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Judgment
Honourable Mr. Justice K. Chandru
The writ petition is filed by the petitioner Company seeking to challenge the Notice Inviting Tender issued by the first respondent, i.e., Controller
of Stores, Southern Railway, Chennai and to set aside the condition insofar as it seeks approval by USFDA for intended clinical use in USA for
supply of Dual Chamber Pacemaker (for short DDD) and for direction to respondents to consider the petitioner''s offer for supply of Dual
Chamber Pacemaker with CE or DGCI certification/ approval instead of approval by USFDA for intended clinical use in USA and pass further
orders. When the matter came up on 4.4.2012, this court directed notice to be served on the Standing Counsel for the Southern Railway Mr. M.
Vellaisamy. Accordingly, the Standing Counsel was served. He also entered appearance and has filed a counter affidavit on behalf of respondents
sworn to by the third respondent, dated 16.4.2012.
The case of the petitioner was that the first respondent had issued a Notice Inviting Tender. The petitioner company had purchased a copy of
the tender schedule. The tender is for Dual Chamber Pacemaker for supply to the Railway hospital, Perambur as per the specifications enclosed.
The petitioner was aggrieved by the condition specified therein which is as follows:
Should be approved by the US FDA for intended clinical use in USA.
The contention of the petitioner was that though Pacemakers should have USFDA / CE certification, the further qualification that it should be for
intended clinical use in USA was to exclude the pacemakers with CE certification from the zone of consideration. They virtually in the name of
specifications had amended the original requirements. There are various Central Government organisations, such as All India Institute of Medical
Sciences (for short AIIMS), G.B. Pant Hospital and Eastern Railway have invited tenders for pacemaker, wherein the condition was that
pacemaker must be USFDA / equivalent European certification (CE) / DGCI Indian approved. For the first time, a departure has been made with
a view to eliminate the competition and to favour few international manufacturers who have USFDA certification. The condition imposed was an
arbitrary condition. The petitioner company has licence from the Government of India for manufacture of cardiac pacemaker. The petitioner
company has also got ISO certification as well as European certification on 12.1.2010. Thus the company has both Indian as well as European
certification relating to quality of pacemaker. If any comparison is found between the USFDA and European certification, then the CE certification
is more stringent and products certified by the CE certification are better than the USFDA certified products. Apart from comparison, the
petitioner company had collected views of medical experts who have certified that both certifications have same scope. The company also got
orders from Dr. Ram Manohar Lohia Hospital, New Delhi and JIPMER, Pondicherry, etc. The company could not apply for tender because of
the arbitrary condition imposed by the respondents. Under these circumstances, the writ petition came to be filed.
In the counter affidavit filed by the respondents, it was indicated that the condition imposed did not eliminate any competition. Already there are
six pacemaker companies with USFDA certification, i.e., Medtronic, Boston Scientific, St. Jude Medical, Vitatron, Biotronik and Sorin. These
companies are market leaders and were responsible for 95% of the market shares. This will show the confidence of the medical community in their
products. The condition imposed by the railways ensures the competition in the tender between the world leaders who make quality pacemakers.
The fact that some Indian manufactures do not have US FDA certification does not have any particular relevance as the Railways are intended to
get the best global products for the benefit of critically ill cardiac patients. They cannot leave the selection only to Indian companies. The
pacemakers are highly technology devises on which patients life depends. Therefore, the railway was intended to get best possible products in the
World. The railways have got their own right to define their own criteria for product selection keeping in mind such criteria to ensure that all leading
manufactures and distributors of a particular product who are recognised worldwide and who satisfy stringent norms for device quality and patient
safety can participate in the tender.
It was further stated that the decision was made by the railways with due application of mind by a competent technical authority nominated by
the Chief Medical Director of Southern Railway. The specifications were counter signed by the senior and responsible officers of the Railway
Hospital, Perambur, the Medical Director and the Chief Medical Director of Southern Railway. The USFDA certification is based on the product
quality and clinical data. The USA had imposed stringent conditions. They are recognised to be the highest in a given field. Even many products
which have CE certification are only few with global leaders. In the past, on several occasions the Railways had rejected products which have only
CE certification on technical grounds. There was no truth in the charge of arbitrariness and there was no favoritism. The railways were guided by
the public interest. It was also contended that any interdiction of railway''s efforts to get best quality products would jeopardize the interest of
critically serious cardiac patients.
