ORDER
1. The petitioners complain that the action of the respondents in fixing the price of “DIOSMIN” (a drug for treating Piles) vide order dated July 20, 1998 and ordering their prosecution for not following the order is arbitrary, illegal and unfair. Is it so? A few facts may be noticed.
2. The first petitioner is a Company. It is engaged in the manufacture, production, distribution and sale of drugs and their formulations. One of these formulations is known as ‘VENUSMIN’. It is a combination of ‘DIOSMIN’ and Hesperidine. The petitioner imports ‘DIOSMIN’ from different countries. The second petitioner is a Director of the Company.
3. The Central Government has periodically issued policy decisions regarding drugs. The object is to ensure availability of drugs at reasonable prices. For the purposes of this case, it would suffice to notice that a drug policy was initially issued in the year 1986. It was revised in Sept. 15, 1994. The “New Drug Policy 1994” was issued. This policy provided for industrial licensing research and development, investment, pricing, quality control and licensing, fn paragraph 22, 7, 1 a provision for introducing the system of price control through a single list of price control drugs and formulations was postulated. In paragraphs 22.7.2 the criterion for inclusion of drugs under the price control regimen was laid down. In paragraph 22,7,3, provision for fixation of sale prices was made. Reference to the relevant provisions shall be made at the appropriate stage.
4. After the issue of the drug policy in the year 1996, the Central Government had promulgated the Drugs (Price Control Order, 1987. This order was issued in exercise of the powers conferred by Section 3 of the Essential Commodities Act, 1955. A new drug policy having been notified in the year 1994, the Central Government issued the Drugs (Price Control) Order 1995.
5. In the purported exercise of the power under the Control Order, the Central Government issued a notification dated July 20, 1998 fixing the ceiling price for ‘DIOSMIN’. A copy of this notification is on record as Annexure P. 1.
6. On Sept. 29, 1999, the petitioner was served with an order under Section 22(1)(c) of the Drugs and Cosmetics Act, 1940. It was alleged that it was selling ‘VENUSMIN’ at a rate higher than fixed by the Government. The first petitioner was directed not to dispose of the stocks for 20 days, A copy of this order is at Annexure P. 3 with the writ petition. On Sept. 30, 1990, the first petitioner was again informed that it had manufactured and sold ‘VENUSMIN’ tablets at a rate much higher than the ceiling price fixed by the Government under the Drugs (Price Control) Order. “It was called upon to explain within 7 days as to why legal action may not be taken against” it for the contravention of the Drugs and Cosmetics Act. 1940 and the rules framed thereunder. A copy of this notice is at Annexure P. 4 with the writ petition. Vide letters dated Oct. 6. 1999 and Oct. 13, 1999 the petitioner sought extension of time. Ultimately on Oct. 20, 1999, the petitioner submitted its reply to the show cause notice. A copy of this reply is at Annexure P. 8. The petitioner firm inter alia pointed out that the price had not been fixed in accordance with the provisions of the Drugs (Price Control) Order, 1995. Other companies like “Serdia Chemicals who are manufacturing ‘DAFLON’ being the formulation from ‘DIOSMIN’ and are similarly placed were not being subjected to the provisions of the Price Control Order”. The petitioner maintained that it had committed no violation of any order passed by the Central Government. A copy of the reply submitted by the petitioner is at Annexure P8 with the writ petition.
7. It appears that the petitioner apprehended coercive action including prosecution. Thus, it did not wait for the passing of any order by the authority. It approached this Court through the present writ petition on Nov. 4, 1999. This petition was posted before a Bench of this Court (G.S. Singhvi and Mehtab Singh Gill JJ) on Nov. 5, 1999. Their Lordships directed the issue of notice of motion to the respondents for January 25, 2000. An interim direction was also given that the concerned authority may pass an appropriate order in the meantime but “before prosecution of any of the Directors or employees of petitioner No. 1 is launched, a notice of seven days should be given by the concerned authority.”
