*HONOURBLE SRI JUSTICE D.V.S.S. SOMAYAJULU

+ WP.No. 1908 of 2019

% 09.04.2021

Hemogenomics Private Limited, Rep., by authorized signatoryKamal Ragh Tumkur Road, Bangalore Karnataka 560022

… Petitioner

Vs.

$ The State of Andhra Pradesh and 4 others

… Respondents

! Counsel for the petitioner : Sri Thomas George

! Counsel for the Respondent Nos.2 and 3 : Sri Marella Radha

! Counsel for the Respondent No.4 : Sri Venkata Chandrasekhar

< Gist:

Head Note:

? Cases referred:

¹ 2016 (13) SCC 382

2 1994 (6) SCC 651

HON'BLE SRI JUSTICE D.V.S.S.SOMAYAJULU

W.P.No.1908 of 2019

ORDER :

This writ petition is filed for the following relief:

"To issue a issue a writ order or direction more particularly a WRIT OF MANDAMUS declaring the action of Respondent Nos.1 to 3 in awarding the Contract of Equipment Placement Agreement NAT dated 23/01/2019 to Respondent No.4 on nomination basis without calling for open tender system as void illegal and arbitrary and set aside the same as illegal arbitrary and contrary to due process of law and consequently award the Contract of Equipment Placement Agreement NAT after following due process of law by inviting tenders."

This Court has heard Sri Thomas George, counsel for the petitioner and Smt. Marella Radha, appearing for respondent Nos.2 and 3 and Sri Venkata Chandrasekhar appearing for the 4th respondent.

The grievance of the petitioner is that the 2nd respondent represented by the 3rd respondent has chosen to award a work covered by the agreement dated 21.03.2019 (herein after called the contract) to the 4th respondent by negotiation/nomination and without inviting tenders. Learned counsel for the petitioner draws the attention of the Court to the fact that the 2nd respondent fits within the definition of 'State' as per Article 12 of

the Constitution of India and that therefore, in view of the settled law on the subject, the 2nd respondent can award a contract only by inviting public tenders. It is his contention that the action taken by the 3rd respondent is totally contrary to the settled law on the subject which talks about awarding of contracts through an auction only. Learned counsel for the petitioner submits that the work in question relates to the tests that are conducted to analyze the blood samples. It is his contention that the Real Time Polymerized Chain Reaction Test (RT-PCR), is not the monopoly of the 4th respondent and that the petitioner also has the technology for doing the same. Learned counsel points out to various institutions, where they have installed their equipment which carries out the test. He also submits that the petitioner is equally qualified to install the said equipment and conduct the tests. Therefore, it is his contention that the awarding of the contract to respondent No.4 is totally contrary to the settled principles of law. He draws the attention of the Court to Ex.B.2 in which it is mentioned that the 4th respondent has the monopoly or proprietary technology for the RT-PCR tests and states that the contents of this document are totally incorrect. Learned counsel relies upon the Office Order dated 05.07.2007 issued by the Central Vigilance Commission to argue that the auction is the rule for acquiring any technology or machinery and that very very limited scope exists for awarding works by nomination basis. Learned counsel also relies upon

the judgment of the Hon'ble Supreme Court of India reported in Nagar Nigam, Meerut v. Al Faheem Meat Exports Pvt. Ltd¹ case. Relying on this, learned counsel argues that even the limited window which is available for awarding a work by nomination is not available in the present case to the respondents to give the work to the 4th respondent. Hence, the petitioner prays for an order/relief as mentioned earlier.

In reply to this, Smt.Marella Radha, learned standing counsel for respondent Nos.2 and 3 argues that respondent No.4 was given the work of installing an equipment called the 'COBAS TAQ SCREEN MPX v. 2.0 for the 2nd respondent's NAT laboratory. Learned standing counsel argues that there are two machines available for this test. One is manufactured by respondent No.4 called the COBAS TAQ SCREEN and the other is the equipment manufactured by the petitioner. Learned counsel points out that the 4th respondent after making a detailed enquiry on a Pan India basis is come to the conclusion that the equipment manufactured exclusively by the 4th respondent is suitable for the tests in their laboratory and that therefore, after conducting the enquiry, they have awarded the work. Learned counsel also draws the attention to the Central Vigilance Commission guidelines which is referred to argue that if there is a sole manufacturer, who has a proprietary right over the technology, the contract can be awarded through private negotiations also. It is her contention that the respondent

¹ 2016 (13) SCC 382

institution wanted a specific type of machinery and a specific technology which is not available elsewhere and therefore, she justifies the award of the work. She also relies upon the documents filed to argue that before the agreement dated 23.01.2019 was concluded, the respondent enquired with a number of other blood banks and blood centers in the year 2018 itself before finally deciding to award the work. Letters referred to are filed as additional documents by the counsel for the petitioner.