Ms. S. Thenmozhi, learned counsel for the petitioner referred to a judgment of the Supreme Court in Reliance Energy Limited and Another Vs.
Maharashtra State Road Development Corporation Ltd. and Others, for contending that Articles 14, 21 and 19(1)(g) ensures that the Government
contracts must have level playing field to all bidders and that the norms and benchmarks must have clarity so as to ensure legal certainty, which
must satisfy the test of reasonableness and that any discriminatory treatment will violate the doctrine of level playing field.
However, this court is not persuaded to accept the contentions of the learned counsel for the petitioner. It is open to the authority to specify the
conditions for their products to ensure the quality of product. As rightly contended, it was not intended to save either one supplier or the company.
The averments in the counter affidavit are not denied by way of filing any rejoinder.
With reference to the purchase of medical equipments and products and the magnitude, complexity and technical nature involved and in view of
far-reaching implications, the Supreme Court vide its judgment in Mr. Cooper on Vincent Panikurlangara v. Union of India and Ors., (1987) 2
SCC 165 held that in such matters, maintenance of quality is important and the judicial proceedings is not an appropriate one. In paragraphs 15,18
and 21, the Supreme Court had observed as follows:
Having regard to the magnitude, complexity and technical nature of the enquiry involved in the matter and keeping in view the far-reaching
implications of the total ban of certain medicines for which the petitioner has prayed, we must at the outset clearly indicate that a judicial
proceeding of the nature initiated is not an appropriate one for determination of such matters.........
The branch with which we are now dealing, namely, health care of citizens, is a problem with various facets. It involves an ever-changing
challenge. There appears to be, as it were, a constant competition between Nature (which can be said to be responsible for new ailments) on one
side and human ingenuity engaged in research and finding out curative processes. This being the situation, the problem has an ever-shifting base. It
is commonplace that what is considered to be the best medicine today for treatment of a particular disease becomes out of date and soon goes out
of the market with the discovery or invention of new drugs. Again what is considered to be incurable at any given point of time becomes subjected
to treatment and cure with new finds. There is yet another situation which must be taken note of as human knowledge expands and marches ahead.
With the onward march of science and complexities of the living process hitherto unknown diseases are noticed. To meet new challenges, new
drugs have to be found. In this field, therefore, change appears to be the rule.
The prescribed preparations must maintain their quality, and for ensuring it, strict regulations are necessary. Provision in statutes or rules or
instructions issued by executive authorities do not meet the demands of today''s situation. The process of regulation has to be strengthened. Law
must be provided with sufficient biting teeth and there must be genuine apprehension in the mind of every person engaged in the trade that any
infraction would be visited with exemplary punishment. In the prevailing situation in the country, unless the law is properly enforced, it would be
difficult to regulate the quality of the drugs. Standardisation of the preparations will also introduce a healthy atmosphere in the market. The
practising doctor should be acquainted with the drug policy, availability of drugs and take care to prescribe available medicine to his patient.
The further scope and ambit of judicial review over the condition imposed in the notice inviting tender is also set out by the Supreme Court in
Union of India and others Vs. Hindustan Development Corpn. and others, . It is necessary to extract the following passages found in paragraphs
7,27,28 and 33, which reads as follows:
7.It is true, as it is today, that the Government in a welfare State has wide powers in regulating and dispensing of special services like leases,
licences, and contracts etc. The magnitude and range of such Governmental function is great. The Government while entering into contracts or
issuing quotas is expected not to act like a private individual but should act in conformity with certain healthy standards and norms. Such actions
should not be arbitrary, irrational or irrelevant. In the matter of awarding contracts inviting tenders is considered to be one of the fair ways. If there
are any reservations or restrictions then they should not be arbitrary and must be justifiable on the basis of some policy or valid principles which by
themselves are reasonable and not discriminatory.....
