Nestor Pharmaceuticals Ltd. vs Union Of India (Uoi) And Ors. ...
2003 Latest Caselaw 680 Del

JUDGMENT

Manmohan Sarin, J.

1. By this common judgment, both the above writ petitions are being decided. Petitioner-M/s. Nestor Pharmaceuticals Ltd. in CW 7632/99 and petitioner- M/s. Pure Pharma Ltd. in CW 260/2000 are both aggrieved by the decision of Ministry of Health & Family Welfare, Union of India, denying them placement of trial orders for the manufacture and tableting of Oral Contraceptive Pills (OCP) on account of not having requisite manufacturing and marketing experience of two years. Placement of trial order was denied despite the requirement of two years' experience having been relaxed by a corrigendum, issued on 4th February, 1999, making new firms also eligible for trial orders, subject to their having valid drug license and satisfactory good manufacturing practices. The challenge in both the writ petitions is to the non-placement of orders under a common tender. Common questions of fact and law arise for consideration. Hence the two writ petitions are being decided by this judgment.

2. The facts common to both the petitions are noted hereinafter.

(i) The Ministry of Family Welfare, for the purposes of distribution of Oral Contraceptive Pills (OCP) to control the population under the national programme, distributes the OCPs through out the country. The Oral Contraceptive Pills contain two active ingredients namely Norgestrel IP and Ethinyl Estradoil IP. The above two hormones are not commercially manufactured in India. These are supplied by the United Nations Population Fund to the Union of India. Union of India has been entering into a rate contract with indigenous manufacturers holding valid licenses, for the manufacture and tableting of OCPs. The manufacturer use the raw materials as supplied, through the Government of India, with excipients and convert the same into tablet/capsule form.

(ii) The last rate contract expired in October, 1998. Union of India floated a fresh tender inquiry, prescribing the eligibility criteria of the manufacturer/bidder possessing two years manufacturing and marketing experience, or having been past supplier to the Union of India for the subject drug on the opening of the tender. The tenders was due for opening on 9th February, 1999. Representation was received from the prospective bidders for relaxation of the two year manufacturing and marketing experience. Government of India considered the matter and keeping in view that the essential ingredients for the manufacture and tableting of the OCP's were supplied by the Government and the process of tableting, involved mixing of the products, a corrigendum was issued on 4th February, 1999. As per the corrigendum, new firms not having two years manufacturing and marketing experience, but possessing a valid drug license and satisfactory good manufacturing practices, were eligible for trial orders being placed.

(iii) The tender opening date was also extended to 22nd February, 1999. The tenders were opened and 17 bids were received. The Tender Purchase Committee considered the offers only of the firms/bidders, who satisfied the condition of two years manufacturing and marketing experience. Accordingly, the recommendation of the Tender Purchase Committee for placement of orders, was confined only to Hindustan Latex Ltd., M/s. Indian Drugs Pharmaceuticals Ltd., M/s. Pharmasia Ltd. and M/s. Famycare Ltd. The Competent Authority considering the matter on 31st March, 1999, included five new comers possessing satisfactory good manufacturing practices in terms of the corrigendum. These were Pure Pharma Ltd, Shivalik Drugs, Targ of Drugs Ltd, Mann Pharmaceuticals, Nestor Pharmaceuticals Ltd. and Mega International. Petitioners-Pure Pharma Ltd. & Nestor Pharmaceuticals Ltd., were recommended for placement of trial order for 10 lacs cycles and 50 lacs cycles of OCP's respectively, subject to their providing performance guarantee. Trial orders were not placed pending inspection for good manufacturing practices. The inspection of plants of M/s. Nestor Parmaceuticals and M/s. Megal International was carried out. The companies were advised to carry out certain rectifications for the deficiencies found. Necessary rectifications are claimed to have been carried out. Inspection for good manufacturing practices for the remaining firms, which could not be carried out earlier, was scheduled in the last week of July, 1999.

