- 1 - IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL JURISDICTION WRIT PETITION No. 1677 OF 2008 1. Caplin Point Laboratories Limited, ) a company incorporated under the ) provisions of the Companies Act, ) 1956, having its registered Office ) at “Narbavi”, No.3, Lakshamanan ) Street, T. Nagar, Chennai-600 017 ) Tamil Nadu, India. ) 2. Mr. M. Jayapal, ) major of age, Indian Inhabitant, ) residing at GA/8th Block, Kences ) Enclave No.1, Ramkrishna Street, ) T. Nagar, Chennai-67. ... Petitioners Vs. 1. The Municipal Corporation of Gr. ) Mumbai, a local authority, ) constituted under the provisions of ) the Mumbai Municipal Corporation ) Act, 1888, having its Registered ) Office at Mahapalika Marg, Mumbai) -400 001 through the Municipal ) Commissioner. ) 2. Bharat Biotech International, Ltd. ) - 2 - a company incorporated under the ) provisions of the Companies Act, ) 1956, having its Registered Office ) at Genome Valley, Turkapally, ) Shaneerpet, Hyderabad-500 078, ) A. P., India. ... Respondents Mrs. Snehal Paranjape i/b Mr. S. M. Kamble, for the petitioners. Mr. C. U. Singh, Sr. counsel a/w Archana Joshi, for the respondent No.1. Mr. F. E. D'Vtre Sr. counsel i/b Thakore Jariwala & Associates, for the respondent No.2. CORAM : F. I. REBELLO & A. A. KUMBHAKONI, JJ. DATE : OCTOBER 6, 2008. JUDGMENT [ A. A. KUMBHAKONI, J.] 1. The petitioners have filed this petition, being aggrieved and dissatisfied by the decision of the Municipal Corporation, Gr. Mumbai, the First Respondent herein, firstly to treat the bid/tender of the petitioners as non-responsive and secondly accepting the bid/tender of the second respondent herein as responsive. According to the petitioners, the first petitioner was eligible, qualified and entitled to be considered in the award of contract for supply of Anti Rabies Vaccines to the hospitals run by the first respondent, and therefore, the decision of the first respondent to award such a contract to the - 3 - second respondent without considering the financial bid of the petitioners is unsustainable. The second part of the case of the petition is that the second respondent is not eligible and/or qualified and therefore, not entitled to be considered for such a contract and therefore, the first respondent ought to have rejected the bid/tender of the second respondent. 2. Somewhere in the month of September 2007 tenders were invited by the first respondent in respect of supply of 138 items, out of which item No.111 pertained to the supply of Anti Rabies Vaccine, which is in issue in the present case. The due date for tender was 17th October, 2007. The period of the contract in issue is from 1st January 2008 to 31st December, 2009. The same involves supply of 6.80 lakhs Anti Rabies Vaccines at the costs of about Rs. 15 crores. 3. The first respondent received in all six bids/tenders including that of the petitioners, second respondent and of Ranbaxy Company, in regard to the item in issue. The petitioners and the second respondent submitted their respective tenders on 17th October, 2007. 4. In terms of the tender document, the procedure laid down for these tenders including the tender in issue, was the usual procedure of - 4 - submission of technical details in envelope “A” and Financial Bids in envelope “B”. Both these envelopes were to be submitted along with other material in a third envelope “C”. 5. The Tender Committee opened initially only envelopes “A” i.e. technical bids, to find out which of the tenderers were eligible/ qualified for being considered in regard to the tender in issue. Out of six tenders received, in regard to the Item in issue, the Committee treated only two offers as responsive; first : of the second respondent and second : of Ranbaxy Company. Other four offers so received, including that of the petitioners were treated as non-responsive. The Ranbaxy Company offered to supply vaccine @ Rs. 234/- whereas the second respondent offered to supply @ Rs.219/- for each vial. As the offer of the second respondent was lowest, the same was accepted and on 28th July, 2008 tender acceptance letter has been issued to the second respondent. 