Prithvi Nath Koul vs State of Jammu & Kashmir

(1) The petitioner who is the sole proprietor of the firm styled as CAULSON Laboratories Pharmaceutical Manufacturers Jammu prays for

issuance of an appropriate writ, order, or direction enjoining the respondent No. 1 to withdraw the directions contained in Under Secretary to

Government, Jammu and Kashmir, Health Departments Letter No. 5 Gen/P/65 dated 681968/2081968 to the Director Health Service and to give

wide publicity to this withdrawal. The letter reads :

It has been found that the firm ""Caulson Laboratories, Jammu, has not been functioning on scientific lines in respect of manufacture of drugs as

required under Law. The department cannot take any legal action against the firm till Drugs Act is enforced properly. In the meanwhile I am

directed to inform you that necessary instructions may please be issued to various instructions of the department that no purchases be made from

the firm until and unless the firm fully satisfies the Government that all the defects have been removed. The circular to be issued in this behalf be

given wide publicity so that Private Medical Shop Keepers and Practitioners also take due precautions.

(2) The petitioner has alleged that the Drug Controller, Jammu and Kashmir State granted him a Drug manufacturing license on 27101966 after

thorough inspection of his Laboratory and after: satisfying himself that the laboratory was fully equipped with modern appliance and necessary

technical staff for the manufacture of drugs, that the petitioner made honest effort to provide the State with pharmaceutical manufacturing factory in

private sector with the aim of producing drugs of the highest quality, that the Director Health ServicecumDrug Controller after being fully convinced

about the quality of the drugs manufactured by the petitioner was pleased to issue Circular No. PS7165/31/16955100 dated 381967 directing all

his subordinate officers to bring the petitioner's laboratory i. e. 'Caulson Lab' on the list of original manufactures and to consider its rates as per

rules and instructions on the subject, that the respondent No. 1 vide its Notification dated 841966 has made it obligatory for all the Government

Health Centres and Government Hospitals to purchase drugs, instruments, hospital equipment etc from the original manufactures, so that by

establishing an upto date fully equipped laboratory, the petitioner was successful in introducing some drugs of high quality as per pharmacopoeia

and that too on reasonable rates, that the action of the petitioner was not hailed by some original manufacturers of the State including the Drug

Research Laboratory, that the said manufacturers, therefore hatched up a conspiracy and started devising ways and means of killing the petitioner's

manufacturing concern which offered to the Medical Department Glucose Saline and solutions at much cheaper rates than these at which the

supplies of the stuffs were made by the Drug Research Laboratory, that the drugs manufactured at the petitioner's laboratory specially the Glucose

Saline and solutions were purchased in huge bulks by the Medical Departments of the State, that whereas efficacy of the drugs manufactured by

the petitioner was appreciated and testimonials of appreciation were issued in his. favour various complaints were lodged by hospitals of the State

alleging that Glucose Saline and Solutions supplied by the Drug Research Laboratory were unfit for use and contained foreign matter including

fungus and their administration had been found to produce adverse reaction, that due to these unscientific preparations of the drugs the

Superintendents of S M. G S. Hospital, Jammu and of the S. M G. S. Hospital, Srinagar, directed the Director, Drug Research Laboratory,

respondent No. 2 to life back these drugs from the stores and warned him not to supply such drugs in future that this being another nail in the coffin

of the Drug Research Laboratory, it used all means to spoil the good name built by the petitioner both in the general market as also in the Medical

Department of the State, that the petitioner made representation to the Director Health Services that in spite of the higher prices quoted by

respondent No. 2 the drugs were still being purchased from him and not from the petitioner whose prices were lower and quality superior than

those of respondent No. 2 and other manufactures, that this kind of complaint was specially made against the Superintendent of S. M. G. S.

