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SUPREME COURT OF INDIA
B.P. JEEVAN REDDY AND S.C. SEN, JJ.
G.D. Zalani and another etc. etc., Appellants
Versus
Union of India and others, Respondents.
Civil Appeals Nos. 1251 and 1252-53 of 1995 (arising out of S.L.P.(C) Nos. 17467 and 18235-36 of 1994)
Decided on 2-2-1995.
Advocates appeared
Mr. K.K. Venugopal, Sr. Advocate, Mr. V. Bhakru, Ms. Vijaylakshmi Menon, Ms. Anuradha Dutt, Ms. Rupali Chopra and Mr. Kirat Rawal, Advocates (in C.A. No.1251/95); Mr. Krat Rawal, and Mr. Bharat Sangal, Advocates (in C.A. No. 1252/95) and Mr. F.S. Nariman, Sr. Advocate, Mr. Subhash Sharma and Mr. Ashok Mathur, Advocates with him (in C.A.No.1253/95), for Appellants; Mr. M. Chandrasekharan, Addl. Solicitor General, Mr. P.P. Malhotra, Sr. Advocate, Ms. Niranjana Singh and Mrs. Anil Katiyar Advocates (for No. 1), Mr. K. Parasaran, Sr. Advocate, Mr. P.K. Mullick and Mr. J.K. Das, Advocates (for No. 2), Mr. Harish N. Salve Sr. Advocate, Mr. Sanjeev Puri, Ms. Meenakshi Grover and Mr. N. Ganapathy, Advocates (for No.3) and Mr. A.K. Ganguly, Sr. Advocate, Mr. P.K. Mullick and Mr. J.K. Das, Advocates (for No.4), for Respondents.
Constitution Of India,1950 - Article 117 - Government company, I.D.P.L.production - Sub-Committee appointed earlier - Hindustan Antibiotics Limited engaged in manufacture of several antibiotic drugs including - It has a plant State of Maharashtra- Though installed capacity plant has been able produce only a Government company fully owned by Government of India- There another Government company producing same drug- Court are told that at present there is only one unit in private sector Alembic which is producing said drug- total production of Penn-G within country is sufficient to meet only country total requirement- remaining being imported price of imported half price at which locally produced drug is sold complex fermentation under controlled conditions of strains of fungus - It stated that companies all over world have been trying develop strains to improve quality and yield which has been producing drug in this country for over two decades has also been trying to improve strain as also quality and yield of said drug- From was using Filamentous Toyo Strains from Japan- Since said technology became outdated it switched over Even so production could not exceed installed capacity – Held, President himself is neither practicable nor consistent with dignity of President- Of course while directive must be expressed in name of President but that is ultimately a matter of form and form has been held to be mandatory- In this view of matter it is unnecessary to consider whether it is open to appellants to raise this contention- Court are therefore unable say that directive issued is not valid in law or that it was not issued by competent authority- It not disputed that directive is binding and all its authorities- If corporate identity or corporate existence no way violated by directive given- It cannot also be stipulated that before giving directive appellants should have been heard- Not only giving of directive was an internal matter between and Government of India there was no point in giving notice whose offers were already rejected by Board once and again after re-evaluation directed by Government Minister of State had asked evaluate its proposal and that without any reference to said order was entered - It is however explained by respondents that said order of Minister of State was revised by Minister for Chemicals and Fertilizers even before issuance of directive- Moreover Torrent having entered picture very late cannot complain of lack fuller consideration- It is equally evident that since it was already in process of selling up its own plant and also because its technology too was that of Slovakia which was already rejected in case useful purpose would be served even by asking reconsideration of its proposals court must say entered into with subject to final approval of Government of India as expressly provided in directive - Court are sure that Government would examine all terms carefully before according its approval- It obvious that it is always open to Government to seek such modification of terms as it thinks appropriate and as are feasible- But if it approves present form or modified form as case may be it is but in interest of all concerned that project is given a concrete shape without any further loss of time - Appeals dismissed
JUDGMENT
B. P. JEEVANREDDY, J. —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 850 MMU. 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 countrys 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.
3. 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.
4. 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.
5. 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.
6. 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 June 20, 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 1180 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 June 20, 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
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