Judgment:
N.K. Agrawal, J.
1. This is a petition under Articles 226/227 of the Constitution, seeking a direction to the respondents (The State of Punjab and its officers) to treat all drug-manufacturers at par without putting any arbitrary conditions as have mentioned in the tender form for the supply of drugs to the Government.
2. The petitioner, the Punjab Drug Manufacturers Association, is a registered organisation of the manufacturers of drugs in the State of Punjab. The Director, Health and Family Welfare, Punjab (respondent No. 3), circulated tender forms inviting quotations for the supply of certain medicines and drugs to the Government hospitals and dispensaries in the State of Punjab. The conditions mentioned in the tender form are alleged to be discriminatory and violative of Articles 14 and 16 of the Constitution of India. The petitioner has alleged that the conditions have been incorporated in the tender form so as to make only the multinational drug manufacturing companies eligible for entering into a contract with Government. The petitioner has challenged the drug-purchase policy framed by the State Government and the consequent incorporation of the unreasonable conditions in the tender form.
3. The policy guidelines dated 1-3-1996 framed by the Governor of Punjab for the purchase of drugs and medicines by the Government incorporate the following conditions in paragraph 'B' :--
'(B) Eligibility Criteria for Tenders : Only those companies/firms which are in existence for three years and have beenmanufacturing drugs/medicines for the last three years and also having a turn-over of at least rupees four crores in the preceding year will be eligible to bid and submit tenders. For supply of hospital material like bandages, cotton, gauze, surgical gloves, suture material, glassware, laboratory reagents, chemicals, detergents, disinfectants etc., firms having turn-over of rupees on crore will be eligible for bidding. If the tenders are not as per N.I.T., tenders will be rejected and recalled.'
4. The petitioner's argument against the aforesaid conditions is that these conditions had no nexus with the object sought to be achieved and are also violative of the Drugs and Cosmetics Act, 1940. These conditions were lifted from the policy guidelines of the Government and were incorporated in the tender form. If these conditions are required to be fulfilled by a drug-manufacturer or supplier, that would only mean that the new units were completely debarred from competing in the business of supply of drugs to the State Government. The condition, that only a firm or company having a turn-over of rupees four crores can submit a tender, is alleged to be a tailor-made condition having no nexus with the object sought to be achieved. Similarly, the condition that a supplier or a manufacturer should have an experience of not less than 3 years is also said to be totally unwarranted, unreasonable and arbitrary. The petitioner's case is that no one should be debarred from making supplies to the Government hospitals and dispensaries by putting such harsh conditions. New manufacturing units have been totally debarred though they may be having the best of medicines and ability. The provisions of the Drugs and Cosmetics Act, 1940, are applicable equally to the new and the old firms and manufacturers and the Government cannot create an artificial classification between the two. (sic) the policy guidelines and the State Government invited tenders in the light of those policy guidelines.
5. The criteria of turn-over of rupees four crores and of manufacturing experience of 3 years are based on the plea that the Stale Government had to make purchases of medicines worth crores of rupees and had, at the same time, to ensure supplies to its hospitals and dispensaries, within a stipulated period of time and also at competitive rates. The State Government has vehemently denied that it had any intention, while laying down the impugned conditions, to show any favour to the multinational companies. Theconditions were laid down so as to ensure that the units were able to supply bulk drugs within the scheduled time at a competitive price. Since big companies had put infra-structure and were able to supply quality medicines, the drug-purchase policy, framed by the State Government, contained the impugned conditions, keeping in view the interests of the State and the public at large. Those conditions were not kept in the tender form to suit any particular firm or company. Small units were not able, to meet the requirement of bulk supply within the given time.
6. A similar question against the policy decision of the Slate Government of Punjab came up for examination in Punjab Drugs Manufacturers Association v. State of Punjab, AIR 1989 P & H 117 : ILR (1988) 2 P & H 540. The State Government had taken a policy decision to purchase drugs from the Public Sector undertaking only. Thus, a monopoly was created by including instructions and that was held as violative of Articles 14 and 19(1)(g) of the Constitution of India.
7. In the present case, the conditions laid down in the policy guidelines as well as in the tender form do not appear to be discriminatory or violative of Articles 14, 16 or 19 of the Constitution. The case earlier decided by this Court is distinguishable on facts inasmuch as, in that case, the State Government had permitted the public sector undertakings only to enter into a contract for the supply of drugs. In the present case before us, no particular manufacturer or unit has been permitted for the purposes of making supplies to the State Government. The two conditions, one relating to the turn-over of rupees four crores and the other in respect of experience of three years, appear to be necessary so as to ensure a regular and timely supply of bulk drugs. No particular manufacturer has been excluded. The allegation that the conditions in question would only suit multinational manufacturers does not appear to be correct.
8. A similar case was earlier examined by this Court in Civil Writ Petition No. 9258 of 1994 (Bio-Remedies (India) v. The State of Punjab) decided on 10-12-1996, and it was ordered that, in future, policy framed by the State is to be followed strictly.
9. The policy guidelines, framed by the Government, on the advice of the Expert Committee cannot be held to be bad in law on the ground that it creates discrimination against certainmanufacturers. The requirement of the Government has to be kept in view. As has been pleaded by the respondents, the Government has to make bulk purchases within a stipulated period and at a competitive price. If the Government lays down certain conditions regarding the minimum turn-over and the experience of a prospective supplier, that cannot be said to be discriminatory or violative of Articles 14,16 and 19 of the Constitution.
10. The conditions have rational nexus with the object sought to be achieved. Simply because the manufacturers have been granted licence under the Drugs and Cosmetics Act, that would not entitle them to qualify as prospective suppliers to the Government. The charge levelled by the petitioner that the conditions are in the nature of tailor made conditions appears to have no force. The criteria for the classification with emphasis on the amount of turn-over and experience do not violate Article 19 of the Constitution. There is found to be a reasonable classification and a rational nexus between the conditions and the object sought to be achieved.
11. In the result, the writ petition fails and is dismissed. No costs.