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2010 DIGILAW 565 (GUJ)

State of Gujarat v. Baroda Surgical (I) Pvt. Ltd.

2010-11-29

JAYANT PATEL, S.R.BRAHMBHATT

body2010
JUDGMENT : Jayant Patel, J. The present appeal is arising from the judgement dated 11.1.2002 passed by the learned Single Judge of this Court in SCA No.7327 of 2001, whereby the condition imposed for production of Good Manufacturing Practices (GMP) Certificate is ordered to be struck down. 2. We may record that for the same of convenience the parties shall be referred to as their status before the learned Single Judge in the writ petition. 3. The relevant facts are that the original petitioner is engaged in manufacturing of surgical dressing and is dealing in various items for such purpose. As per the petitioner, they are holding licence for manufacturing and sale of such products under the Drug and Cosmetic Act, 1940 (hereinafter referred to as 'the Act' for short). It is the case of the petitioner that the licence would be granted under the Act if one complies with the requirement of the Act read with the Drugs and Cosmetics Rules, 1945 and as per the petitioner, the Rule 71 provides for Good Manufacturing Practices (GMP) as per the schedule and if one is complying with the said requirement, then only the licence would be granted to him. The State Government for the purpose of procuring certain items, issued an advertisement and in the said advertisement, one of the conditions provided for eligibility criteria was that the manufacturer has to produce GMP Certificate. The petitioner, at that stage preferred petition challenging the said incorporation of the condition for production of GMP Certificate being violative of Articles 14 and 19(1)(g) of the Constitution of India. The learned Single Judge found that Condition No.6(b) for production of GMP Certificate is unreasonable and, therefore, ultimately he quashed the said condition incorporated in the tender form. It is under these circumstances, the present appeal before us. 4. We have heard Mr.Trivedi, learned AGP for the appellant State and Mr.Saurin Mehta, learned Counsel for Nanavati and Nanavati Associates for the respondent. 5. The contention on the part of the appellant herein is that the Government wanted offer of the manufactured items from a person, who not only holds the licence under the Act, but also from a person, who has been issued GMP Certificate. It was submitted that the condition was incorporated with the essential purpose to have better quality of the products and the same was in a larger public interest. It was submitted that the condition was incorporated with the essential purpose to have better quality of the products and the same was in a larger public interest. It was, therefore, submitted that the learned Single Judge ought not to have struck down the condition, which was in public interest and hence, this appeal. 6. The examination of the said contention, as such, has been elaborately considered by the learned Single Judge at paragraphs 9 and 10, which read as under :- "9. I have carefully considered the rival contentions of the learned Counsel for the parties. In the present case, the question for consideration and determination of this Court is whether condition no.6(B) of the tender document which has been newly added in 2000 is arbitrary and unreasonable. If it is unreasonable and arbitrary, in the larger interest of the State, then it should be struck down. The conditions no.6(b) of the tender condition reads as under : "6(b) For all other drugs the manufacturer must be having valid G.M.P. Certificate from respective P.D.C.A., strictly in the format prescribed in part II-9. No offer will be acceptable unless the tender is accompanied by requisite G.M.P. Document described above. Manufacturers who do not possess required G.M.P. Certification are not entitled to submit tender. Under no circumstances submissions of copies of renewal application challan for expired GMP certificate will be considered in lieu of valid GMP Certificate. The certificates mentioned in (a) and (b) above must include either the name of drugs or the category of drugs for which the GMP is issued. It is not in dispute that the petitioner company is having manufacturing licence for items or drugs for which the tender notice has been issued. It is also not in dispute that the conditions mentioned for issuance of the removal of the licence under Section 71 of the Act are the same which are required for the GMP certificate. The learned Additional Advocate General pointed only one thing that when the licence is granted or renewed, all the requirements are necessary and at the time of issuance of GMP certificate, the inspector has to make a physical verification of inspection regarding actual manufacturing process and a very detailed and thorough examination as regards capacity of instruments and validation of equipments and all other facts right from procuring raw material to realising finished products are being checked. At the time of granting or renewal of a licence, what is not being checked or inspected, those checking is being checked and inspected by issuance GMP certificate by FDCA. It is only a sort of an additional qualification for ensuring higher excellence in terms of quality standard of drugs being manufactured. The petitioner, having undisputedly a licence is complying with all the requirements and provisions of schedule "M" which also require for the issuance of the licence as well as GMP certificate. GMP certificate requires only inspection at the time when the certificate is granted. It is not disputed that after granting the licence, the authorities are required to inspect actual process periodically or even at the time when the licence is renewed. If the medicines are required for Government hospital, then such physical verification is required in order to further assure that articles and medicines have been made in good environment. For that purpose, they are requiring