B.P.JEEVANREDDY - (1.) LEAVE granted.
(2.) HINDUSTAN Antibiotics Limited (H.A.L.) is engaged in the manufacture of several antibiotic drugs including Pencillin-G. It has a plant at Pimpri in the State of Maharashtra. Though the installed capacity of the plant is 1600MMM, it has been able to produce only 850MMU. H.A.L. is a Government company fully owned by the Government of India. There is another Government company, I.D.P.L.producing the same drug. We are told that at present there is only one unit in private sector, Alembic, which is producing the said drug. The total production of Penn-G within the country is sufficient to meet only 45% of the country's total requirement. The remaining 55% is being imported. The price of the imported Penn-G is half the price at which the locally produced drug is sold. Penn-G is produced through complex fermentation under controlled conditions of strains of the fungus Penicillium Notatum and Penicillium Chrysogenum. It is stated that the companies all over the world have been trying to develop the strains to improve the quality and yield. H.A.L., which has been producing the drug in this country for over two decades, has also been trying to improve the strain as also the quality and yield of the said drug. From 1976 up to 1986, it was using the Filamentous Toyo Jozo Strains from Japan. Since the said technology became outdated, it switched over in 1986 to Pellety Strains from Panlabs Inc., U.S.A. Even so, the production could not exceed 55% of the installed capacity. For all these reasons, H.A.L. has been trying to devise ways and mean to improve the production, quality and yield. Gist Brocades of Holland (hereinafter referred to as 'G.B.') is the leading producer of Penn-G in the world. At present, it controls 20% of the world market. It has got plants in several parts of the world.
(3.) ACCORDING to a Government of India publication "Technology in India Pencillin-G/V Industry"- a status report prepared under the national register of foreign collaboration (published in April, 1991)- Panlabs have developed strains capable of yielding above 60,000 units/ml within a relatively short period. Antibioticos of Spain has developed strains yielding 60,000 units/ml whereas G.B. are working at R & D level with strains capable of yielding above 80,000 units/ml. The production capability of most of the companies around the world is 60,000 units/ ml. Only G.B. seems to be ahead. The said publication also states that most of the important information relating to Pencillin technology is not published since the companies keep it a closely guarded secret. As a result of the negotiations between H.A.L. and Max-GB (a company formed by G.B. and Max India coming together), a Memorndum of Understanding (MoU) was signed between H.A.L. and M.G.B. on 20/06/1994. The appellants in these three appeals, viz., Torrent Gujarat Biotec Limited, SPIC and P.B.G. had also offered to collaborate with H.A.L. for the purpose of improving the quality and yield of Penn-G and to achieve the full installed capacity. Each of them had also offered to bring foreign technology through their foreign collaborators. Their offers were not accepted by the H.A.L. which entered into a MoU with M.G.B. on 20/06/1992 as aforesaid. Soon thereafter, these three appellants filed writ petitions in the Delhi High Court questioning the validity of the said MoU. Their case was that though they offered to provide equally superior technology and had indeed offered more advantageous terms to H.A.L., their offers were rejected mainly because of the bias on the part of the Managing Director of H.A.L., Sri A.K. Basu. It is alleged that Sri Basu was interested in having collaboration only with M.G.B. and with nobody else and for that reason he managed to see that the offers of all others are rejected. Different reasons were offered by Sri Basu to different parties who approached for such co-operation. He did not provide them the opportunity to inspect the plant of H.A.L. nor did he provide them the relevant information to enable them to formulate a specific offer. The mala fides on the part of Sri Basu, it is alleged, are responsible for the impugned MoU whereunder the H.A.L. has agreed to lease out its plant and all other facilities for an annual amount of Rs. 17 crores to the proposed Joint Venture Company (J.V.C.) to be formed by H.A.L. and M.G.B. whereas the appellants were prepared to offer a lease amount far above the said figure. The mala fides on the part of Sri Basu is evident from the fact that though the Board of Directors had stipulated a minimum lease amount of Rs. 31.68 crores, he flouted the said stipulation and agreed to a low figure of Rs. 17 crores. It is submitted that H.A.L., being a Government owned corporation, is an authority within the meaning of Article 12 and that it was bound to consider all the offers received in a fair and impartial manner giving an equal opportunity to all competitors to give their bids and select the most suitable among them. This fairness has not been observed by the H.A.L. in arriving at the impugned MoU. Indeed, the submission is that the Government/H.A.L. should have called for tenders or offers on a competitive basis and selected the most suitable among them. This, it is submitted, is the requirement of Article 14. The impugned MoU has, however, been arrived at in a hush hush manner. Even today, nobody knows what are the terms and conditions of the said MoU except the lease amount. A public body cannot and should not adopt such a procedure, it is submitted. There should be transparency in its dealings which is woefully lacking in this case. Reliance is placed upon the decisions of this Court in Tata Cellular v. Union of India, (1994) 4 JT 532 : (1994, AIR SCW 3344) and Sterling Computers Limited v. M/s. M & N Publications Limited, (1993) 1 SCC 445 : (1993 AIR SCW 683) as well as the decision of the Allahabad High Court in Churk Cement Mazdoor Sangh v. State of Uttar Pradesh, AIR 1992 All 88. The High Court, however, has repelled all the said contentions and dismissed the writ petitions.;