Supreme Court of India· 03 January 2023

What must a State prove to buy Ayurvedic medicines only from IMPCL?

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

2023 INSC 7 · Civil Appeal No 6693 of 2022

🔖 Save this judgment 🔔 Follow Art. 14 Constitution of India, 1…📬 Get today's judgments

View the original judgment PDFFree to read. To download it — or the LexStreak typeset copy with the headnote and Points of Law — create an account; downloads are part of the Pro plan.

Answer

That exceptional circumstances exist, established by cogent material. A claim resting on surmises and conjectures that IMPCL is the sole producer of quality medicines does not discharge that burden, and procurement confined to IMPCL is then arbitrary and violative of Article 14.

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 30The argument that the procurement of Ayurvedic drugs from IMPCL would fall within the exceptional circumstances (assurance of quality medicines) is erroneous. The submission of the appellant that IMPCL is the sole producer of quality Ayurvedic medicines is based on surmises and conjectures without any cogent material to support the claim.[^15] In fact, the notification of 2 January 2019 issued by the Ministry of AYUSH stipulates that 50 percent of the grant-in-aid has to be used to procure medicines from IMPCL or other Central/State PSUs’ or pharmacies under the State-Governments and co-operatives. It is open to the appellant to procure medicines using any method other than tender, so long as it is not arbitrary. The claim of the appellant is that it deviated from the rule of tender because IMPCL is the only establishment that produces quality medicines. However, there is no material to substantiate the claim that IMPCL is the only establishment which manufactures ‘quality’ medicines to the exclusion of other establishments mentioned in paragraph 4(vi)(b). The appellant has been unable to discharge the burden placed on it by producing cogent material demonstrating that the procurement of medicines through nomination is warranted because of the existence of exceptional circumstances bearing on need for quality. The action of the appellants of procuring medicines only from IMPCL to the exclusion of the other establishments mentioned in paragraph 4(vi)(c) is arbitrary and violative of Article 14 of the Constitution.

Acts & Sections

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

One judgment a day. That's the whole habit.

Read the full text of M/s Indian Medicines Pharmaceuticals Corporation Ltd. v. Kerala Ayurvedic Co-Operative Society Ltd. & Ors. — and get the Supreme Court's output as a five-minute daily read, with plain-language headnotes and the questions each judgment settles.

Create my free account

Free forever plan · 30 seconds · data stays in India

Open the full judgment →

Also decided in this judgment

Can the State award a contract by nomination instead of inviting tenders?Does paragraph 4(vi)(b) of the National AYUSH Mission Guidelines prefer IMPCL over co-operatives?

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