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WP (C) No.1661 of 2011 HIGH COURT OF DELHI
MEDICAL POINT (I) LTD. …PETITIONER
Through: Mr.T.K.Ganju, Sr.Adv. with Mr.Siddharth Silwal, Mr.Dhruv Kapur, Mr.Vijayender Kumar, Advs.
Through: Mr.Ravinder Aggarwal, CGSC
Mr. Mehmood Pracha, Mr.Sumit Babbar and Mr.Faraz Iqbal, Advocates for
R-2 and R-3/AIIMS.
Mr. Rajeev K.Virmani, Sr.Adv. with Ms.Rashmi Virmani and
Mr.Ashish Kothari, Advocates for R-4/Johnson & Johnson.
2011:DHC:3985-DB _________________________________________________________________________________________
HON’BLE MR. JUSTICE RAJIV SHAKDHER
JUDGMENT
1. Whether the Reporters of local papers YES may be allowed to see the judgment?
2. To be referred to Reporter or not? YES
3. Whether the judgment should be YES reported in the Digest?
SANJAY KISHAN KAUL, J.
1. The petitioner alleges respondent nos.[2] & 3, All India Institute of Medical Sciences (AIIMS) and its Director, for adoption of Decision Oriented Systematic Analysis (DOSA) so as to make the tender conditions in respect of purchase of Gas Plasma Sterilizers tailor-made for respondent no.4.
2. A notice inviting tender was published by respondent no.2/AIIMS through its Director/respondent no.3, in the Times of India on 13.10.2010 for purchase of Gas Plasma Sterilizers vide Tender Reference No.XX/131/Ortho/2010-2011/FSC-I. The petitioner claims to have submitted its tender along with the relevant documents on 21.10.2010, well before the last date of submission of tender dated 15.11.2010. The tenders were opened as scheduled on 16.11.2010 and the petitioner was called upon by respondent no.2 vide its letter dated 01.02.2011 for a demonstration meeting on 09.02.2011. The petitioner claims that though it was present in the demonstration meeting as scheduled with all original catalogues of Gas Plasma Sterilizer, it was not able to make available the Gas Plasma Sterilizer as the same had been put up for demonstration in another hospital in Ahmedabad and this fact is stated to have been verbally informed to respondent no.2. The petitioner addressed a communication dated 09.02.2011, which was received by respondent no.2 on 10.02.2011, informing that on one occasion its Gas Plasma Sterilizer was kept under trial in the main OT of AIIMS from 17.05.2010 to 22.05.2010 against the tender enquiry no.1- 13/H/M&E/200-10. The petitioner stated that during that trial, the Gas Plasma Sterilizer had been used for sterilization of all types of OT instruments including surgical instruments, endoscopes, lumen items, catheters, ET tubes etc. and was found to be as per the requirement.
3. The grievance of the petitioner is that the tender conditions included unjustified clause, arbitrary, unreasonable & discriminatory clauses being clause/term no. 11 & 14 with the object of awarding the tender to R-4. The present writ petition under Articles 226 of Constitution of India which has been filed on 11.03.2011 seeking quashing of these clauses/terms being 11 & 14 of the tender. These specifications are as under:
4. The petitioner has alleged in the writ petition that in the last one year, seven tenders for purchase of plasma sterilizers were invited by various departments of respondent no.2 out of which two have been awarded to respondent no.4 as their equipment was US FDA approved. The petitioner claims to have made various representations seeking amendment of these clauses, but to no avail. The representations annexed show that the first one dated 16.12.2009 was in respect of a prior tender enquiry no. 53/CNC/NS/09- 10/ST for Advanced Low Temperature (H2O[2]) Gas Plasma Sterilizer while the subsequent one dated 13.09.2010 was for tender enquiry no.47/CNC/CTVS/10-11/ST for Low Temperature Hydrogen Peroxide Gas Plasma Sterilizer. The petitioner further pleads that in various other institutions where tenders were invited for Gas Plasma Sterilizers, the requirement was for US FDA or CE or EPA certificate i.e. any one would suffice. The petitioner admits that he was not able to succeed even in those tenders because of other restrictive clauses like past performance.
