{"id":47314,"date":"1987-03-23T00:00:00","date_gmt":"1987-03-22T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/sandoz-india-ltd-and-anr-vs-union-of-india-on-23-march-1987"},"modified":"2016-01-23T15:39:07","modified_gmt":"2016-01-23T10:09:07","slug":"sandoz-india-ltd-and-anr-vs-union-of-india-on-23-march-1987","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/sandoz-india-ltd-and-anr-vs-union-of-india-on-23-march-1987","title":{"rendered":"Sandoz (India) Ltd. And Anr. vs Union Of India on 23 March, 1987"},"content":{"rendered":"
Bombay High Court<\/div>\n
Sandoz (India) Ltd. And Anr. vs Union Of India on 23 March, 1987<\/div>\n
Bench: S Daud<\/div>\n<\/p>\n
<\/pre>\n
ORDER<\/p>\n
 1. This petition  under  Art. 226 of the Constitution  is for the quashing of two orders  purporting to have been  issue under the Drugs (Prices Control) Order, 1979 (DPCO) – these order  begin at Exs.  M and O appended to the petition.\n<\/p>\n
2. Production, transport and supply of essential commodities to the common  man is a major concern of the welfare  state.  Free India, like  other such States, has been grappling with the problem in diverse ways.  On such method  is the framing and  implementation of laws.  The  parent legislation   designed to attain this object is the Essential Commodities Act, 1955 (EC Act). Medicinal products, also known as drugs, are  essential  to the prevention and curing of ailments that  afflict the human race.  Systems of medicine  recognised s native to the country, have  been fighting a losing battle against  allopathy, and it is the increasing domination of the intruder, that  has made the drug industry so  suspect – the suspicion, not  begin confined  to the land mass surrounded by the waters of an ocean, sea and a bay.  With a view to  discipline the industry, there  are no the statute  book, amongst other enactments, 1.  The  Drugs and  Cosmetics Act, 1940  (Drugs Act), 2. The Drugs nd Cosmetics Rules,  1945 (Drug Rules,) and  3. DPCO this last  begin  subordinate legislation promulgated by the Central Government vide the powers  conferred upon it under S. 3 of the  EC Act.  This  DPCO repealed a namesake of the year 1970 In exercise of the  powers  vested by DPCO  1970, the Central Government  fixed prices of seven formulations manufactured by petitioner   No. 1 (Sandoz) as detailed in  para  3 of the petition.  These formulations  contain vitamins and fall under Category III  of the Third Schedule (being  an appendage  to the  DPCO).  R. 124-B of the Drug Rules mandates taht  patent or proprietary medicines  conform to a two fold standards as lid down  by the Second Schedule to the Drugs Act an d Schedule V (“V”  for victory) of the Drug  Rules, Cl. 2  of Schedule V requires that  medicines containing vitamins do not go  below or above the minimum or maximum specified therein.  Clause 2 was inserted  into  the Drug Rules on July  13,  1978 vide Notification bearing  GSR No. 930.\n<\/p>\n
3. The DPCO supplanted its precursor of 1970 and para 14 thereof  laid down prior approval of Government to prices chargeable  upon new formulations.  In August 1979,  Sandoz moved the respondent to accord  approval under para 14 vis-a-vis the seven  formulations duty changed to bring them into  conformity with Schedule V’s  Clause 2 of the  Drug Rules.  This was as detailed in Ex. A. For well over tow years, there was not reply and  on 9-7-1982, the  manufacture  intimated that  it was going to enforce its proposed price list.   To this communication (Ex. B.)  there was a  delayed riposte viz. Ex.C dated 12-8-1983,  purporting to be the fixation of prices by  Government  under  para 13 of the DPCO.  Sandoz applied  for a review of Ex. C under  para 27 and moved  this Court vide Writ Petition No.2207 of 1983.  The  review petitions  were rejected under order marked Exs. F-1  to F-6 Fro that reason, the pending writ petition was amended to also include a l challenge to this rejection.  On  19-10-1983, Mr. Justice Pendse set aside  Exs. C and F-1 to  F-6, directing thus in para 3:-\n<\/p>\n
“Orders dated 12th Aug. 1983 being  Exhibit ‘N’  o the petition  and five orders  dated 24th Sept. 1983 begin Exhibits ‘AC’  to ‘AG’  order dated 14th Sept. 1983 being  Exhibit ‘AH’ and  order dated 9th Sept. 1983 being  Exhibit ‘AI’  to the  petition in so far as they relate to ht  formulations  referred to in paragraph 2 of  the petition  are set aside.  The petitioners are permitted  to file material in support of their  claim of repudiating  From III already filed by them with the respondent sand also to file  additional material , if any, which  they wish  rely upon within four weeks from today.  The  respondents  on receipt of the material  shall proceed to give a personal hearing and  pass appropriate speaking order  on the  materials produced  by the petitioners before  the respondents.  In case the respondent s desire to rely on some material in their  custody, the  respondents shall  disclose such  material  to the petitioners and the petitioners shall be permitted to rebut the same”.\n<\/p>\n
