“REPORTABLE”

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.   3977     OF 2010 (ARISING OUT OF SLP (C) NO. 13953 OF 2009)

Indian Drugs & Pharmaceutical Ltd. … Appellant

Versus

Famy Care & Ors.  … Respondents

J U D G M E N T

V.S. SIRPURKAR, J.

1. Leave granted.

2. In this appeal, the appellant Indian Drugs & Pharmaceutical Ltd.  (IDPL)  

challenges the judgment of Delhi  High Court whereby the Writ  Petition filed by  

respondent, Famy Care and another was allowed.  The High Court passed the  

following operative order while allowing the writ petition:

“We quash the Rate Contract No. S-140013/4/2008-OP/100 dated 2nd December,  2008 awarded by respondent No.1 in favour of IDPL, respondent No.2 herein, to  the extent that it awards 175 lakhs cycles of other OCP brands apart from Mala-D  in the abovestated quantity of 25 lakhs cycles.  The writ petition is partly allowed in  the aforesaid terms.”

3. The respondent,  Famy Care Company is  engaged in  the business of  

manufacture and supply of family planning products including Oral Contraceptives  

Pills (hereinafter “OCPs”).  They have been supplying these OCPs to the Union of  

India.  Respondent Nos. 1 and 2 distribute these OCPs under the family welfare

programmes  by  Union  of  India  (respondent  No.3)  free  of  cost  and/or  at  

substantially subsidized rates.  It was claimed in the petition that for OCPs in India,  

almost  85-90%  of  the  market  is  only  through  family  welfare  programmes  of  

respondent  No.3.   Respondent  No.3 used to  procure the OCPs through open  

tender where all  companies who fulfilled the eligibility criteria were permitted to  

participate.  Tender was invited for the supply of OCPs on 14.03.2005 and a rate  

contract was awarded to various parties including Famy Care Ltd. on 18.10.2005,  

initially for the period of two years which was subsequently extended for another  

year, till 17.10.2008.   

4. One  open  tender  was  floated  on  18.09.2008  by  the  Union  of  India  

(respondent No.3) and for  that,  notice inviting tender was published in various  

newspapers.  Following were the requirements:

S. No. Items Unit Tentative  Quantify  required  during  2008-2009

1. Condoms Million Pcs. 663 2. Oral  Contraceptive  

Pills Lakh Cycles 275

3. IUD Cu-T 380 A Lakh Pcs. 25 4. Emergency  

Contraceptive Pills Lakh Packs of  2 Pills

5.5

5. The  date  of  sale  of  tender  inquiry document  was from 24.09.2008 to  

05.11.2008.  The respondent companies herein were desirous of participating in  

the tender.  On being unable to download the tender inquiry document, respondent  

Nos.1  and  2  wrote  letters  to  the  Union  of  India  (respondent  No.3  herein)  on  

29.09.2008 requesting respondent No. 3 to issue the tender inquiry documents.  

However, it is claimed in the Writ Petition that the Union of India refused to accept  

the pay orders and instead stated that the tender documents had not been issued

by the Department and the same were likely to be issued shortly.   

6. Again, letters were written on 22.10.2008 and 23.10.2008 by respondent  

Nos.1 and 2, respectively, requesting the Union of India to issue tender documents  

to  enable  them  to  participate  in  the  tender  for  the  OCPs.   The  original  writ  

petitioners, respondent companies herein also contacted the concerned officers of  

the  Union  of  India  and  were  informed that  the  date  of  sale  of  tender  inquiry  

documents had been extended and they would be informed of the finalization of  

the date.  In the meantime, M/s. IDPL (appellant herein) pointed out to the Union of  

India and claimed that  the Government had introduced a Purchase Preference  

Policy  for  102  medicines  exclusively  from  Pharma  Central  Public  Sector  

Enterprises (CPSEs) and their subsidiaries.  Reliance was made on letter dated  

07.08.2006  issued  by  the  Ministry  of  Chemicals  &  Fertilizers,  Department  of  

Chemicals & Petrochemicals, bearing No. 50013/1/2006-SO(PI-IV).  It was pointed  

out that the OCPs were listed at serial No. 51 of that list under the said Purchase  

Preference Policy and, therefore, the purchases should be made exclusively from  

Pharma CPSEs.  On this, corrigendum dated 04.11.2008 came to be effected by  

the Union of  India  to  the tender  notice  for  OCPs to  the effect  that  the tender  

enquiry  documents  for  OCPs  would  not  be  opened  on  05.11.2008  as  was  

promised.  The respondent companies herein contacted the Union of India again  

on  03.12.2008,  when  they  were  informed  that  the  rate  contract  of  the  entire  

quantity of 275 lakh cycles of OCPs had already been placed by the respondent  

No.  3  on  appellant  IDPL.   In  short,  the  whole  contract  went  in  favour  of  the  

appellant.  This was challenged before the High Court by way of a Writ  Petition  

filed by Famy Care Ltd.  and Phaarmasia Ltd.,  the respondents herein.   It  was  

urged before the High Court that the impugned rate contract dated 02.12.2008 was

awarded in flagrant violation of the tender notice dated 18.09.2008 and was also  

contrary to the Purchase Preference Policy.  The High Court,  by its  impugned  

judgment, has allowed the Writ Petition and quashed the said rate contract dated  

02.12.2008 insofar as it awards 175 lakh cycles of the other brands of OCPs apart  

from Mala D to the extent of 25 lakh cycles.