5. To buttress its arguments in this regard, learned senior counsel for the petitioner has cited the case of Gharda Chemicals Limited v. Central Warehousing Corporation; 118 (2005) DLT 159 (DB) wherein, while observing that the eligibility criteria should have a nexus with the object which is sought to be achieved, it was stated as under: “The guidelines (CVC Circular dtd 17.12.2002) highlight the fact that the purpose of any selection procedure is to attract the wider participation of reputed and capable firms. It emphasizes that while framing any criteria, the scope and nature of work, experience of the firms in the same field and their financial soundness have to be kept in mind.” (emphasis supplied) Learned senior counsel for the petitioner in this regard has also referred to the judgment of the Supreme Court in UOI v. Dinesh Engineering Corporation;(2001) 8 SCC 491 wherein it was held as under: “Public authorities even in contractual matters should not have unfettered discretion and in contracts having commercial element even though some extra discretion is to be conceded in such authorities, they are bound to follow the norms recognized by courts while dealing with public property. …. …. Therefore, merely because the authority has certain elbow room available for use of discretion in accepting offer in contracts, the same will have to be done within the four corners of the requirements of law, especially Article 14 of the Constitution.”
6. The writ petition is resisted by the respondents. It is stated in the counter affidavit filed on behalf of respondent nos.[2] & 3 that the petitioner failed to even fulfil the requirement of demonstration of the quoted model as required by tender clause 23 which reads as under: “The tenderers may be required to demonstrate the quoted model of the equipment during the technical evaluation, if required, failing which their bids/offer shall be rejected. The firms are intimated that they should get ready for demonstration and only oneweek time will be provided for arrangement of demonstration and no request for extending time for demonstration will be entertained. Failure to demonstrate, their offer will be summarily rejected.” (emphasis supplied)
7. The demonstration meeting was scheduled for 09.02.2011 when a representative of the petitioner was present, but it is an undisputed fact that the petitioner did not give the demonstration during the technical evaluation stage. Despite the failure of the petitioner, it was given a chance to clarify the technical points and comply with the technical specifications. The deficiencies in the case of the petitioner are stated to be not one but five. No challenge was laid in the writ petition to any other condition. In para 7 of the affidavit of respondent nos.[2] & 3, affirmed on 19.03.2011, these deficiencies have been set out in tabular form, which are as under: S.No. Technical Specifications Compliance
1. Should be mobile (with locking mechanism for wheels? And should weigh less than 450 kgs. The model quoted by the petitioner weighed 480 kgs. Compared to maximum permissible weight of less than 450 kgs.
2. Should be approved by US FDA, CE & EPA Quoted model does not have all the required certificates, but have only CE instead of all the three certificates as per the tender condition and only self declaration about EPA approval instead of EPA certificate issued by the Environmental Protection Agency, United States.
3. The system should use the minimum quantity of sterilant to deliver dry terminal sterilization which should be less than 3-5 ml per cycle to ensure safety of instruments against corrosion. Quoted model uses 8 ml (4 ml x 2 times per cycle) sterilant per cycle which is far more than 3-5 ml. per cycle.
4. The sterilizer should be recommended by the IFUs The petitioner did not provide IFUs of the of the reputed device manufacturers of endoscopes, bone cutters, arthoscope, batteries and power tools to ensure compatibility of sterilizer with instrument. reputed device manufacturer of endoscopes, bone cutters, arthoscope etc. Lack of evidence of compatibility and efficacy of sterilizer with instruments used routinely is potentially hazardous. Rather to mislead the respondents, the Petitioner has furnished the letters from the different users rather than giving the recommendations from reputed manufacturers.
5. Sterilant should be in cassette with leak proof indicator and should be air shippable for easy transportation. Petitioner has offered the sterilant in 140 ml bottle instead of cassette without leak proof indicator.
8. The tender of the petitioner was rejected on all the aforementioned grounds in pursuance to the order passed on 22.03.2011. The respondent nos.[2] & 3 filed another affidavit on 10.05.2011 inter alia stating the reasons how the technical specifications are not met by the petitioner, the position regarding seven tenders floated and the rationale for adoption of the US FDA norms. It has been explained that the US FDA is a statutory body which certifies that the medical products, devices and drugs for human use are safe. Since India does not have any such authority for any new technology or drug, reliance was being placed upon US FDA certification to ensure safety of equipment, devices etc. for human use. The objective is stated to be to ensure the safety protocol from the operational safety point, safety of the patients, safety of the medical staff and from the environmental safety point. It has also been explained that while most of the equipments with FDA have a CE mark, the vice versa is not true. The CE deals with the European standards while the FPA deals with the environmental aspect. The monopoly in favour of respondent no.4 has been denied as there were various other companies, other than respondent no.4, who participated in the tenders earlier floated by various departments of respondent no.2 and complied with the requirement of possessing the US FDA certificate.
9. The incorporation of clause 14 as aforesaid requiring the sterilizer to be recommended by IFUs (Instructions for Use) of reputed manufacturers of endoscopes, bone cutters, arthoscope, batteries and power tolls is to ensure compatibility with instruments and this is stated to be a standard practice being followed elsewhere where the manufacturers recommend use of a particular type of a product to ensure that the durability and safety of the device is not compromised at the user’s end.
