Bombay High Court
M/S. Vascular Concepts Ltd vs The State Of Maharashtra on 21 April, 2014
ORDINARY ORIGINAL CIVIL JURISDICTION
WRIT PETITION (L) NO.226 OF 2014
CORAM : V. M. KANADE & A. K. MENON, JJ.
Citation;2015 (7) ALLMR 111
2. By the present Writ Petition, the Petitioner seeks an appropriate Writ for quashing and setting aside decisions of the Purchase Committee of Respondents No.1 and 2 dated 12th June 2013 and 24th September 2013 as also impugned communications dated 27th June 2013 and 31st December 2013 from the said Respondents. The Petitioner also seeks a declaration that it is eligible to bid for and supply of Drug Eluting Stents ("Stents") approved by the Drugs Controller General of India ("DCGI") to beneficiaries of Rajiv Gandhi Aryogya Yojana and other consequential reliefs.
3. The Petitioner company carries on business inter alia as manufacturers and importers of medical devices including coronary Stents which are used for relieving cardiac ailments. Respondent No.1 is the State of Maharashtra and Respondents No.2 is the Joint Director of Health Services of Respondent No.1 and Respondent No.3 3 w226.14-J.sxw is Union of India.
4. The Petitioner claims to hold a valid license for manufacturing under Rule 76 of Drugs and Cosmetics Rules, 1945 framed under the provisions of the Drugs and Cosmetics Act, 1940, and a valid registration certificate entitling it to import Stents from M/s.
EUCATECH AG, from Germany. The Petitioner claims to have supplied its devices in the past to major hospitals in the State of Maharashtra including to the beneficiaries of Rajiv Gandhi Arogya Yojana without any complaints of any kind.
5. In the month of January 2013 and August 2013, the Respondent No.2 published an E-tenders seeking supply of medical devices which included coronary Stents, (both bare metal Stents and covered Stents) from manufacturers and suppliers. The technical specifications required the Stents to be approved by USFDA and also bear the CE mark. The Petitioner participated in tender process and one of these tenders is stated to have lapsed. In November 2013, yet another tender was floated for supply of 400 numbers of Stents.
6. The Petitioner participated in bid and also submitted a representation vide letter dated 21st November, 2013 contending that it was not proper for Respondents No.1 and 2 to ask for price bids only from manufacturers whose devices have USFDA and CE marks. The Petitioner contended that its products bearing DCGI 4 w226.14-J.sxw approval were supplied to various leading hospitals in the State including the beneficiaries of Rajiv Gandhi Arogya Yojana. It was inter alia contended by the Petitioner that DCGI approval alone is sufficient, given the long term presence of its products in the market.
The Petitioner requested the Respondents "not to create bias in the tender".
7. On 22nd November 2013, a pre-bid meeting was held by Respondent No.2 which was attended by many bidders including the Petitioner.
On 20th December 2013, the Petitioner company submitted samples of the Stents it proposed to supply, to Respondent No.2. On 31st December 2013, vide communication issued by Respondent No.2, the Petitioner's bid was rejected, on the ground that the Petitioner did not meet with the required technical specifications.
8. On 3rd January 2014, the Petitioner issued legal notices inter alia contending that Respondent have favoured two companies from USA, namely, M/s. India Medtronics Pvt. Ltd. and M/s. Abbot Healthcare and with malafide intention kept all other companies out of the competitive bidding process. The Petitioner contended that the Stents to be supplied by them were approved by DCGI and that same cannot be excluded from the process of bidding on the ground that it did not have USFDA approval or "CE" mark. The Petitioner not having received any response, has filed the present 5 w226.14-J.sxw petition.
9. The Petitioner, challenges the rejection of the Petitioners bid inter alia on the following grounds :
(a) that insistence upon USFDA or CE mark and DCGI approval on the Stents is arbitrary and discriminatory violating the Petitioner's right under Article 14 and 19 of the Constitution of India,
(b) that by insisting on USFDA or CE certification the Respondents are questioning primacy of the Director Controller General of India in the matter of drugs and devices to be used in India, thereby placing USFDA and CE marks on higher pedestal,
(c) that the existence on the aforesaid condition amounts to invidious discrimination,
(d) that the Respondents have disregarded the order dated 3rd March, 2009 of the Hon'ble Delhi High Court in Writ Petition (Civil) No.8859 of 2008 holding that clinical trial for grant of approval of drugs and devices under the Act and Rules is detailed and exhaustive and, therefore, according to the Petitioner there is no reason for Respondents No.1 and 2 to insist upon Stents having USFDA approval and/or CE remark and
(e) that the Stents imported by the Petitioner withstood the test of time and were used in major hospitals across the country.