6. Before issuance of the aforesaid letter of acceptance by the first respondent to the second respondent, The petitioners firstly preferred a complaint dated 27th November, 2007, objecting to the decision of the Tender Committee of not considering the financial bid of the petitioners. The same was followed by another communication - 5 - dated 25th February, 2008. As non of these representation yielded any favourable result to the petitioners, on 25th March, 2008 the petitioners approached this Court by way of present Writ Petition, impugning both the decisions of the first respondent i.e. Firstly treating the bid/tender of the petitioners as non-responsive, and secondly treating the bid/tender of the second respondent as responsive. . We will consider the two parts of the case of the petitioners separately, not only for the convenience but also for better the better understanding of the rival contentions of the parties and our decision in this regard . ELIGIBILITY OF THE PETITIONER 7. The first petitioner is an Indian company having its office in the State of Tamil Nadu and the second petitioner is its Director. The first petitioner is carrying on business of manufacture and sale of drugs and medicines and its supply to various hospitals. However, the first petitioner is admittedly not a manufacturer of Anti Rabies Vaccine, which was the relevant item no 111 of the tender in issue. On 20th August, 2007 the first petitioner entered into “Exclusive Agency Agreement” with one Liaoning Cheng Da Biotechnology, Co. Ltd. (hereinafter referred to as “the Chinese Manufacturer” for the brevity) as the exclusive agent for supply of Anti Rabies Vaccines, - 6 - manufactured by the Chinese Manufacturer, in India. This agreement is for a tenure of 36 months. Thus, the petitioners submitted the tender in issue not as a manufacturer but only as a supplier of imported Anti Rabies Vaccine, manufactured by the Chinese Manufacturer. 8. The minutes of the Medicines Tender Committee of the first respondent dated 14th November, 2007 contain consideration of all the tenders in as much as technical bids are concerned. So far as the bid of the petitioners is concerned, the minutes read as under- “8) M/s. Caplin Point Laboratories Ltd. (Importer & Distributor) : Item No.111- submitted Sales figures from China, Mfg. By Liauning Chengda Biotechnology, China. Submitted notorized copy of Agreement instead of Authority Letter. Appointed M/s AVA biopharma as Agent/Dealer for supply. This tender was discussed in detail as importer is importing ARV Vaccine from China. Authority Letter is not proper, hence treated as non-responsive.” - 7 - . Thus, the tender of the petitioners appears to have been treated as non-responsive, on the grounds that the petitioners did not submit an Authority Letter of the Chinese Manufacturer. It is also mentioned that the first petitioner has appointed M/s AVA biopharma as Agent/Dealer for supply, though that is not set out specifically as one of the grounds for rejecting the tender of the petitioners. 9. The petitioners impugn the aforesaid decision on the ground that- (a) Firstly, the petitioners had submitted Notorized copy of its Agency Agreement dated 20th August, 2007 and that, therefore, it was not necessary for the petitioners to submit the Authority Letter; (b) Secondly, the petitioners did submit the Authority Letter along with a communication dated 23rd November, 2007, a copy of which is produced at page 269. (c ) In as much as the aspect of the appointment of Agent/Dealer is concerned, the petitioners submit that all the tenderer had appointed such an Agent/Dealer. There is no bar for the same in the tender conditions, and that therefore, the same could not be a ground for treating the tender of the petitioners as non responsive. 10. In as much as the third aspect viz. ( c) aforesaid is concerned - 8 - we are of the view that the tender of the petitioners has not been treated as non-responsive by the first respondent on this ground i.e. appointment of Agent/Dealer by the petitioners. In any case we were unable to find any condition in the tender document prohibiting a tenderer from appointing such an Agent/Dealer. Therefore we find no reason to spend any time in dealing with this contention. 11. In as much as the aforesaid submission (b) is concerned, if we consider the tender document produced at page 47 of the compilation, it shows that due date for tender in issue was 17th October, 2007 and all the tenderers were required to submit all the necessary documents as to their eligibility/ qualification at the time of submission of the tender itself by enclosing the same in envelope “A”. The aforesaid chronology of events clearly demonstrates that the petitioner also submitted its tender on 17th October, 2007 and the envelope “A” of the petitioners tender did not contain the Authority Letter, executed by the Chinese Manufacturer in favour of the first petitioner. Admittedly the same was produced by the petitioners for the first time along with its communication dated 23rd November, 2007 (page 269). The endorsement appearing thereon shows that the same was received by the first respondent only on 26th November, 2007. A perusal of the copy of the Authority Letter, which is produced at page - 9 - 271, shows that this Authority Letter is also dated 23rd November, 2007, which inter-alia states “... hereby authorise ...”