Kerala High Court M/S.Rkg Pharma Pvt.Ltd vs State Of Kerala on 23 June, 2010 WP(C).No. 5512 of 2010(L) 1. M/S.RKG PHARMA PVT.LTD, 12TH MILE STONE, ... Petitioner 2. M/S.UNICURE (INDIA)PVT.LTD,C22&23, 3. M/S.VIVEK PHARMACHEM (INDIA)LTD., Vs 1. STATE OF KERALA, REPRESENTED BY THE ... Respondent 2. THE KERALA MEDICAL SERVICES CORPORATION For Petitioner :SRI.M.RAMESH CHANDER For Respondent :SRI.M.AJAY,SC,KERALA MEDICAL SERV.CORPN The Hon'ble MR. Justice P.N.RAVINDRAN Dated :23/06/2010 O R D E R P.N.RAVINDRAN, J. W.P.(C)Nos.5512 & 5606 of 2010 Dated 23rd June, 2010 JUDGMENT The petitioners in these writ petition are manufacturers of drugs. They have filed these writ petitions challenging Ext.P4 Government order and Ext.P5 corrigendum issued by the second respondent Corporation. The brief facts of the case are as follows. W.P.(C)No.5512 of 2010 2. The second respondent, the Kerala Medical Services Corporation Limited (hereinafter referred to as `the Corporation' for short), is a Government company incorporated under the Companies Act, 1956. The Corporation was formed to harness resources for the timely procurement and prompt distribution of medicines in health care institutions in an efficient, transparent and cost effective way thereby ensuring full utilization of funds. The purpose for which the Corporation was established is set out in Ext.P1 Government order dated 1.11.2007 by which, the Government approved the Memorandum and Articles of Association of the Corporation. 3. After the Corporation was established, during the year 2009, it invited tenders for supply of medicines. As per the tender conditions, small scale industrial units were exempted from WP(C).Nos.5512 & 5606/2010 2 furnishing earnest money deposit. Later, after the tender was awarded to them, the Corporation insisted that they should furnish security deposit. The small scale industrial units thereupon filed W.P. (C)Nos.8915 and 8940 of 2009 in this Court challenging the direction issued by the Corporation to furnish security deposit. Referring to G.O.(P)No.385/2008/Fin. dated 27.8.2008, a copy of which was produced and marked as Ext.P6 in W.P.(C)No.8915 of 2009, it was contended that the stipulation in clause (c) thereof does not apply to the Corporation for the reason that it is not a public sector undertaking working on a competitive basis but a service organization. A copy of Ext.P6 is on record as Ext.R3(4). Reliance was placed on Ext.R3(5) letter dated 23.1.2009 sent by the Principal Secretary to Government, Finance Department to a small scale industrial unit wherein it was stated that the Corporation is a service organization of the Government of Kerala and that it does not undertake sales or compete in open market and therefore it is not a competitive public sector undertaking. When W.P.(C)Nos.8915 and 8940 of 2009 came up for hearing on 23.3.2009, a learned single Judge of this Court after considering the rival contentions passed the following interim order: "Although this is a common order in the two writ petitions, Exhibits referred to in this order are as obtaining in W.P.(C)No.8915 of 2009. The petitioners in these two WP(C).Nos.5512 & 5606/2010 3 writ petitions are S.S.I.Units, who have submitted tenders for supply of medicines pursuant to notification inviting tenders floated by the 1st respondent Public Sector Undertaking. They have been exempted from the condition of submitting Earnest Money Deposit for the tender. They have been awarded the tender. Now they have been directed to furnish security deposit as provided under the conditions of tender and to execute an agreement. According to the petitioners, by virtue of Ext.p6 Government Order, they are exempted from furnishing security deposit and Earnest Money Deposit. The petitioners, therefore, seek an interim order directing the 1st respondent to permit the petitioners to execute the agreement without insisting on furnishing security deposit. 2. Sri.M.Ajay takes notice on behalf of the 1st respondent. The learned Government Pleader takes notice on behalf of the other respondents. The learned counsel for the 1st respondent submits that Clause (c) of Ext.P6 is not applicable to Public Secto