Karnataka High Court
Mahendra Labs Private Limited, ... vs State Of Karnataka And Others on 7 September, 2001
Equivalent citations: 2001(5)KARLJ604, AIR 2002 (NOC) 84 (KAR), 2001 AIR - KANT. H. C. R. 2785 (2001) 5 KANT LJ 604, (2001) 5 KANT LJ 604
Author: R. Gururajan
Bench: R. Gururajan
ORDER R. Gururajan, J.
1. Petitioner in this petition is seeking for the following reliefs on the following facts:
"Wherefore, it is most respectfully prayed that this Hon'ble Court be pleased to issue a writ of certiorari or any other appropriate writ, order or direction:
(a) Quashing the term/condition relating to the requirement of 3 years market standing in respect of drugs sought to be purchased and sought to be offered for purchase in the tender notification dated 19-2-2001 in No. GNS(1)/2/1999-2000(RC 1/2000-2003) issued by respondent 2 and also the condition requiring certain items to be in Alu-Alu Blister found in the corrigendum in An-nexure-B issued by respondent 2 and further directing the respondents to consider the tender to be submitted by the petitioner without insisting upon the aforesaid two conditions, and
(b) Allow this writ petition with costs and grant such other reliefs as this Court may deem fit to grant in the circumstances of the case".
2. Petitioner is a drug manufacturer of Bangalore. The respondent-State Government through the Director of Health and Family Welfare Department, issued a notification dated 19-2-2001, Annexure-A seeking tenders in the matter of supply of medicine to the State Government hospitals. The time-limit was extended upto 16-6-2001. The last date for submission of samples was upto 25-6-2001. The last date for submission of tender is 27-6-2001 and the tenders are to be opened on 2-7-2001 at 11 a.m. Petitioner is a small-scale industry having a licence to manufacture drugs in terms of Drugs Control Act. Petitioner claims to have experience in the drug field.
3. Petitioner states that tender condition provides for a 3 years market standing experience for intending tenderers. Petitioner states that if three years market standing experience is insisted upon, petitioner would be ineligible to submit his offer in respect of items at Serial Nos. 6, 8, 18, 19, 31, 32, 36, 40, 45, 53, 65, 67, 77, 83, 154 and 241. The petitioner states that he has the licence to manufacture these items.
According to him this condition is in violation of Article 14 of the Constitution. Petitioner essentially questions "three years marketing experience" as being arbitrary and unreasonable.
4. The second challenge is with regard to the condition requiring certain items to be in Alu-Alu Blister pack in terms of Annexure-B. A Committee called Technical Advisory Committee (Expert Committee) was constituted and that Technical Advisory Committee indicated that the medicines are required to be supplied are to be packed in the form of strip/blister. This is how the tender condition read earlier and subsequently a corrigendum was issued stating that instead of strip/blister for certain items Alu-Alu blister pack should be used instead of Aluminum Strip/Blister package with one side aluminum. The corrigendum was issued after two months of tender notification. It is issued only to manipulate the matter. Petitioner in these circumstances as mentioned earlier is challenging the two conditions viz., three years market standing experience and requirement of Alu-Alu blister pack in terms of the Corrigendum.
5. Notices were issued by this Court and the respondents have entered appearance. An impleading application was filed and the same was allowed. The impleading applicant was arrayed as respondent 4 in these petitions. The State Government and also the impleading applicant had filed their counters. The State Government states that three years standing experience is an accepted condition in the matter of tender. Respondents state that this condition was there in the earlier tenders. Petitioner did not challenge the same on the earlier occasions. They justify the 3 years market standing experience with a view to maintain better quality, health and medical care. They say that quality and experience are of paramount consideration in public health. Therefore they justify their action. They further say that this condition is imposed to have a free flow of medicines to the needy patients. They also deny that the said condition is imposed to eliminate a few individuals.
