M/S Mdc Pharmaceuticals Limited v. Union of India & Ors

order without its completion/performance certificate, the certificate can be asked for and considered. However, no new supply order should be asked for so as to qualify the bidder."

¶33We may observe that in their counter-affidavit – in response to Ground Q, the respondents have not stated that the said manual is not attracted, or that the same is in-applicable to the tenders in question. Even during the course of arguments, that has not been the submission of the respondents. In fact, Clause 31 extracted above provides that the evaluation of the tender shall be in accordance with, inter alia, guidelines issued by the Government of India from time to time. The said manual is also a guideline

issued by the Government of India, and is, therefore, relevant for evaluation of the tender in question.

¶34We may also take note of the fact that the impugned rejection vide e-mail communication dated 06.07.2021, itself provided for right of representation against the technical rejection of the petitioner"s bid by stating: "This is to inform you that your firm and/or your item(s) is/are found technically ineligible. The detailed description is enclosed herewith as an attachment. Any representation against the informed reason of rejection should be submitted by the firm on email dmcrc@esic.nic.in by 13.07.2021 upto

5.30 PM positively. The representation should only refer to the documents already uploaded against the respective e-tender enquiry at CPP Portal. Any representation submitted after due date and time will be summarily rejected.". (emphasis supplied)

¶35Thus, the bidders declared technically disqualified were given a chance to represent and explain why their disqualification was not justified. This itself shows that the disqualification communicated to the petitioner on

06.07.2021 was not final, as the respondents were open to look into the representation that the bidder may give. Thus, the respondent purchaser chose – at its discretion, to give an opportunity to the bidder to offer a clarification. The said opportunity – we take it, was not an empty formality, and was a genuine attempt to see if the bidder could clarify and explain the apparent deficiency/ confusion, or lack of clarity, on the relevant aspect. Pertinently, even before us, it was represented by the respondent ESIC on

08.08.2021, that the representation of the petitioner is under consideration by the TEC Review Committee. Having given that opportunity to the

petitioner, the respondent was bound to consider the same within the parameters laid down in clause 7.3.5 of the Manual for Procurement of Goods, 2017 extracted hereinabove. Admittedly, the petitioner responded to the said e-mail communication of the respondent vide its communication dated 12.07.2021. The said communication reads as follows: "MDC PHARMACEUTICALS LIMITED AN ISO 9001:2015 CERTIFIED COMPANY (Formerly known as MDC Pharmaceuticals Private Limited) Ref no. MDC/2020-21/072021/06

Date: 12/07/2021 To

Dy. Medical Commissioner (R.C.), Room No. 312 & 314, III Floor, Hqrs. Office, ESI Corporation, Panchdeep Bhawan, C.I.G. Road, New Delhi-110002

Sub: e-Tender Enquiry No. 142C to 146C and 147B –reg. This is with reference to your email dated 06th July, 2021 for representation against the informed reason. We would like to make the following representations with regards to your above-mentioned email.

TE No. Reason for Rejection Submission Remarks 142C 143C 145C 146C Name and code of the firm differ in ESIC Challans Our company has obtained ESI Registration in 2 States i.e. a) Himachal Pradesh (Employer Code no. 14000432970000304) registered vide name MDC PHARMACEUTICALS PVT LTD for manufacturing units situated at Sai Road, Baddi, Distt Solan, Himachal Pradesh

b) Chandigarh (Employer Code no. 17140310530010304) registered vide ESIC challan attached being a historical document which pre-existed at the time of tender opening and which have not undergone change since then (para 7.3.5 p.no. 95-96 Manual for procurement of goods 2017) The tender document is in accordance with GFR, CVC and other guidelines issued by

name MDC PHARMACEUTICALS for Head Office situated at Plot No. 213, First Floor, Industrial Area, Phase I, Chandigarh. We further inform you that our company was converted from private limited to a public limited company on 23rd March, 2018. Copy of certificate for change in name of Company pursuant to a conversion provided by the Drug authority (already submitted with the tender documents) and chalans of ESI Contribution of both the States is attached herewith for your kind consideration. Further our company has been a law-abiding entity and we are regular in payment of ESI contribution and the same can be verified from the ESIC portal. However there has been mismatch in the name of the company in the chalans provided as the chalans attached were of the different employer code i.e. of different states. Last six months (i.e. Oct, 2020, Nov. 2020, Dec. 2020, Jan. 2021, Feb 2021 and March, 2021) challan of ESIC are enclosed for your reference as a historical document. We have already deposited ESIC dues on time. Further we are also enclosing herewith specific schedule of the financial statement specifying the ESIC Contributions made during the year 2019-20. For your further reference we have also provided you the undertaking stating that we are regular in payments of al the employees covered in ESIC. Govt. of India from time to time. Our company is covered under ESIC act.

