M/S Rhydburg Pharmaceuticals Ltd. v. The State of Bihar & Ors.

: Mr. Shekhar Singh, Advocate

21.04.2009 The State Health Society, Bihar issued notice inviting tender which is subject matter of the present writ application. Pleadings being completed, with the consent of parties, the writ petition is being disposed of at the stage of admission itself. The State Government in order to provide services and facilities to patients more effectively created State Health Society. The purpose of this organization basically was to outsource various services and supplies, to maintain - 2 - the same and to regulate the same. In effect it being a part and parcel of the State for implementation of State Policy and State duty. The State Health Society has an obligation to see that certain life saving drugs and medicines are supplied free of cost to the patients all over the State in State Dispensaries and State Hospitals. For rate contracting of these essential drugs, the notice inviting tender in question was issued. What is done hereunder is that for particular drugs rate by particular manufacturers are fixed under which those manufacturers are then obliged to supply those drugs as per orders to be issued. The notice inviting tender is Annexure-5 to the writ application and was issued on 18.06.2008. The first essential eligibility criteria is that the bidder should have a minimum annual turnover of Rs. 25,000,00,00/- (Rupees Twenty Five Crores) in the last three consecutive financial years. This would indicate that the bidders had to be an established reputed manufactures. The second eligibility criteria is quoted hereunder:- standing of “(b) A market minimum 3 years issued by the licensing authority concerned state.” - 3 - In plain and simple language, it makes no reference to license for minimum three years. This is the bone of contention. The petitioner is a company incorporated under the provisions of the Companies Act, 1956. It has its registered office at Dr. Mukherji Nagar, Delhi. It has been in existence for almost two decades and has been manufacturing of drugs and pharmaceuticals. Earlier, it had its factory located at Sonipat in the State of Haryana and as such it had drug licenses issued by the State Drug Controller, Haryana from Panchkula. Subsequently its manufacturing unit moved to Dehradun in the State of Utarakhand. As a consequence of moving the manufacturing facility from Sonipat to Dehradun and that to in a different state a fresh license was issued to him. This license was granted in 2006 not being in continuity of the old license because the old license was granted by the State of Haryana and this by the State of Utarakhand. Petitioner was obliged with a copy of the license and a certificate granted by the State Drug Licensing Authority of Utarakhand. A copy whereof has been filed by the respondents State and marked as part of Annexure-B series. The said certificate granted by Drug Controller and - 4 - Licensing Authroity, Utarakhand also clearly mentions that the said firm is manufacturing and marketing the products as per list attached for last three years. This certification is being granted in April 2008 even though the license has been granted in 2006. With this license the tender was filed by the petitioner. Petitioner was not told about any deficiency in his application but petitioner came to know that its tender was rejected. The rejection of petitioner’s tender was not communicated to the petitioner but it verbally came to know the same and having been verbally told that as the license was not for three years it was found ineligible. Petitioner made a representation and annexed copies of its earlier licenses and explained the situation that the new license in the State of Utarakhand was necessitated because of change of place of manufacturing unit otherwise the company had the necessary markets exposure for over two decades. It had been manufacturing those drugs for over two decades and marketing them. There was no response which forced the petitioner to come to this Court. The question is which of the two stands are correct. The stand of the State Health - 5 - Society as appended to their counter-affidavit is that the license is not of three complete years (issued dated

07.03.2006). In my view, the writ application must succeed in view of the eligibility criteria as quoted above. Here what was important was market standing and not license for three years. License keeps changing by virtue of change in the Constitution of firm, if it is a firm; it changes as a consequence of change of place or premises. What State submits is correct then a well established pharmaceutical firm having over a centuries experience and is granted a new license for a new place. That can not make it ineligible. It is apparent that the authorities completely lost sight of the true import of the clause. The company had manufacturing license for the said drugs for over two decades and had an annual turnover in excess of Rs. 25,000,00,00/- (Rupees Twenty Five Crores). Yet on this, solitary ground that it had license for more three years, ignoring certification contained therein, petitioner has been held to be ineligible. That is patently wrong. The petitioner was eligible. He sought to explain the situation on coming to - 6 - know the reason but the authorities refused to reconsider the matter. In my view, the decision of the tender committee is erroneous in fact and in law can not be sustained. It is accordingly set aside. The tender committee would be well advised and is directed to consider the petitioner to be eligible. Having rejected the petitioner’s tender wrongly and having proceeded with the tender now they cannot say that they can not consider the same. Having committed a wrong, they must themselves correct the wrong and do what is right and proper immediately. With these observations and directions the writ petition stands allowed. Vikash/- (Navaniti Prasad Singh, J.)