8. On May 18, 2000, respondent No.3 informed the first petitioner about its decision to launch prosecution against the firm as also the “person (s) responsible for conduct of business of your firm for having violated the provisions of Drugs and Control Act, 1940 and Essential Commodities Act, 1955 (Drugs Price Control Order 1995) for the reasons mentioned in the enclosed order/decision”, It was further mentioned that “Seven days notice is hereby given to you before launching of the prosecution in compliance of the orders dated 5-11-1999 passed by Hon’ble the Punjab and Haryana High Court in CWP No. 15677 of 1999”. This communication is on record as Annexure P.9. In the order, it was observed that the label strips of the product marketed by petitioner-firm were found “bearing/printing with retail price higher than that fixed by/ notified by the Government.” This was in violation of paragraph 14(2) of the Drugs (Price Control) Order, 1995. Still further, it was also alleged that there was violation of Rule 105(2) of the Drugs and Cosmetics Rules, 1945.
9. A fact, which deserves mention, is that during the interregnum, periodic orders restraining the petitioner firm from disposing of its product were also passed. The last of these orders, which have been placed on record, is dated May 25, 2000 by which the restraint order was extended from May 28. 2000 to June 16, 2000.
10. On receipt of these communications, the petitioner firm made a prayer for permission to amend the petition. The amended petition was filed. The petitioners pray that the orders, copies of which have been produced as Annexures P.1, P.3, P.4, P.7, P.9
and P. 10 be quashed.
11. Two separate written statements have been filed on behalf of the respondents. In the reply filed on behalf of respondent No. 1, the legislative history with regard to the drug policies and the promulgation of the Price Control Orders has been delineated. It has been pointed out by way of a preliminary objection that the petitioners, had filed a writ petition in the Delhi High Court. The prayer for stay was specifically declined. Even a Letters Patent Appeal against the order rejecting the prayer for stay was dismissed. The respondents maintain that the petitioners have withheld the relevant information from the Court . It is also the case of the respondents that in the Drugs (Price Control) Order, 1995, inclusion of ‘DIOSMIN’ and the fixation of price by the impugned order are in conformity with the provisions of the policy of 1994 and the Control Order of 1995. Thus, it is prayed that the petition be dismissed.
12. The Assistant Drug Controller has filed a separate reply on behalf of respondent No. 3 viz. The Drug Controller, State of Haryana. It has been inter alia averred that the petitioner firm is engaged in the manufacture, sale and distribution of ‘VENUS-MIN’. The tablet contains ‘DIOSMIN’. A copy of the list containing the names of the drug formulation has been produced as Annexure R.3/3 with the written statement. It has been further stated that VENUSMIN’ is not a combination of the scheduled bulk drug ‘DIOSMIN’ with any other bulk drug. In fact, it is single drug preparation. A copy of the test report has been produced as Annexure R. 3/4. The respondent maintains that the Central Government has the power to fix the maximum sale price pf the drugs specified in the first Schedule. Under paragraphs 8 and 9 of this Order, the Government has also got the power to fix the retail price and the ceiling price respectively of the scheduled formulations in accordance with the formula laid down in paragraph 7. By the impugned notification issued by the Central Government on July 20, 1998, the ceiling price of the bulk drug has not been fixed in terms of paragraph 9. In fact, the ceiling price of various formulations containing the bulk drug DIOSMIN’ has been fixed. The petitioner’s assertion that ‘VENUSMIN’ is a combination of ‘DIOSMIN’ and HES-PERIDINE’ is wrong. The first respondenthad vide letter dated May, 11, 1999 informed the third respondent that the “petitioner firm is marketing its ‘VENUSMIN’ tablets at a price higher than that (sic) the notified prices and as per the clarification orders dated 22-4-1999 passed by Hon’ble Justice. C.M. Nayar of the Delhi High Court in respect of the writ petition of the firm, the Company is not permitted to sell the medicines at prices higher than the notified prices.” On this basis, the respondent had acted to ensure that the Company implemented the notified prices. Resultantly, the concerned staff was directed to take adequate steps in accordance with law. During the visit, the petitioner-firm had charged Rs. 773.04 as the sale price of 12 strips of tablets each. This was higher than that fixed under the Control Order. Still further, during checking on Sept. 29, 1999, it was found that the petitioner firm had manufactured two more batches of VENUSMIN’ 150 mg. tablets. It had sold a part of the product. It was in this situation that “a non disposal order was served to the petitioner-firm on prescribed form 15 in respect of the above mentioned unsoid stock of the said scheduled formulation drug ……”. The factual
position with regard to the subsequent sequence of events has not been disputed. The respondent maintains that the action taken by it is in conformity with law.