(iv) In the month of August, 1999, representations were received from Members of Parliament cautioning against the inclusion of the new firms without experience in the manufacture of Oral Contraceptive Pills on the ground of risk to human health since OCPs were a hormone preparation. Curiously a Member of Parliament protested against the new entrants being given an opportunity to remove the deficiencies after the inspection for good manufacturing practices. It was represented that this would be grossly unfair to other suppliers whose bids were rejected at the preliminary stage. However the protest in the said representation was not continued or pressed. A communication was received from the Member of Parliament that the matter had been clarified and the Ministry may proceed as it deemed fit for procurements. A representation from another Member of Parliament was received against the waiver of the condition of two years manufacturing and marketing experience. It was urged that there was no justification for waiver, when the same was being insisted for other supplies, namely, Kit A & B by the department of Family Welfare Programme. It was urged that taking new supplier without experience, would tantamount to playing with the health of women of India.

The Managing Director of IDPL, Major General V.K. Sarin, also represented against inducting new entrants in the field of OCPs. He claimed that there was already surplus capacity with the existing suppliers. The manufacturing and other facilities of new suppliers were not up to the mark. It is claimed hat the amendments in the tender conditions by the corrigendum had been made in a hurry, without any rationale and the representation of IDPL and others against the same was not considered.

(v) Earlier pending inspection of the facilities and subsequently as a result of representations, the orders on bidders, such as the petitioner and other new entrants were not placed. The entire matter was reviewed, culminating in the decision of 13.12.1999 of not placing the order on new entrants. It is contended that pursuant to good manufacturing practices inspections, opportunity to remove deficiencies, could not have been given. It needed to be examined as to how with those deficiencies, as detected in good manufacturing practices inspections, could have got the license to manufacture drugs. This also operated unfairly and in a discriminatory manner against bidders, who were rejected at preliminary stage.

(vi) The Union of India also sought the advice of the Drug Controller General of India (DCGI), who opined that since it had already been considered to entertain applications from newcomers, having satisfactory level of `good manufacturing practices, for placement of trial orders, he recommended the testing of the first three batches of OCP tablets produced by such manufacturers. Respondents sought clarification from the Drug Controller General of India, who noted that the concerned manufacturer/newcomers have put in place the facilities required for the manufacturer of OCP tablets, in compliance with GMP requirements. Accordingly under the Drug Manufacturing Rules, these firms could undertake the manufacture of OCP tablets. The DCGI declined to comment on whether it would be prudent to place orders on the fresh entrants or not?

3. It is in this background that the Central Government considered the whole matter and decided that there was no good reason to relax the experience criteria and entrust the manufacture of OCP to newcomers. This resulted in denial of placement of trial orders on the petitioners in the two writ petitions among others. The petitioners are thus aggrieved by this decision and also seek quashing of the orders placed on the successful bidders.

4. Let us consider the challenge in the two writ petitions as also the submissions made.

Dr. A.M. Singhvi, learned senior counsel, submitted that active ingredients, raw material/hormones were not commercially manufactured in India. These were supplied to the Government of India under the United Nation's Population Fund. Petitioner-M/s. Nestor Pharmaceuticals Ltd., had obtained licenses for manufacture of OCP. But this was for Government supplies only. Petitioner-M/s. Nestor Pharmaceuticals Ltd., had made substantial investments in setting up manufacturing facilities including plant and equipments for tableting and supplying the OCP. It is not in dispute that the petitioner Nestor Pharmaceuticals Ltd. has been found to be having good manufacturing practices. Similar is the position with M/s. Pure Pharma Ltd. The said petitioner claims to have requisite drug license for manufacture and marketing of the tablets. Its plant has been found to be observing good manufacturing practices with requisite monthly production capacity. It, however, does not have the requisite two years of marketing and manufacturing experience. The respondents have also raised an objection with regard to the petitioner M/s. Pure Pharma not having the requisite drug license for two years. The present item got included in its license on 15.4.1997. The tender opening date being 18.2.99, the two years period of possessing license had not elapsed.

