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Bharat Biotech International Ltd. v/s Municipal Corporation of Gr.Mumbai & Others

    WRIT PETITION (L) NO.293 OF 2012
    Decided On, 03 September 2012
    At, High Court of Judicature at Bombay
    By, THE HONOURABLE MR. JUSTICE S.A. BOBDE & THE HONOURABLE MR. JUSTICE R.G. KETKAR
    For the Petitioner: Aspi Chinoy, Senior Advocate, a/w Ms Chandana Salgaonkar, Advocates. For the Respondents: R1 & R2, E.P. Bharucha, Senior Advocate, a/w Komal Punjabi, M.C.G.M.& Chief Engineer, R3, M.M.Vashi i/b M/s M.P. Vashi & Associate, R4 & R5, D.D.Madon, Senior Advocate, a/w Gaurav Mehta i/b M/s Dhrve Liladhar & Co., Advocates.


Judgment Text
Oral Judgment: (S.A. Bobde, J.)

1. Heard Mr Aspi Chinoy, learned Senior Counsel for the petitioners,Mr. E.P.Bharucha, learned Senior Counsel for respondent-nos.1 and 2 - M.C.G.M and Chief Engineer, Central Purchase Department, Mr M.M.Vashi, learned counsel for respondent no.3 and Mr D.D.Madon, learned Senior Counsel for respondent nos 4 & 5, at length.

2. Rule. Rule is made returnable forthwith. Heard finally, with consent of parties.

3. The petitioners have challenged the grant of a contract in pursuance of a Tender for the supply of Rabies Vaccine in favour of respondent no.3, who is a Distributor of respondent no. 4 and respondent no. 5 is a Division/manufacture unit of respondent no.4. The main contention of the petitioners is that respondent no.3 is not qualified since the Performance Certificate submitted by them is not in accordance with the prescribed proforma, which is a mandatory condition of the Tender document.

4. Respondent no.4 is a limited Company. Respondent no.5 is a Division/manufacture unit of the respondent no.4, a Limited Company, which holds license for manufacture and supply of Rabies Vaccine. Respondent no.4 has authorized respondent no.3 to submit the tender. The petitioner is a Limited Company engaged in the business of manufacture of next generation vaccines.

5. Since the provision to take measures for ensuring the health of citizens is mandatory duty imposed on respondent no.1-Corporation, the Corporation issued a tender for the supply of Injection and Sera Vaccines to Municipal Hospitals, Maternity Homes and Dispensaries, on 30th November, 2011. The tenders had to be collected and submitted in a wax sealed envelope, which is containing 'A' and 'B' along with details, as specified in the proforma of receipt of tender samples. The technical documents containing envelop 'A' and schedule rate copy in 'B' were to be opened. The contents of envelope 'A' were as follows:-

(i) The complete tender document, all the accompaniments submitted along with the original Solvency Certificate; Test Certificates of the following certificates in case of drug items, copy of drug manufacturing licence, repacking licence with list of products.

(ii) Performance Certificate from the concerned Food and Drugs Administration in case of drug items.

(iii) No Conviction Certificate issued by the office of the Commissioner of FDA of the respective State not more than six months old on the date of the tender.

(iv) Copy of the Drug Selling Licence issued by the office of the Commissioner of FDA to the manufacturer and to the distributor.

(v) Copy of valid relevant ISI/ISO/WHO-GMP/CMP Certificate wherever applicable.

(vi) Test Report from manufacturer/FDA approved laboratory/Govt aided laboratory/in-house test report from manufacturer.

The main contention of the petitioners is that the tender of respondent no.3 did not comply with clause 26, which prescribes mandatory requirements of submitting a tender. In that, it did not contain a performance certificate from the concerned Food and Drugs Administration in the prescribed proforma Annexure No. 'D'.

Clause 26 reads as follows:

'26. Envelope A- Mandatory Requirements:

The technical tender envelope 'Envelope 'A' must contain the following documents which are mandatory requirements and non-submission of any of these documents shall render the tender liable for rejection. The tenderer must submit the documents in the order mentioned below, attached after the last page of this document, paginate each of them starting from page number 'T-2' and submit an index page at page 'T-1' to each of these paginated documents.