4. Sandoz, on 14-9-1983, submitted a set of  revised Form III  applications (Ex. H) .  Its  representative s were personally herd on  February 22 and July 16 of 1985.  They  also  furnished  additional material Exs. 1.J and K. Came March of 1986 and the manufacture  received Exs. L and M.  The two documents  were an imposition of prices under para  13  together with an explanation  for some  features  that  had guided the exercise carried out.  The  past,  it is said, repeats itself,  and, Sandoz applied for a review vide Ex. N dated 29-3-1986.  Predictably, the  review was rejected on  16-6-1986 vide Ex. O and in  July  the present  petition was lodged.  Rule was granted and as  an interim measure, the  operation of Ex. M  has been  stayed.\n<\/p>\n
5. The grounds taken  to assail Exs. M  and O  may be summarised thus: Despite the verdict in the earlier writ  petition, the Government made use of material not  disclosed to the  petitioner.  This was in the  face of repeated requests to furnish the   material.  Next, the  hearing had not  been  effective.  Even before its  completion, the  Government came out with Exs. L and M. The prices fixed  were in violation  of ht e principles laid down in paras 10, 11 and 13  of  the DPCO.  Ex. PP which  was given out to be the backbone of the price fixation was in  contravention of the above paras.  The  formulations were standards formulations and  yet  they were  treated as non-standard.  On d this misconception, the mark-up  had been restricted to 60%.  The restriction was said  to  be in conformity with an unproclaimed policy.  In any case,  the excuse  given for  the reduction  in  the  mark-up  was non-existent.  For  all the reasons given above.  Exs. M and  O deserved to be quashed and respondent  directed to accord the approval solicited by Sandoz.\n<\/p>\n
6. Respondent’s  return is a catch-all  defence justifying the  price list imposed on the formulations.  The mark-up  had been  restricted to 60%  of the ex-factory cost as per  the DPCO.  Sandoz, despite a request, had  not made  available the financial date required  for an assessment of its profitability.  The  formulations in this  petition were not standard  compositions and therefore could not get a  mark-up  of more than 60%.  The  price list fro  which approval was sought, was  an inflated  one and not supported by date.  Packing  material costs were worked out on the basis  of a ceiling or actuals whichever be less.  There was  no substance in the contention  that the directions given in Pendse, J’.s judgment  had not been complied with.  There  had been compliance ” in  letter and spirt”.   Ex. PP was the basis of the price schedule  fixed for the formulations.  It was  the result of  an in depth study of the working of a cross-section of the manufactures.  There was no merit in the petition  and it deserved  to be dismissed.\n<\/p>\n
7. Respondent  has raised a number  of  preliminary objection to the maintainability  of the petition .  A  few of these are specified in  the return and the rest advanced during the  course of the hearing.  the omission, when  pointed out, were dismissed as petitionerry  unsuited to a proceeding under Art. 226.  A  complete dispensation from the ruels of  pleadings is not the prerogative of writ  proceedings .  For  good reasons a deviation from  the rule requiring conformity between  pleadings and proof may be permitted.  But  the rule remains and complete absolution  therefrom  is not permitted on specious  grounds such as the one mentioned above.  Having scrutinised the return, I find no  reference therein to the pleas put forth by  the learned counsel Mr. Desai. Forget this  aspect and let us examine the points raised  by him.  The  petition  is said to be aimed  against  the application   of Ex. PP.  This  statutory order under para 10  the DPCO  was issued  in May 1979.  Sandoz cannot  be permitted  to assail it by  a petition  in  1986.  That  this S.O.’s  application  to the earlier price fixation  was struck down does not deter the  contradictory argument that  the S.O.  itself  emerged unscathed.  The  ingenuity does not  aid the respondent  of the cause of action  is  not the issue of the S.O.; but  its use in imposing  prices on the products of a manufacture.  The second  in the series is the alleged  dubiousness  of Sandoz disentitling it from relief under Art. 226 .  On Aug 6,  1983, the  manufacture was asked to submit information  so as to facilitate a profitability study, vide  Ex. B.  Instead of submitting he asked  for  details, Sandoz rushed to Court.  This  perhaps  could have been ruged at the hearing of the  1983 petition . The  respondent far from so  doing, allowed the petitioner,  the reliefs  claimed by it.   The  respondent  far from so  doing, allowed the petitioner, the  reliefs claimed by it.  