For respondent No.4 Sri S.Vivek Chandrasekhar argues and submits that the Nucleic Acid Test (NAT) can be conducted by using two different technologies as mentioned in page 3 of the counter; para 8 (i) and (ii) which are reproduced hereunder:

• (i) RT-PCR based technology with Cobas S 201 as the instrument and Cobas Taq Screen MPX v 2.0 as the reagent.
• (ii) TMA based technology with panther as the instrument and Procleix Ultrio Blite as the re-agent.

Learned counsel submits that the Cobas S 201 instrument is exclusively manufactured by the 4th respondent and the petitioner uses a different technology. Learned counsel for the petitioner points out that what is awarded to the 4th respondent is an equipment placement agreement dated 23.01.2019. As per the said agreement, the 4th respondent will have to install the Cobas S 201 equipment in the premises of the 2nd respondent for a period of 60 months for which they will be paid a certain

cost per sample. Learned counsel also points out that after the equipment is installed, the 4th respondent should give adequate training to the staff of the 2nd respondent and also give follow up training. They also have a duty to upgrade the equipment. The maintenance of the equipment and the replacement of spares is also given to the 4th respondent alone. The annexure to the agreement points out the equipment to be installed. Learned counsel also draws the attention of this Court to the Proprietary Article Certificate dated 23.07.2018 to argue that this particular system-Cobas 201 is exclusively manufactured by the 4th respondent alone. He also points out various places, hospitals, where the equipment is installed. Therefore, the argument of learned counsel for the 4th respondent is that this technology and equipment which is manufactured by respondent No.4 is the exclusive proprietary technology available with the 4th respondent alone and that since this equipment and technology are solely available with the 4th respondent only, they were given the work of installing the equipment. Learned counsel submits that the awarding of work in this manner is not contrary to the law of the land and that the decision making process is not vitiated. He also argues that on the ground of judicial review, this Court should not step in evaluate the technical decision which is best left to the experts on the subject.

In the rejoinder, learned counsel for the petitioner argues that the respondent No.3 made a requisition to respondent No.2 stating that respondent No.4 has an exclusive monopoly in RT-PCR test and on this basis, the work was awarded. He again

draws attention of the Court to the document dated 11.10.2018 filed as Ex.B.2 to argue that this is the basis for awarding the work. He also argues that NAT is done by various other manufacturers and is not the monopoly of the petitioner. He points out that even in the counter filed, the 4th respondent agrees that NAT can be conducted on the technology and the equipment manufactured by the petitioner. Learned counsel also relies upon a long list of clients that the petitioner has to argue that their equipment is also suitable and that respondent No.2, who fits within a definition of a State cannot award the work to respondent No.4.

COURT:

This Court after hearing all the learned counsel notices that there is no dispute about the fact that the NAT is a test that determines the infections in a donors blood like HIV, HBV and HCV etc. This test which identifies the pre-existing infections/disease can be conducted either with RT-PCR based technology or TMA based technology.

As can be seen from the correspondence, it was decided to establish a NAT laboratory in the 2nd respondent institute in December, 2017. Since then, enquiries were conducted. The enquiries led to a number of certificates being issued in December, 2018 from various institutions through out the country which have certified that they have used Cobas S 201 system for their blood screen. King George Medical University, Luknow gave a certificate stating that it has been using the

Cobas S 201 automatic system for blood test since 2012. Similarly, Apollo Hospitals, Chennai also certified that they have been using the system Cobas S 201 from 2010. The SEB Medical College, Cuttack certifies that they have been using the system from 2016.

As pointed out by the learned standing counsel for the respondent Nos.2 and 3, 'after conducting this sort of enquiry and getting feedback', the petitioner decided to use the Cobas system for its NAT laboratory. Learned standing counsel also pointed out to the letter dated 14.02.2019 addressed by respondent No.3 to the Vice Chancellor in which he has detailed the enquiries made for preferring this technology and equipment. In para 2, it is pointed out that there is a scientific basis for preferring the RT-PCR technology to TMA. Thereafter, in conclusion, the 3rd respondent seeks the approval to proceed with the installation of the equipment. This letter also refers to the CVC guidelines dated 05.07.2007 and 11.07.2018 which shows that where the supplier or contractor has exclusive rights and there is no reasonable alternative/substitute, the normal rule can be departed from.

This Court is also of the opinion that the emphasis placed by the learned counsel on the letter dated 11.10.2018 is not fully correct and this letter alone did not lead to the awarding of the work on 23.01.2019. It is also important to note that the correspondence relied upon by the counsel for the 2nd respondent are all prior to the writ petition which was filed on

18.02.2019. At that point of time, litigation is not in the mind of the parties and third parties who had no connection with this writ or the issues which were giving their opinion about the equipment manufactured by the 4th respondent. Hence, this Court has no reason to suspect the same.

As submitted by the 4th respondent, what is awarded in this case is an equipment placement agreement. The equipment had to be installed for conducting certain tests. Admittedly, the 4th respondent has the sole proprietary knowledge and expertise for this Cobas S 201 system. It is not the petitioner's case that they manufacture the same system. Their system used for conducting a test to determine the pre-existing infections in the blood sample uses a different technology altogether. The 2nd respondent wanted to use one technology since its market survey/search suggested that the technology of the 4th respondent is better.