A. xxx xxx

B. xxx xxx

C. xxx xxx

D. xxx xxx

E.(i) xxx xxx

(ii) Performance Certificate from concerned Food and Drugs Administration in enclosed proforma Annexure No.'D'. If manufacturing the same items for which tender is filled in at various places either in Maharashtra or outside Maharashtra, he should obtain performance certificate from the respective Food and Drugs Administration Authority where the manufacturing activities are carried out. '

Clause 26 refers to the submission of the Performance Certificate in Annexure No. 'D', which reads as follows:

ANNEXURE 'D'

FOOD AND DRUGS ADMINISTRATION

No._________________

Office of the Commissioner,

___________________ Division

Dated : ___________________

PERFORMANCE CERTIFICATES

This is to certify that M/s ___________________________ having manufacturing premises at ______________ its holding license(s) valid up to _________ in forms ________No.________ under the Drugs and Cosmetics Act,1940, and Rules thereunder, on the said address and that the performance of the aforesaid manufacturer for preceding three (3) years is satisfactory, and that -

(a) The drugs in respect of which this certificate is issued is/are manufactured on the own license of the manufacturer and not on the loan license.

(b) The manufacturer has his own quality control section;

(c) During the preceding three (3) years there is no instance of suspension or cancellation of a part of a license issued to the manufacture, in respect of any of the drugs which are offered by the manufacture in the tender mentioned in para 2 below, on account of drug under tender being not standard quality;

(d) During the preceding three (3) years there is no instance of suspension or cancellation of factory license (full license) on any account;

(e) There is no instance wherein any of the drugs manufactured by the manufacturer is reported to be spurious or adulterated;

(f) No administrative action or prosecution is contemplated or launched against the manufacturer under the Drugs and Cosmetics Act 1940 and Rules thereunder in respect of any of the drugs offered by him in the tender mentioned in paragraph 2 below;

(g) During the periods of three (3) preceding years, the manufacturer has not been convicted under the Drugs and Cosmetics Act,1940, and Rules thereunder to undergo imprisonment for more than one day;

(h) The manufacturer has submitted year wise (April to March) three years statement of production and sale of the concerned drugs duly certified by Chartered Accountant; This annual sale is more than 20 percent of the quantity of total requirement specified in the tender.

2. This certificate is issued for the purpose of __________tender of rate contract in respect of the drugs mentioned below:

Name of drugs manufactured under own license No.________

(1)

(2)

Joint Commissioner,

_________Division,

Food And Drugs Administration.'

According to the petitioners, it was mandatory on the part of the respondents and, indeed all the tenderers, to submit a tender which included a Performance Certificate in proforma Annexure No.'D'. According to the petitioners, and this is not denied by the respondents, the Performance Certificate submitted by the respondents does not contain clause (h), reproduced above, at all. Mr Chinoi submitted that the submission of the Performance Certificate is one of the mandatory requirements stipulated by clause 26 E(ii), and its absence renders respondent no.3's tender liable to be rejected. . Mr Chinoi further submitted that the Performance Certificate must necessarily be in Annexure No.'D', which contains various clauses which are essential and have their own significance for considering the eligibility of tenderers for a bid. Clause (h), which is missing in the respondent’s Performance Certificate, is significant since it contemplates a three years' statement of production and sale of the concerned drugs duly certified by Chartered Accountant and a further certification by F.D.A that the annual sale is more than 20 per cent of the quantity of total requirement specified in the tender. A significant requirement of this clause is that it is to be certified by the Food and Drugs Administration Authority of the area where the manufacturing activity is carried out. In short, the submission on behalf of the petitioners is that respondent no.3's tender ought to have been rejected outright since it did not comply with the mandatory requirement of submission of the Performance Certificate in Annexure No.'D'. Mr Madon for respondent nos 4 and 5 and Mr Vashi for respondent no.3 submitted that though the Performance Certificate of respondent no.3 may not have contained the information contained in clause (h) certified by the Director of Drugs Controller, the respondent no.3's tender, which was accompanied by the certificate dated 25.11.2011 at Exhibit F, gave the necessary information to the Corporation for the purpose of evaluation of the tender. In any case, according to the learned counsel for the respondents, respondent no.3 cannot be penalized for the absence of clause (h) since the Performance Certificate was issued by the Director of Controller in Tamil Nadu and over the issue of which they have no control whatsoever. If the Drugs Controller did not include clause (h) in spite of a request from the fifth respondent, respondent no.3 cannot be found to be at fault.