10. After the petition was filed, the Petitioner introduced, by way of amendment, averments assailing the meetings of the Purchase Committee interalia on the grounds :
"(a) that the committee did not have any Cardiologist on board,
(b) that out of seven members five officials have decided purchase of device under USFDA or CE approved remark,
(c) that the decision by the committee was taken without any expert in cardiology."
The Respondents No.1 and 2, then constituted a committee of experts consisting of Dr. Prafulla G. Kelkar, Cardiologist, K.E.M.
Hospital, Mumbai, Dr. Sheetalkumar Hiran, Consultant Cardiologist at Regional Referral Hospital, Nashik, Dr. Ashvin Mehta, Director of Cardiologist, Jaslok Hospital, Mumbai, Dr. Bhanu Duggal Kapoor, Associate Professor of Cardiologist, Sir J. J. Hospital, Mumbai to set final specifications of the Stents to be provided by Respondents No.1 and 2. The Petitioner contended that some of the committee members have either used the Stents supplied by the Petitioner and that it was clearly established that the DCGI approved Stents supplied by the Petitioner were satisfactory.
11. On behalf of Respondents No.1 and 2, namely, the State of Maharashtra and the Joint Director of Health Services (Procurement Cell) two affidavits have been filed. In the affidavit of Radhakishan 7 w226.14-J.sxw Pawar dated 5th March, 2014 it is stated that :
(a) the Petitioner has no locus to challenge the condition of tender having himself participated in the tender process, voluntarily.
(b) The requirement of USFDA approval and CE mark was fundamental and all bidders were bound to comply with the same.
(c) the Petitioner has given a written undertaking to the effect that they have understood all the tender conditions and that they shall supply and deliver the goods in full conformity with the tender document.
(d) The Petitioner is estopped from challenging the tender conditions.
12. The deponent states that the petition involves various disputed questions of fact. That the State has invited bids for supplying Stents having minimum basic technical specifications of USFDA approval or CE mark coupled with the approval of DCGI. Therefore, in addition to USFDA approval or CE mark the Stents must also be approved by DCGI. The bidders were to supply Stents without deviating from tender requirements and in full conformity with all tender conditions in order to declare them eligible. It is contended that the State has rightly insisted on the aforesaid minimum technical requirement in larger public interest and that the State does not wish to take any chance in the matter of health of the patients who 8 w226.14-J.sxw were likely to receive Stents as implants. It is further contended that as per rate contract, the Petitioner proposes to supply the Stents which do not have USFDA approval or CE mark at Rs.30,000/-
each. On the other hand pursuant to tender M/s. India Medtronic Pvt. Ltd. and M/s. Abbot Healthcare Services have agreed to supply USFDA approved or CE marks and DCGI approved Stents at Rs.23,635/-. The deponent has annexed to his affidavit a copy of rate contract to be entered into with the successful bidder M/s. India Medtronic Pvt. Ltd. and M/s. Abbot Healthcare which confers the price at Rs.23,625/- for each Stent. It is also contended that the conditions of tender also require that bidders should have large immediate and long term data of safety and efficacy presented in peer-reviewed scientific journal and reputed conferences.
13. Apparently, the Petitioner's did not comply with the said conditions. This is also one of the reason for rejection of the Petitioner's bid. The State further contends that the Petitioner, in fact, is not the primary manufacturer of the Stents which are proposed to be supplied and the Stents which the Petitioner is intending to supply are manufactured by/on behalf of M/s. Eucatech A.G., Germany which are then imported by the Petitioner.
