Intas Pharmaceuticals Limited v. State of H.P

It was argued by learned senior counsel that after

23.05.2023, the petitioner did not receive any communication from the respondents-State for a period of 271 days from the last date of bid submission i.e. 23.05.2023 and respondent No.2 addressed a letter dated 19.02.2024 (Annexure P-4) informing the petitioner that the rates quoted by its firm for procurement of medicines as per list enclosed have been 3 ( 2025:HHC:46183 ) found L-1 for four products and the petitioner was called upon to confirm the approved rates. Further, the petitioner was asked to give consent for extension of bid validity period upto award of contract. On receipt of letter dated 19.02.2024 the petitioner addressed an e-mail on 22.03.2024, (Annexure P-5) stating that the validity of its bid had already expired, in view of passage of more than 180 days from the last date of bid submission and, therefore, it is not possible for it to extend the validity of its bid.

The petitioner did not receive any further communication from respondent No.2 for a period of one year, however, on 21.03.2025, respondent No.2 issued impugned order Annexure P-6, stating that the petitioner had not complied with the terms and conditions of the tender document and, therefore, as per decision taken by the State Level Store Purchase Committee in its meeting held on

19.02.2025, the earnest money deposited by it is forfeited and the petitioner is debarred from participating in the tender of the Department of Health and Family Welfare of Govt. of H.P. for a period of three years.

The petitioner after receipt of the impugned order dated 21.03.2025 addressed an e-mail to respondent No.2 on 4 ( 2025:HHC:46183 )

28.03.2025 (Annexure P-7) stating that the validity of bid has expired way beyond 180 days and the petitioner had anticipated that the tender is likely to get cancelled as there was no response at their end. On receipt of the said e-mail, respondent No.2 had addressed a letter dated 10.04.2025 (Annexure P-8) to the petitioner that as per Clause 5(F) of tender document that if the successful bidder fails to sign the agreement and to deposit the performance security as prescribed and scheduled or withdraws its bid within its validity after award of contract, the EMD would be forfeited and the firm would be debarred from participating in the tender of the Department of Health & Family Welfare Government of Himachal Pradesh for a period of three years and thus rejected the representation made by the petitioner.

The petitioner thereafter filed the instant petition and contended that as per condition of the tender document, a period of one year referred by respondent No.2 in the letter dated 10.04.2025 would commence from the issue of the letter is mis-conceived inasmuch as the order impugned is ex-facie, illegal, unfair, unjust, arbitrary and violative of principles of natural justice. 5 ( 2025:HHC:46183 )

The respondents filed reply to the petition and supported its decision. It was submitted in the reply that as per e-tender document for supply of medicines and drugs to H.P. Government Health Institutions was published on

27.04.2023 followed by corrigendum dated 12.05.2023, whereby the last date and time for submission/uploading of e-tender stood extended upto 23.05.2023. During scrutiny of the tender documents for procurements of medicines and drugs held w.e.f. 29.05.2023 to 06.07.2023, a committee was constituted and the committee so constituted recommended that deficient documents submitted by the concerned bidders may be asked to be submitted on or before 26.08.2023. The petitioner, turn, of the communication submitted documents on 25.08.2023. After submission of deficient documents/information by all the bidders, the scrutiny of the technical/deficient technical documents was held on different dates by the constituted committee, which concluded on

16.11.2023. Thereafter it was recommended that the financial bids of the techno-commercial qualified bidders may be opened after getting the prior approval of the Chairman of the Health Procurement Cell. Accordingly, the financial bids were opened on 22.12.2023. 6 ( 2025:HHC:46183 )

Thereafter, as per approval granted in the meeting of the State Level Store Purchase Committee held on

31.01.2024, all firms which had turned out to be the lowest L-1 bidders in respect of various medicines/drugs, including the petitioner firm, were communicated vide letter dated

19.02.2024 (Annexure P-4) with a request to confirm the approved rates on or before 26.02.2024. The petitioner did not respond back within a period of one week i.e. on or before

26.02.2024 and e-mailed after one month on 22.03.2024 (Annexure P-5) conveying that due to certain unavoidable circumstances, it would not like to increase its validity for the quoted bid. Since as per the terms and conditions of the e- tender document, the deficient documents/information was furnished by the petitioner firm on 25.08.2023 continuation of its existing bid and further correspondence dated 19.02.2024 stood made to the petitioner firm well within a period of six months, the respondents have rightly passed the order to forfeit the security amount and further debar it to participate in the e-tender process for a period of three years, as per office order dated 21.03.2025.