Hospital Jammu, respondent No. 3 herein who usually purchased drugs from respondent No. 2 knowing full well that the prices quoted by the

petitioner were lower, that these representations made respondent No. 2 and 3 to join hands for wreaking vengeance against the petitioner that in

pursuance of the conspiracy respondent No. 3 inspected the petitioner's laboratory in the month of February, 1968 and submitted a report unduly

castigating the laboratory, that the action of the Superintendent was in contravention of the provisions of the Drug Act and the rules made there

under, that the respondent No 1 had no authority to .direct the Superintendent to inspect petitioner's Labortary, that pursuant to section 17 of the

Drug Act 2009, the Government had by its Notification dated 10 ^1969, already appointed Drug Controller and Assistant Drug Controller to be

the inspectors for the purposes of Chapter IV of the Jammu and Kashmir Drugs Act, 2000, that in view of the notification the Superintendent S.

M. G. S. Hospital, Jammu had no authority to inspect the petitioner's laboratory, that immediately after the inspection by the said Superintendent

the petitioner made representation to respondent No. 1 bringing to its notice the illegal act of the Superintendent and requesting it to send a proper

team of men in accordance with the Drugs Act and the rules made there under to examine and verify the Correctness and authenticity of the report

submitted by the Superintendent but to no purpose and instead of the Under Secretary to Government, Heath Department, addressed the

aforesaid communication to the Director Health Service, that the said order from Under Secretary to Government to the Director Health Services

was illegal and improper and without jurisdiction and was the cumulative effect of the representations made by the petitioner from time to time

against the officials of the Medical Department about their abuse of power high handedness and the violations of the standing orders of the

Government, that the officers of the Medical Department in collusion with the Director Drug Research Laboratory created an atmosphere of

animosity against the petitioner in order to harm him, that the petitioner is a distributor of many pharmaceutical concerns working in the country and

used to submit tenders on behalf of his principal for the supply of the drugs but these tenders were now being returned to him on the basis of the

instructions issued by the Director Health Services, that as a result of the aforesaid communication of the Under Secretary to Government Health

Department to the Director Health Services and its dissemination by the department the petitioner's business has come to stand still, that in spite of

his request copies of the report of Dr. William Riberie and others have not been made available to him, that the Drug Act came into force in State

from October, 1967 and if the petitioner's products were not upto the mark the respondents should have taken legal action against him under the

Act instead of resorting to the impugned malafide action, that by issuing the aforesaid directions to the Director Health Services the respondent No.

1 had violated his (petitioner's) fundamental rights under Articles 14, 16 and 19 of the Constitution of India as applied to the State.

(3) The petitioner has been resisted by the respondents averring interalia that the petitioner was granted license under the Jammu and Kashmir

Drugs Act. Samvat 2000, although he did not completely fulfil the requirements prescribed by law, that the Glucose Saline and other medicines

manufactured by the petitioner are neither of standard quality nor are they manufactured and tested according to hygienic and scientific conditions

prescribed by law and accordingly the use of such medicines would be highly dangerous to human lives, that foreign matter observed or supported

in Glucose Saline bottles supplied by respondent No. 2 was due to had strange arguments, that in order to verify the complaint received from Dr.

Ganapathi, Director Drug Research Laboratories, Jammu about the working of M/S Caulson Laboratories. Gandhi Nagar, Jammu the

Government directed Dr. T. Malla, Deputy Director, Health S3rvices and Dr. William Ribert the Superintendent S, M. G. S. Hospital, Jammu to

make an on spot inspection of the said laboratories and to make a report about their working and that Dr. Malla and Dr. William Riberie

accordingly inspected the said Laboratories separately and submitted their reports. The respondents have also denied the allegations of abuse of

power and malafides in issuing the aforesaid directions contained in Under Secretary to Government Health Department's letter No. 5 Gen/P/65

dated 681968. In the course of his affidavit Dr. William Riberia, Superintendent S. M. G S. Hospital, Jammu, reiterated that the drugs manufacture

by the petitioner were not of standard quality nor were they prepared under legally prescribed hygienic and scientific conditions and as such even if

these medicines were cheaper their use was dangerous to human lives, that before inspection the laboratories of the petitioners as desecrated by

respondent No. 1 the deputed Dr Farooq Quershi M B.B S. the then Assistant Surgeon S M G. S. Hospital Jammu and Dr. S.C. Ray MB.BS, Ph

