Biocon Limited vs State Of Tripura And Ors

Akil Kureshi, CJ

[1] Heard learned counsel for the parties for final disposal of the petition.

[2] This petition has been filed to challenge awarding a contract for supply of a pharmaceutical formulation called Trastuzumab, a life saving drug used for cancer treatment to the respondent No.3 by the State Government. Tender for providing the said drug was published by the State Government on 28-08-2018. The petitioner as well as the respondent No.3 who are manufacturers of the said formulation had filed their technical as well as financial bids. The respondent No.3 was held technically qualified, so was the petitioner. Finding that the offer of the respondent No.3 at `17,399/- per vial was substantially lower than that of the petitioner at `31,950/-, the tender inviting authority had placed an order for supply of the said drug as per the requirement up to 31st March, 2020 under a purchase order dated 30-07-2019. The petitioner has challenged the decision of the Government to hold that the respondent No.3 was technically qualified.

[3] In brief the case of the petitioner is that the respondent No.3 did not have minimum 3 years experience in manufacturing and marketing the said drug which was one of the requirements of the tender. The petitioner had raised such objection several times before the Government during the ongoing tender process. Ignoring such objections of the petitioner, the Government authorities held the respondent No.3 technically qualified and, as noted, placed the purchase order.

[4] Brief facts are as under :

Under the said advertisement dated 28-08-2018 the bids were invited from eligible interested parties to supply the said drug for a specified period. The petitioner as well as the respondent No.3 filed their bids. The petitioner was held to be technically qualified about which there is no dispute raised either by the Government or the private respondent. The petitioner however while the tender process was going on, raised multiple objections before the Government regarding the qualification of the respondent No.3. First such objection was raised under communication dated 02-02-2019 made by the petitioner to the Director of Health Services, Government of Tripura, Agartala. In such communication the petitioner pointed out that the State licensing authority had issued licence to the respondent No.3 only on 15-09-2015 and additional product permission was granted on 27-11-2015. It was further pointed out that the product was launched only in May, 2016. The experience of 3 years required as per the tender notice, is therefore not fulfilled. In subsequent communications dated 21-02-2019, 30-04-2019 and 02-08-2019 such objections were reiterated by the petitioner.

[5] The Government of Tripura upon receipt of such objections formed a two member committee and under a letter dated 20-02-2019 required the said committee to examine the allegations of the petitioner, verify the same and come to proper conclusion. The committee thereupon tendered its report along with a communication dated 28-06-2019 to the Director of Health Services in which it was concluded as under :

"The Permission No. 1023724 dated 15/09/2015 was printed on 16/09/2015 and sent for approval to the Central Licence Approving Authority (CLAA), New Delhi. Accordingly the additional products were approved by the Central Licence Approving Authority, Dr. G. N. Singh, Drugs Controller General (India), New Delhi on 27/11/2015. Copy enclosed). The FDA office of Konkan Division informed that the above mentioned product would be manufactured by the manufacturer only after its approval from the Central Licence Approving Authority.

There is no specified term of Manufacturing and Marketing Certificate (MMC) in Drugs & Cosmetics Act & Rules. The undersigned Officers met Mr. V.T. Paunikar, Jt. Commissioner & Licensing Authority, Food & Drugs Administration. Konkan Division. Maharashtra and Mr. G.S Byale, Assistant Commissioner, Konkan Division, Maharastra regarding MMC. It was clarified that MMC are issued on the basis of the information provided by the manufacturer and financial year wise certificate from Chartered Accountant and documents furnished by the Manufacturer.

The MMC submitted by the manufacturer-M/S Reliance Life Sciences Pvt. Ltd. Plant 2, Thane Belapur Road, Navi Mumbai-400701 was issued b y Mr. V.T. Paunikar, Licensing Authority, Food & Drugs Administration, Konkan Division, Maharashtra. The FDA office confirmed the certificate submitted by M/S Reliance Life Sciences Pvt. Ltd. (Copy enclosed) is genuine and issued on the basis of Chartered Accountant's certificate of last 3(three) financial years (2015-16,2016-17 & 2017-18) and other documents. Further the confirmation letter regarding MMC of M/s reliance Life Sciences Pvt. Ltd. was also given by them earlier on 29.03.2019 & 10.06.2019. (Copy & email copy enclosed). Therefore, the MMC submitted by M/S Reliance Life Sciences Pvt. Ltd. Is the one which was issued by the Licensing Authority, Food & Drugs Administration, Konkan Division, Maharashtra.