13. The petitioners have controverted the averments by filing two separate replications. Certain additional documents have been produced. Respondent No.3 has filed reply to the replications. The petitioners have also filed a rejoinder to the reply filed by the third respondent. A counter to the reply has also been filed.
These are broadly the pleadings of the parties.
14. Mr. Hira Lal Sibal, learned counsel for the petitioners has contended that the Drug Policy issued by the Central Government in the year 1994 lays down the criterion for determining the drugs which shall be subjected to the price control. This criterion has not been followed. Thus, the inclusion of ‘DIOSMIN’ in the First Schedule of the Price Control Order, 1995 is illegal. In any event, even if it is assumed that the inclusion is valid, the notification issued by the Government on July 20. 1998 under paragraph 9 of the Control Order is invalid
as it does not conform to the requirements of the Order. Lastly, it has been eontended that the action is arbitrary and discriminatory in as much as the petitioner-firm has been singled out for coercive action while no proceedings have been initiated against others who are similarly placed.
15. On behalf of respondent Nos. 1 and 2, Mr. Randeep Singh Rai has contended that the writ petition should be dismissed on the short ground that the issue of the validity of the notification dated July 20, 1998 had already been raised by the first petitioner before the Delhi High Court in a petition under Article 226 of the Constitution. The petitioners are guilty of suppressing the relevant information inasmuch as this fact was not even disclosed to the court while filing the present petition. He has further submitted that the action of the respondent authorities is in conformity with the 1994 policy and the Control Order, Ms. Palika Monga, Assistant Advocate General, Haryana, appearing for the third respondent has submitted that the action has been taken against the petitioner-firm in pursuance to the directions of the Central Government. The validity of the orders passed by the third respondent shall depend upon the decision with regard to the validity of the order passed by the first respondent. On these premises, counsel for the respondents have contended that the writ petition should be dismissed.
16. The questions that arise for consideration are :–
(i) Is the writ petition liable to be dismissed on the ground that the petitioners had failed to disclose that they had filed a writ petition to challenge the notification dated July 20, 1998 in the Delhi High Court?
(ii) Is the action of the respondents in subjecting ‘DIOSMIN’ to the Price Control Order and including the Drug in Schedule 1, in conformity with the New Drug Policy of 1994?
(iii) Even if it is assumed that the answer to Question No. Iii) is in favour of the respondents, does the notification dated July 20, 1998 conform to the provisions of the Drug (Price control) Order, 1995?
(iv) Does the action of the respondents suffer from the vice of being arbitrary and discriminatory so as to be violative of Article 14 of the Constitution ?
17. Mr. Rai contended that the petitioners had filed civil Writ Petition No. 2134 of 1998 in the Delhi High Court. This fact was kept back from the Court. The petitioners are guilty of suppression. Thus, the writ petition should be dismissed on that short ground alone. Learned Counsel also pointed out that in a communication dated July 3, 1999, it was claimed by the petitioners that they had filed CWP No. 2134 of 199, Thus, they were fully aware of the factual position before approaching this Court. On this basis, it has been contended that the writ petition should be dismissed.
18. The counsel for the petitioner has controverted the contention raised on behalf of the respondents. It has been inter alia pointed out that there are two independent companies, Though, their names are similar, yet, they have two separate and independent Boards of Directors. One of these companies is Martin and Harris Laboratories Limited. The other company is M/s Maritn and Harris Limited. It has been further submitted that even the cause of action for the filing of the present petition was different from that which had arisen at the time of the filing of the petition before the Delhi High Court. Since the petitioners in the two cases arc independent of each other, there is no suppression of any relevant information, which may warrant the dismissal of the present petition.
19. Another fact. A similar objection had been raised in the written statement too. However, in the replication filed by the petitioners, the factual position has been given in detail. It has been specifically averred that the petitioner-concern had not filed any writ petition in the Delhi High Court. The first petitioner is a body corporate. It is a legal entity. It has an independent Board of Directors, The writ petition before the Delhi High Court was filed by Martin and Harris Limited, which is a separate legal entity with its own Board of Directors “not related to the petitioner’s Board of Directors” it is not a sister concern of the petitioner herein as alleged. These facts have not been controverted by respondent Nos. 1 and 2 by filing any rejoinder to the replication. Thus, despite the claim made by the petitioners in the letter dated July 9, 1999, it appears that the present petition is not by the petitioner
who had approached the Delhi High Court in CWP No. 2134 of 1998.
