Bombay High Court
Cipla Ltd. vs National Pharmaceutical Pricing ... on 24 April, 2026
Author: Bharati Dangre
Bench: Bharati Dangre
2026:BHC-OS:11403-DB
1/34 903 WP-2069-22.odt
Salgaonkar
MANDIRA MILIND
SALGAONKAR
Digitally signed by MANDIRA
MILIND SALGAONKAR
Date: 2026.05.04 15:11:02
+0530
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
WRIT PETITION NO.2069 OF 2022
Cipla Limited .. Petitioner
Versus
National Pharmaceutical Pricing .. Respondents
Authority & Ors.
...
Mr.Navroz Seervai, Senior Advocate with Ms.Bindi Dave,
Mr.Aayesh Ghandhi and Mr.Abhishek Kumar i/b Wadia
Ghandy & Co. for the Petitioner.
Advocate Y.S.Bhate with Mr.D.P.Singh for the Respondent
Nos.1 and 2.
Ms.Fatema Lakdawala, A.G.P. for the State.
CORAM: BHARATI DANGRE &
MANJUSHA DESHPANDE, JJ.
DATE : 24th APRIL, 2026
...
JUDGMENT (PER BHARATI DANGRE, J.)
1. The Petitioner-Cipla Limited, a company incorporated under the provisions of the Companies Act, and staking its claim as a leading global pharmaceutical company in the Indian pharmaceutical industry, has filed the present Writ Petition praying for quashing and setting aside of the impugned Standing Order issued by the National Pharmaceutical Pricing Authority (hereinafter referred to as, "NPPA"), New Delhi, it being illegal and ex facie ultra vires the Drug and Price Control Order (hereinafter referred to as, ::: Uploaded on - 04/05/2026 ::: Downloaded on - 09/05/2026 04:43:59 ::: 2/34 903 WP-2069-22.odt "DPCO"). Further, the Petition also raises a challenge to the impugned Demand Notice.
During the pendency of the Writ Petition, stay is sought to the impugned Standing Order, impugned Demand Notice as well as to the impugned communication dated 6th/10th April, 2018 issued by NPPA addressed to the Petitioner and also to the order dated 07/03/2018 and further communication addressed to the Petitioner reminding it to deposit the amount demanded or else threatening of a coercive action.
2. Upon the notice being issued to the Respondents, an affidavit-in-reply is filed by the Respondent No.1 through its Deputy Director affirmed on 15/03/2026, justifying its action. Pursuant thereto, the Petitioner has filed an affidavit-in- rejoinder.
Upon the pleadings being complete, request is made by the respective counsel to take up the Petition for hearing. Hence, we deem it appropriate to issue Rule, which is made returnable forthwith.
3. We have heard learned senior counsel Mr.Navroz Seervai for the Petitioner, learned counsel Mr.Y.S.Bhate for the Respondent Nos.1 and 2. Respondent Nos.3 and 4 are represented by learned A.G.P. Ms.Fatima Lakdawala. ::: Uploaded on - 04/05/2026 ::: Downloaded on - 09/05/2026 04:43:59 :::
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4. The backdrop of the grievance in the Petition lies in the Drugs (Price Control) Order, 2013.
For meeting requirements of medicines for health needs at reasonable prices and to prevent monopolies in the pharmaceutical market, the Government has formulated the Drug Policy, which is revised over the years, in the wake of exercise of power by the Central Government under Section 3 of the Essential Commodities Act, 1955, by formulating the Drugs (Prices Control) Order, 2013, which is amended from time to time.
In one such policy of 1994, the NPPA is established as an independent body of experts to undertake the task of price fixation of scheduled formulations of bulk drugs and it is entrusted with the task of overseeing the enforcement of the provisions of the DPCOs issued by the Central Government. Under the DPCO of 1995 introduced by the Central Government, the power was conferred to fix the ceiling price of scheduled formulations, containing at least one scheduled bulk drug and from time to time, the NPPA would issue standing orders fixing the ceiling prices, with a clear understanding that the Central Government/NPPA is authorised to fix the prices only for scheduled formulations i.e. formulations ::: Uploaded on - 04/05/2026 ::: Downloaded on - 09/05/2026 04:43:59 ::: 4/34 903 WP-2069-22.odt containing at least one bulk drug specified in the First Schedule of the DPCO. The power to fix the prices was directed to follow the procedure prescribed in Para 10 of the DPCO.