such certificate, otherwise that certificate is not required for manufacturing and selling or purchasing that medicines or articles. When articles or medicines have been prepared in good environment, meaning thereby that they have no concern with the medicines which are manufactured and made available to general public at large. If they are not concerned for classification or condition of the GMP certificate for the medicines or articles to be used by the general public at large and they are granting licence without inspection at the relevant time and thereafter at the time when licence is renewed and they are permitting for manufacturing of such medicines or articles, without any physical verification and inspection, they they are committing a fraud to the entire society. When they purchase for their own hospitals, they are required to see the actual environment in which the manufacturing process is going on and if they are not requiring the medicines for their hospital and they are permitting the manufacture and sale of the articles or medicines to public at large, meaning thereby that they are permitting sub-standard goods to the society at large. If such condition is prevalent in the Government department, they they are not supposed to ensure life and security of the public at large. It is the duty of the Government to see that the articles and medicines manufactured by various manufacturing companies comply with the standard manner and good environment. If such condition is prevalent in the Government department, they they are not supposed to ensure life and security of the public at large. It is the duty of the Government to see that the articles and medicines manufactured by various manufacturing companies comply with the standard manner and good environment. The licence should not be granted without proper inspection and physical verification of the factory concerned. When the licence is granted, the requirement is compulsory. The licence is renewed, the compulsory requirement is again necessary. On periodical inspection physical verification is necessary and it will be presumed that the manufacturer is competent and has complied with all the necessary requirements. If compulsory, the Government can require every manufacturing company to have GMP certificate, otherwise manufacturing process should not be permitted or manufacturing process should not be permitted if the required conditions have not been complied with by the manufacturer and verification and inspection by the appropriate authority is also necessary. If they are failing to do so, then they are not fair to the society. When having made any physical verification and inspection of the factory, they are issuing certificate on the basis of the certificate papers which are produced before them showing that the requirements have been ? complied with. As such, at least the tenders are required to be accepted only after physical verification and inspection made by the competent authority within a specific period of three months or six months irrespective of the fact that the manufacturer has any GMP certificate or not. During the course of arguments, the learned Additional Advocate General was asked about the validity of the GMP certificate. He informed after inquiry from the official concerned that the GMP certificate remains valid for a period of two years. During the course of arguments, the learned Additional Advocate General was asked about the validity of the GMP certificate. He informed after inquiry from the official concerned that the GMP certificate remains valid for a period of two years. In case physical verification and inspection has been made at the time when the renewal of the licence was sought within a period of three months and the certificate for GMP has already been issued, more than one year and six months, it would be very unreasonable that the persons having qualifications and complied with all the relevant requirements under the Act and Rules would not be eligible only due to the fact that he has not produced GMP certificate though his factory has been physically inspected and verified by the appropriate authority within three or six months and the person having GMP certificate whose factory has been inspected and verified more than one year and six months, would be eligible for supplying the goods as per the terms of the tender if accepted. As such, the condition precedent for GMP certificate to make tenderer eligible is unreasonable and arbitrary and it has not been stated by the learned Additional Advocate General that after issuance of the GMP certificate, the manufacturer cannot commit any mistake in compliance with the requirement for GMP certificate laid down in schedule "M". If such physical verification was made prior to 18 or 20 months back, would be eligible and physical verification and inspection has been made at the time of renewal within three months would not be eligible. Certainly that condition would be unreasonable for all purposes and is liable to be struck down. As such, a person having passed HSC examination is not required to have passed a paper of general English and in the same manner, a student having passed general English is not required to pass a paper of general English for LL.B. Thus, a person having qualification is not required to obtain such certificate. Secondly, even according to the learned Additional Advocate General, there are only four companies in Gujarat State having such GMP certificate. Thus, the respondents have malafidely intended to award the contract to one of the four companies and that is not open to competition, which is not fair on the part of the respondents. 10. Secondly, even according to the learned Additional Advocate General, there are only four companies in Gujarat State having such GMP certificate. Thus, the respondents have malafidely intended to award the contract to one of the four companies and that is not open to competition, which is not fair on the part of the respondents. 