The petition (Rare Metabolics Life Sciences Pvt. Ltd v. Matrix Labs) was brought in front of the High Court of Delhi to seek the release of 7.24 lacs Coronavirus Rapid Test Kits and other materials related to COVID-19, which have been imported and/or are being imported by the Respondents from People’s Republic of China. The Petitioner and the Respondent had gotten into an agreement making Rare Metabolics the exclusive distributor of medical products imported into India by the Respondent.
On the 25th March 2020 the Petitioner, Rare Metabolics, had expressed a desire to import one million tests of WONDFO SARS CoV-2 Antibody tests. The Respondent acknowledged the order and replied that it would process and the Performa Invoice soon.
On 27th and 28th of March the ICMR/National Institute of Cancer Prevention and Research placed an order on petitioner no. 2 for five lakh COVID 19 Rapid Tests at the rate of Rs. 600/- per test. The total order value was Rs. 30 crores. The respondent, being the importer, obtained a licence to import medical material. No customs duty was payable for supplies made to ICMR. Of the said order for five lac tests kits, 2.76 lakh had already been delivered to ICMR and the remaining 2.24 lakh tests were expected to be delivered in the next 24 hours, subject to prioritisation by the Government of India.
Petitioner’s Submissions
It was submitted by the Petitioner that as per the bi-partite agreement, the material could only be distributed in India through Rare Metabolics and that the Petitioner has already paid Rs. 12.75 crores to the Respondent which covers the import of 5 lakh tests at the rate of USD 3 per test and the freight cost.
It was further highlighted that the first consignment of 2.76 lakh tests was delivered to ICMR on 17th April 2020, for which invoice has been raised but the payment is awaited. The petitioner submitted that the moment payment would be received, it would be remitted to the Respondent.
Respondent’s Submissions
It was contended by the Respondent that the import was on the understanding between the parties that there would be 100% upfront payment specifically apropos the consignment for ICMR. The Respondent referred to the communication between the parties wherein the Petitioner had agreed to pay the respondent the entire money for the 5 lakh kits upfront.
The respondent further submitted that it had also received an order for the supply of 50,000 kits/tests, from the Government of Tamil Nadu at the ICMR approved rate of @Rs.600/- per test. Of this order, 24,000 has been supplied and 26,000 more are to be supplied. Let the same be supplied, the moment the kits/tests reach India, directly to the State Government of Tamil Nadu.
Court’s Observations
Considering the urgency of the requirement of the kits/tests in the country, the Court ordered:
- 2.24 lakh tests shall be delivered to ICMR, the moment it lands into India,
- The total invoice value raised by the respondent-importer upon petitioner no. 1 is Rs. 20 crores plus GST i.e. Rs. 21 crore. The respondent has received Rs. 12.75 crores. The balance amount of Rs. 8.25 crores shall be first paid to the importer before any monies received from ICMR by Petitioner no. 1/ Petitioner no. 2 is adjusted for any other purpose. Such monies shall be paid to the respondent within 24 hours of it coming into the petitioner’s bank account.
The court stated that:
“The Court is of the view that a profit mark-up of Rs. 155/- i.e 61% on the landed cost price of Rs. 245/- is much on the higher side and in any case more than sufficient for the seller, for the kits/tests to be made available in India for urgent extensive tests through the country, especially in these present extraordinary circumstances of the worldwide pandemic… The lis between the parties should give way to the larger public good. In view of the above, the kits/test should be sold at a price not beyond Rs. 400/- per kit/test inclusive of GST”.
It was further stated by the Petition that in the interest of the country he would not pursue the matter further and would give up all further claims, in the case if the importer undertakes to sell the product at not more than Rs.400/- each, inclusive of GST. Hearing the same, the respondent agreed to supply the kits/tests at Rs.400/- each, plus GST i.e. at 40% lesser than the ICMR approved rate, directly to any Government or its agency or private entity duly approved to carry out these tests.
The court observed that out of the 5 lac kits/tests, 50,000 shall be given to the State of Tamil Nadu and the remaining 450,000 shall be available to the respondent to be disposed-off in terms of the above, directly to any Government or governmental agency or any private entity which has received due approval to carry out such tests.
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