Karnataka State Medical Supplies Corporation Limited against a pharmaceutical supplier. The dispute arose after the petitioner, a successful bidder for iron tablets, supplied a batch that was later tested and reported as Not of Standard Quality.

The Corporation first issued replacement notices on 24.01.2025 and 24.02.2025. When the petitioner did not replace the drugs, it replied on 03.03.2025 and 07.03.2025, contending that the Government Analyst’s report and statutory sample portions had not been furnished and that it should be allowed to pursue remedies under the Drugs and Cosmetics Act, 1940. The Corporation nevertheless proceeded under Clause 21.1(g) of the tender conditions and blacklisted the petitioner on 28.03.2025 for three years.

The central issue was whether the blacklisting was governed by Clause 21.1(g) of the tender document or by Rule 26A of the KTPP Rules. The Court held that the impugned order was an order of blacklisting under the tender clause, not under Rule 26A. On that basis, the Court held that constitution of a Debarment Committee and written recommendations under Rule 26A were not mandatory.

The Court also rejected the challenge based on natural justice. It held that the petitioner had been given a reasonable and effective opportunity through the replacement notices, the show-cause notice, and consideration of its replies. The alleged non-furnishing of the Government Analyst’s report and sample portions by the Drug Inspectorate did not, on the Court’s reasoning, vitiate the Corporation’s contractual action under the tender conditions.

The Court further held that the action was not arbitrary, disproportionate, or procedurally improper. While dismissing the writ petition, it clarified that the order would not prevent the petitioner from pursuing statutory remedies under the Drugs and Cosmetics Act, 1940, including a challenge to the Government Analyst’s report before the competent authority.

Practical takeaway: where a tender clause independently authorises blacklisting, the Court may treat it as distinct from Rule 26A debarment, provided notice and hearing are given.