Gujarat High Court
Indian Immunologicals Ltd vs Gujarat Medical Services Corporation ... on 20 August, 2015
Author: Akil Kureshi
Bench: Akil Kureshi, Mohinder Pal
C/SCA/11548/2015 ORDER
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
SPECIAL CIVIL APPLICATION NO. 11548 of 2015
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INDIAN IMMUNOLOGICALS LTD....Petitioner(s)
Versus
GUJARAT MEDICAL SERVICES CORPORATION LTD & 1....Respondent(s)
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Appearance:
MR DHAVAL DAVE, SENIOR ADVOCATE assisted by MR ASHISH H SHAH, ADVOCATE
for the Petitioner(s) No. 1
MR PARTH H BHATT, AGP for the Respondent(s) No. 1
J SAGAR ASSOCIATES, ADVOCATE for the Respondent(s) No. 2
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CORAM: HONOURABLE MR.JUSTICE AKIL KURESHI
and
HONOURABLE MR.JUSTICE MOHINDER PAL
Date : 20/08/2015
ORAL ORDER (PER : HONOURABLE MR.JUSTICE AKIL KURESHI)
1. Petitioner has challenged a communication dated 23.04.2015, at Annexure-E to the petition, under which the respondent No.1 conveyed to the petitioner that its tender for supply of Anti Rabies Vaccine was rejected on the ground that valid WHO GMP/COPP was not submitted with the tender as per tender condition No.11(a).
2. Brief facts are as under:-
2.1 Petitioner is a company registered under the Companies Act and is a wholly owned subsidiary of National Dairy Development Board ("NDDB" for short) set up in the year 1982 with the object of making vaccines for foot and mouth diseases available to the farmers at Page 1 of 19 HC-NIC Page 1 of 19 Created On Tue Aug 25 00:34:06 IST 2015 C/SCA/11548/2015 ORDER affordable price and other related objects. The respondent No.1 is Government of Gujarat corporation and it required to procure bulk quantity of Anti Rabies Vaccine of Tissue culture/Cell culture for Intra Muscular & Intra Dermal use (hereinafter to be referred as "the said Vaccine"). A tender notice for such purpose along with several other medicines to be procured came to be issued in the month of January 2015 for awarding of contract for supply of such drugs for a period of one year between 01.04.2015 to 31.03.2016. There were several conditions contained in this tender notice, to which we will refer at later stage. The petitioner, desirous of getting the contract, filled up the tender along with covering letter dated 14.02.2015. With the tender documents, the petitioner produced a certificate of Pharmaceutical Products issued by the Department of Food Safety and Drug Administration certifying that the manufacturer conforms to requirements of good practice in the manufacture and quality control as recommended By World Health Organization with respect to the product in question. This certificate was dated 31.01.2013 and was valid up to 31.12.2014.
2.2 On 12.02.2015, the petitioner addressed a letter to the respondent No.1, in which it was conveyed as under:-
Page 2 of 19
HC-NIC Page 2 of 19 Created On Tue Aug 25 00:34:06 IST 2015 C/SCA/11548/2015 ORDER "4. However, without prejudice to above, we are submitting WHO-GMP certificate dated 31st January 2013 issued by Directorate of Drugs Control Administration (DDCA), Govt.
of Talim Nadu, Chennai, valid upto 31st December 2014. We had applied for the renewal of the WHO-GMP certificate and the same is under process. We are expecting the certificate in a month's time.
Nevertheless, the Under Process certificate dated 7th Jan 2015 issued by O/o.DDCA, Govt. of T.N., Chennai, in lieu of WHO GMP certificate, is enclosed herewith as Annexure 2 for your kind perusal."
2.3 Along with the said letter dated 12.02.2015, the petitioner had produced letter dated 07.01.2015 from the office of the Director of Drugs Control, Tamilnadu certifying that the petitioner's request for renewal of its certificate was under consideration. In such letter, it was stated as under:-
"Certified that M/s.Human Biologicals Institute, A Division of Indian Immunologicals Ltd., Kozhipannai, Pudumund Post. Udhagamandalam-643 007 having manufacturing licences in Form 28D bearing No.15 dated 06.08.1998 valid up to 31.12.2006. They have been issued with GMP certificate on WHO norms for 2 years under manufacturing licence which is valid upto 31.12.2014. They have applied for renewal of their GMP Certificate on WHO norm for a further period of 2 years for 2015- 2016 and their application is under process in this Directorate."