The information and documents are placed before the Tendering Authority (DHS) for kind decision for further course of action regarding the said tender."

[6] Eventually acting on such report the Government held the respondent No.3 technically qualified and awarded the purchase order. Thereupon the present petition has been filed.

[7] Learned counsel appearing for the petitioner took us through several documents on record to contend that the respondent No.3 had wrongly claimed experience of 3 years of marketing and manufacturing on the cut-off date as on 09-11-2018 which was the last date for submitting tender documents as per the tender notice. He argued that the experience certificate produced by the respondent No.3 dated 24th October, 2018 did not contain correct declaration. The claim of the respondent No.3 that it had such experience of 3 years of manufacturing and marketing the drug as on 24-10-2018 is falsified from the materials on record. To the documents relied upon by the counsel for the petitioner we would refer at a later stage.

[8] Counsel submitted that the petitioner and the respondent No.3 are the only two technically qualified bidders. If the respondent No.3 is knocked out of contention, the contract for the remaining period should be awarded to the petitioner. He stated that the petitioner is prepared to negotiate with the Government and reduce its initial offer.

[9] On the other hand Government counsel relied on the affidavit in reply dated 17th September, 2019 filed by one Smt. Anima Debbarma, Under Secretary, Government of Tripura, Health and Family Welfare Department, to contend that the Government had taken into account all relevant aspects of the matter before holding the respondent No.3 technically qualified. Upon the petitioner raising objections, the issue was examined through a special committee of experts formed for such purpose. The Government has acted on the report of such committee. He further pointed out that there was substantial price difference between the offer of the respondent No.3 and that of the petitioner.

[10] Counsel for the respondent No.3 opposed the petition contending that the respondent No.3 did have requisite technical qualification. The respondent No.3 had started marketing the product long before its launch. Marketing would not be confined to selling the product after its launch. Marketing would not be confined to selling the product after its launch. Marketing can and in this case started before launch in form of advertisement and publicity. The manufacturing activity had also commenced. Thus the said respondent had fulfilled the requirement of experience of minimum 3 years of manufacturing and marketing.

[11] The requirement of minimum 3 years of manufacturing and marketing is not in dispute and was specified in the corrigendum dated 12-10-2018. Relevant portion of which reads as under :

"6. Manufacturing & Marketing Certificate of the products quoted in the NIT for at least 3(three) years to be issued by concerned Drug Controller/State Licensing authority is to be uploaded in Sl No: 03 of page no 09."

[12] Thus as per this condition any agency to qualify technically, must possess manufacturing and marketing certificate of minimum 3 years to be issued by the concerned Drug Controller of the State Licensing Authority. In this context the short question is did the respondent No.3 possess this qualification.

[13] The respondent No.3 in this context relies on a certificate dated 14-10-2018 issued by the licensing authority i.e. Food and Drags Administration, Konkan Division, Maharashtra State. In this certificate it was certified that:

"This is to certify that M/s. RELIANCE LIFE SCIENCES PVT. LTD. (705684), PLANT 2, R-282, TTC AREA OF MIDC, RABALE. THANE BELAPUR ROAD, NAVI MUMBAI, MAHARASHTRA INDIA-400701, Dist: Thane-Zone7 is holding drug manufacturing licence in Form No.28D bearing No.

28D-KD/7 (Iss Dt: 29/04/2009, Ren Dt: 29/04/2014, Val Dt: 28/04/2019)"

[14] This certificate itself qualified the above certification as under :

"This is further certified that, the above products are being marketed by the firm since last 3 Yrs. This Certificate is issued, on the basis of the information provided by the manufacturer and certified by his Chartered Accountant.

This Certificate is valid for a period: 24/10/2018 - 23/10/2019."