20. There is another aspect of the matter. We are informed that the writ petition had been filed In the Delhi High Court in April 1998. At that time, none of the orders, which are impugned in the present petition, were even in existence. The present petition is directed against the order dated July 20, 1998 and the consequential action as takea by the respondents. In fact, a perusal of the order passed by C. M. Nayar, J. on December 20, 1999 shows that an objection with regard to the existence of the notification dated July 20, 1998 was raised on behalf of the respondents. It was, however, controverted by the counsel for the petitioners by stating that “there is no necessity of challenging the notification dated 20-7-1998”. The basic challenge is “with regard to the annual turnover of the petitioners with regard to the drug In question…” Still further, it is the admitted position that the notification dated July 20, 1998 and the subsequent notices or orders passed by the respondents did not even exist at the time of the filing of the petition before the Delhi High court.
21. It is true that a person who approaches the court must come with clean hands. Suppression of true facts can be fatal to the proceedings under Art. 226. However, It is equally imperative that suppression must be clearly established. In the present case, the respondents have failed In their attempt. It Is clear that the parties and the causes of action in the two cases are different. Thus, the objection as raised on behalf of the respondents cannot be sustained. It is, consequently, rejected. The first question is answered in favour of the petitioners.
Reg: (ii)
22. Mr. Sibal contended that the new Drug Policy issued by the Government in the year 1994 laid down a criterion, which had to be followed before a drug could’ be subjected to price control. This criterion was not followed by the respondents. Consequently the inclusion of ‘DIOSMIN* in the First Schedule of the Price control Order 1995 is invalid.
23. The Drug Policy of 1994 is a published document. It was noticed that certain aberrations “in the listing of drugs and
their categorization for the purpose of price control” existed. There was a need to eliminate these and to lay down a transparent criterion. With this objection in view, the following provision was made in paragraph 22.7.2 :–
“Span of control-
(i) The criterion of including drugs under price control would be the minimum annual turnover of Rs. 400 lakhs.
(ii) Drugs of popular use in which there is a monopoly situation be kept under price control. For this purpose for any bulk drug, having an annual turnover of Rs. 100 lakhs or more, if there is a single formulator having 90% or more market share in the Retail trade (as per ORG), a monopoly situation would be considered as existing.
(iii) Drugs in which there is sufficient market competition viz. at least 5 bulk drug producers and at least 10 formulators and none having more than the 40% market share in the Retail trade (as per ORG) may be kept outside the price control. However, a strict watch would be kept on the movement of prices as it is expected that their prices would be kept in check by the forces of market competition. The Government may determine the celling levels beyond which increase in prices would not be permissible.
(iv) Government will keep a close watch on the prices of medicines, which are taken out of price control. In case, the prices of these medicines rise unreasonably, the Government would take appropriate measures including reclamping of price control.
(v) For applying the above criteria to start with, the basis would be the data up to 31 st March, 1990 collected for the exercise of the Review of the Drug Policy, The updating of the data will be done by the National Pharmaceutical Pricing Authority as detailed in Para 22.7.4 (i).
(vi) Genetically engineered drugs produced by recombinant DNA technology and specific cell/tissue targeted drug formulations will not be under price control for 5 years from the date of manufacture in India.”
24. The above provision prescribes the ‘Span’. The control could not be stretched or taken beyond the prescribed limits.
25. A perusal of the provision shows that
a drug could be subjected to price control only when the prescribed conditions were fulfilled. The Price Control was intended to apply in all cases where the annual turnover was Rs. 400 lakhs. However, it was also intended to be enforced to exclude exploitation on account of monopoly. Thus, it was provided that if the turnover was Rs. 100 lakhs or more and a single formulator had a share of 90% or more, a monopoly situation could be presumed to exist. Even in such a case the drug could be included in the price control regimen.
26. What is the position in the present case?
According to the petitioners, the facts as relevant under paragraph 22.7.2 were never examined by the respondents. The Central Government did not assess the turnover of various companies, which were engaged in the use or sale of ‘DIOSMIN’. There was nothing to show that the petitioners had a share of 90% or more in the Retail Trade.