2.4 On 13.04.2015, the petitioner wrote a letter to the respondent No.1 pointing out that the certificate of renewal has already been granted and that the renewal is Page 3 of 19 HC-NIC Page 3 of 19 Created On Tue Aug 25 00:34:06 IST 2015 C/SCA/11548/2015 ORDER now up to 31.12.2016. Along with the letter, the petitioner produced certificate dated 01.04.2015 issued by the Director of Drugs Control, Tamilnadu granting similar quality control certificate, certifying that the product conforms to the standards recommended by the WHO. This certificate was valid up to 31.12.2016. The petitioner also produced before the authorities letter dated 14.05.2015 issued by the Director of Drugs Control certifying that the renewal would cover the period between 01.01.2015 to 31.12.2016.
2.5 In the meantime, the last date for receiving tender forms was 16.02.2015 for physical tenders and 19.02.2015 for on-line tenders. It is an admitted position that as per the tender form, though on 19.02.2015 itself, the technical bids were to be opened, on the said date, the bids could not be opened. The technical bids were opened only on 21.04.2015. The bid of the petitioner was rejected on the ground that the petitioner had not submitted valid WHO GMP/COPP as per tender condition-11(a). This was so communicated to the petitioner under impugned communication dated 23.04.2015. The respondent No.2 and another tenderer were found technically qualified. Their offers were opened. They were informed that respondent No.2's offer was lower of the two. The second offerer was given an opportunity to Page 4 of 19 HC-NIC Page 4 of 19 Created On Tue Aug 25 00:34:06 IST 2015 C/SCA/11548/2015 ORDER match the price of the respondent No.2. He was unwilling to do so. The offer of the respondent No.2 was received on 03.07.2015 and the contract was awarded on 27.07.2015. 2.6 Aggrieved by the rejection of the technical bid, the petitioner filed this petition and challenged the said communication dated 23.04.2015.
3. Learned Counsel Shri Dhaval Dave for the petitioner drew our attention to relevant terms and conditions of the contract and contended that though at the time of filling the tender bid, the petitioner did not have the certificate of renewal, nevertheless, the application for renewal was already filed. The renewal was granted by the competent authority before the technical bids were opened. Such renewal related back to the date of the application and the certificate of renewal covered the period between 01.01.2015 to 31.12.2016. These facts were brought to the notice of the competent authority before opening of the technical bids. The respondent No.1 therefore committed a serious error in rejecting the tender of the petitioner on highly technical ground. What was the essence was that the tenderer must have quality control certificate by one of the two specified authorities. Merely because on the date of filling up the tender, such renewal certificate could not be produced, though was applied for, would not Page 5 of 19 HC-NIC Page 5 of 19 Created On Tue Aug 25 00:34:06 IST 2015 C/SCA/11548/2015 ORDER disqualify the petitioner. Counsel submitted that the condition for production of such a certificate along with the tender was not an essential condition and depending on the past practice, could have been relaxed. He pointed out that on the earlier occasion, in case of this very petitioner for supply of same or similar drugs, under similar fact situation, predecessor of the respondent No.1 corporation had relaxed the condition. Relying on the decision of the Supreme Court in case of B.S.N. Joshi & Sons Ltd. Vs. Nair Coal Services Ltd. & Ors., reported in (2006) 11 SCC 548, Counsel submitted that the condition in question not being essential condition of the tender, the same ought to have been, in facts of the present case, relaxed. He submitted that the petitioner's offer was lower than that of the respondent No.2.
4. On the other hand, learned Counsel Shri Chhatrapati for respondent No.2 raised following contentions:-
I. Condition of production of the certificate contained in Clause-11(a) of the tender notice was an essential condition. In absence of any power to relax the same, could not have been relaxed.
Page 6 of 19 HC-NIC Page 6 of 19 Created On Tue Aug 25 00:34:06 IST 2015 C/SCA/11548/2015 ORDER II. Any relaxation in the condition would exclude large number of similarly situated companies who also might have applied for renewal of certificate, but did not fill up the tender since renewal before the last date had not been granted.
III. In case of the respondent No.2 itself, under identical when the renewal could not be obtained before the last date of filling up the tender, the State authorities had rejected the tender, though before opening the technical bids, such renewal was available and produced before the authorities. He therefore submitted that according to him, therefore, no consistent practice can be discerned from the action of the State authorities in this respect.
IV. He contended that there has been
considerable delay non part of the
petitioner in filing the petition.