[15] This certificate thus simply stated that the respondent No.3 had the drug manufacturing licence and that such drug is marketed by the said firm since three years and that such certificate was issued on the basis of information provided by the manufacturer as certified by the chartered accountant. This certificate thus is not a conclusive or a binding proof of the experience of respondent No.3 of manufacturing and marketing the product for a minimum of 3 years.

[16] In this background, we may refer to certain documents produced and relied upon by the petitioner. As correctly pointed out by the counsel for the petitioner, the respondent No.3 was granted licence by the Drugs Controller General (India) on 2nd June, 2015 for permission to manufacture the drug in question. This licence however specified that "for manufacture of the formulation in the country, separate approval under rule 122-B shall be obtained from the Licensing Authority".

[17] The separate approval as referred to in rule 122-B of the Drugs and Cosmetic Rules was issued by the State Licensing Authority, Food and Drugs Administration only on 15-09-2015. Till such date thus the respondent No.3 could not have started manufacturing the drug or even marketing it. Expression "marketing" in the present context cannot include pre-launch publicity. What the essential condition of the tender required was successful manufacture and marketing the drug for a minimum period of 3 years.

[18] Further on 2nd November, 2015 in a suit filed before the Delhi High Court in which the respondent No.3 was the defendant, concerning the same drug, the High Court had made the following observations :

"Learned counsel for the plaintiffs is pressing for ad-interim order. The same is opposed by the learned counsel appearing on behalf of the defendant No.3. Both the parties have made their submissions for some time. Counsel for the defendant No.3 admitted that the approval of the drug was granted on 2nd June, 2015. The drug in question has not been launched in the market. However, she states that approval of label and carton is granted recently."

[19] Eventually the learned Single Judge of Delhi High Court passed the following interim order :

"10. After small hearing, it appears to the Court that the serious issues are raised in the matter. The authority has granted the approval to the defendant No.3 on 2nd June, 2015. The product has not been launched. The explanation given by the defendant NO.3 would have to be considered after filing of the reply. Let the reply be filed within then days. Rejoinder thereto be filed by the next date. List the application for hearing on 17th November, 2015.

It is clarified that no adjournment shall be granted and the matter would be taken up on day-to-day basis. As soon as the hearing is concluded, the order would be passed. Both the parties are granted time to file the written submissions by 16th November, 2015.

Till the next date of hearing, the defendant No.3 is directed not to launch the drug in question in the market.

Copy of the order be given Dasti to both the parties under the signatures of the Court Master."

[20] This interim order was challenged by the respondent No.3 before the Division Bench of the said High Court. The Division Bench by an order dated 18-01-2016 provided as under :

"8. Since the appellant is under an injunction as per the impugned order, we would hope and expect that the learned Single Judge would pronounce the decision in I.A. NO.23041/2015 as expeditiously as possible and preferably within 30 days of January 13, 2016, being the date when orders were reserved.

At this stage we would be failing not to note that the predecessor bench which was seized of the instant appeal h as on November 19, 2015 permitted the Drug Controller General of India of process the approval application filed by the appellant and the same has since been processed and approval had been granted."

[21] The learned Single Judge eventually lifted the rigors imposed in the interim order dated 02-11-2015 only on 25th April, 2016. Relevant portion of this order reads as under.

"I am of the view that the approvals granted to TrastuRel product are not on the basis of the adherence of the Guidelines of 2012 and rules framed under the Drug Act. The final finding in this respect is yet to be arrived after the present suit is heard upon completion of the trial. Pending the final outcome of the suit, there is a need to arrive at interim measure by working out certain terms between the parties by passing the following directions:

a) The defendant No.3 may launch to manufacture, market and advertise their product under the name TrastuRel on the basis of the approvals already granted to defendant No.3 without calling their product as "bio similar" and/ or "bio similar to HERCEPTIN, HERCLON, BICELTIS" or in any way ascribing any bio-similarity with that of the plaintiffs products HERCEPTIN, HERCLON, BICELTIS in any press releases, public announcements, promotional or other in printed form and from relying upon or referring the plaintiffs' names.

b) The defendant No.3 may also manufacture and market the drug by qualifying the INN name Trastuzumab but not to use the said name stand alone on the carton or package insert as a brand name. The defendant No.3 can use the INN name as Reliance Trastuzumab or TrastuRel wherever applicable to describe the composition of molecule on the product as well as in its insert and not in a prominent manner. The said expression shall be used at the bottom part of the carton and should be in small size letters than the brand name TrastuRel."