5. In the wake of the aforesaid power being conferred on 01/08/2007, the NPPA issued the Standing Order, purporting to fix a ceiling price for formulations composed of Silver Sulphadiazine (1% w/w) and Chlorhexidine Gluconate(0.2% w/w) and the grievance of the Petitioner is that the power is being exercised despite the fact that neither of the two is a scheduled bulk drug, specified in First Schedule and, therefore, the impugned Standing Order is ex facie ultra vires and null and void.
The Petitioner is aggrieved by the aforesaid, as it was manufacturing a non-scheduled formulation containing Silver Sulfadiazine (1% w/w) and Chlorhexidine Gluconate (0.20% w/w), but discontinued the same. In or around February 2008, the Petitioner started manufacturing the product, which was also a non-scheduled formulation, composed of Silver Sulfadiazine (1% w/w) and Chlorhexidine Gluconate (0.60% w/w), but this product, according to the Petitioner, has different composition from the formulation sought to be illegally brought under the price control regime by the ::: Uploaded on - 04/05/2026 ::: Downloaded on - 09/05/2026 04:43:59 ::: 5/34 903 WP-2069-22.odt impugned Standing Order. According to the Petitioner, it was selling the said product to its stockists at Rs.9.75 at its highest rate, but the Petitioner discontinued manufacturing it after November 2010.
6. It is the grievance of the Petitioner that, despite the product being different from the formulation covered under the impugned Standing Order, the Petitioner received two letters dated 27/08/2008 and 29/10/2008 from the NPPA, calling upon the Petitioner to furnish details of production and sales with respect to the product, failing which, the Petitioner was cautioned of suitable action, for purported violation of provisions of DPCO read with the Essential Commodities Act.
Since these letters contained a mention of a previous letter dated 15/04/2008, the Petitioner requested for copy of this communication, but according to the Petitioner, this letter was never received by it, despite repeated demands. In any case, according to the Petitioner, it had stopped manufacturing the revised product in or around November 2010.
7. On 11/10/2010, the NPPA issued a standing order being S.O.2503(E) purporting to fix the price and according to the Petitioner, even assuming, while denying that NPPA was empowered to impose a ceiling price, prior to 11/10/2010, ::: Uploaded on - 04/05/2026 ::: Downloaded on - 09/05/2026 04:43:59 ::: 6/34 903 WP-2069-22.odt there was no standing order for fixing the price of the specific composition of the product. It is, therefore, the specific case of the Petitioner that the composition strength of a product is a significant aspect, which changes the very characteristic of formulation and if it was not so, there was no reason for Respondent No.1/NPPA to issue separate standing order for the difference in composition strength and the standing order provided that, any formulation/composition not covered in the table, specified therein that has any one of the scheduled bulk drugs as one of its ingredients, then it shall be subject to the price ceiling as mentioned therein. However, such stipulations were not present in the impugned Standing Order and in any case, since an attempt was purported to fix the price of a non- scheduled formulation without following the procedure laid down in the DPCO, the Petitioner claim that the impugned Standing Order is illegal, ultra vires, null and void.
8. The Petitioner is further aggrieved by the action on part of NPPA when after period of about four years from its past correspondence with respect to the product, a show cause notice/letter was addressed to the Petitioner on 31/08/2012, alleging that the Petitioner had been selling the product at a price higher than the purported ceiling price, notified by the ::: Uploaded on - 04/05/2026 ::: Downloaded on - 09/05/2026 04:43:59 ::: 7/34 903 WP-2069-22.odt Central Government under the impugned Standing Order. In the said communication, NPPA estimated that the Petitioner had purportedly charged an amount of Rs.6,54,95,091/- in excess during the period of August 2007 to June 2012 and the Petitioner was asked to show cause as to why the amount overcharged shall not be recovered.
