LIFECARE INNOVATIONS PVT. LTD Vs. UNION OF INDIA

JUDGEMENT

(1.) The petitioner before us, a Micro Enterprise, and its founder Dr. Jitendra Nath Verma, raise two important questions. The first question relates to the 'right' of Micro and Small Enterprises [Hereinafter referred to as the "MSE(s)"] to supply 25% of goods and services to be procured by the Government and its instrumentalities under its Procurement Policy. The second issue relates to the legality of 'minimum turnover clauses' prescribed in the Notice Inviting Tenders, Hereinafter referred to as 'NIT' issued by the Government and its instrumentalities. Determination of these questions required us to consider the 'rights' and duties flowing out of Sec. 11 of the Micro, Small and Medium Enterprises Development Act, 2006, [Hereinafter referred to as the "MSMED Act/Act"] prescribing a Public Procurement Policy for Micro and Small Enterprises (MSEs) Order 2012 [Hereinafter referred to as the "Procurement Order 2012"] and this consideration led us to examine the legal status of the Procurement Order 2012.

(2.) Brief facts: The brief facts necessary for the disposal of the case are as follows. The first Petitioner is a Micro Enterprise under Sec. 7 of the MSMED Act, 2006, and operates in the pharmaceuticals and medical biotechnology sector. More specifically, the Enterprise's business involves the manufacturing, development and marketing of healthcare products. The second petitioner, the founder and managing director of the enterprise, is a specialist in the application of 'Liposome Technology' for healthcare, a technology utilised for delivering drugs to the human body. Put simply, this involves enveloping a drug in a bubble made of fats or lipids, which can be dissolved and absorbed directly into the specific site of the body targeted for treatment. Pertinent in the context of this petition is the company's production of a nano-drug called 'Liposomal Amphotericin B Suspension in Saline- Fungisome' ('LAmB'), which is a special form of medication to treat serious fungal infections. The Enterprise claims that LAmB is the only medication in India that treats fungal infection effectively and generates the least amount of toxicity in the kidney compared to other medications formulated and sold by other players in the field. The petitioners state that the Government of India has also recognised LAmB as a critical life-saving drug, and recently, the drug proved instrumental in treating patients suffering from mucormycosis amid the rise of COVID-19.

(3.) The Enterprise claims that it has attempted to participate in several public procurement processes to supply the drug it manufactures. However, it continuously faces disqualification from participation in the procurement process evolved by the Central and State Governments and their instrumentalities. The cause for such disqualification is the presence of mandatory minimum turnover clauses, requiring the participants to meet a certain financial threshold in terms of past sales or revenues generated for participation. This requirement disadvantages enterprises such as petitioners since their turnover is bound to be lower than that of their competitors for two reasons. First is obvious, the enterprise would qualify as a Micro Enterprise only when its turnover is lower. Secondly, the turnover of the Enterprise is also bound to be low since it only deals in specialised areas of medical technology and drugs. In contrast, many of its competitors get to factor in their revenue for multiple drugs that they deal in.