Summary
Uttar Pradesh bought Ayurvedic medicines under the National AYUSH Mission from IMPCL alone, by nomination, without inviting tenders. The Allahabad High Court held this illegal. The Supreme Court agreed. Paragraph 4(vi)(b) of the Mission's Operational Guidelines names IMPCL 'or' other PSUs, State pharmacies and GMP-compliant co-operatives, and places them all on an equal footing. Spending public money must satisfy Article 14. The State may depart from tendering only on cogent proof of exceptional circumstances. Its claim that only IMPCL makes quality medicines rested on surmise. Interventions seeking MSME quotas were dismissed as beyond the scope of the appeal.
Issues
- Whether, under paragraph 4(vi)(b) of the Operational Guidelines of the National AYUSH Mission, the State could procure Ayurvedic medicines solely from IMPCL by nomination without inviting tenders from the other eligible units.
- Whether a government purchase that involves no disposal of State property is exempt from the Article 14 requirement of a fair and transparent procurement process.
Provisions considered
- Article 14, Constitution of IndiaGovernment contracts involve expenditure from the public exchequer and must be tested for non-arbitrariness; tender is the preferred, though not constitutionally mandated, method, and any deviation must be justified as non-discriminatory and non-arbitrary. (¶¶ 14, 15, 16, 17, 19, 20, 21, 22)
- Paragraph 4(vi)(b) and (c), Operational Guidelines of the National AYUSH MissionRead with the Ministry of AYUSH notification of 2 January 2019, which superseded the 1994 letter favouring IMPCL, the paragraph identifies from whom at least 50 percent of medicines are to be bought but creates no gradation or monopoly among the listed units. (¶¶ 10, 12, 23, 24, 25)
Held
- Describing welfare actions of the State as 'largesse' conflates power with duty; and the State does not have absolute discretion in spending public money, so the argument that only an oblique motive could be examined because no State property was being disposed of fails. (¶¶ 11, 21)
- Paragraph 4(vi)(b) prescribes the sources and not the method of procurement, and by its use of 'or' places IMPCL and the PSUs, State pharmacies and co-operatives on an equal footing; the 2019 notification confirms that IMPCL has no higher standing. (¶¶ 12, 25)
- There was no cogent material that IMPCL alone among the listed units makes quality Ayurvedic medicines; the 1994 and 2008 government communications themselves recorded that no method existed to test quality, and the absence of commercial interest claimed for IMPCL applies equally to the other public units, so the State failed to discharge its burden and the nomination was arbitrary and violative of Article 14. (¶¶ 26, 27, 28, 29, 30)
- The State must henceforth buy Ayurvedic medicines through a free and transparent procedure such as tenders among the eligible units, and may procure by nomination only where it shows exceptional circumstances on cogent material. (¶ 31)
- Interventions by a federation of MSME manufacturers seeking a minimum share of procurement under paragraph 4(vi)(c) enlarged the scope of the appeal, which concerned only paragraph 4(vi)(b), and were dismissed leaving the interveners to their own remedies. (¶¶ 33, 34, 35, 36)
Result
Civil Appeal Nos. 6693 and 6694 of 2022 against the Allahabad High Court (Lucknow Bench) judgment dated 18.10.2019 in Writ Petition No. 1364 of 2019 dismissed; IA 9631 of 2020 and IA No. 46786 of 2022 dismissed; pending applications disposed of.