The Petitioner responded to the said communication, by denying the accusations with reference to the earlier correspondence exchanged and requested for withdrawal of the letter dated 31/08/2012. However, the Petitioner received the impugned Demand Notice, where it was mentioned that the Petitioner had purportedly charged Rs.7,76,30,081/- in excess from the consumers, between the period of August 2007 to May 2013 and it shall deposit a sum of Rs.16,20,26,217/-, the amount computed towards overcharge and the interest thereon within 15 days from the date of issuance of the Demand Notice.
The Petitioner, therefore, addressed a communication in reply to the impugned Demand Notice, clarifying as below :-
"a. The Revised Product is different from the formulations notified under the Impugned Standing Order;
b. Silver Sulfadiazine is not a Scheduled bulk drug, and therefore not covered under the said DPCO;
c. Silver sulfadiazine is not a derivative of Sulfadiazine, and differs significantly from the latter, including in terms of indication and usage." ::: Uploaded on - 04/05/2026 ::: Downloaded on - 09/05/2026 04:43:59 :::
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9. The Petitioner also requested for an opportunity of personal hearing and this request was acceded to, but it is the case of the Petitioner that the Respondent Authority had already made up its mind and by way of empty formality, the hearing was granted, but the outcome of the correspondence as well as the hearing, was the order dated 07/03/2018, passed by NPPA, reiterating its stand that the intent and mandate of DPCO 1995 was sufficiently clear and it was evident that the manufacturer selling its formulations at a price higher than the fixed price is liable to deposit the overcharged amount. The communication offered a justification by stating that Silver sulphadiazine (C10H9AgN4O2S) is derived from Sulphadiazine (C10H10N4O2S) by substituting one Hydrogen atom by a Silver atom and, therefore, it is a derivative of sulphadiazine. It was, therefore, concluded that Silver sulphadiazine is derivative of sulfadiazine, which is a scheduled bulk drug and the former being the derivative of later, it is also covered under the Price Control Order.
Once again, the demand in the sum of Rs.16,78,32,522/- inclusive of the amount overcharged and the interest calculated upto 31/03/2018 was reiterated, with a request to deposit the same or else, it was directed that the matter shall ::: Uploaded on - 04/05/2026 ::: Downloaded on - 09/05/2026 04:43:59 ::: 9/34 903 WP-2069-22.odt be referred to the Collector for taking necessary action for recovery of the demanded amount.
10. Pursuant to the said order being passed, the Petitioner further corresponded with the Authority, but no heed was paid to its submissions and the NPPA continued to be under the misconception, which the Petitioner attempted to defuse through its representations as well as the oral hearing, which was conducted before. Despite all such efforts, the impugned order came to be passed.
11. The learned senior counsel Mr.Seervai, would vehemently submit that the impugned Standing Order issued by NPPA is covered under para 9 of the DPCO, which empowers the Government to fix ceiling price of scheduled formulations, which are the formulations containing atleast one scheduled bulk drug, and which are specified in the First Schedule of DPCO. According to him, one important thing, which is required to be ascertained for the purpose of determining, whether a formulation is liable for price control, is to verify whether it contains any of the bulk drugs listed in the First Schedule to the said DPCO, but neither Silver Sulphadiazine nor Chlorhexidine Gluconate is listed in the First Schedule and, ::: Uploaded on - 04/05/2026 ::: Downloaded on - 09/05/2026 04:43:59 ::: 10/34 903 WP-2069-22.odt therefore, there is no justification in fixation of its price by the Central Government.
Mr.Seervai would also urge that Silver Sulfadiazine is not a derivative of Sulfadiazine, as they have different chemical properties, different indications of use and are in fact used for treatment of different afflictions. Apart from this, it is also submitted that route of administration of Sulfadiazine and Silver Sulfadiazine are different, as Sulfadiazine is ingested for protection from Rheumatic fever and treatment of toxoplasmosis, whereas Silver Sulfadiazine is applied topically for treating and ameliorating burn wounds. It is for its peculiar use, Sulfadiazine is brought under price control and not Silver Sulfadiazine, which is a commonly used drug.