For your reference, we hereunder provide you the details of our last six months ESIC paid contributions of both the states:

i. Chandigarh

ployer code no. Challan period Challan No. Paid date Amount 40310530010304 October,2020 01720133458176

16.11.2020 Rs. 12,281/- 40310530010304 Novermber,2020 01720136496801

15.12.2020 Rs. 12,199/-

17140310530010304 December, 2020 01721102127301

13.01.2021 Rs. 13,655/- 17140310530010304 January, 2021 01721105980839

15.02.2021 Rs. 13.677/- 17140310530010304 February, 2021 01721109412967

15.03.2021 Rs. 13,688/- 17140310530010304 March, 2021 01721113165158

16.04.2021 Rs. 13,637/-

ii. Himachal Pradesh

TE No. Item No. Item Name and Description as per Drug Schedule 143C Reason for rejection Submission Remarks C 2203 Terbutaline+ Guiaphenesin+ Ambroxol Syp-Each 5ml to contain Terbutaline I.P.

1.25mg+Guiaphenesin I.P. 50mg+ Ambroxol I.P. 15mg Syrup Base QS Specification of item not as per Drug Schedule Specification of item is as per drug schedule in our D/L mention in "in a mentholated flavoured syrup base q.s." is not an active ingredient in composition. So, there is no question for not meeting the specification as per drug schedule. "reference Indian pharmacopoeia 2007) D/L at p. no. 22

If the tender is considered then the comparison increases and ESIC will be able to get competitive rates and the financial benefit of the ESIC institution also increases as well.

We again humbly request you to accept our tender for your kind perusal and consideration that the information given by me is true and correct to the best of my knowledge and belief.

For MDC PHARMACEUTICALS LIMITED

Parvinder Singh Chairman cum whole Time Director"

¶36The aforesaid response filed by the Petitioner – on the face of it, only relies on pre-existing documents and records i.e. " historical documents Employer code no. Challan period Challan No. Paid date Amount 14000432970000304 October,2020 01420133482136

16.11.2020 Rs. 72,755/- 14000432970000304 Novermber,2020 01420135565411

16.12.2020 Rs. 71,726/- 14000432970000304 December, 2020 01421101476900

13.11.2021 Rs. 72,649/- 14000432970000304 January, 2021 01421105955467

15.02.2021 Rs. 76,368/- 14000432970000304 February, 2021 01421108635612

15.03.2021 Rs. 75,425/- 14000432970000304 March, 2021 01421113166189

16.04.2021 Rs. 79,124/-

which pre-existed at the time of tender opening and which have not undergone a change since then". Thus, the aforesaid representation could not have been ignored or discarded. In the aforesaid background, the question which arise for our consideration is, whether the petitioner"s disqualification, even by the Review TEC, is justified in terms of e-tender enquiry, and the Respondents acted in an arbitrary and unreasonable manner while disqualifying the Petitioner on a hyper-technical ground.

¶37The answer to the first question emerges from the proceedings which have taken place before us, and which have been taken note of hereinabove. On a scrutiny of those very documents – which the petitioner filed either with its bids, or with the representation dated 12.07.2021, and from the explanation furnished by the petitioner, after repeated nudging and prodding the respondents have admitted that there are no outstanding dues of the petitioner towards ESI contribution. Nothing prevented the respondent-ESIC from reaching the same conclusion without this Court"s intervention. In fact, the respondent was bound to apply its mind to all the relevant materials, and come to a rational and informed decision, which it failed to do when it decided to disqualify the petitioner, and to reaffirm the said decision even on a review.

¶38The petitioner had provided the following information/documents to give clarity to the Respondents: a) It has ESI registration in two states i.e., Chandigarh and Himachal Pradesh and therefore, has two employer code numbers. These were in the names of MDC Pharmaceuticals at

Chandigarh Head Office, and MDC Pharmaceuticals Pvt. Ltd at Baddi, Salon, Himachal Pradesh – the manufacturing units. b) Furthermore, to make things easier, MDC provided all historical documents in form of ESIC challans, to check for arrears and any other details. Challans issued in both names aforesaid were provided. c) They also stated in their clarificatory letter that their company was converted from private limited to a public limited company on 23rd March, 2018. A copy of certificate incorporating the change in name of Company by the Drug authority was submitted with the tender documents.

¶39The historical documents –which were a creation of the Respondent ESIC itself, viz. the ESI deposit challans were provided by the petitioner, but the respondent ESIC has chosen to not examine the same.