D, the then Pathelogist General Laboratory S. M. G, S. Hospital Jammu to inspect the petitioner's laboratory and to make a preliminary report

which they did on 1321961, that to verify this report he inspected (the laboratory & submitted his report which was, true, impartial) and correct

according to the state of affairs, observed by him on spot and that it was in pursuance of the Government directive and of the facts that Drug

Research Laboratory Jammu was a Government concern and its products conformed to the hygienic and scientific standards prescribed by law

and the army authorities also got their supplies of drugs and medicines from the said laboratory that he continued to have the supplies from it.

(4) Appearing for the petitioner Shri J. N. Bhat has urged that the petitioner has a right to enter into advantageous relationship with and to supply

his products to the Government and since the directions contained in the Under Secretary to Government Health Department's aforesaid letter are

attended with serious consequences to his trade and business reputation they should not have been issued without giving him i. e. the petitioner an

opportunity of being heard. He has accordingly contended that the directions are violarive of principles of natural justice He has further submitted

that the fundamental rights of the petitioner under Articles 14,16 and 19 of the Constitution of India as applied to the State of Jammu and Kashmir

have also been violated.

(5) Mr, Amar Chand, Additional Advocate General, has on the other hand submitted that there is no question of violation of principles of natural

justice or of any fundamental right of the petitioner. He has further submitted that the Government is free to purchase the commodities it requires

specially the drugs and medicines which are required by it for eradication of the disease from any source it likes and if it is not willing to enter into

business relations with the petitioner, it cannot be forced to do so'.

(6) I have given my earnest consideration to the submissions made by the learned counsel for the parties and I am of the opinion that there is no

merit in this petition.

(7) The opportunity to enter into advantageous relationship with the Government is nothing but a privilege and the denial of this privilege cannot be

challenged in a writ petition.

(8) It is now well settled that the Government has a right to have business relation with any person it likes and although a citizen has a fundamental

right to carry on any trade, business or profession, he has no right fundamental or otherwise to compel the Government to enter into business

relations with him. In K. Bhaskaram v. State of Kerala AIR 1958 Kerala, 333 where the Government refused to deal with a black list contractor,

Menon J. Spraking for the Bench said :

We are unable to see any fundamental or other right to compete for a Government contract or to obtain the same. As stated in Vedachala

Mudaliar V. Divisional Engineer, Highways, Saidapet, Madras AIR 1955 Madras, 365 (A) a citizen of India ""undoubtedly has a fundamental right

to carry on a trade or business, but he has no fundamental right to insist upon the Government or any other individual doing business with him. The

Government as well as any individual has got a right to enter or not into a contract with a particular person.

(9) In C. K. Achutan v. The State of Kerala and others, AIR 1959 Supreme Court, 490, where the petitioner's contract for supply of milk to the

Government hospital at Tannanere (Kerala State) was cancelled by the District Medical Officer and given to the Cooperative Society it was

observed i

*'The gist of the present matter is the breach if any, of the contract said to have been given to the petitioner has been cancelled either for good or

for bad reasons. There is no discrimination, because it is perfectly open to the Government even as it is to a private party, to choose a person to

their liking to fulfil contracts which they wish to be performed. When one person is chosen rather than another, the aggrieved party cannot claim the

protection of Art. 14 because the choice of the person to fulfil a particular contract must be left to the Government. Similarly a contract which is

held from Government stands on no different footing from a private party. The breach of the contract if any, may entitle the person aggrieved to sue

for damages or in appropriate cases, even specific performance but he cannot complain that there has been a deprivation of the right to practise

any profession or to carry on any occupation trade or business such as is contemplated by Art. 19 (1) (g). Nor has it been shown how Art. 31 of

the Constitution may be invoked to prevent cancellation of a contract in exercise of powers conferred by one of the terms of the contract itself.