Urging that Silver Sulfadiazine is not a scheduled bulk drug, and hence, not amenable to price control under the DPCO, Mr.Seervai would urge that NPPA has erred in considering it to be a derivative, but has not offered any reasons for doing so. According to him, the scheduled bulk drug under DPCO has a specific meaning and it is restricted to bulk drugs specified in First Schedule of the DPCO and does not include a derivative of scheduled bulk drug and adding words to an otherwise explicit and unambiguous provision, is ::: Uploaded on - 04/05/2026 ::: Downloaded on - 09/05/2026 04:43:59 ::: 11/34 903 WP-2069-22.odt completely impermissible, according to Mr.Seervai. Thus according to him, the impugned order is passed with non application of mind, without citing proper reasons.
12. One more point, which is pressed into service by Mr.Seervai is, DPCO has prescribed specific procedure for inclusion of particular bulk drug as scheduled bulk drug in para 10(c) and the inclusion thus can happen only after following the procedure. He would submit that if it was the intention of NPPA to include Silver Sulfadiazine which has different chemical properties, different indications of use, it could have included the said bulk drug as a scheduled bulk drug by following the procedure prescribed under para 10. According to Mr.Seervai, NPPA is seeking to subvert the procedure laid down in the DPCO by seeking to impose a ceiling price on the non-scheduled formulation, which is completely illegal and, therefore the impugned Standing Order followed by the demand, is liable to be quashed and set aside.
Apart from this, it is also his submission that the product of the Petitioner had a composition of Silver Sulfadiazine (1% w/w) and Chlorhexidine Gluconate (0.60% w/w), whereas the impugned Standing Order sought to fix a ceiling price on ::: Uploaded on - 04/05/2026 ::: Downloaded on - 09/05/2026 04:43:59 ::: 12/34 903 WP-2069-22.odt formulation with composition strength of Silver Sulfadiazine (1% w/w) and Chlorhexidine Gluconate (0.20% w/w). According to him, the former formulation was sought to be price controlled by a separate Standing Order dated 11/10/2020 and, therefore, it is his submission that even NPPA has also treated the different composition strength as different formulations and it cannot be allowed to impose a price ceiling for a product for which it purported to issue a Standing Order only on 11/10/2010 covering the sale of the product before this date, as the charging provisions, according to him, cannot be applied retrospectively.
13. Opposing the submissions advanced on behalf of the Petitioner, learned counsel Mr.Bhate, representing Respondent Nos. 1 and 2, would place reliance upon the affidavit filed by the Deputy Director, NPPA, and it is submitted that the Petitioner is aggrieved by the Standing Order issued on 01/08/2007 and the order passed on 07/03/2018 by the NPPA, pursuant to the grant of personal hearing, and it has also raised a challenge to the Demand Notice, where the Petitioner is called upon to pay a sum of Rs,16,78,32,522/- for manufacturing/marketing of scheduled formulation 'Burnheal ::: Uploaded on - 04/05/2026 ::: Downloaded on - 09/05/2026 04:43:59 ::: 13/34 903 WP-2069-22.odt Cream" 15gm, with a composition of Silver Sulfadiazine 1.00% w/w and Chlorhexidine Gluconate 0.20% w/w at a price higher than the notified ceiling price under DPCO.
By relying upon the definition of 'bulk drug', it is urged that it covers 'derivatives'.
According to the stand adopted by the Respondents, 'Sulphadiazine' is a scheduled bulk drug included at Serial No.53 of the First Schedule to the DPCO 1995 and the formulation in question contain Silver Sulphadiazine 1% w/w, which is essentially covered in the definition of 'bulk drug' as Silver Sulphadiazine is a salt/derivative of Sulphadiazine, which is 'bulk drug'.