The  judgment  in that  petition was delivered  on Oct.  19, 1983, i.e.  a good two months after the issue of Ex. B. The  occasion to urge the defence is  gone.  Third,  it is said the company  should have followed  the price list imposed upon it, seen how its profitability was affected and then come to  Court.  Sandoz contends that Ex. M is a violation  of the DPCO.  Whether  it rally is  so, is  a different question.  That  however gives  rise to an actionable  claim.  There  is no  requirement that  a manufacture follow  (should?)  the fiat  of the if the  same be in contravention of the law and  come only  if it finds  the same jeopardising  its financial position.  Next, it is contended that Sandoz has not come out with material  revealing its present  finances pursuant to the  non-implementation of Ex. M.  This  it is  argued  would have borne out the justness of the prices fixed by the  Government .  This  somewhat incongruous plea merits the short answer  that an infraction of the law suffices  for access to a Court, without  it being further proved that  financial ruin stares the  suitor in  the face in case he is made to put up with the  legal violation.   Last  is the submission  that the present  petition  is misconceived.  The  main  plank of the Sandoz’s  case is that the  judgment  in the 1983 petition had not  been complied with.  Petitioners should  have sought a revival of that petition or proceeded against the respondent  for  committing  contempt of Court.  It  is Exs. L and M which  gave petitioners  the  reason to move this Court.  These did not  exist when the  earlier petition  was decided.  In fact,  respondent inconsistently enough  maintains that no violation of the verdict has  occurred.  Respondent  cannot therefore be heard  to urge the non-maintainability of the  present  petition.  The  shorter answer however  is that the cause of action for this petition  is  not limited to non-observance of the   obligation  cast on the respondent  by Pendse,  J.’s  verdict.  The  preliminary objections are  all berefit of merit, and  have therefore, to be negatived.\n<\/p>\n
8. The crucial question is whether Exs. L and M are  violative of the law”  This  question  I will  first consider dehors the attributed  contravention of the verdict in the 1983  petition.  Shortly  stated, the  petitioners’ case  is that Ex. M is an exercise under para 13(1) of the DPCO  with Ex. PP as the base therefor.  Para 13 (1)  has an inextricable connection  with paras 10 and 11. Para 10 requires  not  only formulation of norms in relation to  material cost, conversion cost, process loss in cost  of packing material and packing  charges, but  also their notification in the   official gazette in this behalf .  para 11 deals  with the mark on  ex-factory costs as worked  out vide  para 10.  In so far as the formulations  in this petition are concerned, they  being in  Category III  of the Third Schedule, the mark up cannot be more than 100%.  The mark-up  has to take care of the manufacture’s  margin  and  the  trade – commission  apart from a host  of other things.  Are the statutory orders at  Ex. PP “norms” as conceived  of  by para 10?   Even  the irrepressible Mr. Desai had  to concede  that  Ex. PP  fell short  of the  requirement in that  the norm to work  out  the cost of packing  material did  not find a  place therein.  This failing, according to him, was of no consequence as a norm  did not  ceases to be one merely because  it had not l been notified.  I shall deal  with this aspect at a later  stages.  The  primary  question  is whether  Ex. PP  can be said to be the “norms”  spoken  of by para 10?  This  necessitates a search for what the word implies.  No  meaning having been  ascribed to it by the DPCO , I turn to the Chambers 20th  Century Dictionary.  Therein the  following  are the meanings, amongst others,  ascribed  to the expression:-\n<\/p>\n
“a rule; a pattern; an authoritative standard: a type”.\n<\/p>\n
Tested thus, is it possible  to accept Ex. PP  as setting forth norms? Ex. PP  gives figures as to  how  the various items are to be valued with  reference to the inputs.  These  figures may be  acceptable as the product  of calculations  based on a rule, pattern, standard or type.  The return  says that  these are based  on in  depth studies or surveys carried out.  Para 10 requires the notification  of the rule, pattern  standard or type on which  the figures in Ex. PP rest.  As the figures stand, there is no Knowing  what  date or reasoning has gone into their  formulation.  The figures  to not get converted into  norms because  the statutory  order  at  Ex. PP  says so.  Instead of specifying  the norms,  the respondent has presented the  manufactures with a fait accompli. Mr. Desai contends that the quarrel of Sandoz is not that Ex. PP  does  not incorporate norms, but  that the  same  formulated in  1979 had become  out dated in 1986 and could  not therefore the  applied.  This is a wrong construction of the  Sandoz stand.  