Learned senior counsel for the petitioner has vehemently argued that as per terms of the tender 7 ( 2025:HHC:46183 ) documents, the validity of the bid was for a period of 180 days from the last date of bid submission and since no decision was taken by the respondents within 180 days from

23.05.2023, the action of forfeiture of the earnest money is illegal, arbitrary and unjust. At this stage, it is relevant to quote Clause 2 of the tender document, which reads as under:- "2. TENDER VALIDITY A. Each Bid shall remain valid for a period of 180 days from the last date of bid submission (excluding the last date of bid submission). A Bid valid for a shorter period shall be rejected as being non- responsive.”

A perusal of Clause 2 clearly envisages that each bid shall remain valid for a period of 180 days from the last date of bid submission (excluding the last date of bid submission). As per pleadings, the last date of submission of bid document was 23.05.2025, after issuance of corrigendum and since no action was taken by the respondents within 180 days, the action to forfeit the amount and further debar the petitioner is illegal, arbitrary and unjust. Once Clause 2 specifically provides that each bid shall be valid for a period of 180 days from the last date of bid submission, which admittedly, was on 23.05.2023, the action on the part of the respondents to forfeit the amount is unjust and arbitrary. 8 ( 2025:HHC:46183 )

Learned Additional Advocate General has vehemently argued that as per Clause 5(F) of the tender document, if the successful bidder fails to sign the agreement and to deposit the performance security as prescribed and scheduled or withdraws its bid within its validity after award of contract, the EMD will be forfeited and the successful bidder will be debarred from participation in the tender of the Department. Since the petitioner had failed to deposit the performance security, the respondents had rightly passed the order to forfeit the amount of earnest money deposited by the petitioner firm.

The contention raised by the counsel for the respondents-State that since the petitioner had submitted the deficient documents on 25.08.2023 as per the specified date fixed on 26.08.2023 which was the cut of date, the period of 180 days will start the said date cannot be countenanced in view of the clear law that the parties are governed by the terms and conditions of the tender documents. The perusal of the tender document clear reveals that the period will start from the last date of bid submission (excluding the last date of bid submission). Admittedly in the present case, the last date of bid submission was 23.05.2023 9 ( 2025:HHC:46183 ) and the period of 180 days was expired on 24.11.2023. The respondents did not take any decision before 24.11.2023 and thus, the contention raised by the counsel respondents-State that the period is to start from the receipt of deficient document on 25.08.2023 is ill founded and is rejected.

Learned Additional Advocate General has vehemently argued that since the petitioner firm has failed to confirm the approved rates as per letter dated 19.02.2024 (Annexure P-4) within a period of one week, the respondents were right in passing the impugned order.

As already discussed above, once Clause 2 of the tender document clearly envisages that the bid shall be valid for a period of 180 days from the last date of bid submission which was 23.05.2023 and said period expired on

24.11.2023. If the respondents could not finalize the same on or before 24.11.2023, the petitioner was not under any obligation to extend the validity period of bid by him. Thus, the impugned order passed is not sustainable. The impugned order dated 21.03.2025 has been passed almost after one year after receipt of the communication dated 22.03.2024 (Annexure P-5) written by the petitioner, when it had 10 ( 2025:HHC:46183 ) conveyed that the firm due to unavoidable circumstances would not like to increase the validity of the bid. This aspect has also not been examined by the respondents before passing the impugned order and thus, the impugned order is illegal, arbitrary and unjust and as such not sustainable.

So far as the order debarring the petitioner to participate in the tender of the Department of Health & Family Welfare Government of Himachal Pradesh for a period of three years is concerned, it cannot stand for the simple reason that passing the impugned order, which is punitive in nature and had civil/evil consequences, no specific notice proposing such punishment had been issued which was mandatory, in view of the law laid down by the Hon’ble Apex Court in Gorkha Security Services vs. Govt. of NCT of Delhi, AIR 2014 SC 3371, wherein, it has been held that any order which has civil and evil consequences, the principles of natural justice have to be adhered to and further the rule of Audi Alteram Partem has to be considered. The relevant paras of the said judgments read as under:- “17. It is a common case of the parties that the blacklisting has to be preceded by a show cause notice. Law in this regard is firmly grounded and does not even demand much amplification.

Blacklisting has the effect of preventing a the privilege and advantage of person entering Government for purposes of gains. The fact that a disability is created by the order of blacklisting relationship with lawful 12 ( 2025:HHC:46183 ) indicates that the relevant authority is to have an objective satisfaction. Fundamentals of fair play require that the person concerned should be given an opportunity to represent his case before he is put on the blacklist”.