¶40The consideration of the petitioner"s case by the TEC Review Committee unfortunately exhibits complete non-application of mind by it. It, firstly, records that the "firm accepts the reason of rejection." The petitioner has nowhere accepted the reason given by the respondents for rejection of its technical bid. In fact, the case of the petitioner is that the reason, namely, "The name and code of the firm differ in ESIC challans" is not correct, since the petitioner had, at the outset, informed the respondents while submitting its bid that the petitioner was operating under 2 names, and codes, and the name of the petitioner company, upon the petitioner becoming a limited company had changed from MDC Pharmaceuticals Private Limited to MDC Pharmaceuticals Limited. The fact that the petitioner had preferred the present writ petition itself shows that the

petitioner had not accepted the so called reason of rejection. A perusal of the petitioner"s communication dated 12.07.2021 extracted hereinabove also shows that the petitioner never accepted the so called reason for rejection. The TEC Review Committee further states "explanation reviewed and does not adhere to Clause 5(XIII) of TE. Reply not found satisfactory. Firm not eligible."

¶41The Review Committee of the respondent, however, does not state as to why the explanation furnished by the petitioner in its communication dated 12.07.2021 was held to be as not adhering to Clause 5(XIII) of the TE. Clause 5(XIII) oblige the petitioner to submit employer code number and copy of last three contributions towards ESI in case factory is covered under ESI Act. That was done by the petitioner, not only while submitting the bid, but also while submitting the clarification on 12.07.2021 in terms of the opportunity provided to the petitioner. Even during arguments, learned counsel for the respondent has not been able to state as to why the Review TEC Committee observed – and what it means, when it states that the explanation does not adhere to Clause 5(XIII) of the TE. As noticed hereinabove, the purpose of requiring the bidders to submit their name and employer code number, and copy of last 3 contributions towards ESI, was to ensure that the bidder was in compliance of the provisions of the ESI Act, if it was covered by the said Act.

¶42Admittedly, the respondents have found that the petitioner was in compliance, and was not in default in the matter of deposit of ESI dues of its employees either at its head office at Chandigarh, or its factory at Baddi, Himachal Pradesh. This was so admitted before us on 18.01.2021. If the

reason given by the TEC of the respondents for the initial disqualification of the petitioner, namely, that the "name and code of the firm differ in ESIC Challans", were to be accepted, the respondent would not have been in a position to state before this Court that there is no ESIC Dues outstanding of the petitioner. The decision taken by the respondents to declare the petitioner technically disqualified, and not eligible, is therefore, not only wrong but irrational and arbitrary.

¶43We have held in our decisions in Xcellance medical Technologies Private Limited v. HLL Infra Tech Services & Anr.1 that "the tender authority should not have a myopic view. Its objective should be to encourage maximum participation in a fair manner…". Therefore, the tendering authority which issues a public tender should ensure that each decision should be made bearing public"s interest in mind. The TEC while considering and evaluating bids cannot act in a mechanical manner. It is not a post office, or a mechanical computer, and comprises – as its members, highly intelligent and qualified people, who are experts in their fields. They are expected to sift through information in a reasonable manner, and apply their mind to the same. They are to evaluate tenders to derive maximum benefit and should keep their ultimate goal in mind – which in the present case is welfare of workers. Additionally, it should keep in mind that the purpose of tenders is to get maximum participation, and not stump the bidders on hyper technical grounds, only because the examination of their bids requires some application of mind. Pertinently, the respondent ESIC itself holds the records in relation to the deposit of ESI dues by an employer.

1 W.P.(C) 6643/2021, High Court of Delhi.

The petitioner had not only provided the employer name and code numbers, but also the ESI Challans by which ESI dues were deposited. All that the respondent was required to do was to check, at its own end, whether the petitioner"s claim that it made deposits in respect of its employees – both at the head office and at the factory premises, was correct. Is it to be expected that even this minimal scrutiny and verification would not be undertaken by the TEC while examining the bids? If these aspects had been kept in mind, the petitioner would not have disqualified initially, or at least after the petitioner furnished the clarification. Admittedly, MDC is the lowest bidder for the four items.

¶44Furthermore, the manual for Procurement of Goods, 2017 issued by the Govt. of India, Ministry of Finance, Department of Expenditure, provides that minor infirmities, irregularities, or non-conformities during the preliminary examination of the tenders should not prejudice or effect the fate of the tenderers. Therefore, even if, one were to assume that there was any infirmity, irregularity, or non-conformity found by the TEC of the respondents, the same was minor. If it had not been so, the respondent ESIC would not have given an opportunity to the petitioner to represent against the disqualification communicated to the petitioner vide email dated

06.07.2021 in the first place.