The main contention of the petitioner before us was thus under Act. 16 (1) of Constitution and he claimed equal opportunity of employment under

the State. To begin with a contract for the supply of goods is not contract of employment in the sense in which that work has been used in the

Article. The petitioner was not to be employed as a servant to fetch milk on behalf of the institution but was a contract for supplying the articles on

payment of price. He claimed to have been given a contract for supplying of milk and did not claim to be an employee of the State. Article 16 (1)

of the Constitution, both in its terms and in the collection of the words indicates that it is confined to ""employment"" by the State and has reference

to employment in service rather than as contractors. Of course there may be cases in which the contract may include within itself an element of

service. In the present case, however, such a consideration does not arise and it is, therefore, not necessary for us to examine whether these cases

are covered by the said Article. But it is clear that every person whose offer to perform a contract of supply is refused or whose contract for such

supply is breached cannot be said to have been denied equal opportunity of employment and it is to this matter that this case is confined.

Looking to the facts of the case, it is manifest that the petitioner was supplying or in other words, selling milk and 01 her articles of diet to the State

for the use of hospitals and similar institution, He was in no sense a servant and no question of employment qua servant arose. In these

circumstances, it is plain that Art. 16 (1) of the Constitution is not attracted to the facts.

In our opinion, the petition under Art, 32 of the Constitution is wholly misconceived. No fundamental right is invoked. At best it is a right to take

the matter to the civil court, if so advised and to claim damages for breach of contract, if any.

In Punnen Thomas V. State of Kerala, AIR 1969 Kerala 81 (FB) where the Government put two tenders on black list, as they were alleged to

have committed irregularities in execution of forest contractors resulting in loss to the Government and debarred them from taking any Government

work for next then year, it was observed as follows '

The impugned order, it seems to us is no more than a direction by the Government to its subordinates not to give any contracts to the petitioner

and it is we apprehend the use of vivid expressions like 'blacklist"" and ""debar""' in such orders savouring as they do of punishment and of

deprivation of legal rights and the references to such orders as decisions suggestive of an element of adjudication which, in fact, there is not that

give rise to contentions like the present, in our view unfounded invoking the principles of natural justice and the fundamental rights in Articles 14, 16

and 19 of the Constitution. Subject to any limitations that might be imposed by statute and in this case no such limitation is pleaded the law does

not deny is the Government the freedom of contract (carrying with it the freedom not to enter into a contract it vouchasafes to every person. And

subject to any such limitation, Government like any private party is free to treat with whom it pleased. It is free, if it so pleased not to treat with any

particular person or any or for reason what so ever.........

A mere refusal to afford a man the prospect of doing profitable or unprofitable business with the Government of of entering into advantageous

relationship with the Government as it has seen put entails no civil consequences however serious a blow that might be to the person concerned. If

a man's principal business is .taking up Government contracts such a refusal might have the consequence of' depriving him of that particular mode

of earning a living. But so might a like refusal by a private party. It is not difficult to conceive of a company or other private party having a

monopoly of a particular kind of business in a particular area and the refusal of such a private party to do business with a particular person engaged

in that particular line might have the effect of depriving that person of that particular means of earning a living. But no one would say that any

principle of natural justice can be invoked in such a case Why then should it be invoked when the party refusing to do business is the Government

unless Article, 14 be attracted ? And how can Article 14 be attracted or any complaint by a person provoke judicial interference, unless some

legal right of his is affected ?

(11) The following observations made by the Supreme Court of the United States in the decision reported in Perkins v Likens Steel Col (1939)

310 US 113 are also opposite :

Like private individuals and businesses the Government enjoys the unrestricted power to produce its own supplies, to determine these with it will

deal and to fix the terms and conditions upon which it will make needed purchases,

X X X X X

Judicial restraint of those who administer the Government's purchasing would constitute a break with settled judicial practice and a departure into

fields hitherto wisely and happy apportioned by the genius of our polity to the administration of another branch of Government..........

x x x x x

The case before us makes it fitting to remember that the interference of the courts with the performance of the ordinary duties of the executive

departments of the Government would be productive of nothing but mischief and we are quite satisfied that such a power was never intended to be

given to them.