14. The counsel would submit that the Petitioner Company has urged during the personal hearing that Sulphadiazine and Silver Sulphadiazine are two different bulk drugs and Silver Sulphadiazine cannot be considered as a derivative of Sulphadiazine. He would submit that the derivative is a compound that is synthesized from a parent compound by replacement of one atom with another, and by drawing a comparison in the molecular formation, he would attempt to demonstrate, that Silver sulphadiazine (C10H9AgN4O2S) is derived from Sulphadiazine (C10H10N4O2S) by substituting one ::: Uploaded on - 04/05/2026 ::: Downloaded on - 09/05/2026 04:43:59 ::: 14/34 903 WP-2069-22.odt Hydrogen atom by a silver atom and it is not very difficult to assume that it is a derivative.
Further, the learned counsel would submit that the properties of a derivative can be very different from the main compound from which it is derived,but that is not the test for considering, whether it is a derivative.
According to Mr.Bhate, various contentions raised by the Petitioner during the personal hearing held on 28/12/2017 were considered and its written submissions were also taken into consideration when the demand was affirmed, as according to him, the formulation in question contains Silver Sulphadiazine and the formulation containing Silver Sulphadiazine is a scheduled formulation for the purpose of the DPCO, 1995 and the ceiling price has been rightly fixed under para 9 of the DPCO 1995.
15. It is also the specific stand adopted by the Respondents in their affidavit that issuance of a separate standing order dated 11/10/2010 for a formulation containing Silver Sulphadiazine(1%w/w) and Chlorhexidine Gluconate (0.60% w/w) does not render the earlier standing order inapplicable to the period during which the Petitioner manufactured and sold the formulation containing Chlorhexidine Gluconate (0.20% w/w). ::: Uploaded on - 04/05/2026 ::: Downloaded on - 09/05/2026 04:43:59 :::
15/34 903 WP-2069-22.odt With reference to the submission about the standard pharmacological texts such as Martindale or the Indian Pharmacopoeia is also deflated, by submitting that the issue which was under consideration was not one of pharmacological efficacy or therapeutic interchangeability, but whether Silver Sulphadiazine is derived from Sulphadiazine for the purposes of DPCO, 1995. The conclusion that Silver Sulphadiazine is a derivative of Sulphadiazine was based on examination of the chemical structure and composition of the two substances, including the substitution of one hydrogen atom of Sulphadiazine with silver, as well as to the standard medical descriptions, which identified Silver Sulphadiazine as the silver derivative of Sulphadiazine.
16. In conclusion, the learned counsel for Respondent Nos.1 and 2, would submit that the Petitioner Company was selling 'Burnheal Cream' at prices higher than the notified ceiling price as per Standing Order No.1334(E) dated 01/08/2007 and despite seeking the necessary details of the product being sold, the requisite certified details were not furnished and, therefore, based on the data available with the Authority, the estimated overcharged amount was computed and on ::: Uploaded on - 04/05/2026 ::: Downloaded on - 09/05/2026 04:43:59 ::: 16/34 903 WP-2069-22.odt 14/12/2017, NPPA estimated the liability of the Petitioner Company as below :-
Statement of Overcharging by M/s Cipla Ltd. & M/s Curetech Skincare Name of the O/C Amount Period from Interest formulation to Rs. mm/dd/yy mm/dd/yy Rs.
Burnheal 12319288 Upto 15.09.2025 7302840 Cream 15 gm Total 12319288 16-Sep-2015 31-Dec-2017 4242560 Grand Total 23864688
17. We have given our thoughtful consideration to the rival contentions.
At the outset, we would make reference to the Drugs (Prices Control) Order, 1995 formulated under Section 3 of the Essential Commodities Act, 1955, which was superseded by the Drug (Prices Control) Order, 2013. In any case, the impugned Standing Order passed by NPPA on 01/08/2007 was based on the DPCO 1995 and in specific, paragraph 1 and 2 of paragraph 9 and paragraph 11.
DPCO 1995 define "bulk drug" as below :
"2(a) "bulk drug" means any pharmaceutical, chemical, biological or plant product including its salts, esters, stereo-isomers and derivatives, conforming to pharmacopoeial or other standards specified in the Second Schedule to the Drugs and Cosmetics Act, 1940 (23 of 1940), and which is used as such or as an ingredient in any formulation."