6. Insofar as packing condition is concerned they say that total number of items tendered are 455. Only in respect of 14 items the department has prescribed the Alu-Alu blister packing. They say that the Technical Advisory Committee resolved and communicated to the respondents that the medicines to be supplied are to be packed in the form of strip/blister. A corrigendum was issued to correct the packing specification. They say that the mistake is committed by the respondent. With a view to have proper evaluation of samples and the variation in price the Committee consisting of Director of Health and Family Welfare, Joint Director, Government Medical Stores, Joint Director (Medical), Additional Drugs Controller and in charge Drugs Controller and Deputy Director (Pharmacy) decided that items which should carry specific packing specifications and only such items which are considerably expensive in the market/that needs to be protected from radiation and hygroscopic effect likely to be got damaged in handling or storage should be specified with blister packing with both sides aluminum and the Joint Director, Government Medical Stores were requested to identify and incorporate the specifications in the tender list. It was in these circumstances a corrigendum was issued with a view to correct the mistake committed earlier while mentioning the packing specification. Only 14 items were needed to be protected from radiation and hygroscopic effect. Alu-Alu blister packing provides for a special laminate and this is much superior pack, it totally avoids heating for forming the blister cavities. It further provides for excellent barrier properties against water vapour, gases and light permeation and it provides for a high degree of thermal stability. They further say that policy decision cannot be questioned by the petitioner.
7. The respondent 4 has also filed a statement of objection. They say that this petition is filed belatedly. They further say that 3 years market standing is proper and legal. They refer to this condition being available in all other States. They have filed condition of other authorities in justification of this condition in terms of Annexures-R1 to R6. Insofar as Alu-Alu blister packing is concerned, they say that this packing is a latest type which is an excellent barrier for water vapur, gases and light permeation, water, light etc. The process of Alu-Alu blister is done in a cold form state by stretching a deep drawing, moulding the aluminum plastic compound to form the blister cavity for holding the product. Out of 454 items sought for, only 14 are in Alu-Alu blister packing. They justify their stand.
8. Reply and the rejoinder has been filed by the respondent. Additional statement is also filed in the matter.
9. Matter was elaborately argued on several dates.
10. Mr. Madhu Naik, learned Counsel for the petitioner in W.P. No. 27063 of 2001 is permitted to address arguments since one of his prayers is the same or similar in these cases. Similarly Sri Krishnaswamy, learned Counsel in W.P. 25107 of 2001 was permitted to address his arguments.
11. Mr. G.S. Vishweshwara, learned Counsel appearing for the petitioner strenuously and vehemently argues before me that this Court has to grant the relief as sought for by the petitioner. He took me through the material pleadings to contend that arbitrariness is pervasive in the case on hand. He invites my attention to Annexure-A, dated 19-2-2001 and the subsequent proceedings in the matter. He also says that the policy of the Government is to encourage small-scale tiny industries. In the year 1986 a condition was imposed with regard to three years manufacturing experience which was held to be arbitrary in terms of the judgments of this Court in W.P. No. 5245 of 1986, DD: 7-8-1986 and connected matters, the said judgment is binding on the Government. He in these circumstances states that the 3 years marketing experience fixed by the State Government is clearly perverse and in violation of Article 14 of the Constitution of India. There is no nexus sought to be achieved on account of this arbitrary fixation of 3 years marketing experience. He also invites my attention to the various provisions of the Drugs Act to contend that the Drugs Act has taken care of every requirement of drug manufacturing and that being the position the further insistence of three years market experience according to Counsel would be in violation of the Act. Counsel invites my attention to the various provisions to contend that experience is in-built in the Act itself. The samples are tested; the standards are fixed; experts examine the drugs. He also invites my attention to various forms prescribed under the Act to contend that present policy of fixation of 3 years is unreasonable and arbitrary according to the Counsel,
12. Secondly, the Counsel contends that the packing strip Alu-Alu blister is equally arbitrary. Counsel states that corrigendum has been issued in respect of 14 items. There are no additional advantages available in the case on hand. The said packing is not available under the Drugs Act nor in the pricing order. The present corrigendum is mostly packing evolved in order to help a few companies. Counsel also alleges mala fides in the matter. Counsel says an inference of legal mala fide or legal malice can be noticed in the case on hand. The corrigendum is also not supported by any reason whatsoever. He took me through various details to contend that the said fixation requires my interference.
13. He relies on the various judgments of Supreme Court in Raunaq International Limited v I.V.R. Construction Limited and Others, Krish-nan Kakkanth v Government of Kerala and Others, Mis, Esteco Coal Services Limited v The Karnataka Power Corporation Limited and Others, Nav Bharat Oil Mills and Another v Union of India, AIR 2000 SC 3372 (sic), Tata Cellular v Union of India and an order in W,A. Nos. 988 to 993 of 1991, DD: 3-6-1991.