Not that they have not put forth the contention  afore mentioned.  Apart thereform, it is also submitted  that Ex.PP  cannot  be viewed  as norms.  The same  vice  afflicts respondent ‘s fiat vis-a-vis the mark-up .  Para 11  permits a mark-up  up to 100% of  the ex-factory cost. Ex. L restricted the mark-up admissible to Sandoz at 60% because the  formulations were said to have “non-standard  compositions”.  Petitioners rightly take  umbrage at these words.  First, neither in Ex. L  nor in the return has  the Union of India cared to specify what a non-standard composition is. Admittedly, the formulations comply with the standards set forth in Schedule V.  At the hearing , Mr. Desai flourishes the third edition of a publication titled “National Formulary of India”.  Conformity to this formulary is not a prescription of the Drugs Act, Drug Rules or the DPCO. The Union of India cannot make use of standards other than those set up by the statute. However laudable the objective behind the Government’s desire to compel compliance with the formularly, its user in the matter of price fixation is not sanctioned by DPCO.  No extraneous influence can be brought to bear upon the exercise of a statutory power.  If the  formulary was to be applied, the proper thing to do was to incorporate it in Schedule V. This also is the stage where I will consider the plea that non-notification of a norm does not make it any less so.  If the statute requires the publication of a norm in the gazette, the obvious reason is that people in the trade are made aware of the same. The need to make them aware is so that they can plan their future course of action.  It is not therefore possible to agree that a norm evolved on the basis of some in depth study though not notified, still conforms to the requirement of DPCO para 10.\n<\/p>\n
9. In the foregoing discussion I have restricted myself testing Exs. L and M on the anvil of  DPCO para 13(1). Nothing wrong in this user as the parameter, for Exs. L and M quote that para as the source of power.  Flexible as the respondent has kept its return )to permit the use of any plea found convenient) that does not permit recourse to the argument that the price list impugned is the product of an exercise under paras 14, 15 or 16. The shelter of these paras is sought to avoid the consequence of non-compliance with paras 10 and 11 as is the requirement of para 13. Having quoted chapter and verse in Exs. L and M, respondent cannot now turn around and seek to bring them under paras not specified. Secondly, the power under paras not specified. Secondly, the power under para 14 had been once exercised. The shelter of these paras is sought to avoid the consequence of non-compliance with paras 10 and 11 as is the requirement of para 13. Having  quoted chapter and verse in Exs. L and M, respondent cannot now turn around and seek to bring them under paras not specified. Secondly, the power under para 14 had been once exercised. The price so fixed were  struck down in the 1983 petition. This however did not wipe  the slate clean as was suggested by Mr. Desai to permit a fresh exercise under the last proviso to para 14 had been once exercised. The prices so fixed  were struck down in the 1983 petition. This however did not wipe the slate clean as was suggested by Mr.Desai to permit a fresh exercise under the last proviso to para 14.  Counsel argued that the power conferred by paras 15  and 16 was unfettered by the other provisions of the DPCO and Ex. M should be viewed thereunder. If so, Government should have so specified in Ex. M itself. The search for the umbrella of paras 14 to `6 is sought to get the benefit of certain, observations in the Cyanamid case reported at . The observations do not imply that prices  fixed for the first time are a legislative act, not subject to the need to conform to paras 10 and 11 as Mr. Desai  wants to suggest. But assuming otherwise, Ex. M cannot be viewed as the maiden effort at price fixation  under the second proviso to para 14.  Paras 15 and 16 do not provide a power parallel to paras 13 and 14.  In fact, the former two are an exercise pursuant to a call for information from manufacturers and\/or the failure to furnish the same. Having regard to the verdict in the 1983 petition. Ex. M cannot be ascribed to an exercise under para 14, for the power thereunder stood exhausted with the issue of Ex. C.\n<\/p>\n
 10. It is time now to deal with Mr. Desai’s off-repeated theme of Ex. M being  legislation, and therefore, immune from attack, unless it be shown as contravening the fundamental rights of the petitioner.  The petition does list the ground of petitioner’s right under Art. 19(1) (Government) of the Constitution being violated incase Ex. M is enforced. But is the  contention of Ex. M being legislation correct? The DPCO gives Government power to legislate the prices vide paras 12, and 13(6) (a).  But Ex. M is not the product of an exercise of power under these provisions of an exercise of power under these provisions which deal with leader prices. To refute the respondent’s contention, Mr. Setalvad relies on the following lines from Professor De.Smith’s “Judicial Review of Administrative Action” (4th Edition) P.71:-\n<\/p>\n