Rejection of the petitioner's tender was communicated on 23.04.2015. Commercial bids of the technically qualified tenderers were opened on 02.05.2015. The Page 7 of 19 HC-NIC Page 7 of 19 Created On Tue Aug 25 00:34:06 IST 2015 C/SCA/11548/2015 ORDER offer of the respondent No.2 was accepted on 03.07.2015, whereas the present petition was filed on or around 08.07.2015. By now, during the pendency of the petition, the contract is already awarded to the respondent No.2. Orders have been placed and the respondent No.2 has already started manufacturing the drug.
5. Counsel relied on following decisions:-
I. In case of Kanhaiya Lal Agrawal Vs. Union of India & Ors., reported in (2002) 6 SCC 315, in which it was observed as under:-
"6. It is settled law that when an essential condition of tender is not complied with, it is open to the person inviting tender to reject the same. Whether a condition is essential or collateral could be ascertained by reference to the consequence of non-compliance thereto. If non-fulfillment of the requirement results in rejection of the tender, then it would be an essential part of the tender otherwise it is only a collateral term.
This legal position has been well explained in G.J. Fernandez v. State of Karnataka."
II. In case of Monarch Infrastructure (P) Ltd.
Vs. Commissioner, Ulhasnagar Municipal Corporation & Ors., reported in (2000) 5 Page 8 of 19 HC-NIC Page 8 of 19 Created On Tue Aug 25 00:34:06 IST 2015 C/SCA/11548/2015 ORDER SCC 287, in which it was observed as under:-
"10. There have been several decisions rendered by this Court on the question of tender process, the award of contract and have evolved several principles in regard to the same. Ultimately what prevails with the Courts in these matters is that while public interest is paramount there should be no arbitrariness in the matter of award of contract and all participants in the tender process should be treated alike. We may sum up the legal position thus :
(i) The Government is free to enter into any contract with citizens but the Court may interfere where it acts arbitrarily or contrary to public interest.
(ii) The Government cannot arbitrarily choose any person it likes for entering into such a relationship or to discriminate between persons similarly situate.
(iii) It is open to the Government to reject even the highest bid at a tender where such rejection is not arbitrary1 or unreasonable or such rejection is in public interest for valid and good reasons."
III. In case of W.B. State Electricity Board Vs. Patel Engineering Co. Ltd. & Ors., reported in (2001) 2 SCC 451, in which it was observed that relaxation or waiver of a rule or condition, unless so provided under the tender notice, by the State or its agencies in favour of one bidder would crate justifiable doubts in the minds of other bidders, would impair the rule of Page 9 of 19 HC-NIC Page 9 of 19 Created On Tue Aug 25 00:34:06 IST 2015 C/SCA/11548/2015 ORDER transparency and fairness and provide room for manipulation to suit the shims of the State agencies in picking and choosing a bidder for awarding contracts
6. Learned AGP Shri Bhatt for the respondent No.1, in addition to what was argued by Shri Chhatrapati, submitted that the contract was for supply of life saving drugs. Quality control was therefore of paramount importance. Insistence of quality control certificate was therefore justified. No tenderer, who cannot meet with the essential requirements till the last date of filing the tender, can have vested right to insist that such requirement be relaxed or the date be pushed back. He submitted that admittedly on the date of filing of the tender, the petitioner did not have renewal of the certificate which was issued later. The State authorities therefore committed an error in rejecting the technical bid. He relied on decision of the Supreme Court in case of Poddar Steel Corporation Vs. Ganesh Engineering Works & Ors., reported in (1991) 3 SCC 273, in which the Supreme Court highlighted distinction between essential and non-essential condition of tender notice.
