The Allahabad High Court has restrained Uttar Pradesh government from holding auctions under its new drug purchase policy whereby tenders of only those companies from outside the state, which had a yearly turnover of more than Rs 100 crore, are to be accepted.

A division bench comprising Justice Sunil Ambawani and Justice Sabhajeet Yadav passed the order, terming the new policy as “irrational”, “highly unreasonable”, “discriminatory” and violative of the fundamental rights guaranteed under the constitution, while hearing a petitition filed by a drug manufacturing company Omega Biotech Limited.

The petitioner had challenged the state government's new drug purchase policy, which came into effect on 16.05.2011, whereby tenders were to be accepted from only those companies situated outside UP which had a yearly turnover of more than Rs 100 crore while among the firms located within the state those with a turnover of not less than Rs 25 crore could be considered eligible.

The petitioner, a drug manufacturing company located outside Uttar Pradesh, alleged that by excluding firms registered outside UP having a turnover of less than Rs 100 crore, “the state government is monopolizing the purchase of drugs in favour of only a few large companies and firms”.

Fixing July 15 as the next date of hearing in the matter, the court directed that "as an interim measure" in any auction in the meantime "eligibility criteria of the previous year in respect of turnover will be applied".