14. Mr. Madhunaik, learned Counsel who is permitted to submit his arguments has taken me through the various provisions of the Drugs Act and other material in support of his contention. He strenuously relies on para 17 of the order in W.A. Nos. 988 to 993 of 1991, DD; 3-6-1991. The Counsel says that public interest and public purpose are the two sides of same coin and if that test is applied the petitioner has to succeed. He also says that the judicial review is permissible in these matters. Counsel strenuously relies on Mahabir Auto Stores and Others v Indian Oil Corporation and Others .
15. Mr. Krishnaswamy, learned Advocate appearing in the connected matters also supports Mr. G.S. Vishweshwara and Sri Madhu Naik in contending that this Court on the facts placed before the Court has to intervene in saving the small-scale industry and in saving the public revenue.
16. Smt. Shoba Patil, learned Government Pleader, very effectively placed her arguments in countering everyone of the arguments of the petitioner's Counsel. She contends that the petitioner is not a manufacturer having 3 years marketing experience and it is necessary to maintain continuity of the supply. She states that the Court has to take judicial notice of the need of the hospital in having continuity of supply of medicines. Medicines are essential for maintenance of public health and there cannot be any slackness in the matter. Marketing experience is a reasonable one. She also states that in the previous year three years experience was fixed and the same was not opposed to by anybody including the petitioner. She says that the medical policy of the Government also provides for the same. She says that Drugs Act is not violated. It is just and proper to impose this clause of three years marketing experience in a case of bulk order tender. Insofar as packing is concerned Counsel says that on realising the mistake and for proper valuation of price a corrigendum has been issued. Out of 454 items, only 14 items were required to be in Alu-Alu blister packing. She reminds the Court of revolution in packing and says that the Court and the Government cannot shut any progressive packing in the matter. She refers to, , G.J. Fernanda v State ofKarnataka and Others, State of Orissa and Another v Aswini Kumar Dash and Others , Tata Cellular's case, supra, and Central Inland Water Transport Corporation Limited v Brojo Nath Ganguly. She further says that the argument of the cost is premature and a Committee consisting of experts would review the pricing and determine pricing in the matter. She also refers to an affidavit in support of her contentions. She also states that the Court cannot interfere in commercial matters. She refers to 2001(1) Supreme 351.
17. Mr. Datar, learned Counsel appearing for the contesting respondent questioned the very locus of the petitioner. He states that the petitioner has come at the last moment to the Court and the petition has to be rejected on the ground of delay only. He also states that tenders have been submitted for 195 items by several tenderers. Counsel refers to the marketing experience prevailing in other States to contend that the same cannot be said to be in violation of Article 14. Counsel refers to the case of M/s. Esteco Coal Services Limited, supra, to contend that there is a concession in the said case on hand. Insofar as Drug Control Act is concerned they are not relevant according to the Counsel. He refers to AIR 1979 SC 328 (sic), Krishnan Kakkanth's case, supra, Rau-naq International Limited's case, supra, Tam Tam Pedda Guruva Ready, B.T. Patil and Sons v State of Karnataka and Others and M/s. Monarch Infrastructure (Private) Limited v Commissioner, Ulhasnagar Municipal Corporation and Others . Insofar as packing is concerned the Counsel says that there are better advantages in the matter. He refers to various documents in this regard.
18. In reply Sri G.S. Vishweshwara, in addition to reiterating his contentions also contends that the present corrigendum is a clear case of non-application of mind. He states that the notification was issued on 19-2-2001 and the sale of tender was between 1-3-2001 to 16-4-2001; last date of tender was 30-4-2001; opening of tender was 2-5-2001, 12-4-2001 extension was given. The introduction was introduced on 24-1-2001. The Committee was constituted by the Government and if the present packing is allowed the Government would be incurring additional expenditure of several lakhs. He also says that the decision has been taken only by the Joint Director in the matter,
19. After hearing the Counsel three questions emerge for my consideration:
1. Whether the imposition of a condition of three years market standing experience is reasonable and is in violation of Article 14 of the Constitution of India?
2. Whether the condition requiring in respect of certain items, Alu-Alu blister pack is valid and reasonable?
3. Whether these conditions suffer from legal malice?
20. After hearing the Counsel at length on several dates I carefully perused the bulk material placed before the Court by both the parties.
21. The State Government issued a tender notification dated 19-2-2001. The said documents provide for a notification for drugs, chemicals and miscellaneous items for various hospitals by the Government. The tendering authority of Karnataka Health and Family Welfare Services, Bangalore. The tender document provide for various terms and conditions including EMD etc. The time schedule announced in the notification dated 19-2-2001 explains as under. Sale of tenders form up to 11-6-2001 4 p.m.; last date for submission of samples upto 25-6-2001; last date for submission of tender 27-6-2001, the tenders will be opened on 2-7-2001.