27. Mr. Rai submits that the petitioner-company had a turnover of Rs.96.20 lakhs. The total import of ‘DIOSMIN’ during the year 1989-90 was valued at Rs.130.58 lakhs. Thus, the petitioner had a turnover of more than 90%.
28. The contention, though apparently fallacious, appears to be based on the averments made in paragraph 15 of the written statement filed on behalf of respondent No. 1. It reads as under :–
“The ‘Diosmine’ was classified as a schedule bulk drug under DPCO 95 on the basis of the criteria laid down in paras 22,72.2. For the inclusion of the bulk drug in the first schedule of SPCO’ 95, the annual turnover of the bulk drug during the period 89-90 was considered by the Government of India. In the case of bulk drug Diosmine the turnover (total imports) was found at Rs.130.58 lakhs. As per the available data there was only one company i.e. M/s Martin & Harris Ltd. Producing a single Ingredient based formulation of Diosmine which contains only one bulk drug i.e. Diosmine. The single Ingredient formulation was considered for the purpose of determining the market share. Hence the share of the petitioner company was considered to determine the market share of single ingredient formulation. In the present case the market share of the single ingredient formulation was 96.20 lakhs, which works out to 100%
share in this case. It is submitted that the other formulations of Diosmine’bulk drug were based on combination and hence their market share was not considered. So on the basis of the above criteria the bulk drug Disomine fulfils the requirement laid down under the drug policy 94 and hence it qualifies for inclusion in the first schedule of DPCO’ 95.”
29. A perusal of the above averment shows that the total import has been treated as turnover. The petitioner’s share was fixed at Rs. 96.20 lakhs on the ground that it was the only unit selling ‘DIOSMIN’ as a single ingredient formulation. This stand of the respondents is clearly untenable. The total imports cannot constitute the turnover. Still further, it is clear that the respondents assumed that petitioner-firm is the only unit selling ‘DIOSMIN’ or scheduled formulations. Even this is wrong.
30. It is relevant to refer to the averments made by the respondents in C. M. No. 2420 of 2002. It has been inter-alia alleged that “the major producers of’DIOSMIN’ were identified as M/s Serdia Pharmaceuti-cals (P) Limited, Mumbai, M/s Elder Phar-maceuticals Limited, Mumbai, M/s Hellios Pharmaceuticals Limited, Ahmedabad and M/s Walter Bushnell Limited, New Delhi-I”. Still further, it has also been stated in this application that letters were issued on January 30, 2001 seeking information regarding the quantity of ‘DIOSMIN’ based formulations manufactured by these companies since 1995 till date. Even information with regard to the price charged by these companies was sought. Vide letter dated February 8, 2001, M/s Hellios Pharmaceuticals, Ahmedabad had informed the Government that they had not over charged in the sale of DIOSMIN based formulations. In addition, a letter dated February 20, 2001 was received from the Officer, Food and Drugs Administration, Gandhi Nagar by which it was conveyed that M/s Hellios Pharmaceuticals had discontinued the production of DIOSMIN 100 mg tablets w.e.f. August 1999 and Diosmin 300 mg tablets with effect from February, 2001. It further appears that M/s Serdia Pharmaceuticals were marketing Diosmin under the trade name ‘DEFLON 500’. The authority found that the said company had been selling the drug at a price higher than that fixed by the Government. A show cause notice dated March 29, 2001 was issued to the company.
The reply is still under examination. M/s Elder Pharmaceuticals had admitted having overcharged an amount of Rs. 3,43,778/-during the period from October 1997 to December 2000. This amount was deposited by the company with the Government of India.
31. The averments as made in this miscellaneous application clearly show that various companies were selling formulations with ‘DIOSMIN’as one of the ingredients. Thus, the basic assumption was unfounded. Still further, how much was the share of each? The respondents have not disclosed. In this situation, it is clear that either the facts had not been correctly examined before concluding that the petitioner had a share of more than 90% or the factual position was deliberately overlooked and a decision to fix the price was taken. In any event, despite being asked, Mr. Rai has not been able to show that the total turnover had been determined or that the decision to include ‘DIOSMIN’ in the list of drugs, which had to be subjected to the price control, had been taken in accordance with the proclaimed policy. Even at the hearing, it has not been shown that the turnover was more than Rs. 100 lakhs or that the petitioner had a share of 90% or more in the retail trade.