. Thus, even according to the case of the petitioners, the Chinese Manufacturer issued the Authority Letter to the petitioners only on 23rd November, 2007, effective from the same date which was first time submitted by the petitioner with the first respondent on 26th November, 2007. Whereas the Medicines Tender Committee of the first respondent considered technical bid of the petitioners on 14th November, 2007, the due date of the tender being 17th October, 2007. 12. Thus, it is clear that neither on 17th October, 2007 which was the due date for the tender nor on 14th November, 2007 the date on which technical bids of all the tenderers including that of the petitioners were considered by the Medicines Tender Committee of the first respondent, the petitioner had the Letter of Authority of the Chinese Manufacturer in its favour. We therefore, find no reason whatsoever to find any fault or defect in the decision that the Medicines Tender Committee of the first respondent has taken on 14th November, 2007 holding the petitioner as ineligible and treating the tender of the petitioners as non responsive. . We also do not find any substance in the case of the petitioners, set out as (a) hereinabove, that since the petitioners had - 10 - already submitted copy of its Agency Agreement, it was not necessary for the petitioners to submit Authority Letter from its Chinese Manufacturer. 13. It is contended by the petitioners that in any case Ranbaxy Co. had offered rate of Rs. 234/-, the second respondent had offered rate of Rs. 219/- and the petitioners had offered admittedly the rate of Rs. 220/-. Thus, the second respondent was the lowest tenderer, even if the tender of the petitioner were to be considered by the first respondent as responsive. 14. As we are entertaining the case of the petitioner under Article 226 of the Constitution, we also tried to verify the eligibility of the petitioner, even apart from the grounds on which the ternder of the petitioner was treated as non-responsive. In this regard, what we have observed and have to conclude as under- . The terms and conditions of the tender in issue inter-alia mandatorily require the tenderer to enclose the following documents- “E. Attested copies of the following certificates: i. In case of drug items, copy of drug Manufacturing License / Repacking License (valid for current year) with list of products approved (list must contain name of the items as per specification). The list must be signed and stamped by FDA authority. - 11 - 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. iii. In case of drug items, No Conviction Certificate issued by the office of the Commissioner of FDA (of respective state) not more than six months old on the due date of the tender. iv. In case of drug items, copy of drug selling License issued by the office of the Commissioner of FDA (of respective State) to the manufacturer and to the distributor (if appointed). v. Copy of the valid relevant ISI/ISO/WHO-GMP/GMP Certificate, wherever applicable as per enclosed schedule copy (pre qualifying criteria). vi. Test Report from manufacturer/FDA approved laboratory/ Govt. aided laboratory/ inhouse test report from manufacturer. vii. Copy of EMD receipt. viii. PAN Documents & Photographs (As per condition No.22 above). ix. Valid VAT/Sales Tax Registration certificate. F. In case of imported items copies of the following certificates must be attached. i. Name of the manufacturer its complete Address & the authority letter to th tenderer. ii. Copy of valid import license in the name of tenderer issued - 12 - by Competent Authority, if any. Iii Itemwise Sales figures of two previous years duly certified by Chartered Accountant on his letterhead.” 14. Annexure “D” is performance certificate that is required to be mandatorily submitted by a tenderer in the aforesaid terms of the tender document. This document is produced at page 102 of the compilation and was originally at page 43 of the Tender Document. This proforma certificate appears to have been designed and notified by the Government Resolutions referredto at the bottom of the form of the certificate. 