CENTURY PHARMALABS INDIA Vs. STATE OF ANDHRA PRADESH

JUDGEMENT

(1.) The petitioner is a small scale industry and MSME Unit, engaged in manufacturing, export and supply of pharmaceutical products. The Petitioner was one of the successful tenderers in the tender issued by the 2 nd Respondent, as the implementing agency of the 1st Respondent, vide 'E' tender notification vide tender notice No.2/APMSIDC/Medicines/2015- 17, dtd. 12/10/2015 for supply of general medicines to its 13 central Medicines Stores. Consequently, an agreement dtd. 16/4/2016 was executed between the petitioner and the 2nd Respondent. The provisions of the Tender and the consequent agreement, relevant to the present case, are clause 21 of the tender and Clause 3 of the agreement which read as under:

(2.) The Petitioner used to supply the pharmaceutical products as per the indent and demand of the second respondent. But, according to the petitioner, due to the placement of orders by the 2nd respondent over and above the quantities mentioned in the tender notification to the tune of 200% to 400%, there were delays in the supply of medicines. For the delayed supplies, the 2 nd respondent imposed penalty at the rate of 0.5% of the value of the goods not supplied, for each delay up to a maximum period of 15 days, and 1% per day thereafter and deducted the penalties from the running bills of the petitioner. Being a small scale industry and MSME Unit, the petitioner submitted its representation on 2/8/2017 to the 2nd respondent for waiver of all the penalties and refund of the forfeited amounts.

(3.) In a related development, various pulverising barytes units had sought waiver of certain liquidated damages from M/s. A.P. Mineral Development Corporation Limited. This request had been forwarded to the Government, which had issued G.O.Ms.No.169 dtd. 2/12/2016. In this G.O. the Government had accorded approval to the proposal of M/s. A.P. Mineral Development Corporation Limited, to cap levy of liquidated damages to 5% of the shortfall of quantity supplied to the Corporation. Subsequently, two companies, which are similarly situated to the petitioner, had submitted representations to the 2nd respondent, who forwarded the said representations to the Government along with the recommendation made by the Managing Committee of the 2nd respondent in its 77th meeting held on 11/4/2018 resolving to restrict the total deduction towards liquidated damages to 5% of the contract value, of the delayed supplies, in line with the concessions given under G.O.Ms.No.169 dtd. 2/12/2016, to support SSI Units, which are facing difficulties. This recommendation was accepted by the Government which issued Memo No.42/H2/2018-1, dtd. 4/5/2018 according permission to the Managing Director of the 2nd respondent to restrict the total deduction of liquidated damages to 5% of the contract value. In view of this Memo, units such as the petitioner were entitled to seek refund of all those amounts which had been deducted in excess of 5% of the contract value. On that basis, the petitioner has approached this Court claiming that its representation dtd. 2/8/2017 should be considered by the respondents in the light of G.O.Ms.No.169, dtd. 2/12/2016 and Memo No.42/H2/2018-1, dtd. 4/5/2018.