22. Point No. 1,--Section 1 provides for invitation of tenders. Section 2 provides for terms and conditions. It provides for various certificates. It provides for submission of various documents including demand draft. EMD, income-tax clearance certificate for the previous accounting year, sales tax clearance certificate for the previous accounting year, annual turnover statement for 3 preceding years and certified by a Chartered Accountant, list of items supplied to various State/National/Inter-national Agencies with quantities including supply to programs sponsored by WHO/UNICEF in the past three years if any, capacity installation certificate (format attached) issued by a Chartered Accountant subsequent to the date of notification, attested photocopy of manufacturing licence duly renewed upto date/licence validity certificate along with approved list/permission letter issued by the Licensing Authority under Drugs and Cosmetics Act, 1940 and Rules thereunder in case of Drugs; Market standing certificate issued by a Chartered Accountant to be submitted in original only, "No conviction" certificate, "Product-wise" certificate, Performance certificate for the last 3 years, "From Fill and Seal" technology certification, BIS/ISI certification, wherever applicable, sample submission acknowledgement issued by the Joint Director, Government Medical Stores in original only, undertaking to print Logogram, copy of the constitution of the firm, copy of the updated import licences for imported items, letter of authority in original in proof of his authority to sign the tender document with attested photograph on the tender offer form. These certificates providing for market standing certificate is in the form of format with the details of the year, name of the drug produced, code number, whether renewed as per Drugs Act, number of batches produced, batch numbers, name and address of the purchaser. It provides for signature of the manufacturer and signature of the Chartered Accountant. Similarly the tender condition provides for other certificates. Petitioner questions this market standing certificate as arbitrary and unreasonable.
23. Counsels essentially refer to Drugs and Cosmetics Act, 1940 (for short 'Act'), and invite my attention to Chapter II dealing with the Drugs Technical Advisoiy Board, the Central Drugs Laboratory and the Drugs Consultative Committee. They also refer to the standards of quality in terms of Chapter III and invite my attention to Section 18 of the Act in the matter of prohibition of manufacture and sale of certain drugs and cosmetics. Counsel also relies on various forms and rules to contend three years experience runs counter to the Drugs Act. This argument is very attractive bit if it is striped it can be noticed that the said argument is wholly unnecessary for the purpose of deciding the issue of 3 years market experience in the case on hand. The Act is an Act essentially providing for regulating the import into, manufacture, distribution and sale of drugs and cosmetics in the country. In the case on hand the State Government is not putting any embargo with regard to either manufacture, distribution and sale of drugs. The Government nowhere in the notification provides for any condition contrary to the manufacturing standards, distribution standards and sale of drugs standard provided under the Act. This Act provides for distribution and sale of drugs all over the State. The notification does not come in the way of sale of drugs in the State. All that the State wants is a marketing experience insofar as this tender is concerned. The petitioner seems to be under the apprehension that the sale of drug is banned by the State. It is not so. Sale is permissible in the State. But what is required is of three years marketing experience for supply in a commercial contract. Such experience was incorporated for the previous years which is an admitted fact. The same is not opposed or objected to by the parties including the petitioner herein. There is no prohibition in the Act providing such condition in a commercial contract. Three years marketing experience has stood the test of time. In fact this three years marketing experience is imposed by various Governments as rightly pointed out by Mr. Datar, learned Counsel for the contesting respondent. The Ministry of the Health and Family Welfare, Government of India, in their notification dated 21-4-2001 has imposed 5 years experience. The ESI Corporation in their tender has provided for a 3 years marketing experience. The Government of Andhra Pradesh in their tender dated 12-6-2000 has provided for a Marketing Standing Certificate issued by the Licensing Authority as a manufacturer with atleast 3 years manufacturing licence i.e., 1997-98, 1998-99 and 1999-2000 in respect of the items covered by Drugs Act. Orissa Health Development Project has provided for 5 years in the manufacture. Market standard certificate is insisted upon by the Tamilnadu Medical Services Corporation Limited, the Uttar Pradesh Government has insisted upon the marketing experience of 5 years. Therefore, in my view the insistence of marketing experience is a relevant factor for the purpose of acceptance of a bulk rate tender for supply of essential medicines to the hospitals in the State of Karnataka. As rightly pointed out by the Government Pleader the insistence is for continuous supply of drugs to the department. One main point is that the Government must have faith in the continuous supply of essential drug to the hospitals. This is the object that is sought to be achieved in insisting 3 years marketing experience. From the past experience and in the light of the past experience of the other Governments if the insistence of marketing experience by other State Governments is insisted this Court cannot say that this is arbitrary or unreasonable. The vehement argument of Sri G.S. Visweshwara with regard to no nexus cannot be accepted in the light of the object of the tender and in the light of the necessity of the marketing experience in the matter.