(12) The petitioner has also complained that the impugned directions contain imputations against the petitioner and are injurious to his business

reputation. It may be open to the petitioner to sue the Government for damages for the alleged wrong but the remedy by way of writ petition

appears to me to be misconceived. He cannot, in my opinion, maintain the petition for compelling the Government to withdraw the administrative

directions which the Government has considered fit to issue to its subordinates in the interests of the well being of the community. A contention

similar to the one advanced in this case by the learned counsel for the petitioner was advanced in Punan Thomas v State of Kerala (Supra) where

the learned Judges constituting the Full Bench observed.

It is said that the impugned order casts a stigma on the petitioner............ The question whether an impugned act involves a stigma or not is

relevant only for the purpose of determining whether the act sounds only in the region of contract or involves a punishment attracting the rules of

natural justice or statutory provisions such as Article 311 of the Constitution embodying such rules.

It is said that the reason given in the order for blacklisting the petitioner namely, that he had committed irregularities in connection with some tender

with resultant loss to the Government is defamatory It is difficult to understand how such a Communication by the Government to one of its

subordinates for the purpose of protecting its own interests can amount to defamation But even if it does, it is quite obvious that the petitioner

remedy does not lie in Article 226 of the Constitution. Moreover what the petitioner seeks to set aside is the debarment and not the reasons given

therefore and if the debarment cannot in any circumstances affect his civil rights he can make no complaint against it on the ground that the reasons

were not reached by the judicial process.

It is but proper that even a purely administrative order, involving not the least element of adjudication should be reasonable and judicious But that is

not to say that the reasons must be reached by the judicial process Can face the clear light of day and that all other means of reaching a conclusion

are necessarily benighted. Supposing the impugned order gave no reason at all, could the petitioner's complaint be entertained unless some civil

right of his were threatened. Why should he be in a better position because the order gives reasons, reasons which according to him affect his

reputation.'

(12) There can also be no question of violation of principles of natural justice in a matter of administrative nature of the present kind. In Nagendra

Nath Bora V. Comrnr, of Hills Division and Appeals Assam, AIR 1958 SC 398, which was quoted with approval by their Lordships of the

Supreme Court in the State of Jammu and Kashmir and others. Vs Bakshi Ghulam Mohammad and another, AIR 1967 SC 122, it was held :

The rules of natural justice vary with the varying Constitution of statutory bodies and the rules, prescribed by the Act under which they function

and the question whether or not any rules of natural justice had been Contravened should be decided not under any preconceived notions but in

the light of the statutory rules and provisions.

That the rules of natural justice cannot be invoked in cases of the present kind will also be clear from a perusal of the following passage in Bunna

Thomas V. State of Kerala. (Supra)

Assuming that it does (i. e. it Casts a stigma) does that by itself attract the principle of natural justice ? We think not......

Supposing a police officer were to give as a reason for arresting a person that the man was drunk and disorderly. Surely the statement that he was

drunk and disorderly would affect his reputation and what is more unlike as in the present case, the arrest would clearly involve civil consequences

But could the arrest be denounced as unlawful and could the police officer be exposed to action civil or criminal merely because he had reached

the conclusion that the man was drunk and disorderly without observing the rule of audialteram partem ?

To accept the contention of the petitioner would so widen the scope of the principle of audialteram partem and therefore the scope for judicial

reference as to seriously hamper the administration. It would, mean for example that before , Government refuses to deal with a person because he

is not solvent or declines to employ a person because he is medically unfit or otherwise unqualified or abolishes a post with the result that some

body is thrown out of office, or instructs its subordinates or agents not to buy goods from a particular source because previous supplies by that

source were unsatisfactory, it would have to give the person concerned a hearing.

For the foregoing reasons, I don't find any substance in the contentions of the learned counsel for the petitioner. The petition, therefore, failsand is

hereby dismissed but in the circumstance of the case without any order as to costs.