 “A distinction often made between legislative and administrative acts is that between the general and the particular. A legislative act is the creation and promulgation of a general rule of conduct without reference to particular cases.”\n<\/p>\n
 Ex. M pertains to Sandoz formulations and not identical formulations manufactured by all in the trade.  Not that this  is decisive of the question, for there can be legislation concerning one single entity. Mr. Desai has cited a large number of decisions to support the propositions that prices can be fixed by legislation and if so fixed,  are immune from judicial scrutiny bar the limitation aforementioned. These are reported at AIR 1983 SC 1015, AIR 1960 SC 475, AIR 1978 SC 1296, AIR 1972 SC 1168, AIR 1971 SC 474 and AIR 1954 SC 465.  What is common to all these decisions, are, that barring one (which is irrelevant), they arose out of subordinate legislation framed under the EC Act or its predecessors.  The determinative element is the content of such legislation. As I have shown earlier, the DPCO contains paras which permit legislative price fixing. But para 13(1), where under Exs. L and M have been issued, condition the power of price fixation by requiring the government to conform to the provisions of paras 10 and 11. These paras read as below:-\n<\/p>\n
 “10. Calculation of  retail price of formulations – The retail price of a formulation shall be calculated in accordance with the following formula, viz.\n<\/p>\n
 R.P = (M.C + C.C+P.M+P.C) * 1 + MU\/100 + ED<\/p>\n
Where —\n<\/p>\n
 “R.P”. means retail price.\n<\/p>\n
 “M.C” means material cost and includes the cost of drugs and other pharmaceutical aids used including averages, if any, and norms as may be specified by the Government from time to time by notification in the Official Gazette in this behalf.\n<\/p>\n
 “C.C” means conversion cost worked out in accordance with such norms as may be specified by the Government from time to time by notification in the  Official Gazette in this behalf.\n<\/p>\n
 “P.M.” means the costs of packing material including process loss thereon worked out in accordance with such norms as may be specified by the Government from time to time by notification of Official Gazette in this behalf.\n<\/p>\n
 “M.U.” means mark-up referred to in paragraph 11.\n<\/p>\n
 “E.D.” means excise duty :\n<\/p>\n
 Provided that in the case of an imported formulation the land cost shall form the basis for fixing its price along with such margin as the Government may allow from time to time.\n<\/p>\n
 Provided further that where an imported formulation in repacked. Its landed cost plus the cost of packing materials and packing charges as worked out in accordance with such norms as may be specified by the Government from time to time by notification in the Official Gazette, shall from the basis for fixing its price.\n<\/p>\n
 Explanation – For the purposes of this paragraph, “landed cost” shall mean the cost in import of drug inclusive of customs duty and clearing charges.\n<\/p>\n
 11. Mark-up – Mark-up referred to in paragraph 10 includes the distribution cost, outward freight, promotional expenses, manufactures margin and the trade Commision and shall not exceed-\n<\/p>\n
 (a) forty per cent in the case of formulations specified in Category 1 of the Third Schedule;\n<\/p>\n
 (b) fifty -five per cent in the case of formulations specified in category 11 of the said  Schedule;\n<\/p>\n
 (c) One hundred per cent in the case of formulations specified in Category III of the Third Schedule.\n<\/p>\n
 13. Power of Government to fix retail price of a formulation specified in category III of the Third Schedule in accordance  with the provisions of paras 10 and 11.”\n<\/p>\n
 Even a cursory perusal of the above shows that these paras provide for exercise of an administrative or executive power. That this power has to be in conformity with what is legislation, does not make the end product, legislation, does not make the end product, legislation in character. The end product is a consequence of  the application of the legislation to a particular case.  It was, argued, and in the alternative, the prove fixation by the Government partakes the character of legislation.  Sustenance for this submission was sought to be drawn from Saraswati Industrial Syndicate Ltd. v. Union of India<\/a>  , wherein it was observed:-\n<\/p>\n
 “Price fixation is more in the nature of a legislative measure even though it may be based upon objective criteria found in a report or other material.”\n<\/p>\n
Next, reliance was placed upon this passage from the opinion of Chief Justice Beg on behalf of himself and D.A. Desai J. in M\/s. Prag Ice and Oil Mills v. Union of India Reported<\/a> in .\n<\/p>\n
