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Profiteering of 145 per cent exposed in coronavirus rapid kits sold to ICMR

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New Delhi, Apr 27: A dispute in the Delhi High Court between the distributor and import of COVID-19 rapid testing kits, being shipped from China has revealed massive profiteering and over-pricing in kits that were sold to the Indian Council of Medical Research (ICMR).

Profiteering of 145 per cent exposed in coronavirus rapid kits sold to ICMR

Justice Najmi Waziri, while observing that 61 per cent mark up on such kits on the higher side, disallowed a 145 per cent mark up from the landed price of Rs 245 crore to ICMR's purchase price of Rs 600 per test. The court instead slashed the price for every kit by 33 per cent from Rs 600 to Rs 400 per test.

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The order was passed on a petition filed by Rare Metabolics, the sole distributor of the kits imported by Matrix Labs from China's Wondfo Biotech.

The dispute was pertaining to the release of the remaining 2.24 lakh kits of the 5 lakh that were imported from China, which was to be sent to the ICMR. Matrix Labs argued that it had only been paid Rs 12.25 crore of the Rs 20 crore. As per the agreement, the balance amount of Rs 8.25 crore had to be first paid to the importer before any monies received from ICMR.

Rare Metabolics, filed the petition seeking the release of the remaining 2.24 lakh kits so that it could be supplied to the ICMR. The petitioner said that under its bi-partite agreement, with Matrix Labs, no other company can market them in India. It also said that it had already paid Rs 12.75 crore, which covers the freight cost of Rs 5 lakh test kits. Rare Metabolics assured that the payment due to Matrix Labs will be remitted as soon as it is received.

Matrix, however, demanded an upfront payment, but the petitioner said that the payment could be made only after the ICMR released the funds. The petitioner also said that the consignment of 2.76 lakh kits had already been supplied to the ICMR for which the payment was still awaited. The ICMR, it may be recalled had put the rapid test kits on hold after detecting faulty results.

The Delhi High Court in its order said the Court is of the view that a profit mark-up of Rs 155, i.e. 61 per cent 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, public interest must outweigh private gain. The lis (litigation) 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.

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Both parties agreed to sell the anti-body test kits at the price as mandated by the Court. The court decided that 2.24 lakh tests shall be delivered to the ICMR, the moment it lands in India. The balance amount of Rs 8.25 crore has to be first paid to the importer Matrix Labs within 24 hours of the petitioner receiving the monies from the ICMR, before they are adjusted for any other purpose.

So, from the other 5 lakh kits/tests, 50,000 shall be excluded for the State of Tamil Nadu and the remaining 4,50,000 would 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, the court also said.

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