10. The respondent no.4 was initially not impleaded as a party as the tender had been awarded. However, on an application being filed on 03.05.2011, the said party was impleaded in the present proceedings keeping in mind the nature of allegations made in the writ petition and a separate counter affidavit was filed by the said respondent no.4.
11. In the counter affidavit filed on behalf of respondent no.4, the attention of this court has been invited to the compliance statement submitted by the petitioner to respondent no.2 for purposes of tender, where against the tender specifications, the petitioner has made the endorsement “Yes, we comply, certificate attached.” And “Yes, we comply.” respectively. It is the say of respondent no.4 that the petitioner participated in the tender stating that it complied with the conditions and thus having not succeeded in the tender, cannot now be permitted to turn around and allege that these clauses were creating a monopoly. This is apart from the fact that the petitioner has falsely alleged that it complied with the requirement of impugned clauses though it did not do so and the petitioner having been exposed filed the present writ petition.
12. The respondent no.4 has alleged concealment and misrepresentation of facts before this Court. It is the say of respondent no.4 that the petitioner had participated in a previous tender bearing no.1- 13/H/M&E/2009-10 for the same product and had given documents purported to be IFUs of foreign manufacturer of devices, which on enquiry, were found to be non-existent and that tender was scrapped. The petitioner is stated to be in the know of all the conditions and even previously participated in the tenders issued by respondent no.2, while a picture was sought to be given in the present case as if these clauses were inserted for the first time. Even in the earlier tenders, the petitioner was objecting to the tender conditions requiring presence in the market for certain period of time, but no challenge was laid to the impugned clauses incorporated in those earlier tenders.
13. The respondent no.4 has sought to rely upon the judgment of the Supreme Court in K.D.Sharma Vs SAIL; (2008) 12 SCC 481 to non-suit the petitioner on this ground alone, relevant portion of which is reproduced as under: “The jurisdiction of the Supreme Court under Article 32 and of the High Court under Article 226 of the Constitution is extraordinary, equitable and discretionary. It is, therefore, of utmost necessity that the petitioner approaching the writ court must come with clean hands, put forward all the facts before the court without concealing or suppressing anything and seek an appropriate relief. If there is no candid disclosure of relevant and material facts or the petitioner is guilty of misleading the court, his petition may be dismissed at the threshold without considering the merits of the claim. …….. …….. While exercising extraordinary power a writ court would certainly bear in mind the conduct of the party who invokes the jurisdiction of the court. If the applicant makes a false statement or suppresses any material fact or attempt to mislead the court, the court may dismiss he action on that ground alone and may refuse to enter into the merits of the case. The rule has been evolved in the larger public interest deter unscrupulous litigants from abusing the process of court by deceiving it.”
14. The petitioner is the sole authorized distributor of Gas Plasma Sterilizer manufactured by Beijing Derun Technology Co.Ltd., which is the holding company of MuDanJiang Plasma Physical Application Technology Co.Ltd. The respondent no.4 has emphasized that the petitioner has not even filed a document showing its approval by EPA, but it has filed a letter/declaration from a private company namely Beijing Derun Technology Co.Ltd. stating that the plasma sterilizer being manufactured by that entity and sold by the petitioner in India are approved by EPA. This is stated to be, thus, a self-certification from EPA. Even Beijing Derun Technology Co.Ltd. is stated not to manufacture the sterilizers as according to the CE certification filed by the petitioner, it is Mudanjiang Plasma Physical Application Technology Co.Ltd, which is the manufacturer of the sterilizer offered by the petitioner. The respondent no.4 has also emphasized on the failure of the petitioner to comply with the conditions of physical demonstration of the equipment.
15. It is stated by respondent no.4 that as per the guidelines issued by the Ministry of Health and Family Welfare in respect of the import of various medical devices, US FDA and CE approval/certification has been acknowledged and made acceptable for medical devices for being eligible for import in India. The petitioner, it is alleged, cannot call upon this Court to vary the terms of the tender settled by an expert body. A reliance in this regard has been placed upon the judgment of the Supreme Court in Tata Cellular Vs. Union of India;(1994) 6 SCC 651 where it has been that the power of judicial review of a Court in government contracts is a limited one.
