Holding

The Supreme Court held that the High Court's directions were unwarranted and beyond its jurisdiction, but the appeal was dismissed as infructuous due to the long lapse of time.

Summary

The case arose from a writ petition before the Madhya Pradesh High Court alleging arbitrariness in the award of a contract for the purchase of intravenous fluids, where the appellant, Hindustan Antibiotics Ltd., was accused of supplying sub‑standard fluids containing fungus. The High Court, upon finding letters indicating the presence of fungus, issued directions for the State Government to prosecute officials of the appellant and to investigate the alleged false affidavits. The appellant challenged these directions, arguing that the High Court exceeded its jurisdiction, violated principles of natural justice by not issuing a notice, and that such matters were beyond the scope of a private contract dispute. The Supreme Court held that the High Court's directions were indeed unwarranted and beyond its jurisdiction, but observed that the appeal had become infructuous due to an eleven‑year lapse without any action by the State. Consequently, the appeal was disposed of without any order as to costs, emphasizing the limits of judicial dynamism despite the court's social duty.

Issues considered

Whether the High Court exceeded its jurisdiction by directing prosecution of government officials in a contract dispute.
Whether the High Court violated principles of natural justice by issuing directions without notice or an opportunity to be heard.
Whether courts may exercise judicial activism in matters of public health and social interest arising from a private dispute.
Whether the appeal is infructuous due to the lapse of time and inaction by the State.

Legislation cited

Constitution of Indias. Article 226, s. Article 299

Subjects

arbitrarinessjudicial activismhigh court jurisdictionsub‑standard drugsprosecutionpublic interestlapse of timeinfructuous appeal

Judgment

MIS. HINDUSTAN ANTIBIOTICS LTD. ETC. A
v.
MIS. PARENTERAL DRUGS (INDIA) PVT. LTD. ETC.

NOVEMBER 22, 2000

[U.C. BANERJEE AND K.G. BALAKRISHNAN, JJ.] B

...
Constitution of India, I Y50

Arlie/es 226 and 299-High Court Power lo issue appropriale
directions relaling to social problems though /is be/ween parties may not C
warrant such conclusion-Writ petition before High Court al/eging arbitrmy
aclion in matter of award of co/1/ract for purchase of drugs from Government
Undertakings-High Co>1rt noticing that Government Undertaking appeared
10 have supplied I. V. Fluids containing fungus and Government officials
sweared false affidavits-Issuance of notices to officials filing false affidavits D
and directions to State Government to prosecute persons responsible for
supplying sub-standard I. V. Fluids--Judgment of High Court challenged
contending that High Court transgressed its limits in the matter of exercise
ofjurisdiction-Held, though the directions are total~v unwarranted and
judicial dynamism has also its limits to warra/1/ exercise of jurisdiction, but
since the law courts have a social duty, issuance of appropriate directions E
for an inquiry would not be who//y zmwarranted-However, the State did not
take any steps prior to obtaining stay, and by reason of long lapse of time
appeal has become infructuous.

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 3925 of 1990.
F
From the Judgment and Order dated 5.4.90 of the Madhya Pradesh High
Court in Misc. P. No. 1012 of 1989.

WITH

Civil Appeal No. 3926 of 1990. G

A.K. Ganguli, A. Mariarputham, Aruna Mathur, Anurag D. Mathur.
Sakesh Kumar, S.K. Agnihotri and R.P. Wadhwani for the appearing parties.

The following Order of the Court was delivered :
19
H
20 SUPREME COURT REPORTS [2000] SUPP. 5 S.C.R.

A:< Civil Appeal No. 392511990. The appellant - Mis. Hindustan Antibiotics
Ltd., a Government of India Undertaking, is in appeal against the impugned
judgment of the Madhya Pradesh High Court and the principal grievance
being a direction to the State Government to launch prosecution against the
officers of the appellant-company for supplying sub-standard I.V. Fluids.
B There exists no manner of doubt that (. V. Fluids being a life saving drug need
to contain the specification and any foreign element found therein ought to
be taken note of rather seriously and as such at the first blush this court was
of the view that no interference ought to be had, though Mr. Ganguli contended
that the High Court has, in fact, transgressed its limits in the matter of exercise
of jurisdiction and it is on this score further that the Court was invited to go
C into the matter in some greater detail.

Mr. Ganguli contended that as a matter of fact and admittedly the core
question that fell for consideration before the High Court was whether
Government possesses absolute discretion to confer any benefit on any one
or should that be regulated by some norms'. Mr. Ganguli contended that
D question of sub-standard goods did not fall for consideration before the High
Court; neicher the High Court was otherwise within its jurisdiction to express
any opinion in regard thereto. The opinion so expressed cannot, thus,
Mr. Ganguli contended, but be termed to be obiter. Mr. Ganguli further
contended that in any event the direction as contained in the judgment under
E appeal, cannot be termed to be otherwise in accordance with the norms and
principles of law and there is existing a definite violation of the principles of
natural justice since no notice was issued neither any explanation was asked
for and without any even submission being made in regard thereto, an order
has been passed by the High Court condemning the supplies of the government
undertaking.
F
From a perusal of the judgment we find some credence to Mr. Ganguli's
submission since the judgment itself records the admitted set of facts to the
effect that Mis. Parenteral Drugs (India) P. Ltd. being the writ petitioner is
regular manufacturer of drugs and the respondent Nos. I to 3 purchased
G drugs, medicines and other items alike materials including intravenous fluids
for consumption in various hospitals in the State. The State Government,
however, in order to afford protection to small scale industries in the State
issued a Circular dated 9. I I .1976 granting 10% price preference to small scale
industries in the State. The policy of the Government as depicted therein in
the matter of purchase of drugs has been that the same ought to be purchased
H from the government undertakings and that being the issue and core question
HINDUSTAN ANTIBIOTICS v. PARENTERAL DRUGS (INDIA) PVT. LTD. 21