32. Mr. Rai submits that the total import should be a reasonable basis for fixing the turnover. There appears to be basis for the submission. Total import may not always represent the total turnover. However, even if it is assumed to be so, on the showing of the respondents, the total imports were of the value of Rs. 130.58 lakhs. The petitioner could have a share of 90% or more only if it had a turnover of Rs. 117 lakhs approximately. According to the respondents, the petitioner’s share was only Rs. 96.20 lacks. This is well below the prescribed figure of 90%.
33. In view of the above, it is clear that one of the ingredients viz. a share of 90% is not fulfilled in the present case.
34. There is another aspect of the matter. A perusal of paragraph 22.7.2 as quoted above shows that in Clause (v), a specific provision for the “updating of the data” had been made. It was incumbent upon the National Pharmaceutical Pricing Authority to update the data from 31st March, 1990 on-
wards. This has admittedly not been undertaken in the present case. The decision was taken in the year 1995 to include ‘DIOSMIN’ in the first Schedule and to subject it to the price Control Order without following the prescribed criterion as laid down in the policy issued by the Central Government itself. Since the relevant facts had not been taken into consideration, the decision to include ‘DIOSMIN’ in the first Schedule cannot be sustained.
35. It is the admitted position that the central Government had issued the Drug Policy of 1994, on Sept. 15, 1994. The declared object was to meet ‘the requirements of medicines …..at reasonable prices and strengthening the indigenous base.’ It was duly published. The Industry was entitled to act upon it. The government was bound by it. In the present case, the authority had clearly failed to follow the mandate.
36. Thus, even the second question is answered against the respondents.
Reg : (iii)
37. Mr. Sibal contended that even if it is assumed that ‘DIOSMIN’ had been validly included in the first Schedule to the 1995 Order, the fixation of price vide notification dated July 20, 1998 does not conform to the provisions of the Order. The claim made on behalf of the petitioners was controverted by the counsel for the respondents.
38. It deserves notice at the outset that a writ court does not normally enter upon an enquiry into the fixation of price. This job has to be performed by the concerned authority. However, there is a well-defined exception to this rule. Whenever a statutory provision provides the parameters, the authority has to follow the norms. Thus, judicial review is clearly permissible when the relevant factors are ignored or any irrelevant matters are taken into consideration.
39. What is the position in the present case?
A brief reference to the provisions of the Drugs (Price Control) Order 1995 shall be useful. Clause 2 gives the definitions. The method of fixation of price has been laid down in paragraphs 3, 7, 8 and 9. In a nutshell, it has been provided that the Government can fix the price of a bulk drug “after making such enquiry as it deems fit…,.by notification in the Official Gazette.” Under paragraph 7, the method of calculating re-
tail price of a formulation has been laid down. Broadly, it has been provided that the retail price shall be equal to the material cost, the expense on conversion, the cost of packing material, the packing charges, the maximum allowable post-manufacturing expenses and the excise duty etc. The price of a scheduled formulation has to be fixed in accordance with the formula laid down in paragraph 7.
40. The. impugned notification has been issued in exercise of the powers under paragraphs 9(1) and (2). These may be noticed in extenso. The provision provides as under :–
“9. Power to fix ceiling price of scheduled formulations — (1) Notwithstanding anything contained in this Order, the Government may, from time to time, by notification in the Official Gazette, fix the ceiling price of a scheduled formulation in accordance with the formula laid down in Para 7 keeping in view the cost or efficiency, or both, of major manufacturers of such formulation and such price shall operate as the ceiling sale price for all such packs including those sold under generic name and for every manufacturer of such formulations.
(2) The Government may, either on its own motion or on application made to it in this behalf by a manufacturer in From III or Form IV, as the case may be, after calling for such information as it may consider necessary, by notification in the Official Gazette, fix a revised ceiling price for a scheduled formulation.”
41. A perusal of the above would show that the ceiling price of a scheduled formulation can be fixed on the basis of the criteria laid down in Para 7 and keeping in view “the cost…..of major manufacturers of such formulation.,….” Under Clause (2), the Government has the power to revise the price from time to time.
42. On a perusal of these provisions, it is clear that the Government has to fix the price of the bulk drug under Para 3. This retail price of a formulation has to be calculated under Para 7. The ceiling price of a scheduled formulation has to be fixed under para 9.