7. Having thus heard learned Counsel for the parties and having perused documents on record, before revisiting the sequence of events, we may recall that the Page 10 of 19 HC-NIC Page 10 of 19 Created On Tue Aug 25 00:34:06 IST 2015 C/SCA/11548/2015 ORDER last date of filling up the tender was 16.02.2015 for physical submission and 19.02.2015 for on-line application Till that date, the petitioner did not possess the certificate of the competent authority of the quality control of the drug. The petitioner did enjoy such certificate right from the year 1998, but on 16.02.2015, when the tender filled in, such certificate had expired. The petitioner had applied for renewal which was under process. Renewal was granted under order dated 01.04.2015. Renewal was valid up to 31.12.2016. Though it does not state that it would relate back to the date of application, nevertheless, the validity of the certificate up to 31.12.2016 would indicate that its two years period would commence from 01.01.2015. This is really not in doubt, Whatever doubt may be possible, it got cleared through the clarification dated 14.05.2015 from the Director of Drugs Control, Tamilnadu pointing out that the certificate would cover the entire period between 01.01.2015 to 31.12.2016. These facts were brought to the notice of the respondent No.1 before the technical bids were opened on 21.04.2015. In this context, a short question is was the respondent No.1 authorized to and required to relax the condition of not producing the certificate of quality control along with tender form. The answer to this question would have to be found in the tender conditions. Tender condition Page 11 of 19 HC-NIC Page 11 of 19 Created On Tue Aug 25 00:34:06 IST 2015 C/SCA/11548/2015 ORDER No.11 provided as under:-
"11. (a) For lifesaving drugs, the manufacture should have valid WHOGMP certificate or valid Certificate of Pharmaceutical Produce (COPP) for individual product in the WHO format. In absence of such certificate, the tender is liable to be rejected. Unless the date of expiry is specially mentioned in the certificate, the validity of WHOGMP (COPP) certificate will be considered as two years from the date of issue, effect for foreign product where the tenders most affirm the date of validity.
No offer will be acceptable unless the tender is accompanied by requisite WHOGMP describe above. Manufactures not having valid WHOGMP certificate are not entitled to submit tender. Under no circumstances submission of copies of renewal application challan for expired WHOGMP certificate will be considered in lieu of valid WHOGMP certificate. Conditional WHOGMP will not be accepted.
The certificate mentioned in above must include either the name of drugs or the category of drugs for which the WHOGMP is issued.
(b) In case of imported Drugs /Surgical /Diagnostic Kit, valid Drug Manufacturing Licence, Product Permission, WHOGMP certificate of manufacture, Labels and Product literature of all quoted product must be submitted along with the tender.
7.1 Clause No.15 of the tender reads as under:-
"15. No conditional offer /quotation will be accepted. No variation in the terms and conditions of the tender, including deviation from standards / specifications / terms of supply will be accepted.
Page 12 of 19 HC-NIC Page 12 of 19 Created On Tue Aug 25 00:34:06 IST 2015 C/SCA/11548/2015 ORDER 7.2 Relevant portion of Clause-17 provided as under:-
"17. The legible and certified copies of the following documents must be attached /annexed to Technical Supporting Documents.
(d) Valid WHOGMP certificate of manufacturer for life saving drugs as well as for imported drug products.
7.3 Clause-20 reads as under:-
"20. Before submission of any tender, the tenderer must verify that they have submitted all relevant certificates /permissions /documents in proper format alongwith tender. No intimation of missing documents will be given by this office. No documents will be accepted thereafter and the tenders will be processed on the basis of available documents /certificates. If the requisite documents are not submitted or even if submitted are not in proper format, the tender is liable to be rejected.
7.4 Relevant portion of Clause-25 provided as under:-
"25. The tender is liable for rejection due to any of the reasons mentioned below:
4. Non-submission of required documents as shown in general condition No.17 above.
8. It is undisputed that the tender notice did not contain any express power for relaxation of any of the conditions. Nevertheless, if a condition is otherwise Page 13 of 19 HC-NIC Page 13 of 19 Created On Tue Aug 25 00:34:06 IST 2015 C/SCA/11548/2015 ORDER found to be non-essential condition, substantial compliance thereof, may, in a given set of facts, be sufficient and as held by the decision of the Supreme Court noted above, may be relaxed. However, in the present case, Clause-11 of the tender notice, which pertained to lifesaving drugs, required the manufacturer not only to have a valid WHO certificate of good manufacturing practice or valid certificate or Pharmaceutical Product in WHO format, it also provided that in absence of such certificate, the tender would be rejected. The condition also stipulated that in absence of any date of expiry mentioned in the certificate, its validity would be considered for two years from the date of issue. It also provided that no offer will be accepted unless the tender is accompanied by the requisite certificate. Manufacturer not having valid certificate would not be entitled to submit the tender. Most importantly, it was stated that "Under no circumstances submission of copies of renewal application challan for expired WHOGMP certificate will be considered in lieu of valid WHOGMP certificate. Conditional WHOGMP will not be accepted".