14. In a second affidavit on behalf of Respondents No.1 and 2 dated 10th March, 2014, the deponent states that the present tender has been issued pursuant to implementation of a procurement policy 9 w226.14-J.sxw adopted by Government Resolution dated 6th September, 2011 and, therefore, the purpose of implementation of the said policy of the Purchase Committee was established on 12th June, 2013. At the meeting held by the committee the issue of certification of quality was considered and after deliberations and discussions and after considering all the relevant aspects of matter it was considered that the medical equipment to be purchased should have USFDA approval and/or CE mark as per new policy. The Minutes of Meeting of 12th June, 2013 have been annexed to the affidavit. Perusal of the Minutes reveals that on 27th June, 2013 the State granted approval to the draft tender document in compliance with decision taken at the said meeting and, accordingly, tender No.E-145 was issued on 8th August, 2013.
15. On 30th August, 2013 a pre-bid meeting of all tenderers was held for considering such objections and suggestions to the said tender in general, 90% of the bidders were present and they suggested that the State should change specifications from USFDA approval "and" CE mark to USFDA approval "or" CE mark. The Purchase Committee, then was called upon to consider the suggestions. In the meeting on 24th September, 2013 the committee accepted the suggestions and changed the specifications to USFDA approval or CE mark.
16. A further meeting held at Secretary level to consider overall 10 w226.14-J.sxw progress in the process of executing rate contracts on 7th November, 2013 at which meeting it was noticed that there was a difference between the technical specifications for the Stents procured in the year 2012 and 2013. It was thought fit that utmost care should be taken while purchasing the Stents, not only because it involves huge financial implications but also from the point of view of public health, no chances could be taken. It was then felt that a final decision could be taken by an independent/impartial committee of renowned experts in the medical field. Accordingly, a Cardiologists committee was appointed and this new committee, at the meeting held on 12th November, 2013, concluded that the Stents should have USFDA approval or CE mark and DCGI approval. A copy of the Minutes of Meeting has been annexed to the affidavit.
17. It is thus the contention of the State that with active assistance and advice of experts in the field, it has taken a conscious decision in the larger public interest that USFDA approval or CE mark and DCGI approval was to be insisted upon. It is also pointed out that the Petitioner has approached the court on the premise that it is an indigenous manufacturer of Stents whereas the Petitioner basically imports Stents, in its not-sterile condition and the only activity of "manufacturing" that the Petitioner conducts is to sterilize the imported Stents by the ETO sterilization process. No doubt the said process is included in the definition of the word "manufacture" in the Drugs and Cosmetic Act, 1940 but the Petitioner is actually importing 11 w226.14-J.sxw the Stents and sterilizing the Stents.
18. The contention of the Petitioner that insistence of USFDA approval or CE mark in addition to DCGI approval is arbitrary and violative of the Petitioner's right is not correct. The State has clearly required almost all the items to be supplied to bear USFDA approval and/or CE mark. It cannot, therefore, be gainsaid that the Petitioner's bid is rejected in arbitrary manner. It is not in dispute that :
(a) Almost all items to be supplied under invitation of tender required to be USFDA approval and/or CE mark to start with.
(b) That DCGI approval was incorporated in relation to Stents after the expert committee evaluated the requirements,
(c) That the Petitioner is importing the Stents proposed to be supplied.
(d) That the price that the Petitioner proposes to supply at Rs.30,000/- per stent is against rate of Rs.23,625/- per stent supplied by M/s. India Medtronics and M/s. Abbot Healthcare Services, despite the Stents bearing USFDA approval or CE mark.
(e) That the Petitioner had bid with full knowledge of the technical requirements of USFDA approval and/or CE mark and DCGI approval.
(f) That the Petitioner had failed to establish that they have large immediate and long term data of safety and efficacy presented in peer-reviewed scientific journal and reputed conferences, and finally,
(h) That the Petitioner had in fact filed an undertaking 12 w226.14-J.sxw to comply with the tender conditions which included requirement of USFDA approval or CE mark and DCGI approval.
19. The Petitioner relies on the fact that in past, DCGI approved Stents supplied by the Petitioner has been used by major hospitals in the State of Maharashtra for patients including beneficiaries under Rajiv Gandhi Arogya Yojana. That Respondent No.2 had published an E-tender but has discriminated against suppliers of Stents on the basis of the authority approving.
ig The Petitioner has relied on its registration certificate, import license, list of hospitals to which supplied have been made State wise in India as also few decisions in support of its case which we will now deal with.