before the Court, it was in this sphere the arbitrariness had been recorded. A
After the hearing was concluded the Bench however, thought it fit to require
the production of the files as regards the award of contract to Hindustan
Antibiotics and it was on the perusal of the files that two letters were
discovered in the files wherefrom it appeared that there was a supply of 1.V.
Fluids by Hindustan Antibiotics-appellant herein containing fungus and it B
was on the basis thereof the High Court felt that the officials of the government

- undertaking ought to be punished and prosecution ought to be launched.
Severe criticism has been levelled against the government officials for swearing
affidavits which are not true to its contents and prosecutions have been
directed on that score as well.

Mr. Ganguli in support of the appeal on the basis of the facts above
c
contended that law would not countenance such a state of judicial approval
in the country and question of any prosecution without even a show cause
notice or even without affording an opportunity to file an affidavit in the
)
matter, would not arise. Mr. Ganguli further contended that the matter in
dispute is not in issue and the issue before the Court was rather specific as D
regards the arbitrary action in the matter of award of contract which would
otherwise not entail the consequences of initiation of a prosecution.

Incidentally, be it noted that the policy in the matter of award of
contracts in favour of the government undertakings now stand changed and
in fact the policy has been to recognise the small scale units and on the wake E
of the aforesaid question of there being any further arbitrary action would not
arise. As such neither the State Government nor the appellant is inclined to
proceed with the appeal excepting however for the directions as contained in
paragraphs 41, 42 and 43 of the Judgment. Paragraphs 41, 42 and 43 so far
as relevant for our purposes are set out herein :- F
"41.. ...... Keeping aside these two aspects for a while, a case for
wilful suppression of material facts, and knowingly swearing a false
affidavit, concealing vital facts, is made out against the respondents
1, 2, 3 and 4. Let notices be issued, calling upon each one of them
to show cause as to why they should not be ordered to be prosecuted G
for knowingly swearing false affidavits. Notices be made returnable
within three weeks.

42. As for drug offences, the State is directed to prosecute the
respondent No. 4, its agents and/or servants concerned in accordance
with law for supplying sub standard l.V. Fluids. H·
22 Sl'PRE:vtF COlcRT REPORTS 1200UJ SUPP. 5 S.C.R.

A 43. Uncertainty as to the quality of the product is perhaps more
intens~ in medicine than any other commodity and added to it is the
consumer's- -the patients Jack of information. One of the most
significant aspects of monopolisy health services and medical care
unlike other services, are its expensive components, controlled by the
physician's decision making process, where the patient or consumer
B has no role, yet to have a very high level of trust, in, and acceptance
of physician's role. It is this trust of the patient, which has been
breached with impunity by the respondents, who created a monopoly
in supply of poor quality drugs at premium rates, that too in the name
of public-interest, little realising that human life has no spare, who has
C benefited by such conduct, is a matter of investigation, but it was
certainly a case exposing the poor patient, to all sorts or risks and
hazards of medication, as well as the unhygenic conditions in which
the l.V. Fluids supplied by the H.A.L. were stocked. What is worst is
that all this goes on in the name of 'public interest'. It is time that the
respondents, the Directors of Health Services and Medical Education (

D learn a bit of grammar of public-interest and welfare economics of
medical care rather than in indulging pure mathematics thereof. It calls
for a thorough investigation and respondent State is directed to get •
the matter investigated and proceed against all those involved and
concerned in accordance with law."
E
Admittedly neither of parties came to court with a case of the nature
as has been depicted above. While it is true that the observations of the
Court as the one noticed above, are not as strictly warranted in the facts but
one need not fail to appreciate that the Jaw courts exist for the society and
in the event of there being any social problem it would be well within the
F domain of the law court to take such step or steps as they may deem fit and
appropriate and this is so in spite of the fact that the !is between the parties
does not warrant such a conclusion. But in the matter in issue by reason of
the long lapse of time the whole exercise has become totally infructuous :
Eleven years have passed and the State however has not taken any steps in
G terms thereof prior to the obtaining the order of stay from this Court.

On the wake of the facts as above and by reason of the expiry of such
a long lapse of time this appeal has become infructuous. We do however
deem it expedient to record that while it is true that the directions as above,
are totally unwarranted and judicial dynamism has also its limits to warrant
H exercise of jurisdiction to the extent as above, but since the law courts are
HINDUSTAN ANTIBIOTICS v. PARENTERAL DRUGS (INDIA) PVT. LTD. 23
having a social duty, issuance of appropriate directions for an enquiry would A
not be wholly unwarranted. The appeal is disposed of accordingly. No order
as to costs.

Civil Appeal No. 392611990. This appeal is disposed of in terms of the
order passed in civil appeal No. 3925/1990. No order as to costs.
B
RP. Appeals disposed of.