6. We have considered the matter at length and it appears that there is a clear breach or non-compliance of the mandatory requirement provided by clause 26. In that, there is a complete absence of clause (h), which is required to be certified by the Food and Drugs Administration Authority where the manufacturing activities are carried out. The significance of clause (h) cannot be belittled or marginalized since the information in clause (h) is clearly intended to demonstrate that the tenderer has, for a period of three years prior to the tender, produced and sold the concerned drugs duly certified by the Chartered Accountant. The certificate further requires a certification from the authority of the Food and Drugs Administration that the tenderer's annual sale is more than 20% of the quantity of total requirement specified in the tender. This clause is obviously inserted by the Corporation to ensure that the supply of drugs, particularly life saving drugs, such as rabies vaccines, is available through out the year to meet with cases of dog bites in the city of Mumbai. Indeed, the Corporation, which is under a statutory duty to treat such victims, a dog bite free of charge, cannot take the risk of awarding a contract to a tenderer who is not a regular manufacturer and seller of the drugs and who does not have the capacity to supply drugs in adequate quantity. Apparently, in the Corporation's assessment, this is ensured if the Food and Drugs Authority certify that the annual sale of the tenderer is more than 20 percent of the quantity of total requirement. Surely, the clause has not been inserted in order to be ignored as seems to have happened in the present case.

7. Mr Madon, learned counsel for respondent nos. 4 and 5, relied on the Judgment of the Supreme Court in TejasConstructions and Infrastructure Pvt Ltd Vs. Municipal Council, Sendhwa and Anr, 2012 (6) SCC 464 in support of the submission that a party ought not to suffer prejudice if it has been unable to produce a document , such as Performance Certificate in this case, if it was impossible for the party to produce it. According to Mr Madon, since it was impossible for the party to produce it, particularly since it had no control over the manner in which the certificate is issued. The learned counsel relied on the observations of the Supreme court in para 15, wherein the Supreme Court has observed as follows.

'It is true that the date of submission of tender was initially fixed up to 25th March, 2011 but the same was extended up to 7th April, 2011. That being so, 5 years immediately preceding the issue of the tender notice would have included the year 2010-2011 also for which financial year, audit of the company's books, accounts and documents had not been completed. Such being the case, Respondent No. 2 could not possibly comply with the requirement of the tender notice or produce certified copy of the audited balance-sheet for the said year. All that it could possibly do was to obtain a certificate based on the relevant books, registers, records accounts etc., of the company, which certificate was indeed produced by the said Respondent. The High Court has rightly observed that the Appellant had not disputed the correctness of the turnover certified by the Chartered Accountant for the year 2010-2011 nor was it disputed that the same satisfied the requirement of the tender notice. In that view, therefore, there was no question of Respondent No. 2 being ineligible or committing a deliberate default in producing the requisite documents to establish its eligibility to offer a bid.'

The circumstances of the present case are not like those before the Supreme Court. In that case, the bidder could not have been expected to produce turn over certified by the Chartered Accountant in the year 2010-2011 since for that financial year the audit of the books of accounts and documents had not been completed. In the present case, there is no such impossibility. The party had due notice of the proforma in which they were required to produce the Performance Certificate. The proforma in Annexure No 'D' in which they were required to produce the Performance Certificate, had ample time to persuade or even demand from the authorities that the certificate be issued in Form Annexure No'D' along with clause (h). This required the respondents to produce a certificate of the Chartered Accountant before the authority which was well within their power.