5. Senior counsel, Dr. Singhvi and Mr. A.S. Chandhiok on behalf of both the petitioners submitted that hormones were not manufactured in the country and that the entire or major part of the supply of raw materials for manufacture of OCPs was met from supplies through Government. Therefore, the petitioners and other non-suppliers to the Government would not have an opportunity to gain experience of manufacture in the open market. Accordingly with a view to enlarge the scope of supplies from different suppliers and increase healthy competition, the respondent No. 1 formulated a change in policy by issuing a corrigendum for purchases under the National Family Welfare Programme. This corrigendum to the tender inquiry provided for placing of trial orders, subject to good manufacturing practices, on suppliers not having two years' experience. It is contended that The Government duly considered all aspects including public health, public safety, public interest, while issuing corrigendum. Trial orders thus could be placed on firms having satisfactory good manufacturing practice.

6. Counsel for the petitioners further submitted that the Secretary to the Family Welfare Department recommended that the policy published by way of corrigendum, should be fairly implemented and the petitioners be considered. It was also noted that respondents 2 to 5 had indulged in unethical practices had quoted identical rates so as to sabotage the tender process. The minimum rate quoted by all the regular suppliers with experience was 2.70 per cycle as against 1.72 per cycle by the New comers, such as petitioners. The bid of the petitioners Nestor Pharmaceuticals Ltd., as also Pure Pharma Ltd., was considered. The Competent Authority approved placing of trial orders on the petitioner-Nestor Pharmaceuticals Ltd. of 50 lacs cycles and 10 lac cycles on Pure Pharma Ltd., respectively. To further safeguard the interest of respondent, performance guarantees were required from the two petitioners. It may be noted that the petitioner-Nestor Pharmaceuticals Ltd. claims that the petitioner had already been supplying drugs under the Rural Child Health Programme and Safe Motherhood Programmes etc., to respondents. Petitioner-M/s. Nestor Pharmaceutical Ltd., claims to have supplied drugs worth more than Rs. 150 crores to respondent No. 1. It was urged that admittedly the manufacturing facilities of the petitioners after inspection and removal of such deficiencies as were pointed out were found satisfactory by the respondents. The Drug Controller General Of India had also found the manufacturing facility of the petitioners to be satisfactory and petitioners capable of taking up the manufacture of the OCPs.

7. Counsel urged that all necessary precautions required in public interest had been taken including the recommendation for testing of the trial orders, furnishing of a performance guarantee.

It is claimed that a non-technical officer for collateral purposes recommended that the corrigendum to the tender condition be ignored since the drugs were to be distributed under National Family Welfare Programme and no chance could be taken with regard to its quality. Further that the petitioners and other new manufactures should first gain experience by manufacturing and marketing in open market and establish their credentials before supplying under the National Family Welfare Programme.

8. Petitioners claim that the decision taken to ignore the corrigendum has been taken at the behest of the established suppliers who had even otherwise tried to subvert the tendering process by quoting identical rates, which evidenced formation of a cartel, detrimental to fair play and public interest.

9. The decision and recommendation not to relax the tender condition as per the corrigendum was assailed as irrational and non-justifiable. It is submitted that neither there were any deliberations by technical experts nor was there any change of circumstances, which could necessitate or justify the decision to ignore the corrigendum. It is submitted that the corrigendum had been issued and the tender conditions relaxed with regard to two years experience, after necessary deliberations and considering all relevant factors. Besides sufficient safeguards had been inbuilt in terms of the requirement for good manufacturing practices, testing of facilities and yet another safeguard as advised by the Drug Controller General of India, to test the batches as produced by the petitioner and other newcomers by the Central Government Laboratory was directed. Performance guarantees were also asked for. The bid of the petitioners having been considered as per the corrigendum, there was no new factor or change in circumstances, except the representations at the behest of the interested parties. The decision, therefore, to ignore the petitioners suffered from procedural impropriety and the decision making process culminated into an unreasoned decision dated 13.12.89 vitiated and hit by Wednesbury's unreasonableness.

