Rare Metabokics Life Sciences PVT. LTD. & Anr. vs. Matrix Labs

Held

The Court acknowledged the urgent need for COVID-19 test kits due to the pandemic and prioritized public interest over private gain. The Court directed that the remaining 2.24 lakh test kits be delivered to ICMR immediately upon landing in India. Regarding the payment dispute, the Court ordered that the balance amount of Rs. 8.25 crores owed by Petitioner No. 1 to the respondent be paid first, within 24 hours of receipt into the petitioner's bank account, before any monies received from ICMR by Petitioner No. 1/Petitioner No. 2 are adjusted for any other purpose. Furthermore, the Court found the profit mark-up of Rs. 155/- (61%) on the landed cost price of Rs. 245/- to be excessive. The Court held that the kits/tests should be sold at a price not exceeding Rs. 400/- per kit/test inclusive of GST, considering the extraordinary circumstances of the pandemic. The respondent undertook to supply the kits/tests at this price. The Court also noted an order for 50,000 kits for the Government of Tamil Nadu and directed their supply directly to the State Government upon arrival.

Facts

The petitioners, Rare Metabolics Life Sciences Pvt. Ltd. and another, sought the release of imported COVID-19 Rapid Test Kits. The respondent, Matrix Labs, was the importer. The petitioners were appointed exclusive distributors. An agreement was in place for the distribution of medical products, including COVID-19 Rapid Test Kits. The ICMR placed an order for 500,000 test kits with Petitioner No. 2, with a total value of Rs. 30 crores. The respondent, as the importer, obtained the necessary license. The petitioners had paid Rs. 12.75 crores to the respondent, covering the cost of import and freight for 500,000 tests. The respondent contended that the import was on the understanding of 100% upfront payment. The petitioners argued this was under duress. The court was informed that the goods were being flown in by Air India.

Key Issues

1. Whether the petitioners are entitled to the release of the imported COVID-19 Rapid Test Kits, considering the dispute over payment terms and the existing distribution agreements? (Mixed question of law and fact). 2. Whether the profit margin sought by the respondent on the sale of COVID-19 Rapid Test Kits is excessive and against public interest, given the ongoing pandemic? (Question of law). Petitioner's Contentions: The petitioners argued that they had paid a substantial amount towards the import cost and freight as per the agreements. They contended that the respondent's demand for 100% upfront payment for the ICMR consignment was under duress and contrary to the agreed terms. They sought the release of the kits to fulfill their distribution obligations. Respondent's Contentions: The respondent argued that the import was based on an understanding of 100% upfront payment for the ICMR consignment, citing communications to support this. They also highlighted the cost of import per test and freight charges.