10. In the facts and circumstances of the case, the condition no.6(b) imposed by the respondents in the tender does not appear to be reasonable one on the basis of the policy decision which itself is unreasonable, is not sustainable in the eye of law and the same requires to be struck down and more particularly when this policy has been introduced for the first time in the present tender. According to the learned AGP this policy has been introduced on 1.4.2000 and has been adopted in several contracts. But the learned Counsel for the petitioner has submitted that the petitioner company has been supplying the goods as per the contract for the year 2000-2001 and its licence has already been renewed till 2003. The licensing authority and the GMP certificate is one and the same. They can make physical verification at any item and there is no bar under the Act and Rules. The plea of the respondents that they cannot make physical verification and inspection after grant of the licence is not in law. The policy decision is introduced recently, but has not been made effective in the case of renewal of the petitioner company's licence for the supply of medicines/articles to the Government itself. If the Government is not complying with the policy decision introduced on 1.4.2000 in certificate matters and complying with in certain matters, though it is not obligatory for the Government to comply with all, but it would be discriminatory in certain tenders in view of the fact that the Government is implementing that policy decision in certain cases and not implementing the same in other cases." 7. It is not a matter where any special procedure is provided for investment of the power for issuance of the GMP Certificate, nor any statutory identification exists of such GMP Certificate. If the issuance of the certificate is not being regulated by any specific Government Resolution or by the provisions of the Act read with the Rules, the manufacturer cannot be compelled to obtain GMP Certificate. 8. If the issuance of the certificate is not being regulated by any specific Government Resolution or by the provisions of the Act read with the Rules, the manufacturer cannot be compelled to obtain GMP Certificate. 8. We may record that learned AGP Mr. Trivedi has not been able to show this Court any Resolution of the Government regulating the procedure for issuance of the GMP certificate to the manufacturers, who is having license under the Drugs and Cosmetic Act, 1940 read with Rules. We may also record that unless the Act or the Rules specifically lays down any powers with the State Government to issue executive order, such powers can neither be read as so vested nor can be enforced for issuance of GMP certificate. If such is permitted, it may result into amending the Act or the Rules by executive order, which is not permissible. 9. The attempt was made by learned counsel for the appellant to contend that it was in a larger public interest, the policy decision was taken for production of GMP certificate by the tenderer, who is desirous to supply medicine to the Government. The contention prima-facie appears to be attractive but upon close scrutiny, it appears that same could be termed as by way of an eyewash and without their being any authority with the Government. Firstly, if the insistence is to be made for production of GMP certificate, there must be a statutory recognition of such GMP certificate or in the alternative, the procedure for issuance of GMP certificate be regulated by common course, known to law, which is lacking in the present case. 10. The another aspect is that if the policy is to be formulated, it must be on the rational basis and there must be foundation for such policy. If the process or procedure for issuance of GMP certificate is lacking, nor such GMP certificate is identified by the Act or Rules, it would not only be unreasonable on the part of Government to insist for production of GMP certificate but it can also be said to be a policy formulated without their being any basis or existence of the basis. It is by now well settled that even if any policy is formulated in exercise of powers for framing of the policy by the Government, such policy has to meet with the test of Article 14 of the Constitution. It is by now well settled that even if any policy is formulated in exercise of powers for framing of the policy by the Government, such policy has to meet with the test of Article 14 of the Constitution. It is also true that, normally this Court in exercise of powers under Article 226 of the Constitution of India, may not substitute its own wisdom for framing of the policy in place of rational exercise by the Government but at the same time, it is by now well settled that the policy should not result into absurdity. If the foundation for making policy is unavailable, no citizen can be compelled to produce such foundation. If the practice or procedure for issuance of GMP certificate is neither warranted nor regulated by any means of law, the insistence on the part of Government for production of such certificate would result into absurdity. We find that as held by learned Single Judge, the such policy or insistence of certificate would not meet with the test of Article 14 of the Constitution. 11. Apart from above, if any manufacturer is holding a valid license for manufacturing the items covered by the provisions of the Act, and is desirous to submit the tender, he cannot be discriminated nor his right to submit tender can be curtailed by a policy of the Government for production of GMP certificate, for which, there is no existence. Consequently, such an action on the part of Government could also be termed as violative of Article 19(1)(g) of the Constitution. 12. In view of the above, we are of the view that impugned order passed by learned Single Judge does not deserve to be interfered with. 13. Hence appeal is merit less. Therefore, dismissed. Interim relief, if any, vacated. No order as to costs.