8. It is clear that the tender of respondent no.3 fails in an essential and mandatory requirement and respondent no.3 ought to have been disqualified. The learned counsel for the respondents referred to the correspondence they made with the Drugs Controller for requesting that the Performance Certificate be issued in Annexure No.'D'. According to the learned counsel for the respondents, though they had made such request, apparently, the Drug Controller in Tamil Nadu refused to comply with it and, therefore, they had no choice. Though there is correspondence to that effect on record, it is difficult to accept that the respondents could not have taken due efforts to obtain a certificate along with clause (h). Moreover, we do not find anything in the correspondence, from which it may be seen that the respondents specifically requested the Drug Controllers in Tamil Nadu to insert clause (h) on the basis of a certificate of the Chartered Accountant produced by them. It cannot be said that it was impossible for the respondent to produce a certificate in clause 'h' as required by the Proforma.

9. Indeed, it was submitted on behalf of the respondents that the certificate of the Chartered Accountant which was submitted to the M.C.G.M., gave the entire information required by clause (h). The certificate, which is annexed at Exhibit F, is not a certificate granted to respondent no.3 or even to respondent no.5 which holds the license for manufacturing. The name of respondent no.5, which holds the license for manufacturing, is as follows: 'Human Biological Institute'-respondent no.4, whereas the certificate is in the name of 'Indian Immunological Limited'. Having regard to the purpose of the information sought under clause (h), we find that the certificate of the Chartered Accountant which is in the name of respondent no.4, is of no avail for considering the capacity of manufacture and sale of respondent no.5, who holds the license to manufacture. Indeed, reading of clauses of the Tender shows that what is crucial is the information about the manufacture or the manufacturing unit and not the owner of the manufacturing unit.

10. Mr Bharucha, for the Corporation submitted that there is power to relax a tender condition reserved by the Corporation to itself and that this power to relax tender condition includes the power to dispense with a certificate in the particular form. According to the learned counsel, this power was, in fact, exercised by the Corporation. In support of this, the Corporation has produced before us a decision to relax certain conditions of the tender including clause (h) taken on 14.10.2002. Terms of the decision are general in nature and do not refer to any particular tender. It is of no avail for the Corporation to produce relaxation of general nature taken in the year 2002 for the purpose of contending that particular condition of a tender in 2011 was relaxed. The argument must, therefore, be rejected without any further consideration. Assuming that if at all such decision was taken in the year 2002, there is no explanation as to why clause (h) was still retained in Annexure 'D' in the tender of 2011.

11. Mr Bharucha relied on the Judgment of the Supreme Court in Air India Ltd Vs. Cochin International Airport Ltd and Ors., (2000) 2 Supreme Court Cases 617, wherein the Supreme Court made the following observations;

'The award of contract, whether it is by a private party or by a public body or the State, is essentially a commercial transaction. In arriving at a commercial decision considerations which are of paramount are commercial considerations. The State can choose its own method to arrive at a decision. It can fix its own terms of invitation to tender and that is not open to judicial scrutiny. It can enter into negotiations before finally deciding to accept one of the offers made to it. Price need not always be the sole criterion for awarding a contract. It is free to grant any relaxation, for bona fide reasons, if the tender conditions permit such a relaxation. It may not accept the offer even though it happens to be the highest or the lowest.'

There is no doubt that the corporation was entitled to grant any relaxation for bonafide reason, as in the case before the Supreme Court but, as found by us, the Corporation did not exercise their power to relax any requirement in relation to the present case. As observed earlier, the case of the Corporation is that they have relaxed tender condition in the year 2002 and, therefore, that relaxation should be treated as the relaxation in the tender in the year 2011. The submission is, therefore, rejected.

12. Learned counsel for the respondents submitted that the petitioners are not entitled to any reliefs from this Court since they have not availed of clause 27 of the terms, which provides for a complaint to be submitted to the Corporation. According to the Corporation, the petitioners have deliberately avoided the complaint procedure because the petitioners know that their grievance is false and, if so found, they will be liable for being blacklisted for a period of five years.

