Supreme Court of India· 03 January 2023

Does paragraph 4(vi)(b) of the National AYUSH Mission Guidelines prefer IMPCL over co-operatives?

M/s Indian Medicines Pharmaceuticals Corporation Ltd. v. Kerala Ayurvedic Co-Operative Society Ltd. & Ors.

2023 INSC 7 · Civil Appeal No 6693 of 2022

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Answer

No. The word 'or' places IMPCL, public sector undertakings, pharmacies under State Governments and co-operatives on an equal footing. IMPCL is given no higher standing than the other manufacturing units, and the paragraph creates neither a gradation among them nor a monopoly.

Headnote

Constitution of India, 1950 - Art. 14 - National AYUSH Mission, Operational Guidelines - para 4(vi)(b) - Government contracts - Procurement by nomination - Judicial review - Constitution of India, 1950 - Art. 14 - Government contracts - Expenditure from the public exchequer - Held: Money paid under a government contract comes out of the public exchequer, so the State has no absolute discretion over how it is spent. Every government contract must be tested on the touchstone of Article 14. (¶21) Constitution of India, 1950 - Art. 14 - Tender route - Deviation must be justified - Held further: Inviting tenders is not a constitutional requirement, and a contract may be granted by another method. Any deviation from the tender route must be neither discriminatory nor arbitrary, and the justification must comply with Article 14. (¶22) Operational Guidelines, para 4(vi)(b) - National AYUSH Mission - Sources placed on an equal footing - Held further: The word 'or' in paragraph 4(vi)(b) lists IMPCL alongside public sector undertakings, pharmacies under State Governments and co-operatives, all on an equal footing. IMPCL is given no higher standing, and no gradation or monopoly is created. (¶25) Constitution of India, 1950 - Art. 14 - Procurement by nomination - Burden of cogent material - Held further: A State claiming that one unit alone manufactures quality medicines must discharge that burden by cogent material, not by surmises and conjectures. Procurement confined to IMPCL is arbitrary, and tenders must henceforth be invited absent exceptional circumstances. Appeals dismissed. (¶30, 31)

In the Court's own words

Paragraph 25Thus, the letter which was issued by the Union Ministry of Health and Family Welfare in 1994 stating that Ayurvedic medicines must be procured only from IMPCL is superseded by the latest notification issued by the Ministry of AYUSH in 2019 which stipulates that paragraph 4(vi)(b) of the Operational Guidelines does not differentiate between the units mentioned in the provision. Paragraph 4(vi)(b) does not stipulate that IMPCL will have a higher standing as compared to other manufacturing units of the State Governments and cooperatives mentioned in the paragraph. The position of the Ministry of AYUSH as evidenced by the 2019 notification is that 50 percent of the grant-in-aid shall be used to procure medicines from any of the establishments specified in the paragraph. This conclusion is substantiated by the use of the phrase ‘or’ in paragraph 4(vi)(b) - IMPCL ‘or’ from PSUs’, pharmacies under State Governments and co-operatives. Thus, on a plain reading of paragraph 4(vi)(b), it is evident that all the units mentioned in the paragraph are placed at an equal footing. The provision does not create a gradation amongst the manufacturing units mentioned in the paragraph. Nor does it evince an intent to create a monopoly.

Acts & Sections

Art. 14 Constitution of India, 1950Art. 226 Constitution of India, 1950Art. 136 Constitution of India, 1950

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Also decided in this judgment

Can the State award a contract by nomination instead of inviting tenders?What must a State prove to buy Ayurvedic medicines only from IMPCL?

Plain-language answer prepared by the LexStreak Editorial Desk — verify against the judgment. Source: Supreme Court of India. Corrections