The CVC circular relied upon by both the parties dated 11.02.2012 also points out basing on the judgment of the Hon'ble Supreme Court of India in Nagar Nigam's case (1 supra), that when there is a single source of supply or when the supplier has exclusive rights adopting negotiations is permissible. The following passage from the case is reproduced hereunder:

"The law is well-settled that contracts by the State, its corporations, instrumentalities and agencies must be normally granted through public auction/public tender by

inviting tenders from eligible persons and the notification of the public-auction or inviting tenders should be advertised in well known dailies having wide circulation in the locality with all relevant details such as date, time and place of auction, subject-matter of auction, technical specifications, estimated cost, earnest money Deposit, etc. The award of Government contracts through publicauction/public tender is to ensure transparency in the public procurement, to maximise economy and efficiency in Government procurement, to promote healthy competition among the tenderers, to provide for fair and equitable treatment of all tenderers, and to eliminate irregularities, interference and corrupt practices by the authorities concerned. This is required by Article 14 of the Constitution. However, in rare and exceptional cases, for instance during natural calamities and emergencies declared by the Government; where the procurement is possible from a single source only; where the supplier or contractor has exclusive rights in respect of the goods or services and no reasonable alternative or substitute exists; where the auction was held on several dates but there were no bidders or the bids offered were too low, etc., this normal rule may be departed from and such contracts may be awarded through 'private negotiations'. (See Ram and Shyam Company v. State of Haryana and Ors. MANU/SC/0017/1985 : AIR1985SC1147 ). …(Emphasis supplied)

The law on the subject is also very well settled and does not require repetition. The leading case of Tata Cellular v. Union

of India (UOI)2 sets out the grounds on which the Court can interfere. The Court has to look into the decision making process to ensure that there is no unbridled executive functioning. The Court should also be conscious of the fact that in matters which require technical knowledge and expertise, it is hardly qualified to decide on the matters. Whether a particular decision is fair or not will vary from the facts and circumstances of each case. In the judgment referred to above, the guidelines for judicial review were given as (a) illegality (b) irrationality and (c) procedural impropriety. The Hon'ble Supreme Court also pointed out that modern trend is judicial restraint in administrative action and that the Court does not have the expertise to correct a plain administrative decision. Lastly, the Hon'ble Supreme Court also pointed out that the Government must have the freedom of contract or a fair play in the joints.

If the decision taken in this case is viewed against the backdrop of judgment of Hon'ble Supreme Court of India, this Court finds that there is no illegality or impropriety in the decision making process. The petitioner wanted to establish NAT lab. They had two options:- the technology of the petitioner or the technology of the 4th respondent. Their survey or enquiry revealed that the equipment made by the 4th respondent was preferable. This was adopted and followed.

This Court does not find that the said decision is 'irrational'. In fact, the Hon'ble Supreme Court in Tata Cellular case (2

² 1994 (6) SCC 651

supra) while discussing the Wednesbury principles of reasonableness held that a decision can be classified as irrational when it is so outrageous or is in defiance of logic. In the opinion of the Court, the decision in this case is not outrageous or shocking the judicial conscience. With the limited technical expertise available with this Court, this Court cannot pronounce on the suitability of the technology. It cannot state which of the two competing technology, namely the technology of the petitioner or the technology of the 4th respondent is better. This Court can only review the decision making process. A certain amount of flexibility is conferred by the law and this is what is referred to as the fair play in the joints.

Respondent Nos.2 and 3 exercising this limited 'play in the joints' that is available to them made an enquiry on their own which led to a conclusion that they should prefer the technology of the 4th respondent to the technology supplied by the 1st respondent. They decided to secure the Cobas S 201 equipment for their laboratory. This equipment is admittedly a proprietary article of the 4th respondent. Therefore, this Court is of the opinion that this case fits into the definition of an exceptional case noted by the Hon'ble Supreme Court of India in Nagar Nigam's case (1 supra). There is only one supplier or source who has an exclusive right in respect of the goods. An alternative was not adopted because the market survey revealed that it is not a reasonable alternative. This Court has to conclude that the decision making process in this case is based on tangible data which has a bearing on the decision. It is

neither discriminatory nor irrational. The fact that enquiries were made and a firm decision was taken thereafter reveals that some thought has gone into this decision. In the letter dated 14.02.2019, certain technical or scientific criteria are also given for choosing the equipment of the 4th respondent, which are not in any way proven to be incorrect.

Therefore, for all the above mentioned reasons, this Court finds that the actions of the respondent are correct in the facts and circumstances of this case. The petitioner is not entitled to an order. The writ petition is therefore dismissed. No order as to costs.

As a sequel, the miscellaneous petitions if any shall stand dismissed.

________________________ D.V.S.S.SOMAYAJULU,J

Date : 09.04.2021 Note: L.R. copy be marked. KLP