16. The said respondent has explained that the Low Temperature Hydrogen Peroxide Gas Plasma Sterilizer uses a low-temperature hydrogen peroxide gas plasma technology to sterilize safely and effectively all the instruments and medical devices used in operation theatres and for invasive procedures and surgeries. This requires utmost protection to the patients, users, instruments and environment in healthcare facility. Such sterilizers exploit the synergism between peroxide and low temperature gas plasma (an excited or ionized gas) to rapidly destroy microorganisms. On completion of sterilization process based on this technology, no toxic residues remain on the sterilized items. The technology is particularly suited to the sterilization of heat and moisture sensitive instruments used in surgery, like cameras, scopes, batteries, polymer based reusable instruments, fiber optic cables etc. since process temperatures do not exceed 500 C and sterilization occurs in a low moisture environment. The new models of sensitive and expensive medical instruments and devices are launched periodically. The new models comprise of combinations of different metal alloys, polymers and adhesives. These are very sensitive to temperature, pressure, concentration of sterilant and time of exposure. Thus, any attempt to sterilize with such instruments/devices may result in improper sterilizing or damage to the devices sterilized in the sterilizer. It is for this reason that the condition requiring recommendations by IFUs of reputed device manufacturers is stipulated.
17. The role of three entities has been explained. The US FDA is responsible for safety, efficacy and security of human and veterinary drugs, biological products, medical devices, food supply, cosmetics and products that emit radiation by regulating the manufacture, marketing and distribution of products. The premarketing approval of all medical devices as well as overseeing the manufacturing, performance and safety of these devices is also done by US FDA. The CE marking on a product is a manufacturer’s declaration that the product complies with the essential requirements of the relevant European health, safety and environmental protection legislation. The United States Environmental Protection Agency (EPA) has a primary responsibility for enforcing the environmental statutes and regulations of the United States. Since the medical institutions in India are also now demanding the best available sterilizers for their institutions, the requirement of US FDA, CE and EPA approvals ensure that the instruments meet with the highest standards and there can be no objection to the expert body providing for highest standards.
18. The annexures to the counter affidavit show that the guidelines for import and manufacture of medical devices in India and the regulatory status inter alia refer to the US FDA clearance/approval and EU medical device directive (CE certificate). The CE marking is actually an abbreviation of French phrase “Conformite Europeene” which literally means “European Conformity”. It is the manufacturer’s declaration that the product complies with the essential requirements of the relevant European health, safety and environmental protection legislation. On the other hand, the FDA approval envisages the US Food and Drug Administration conducting inspections of medical device manufacturers to ensure that they comply with the regulations about the device safety and effectiveness. If a medical device violates FDA law, FDA can take action to enforce compliance and ensure public health – two main tools being Warning Letters and Recalls. US Environmental Protection Agency (EPA) has a primary responsibility for enforcing many of the environmental statutes and regulations of the United States and as such is granted explicit enforcement authority in environmental statutes. The EPA regulations help to ensure that facilities take steps to prevent oil spills, chemical accidents and other emergencies and implement planning and response requirements.
19. The petitioner in the rejoinder sought to deal with the other objections raised by respondent nos.[2] & 3 about the technical feasibility of the sterilizer of the petitioner. It has emphasized on the circulars issued by the CVC for purposes of fixation of broad parameters in cases where the equipment/plant to be procured is of complex nature and the procuring organization may not possess the full knowledge of the various technical solutions available in the market. The petitioner has also sought to label the equipment of respondent no.4 as lacking in technical specifications since the cycle temperature of equipment of respondent no.4 is 550 C though the technical specification provides it to be in 40-500 C range.
20. Another aspect emphasized in the rejoinder for the first time is that it has come to the knowledge of the petitioner that respondent no.4 has been served with a Warning Letter issued by the US FDA in regard to Sterrad 100S (stated to be quoted by respondent no.4 in the tender) and other models to the effect that the models on inspection were found adulterated. This model is stated to have been recalled throughout the world including India. This information is stated to have concealed by respondent no.4 from respondent nos.[2] & 3. The petitioner has also sought to deal with each of the technical specifications not complied by it. So far as the weight of the petitioner’s equipment is concerned, a technical justification is sought to be given why it is not significant. The petitioner admits that it does not have a US FDA certificate though it has a CE certificate. The EPA certificate is not issued by the US EPA, but is a self-certification by the manufacturer. On the issue of minimum quantity sterilant to deliver dry terminal sterilization to be less than 3-5 ml per cycle to ensure safety of instruments against corrosion, this is stated not to be a disadvantage. Similarly, in respect of the petitioner’s offer of the sterilant in a 140 ml bottle instead of cassette without leak proof indicator, the same is sought to be justified. The requirement in respect of the sterilizer to be recommended by the IFUs is also stated to be without any basis.
21. In a nutshell, the petitioner seeks to claim that the though it does not meet with the five parameters as set out by respondent nos.[2] & 3, these should also be waived or are not essential. Interestingly, another stipulation of a US FDA approved biological indicator with 24-hour readout time for faster validation of the sterilization process is not disputed as apparently the petitioner complied with the same.