43. In the present case, it is the admitted position that ‘DIOSMIN’ is now a scheduled bulk drug as It has been included in the first Schedule. ‘VENUSMIN’ would fall
within the definition of scheduled formulation as given in the order. It is the admitted position that no order fixing the price of the bulk drug was passed. No notification, which may be referable to Para 3 of the Price control Order 1995, is shown to have been issued by the Central Government. Without determining the price of the basic drug, the retail price could not have been fixed. Under Para 7, it is provided that the material cost has to be notified in the Official Gazette. Similarly, the conversion cost, the cost of packing material, the packing charges have to be notified in the Official Gazette from time to time. No notification is shown to have been issued. Still further, even under paragraph 9, the authority had to check up the cost of major manufacturers of the formulation in question. No such enquiry is shown to have been made. Thus, it is clear that the provisions of paragraphs 3, 7 and 9 have not been complied with at all. These have been totally violated.
44. Resultantly, even the third question is answered against the respondents.
Reg : (iv)
45. Mr. Sibal contended that the action of the respondents is arbitrary. The petitioner has been singled out for discriminatory treatment. On behalf of the respondents, it has been stated that the action is being taken against others as well.
46. The sequence of events needs to be noticed. The petitioner was given a notice. On October 20, 1999, petitioner No. 1 had submitted a reply. It was inter-alia pointed out that the petitioner was “not a single formulator of ‘DIOSMIN’. There are other companies namely M/s Serdia Chemicals who are manufacturing ‘DAFLON’ being the formulation from ‘DIOSMIN’and are similarly placed …” It was, thus, clear to the respondents that the first petitioner was not the only company dealing in ‘DIOSMIN’. In fact, the application filed by the respondents shows that there are at least four other companies, which are making formulations of ‘DIOSMIN’ and marketing these. Yet, it was only on January 30, 2001 that the respondents had sought information from the four companies. It deserves mention that even at the stage of preliminary hearing of the writ petition on January 11, 2001, it was urged by the counsel for the petitioners that “the action of the respondents suffers from
the vice of discrimination in as much as no price has been fixed for the formulation –‘DAFLONV’ The respondents were directed to produce the record. It is only thereafter that the respondents made the query from the four companies. Even after the issue of notices in January 2001, no proper enquiry can be said to have been made. One of the companies had merely informed the petitioner that it had discontinued the production ‘DIOSM1N’ 100 mg. Tablets with effect from August 1999 and 300 mg. Tablets with effect from February 2001. Similar was the reply given by some of the other companies. When did they start the production? What rates were they charging? What was their turnover? No action was taken. No enquiry is shown to have been made. In case of M/s Serdia, a show cause notice was admittedly issued on March 29, 2001. The reply was received after a lapse of more than six months on October 8, 2001. Still, no action is shown to have been taken despite the lapse of more than six months. Why this lethargy? There is no explanation.
47. It is true that two wrongs will never make a right. It is also true that the action against the petitioner-firm cannot be annulled merely because the respondents have failed to move against others. However, the facts are self -eloquent. It is clear that initially no action was initiated. When the petitioner pointed out, the respondents have reluctantly moved at a slow pace. Why this differential treatment? There is no answer. We are left with a definite impression that the respondents have not been fair in dealing with the petitioner.
48. In view of the above, it is held that :-
(1) The inclusion of ‘DIOSMIN’ in the First Schedule was not in conformity with the declared policy viz. The New Drug Policy of
1994, issued by the Government.
C. W. P. No. 15677 of 1999
(2) The fixation of price of the scheduled formulation ‘DIOSMIN’ vide notification dated July 20, 1998 (Annexure P. 1 with the writ petition) does not conform to the provisions of the Drugs (Price Control) Order,
1995.
(3) The action of the respondents is arbitrary and unfair.
(4) The objection raised by the respondents regarding the maintainability of the
petition on the ground that the petitioner No. 1 had filed a petition in the High Court at Delhi is rejected.
49. Resultantly, the proceedings initiated by respondents No. 3 the notices, the restraint orders and the order for prosecution issued by the third respondent or his officers vide documents at Annexures P. 3, P.4, P. 7, P. 9 and P. 10, cannot be sustained. These are quashed. However, the parties are left to bear their own costs.