15. A controversy was raised before us as to whether only an Indian Manufacturer is required to produce such a certificate. We are keeping this issue open for being considered in an appropriate case and do not think it necessary to decide this issue in this case, in view of our following observations- . Admittedly the petitioners did not submit this performance certificate. Assuming that the petitioners was going to supply the vaccines in issue, manufactured by a Chinese Manufacturer, the petitioners ought to have submitted the performance certificate in the prescribed form, from the appropriate authorities from China. This performance certificate in our view was - 13 - important requirement of the eligibility / qualification in as much as it certifies that the manufacturer of the concerned drug/medicines/ vaccines for preceding three years have been manufacturing the same satisfactorily and that during this period of 3 years, there had been no instance for suspension or cancellation of license, issued to manufacturer of the concerned drug or that of the factory license. The same also certifies that there had been no instance of any drug manufactured by the manufacturer reported to be spurious or adulterated, etc. The petitioners having failed to submit such a performance certificate, in our view, was not eligible and/or qualified for being considered in regard to the tenders in issue. In our view for this additional reason also, it cannot be said that the first respondent was not justified in treating the bid/tender of the petitioners as non responsive. The contention urged that the said certificate is not required by the importers of the drug, if the drug is manufactured by foreign company, in our opinion is no answer. That clause clause regarding performance certificate is a mandatory requirement. ELIGIBILITY OF THE SECOND RESPONDENT 16. The affidavit in reply filed on behalf of the second respondent shows that the second respondent is a company, which has turn over to Rs.100 crores in the last financial year. It is an Indian - 14 - Manufacturer of the vaccine in issue and has been awarded several awards and accolades, the details of which are contained in the affidavit of the second respondent and need not be set out hereunder. Suffice it to note that the second respondent herein is a well- established reputed company manufacturing drugs/medicines in India for a considerable period and is not some kind of 'a fly by night' manufacturer or supplier. 17. In as much as the vaccine in issue is concerned, the second respondent was manufacturing the same initially with the trade name “REBIRIX” which was subsequently changed to “INDIRAB”. A drug license in that regard was issued to the second respondent on 14th October, 1998. The trial permission was granted to the second respondent in the year 2003 and the manufacturer license in that regard was issued on 20th December, 2005. A final permission to manufacture and market the said vaccine in issue under Rule 122 B of the Drugs and Cosmetics Rules 1945 ( herein referredto as the said Rules for the sake of brevity) was accorded to the second respondent on 14th December, 2006. On that basis a manufacturer's license was issued to the second respondent on 11th June, 2007. On the basis of all the aforesaid documents and the track record of the second respondent, the Jt. Director, Drugs Control Administration has issued - 15 - the performance license, referred to hereinabove to the second respondent on 12th October, 2007. 18. With the aforesaid chronology of dates and events, it is the contention of the petitioners that the performance certificate produced at page 256 of the compilation dated 12th October, 2007 could not have been issued to the petitioner in as much as the performance certificate requires the petitioner to be a manufacturer and supplier of the concerned medicines/ drugs for preceding three years of the issuance of such a certificate. According to the petitioners, the second respondent was issued manufacturing license as late as on 11th June, 2007, as is clear from the document produced at page 243 A and therefore, the performance certificate for preceding three years could not have been issued to the petitioner. On this ground alone it is the case of the petitioners that the second respondent was not eligible / qualified for the tender in issue, and therefore, the bid/tender of the second respondent ought to have been treated as non-responsive. 19. It is contended on behalf of the second respondent in reply to the aforesaid submission of the petitioners that in terms of the tender condition, the second respondent was required to satisfy the aforesaid requirement, in regard to the preceding “three Financial - 16 - Years”, which the second respondent does satisfy. In this regard, our attention has been drawn to second clause from Annexure “B” of the tender document, produced at page 77 of the Compilation which was page 43 of the tender document. The same reads as under- “2. Total annual turn over in preceding 3 Financial Year” . Our attention has already been drawn in this regard to the performance certificate itself, referred hereinabove and in particularly Clause H thereof which reads as under- “h. The Manufacturer has submitted year wise (April to March) three year' s statement of production and sale of the concerned drugs duly certified by Chartered Accountant; This annual sale is more than 20 per cent of the quantity of total requirement specified in th tender.” 