¶45Keeping in mind the above, the financial bids of the Petitioner have been opened and in respect of four items out of 15 for which the petitioner had submitted its bid, the petitioner was the lowest bidders. The difference between the Petitioner"s bid and the next lowest bid is more than double in respect of Tolperisone Hcl. The following chart provides the comparison between the Petitioner"s bid and the L1 rates found by the respondents.

Sr No. Description Tende r No Item Code Unit Size Petitioner"s Rate Quoted L-1 Rate & Company

¶1Tolperisone Hcl Tab / Cap-Each Tab / Cap contain: Tolperisone Hcl 150 mg 142-C 1545A 1Tab/ Cap Rs. 1.36 Rs. 3.18 Themis

¶2Methylprednisolone Tab / Cap-Each Tab / Cap to contain: Methylprednisolone 4 mg 145-C 466A 1Tab/ Cap Rs. 1.32 Rs. 1.36 Mesmer Pharma

¶3Hydroxyzine Hydrochloride Syp-Each 5ml to contain: Hydroxyzine Hydrochloride 10mg 143-C 1570 ML Bottle Rs. 24.8 Rs. Relax Pharma

¶4Potassium + Magnesium Syp-Each 5ml to contain: Potassium Citrate IP 1100mg, Magnesium Citrate USP 375mg, Pyridoxine Hcl IP 20mg, (Each ml to contain: Approx 1mEq Magnesium Ion, Patassium Ion, 3mEq Citrate Ion and 4mg Of Pyridoxine Hcl) 1 TAB/CAP 143-C 2075 ML Bottle Rs. 61.4 Rs. Overseas Health Care

¶46The Supreme Court has held in B.S.N. Joshi & Sons Ltd. v. Nair Coal Services Ltd.,2 that when huge public money is involved, the tender authority may accept a bid which economically beneficial to it. The relevant extract from the judgment is as under: "69. While saying so, however, we would like to observe that having regard to the fact that huge public money is involved, a public sector undertaking in view of the principles of good corporate governance may accept such tenders which are economically beneficial to it. It may be true that essential terms of the contract were required to be fulfilled. If a party failed and/or neglected to comply with the requisite conditions which were essential for consideration of its case by the employer, it cannot supply the details at a later stage or quote

2 (2006) 11 SCC 548

a lower rate upon ascertaining the rate quoted by others. Whether an employer has power of relaxation must be found out not only from the terms of the notice inviting tender but also the general practice prevailing in India. For the said purpose, the court may consider the practice prevailing in the past. Keeping in view a particular object, if in effect and substance it is found that the offer made by one of the bidders substantially satisfies the requirements of the conditions of notice inviting tender, the employer may be said to have a general power of relaxation in that behalf. Once such a power is exercised, one of the questions which would arise for consideration by the superior courts would be as to whether exercise of such power was fair, reasonable and bona fide. If the answer thereto is not in the negative, save and except for sufficient and cogent reasons, the writ courts would be well advised to refrain themselves in exercise of their discretionary jurisdiction."

¶47The scope of judicial review and scrutiny encompasses arbitrary, unreasonable, and illegal treatment by the Respondent. This has also been held in in the Supreme Court judgment of Tata Cellular v. Union of India3 that - "77. … Therefore, it is not for the court to determine whether a particular policy or particular decision taken in the fulfilment of that policy is fair. It is only concerned with the manner in which those decisions have been taken. The extent of the duty to act fairly will vary from case to case. Shortly put, the grounds upon which an administrative action is subject to control by judicial review can be classified as under:

(i) Illegality : This means the decision-maker must understand correctly the law that regulates his decision-making power and must give effect to it.

(ii) Irrationality, namely, Wednesbury unreasonableness.

3 (1994) 6 SCC 651.

(iii) Procedural impropriety."

¶48In light of the above, the petition is allowed, and the Respondent is directed to consider the Petitioner"s bid as technically eligible for the four items quoted below. Sr No. Description Tender No Item Code Unit Size

¶1Tolperisone Hcl Tab / Cap-Each Tab / Cap contain: Tolperisone Hcl 150 mg 142-C 1545A 1Tab/Cap

¶2Methylprednisolone Tab / Cap-Each Tab / Cap to contain: Methylprednisolone 4 mg 145-C 466A 1Tab/Cap

¶3Hydroxyzine Hydrochloride Syp-Each 5ml to contain: Hydroxyzine Hydrochloride 10mg 143-C 1570 ML Bottle

¶4Potassium + Magnesium Syp-Each 5ml to contain: Potassium Citrate IP 1100mg, Magnesium Citrate USP 375mg, Pyridoxine Hcl IP 20mg, (Each ml to contain: Approx ImEq Magnesium Ion, 2mEq Patassium Ion, 3mEq Citrate Ion and 4mg Of Pyridoxine Hcl) 1 TAB/CAP 143-C 2075 ML Bottle

¶49Since the petitioner is the lowest bidder in respect of the aforesaid four items, the respondent shall proceed in accordance with the law in the matter of award of the contracts for the said items. The parties are left to bear their own costs.