[22] It can thus be seen that till 25th April, 2016 the respondent No.3 was under an injunction from the Delhi High Court from launching the drug in question in the market. It was only under the order dated 25.4.2016 that the High Court allowed respondent No.3 to launch to manufacture, market and advertise the product. The order dated 2.11.2015 passed by learned Single Judge itself recorded that the drug in question had till then not been launched in the market and that the approval for label and carton was granted recently.

[23] We further find that for the supply of the same drug the army organization had called for the tender and insisted on the same degree of experience. The petitioner had opposed the qualification of respondent No.3 on similar grounds before the said agency also. We find that the tender inviting agency in that case had rejected the qualification of the respondent No.3 on similar grounds on 30th July, 2019. It is true that the time periods in both tender exercises may be different but the respondent No.3 in the reply to the said contention of the petitioner has merely stated that the time lines are different without further elaborating as to what was the cut-off date for achieving the experience of 3 years as per the tender notice in the said case.

[24] In any case, we have utilized this factor for additional support to hold that the claim of the respondent No.3 of requisite experience of marketing and manufacturing of the drug was hugely doubtful. Reverting back to the materials and documents on record concerning the current tender process, inescapable concluding that one would arrive at is that the said respondent did not have 3 years of experience of marketing and manufacturing the drug as on 09-11-2018, the certificate issued by the licensing authority was merely based on the declaration made by the respondent No.3 certified by the chartered accountant and such claim is falsified looking to the above referred documents on record.

[25] The committee formed by the Government to inquire into the correctness of the claim of respondent No.3 merely verified whether such a certificate was issued by the licensing authority. This was not the brief of the committee. The task of the committee was to verify whether in fact the respondent No.3 did possess such qualification or not. The petitioner had produced several documents pointing out that the claim of the respondent No.3 of having minimum period of 3 years manufacturing and marketing the drug before 09-11-2018 was simply an impossible claim. When Delhi High Court had prevented the respondent No.3 from launching the drug till as late as 25th April, 2016, the respondent No.3 cannot claim the experience of marketing and manufacturing of over three years period prior to 09-11-2018. The very licensing process was not completed before the period of 3 years or the said date. As is well known any drug to be marketed would require several licences and even certification of its package. In the present case admittedly the package certification was also done much later.

[26] While therefore, setting aside the work order dated 28-08-2018 issued by the Government of Tripura in favour of the respondent No.3, we need to mould the relief in peculiar facts of the case. The drug in question is a life saving drug and the Government hospitals cannot be left without supply of such drugs. Further, the initial offer of the petitioner as compared to that of the respondent No.3 was much higher. The petitioner cannot hope to secure the contract for the remaining quota at the said initial offer price.

[27] Under the circumstances, the petition is disposed of in the following directions :

(i) The work order dated 28-08-2018 is set aside.

(ii) The petitioner is given liberty to negotiate with the Government its initial price rate which negotiation shall be completed within a period of two weeks from today.

(iii) If the petitioner offers revised rates in any form including by providing patient assistance programme such that the rates for supply of the viles are not in real terms more than 10% of the rates offered by the respondent No.3, the Government shall place order for purchase of the remainder of the quantity of the drugs as per its requirement for the period up to 31st March, 2019.

(iv) However to cover the requirement for the period of two weeks, it will be open for the Government to purchase further 10% of the tender quantity from the respondent No.3 on the agreed terms and conditions.

(v) Government was permitted to purchase 25% requirement from the respondent No.3 subject to outcome of this petition. Now that the petition is being disposed of finally, the purchases already made by the Government from respondent No.3 and which may be made hereafter under this order, would not be subject to any further rigors.

[28] The petition is disposed of accordingly. Pending application(s), if any, also stands disposed of.