20. It is therefore, submitted that the relevant financial years for consideration would be 2004-05, 2005-06, 2006-07 considering the fact that due date for tender was 17th October, 2007. It is further contended that on behalf of the second respondent that admittedly in all the aforesaid three Financial Years, the second respondent did manufacture and sell the vaccines in issue. According to second respondent therefore, the second respondent was and is fully qualified and/or eligible in terms of the tender document/ conditions and therefore, the contentions to the contrary raised by the petitioners are - 17 - incorrect. 21. A contention was also raised during the course of arguments on behalf of the petitioners that the second respondent did not produce form No.46 as prescribed by Rule 122-B, 122-D and 122-DA of the said Rules. However, it was pointed out on behalf of the respondents that no such objection was ever raised by the petitioner any time before making such submissions orally during the course of arguments, not even in the writ petition filed by the petitioner containing all possible grounds, which has been even amended twice. However, it was submitted on behalf of the second respondent that the second respondent does possess the appropriate permission and/or approvals. A xerox copy of Form No.46 was also tendered across the bar by the learned counsel appearing on behalf of the second respondent. We have accepted it and taken it on record. This document dated 14th December, 2006 clearly shows that the second respondent has been granted final permission/ approval for manufacturing Ante Rabies Vaccine (Verocell) by the Drugs Controller General (India) and the permission is numbered as NF- 7076/06. It appears that the second respondent was granted manufacturing license to manufacture Anti Rabies Vaccine on 20th December, 2005 (page 319) and that the second respondent had - 18 - named it for commercial purpose as “RABIRIX VACCINE” which was approved by the Director, Drugs Control Administration General of India,Andhra Pradesh, vide document dated 25th November, 2005, signed by the Director on 31st October, 2005 (page 320). It is the case of the second respondent that the second respondent as a result of some litigation over the trade name of the aforesaid vaccine was constrained to change the same to the present one i.e. “INDIRAB”. 22. We find much force in the contention of the second respondent that initially it was manufacturing Anti Rabies Vaccine with all due permissions and/or approvals under the trade name “RABIRIX” and that it changed only the name of that product to “INDIRAB”. It appears that change in the brand name of the vaccine so manufactured by the second respondent from “RABIRIX” to “INDIRAB” has been approved by the Drug Controller General of India, vide communication dated 2nd July, 2007, a copy of which has been produced at page 316 in the present proceedings. 23. On consideration of all the aforesaid documents, referred to hereinabove, it is clear that the first petitioner is the manufacturer of the aforesaid vaccine in issue for atleast three Financial Years, preceding the issuance of the performance license in favour of the - 19 - second respondent dated 12th October, 2007. The contention of the petitioners that the term “preceding three (3) years” appearing in the performance certificate will have to be interpreted for the respondent as if starting from 11th June, 2007 only, making the second respondent eligible on and from 11th June 2010 only, in our view is not correct. In our view the entire tenor of the conditions of the tender and also of the language used in the performance certificate clearly demonstrate that the eligibility/ qualification was required to be satisfied taking into consideration preceding “three Financial Years” and that the period of three years cannot be calculated from the actual date of issuance of manufacturing license. In this regard the fact that the first petitioner has been manufacturing Rabies Vaccines though in another trade name is not in dispute before us, and could not have been disputed, in view of the documentary evidence produced by the second respondent in that regard. 24. Another aspect of the matter that has come on record also needs to be considered in its proper perspective. The same is as under. In 1986 about 14 patients died in Government run J.J. Hospital, due to supply and administration of substandard drugs to these patients. This resulted into constitution of Justice Lentin Commission which inquired into the causes and made certain - 20 - recommendations inter-alia for framing policy for purchase of medicines to be used in the Government hospitals. This Court by