 “We think that unless, by the terms of a particular statute, or order, price fixation is made a quasi-judicial function for specified purposes or cases, it is really legislative in character in the type of control order which is now before us because is satisfied the tests of legislation. A legislative measure does not concern  itself with the facts of an individual case.  It is meant to lay down a general rule applicable to all persons or objects or transactions of a particular kind or class.  In the case before us, the Control Order applies to sales of mustard oil anywhere in India by any dealer.  Its validity does not depend on the observance of any procedure to be complied with or particular types of evidence to be taken on any specified matters as conditions precedent to its validity. The test of validity is constituted by the nexus shown between  the order passed and the purposes for which  it can be passed, or, in other words by reasonableness judged by possible or probable consequences.”\n<\/p>\n
 The above observations have to be read in the light of the fact that the Control Orders in both the cases permitted fixation of prices of the commodities by legislation. Under Para 13(1), the prices to be fixed by the Government from time to time , have to be in accordance with paras 10 and 11 of the DPCO. This is a vital difference excluding the application of the cases relied upon by Mr. Desai. Until now, I have been considering the  question dehors an authority directly applicable . The precedent applicable is the judgment of the Delhi High Court  in the Cyanamid case (supra). Para 40 from that judgment is applicable to the question under  consideration and I cannot improve upon the exposition which reads thus:-\n<\/p>\n
 “Another question on which there is considerable divergence between the parties is with  regard to the working of the formula provided in para of 10 of the Order with regard to the fixation of the retail price of formulation.  According to the petitioners, Para 10 requires that norms on which conversion cost, cost of packing material and packing charges are to be calculated have to be notified by the Government from time to time in the Official Gazette. The submission was that this was not being done.  On the  other hand, the respondents contend that by order dated 3rd May, 1979, the norms have been fixed. Our attention has been drawn to the said Order. The said Order merely lays down the conversion cost and the packing charges which have to be taken into consideration while fixing the price of formulations. The basis on which these costs have been arrived at is not indicated. What is  required to be notified under paragraph 10 is not the conversion cost or the packing charges but the norms on which the same are to be calculated. The petitioners are justified in contending that they do not know as to what is the basis or norms adopted while fixing the conversion cost and packing charges by order dated 3rd May, 1979. As regards packing material, it is admitted that no notification at all has been issued.  It is true that in the notification of 3.5.1979 it is said that norms for conversion cost and packing charges are being issued, but the plain reading of the said notification shows that norms are not indicated. It is only the conversion cost and packing charges must have been arrived  at by the Central  Government by applying some norms.  What those norms or principles are have not been indicated or disclosed either to this Court or to the petitioners.  In our opinion, therefore, while fixing the price of formulations the respondents must inform the petitioners as to the basis of the calculation of the conversion cost, packing charges cost of packing material. The Government should take into consideration the representations and the submissions which the submissions which the petitioners may make in this behalf before determining the conversion cost, cost of packing material and packing charges. Furthermore, unless and until the norms as postulated by para 10 are notified, which norms again ought not to be arbitrary or unrealistic, the petitioners would be entitled to contend that the actual cost of conversion, the actual packing charges incurred should be taken into consideration while fixing the price of the formulations.  If however, the Central Government feels that there is justification for ignoring the figures so submitted by the petitioners, it should give out its mind to the petitioners, let them make a representation and then take a final decision in the matter.”\n<\/p>\n