9. Clause-11 of the tender notice is worded in express terms, in different manner conveying that the WHO GMP or the certificate of Pharmaceutical Products is of Page 14 of 19 HC-NIC Page 14 of 19 Created On Tue Aug 25 00:34:06 IST 2015 C/SCA/11548/2015 ORDER paramount importance. To begin with, this is a special specification for lifesaving drugs. Secondly, in different manner, in Clause-11, it has been provided that in absence of such a certificate filed along with the tender application, the tenderer would not be qualified. As noted above, at one stage, it has been stated that in absence of such certificate, the tender is liable to be rejected. It is further stated that no offer will be accepted unless the tender is accompanied by requisite certificate. It is made abundantly clear that under no circumstances, submission of copies of renewal application in lieu of the certificate itself would be sufficient and conditional certificate would not be accepted. The specifications that in absence of validity period, the certificate would be treated as valid for two years from the date of issue, further emphasis the anxiety on part of the authorities to ensure strict compliance with the requirement of quality control in lifesaving drugs. When this clause is read with conjunction with other clauses of the tender notice reproduced above, it becomes abundantly clear that furnishing of such a certificate along with the tender was an essential condition. For example in Clause-15, it has been provided that no conditional offer will be accepted and no variation in terms and conditions will be accepted. In Clause-17, it has been provided that Page 15 of 19 HC-NIC Page 15 of 19 Created On Tue Aug 25 00:34:06 IST 2015 C/SCA/11548/2015 ORDER supporting technical documents would include valid WHO GMP certificate of manufacture for lifesaving drugs. In Clause-20, it has been provided that no documents will be accepted after filing of the tender and the tenders will be processed on the basis of available documents and certificates. Clause-25 once again provided that the tender would be liable to be rejected for any of the reasons including for non-submission of required documents as shown in Clause-17.
10. Looked from any angle, the requirements contained in Clause-11 of the tender document cannot be seen as non-essential. Whether to make certain condition essential or non-essential is the prerogative of the Government agency inviting tenders. It is well settled that in the arena of contractual relations, Government enjoys a degree of flexibility and subject, of course to charges of malafides or arbitrariness or discrimination of such like, even the Government agency would be free to contract with the citizens as any other citizen could. As a procuring agency, the respondent No.1-State was free to prescribe standards for qualifying an intending tenderer and impose such conditions which would meet with its requirement of strict quality control. Such conditions are ordinarily not open to judicial review. The conditions contained in Clause-11 are not even Page 16 of 19 HC-NIC Page 16 of 19 Created On Tue Aug 25 00:34:06 IST 2015 C/SCA/11548/2015 ORDER challenged before us. Its interpretation is the only debate. Close perusal of Clause-11 read in tune with other conditions, make it amply clear that what was insisted upon was that the contractor must fulfill all requirements, particularly one of possessing quality control certificate issued by only one of the two agencies specified in the tender document before the last date of filling up the tender. It was provided that such certificate would be accompanied along with the tender form. No application without such certificate would be valid. No application would be considered on the basis of documents not produced along with it. From various angles, it was made plain to the public at large that this was an essential condition, not open to variation. The issue can be looked from a different angle. If the tenderer had such a valid certificate but due to any reason did not produce till the last date for making application, his tender would be rejected even if he produced such a certificate later on. In the present case, the petitioner did not even have such a certificate till the last date for making application.
11. It is true that in one such instance, in case of the petitioner itself, the predecessor of the respondent No.1 corporation had made a minor departure. Along with the tender application when the petitioner had Page 17 of 19 HC-NIC Page 17 of 19 Created On Tue Aug 25 00:34:06 IST 2015 C/SCA/11548/2015 ORDER not been able to produce the renewal certificate, the slight distinction was there that renewal was granted on the last date for applying, but certificate was produced later on. Whether this would be significant or material difference or not is not really important. What is important is that as pointed out by the respondent No.2, under similar circumstances, the company's tender was rejected as the company could not produce quality control certificate along with tender application though the renewal was granted and produced before opening the technical bid. What emerges is that no consistent practice in the Government departments can be traced as to held that by virtue of such long standing and customary practice, even in absence of any express power of relaxation, such power should be read into in this tender and the general public at large would be at notice that Government considers such condition non-essential and may be relaxed.
12. In view of such conclusions, we need not to into the alleged delay in filing the petition or creating of equities in the meantime. Petition is therefore dismissed. Notice is discharged.
(AKIL KURESHI, J.) Page 18 of 19 HC-NIC Page 18 of 19 Created On Tue Aug 25 00:34:06 IST 2015 C/SCA/11548/2015 ORDER (MOHINDER PAL, J.) SHITOLE Page 19 of 19 HC-NIC Page 19 of 19 Created On Tue Aug 25 00:34:06 IST 2015