24. In fact the Government has placed before this Court the report of House Committee of Karnataka Legislative Council with regard to purchase of drugs in the Government hospital. In the Appendix IV the report presented on 30-5-1996 provides for marketing standing certificate with atleast 3 years continuous manufacturing licence for 3 years for every product quoted by the tenderer. Therefore, in my opinion in the light of this abundant material available the vehement argument of the petitioner's Counsel with regard to marketing experience for three years is unreasonable or arbitrary is not acceptable. Various provisions of Drugs Act do not come in the way of prescription of this marketing experience. This condition in no way prevents the petitioner from either manufacturing or distributing the drugs elsewhere. If the Government wants to introduce condition in the larger interest of the public the same cannot be said to be arbitrary as contended by the petitioner. Public interest plays a vital role in the governmental commercial transactions. Individual interest has to pave way for this interest. It is a well-settled principle of law that Courts cannot judicially interfere in these contractual matters unless the same is held to be arbitrary or unreasonable. Since on facts I have come to a categorical conclusion that the insistence is not arbitrary the petitioner has to fail on this principle.
25. Petitioner places strong reliance on the judgment of this Court in W.P. No. 5245 of 1986, DD: 7-8-1986. In the light of the vehement argument of the petitioners I have carefully gone through the said judgment. If one reads the facts of the case of the said judgment it is very clear that in the said judgment what was challenged was Clause 9 of the tender form which provided for a minimum of 3 years manufacturing experience. The insistence of manufacturing experience is struck down by the Court after referring to the Drugs Act in the said case. The Court noticed in para 11 that the Drugs Act is Central Act and Rules are statutory in character, are framed by Central Government. The Act and Rules having made adequate provisions for manufacture and sale of drugs, is there any justification to impose further restriction on the sale of drug and is there any rationale or nexus for such restrictions? The Court noticed in para 13 that a person having obtained licence for manufacture, can be prohibited to sell the drug only in accordance with Section 18 and on no other account. In the case on hand no such restriction is imposed. The manufacturing aspect of the matter has not been touched by the Government. What is touched is marketing experience. Manufacturing experience is different from marketing experience. Manufacturing is not prohibited in the case on hand. Therefore, the said judgment is not applicable. Even the present insistence of marketing experience cannot be said to be in violation of Section 18 of the Act. Section 19 of the Act provides for prohibition of manufacture and sale of certain drugs and cosmetics. There is no notification prohibiting the sale of drugs. What the Government wants is that in case they want to supply to the Government by way of bulk supply then they must have 3 years marketing standing experience. This is in consonance with public interest and continuous supply. They are essentially matters for the State and not for the Courts to decide particularly in a commercial contract of bulk purchase. Therefore, the defence of the Act on the facts of this case is rejected and I do so.
26. Petitioner also refers to a judgment of this Court in M/s. Esteco Coal Services Limited's case, supra. That is again a contract providing for eligibility conditions of 5 years experience in movement of coal to thermal power stations in addition to having supply of one lakh tonnes of coal per month to a thermal power station by rail-sea-rail route. Court noticed the 5 years experience in movement of coal to large thermal power stations and after noticing the insistence of 5 years experience to large thermal power station Court found it to be unreasonable. Even the argument of the petitioner as I see to para 8 is "while the minimum five years experience as an handling agent in movement of coal may be relevant and has nexus with the object sought to be achieved, the insistence that the handling agent should have the handling experience of movement of coal to large thermal power stations is totally irrelevant. Court noticing this argument has finally in para 27 declared that the words "large thermal power stations" as "unconstitutional and not valid in law". On the other hand the Court noticing the experience point in para 19 ruled that "therefore, the qualification or the eligibility required to be prescribed for inviting tenders must point out with regard to capability, competency, availability, of proficient manpower and other infrastructure, and experience of transporting the coal to a long distance. Such a prescription which would ensure that the transporting or handling agent is capable of executing the work of transporting the coal, is certainly be valid and cannot be charged as either arbitrary or unreason-
able, and it is not permissible for this Court to interfere against the such decision taken by the respondent 1".
