Home Legal NewsRecent Development High Profit Margin On COVID Rapid Test Kits: Delhi HC Fixes Price As Rs. 400 Per Kit, 40% Less Than ICMR Approved Rate [Read Order]

High Profit Margin On COVID Rapid Test Kits: Delhi HC Fixes Price As Rs. 400 Per Kit, 40% Less Than ICMR Approved Rate [Read Order]

by Shreya

The Delhi High Court has capped the price of the COVID Rapid Test Kits in a dispute between a distributor and an importer of the kits, the court observed “Public interest must outweigh the private interest.”

The Single Bench of Justice Najmi Waziri reduced the price of the Rapid Test Kits from Rupees 600 per kit to Rupees 400 as 61% profit mark up of such test kits is a bit on a higher side, especially at these extraordinary times when economy has reached a standstill and a serious pandemic is upon us.

The order, while commenting upon the COVID rapid test kits stated:

“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 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 kits/test should be sold at a price not beyond Rs. 400/- per kit/test inclusive of GST”

Also Read: State of Missouri (US) to sue China over COVID-19; Alleges delayed reporting, demands damages

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Advocates Jayant Mehta & Anshumaan Sahni, appeared for the petitioner.

Advocates Amitabh Chaturvedi, Jeevesh Nagrath, Sangeeth Mohan & Chandan Dutta appeared for the respondent.

Rare Metabolics have filed the petition who had agreed to be the sole distributor of COVID-19 Rapid Test Kits imported via Matrix Labs (respondent) from China.

There was a dispute regarding non-supply of the imported kits to the petitioner. The importer, Matrix Labs, insisted on upfront payment, whereas the petitioner maintained that the payment can be made only after release of funds by the ICMR.

The parties agreed to the selling of kits at Rs.400 per test, which is 40% less than the ICMR approved price of Rs.600 per test.

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The Court recorded the concession of parties,

“Mr. Jayant Mehta, the learned counsel for the petitioners, states upon instructions, that in the interest of the country he would not pursue the matter any 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. Indeed, both parties agree to the principle public interest should be paramount and the tests should be made available to the general public at the lowest cost possible. Mr Nagrath, the learned counsel for the respondent submits, that the respondent is ready to and undertakes 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”

On 25th March, the Petitioner had expressed a desire to get one million SARS COV-2 Antibody Test Kits from China, and the Respondent agreed to import the same. Subsequently, on 27-28th March, ICMR had placed an order for the supply of 5 lakh test kits from the Petitioner at a rate of ?600/per kit. 5 lakh tests kits, 2.76 lakh have already been delivered to ICMR and the remaining 2.24 lakh tests are expected to be delivered very shortly. It was informed to the court that the said consignment is likely to land in India in the next 24 hours, subject to prioritisation by the Government of India.

The Petitioner moved the court seeking the release of remaining Rapid Test Kits and other COVID related materials , so that further supplies can be made to the ICMR as per the agreement. On 17 April, a consignment of 2.76 lakh test kits was delivered to ICMR, the payment for which had been still awaited. According to ICMR, such payments were to be paid after the tests after having met the requisite standards set by it.

The Respondent also informed the court that it had received an order for supply of 50,000 kits/tests, from the Tamil Nadu Government , through an intermediary dealer Shan Biotech and Diagnostics, at the ICMR approved rate of ?600/- per test. Of this order, 24,000 have been supplied and 26,000 more were to be supplied.

The Court passed the following directions in this regards  and ordered,

a. 2.24 lakh tests shall be delivered to ICMR, the moment it lands into India

b. The total invoice value raised by the Respondent-importer upon Petitioner is a total of ?21 crore. The Respondent has received ?12.75 crores. The balance amount of ?8.25 crores shall be first paid to the importer before any monies received from ICMR by Petitioner 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 Respondent importer agreed to supply the kits/tests at ?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.

Read the order here:

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