Case Note & Summary
The petitioner, M/s. United Brothers Healthcare Services Pvt. Ltd. through its unit United Hospital, a 50-bed super specialty hospital in Bengaluru, entered into a supply agreement dated 02-07-2021 with the 4th respondent, M/s. Bharat Biotech International Limited, for the purchase of 25,000 doses (2,500 vials) of Covaxin, the indigenously developed COVID-19 vaccine. The agreement required advance payment of Rs.2,62,50,000/-. Covaxin was developed by Bharat Biotech in collaboration with the Indian Council of Medical Research (2nd respondent) under a public-private partnership, and the Government of India had funded Rs.200 crores to the company. The petitioner claimed that due to negative publicity and delayed WHO approval, the vaccines remained unused and approached the 4th respondent to take back the doses, compensate, or replace them. The 4th respondent initially offered to facilitate transfers but later refused relying on the supply agreement terms. The petitioner issued a legal notice seeking refund of Rs.1,69,15,500/- and, upon denial, filed the writ petition under Articles 226 and 227 of the Constitution, seeking quashing of the supply agreement and recovery of money. The respondents contested maintainability, arguing that it was a private contractual dispute and the 4th respondent was not a State or instrumentality under Article 12. The court heard arguments only on the preliminary issue of maintainability. The petitioner contended that the contract had a public law element due to government funding, price capping, and the essential nature of vaccine distribution, citing Supreme Court decisions in ABL International, K.K. Saksena, Sanjana M. Wig, Pioneer Urban Land, and others. The respondents relied on Ramakrishna Mission and Federal Bank to argue that government funding does not make a body amenable to writ jurisdiction. The court analyzed the nature of the contract, the role of the 4th respondent, and the applicable legal tests. It held that the supply agreement was a pure commercial contract between two private entities, and the 4th respondent did not perform any public function merely because the vaccine was developed with government support. The existence of an arbitration clause reinforced the private character. The court distinguished the cited precedents and concluded that no public law element existed to attract writ jurisdiction under Article 226. Accordingly, the petition was dismissed on the ground of maintainability, reserving liberty to the petitioner to seek remedy before the appropriate civil court.
Headnote
A) Constitutional Law - Writ Jurisdiction under Article 226 - Maintainability against private entities in contractual disputes - Article 226, Constitution of India - The court held that a writ petition is not maintainable where the dispute arises from a purely private commercial contract between a hospital and a vaccine manufacturer, despite government funding and price regulation; the manufacturer does not perform a public function; the existence of an arbitration clause further indicates the private nature of the contract. (Paras 13-22) B) Constitutional Law - 'State' under Article 12 - Instrumentality of State - Article 12, Constitution of India - The court reiterated that mere receipt of government grants or collaboration with a government institute does not convert a private company into an authority under Article 12; tests of financial, functional, and administrative control are not satisfied. (Paras 18-22)
Issue of Consideration
Whether a writ petition under Article 226 of the Constitution of India is maintainable against a private company in a dispute arising from a supply agreement for COVID-19 vaccines, where the vaccine was developed with government funding and under a public-private partnership, and the government capped the price.
Final Decision
The writ petition was dismissed as not maintainable. The court held that the dispute arose from a private contract and the 4th respondent does not perform a public function. The petitioner was given liberty to approach the appropriate civil court for redressal.
Law Points
- Writ jurisdiction under Article 226 is not maintainable against private entities in purely contractual matters unless the entity performs a public function or is an authority under Article 12
- Government funding and price capping do not convert a private contract into one amenable to writ jurisdiction
- The existence of an arbitration clause does not oust writ jurisdiction if a public law element is present
- For a writ to lie against a private body
- it must be established that the body performs public functions or duties enforceable under Article 226
- Tests for determining whether a body is 'State' under Article 12 include financial
- functional
- and administrative control by the government
- but mere receipt of government grants does not make it a State or its actions amenable to writ.