27. Therefore, in my opinion on the given set of facts the respondents are perfectly justified in imposing three years marketing experience. Petitioner has also not opposed the same for the previous years. The Supreme Court in the case of Ramana Dayaram Shetty v The International Airport Authority of India and Others, has ruled in para 34 with regard to experience. Supreme Court has noticed the fact that the experience is a relevant factor. In the circumstances this argument requires to be rejected.
28. Point No. 2.--The second attack is with regard to insistence of a condition of certain items requiring Alu-Alu blister packing in terms of corrigendum.
29. Admitted fact reveals that the Government floated a tender in terms of Annexure-B on 19-2-2001. Corrigendum has been issued in terms of an order at page 25-A providing for Aluminum blister in respect of Code Nos. A-13, A-14, B-11, B-12, B-14, B-15, B-16, B-17, B-18, B-19 and B-20 and K-02, P-14 to 20. Petitioner's arguments are of twofold. The first argument is that this introduction is not recommended by the Committee known as Technical Advisory Committee. The second argument is that it was introduced after 2 months after tender notification. This corrigendum is to benefit only three manufacturers if it would result in loss to the State Exchequer. Third submission is Alu-Alu blister strips cost Rs. 17 lakhs. On this ground petitioner contends that said matter requires interference. As mentioned earlier the State and the contesting respondents in the reply have contended that this Alu-Alu blister pack provides for a cold form state by stretching a deep drawing, molding the aluminum plastic compound to form the blister cavity for holding the product. This is provided only for 14 items. The State Government also in para 5 have stated that this packing is imposed to avoid heating for forming the blister cavities.
30. Counsels have advanced elaborate arguments on this issue. Mr. G.S. Vishweshwara and Mr. Madhu Naik, state that this is not an absolute necessity in the case on hand. It is not as though without this Alu-Alu blister the medicines cannot be supplied. This is introduced only by way of corrigendum. They say that in the matter of tender the decision making process is a relevant factor. Though the decision as such is not for judicial interference but the process can certainly be interfered with by Courts. Their strong argument is "saving money" for the Government and providing supply of medicines to Government by others as well. The same has been countered by State as mentioned earlier. Before I take up this issue it is pertinent to refer to a few case-laws with regard to power of judicial review in these matters.
31. The Supreme Court in the famous case of Tata Cellular, supra has ruled as under:
"Judicial quest in administrative matters has been to find the right balance between the administrative discretion to decide matters whether contractual or political in nature or issues of social policy; thus they are not essentially justiciable and the need to remedy any unfairness. Such an unfairness is set right by judicial review. The judicial power of review is exercised to rein in any unbridled executive functioning. The restraint has two contemporary manifestations. One is the ambit of judicial intervention; the other covers the scope of the Court's ability to quash an administrative decision on its merits. These restraints bear the hallmarks of judicial control over administrative action. Judicial review is concerned with reviewing not the merits of the decision in support of which the application for judicial review is made, hut the decision making process itself.
32. In New Horizons Limited and Another v Union of India an Others, the Supreme Court ruled as under:
"18. In the recent decision in Tata Cellular's case, supra, this Court has examined the scope of judicial review in the field of exercise of contractual powers by Government bodies and, after noticing the current mood of judicial restrain in England, the Court has laid down the following principles (SCC p. 687 and 688, para 94):
"(1) The modern trend points to judicial restrain in administrative action.
(2) The Court does not sit as a Court of appeal but merely reviews of the manner in which the decision was made.
(3) The Court does not have the expertise to correct the administrative decision. If a review of the administrative decision is permitted it will be substituting its own decision, without the necessary expertise which itself may be falliable.
(4) The terms of the invitation to tender cannot be open to judicial scrutiny because the invitation to tender is in the realm of contract. Normally speaking, the decision to accept the tender or award the contract is reached by process of negotiations through several tiers. More often than not, such decisions are made qualitatively by experts.
(5) The Government must have freedom of contract. In other words, a fairplay in the joints is a necessary concomitant for an administrative body functioning in an administrative sphere of quasi-administrative sphere. However, the decision must not only be tested by the application of Wednesbury principle of reasonableness (including its other fac-
ets pointed out above) but must be free from arbitrariness not affected by bias or actuated by mala fides.
(6) Quashing decisions may impose heavy administrative burden on the administration and lead to increased and un-budgeted expenditure".