20. The Petitioner contends that in 1 Ramana Dayaram Shetty
Vs. International Airport India and Others, the Supreme Court has held that Standard of eligibility laid down in the notice that tenders, cannot be departed from arbitrarily. Reliance is placed upon paragraphs 10, 11 and 21 of the judgment to emphasise the point that in a welfare State, every action of the executive Government must be free from arbitrariness. That if the State should enter into contracts, it should do without discrimination and follow fair procedure and must base its decision on some rational and relevant principle which is non-discrimnatory.
1 (1979) 3 Supreme Court Cases 489 13 w226.14-J.sxw
21. Learned counsel for the Petitioner also relied upon the decision of the Supreme Court in 2Raunaq International Ltd. Vs. I.V.R.
Construction Ltd. and Others which sets out considerations which are of paramount importance while awarding contracts.
Learned counsel relied upon observations of the Supreme Court in Tata Cellular (supra), where the Apex Court examined scope of judicial review in the case of a tender awarded by a public authority and noted that the principles of judicial review can apply to the exercise of contractual powers by Government bodies in order to prevent arbitrariness and favouritism.
22. The learned counsel then relied upon the decisions of the Supreme Court for 3 Master Marine Services (P) Ltd. Vs. Metcalfe & Hodgkinson (P) Ltd. and Anr., 4B. S. M. Joshi &
Sons Ltd. Vs. Nair Coal Services Ltd. and Others, in support of his contention which interalia reiterates the principles considered in detail by the Supreme Court in Tata Cellular (supra).
23. Learned Senior Counsel also relied upon the decision of the Delhi High Court in Writ Petition No.8859 of 2008 and Writ Petition No.2262 of 2010 but this decision if of no assistance inasmuch as those decisions deal with a fact situation where DCGI approved Drug 2 1999 (1) SCC 492 3 2005 (6) SCC 138 4 (2006) 11 SCC 548 14 w226.14-J.sxw Eluting Stents were found acceptable, there was no requirement of USFDA approved or CE mark Stents being also approved by DCGI.
In the case referred in Writ Petition No.8859 of 2008, the Indian Regulatory Authority provided for following condition :
"Interventional Cardiology items must be USFDA approved or CE marked or approved by Indian regulatory authority wherever applicable."
24. Thus there was an option given to the Petitioner to supply items which are USFDA approved or CE mark or approved by Indian Regulatory Authority, presumably DCGI. In Writ Petition No.2262 of 2008 the Expert Committee itself had recommended inclusion of all drug eluting Stents be approved by DCGI. These pronouncements are therefore of no assistance. In the present case, in the tender, it is clearly provided for supplying the Stents which are USFDA approved and CE mark which was later modified to USFDA approved or CE mark and DCGI approved.
25. On the other hand the counsel appearing on behalf of Respondents No.1 and 2 relied upon the decision of the Supreme Court in case of 5 Directorate of Education and Others Vs. Educompn Datamatics and Others, wherein the Court had an occasion to deal with Judicial Review of the Government contracts, wherein it is held that only when arbitrary, discriminatory or biased 5 (2004) 4 SCC 19 15 w226.14-J.sxw decisions are taken, can it be open to interference. This decision also took into consideration the Tata Cellular case (supra) and reiterates the view that while the court can scrutinise award of Government contracts, there are inherent limitations in exercise of the powers of judicial review in such matters. That the principles deducible by the Supreme Court interalia points to restraint in administrative action and that the court does not sit in appeal and merely reviews the manner in which decision is taken in view of the fact that the court does not have expertise to correct the administrative decision and the court will be substituting its own decision while reviewing the administrative decision without experience.
26. Tata Cellular (supra) in terms hold that the terms of invitation to tender are not open to judicial scrutiny because invitation of tender is in the realm of contract and the decision to accept the tender or award contract is reached by process of negotiations through several tiers and such decisions are more often than not made by the experts. It highlights the principle that the Government must have freedom of contract and that apart from applying the Wednesbury principle of reasonableness, it must also be free from arbitrariness not affected by bias or by act of malafides.