"Ceiling Price" is defined in 2(c) to mean a price fixed by the Government for Scheduled formulations in accordance with ::: Uploaded on - 04/05/2026 ::: Downloaded on - 09/05/2026 04:43:59 ::: 17/34 903 WP-2069-22.odt the provisions of paragraph 9. The DPCO, 1995 defines "formulation" as below :-
"2(h) "formulation" means a medicine processed out of, or containing one or more bulk drug or drugs with or without the use of any pharmaceutical aids, for internal or external use for or in the diagnosis, treatment, mitigation or prevention of disease in human beings or animals, but shall not include-
(i) any medicine included in any bona fide Ayurvedic (including Sidha) or Unani (Tibb) systems of medicines;
(ii) any medicine included in the Homoeopathic system of medicine; and
(iii) any substance to which the provisions of the Drugs and Cosmetics Act, 1940 (23 of 1940) do not apply."
Similarly, the term "Scheduled bulk drug" is defined in the Order to mean a bulk drug specified in the First Schedule and "Scheduled formulation" is defined to mean a formulation containing any bulk drug specified in the First Schedule either individually or in combination with other drugs, including one or more than one drug or drugs not specified in the First Schedule except single ingredient formulation based on bulk drugs specified in the First Schedule and sold under the generic name.
18. As per paragraph 3, with a view to regulate the equitable distribution and increasing supplies of a bulk drug specified in the First Schedule and making it available at a fair price, the Government is empowered to fix from time to time, by notification in the Official Gazette, a maximum sale price at ::: Uploaded on - 04/05/2026 ::: Downloaded on - 09/05/2026 04:43:59 ::: 18/34 903 WP-2069-22.odt which the bulk drug shall be sold and upon such notification being issued, no person shall sell a bulk drug at a price exceeding the maximum sale price.
As per paragraph 9 of the DPCO, the Government is empowered to fix the ceiling price of a Scheduled formulation in accordance with the formula prescribed therein by notification in the Official Gazette, keeping in view the cost or efficiency, or both, of major manufacturers of such formulations 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.
The Government is also empowered to fix a revised ceiling price for a Scheduled formulation and the explanation appended to the said paragraph has defined 'Scheduled formulation' to include single ingredient formulation based on bulk drugs specified in the First Schedule and sold under the generic name.
Paragraph 11 of the DPCO, provide thus :-
"11. Fixation of price under certain circumstances.-Where any manufacturer, importer of a bulk drug or formulation fails to submit the application for price fixation or revision, as the case may be, or to furnish information as required under this Order, within the time specified therein, the Government may, on the basis of such information as may be available with it, by order fix a price in respect of such bulk drug or formulation as the case may be.". ::: Uploaded on - 04/05/2026 ::: Downloaded on - 09/05/2026 04:43:59 :::
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19. Under the DPCO, it is imperative for every manufacturer and the importer to maintain records relating to the sales turnover of individual bulk drugs manufactured or imported by him and the sales turnover of formulations and also such other record, as may be directed by the Government from time to time and the Government is empowered to call for such records or inspect such records, as it deems fit.
The First Schedule of the DPCO, which has set out the bulk drugs, include 'Sulphadoxine' at item No.47.
20. On 01/08/2007, the NPPA in exercise of the power conferred by sub-paragraph (1) and (2) of paragraph 9 and 11 of DPCO 1995, issued an order, fixing the ceiling prices for the scheduled formulations set out therein with reference to the strength of the formulation. As per the Petitioner, it was manufacturing a non-scheduled formulation containing Silver Sulfadiazine (1% w/w) and Chlorhexidine Gluconate (0.20% w/w), but discontinued the same, and in or around February 2008, started manufacturing formulation composed of Silver Sulfadiazine (1% w/w) and Chlorhexidine Glucomate (0.60% w/w), and according to it, its earlier product and the new product differed in formulation and the Petitioner was selling the product to its stockists at Rs.9.75 at its highest rate, but ::: Uploaded on - 04/05/2026 ::: Downloaded on - 09/05/2026 04:43:59 ::: 20/34 903 WP-2069-22.odt even this was discontinued by the Petitioner after November 2010.