19. "Wednesbury principle of reasonableness" to which reference has been made in principle (5) aforementioned is contained in Associated Provincial Picture Houses Limited v Wednesbury Corporation . In that case Lord Greene, MR has held that a decision of a public authority will be liable to be quashed or otherwise dealt with by an appropriate order in judicial review proceedings where the Court concludes that the decision is such that no authority properly directing itself on the relevant law and acting reasonably could have reached it. In Tata Cellular's case, supra, this Court, has mentioned two other facets of irrationality:
1. It is open to the Court to review the decision maker's evaluation of the facts. The Court will intervene where the facts taken as a whole could not logically warrant the conclusion of the decision maker. If the weight of facts pointing to one course of action is overwhelming, then a decision the other way, cannot be upheld.
2. A decision would be regarded as unreasonable if it is partial and unequal in its operation as between different classes".
33. There are several other cases with regard to judicial review in this contractual commercial matters. Courts have certainly ruled that the decision as such is not justifiable but the decision making process is to stand the test of Wednesbury principle of reasonableness.
34. In the case on hand let me say as to whether decision making principle stand the test of Wednesbury principle or not. It is an admitted fact that the tender was floated on 19-2-2001. By way of corrigendum the respondents have introduced Alu-Alu blister pack. The petitioner in the pleadings as mentioned earlier have stated that it is without any application of mind. In reply to this the respondent-State Government has stated in the first counter in para 5 reading as under:
"Having realised the mistake committed for the reason that it will be very difficult to evaluate the samples and the variation in price the Committee consisting of Director of Health and Family Welfare, Joint Director, Government Medical Stores, Joint Director (Medical), Additional Drugs Controller and Incharge Drugs Controller and Deputy Director (Pharmacy) have decided that items should carry specific packing specification and only such items which are considerably expensive in the market/that needs to be protected from radiation and hygroscopic effect/likely to get damaged in handling or storage should be specified with blister pack-
ing with both sides aluminum (Alu-Alu blister) and the Joint Director, Government Medical Stores was requested to identify and incorporate the specifications in the tender list. Accordingly, a corrigendum was issued only with a view to correct the mistakes committed earlier while mentioning the packing specifications. A true copy of the corrigendum which is part of the tender form is produced herewith and marked as Annexure-R3. As is clear from the corrigendum, in respect of certain items aluminum strip pack is prescribed and in respect of certain other items blister pack with one side, aluminum is prescribed. Likewise, only in respect of 14 items which are considerably expensive in the market and which needs to be protected from radiation and hygroscopic effect and are likely to get damaged in handling or storage Alu-Alu blister pack prescribed".
35. A rejoinder is filed in which certain malice has been attributed. The Government has filed an affidavit by the Joint Director, Government Medical Stores, respondent 3. In paras 3 and 4 this is what he states:
"It is respectfully submitted that with reference to letter No. GNS (1V2/1999-2000, dated 20-4-2001, a Committee was constituted under the Chairmanship of the Director of Health and Family Welfare Services, Bangalore to look into the packing specifications of each item in the tender document as it was not properly specified. On 21-4-2001, the meeting was convened in the presence of the Director of Health and Family Services, Joint Director, Medical Stores, Joint (Medical), Additional Drugs Controller and Drugs Controller I/c and the Deputy Director (Pharmacy). Having discussed various aspects of the matter, the Committee was decided to entrust the job of identifying the items to be packed in Alu-Alu blister pack. Thereafter, after going through the list along with the Deputy Director of pharmacy, I have identified 14 items from out of 455 items which are costlier and also require hygroscopic and ultraviolet light protection and the same was incorporated as a corrigendum duly signed by me and countersigned by the Director of Health and Family Welfare Services.
It is respectfully submitted that I have identified the drugs, for which Alu-Alu blister pack has to be prescribed after discussing the matter with the Deputy Director of Pharmacy. But I have not maintained any separate records and I have not given any reasons in writing while identifying the drugs".