27. Respondents No.1 and 2 also relied upon the decision of the 16 w226.14-J.sxw Supreme Court in 6 Association of Registration Plates Vs. Union of India and Others in which it was held that in formulating tender document and awarding contracts, greater latitude is required to be conceded to the State and to ensure that the contractor has capacity and resources to successfully execute the work, unless action of tendering authority is found to be malicious and a misuse of statutory power, tender conditions are unassailable.
It was held that no person can claim fundamental right to carry on business with the Government. The Government must act fairly and reasonably in the public interest.
28. As far as law relating to tenders is concerned, the narrow scope for judicial review of tender conditions is well settled. In essence, the court can only interfere in policy decision if they are arbitrary, discriminatory or malafide and not otherwise. On analysing the aforesaid decisions it is evident that unless administrative action of State is against public interest, is arbitrary and malafide, the courts ought not to interfere in matters of commercial contracts. In many cases, the court would not have expertise to review administrative decisions and the court cannot risk to substitute its own decision. The court should also bear in mind that interfering with the decisions in the matter of award of contracts by the State would also impose heavy administrative burden, and therefore, the court should be cautious and reluctant to 6 (2005) 1 SCC 679 17 w226.14-J.sxw interfere with such decisions. The court should also note that a person who willing participated in tender process had no right to challenge the tender conditions especially after undertaking in writing to comply with the tender terms.
29. In the present case, we are unable to justify any interference.
When the tender was initially floated the technical specifications required the Stents to have USFDA approval and CE mark.
Subsequently, at the meeting of pre-bid held on 30th August, 2013, some of the bidders suggested that the State should change the specifications of USFDA approval and CE mark to USFDA approval or CE mark. This request was forwarded to the Purchase Committee which considered the request at its meeting on 24th September, 2013 and accepted the suggestion and changed the specification from USFDA approval and CE mark to USFDA approval or CE mark.
Thereafter, the expert committee appears to have added and recommended one more specification, namely, DCGI approval in addition to the USFDA approval or the CE mark requirement. The expert committee on 12th November, 2013 has exercised its discretion in general public interest with a desire to ensure that nothing is left to chance. The Respondents No.1 and 2 have accepted the recommendation and acted upon it. Thus, DCGI approval indicates an additional technical requirement which further ensures that the quality of Stents used are also certified by the DCGI notwithstanding its approval by USFDA and CE mark. In fact DCGI 18 w226.14-J.sxw approval does not put the Stents approved by USFDA or CE marked on a higher pedestal. On the other hand the DCGI puts final its stamp of approval on Stents that are already approved by the USFDA or CE marked.
30. It is case of the State that the Stents being imported pursuant to this tender are to be used by the State in the hospitals under Rajiv Gandhi Arogya Yojana to provide relief to the patients whose income is below Rs.1,00,000/- per annum. The State in its endeavor to ensure that best possible equipment is obtained for discharge of its social responsibility has, therefore, taken a decision in public interest. The Petitioner can hardly be heard to assail such motive let alone allege malafide, arbitrariness in providing for the best possible specifications. This clubbed with the fact that almost all other equipment forming subject matter of tender, also require USFDA approval or CE mark leaves no manner of doubt that Respondents No.1 and 2 had no malafide intention nor did they act in an arbitrary manner while issuing technical specifications. Annexure to tender E-142/12-13 also required bids from primary manufacturers. The Petitioner does not claim to be a primary manufacturer of Stents. 42 items forming subject matter of the tender are listed on internal Page 9 of the tender document. The Stents proposed to be supplied by the Petitioner appears at Item No.14. Leaving aside item Nos.1, 38, 39 and 40, the other 38 items required USFDA approval and CE mark prior to change made at pre-bid meeting.
31. In the circumstances, the Petitioner has failed to establish that the State has acted in arbitrary or malafide manner or in manner that can be said to be against public interest. To provide the best possible devices and equipment for the purpose of its public health programme, the State opted for stringent technical requirements.
No fault can be found for imposing these specifications.
32. The challenge to impugned decisions of the Purchase Committee as well as communications forming subject matter of the petition therefore fails. Vide an order dated 11th February, 2014, passed by this court, the State was directed not to take any further steps pursuant to the tender. The interim direction to the State not to allot the contract to any third party issued on 11th February, 2014 stands vacated. The petition is dismissed with no order as to costs.
(A. K. MENON, J.) (V. M. KANADE, J.)