10. Reliance was placed on TATA Celullar Vs. Union of India . Counsel for the petitioners submitted that the corrigendum manifested the policy and criteria as adopted by the Central Government. The Government cannot deviate or ignore the same. It is required to fairly implement the same. The respondents 2 to 5 cannot question or challenge the corrigendum as they themselves participated in the tender process on the basis of the invitation to tender as modified by the corrigendum. Counsel next submitted that the petitioners had a legitimate expectation that the policy formulated and as modified by the corrigendum would be fairly implemented. It was urged that the legitimate expectation of the petitioners was sought to be defeated by the irrational, unreasonable and arbitrary acts of respondents. The denial of legitimate expectation amounts to denial of right guaranteed under the Constitution, it was an enforceable right guaranteed under Article 14. Reliance was placed on MP Oil Extraction Vs. State of M.P. . Counsel next submitted that during the period April, 1999 to October, 1999, trial orders were recommended to be placed on the petitioners. The respondents have not acted fairly and in a transparent manner. Decision making process was not informed with reason. It has been vitiated by extraneous considerations and collateral purposes. Besides the decision to ignore the corrigendum was neither notified nor published.

11. Petitioners also challenged the placement of orders on respondent No. 5. It was claimed that respondent No. 5 was granted the license only on 28th November, 1998. Bids were opened on 18th February, 1999. The respondents had not made any supplies prior to opening of the bids. Respondent No. 5 was primarily engaged in the business of diagnostic equipment and not the manufacture of the OCP's. In these circumstances, counsel prayed for the writ being allowed and the decision dated 13th December, 1999 being quashed and orders being placed on the petitioners with corresponding cancellation of the orders placed on the answering respondents.

12. As noted in the beginning, the crux of the matter is the legality and validity of the decision dated 13.12.1999. Learned Additional Solicitor General as well as counsel for respondent No. 1 Ms. Pinki Anand submitted that the decision taken on 13.12.1999, by respondent No. 1 not to place trial orders on new firms has been taken bonafide in public and national interest. Learned Additional Solicitor General submitted that considering that the Oral Contraceptive Pills were a hormonal preparation, any lack of strict quality control or failure to maintain uniformity of the content, could be injurious to health. The OCPs were to be distributed on a massive scale through out the length and breadth of the country. Any defective supply could have large ramifications. In this view of the matter, the respondents decided to act with "caution rather than to err".

13. As regards the advice tendered by the Drug Controller General of India, it is stated that the Drug Controller himself recognised the critical parameter "in formulating OCP tablets was the uniformity of content". The Drug Controller proceeded on the basis that it had already been decided to entertain new applicant-firms having satisfactorily level of `GMP' for placing of trial orders. It is in this background that he recommended testing of the first three batches of the OCP tablets of new entrants at Central Laboratory by the Zonal Offices. Again when the Drug Controller General was asked to clarify his position with regard to placing orders on fresh entrants, he noted that the new entrants including the petitioners had put in place the facilities required for manufacture of OCP tablets in compliance with good manufacturing practice requirements. He nevertheless observed that "DCGI was not in a position to comment whether it would be prudent to place orders with fresh entrants or not?" The Ministry of Health & Family Welfare reviewed and considered the matter. It reached the conclusion that since sufficient capacity existed both in the public sector and private sector with experienced manufacturers to meet the requirements of OCP's, there was no good reason to relax the experience criteria and to entrust the manufacture of OCPs to relative new comers. It was felt that the new companies could go ahead and prove their credentials by manufacturing OCP in the open market before being considered for inclusion in the National Family Welfare Programme. The import of hormones i.e. raw materials for OCP was permissible under OGL.

14. Considering the nature of the National Family Welfare Programme and the possible side and ill effects of defective hormonal preparations, it was felt that it would not be prudent to take any risk whatsoever in manufacture of OCPs. It was urged that the above decision fell within the ambit of discretion vested in the administrative authority and would even come within the flexibility afforded to the administrative authority, described as play in joints.