With respect to the product 'Burnheal Cream', the Petitioner has received a Demand Notice with reference to an earlier notice dated 15/04/2008 intimating the Petitioner that it had manufactured/marketed the scheduled formulation 'Burnheal Cream' at a price higher than the one notified by the NPPA and the amount overcharged in respect of the formulation alongwith the interest was sought to be deposited.
The statement of overcharging amount, which is a part of the Petition, refer to the formulation 'Burnheal Cream', and has computed the sale of the product from August 2007 and with reference to the MRP at which the product was sold as against the ceiling price fixed, being computed against per pack, the overcharged amount alongwith interest was added and this covered the sale of the product from August 2007 to May 2013. The computation annexed, thus claimed the overcharged amount as Rs.77,630,081/- alongwith the interest of Rs.16,20,26,217/-
21. Perusal of the impugned order of 07/03/2018 is reflective of the deliberation subsequent to an opportunity of hearing being given to the Petitioner and on consideration of the ::: Uploaded on - 04/05/2026 ::: Downloaded on - 09/05/2026 04:43:59 ::: 21/34 903 WP-2069-22.odt written submissions/additional written submissions, where it was contended that Sulfadiazine and Silver Sulfadiazine are two independent bulk drugs and Silver Sulfadiazine cannot be considered as a derivative of Sulfadiazine for the basic reason that the indication and the therapeutic value of the two product are completely different. A specific stand was adopted to the effect that Silver Sulfadiazine is neither a salt, ester, stereo-isomer or derivative of Sulfadiazine and it is completely a different drug. However, this contention came to be rejected and being aggrieved, the Petitioner is before this Court.
22. The DPCO 1995 has specifically defined 'bulk drug' to mean any pharmaceutical, chemical, biological or plant product including its salts, esters, stereo-isomers and 'derivatives', conforming to pharmacopoeial or other standards specified in the Second Schedule to the Drugs and Cosmetics Act, 1940 and which is used as such or as an ingredient in any formulation.
"Scheduled formulation", as per paragraph 2(v), is a formulation containing any bulk drug specified in the First Schedule either individually or in combination with other drugs, including one or more than one drug or drugs not specified in the First Schedule.
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23. The Hon'ble Apex Court had an opportunity to consider the term 'bulk drug' and 'Scheduled formulation' and after detailed analysis of the DPCO 1995, it pronounced upon its width and scope in the case of Union of India & Anr. Vs. Swiss Garnier Life Sciences & Ors.1. The factual matrix placed before a Court, involve the drug Doxofylline and Theophylline.
The background facts reveal that on the advice of Indian Institute of Science, Bangalore, the price of Doxofylline formulation was fixed and a communication was addressed to all known manufactures of Doxofylline formulation seeking details of purchase price of the bulk drug, which was necessitated for fixation of price of the formulation. However, none of the manufacturers complied with the requirement and based on the best information available in terms of paragraph 11 of the 1995 DPCO, the NPPA fixed the price by notification dated 30/04/2009. A request was forwarded to Indian Institute of Science (IISc), Bangalore for its view as to whether Doxofylline is a salt or esters or derivative of the bulk drug Theophylline and IISC opined that the Doxofylline is a derivative of Theophylline.
When the manufacturers approached the Delhi High Court, raising a challenge to the notification revising the prices 1 (2013) 8 SCC 615 ::: Uploaded on - 04/05/2026 ::: Downloaded on - 09/05/2026 04:43:59 ::: 23/34 903 WP-2069-22.odt of Doxofylline formulation based on the available information, the Single Judge of the High Court allowed the writ petition, which view was affirmed by the Division Bench.
24. In an appeal before the Apex Court by the Union of India, it was urged that Doxofylline is the bulk drug within the meaning of para 2(a) of the DPCO 1995 and, therefore, the maximum sale price of such bulk drug can be notified under paragraph 9. It was urged that Doxofylline is derivative of Theophylline, which comes within the meaning of 'bulk drug' and reliance was placed upon para 2(a) of 1995 DPCO.