Clause 27 reads as follows.

'Every complaints, submitted by a competitive tenderer in the matter of challenge to the authenticity of documents/information and/or particulars submitted by another tenderer ought to be accompanied with the deposit of Rs.two lakhs towards charges for inspection of the manufacturing premises and verification of the documents of the another tenderer. On verification of the complaint, if the representations made therein are found to be true and correct, the deposit will be refunded to the complainant and the E.M.D of the defaulting tenderer shall be forfeited and further it shall be lawful for MCGM to blacklist such defaulting tenderer for a maximum period of five years. On verification of the complaint, if the representations made therein are found to be false and incorrect, the deposit shall be forfeited and the complainant shall be black-listed for a period of five years.'

Prima facie, on a true construction, the clause does not intend to bar an aggrieved person from approaching a court of law since it carries no mandate that an aggrieved person must first avail a complaint. There is, of course, no question of the clause barring a person from invoking an extra ordinary jurisdiction of the High Court under Article 226 of the Constitution of India. The clause does not provide for arbitration or conciliation, which might have required this court to consider the propriety of exercising the jurisdiction of this court. Moreover, it seems that the clause contemplates a challenge to the authenticity of documents/information and/or particulars submitted by another tenderer along with the deposit of Rs. Two lakhs. Consequently, the scope of such a complaint would involve a verification of the authenticity of documents and the representation made therein pertaining to such authenticity of documents etc. The clause does not expressly provide for an adjudication of whether a tenderer is qualified in law or not to submit a tender. It was contended by Mr Madon that the petitioners' complaint is that respondent no.3 is disqualified because the proforma 'D' submitted by him does not contain clause (h) and this is, therefore, the challenge to the authenticity of documents/information and/or particulars submitted by another tenderer. The submission is not correct since an allegation that an essential clause is absent in a tender, cannot be equated with the allegation that the information or particulars submitted by such a tenderer is not authentic. Moreover, we find from the record that the petitioners had filed a complaint but were asked to deposit the amount of Rs. Two lakhs by a letter dated 30.01.2012 which was received by them after the petitioners had filed this petition on 7.2.2012. In the circumstances, we see no reason to refuse to entertain the petitioners' grievances because they have not submitted themselves to a decision under clause 27.

13. Mr Vashi, who appeared for respondent no.3, submitted that the petitioners are attempting to gain unfair commercial advantage and are seeking a disqualification of the respondent only because the respondent has quoted a price of Rs.132 per vial in relation to another contract with the government. According to Mr Vashi, the Government has found out that respondent no.3 has quoted a price of Rs.132/- per vial and called upon the petitioners to match that price. It is, therefore, in the petitioners' interest to have this contract awarded to respondent no.3 set aside so that they can tell the Government that Rs.132/- is not a realistic price. We find the apprehension expressed on behalf of respondent no.3 unfounded, particularly we have not considered the validity of the respondent-corporation's --- has wrongly accepted the tender of respondent no.3 on the basis of the price rate quoted by respondent no.3. The impugned decision has no bearing on the rate quoted by the parties. It was also submitted by Mr Vashi that respondent no.3 had already supplied about 1,35,000 vials and, therefore, has also printed the labels for the quantity to be supplied. We are of the view that if this is so, the respondents may claim such amount by way of deduction or adjustment from the respondent-corporation on this account. However, this submission would have not bearing on the disqualification of the respondent.

14. Shri Bharucha also relied on the subsequent Judgment of the Supreme Court in JagdishManda Vs. State of Orissa and Ors, (2007) 4 Supreme Court Cases 517, wherein the Supreme Court set out the circumstances in which the power of judicial review may be invoked. While doing so, the Supreme Court has observed as follows;

'The power of judicial review will not be permitted to be invoked to protect private interest at the cost of public interest, or to decide contractual disputes. The tenderer or contractor with a grievance can always seek damages in a civil court.'