15. Mr. Rajiv Nayyar and Mr. Vikas Dhawan on behalf of respondent No. 5 submitted that the corrigendum did not vest the petitioners or other new entrants with any right or a corresponding obligation on the respondents that orders had to be placed on them. The decision of the Union of India in not placing orders on the new entrants was sought to be justified in the interest of National Family Welfare Programme and public health. It was urged that the hormonal preparation required uniformity in content as the most crucial factor. Any wrong dosage of the raw material could have serious effect on the health of the consumer/patient. The Government was, therefore, fully competent to review its earlier decision of placing trial orders. Secondly, since sufficient capacity existed with companies having requisite experience, there was no valid reason for relaxing the experience criteria. Mr. Nayyar further argued that the condition of two years experience was fully justifiable and warranted. There was no reason why the new entrants be not asked to obtain requisite experience for two years before bidding and participating as suppliers in the National Family Welfare Programme. He also submitted that the contention of the petitioner-M/s. Nestor Pharmaceuticals Ltd., that manufacturing license issued to them being restricted to supplies to the Government, disabled them from gaining experience in the private sector, was a misconceived submission. Counsel submitted that there was no embargo on the petitioner or new entrants from importing the raw-materials i.e. hormones under OGL and obtaining a license to manufacture. The relevant rules provided for a license for manufacture of the drug under Rule 76 of the Drugs and Cosmetics Rules, 1975. The manufacturer was free to apply for license and it need not be limited to supplies to the Government. Of course, if a license is sought by the applicant only for Government supplies, it cannot later on be claimed that applicant does not have a license for manufacturing in the private sector and urge the same as a reason for placement of trial orders. The applicant has to blame itself for such a situation.

16. I have considered carefully the pleadings on record, submissions made by the counsel for the parties, written submissions as filed, as also the original records of the decision making process which have been produced. It is correct that after issuance of the tender inquiry on 24th November, 1998, the Corrigendum was issued allowing new firms having valid drug license and satisfactory good manufacturing practices, but not the two years manufacturing and marketing experience, to participate. The relevant clause of the corrigendum is "notwithstanding the above, trial order may be considered on new firms who are found to have satisfactory good manufacturing practices, but did not have two years manufacturing and marketing experience. All other terms and conditions and time of opening of the tender document remain unaltered".

The above corrigendum enabled new firms who did not have the requisite two years experience to participate in the tender. Corrigendum made them eligible for being considered for placement of trial orders. The petitioners rightly contend that pursuant to this, the respondent No. 1 considered and processed the case for placement of trial orders of 50 lacs cycles on petitioner-Nestor Pharmaceuticals Ltd. in CW 7632/99 and 10 lacs cycles on petitioner -Pure Pharma in CW 260/2000. This position continued for a fairly long period. In the meanwhile, the inspection of the facilities of other new entrants was done. The facilities of all except M/s. Shivalik, Haridwar were found to be conforming to good manufacturing practices. M/s. Shivalik did not possess the requisite drug license on opening date of tender.

It was only in December, 1999 that the Central Government took the decision not to place the trial orders on the new entrants including petitioners. Petitioners, therefore, contend that there manufacturing facilities having been found to be adequate and satisfactory with good manufacturing practices being followed, they met the eligibility conditions as per the corrigendum and were entitled to trial orders being considered. The Drug Controller General had recommended testing of the first three batches to be manufactured by the petitioners as an additional safeguard. Performance guarantee was also sought from these petitioners. The Drug Controller General had also found them having the capability to assimilate and to manufacture and tablet the OCPs, yet in the final analysis, the respondent denied them the opportunity. The placement of trial orders is denied on the ground that uniformity of content in OCP's was of critical importance. The supplies being for mass distribution under the National Family Welfare Programme, no chance or risk could be taken as regards the quality. Moreover, it is a hormonal preparation and any defective supply could be injurious to health. The price quoted by petitioner being less cannot be a determinative factor.

There is also some merit in the contention that the conduct of the established manufacturers and some of the respondents showed that they formed a cartel by quoting identical prices. This brings to the fore the need to encourage competition by permitting the new entrants to bid and thereby prevent formation of cartel detrimental to public interest.

