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Vetindia Pharmaceuticals Limited v. The State of Uttar Pradesh

Civil Appeal · 2020 INSC 639Decided 6 Nov 2020
Civil Appeal No. 3647 of 2020
Justice Rohinton Fali Nariman · Justice Navin Sinha · Justice Krishna Murari

Background

A licensed veterinary medicine manufacturer was blacklisted indefinitely by Uttar Pradesh authorities in 2009 after a batch of its medicine, supplied through an intermediary, was found "misbranded" because the label said "OXYTETRACYCLINE INJ." instead of "OXYTETRACYCLINE HCL INJ.": a printing omission, not a claim that the medicine itself was fake or substandard. The company said it had never even directly supplied the respondents under that tender, and the show-cause notice before blacklisting never actually warned that blacklisting (as opposed to some lesser tender-related action) was being considered. The High Court dismissed the company's challenge solely because it was filed ten years after the blacklisting order, without examining these merits.

Decision Breakdown

The Supreme Court held that a show-cause notice preceding blacklisting must clearly convey that blacklisting itself is under consideration, so the affected party can meaningfully respond, since this notice did not do so, and since the company had no direct supply relationship with the respondents under the tender in question, the blacklisting order was fundamentally flawed from the outset. The Court also held that delay in approaching a writ court is a discretionary, not mandatory, bar, and here the company had continuously pursued the matter with the authorities, who simply failed to respond until a Rajasthan tender rejection finally forced the issue, so the High Court was wrong to dismiss the petition purely on delay. Separately, the Court noted that indefinite blacklisting is disproportionate, with its own precedent suggesting even serious blacklisting should not exceed three to five years. It set aside both the High Court's order and the original 2009 blacklisting order and allowed the appeal in full.

Lesson Learnt

Before any government authority blacklists a business or contractor, it must give clear, specific notice that blacklisting is being considered (not just vague "appropriate action") and give a real chance to respond, and courts will not automatically throw out a delayed legal challenge if the affected party has been actively, continuously pursuing the issue with the authorities in the meantime.

Official source (sci.gov.in)View Judgment (PDF)

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