We are of the view that the observations do not govern the present case since it is not in public interest that respondent no.3 should be taken as qualified even though he had not submitted the necessary particulars required by clause (h) to enable the corporation to assess his capacity to supply rabies vaccine for the duration of the contract. Indeed, it would be hazardous for the Corporation to enter into a contract for supply of life saving drug like rabies vaccine with a party who does not have a record of manufacturing supply of the vaccine.

15. Mr Vashi relied on a decision of RadhakissonGopikisson Vs. Balmukund Ramchandra, AIR 1933 Privy Council 55, wherein the Privy Council observed that it was not essential that there should be literal compliance with the proforma in which terms and conditions were to be submitted. Their Lordships took the view that what is necessary is substantial compliance with the form. With respect, we are unable to apply the said decision for overlooking total absence of clause (h) and the particulars demanded thereby in the tender of respondent no.3. As pointed out. Clause (h) contains significant information which must be submitted by the tenderer and the absence of clause (h) and the particulars required thereby cannot be termed as substantial compliance in the present case. Mr Vashi also relied on the Judgment of the Supreme Court in G.J.FernandezVs. State of Karnataka and Ors, (1990) 2 Supreme Court Cases 488 for the following observations.

'If a party has been consistently and bona fide interpreting the standards prescribed by it in a particular manner, we do not think this court should interfere though it may be inclined to read or construe the conditions differently. We are, therefore, of opinion that the High court was right in declining to interfere.'

According to Mr Vashi, the respondents had submitted a similar tender without clause (h) in an earlier occasion and though the petitioners herein were also a party to the tender process and had submitted its tender, they had not raised any objection regarding the absence of clause (h). W

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e are not inclined to accept such an argument since it is not possible to know the circumstances why this lacunae was not challenged. In any case, it would be difficult to condone and overlook the lacunae pointed out in the present case merely because it was not challenged on an earlier occasion and it cannot be described as a consistent and bonafide practice of interpretation of the standards prescribed. The case of PoddarSteel Corporation Vs. Ganesh Engineering Works and Ors, (1991) 3 Supreme Court Cases 273 relied on by Mr Vashi, has no application to the present case .Mr Vashi relied on the following observations in paragraph 6 of the Judgment: 'As a matter of general proposition it cannot be held that an authority inviting tenders is bound to give effect to every term mentioned in the notice in meticulous detail, and is not entitled to waive even a technical irregularity of little or no significance. The requirements in a tender notice can be classified into two categories – those which lay down the essential conditions of eligibility and the others which are merely ancillary or subsidiary with the main object to be achieved by the condition. In the first case the authority issuing the tender may be required to enforce them rigidly. In the other case it must be open to the authority to deviate from and not to insist upon the strict literal compliance of the condition in appropriate cases.' As observed earlier, we are of the view that clause (h) cannot be described to be a term little or no significance as in the case before the Supreme Court. In that case, the deviation was that the tender was accompanied by a cheque of the Union Bank of India and not the State Bank of India, as required by clause (6) of the tender notice. Thus, the circumstances in which the observations are made by the Supreme Court are entirely different from the present case. 16. In the result, we are of the view that the rate contract issued by the Respondent-Corporation in favour of respondent no.3 for a period of two years from 18.2.2012 to 17.2.2014 in respect of Item nos. 99 and 180, is liable to be struck down and is, accordingly, set aside. Rule is made absolute in the above terms. 17. At this stage, Mr Madon learned senior counsel for respondent nos. 4 and 5, prays for stay of this Judgment on the ground that some respondents have already manufactured three lacs vials with label 'for M.C.G.M use only'. This prayer is vehemently opposed by the learned counsel for the petitioners. However, having regard to the circumstances referred to by Mr Madon and having regard to the fact that the respondent-Corporation would have to make some alternative arrangements for these life saving drugs, there should be a stay of this judgment for a period of 12 weeks from today, during which time respondent no.3 may continue to supply the vials to the Corporation.
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