17. At this stage, I may also notice briefly the process of the manufacture of the oral contraceptive pills as the decision by the respondents-Union of India is also sought to be justified on the requirement for adherence to the strictest quality control. It is stated that the National Family Welfare Programme introduced by the Government of India is the second largest family planning programme in the world. There is no infrastructure in India for the manufacture of the active ingredients of the OCP which are being supplied to Government of India as commodity supply. The total weight of OCP tablet is about 88 mg and the active ingredients comprise only 0.33 mg which is 0.00375% of the total weight. The rest are the chosen excipients. The choice of the excipients entirely depends on the manufacturers. The OCP require exacting standards for content uniformity. Apart from the requisite facilities and systems to handle the flow of air, water raw material etc well trained personnel are essential to produce good hormonal contraceptives. The consistency of formulation and the use of excipients depend on the experience of the manufacturer. Hence experience is also a crucial factor. Besides the testing of the tablets as recommended by the Drug Controller General has limitations. It cannot bring out the true assessment of the product. The efficacy and safety of the product would depend upon the manufacturer using the right combination of the excipients. It is the right dosage and the stage and time of its introduction. Any wrong dosage of the excipients will make the product lose its efficacy and effectiveness. The fact that a defective hormonal drug could be injurious to health is also not in dispute. It would be seen that having regard to the nature of drug and the process of manufacture, the need for adherence to strict quality control cannot be undermined.

18. Having noted and discussed the rival contentions and factors arising for consideration, I find that though on the first flush, the decision not to place trial orders on the new entrants appears to be unjust especially considering that the whole purpose of permitting the new entrants was to ensure that competition grows and the established manufacturers do not form cartels, so as to deprive the Union of the best prices available. In the ultimate analysis, the view taken by the Union of India in not placing trial orders despite having issued the corrigendum permitting the new entrants also to participate cannot be said to be vitiated by any mala fides, arbitrariness or irrationality. The approach of being "cautious rather than to err" is one which is plausible and would commend to many.

Reference may also be usefully made to the judgment of the Supreme Court in Tata Cellular Vs. Union of India (supra), wherein the principles of judicial review have been culled out while dealing with the judicial and administrative actions of the Government. These, insofar as relevant for the present case, are being reproduced as under:

"The principles of judicial review would apply to the exercise of contractual powers by Government bodies in order to prevent arbitrariness or favoritism. However, there are inherent limitations in exercise of that power of judicial review. Government is the guardian of the finances of the State. It is expected to protect the financial interest of the State. The right to refuse the lowest or any other tender is always available to the Government. But, the principles laid down in Article 14 of the Constitution have to be kept in view while accepting or refusing a tender. There can be no question of infringement of Article 14 if the Government tries to get the best person or the best quotation. The right to choose cannot be considered to be an arbitrary power. Of course, if the said power is exercised for any collateral purpose the exercise of that power will be struck down.

Judicial quest in administrative matters has been to find the right balance between the administrative discretion to decide matters whether contractual or political in nature or issues of social policy; thus they are not essentially justiciable and the need to remedy any unfairness. Such an unfairness is set right by judicial review.

Judicial review is concerned with reviewing not the merits of the decision in support of which the application for judicial review is made, but the decision making process itself. It is thus different from an appeal. When hearing an appeal, the Court is concerned with the merits of the decision under appeal. Since the power of judicial review is not an appeal from the decision, the Court cannot substitute its own decision. Apart from the fact that the Court is hardly equipped to do so, it would not be desirable either. Where the selection or rejection is arbitrary, certainly the Court would interfere. It is not the function of a judge to act as a superboard, or with the zeal of a pedantic schoolmaster substituting its judgment for that of the administrator.

Therefore, it is not for the court to determine whether a particular policy or particular decision taken in the fulfillment of that policy is fair. It is only concerned with the manner in which those decisions have been taken. The extent of the duty to act fairly will vary from case to case. Shortly put, the grounds upon which an administrative action is subject to control by judicial review can be classified as under:

(i) Illegality: This means the decision-maker must understand correctly the law that regulates his decision-making power and must give effect to it.

(ii) Irrationality, namely, Wednesbury unreasonableness. It applies to a decision which is so outrageous in its defiance of logic or of accepted moral standards that no sensible person who had applied his mind to the question to be decided could have arrived at. The decision is such that no authority properly directing itself on the relevant law and acting reasonably could have reached it.

(iii) Procedural impropriety.

The above are only the broad grounds but it does not rule out addition of further grounds in course of time.

The Government must have freedom of contract. In other words, a fair-play in the joints is a necessary concomitant for an administrative body functioning in an administrative sphere or quasi-administrative sphere. However, the decision must not only be tested by the application of Wednesbury principle of reasonableness (including its other facts pointed out above) but must be free from arbitrariness not affected by bias or actuated by mala fides."