27.Of late the doctrine of legitimate expectation is being pressed into service in many cases particularly in contractual sphere while canvassing the
implications underlying the administrative law. Since we have not come across any pronouncement of this Court on this subject explaining the
meaning and scope of the doctrine of legitimate expectation, we would like to examine the same a little more elaborately at this stage. Who is the
expectant and what is the nature of the expectation? When does such an expectation become a legitimate one and what is the foundation for the
same? What are the duties of the administrative authorities while taking a decision in cases attracting the doctrine of legitimate expectation.
28.Time is a three-fold present: the present as we experience it, the past as a present memory and future as a present expectation. For legal
purposes, the expectation cannot be the same as anticipation. It is different from a wish, a desire or a hope nor can it amount to a claim or demand
on the ground of a right. However earnest and sincere a wish, a desire or a hope may be and however confidently one may look to them to be
fulfilled, they by themselves cannot amount to an assertable expectation and a mere disappointment does not attract legal consequences. A pious
hope even leading to a moral obligation cannot amount to a legitimate expectation. The legitimacy of an expectation can be inferred only if it is
founded on the sanction of law or custom or an established procedure followed in regular and natural sequence. Again it is distinguishable from a
genuine expectation. Such expectation should be justifiably legitimate and protectable. Every such legitimate expectation does not by itself fructify
into a right and therefore it does not amount to a right in the conventional sense.
33....... The protection is limited to that extent and a judicial review can be within those limits. But as discussed above a person who bases his
claim on the doctrine of legitimate expectation, in the first instance, must satisfy that there is a foundation and thus has locus standi to make such a
claim. In considering the same several factors which give rise to such legitimate expectation must be present. The decision taken by the authority
must be found to be arbitrary, unreasonable and not taken in public interest. If it is a question of policy, even by way of change of old policy, the
courts cannot interfere with a decision. In a given case whether there are such facts and circumstances giving rise to a legitimate expectation, it
would primarily be a question of fact. If these tests are satisfied and if the court is satisfied that a case of legitimate expectation is made out then the
next question would be whether failure to give an opportunity of hearing before the decision affecting such legitimate expectation is taken, has
resulted in failure of justice and whether on that ground the decision should be quashed. If that be so then what should be the relief is again a matter
which depends on several factors.
Similar view was expressed by the Supreme Court in Nagar Nigam, Meerut Vs. Al Faheem Meat Exports Pvt. Ltd and Others, and in
paragraphs 21 to 23 it was observed as follows:
21.In the present case, Respondent 1 challenged the impugned advertisement dated 6-12-2004 issued by the Nagar Nigam. We have carefully
perused the said advertisement and find no illegality in the same. It has been held by this Court in several decisions that the court should not
ordinarily interfere with the terms mentioned in such an advertisement. Thus in Global Energy Ltd. v. Adani Exports Ltd. 10 this Court observed
(vide SCC p. 441, para 10):
The principle is, therefore, well settled that the terms of the invitation to tender are not open to judicial scrutiny and the courts cannot whittle
down the terms of the tender as they are in the realm of contract unless they are wholly arbitrary, discriminatory or actuated by malice.
22.Similarly, in Master Marine Services (P) Ltd. v. Metcalfe & Hodgkinson (P) Ltd.11 this Court held that the modern trend points to judicial
restraint in reviewing the administrative action. The court does not sit as a court of appeal over such a decision but merely reviews the manner in
which the decision was made. The court ordinarily would not interfere with an administrative decision. The Government must have freedom of
contract. Some fair play in the joints is a necessary concomitant for an administrative body functioning in an administrative sphere.
23.We have carefully perused the impugned advertisement and we do not find any arbitrariness, discrimination or mala fides in the same. Hence
the High Court had no justification for interfering with the said advertisement.
In view of the above factual matrix and the legal precedents set out, it is not a fit case where any relief can be granted to the petitioner. Hence the
writ petition will stand dismissed. No costs.