(VIPIN SANGHI) (JASMEET SINGH) JUDGE

JUDGE

FEBRUARY 16, 2022

* IN THE HIGH COURT OF DELHI AT NEW DELHI Judgment reserved on: 18.11.2021 % Judgment delivered on: 16.02.2022 + W.P.(C) 7620/2021 and CM APPL. Nos.23847/2021 & 24944/2021 M/S MDC PHARMACEUTICALS LIMITED ..... Petitioner Through: Mr. Abhishek Sethi, Ms. Richa Sethi, Mr. Garvit Kalra and Mr. Jeevesh Mehta, Advocates. Versus UNION OF INDIA & ORS. ..... Respondents Through: Mr. Bhagvan Swarup Shukla and Mr. Sarvan Kumar, Advocates for UOI. Mr. Shlok Chandra, ESIC with Mr. Shrey Chakraborty, Advocate. Mr. Vibhor Garg and Mr. Sidhant Bhatia, Advocates for applicant in CM No. 40039/2021 CORAM: HON'BLE MR. JUSTICE VIPIN SANGHI HON'BLE MR. JUSTICE JASMEET SINGH J U D G M E N T O F T H E C O U R T 1. The present petition has been filed by the petitioner seeking substantially the following prayers: " i. To issue a writ of in the nature of certiorari or any other writ or direction for declaring the e-mail dated 06.07.2021 issued by respondent No. 4, whereby the bid of the petitioner company has been summarily rejected with a malafide intention to award the tender to a company of their choosing as illegal, arbitrary, unconstitutional, null and void-ab-initio and is liable to be quashed and set aside; ii. And a writ in the nature of mandamus or any other appropriate writ, order or direction thereby directing the respondents to consider the financial bid of the petitioner on merits to match the lowest bid as would be made by the successful bidder in the tender under consideration; iii. Or in alternative pass any Writ Petition Under Article 226 Of Constitution Of India For The Issuance Of Writ Of Mandamus Or Any Other Appropriate Writ, Order Or Direction thereby directing the Respondent to desist from opening the financial bids of other contenders and/or to desist from awarding the tenders under consideration to any of the bidders, during the pendency of the instant writ petition;" 2. The case set up by the petitioner is that the petitioner M/s MDC Pharmaceutical Limited (hereinafter called either "MDC" or "petitioner") is a company registered under the Companies Act, 1956 having its registered office at 213, First Floor, Industrial Area Phase I, Chandigarh – 160002. 3. MDC was conceived of in the year 1994, and was incorporated originally as a private limited company which was duly registered as M/s MDC Pharmaceuticals Private Limited under the provisions of Companies Act, 1956 with the office of the Registrar of Companies, Punjab, Himachal Pradesh and Chandigarh vide Registration No. 53-14820 of 1994 on 14.07.1994. The petitioner was doing business in pharma industry, and was getting medicines manufactured from other pharma manufacturing units within the state of Himachal Pradesh. The petitioner continued selling/marketing its products, which were manufactured by other units, till the year 1999. 4. In the year 1999, the petitioner company acquired a manufacturing facility on rent, and started manufacturing its own products w.e.f. 14.02.2000, obliterating its need to outsource. Subsequently, Petitioner company purchased land at village Gullarwala, Post Office and Tehsil Baddi, District Solan, H.P. to set up its manufacturing facility. 5. On 12.08.2005, the petitioner company acquired the adjoining land also, and obtained necessary permission under Section 118 of the Himachal Pradesh Tenancy & Land Reforms Act, 1972, and started a manufacturing facility for its pharma products on 02.04.2006. 6. On 13.03.2018, the petitioner company converted from a private limited company into a public limited company, and consequently, changed its name from MDC Pharmaceutical Private Limited to MDC Pharmaceuticals Limited with the approval of Registrar of Companies, Chandigarh. A certificate dated 13.03.2018 was issued by the ROC, Chandigarh to that effect, with the approval of the Central Government, accorded vide SRN G79087573 dated 13.03.2018. 7. Although, vide letter dated 27.01.2020, the petitioner company has been granted the necessary permission for