“Public interest must outweigh private gain.”
Delhi High Court: Najmi Waziri, J., has capped the price of the COVID-19 Rapid Test Kit at Rs 400 per unit which is 40% lesser than the price of Rs 600 per unit approved by ICMR.
The Court was considering a petition filed by Rare Metabolics Life Sciences Pvt. Ltd., the exclusive distributer of medical products imported into India by the respondent, Matrix Labs. The petitioner was seeking the release of 7.24 lakh COVID-19 Rapid Test Kits and other COVID-19 related materials imported by the respondent from People’s Republic of China. On 25th March, the petitioner had desired to import 10 lakh WONDFO SARS CoV-2 Antibody test kits, for which proforma invoice was requested from the respondent. Subsequently, on 27th-28th March, ICMR placed an order with petitioner’s distributor for 5 lakh COVID-19 Rapid Test Kits at the rate of Rs 600 per unit. The total order was for Rs 30 crores. Of the said 5 lakh kits, 2.76 lack kits have already been delivered to ICMR and the remaining 2.24 lakh kits were expected to be delivered very shortly.
The petitioner submitted that it has already paid Rs 12.75 crores to the respondent, which amount covers the cost of 5 lakh kits. It was submitted that it will pay the balance when payment is received from ICMR. Whereas, the respondent contended that the entire amount was to be paid upfront. The Court stated that be as it may, since the kits are required in the country on urgent basis, the remaining 2.24 lakh kits shall be delivered to ICMR the moment it lands in India and the balance payment due to respondent shall be paid by the petitioner within 24 hours of receiving payment from ICMR.
The Court was informed that the actual cost paid to the supplier of these 5 lakh test kits is Rs 11.25 crores and ICMR will pay Rs 30 crores for purchasing the same, which means that Rs 18.75 crores will be shared by intermediaries without any value addition to the goods.
The Court was of the view that the profit mark-up of 61% on the landed cost of these kits is much on the higher side. It stated that
“The country is going through an unprecedented medical crisis affecting public order. People have been cloistered in their homes or constrained to stay wherever they were on 24th March 2020. The economy is virtually at a standstill for the last one month. There is an element of disquiet apropos one’s safety. For people to be assured that the pandemic is under control and for governments to ensure and for agencies engaged in the frontline battle to safeguard people’s health, more kits/tests should be made available urgently at the lowest cost, for carrying out extensive tests throughout the country. Public interest must outweigh private gain. The lis between the parties should give way to the larger public good.”
In view of the above, the Court ordered that the kits should be sold at a price not beyond Rs per kit, inclusive of GST.
The Court was also informed that State of T.N. had placed an order of Rs 50,000 test kits with the respondent at the rate of Rs 600 per unit.
Accordingly, the Court directed that from the other 5 lakh kits (apart from those 5 lakh to be delivered to ICMR), 50,000 shall be excluded for the State of T.N. and the remaining 4.5 lakhs would be available to the respondent to be disposed of in the terms mentioned above. [Rare Metabolics Life Sciences (P) Ltd. v. Matrix Labs, 2020 SCC OnLine Del 569 , decided on 24-4-2020]