7. In its judgment, the High Court quoted the order dated 26.08.2005 passed  

by the Joint Secretary to the Government of India as also the Office Memorandum  

dated 07.08.2006.  In the first referred order, the Government of India had made a  

proposal to make M/s Hindustan Latex Ltd. (HLL) the captive unit of the Ministry of  

Health and Family Welfare and expressed that the Department would utilizes 75  

per cent installed capacity of HLL or 75 per cent of the annual procurement of the  

Ministry from HLL, whichever is lower for condoms.  In so far as the OCPs are  

concerned, the reservation for HLL was fixed at 55 per cent.  It  had also been  

decided  that  the  order  for  the  private  sector  could  be  realized  only  after  the  

finalization of the rate contract through tendering process.   

8. In the second referred office Memorandum dated 07.08.2006, a policy  

was formulated that the Government had decided to grant purchase preference  

exclusively to Pharma CPSEs and their subsidiaries in respect of 102 medicines  

manufactured by them as per the list.  Thus, in all, 102 products were covered in  

the Purchase Preference Policy.  This list was eventually to be reviewed or revised  

by  the  Department  of  Chemicals  and  Petro-Chemicals  as  and  when required,  

taking care not to include any item reserved for SSI units.   The entry at  serial  

No.51 in this list is as under:

“51) Oral Contraceptive Pills (Mala ‘D’ and Mala ‘N’)”

(Emphasis supplied by us)

9. The  High  Court  noted  that  in  case  of  contraceptives  other  than  

reservation in favour of HLL was required to be 55 per cent and the balance of 45  

per cent was to be opened for private sector and could be released only after  

finalization of the rate contract through tendering process.  The High Court further  

noted that the Purchase Preference Policy was to be applicable to the purchases  

of maximum 102 medicines, which was to be valid for a period of five years up to  

06.08.2011.   The  High  Court  also  noted  that,  before  it,  the  original  

petitioners/present  respondents  did  not  challenge  the  validity  of  the  Purchase  

Preference Policy.  The only contention raised was that in so far as the OCPs were  

concerned, the Purchase Preference Policy set out only specifically Mala D and  

Mala N in the category of OCPs as the medicines covered under the said Policy.  

In other words, the other branded contraceptive pills apart from Mala D and Mala N  

were  not  covered  under  the  purchase  preference  policy  in  favour  of  Pharma  

CPSEs and their subsidiaries and as such the Union of India could not have placed  

an order for all other branded OCPs on the appellant herein, IDPL under the said  

Purchase Preference Policy.  The High Court also noted the defence raised by the  

Union of India that the entry at serial No.51 was only illustrative and not exhaustive  

and in fact the said Purchase Preference Policy in favour of CPSEs extended to all  

the OCPs.  The High Court further noted the stand taken by the Union of India that  

the Purchase Preference Policy ousted all private players from selling medicines  

therein to the Union of India.  The High Court rejected the stand taken by the Union  

of India.  It went on the plain language of entry at serial No.51 in the list and held  

that it was clear from the language of entry that it was only in respect of Mala D  

and Mala N that the Purchase Preference Policy was applicable and in fact the

Policy was formulated by the Government only in respect of these two brands in  

mind in respect of OCPs and it was not possible to countenance the submission  

that the specific mention of Mala D and Mala N was only illustrative.  It was on this  

basis that the High Court came to the conclusion that the entry related only to Mala  

D and Mala N and it did not cover the other brands of OCPs, the purchase of which  

was bound to be effected by the Union of India through tendering process which  

was the earlier policy.

10. In that view, the High Court further approved of the Purchase Preference  

Policy  and  held  that  the  orders  could  be  placed  on  private  sector,  once  the  

preference in favour of Pharma CPSEs had been exhausted.

11. This judgment was severely commented upon by Shri L.N. Rao, Learned  

Senior  Counsel  appearing on  behalf  of  the  appellant  herein.   We  were taken  

through the whole facts including the initial orders and the Purchase Preference  

Policy.  The basic contention raised was that it was for the Union of India to decide  

as to from whom it would purchase the OCPs and it made quite clear in the list of  

102 items that those 102 items would be purchased directly without any tendering  

process.  Therefore,  the High Court  should  not  have interfered with the policy  

making exercise of the Union of India.   