 The passage above applies on all fours to the instant case. Ex. PP has in terms been rejected as not prescribing  norms. Mr. Desai submits that the  above decision is wrong. All that he could say in support of this contention was based upon observations which have no bearing on the issues that have arisen. For instance, one of the arguments canvassed by Mr. Desai is that price fixation has necessarily to be left to the judgment of the executive and unless it is patent that there is hostile discrimination against a class of operators, the price fixed by the executive have to be accepted as valid. A somewhat similar argument was negatived by the Division Bench in the Cyanamid case in these words:-\n<\/p>\n
 “The decision in Prag Ice case, therefore, is of little assistance to the respondents, because whereas in Prag  Ice case the challenge was to the provisions of the Central Order itself, in the present case the  challenge is to the alleged non-compliance with the provisions of the Central Order.”\n<\/p>\n
To repeat times without number, Exs. L and M are not legislation, but an executive order purporting to be based upon legislation. Ex. PP on which Ex. M is based does not constitute a norm as contemplated by para 10 and   Ex. L which deals with the mark-up introduces an extraneous element in laying down 60% as the permissible mark-up.  Agreeing with the passages from Cyanamid case reproduced above, I hold that Exs. L and m cannot be sustained.\n<\/p>\n
 11. Last, I deal with  the contravention of the judgment in the 1983 petition.  Surprisingly, respondent has made use of Ex. PP. despite the criticism merited by that statutory order in the Cyanamid judgment. Mr. Desai submits Ex. PP was sustained or rather escaped being struck down in the 1983 petition. The price fixation based upon Ex. PP. was struck down, and, the primary reason for that was the concession that Government had not gone through the exercise prescribed by paras 10 and 11. According to Mr. Desai, all that the  1983 petition decided was the furnishing of an opportunity to the petitioners to submit material so as to update the application material so as to update the application for price fixation submitted by them.  In other, words, only a review was permitted, and that, on account of the passage of time. If this were true, the judgment has only to say that petitioners were at liberty to apply for a review under para 27 of the DPCO and that on receipt of a request to that effect, the Government  would do the needful.  But the verdict was a quashing of the price list imposed upon sandoz by the Government. Next, the respondent was called upon  to disclose to the petitioners the material it proposed to use in framing prices a new seeing that the 1983 order was quashed.  Petitioners are also right  in contending that Exs. L and M were issued without fully hearing them and after keeping  them under the belief that the hearing had not been completed. In specific terms, the complaint is voiced in Ex. N.Ex.O avoids a reply to the charge that Ex. M had been issued  without the hearing having been completed, Mr. Desai replies that the telegram sent by respondent made it clear that the hearing to be held on 16.7.1985 would be a final one.  But this was before the hearing final one. But this was before the hearing took place.  If the petitioners contended the contrary – and they did so in Ex. N – nothing stopped the respondent from pointing this out. It did not do so and the sure inference is that Ex. M was issued without an effective hearing as directed in the verdict of the 1983  petitions. Surprisingly, despite the obvious of ailure to comply with the directions in a binding judgment, respondent maintains the contrary.  Mr. Desai even went to the extent of saying that the said judgment had in no way prejudiced  respondent that Ex.PP emerged unscathed and that petitioners had scored a pyrrhic victory. The correct position is otherwise. There was a failure to comply with the judgment and that by itself suffices to invalidate Exs. L and M.\n<\/p>\n
12.  The result of the foregoing discussion is that petition succeeds. Having regard to the complex questions that arose for determination, parties would be left to bear their own costs. Hence the order.\n<\/p>\n
 ORDER  <\/p>\n
 13. Orders incorporated in Exs. M and O are here by quashed. Respondents is injuncted from seeking to enforce Ex.M. Respondent is directed to permit the petitioners to sell the petition formulations at the prices set out in their applications Exs. J-1 to J-15. Rule in the above terms made absolute, with parties being left to bear their own costs.\n<\/p>\n
 14. Petition allowed  <\/p>\n","protected":false},"excerpt":{"rendered":"
Bombay High Court Sandoz (India) Ltd. And Anr. vs Union Of India on 23 March, 1987 Bench: S Daud ORDER 1. This petition under Art. 226 of the Constitution is for the quashing of two orders purporting to have been issue under the Drugs (Prices Control) Order, 1979 (DPCO) – these order begin at Exs. […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[11,8],"tags":[],"class_list":["post-47314","post","type-post","status-publish","format-standard","hentry","category-bombay-high-court","category-high-court"],"yoast_head":"\nSandoz (India) Ltd. 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