19. A perusal of the record shows that the respondents have considered all relevant factors. The object of issuance of corrigendum was itself to encourage competition and make the tender process more participative and beneficial to the State. Secondly, the corrigendum merely enabled the petitioners to participate, despite not possessing the requisite two years experience. The corrigendum only conferred on them a right to be fairly considered for placement of trial orders. The petitioners were duly considered for the same. Rather the record shows that the case was processed for placement of trial orders also. The turn around came with the Government on reconsideration finding that there was sufficient capacity available both in the private and public sector for manufacture of OCPs. Further that the placement of the trial orders as envisaged may be fraught with risk, as discussed hereinbefore. The financial benefit in these cases cannot be the determinative factor alone, though being a relevant factor. The testing of the manufactured product had itself limitations in terms of logistics in testing the entire quantity as also the limitation on assessing efficacy of the product. In these circumstances, the respondents-Government of India decided that trial orders need not be placed on the petitioners and they could wait and acquire the requisite marketing and manufacturing experience of two years in private sector. This was so required since the process of manufacture of OCPs required strict adherence to quality control, introduction of the excipients in measured and limited quantities at various stages of mixing to ensure uniformity of content. To achieve the above, the manufacturer not only has to have the requisite plant and machinery, it must also develop the expertise of its personnel in training and technology, which become available only with the experience. In these circumstances, the view taken by the Government cannot be described as one which was not a plausible view taken in public interest. There is also no merit in the petitioners' contention that it is not feasible to gain experience in the private sector or market the drug themselves. The import was permissible at the relevant time under the OGL. There is also no embargo in acquiring a license to manufacture for the open market and gain the requisite experience. The product as manufactured by the party would acquire its reputation and also enable and equip the manufacturer after requisite experience, for the National Family Welfare Programme. There is also no merit in the contention of the petitioners that respondent No. 5-M/s. Famy Care Ltd. did not have two years experience. The criteria of possession of two years manufacturing and marketing experience for OCP's could neither be said to be unreasonable or rigorous requirement. The two years experience/criteria is an internationally accepted one and included for the World Bank as well as the Asian Development Bank aided projects.

20. Union of India in its affidavit has averred that respondent No. 5 had taken over the manufacturing unit at Sarigram, Gujrat of M/s. Phimax International as an on-going concern. The Sarigram unit has been tableting the OCP for the Department of Family Welfare since 1993-94. The respondent No. 5 M/s. Famy Care Ltd having taken over the unit would have the benefit of the technical now-how, experience of the Sarigram Unit and the experience of the latter can be considered for the purpose of the experience of respondent No. 5. Reference is invited to the decision of the Supreme Court in New Horizon Ltd. Vs. Union of India , wherein the Court approved consideration of the experience of one of the partners of the joint venture even though the joint venture was a separate legal entity.

21. In view of the foregoing discussion, the decision of the Union of India though it may have belied the hopes of the petitioners, the same cannot be said to be either vitiated by arbitrariness, unreasonableness or mala fides. It is a plausible view that has been taken and is not liable to be corrected in the exercise of writ jurisdiction in judicial review.

22. Before parting with the case, it may be observed that the need for a well defined and certain policy, to be formulated in the matter of permitting new entrants i.e., those with less than two years experience to manufacture OCPs and other similar drugs under the National Family Welfare Programme, cannot be under-scored. The competing and conflicting interest require to be balanced and reconciled. While the need to ensure adherence to the highest standard and quality production of drugs, such as OCPs remains a top priority on the agenda yet few select manufacturers cannot be permitted to form a cartel and quote identical prices in the absence of competition. Besides, in practical terms a new entrant faces considerable difficulty in gaining or acquiring experience, when major market share of the product is in Government supplies and the private market is limited. Towards this end, the Government may consider working out and prescribing a strict regime of quality control and tests at various stages of manufacture and processing apart from other safeguards, such as performance guarantee, which could ensure adherence to quality standards even by new entrants, so as to enable them to participate.

With these observations, the writ petitions are accordingly dismissed. Interim applications stand dismissed.