36. In the light of this affidavit what is clear to me is that a Committee was constituted under the Chairmanship of Director of Health and Family Welfare to look into packing specification of each item of tender document. On 21-4-2001 meeting was held in the presence of Director. Joint Director, Additional Drugs Controller incharge and Deputy Director, Pharmacy. The Committee entrusted the job of identifying items in the Alu-Alu blister pack to the Joint Director, Government Medical Stores. After going through the list along with the Deputy Director of Pharmacy he has identified 14 items which are costlier. He has admitted that no reasons are available in writing while identifying the drugs. What is clear to me is that this corrigendum was issued on 31-5-2001. It is also admitted that Committee on 9-10-2000 identified drugs list in respect of each tender which has to be invited for 2001-03. Committee prescribed size of packing and type of packing. Therapeutic-cum-Expert Committee has not prescribed the type of packing (as referred to in affidavit dated 24-7-2001). It was in these circumstances the present corrigendum is issued. Though the State has issued a corrigendum with a view to rectify the mistake but the said corrigendum even according to the admitted affidavit is without any reasons whatsoever. Elaborate arguments have been advanced before me with regard to the increasing cost on account of this corrigendum in respect of 14 items. There are allegations and counter-allegations in the case on hand. There are documents including affidavits by either parties. Unfortunately, the Joint Director has admitted in the affidavit that he has introduced this corrigendum in the light of the decision of the Committee identifying the packing in Alu-Alu blister pack. He says that he has not maintained any separate record and has not given any reasons. It is well-settled principle of law that decision making process has to be supported by reasons and records. Admittedly the present case involves all of bulk rate contract involving crores of rupees. There are no reasons available in writing in terms of the affidavit. The Court is unable to know as to whether the decision making process is reasonable or not in the absence of any record or reasons admittedly not maintained by the authorities.
37. In Mohinder Singh Gill and Another v The Chief Election Commissioner, New Delhi and Others, the Supreme Court has ruled that reasons cannot be supplemented in Courts. In these circumstances in my view corrigendum in respect of these 14 items suffer from the theory of unreasonableness. Moreover even according to respondents that said packing involves more expenditure to State revenue. Though this packing may be helpful in drug distribution, still the Court cannot but observe that any charge or modification has to be not at the cost of Government revenue. In this connection it is pertinent to refer to a judgment of this Court in W.A. Nos. 998 to 993 of 1991, DD: 3-6-1991. This Court noticed in para as under:
"If these funds could be saved, the funds could be utilised for the purchase of more drugs or other essential articles needed to the Government Hospitals".
In a poor country like India, Government cannot be permitted to spend its money without any acceptable reasons available on the record. In this case the decision making process is not supported by any documents. The Government is expected to undertake cost saving, availability of drugs and medicinal costs, providing for larger participation of tenderers in a commercial contract in addition to other relevant considerations as applicable to this case. In addition the corrigendum has also not been approved by the Committee. Taking into consideration all these aspects of the case I am clearly of the view that the decision making process suffers from arbitrariness insofar as these 14 items are concerned in the absence of any acceptable material available on record. The Government Pleader has stated that the tender Committee would consider pricing structure. But what the Counsel forgets is that basic foundation figures are not available in the case on hand. Unless appropriate and proper steps are taken, it is not proper to venture into this new experimentation at the cost of Government exchequer. Hence, the point No. 2 is answered in favour of the petitioner.
38. With regard to delay and legal malice let me see as to whether any case is made out by the authorities in this case. It is no doubt true that the petitioner has approached this Court after issue of tenders. In normal circumstances this Court would not have interfered but in the case on hand it is seen that the tender documents have several corrigendums issued from time to time and moreover if the interference is in the interest of State revenue the delay if at all has to be given a second place when compared to saving of revenue. Therefore the arguments of delay raised by Mr. Datar is rejected on the peculiar facts of this case.
39. Arguments of legal malice in my view is not supported by the material on record. Petitioner complains that this has been introduced only to help respondent 3. In fact respondent 3 was not even made a party in the beginning. Respondent 3 on his own got impleaded the case. Malice is a serious matter and that cannot be decided without any particular foundation whatsoever.
40. In these circumstances the following order is passed.
41. The challenge to the condition relating to 3 years market standing in respect of drugs sought to be purchased and sought to be offered for purchase in the tender notification dated 19-2-2001 in No. GNS 10-2-1999-2000 (RC 1/2000-03) is rejected.
42. The condition in respect of 14 items in respect of corrigendum requiring Alu-Alu blister pack in Annexure-B is set aside.
43. A writ of mandamus is issued to the respondents to hold the auction in terms of the tender condition excluding these 14 items in terms of the corrigendum.
44. A further direction is issued to continue the existing practice as on today insofar as these 14 items are concerned for a period of 3 months from the date of receipt of copy of this order as a stopgap arrangement. However, liberty is reserved to the respondent to re-examine and rein-troduce Alu-Alu blister packing in accordance with law and in accordance with the observation made in the course of this order. No costs.