New Delhi, Nov 7 (IANS): The Supreme Court on Friday said blacklisting orders may spell the death knell of an organisation, as it set aside an indefinite backlisting order issued against VetIndia Pharmaceuticals Ltd in 2009.

A bench headed by Justice R. F. Nariman and comprising Justices Navin Sinha and Krishna Murari said: "An order of blacklisting operates to the prejudice of a commercial person not only in praesenti (at the present time) but also puts a taint which attaches far beyond and may well spell the death knell of the organisation/institution for all times to come described as a civil death."

The pharma company was served an order of blacklisting by the Animal Husbandry Department of Uttar Pradesh Government referring state analyst report in October 2008, declaring the batch supplied by it to be of substandard quality (misbranded/not in accordance with Oxytetracycline injection), which violated tender stipulations. The bench noted the injection was not supplied.

The company said it had never made any supplies under the tender in question and the misbranding was an inadvertent error. This order was challenged in 2019 in the High Court, which dismissed it on ground of delay. The apex court set this order aside.

The bench observed that it found blacklisting order unsustainable and considering the long passage of time, the court is not inclined to remand the matter to the authorities.

The bench said: "The fact that the terms of the tender may have provided for blacklisting is irrelevant in the facts of the case. In absence of any supply by the appellant, the order of blacklisting dated September 8, 2009 invoking clauses 8.12 and 8.23 of the Tender is a fundamental flaw, vitiating the impugned order on the face of it reflecting non application of mind to the issues involved."

The bench observed that an order of blacklisting beyond 3 years or maximum of 5 years was disproportionate. As a consequence, this blacklisting order, the company faced rejection in the tender floated by Rajasthan government on July 5, 2019, which led it to institute a petition on July 24, 2019.

The High Court therefore erred in dismissing the writ petition on grounds of delay. "The illegality and the disproportionate nature of the order dated September 8, 2009, with no third-party rights affected, never engaged the attention of the High Court in judicious exercise of the discretionary equitable jurisdiction", said the top court.