12. When we see the impugned judgment, it  is clear that the policy of the  

Union of India was not in question in any manner before the High Court.  In fact,  

even the writ petitioners before the High Court i.e.  the respondents herein had  

relied upon that  policy and their  only contention was that the policy should be  

implemented in its true spirit.  In that, the contention was that the bare reading of  

entry at serial No.51 was clear that the Government had decided to purchase these

products directly without any tendering process and had decided so only in case of  

Mala D and Mala N.  There will be no question of finding fault with the policy nor  

can it be argued that the policy was being tinkered with.  The argument raised by  

Shri Rao, Learned Senior Counsel and Shri Prag Tripathi, Learned ASG has to be  

rejected.  The basic question that fell for consideration was the interpretation of the  

entry at serial No.51 and that is correctly decided.  

13. The contention raised on behalf of Shri Rao as well as Shri Tripathi was  

that the entry was only illustrative.  To buttress this argument, it was tried to be  

contended that the chemical formulation of Mala D and Mala N was identical with  

the other brands and, therefore, mere mention of Mala D and Mala N did not make  

any  difference  and  the  entry  related  to  all  the  Oral  Contraceptive  Pills.   The  

argument is quite attractive, however, it lacks substance.   

14. A  simple  question  was  asked  during  the  debate  as  to  whether  if  a  

customer  went  to  a  medical  shop  and  demanded  some  other  brand  of  Oral  

Contraceptive Pills, could Mala D and Mala N, as the case may be, given to that  

customer legitimately.  This is obviously answered in the negative.  It  was also  

found that  even the price of  Mala  D and Mala  N differed from the other  Oral  

Contraceptive Pills.  But even more than that, the basic argument on behalf of the  

appellant is that the entry was only illustrative.  We do not see any merit in this  

argument.  The whole world knows and presumably the Union of India also knew  

what an Oral Contraceptive Pill is.   The Union of India, therefore, in branding the  

particular entry at serial No. 51 could have simply stated Oral Contraceptive Pills.  

That  would  have  been  the  end  of  the  matter  and  that  would  have  been  the  

complete  answer  to  the  original  writ  petitioner’s  claim  before  the  High  Court.  

However, if the list specifically mentions Mala D and Mala N, there was no question

of jumping back and explaining that it was only an illustrative entry.  

15. We have scanned the whole list very carefully and we do not find any  

such illustrations which would lead to some other meaning to the entry.  Wherever  

an illustration is required, it has been specifically given.  The explanations are also  

to be found in that list.  The entries at serial No.12, fluconazole and at serial No.2,  

Ampicillin IP so also the entries at serial Nos. 13, 72 and 78 are clear enough to  

suggest that wherever the authorities wanted to be specific, they have been very  

specific.  However, in so far as the present entry is concerned, it is specific and  

tends to be restrictive to Mala D and Mala N.  In short, the controversy here is quite  

simple and that is the true and correct meaning of entry at serial No.51.  In our  

opinion, the High Court has committed no mistake in giving the correct explanation  

of the entry.  We are not prepared to accept the argument that the entry in the  

bracket was illustrative,  as,  in our opinion,  there was no necessity to give any  

illustrations  for  the  general  and  commonly  well  understood  words  ‘Oral  

Contraceptive Pills’.

16. Learned Counsel, in support of their argument, further argued that entry  

at serial No. 50 was relating to a generic medicine and did not refer to any branded  

product.   We were also taken to the position prior to the introduction of this entry.  

The entry then read was Nishchint Emergency Contraceptive Pills Livonorgestrel.  

It was argued that Nishchint was an Oral Contraceptive Pill. However, it was a pill  

to  be  taken  after  the  sexual  intercourse,  as  opposed  to  the  type  of  Oral  

Contraceptive Pills in categories similar to Mala D and Mala N, which are to be  

used in one complete cycle for efficacy.

17. This argument does not impress us.  There was no necessity on the part

of the Union of India to explain or make illustration of OCPs because the whole  

world knows what an OCP is.  Once a specific brand name was included, it was  

obvious that it would be only the Mala D and Mala N which would be covered under  

the entry.  

18. It was further tried to be suggested that where two views are possible, the  

view of the policy maker should be adopted.   For this purpose, reliance was made  

on Secretary, Ministry of Chemicals & Fertilizers  Government  of  India  v.  

M/s. Cipla Ltd. & Ors. [2003 (7) SCC 1].  We have absolutely no quarrel with the  

proposition laid down by this Court in the aforementioned judgment.  However, in  

this case, we do not think that two views could be possible.  The mention of Mala D  

and Mala N in the bracket was specific, and, therefore, the Oral Contraceptive Pills  

only of that brand were obviously included in the list.

19. It was further suggested that the argument based on the notings on the  

file on behalf of the present respondent cannot be accepted.  We do not want to go  

into that question, since we have already held that on merits the entry cannot mean  

anything else and it has to be restricted only to Mala D and Mala N.   

20. In view of what we have held above, we do not find any merits in the  

appeal.  We, therefore, confirm the judgment of the High Court.  The appeal is,  

thus, dismissed but with no order as to costs.

 ……………………………………….J. (V.S. SIRPURKAR)

………………………………………J. (DEEPAK VERMA)

New Delhi;

April 30, 2010