It was urged that if the pharmaceutical, chemical, biological or plant product confirms to requirement of Second Schedule of the Drugs and Cosmetics Act, 194o, it also apply to every salts, esters, derivatives etc. and they are not required to be listed separately in the First Schedule of 1995 DPCO. In light of the contest raised, the Apex Court with reference to the definition of the term 'formulation' in para 2(h) as well as the definition of 'scheduled formulation' in 2(v), noted thus :-
"21. From the aforesaid definitions, we find that for the purpose of coming within the meaning of "bulk drug", pharmaceutical, chemical, biological or plant product including its salts, esters, stereoisomers and derivatives should conform to pharmacopoeial or other standards specified in the Second Schedule to the Drugs and Cosmetics Act, 1940, while for the purpose of coming within the purview of "scheduled bulk drug"
within the meaning of Para 2(u) or "scheduled formulation" within the meaning of Para 2(v), it is not necessary to refer to the Second ::: Uploaded on - 04/05/2026 ::: Downloaded on - 09/05/2026 04:43:59 ::: 24/34 903 WP-2069-22.odt Schedule of the Drugs and Cosmetics Act, 1940, the bulk drug is specified in the First Schedule of the 1995 DPCO."
With regards to the power of the Government to fix the maximum sale price of the bulk drugs specified in First Schedule as set out in paragraph 3, it is specifically held that the First Schedule of the DPCO 1995 indicates the 'bulk drugs' recognised by the Government, which are 75 in number. In the said list, at Sr.No.34, Theophylline is shown as one of the bulk drugs and Doxofylline is not shown as one of the bulk drugs. Reliance is placed upon the Second Schedule of the Drugs and Cosmetics Act prescribing the standards to be complied with by imported drugs and by the drugs manufactured for sale, stocked or exhibited for sale or distributed and with reference to the class of drugs, the standards to be complied with are set out. The Hon'ble Apex Court referred to Item Nos.1 and 5, namely, the patent or proprietary medicines other than Homoeopathic medicines and other drugs; included in Indian Pharmacopoeia and not included in the Indian Pharmacopoeia, but included in the official pharmacopoeia of any other country.
The contest before the Apex Court being, the respondents contended that the Doxofylline is a new drug and, since, it is not a bulk drug, it is not mentioned in the official ::: Uploaded on - 04/05/2026 ::: Downloaded on - 09/05/2026 04:43:59 ::: 25/34 903 WP-2069-22.odt pharmacopoeia, whereas the Union of India adopted a stand that Doxofylline is derivative of Theophylline and being its derivative, ipso facto, by itself a bulk drug and, therefore, the Apex Court proceeded to determine whether the Doxofylline is derivative of Theophylline.
For answering this question, and with reference to the record of Mars Therapeutics Ltd., as well as with reference to the toxicological and pharmacological documentation of Doxofylline, a conclusion was reached that Doxofylline is derivative of Theophylline. For this purpose, the composition of the formulation of Doxofylline was compared to reveal that Doxofylline is the ingredient of Theophylline as the chemical pharmaceutical information, which was supplied, reflected thus :-
"(iv) In Annexure II attached with Form 44 chemical pharmaceutical information has been supplied therein. Chemical information has been shown as follows:
"Name of the material/Code: Doxofylline Category: Finished formulation Chemical information General name: Doxofylline Chemical 2-7′--Theophyllinemethyl-1.3-
name(s): dioxolane"
Further with reference to the pharmacological documentation, the Apex Court considered the following :-::: Uploaded on - 04/05/2026 ::: Downloaded on - 09/05/2026 04:43:59 :::
26/34 903 WP-2069-22.odt "(v) On the toxicological and pharmacological (Pre-clinical) documentation of Doxofylline has been shown in the expert report enclosed with Form 44, relevant portion of which reads as follows:
"1.INTRODUCTION Doxofylline or 2(7′-theophyllinemethyl)-1.3- dioxolane is a theophylline derivative with the following structural formula:
Doxofylline was synthesised with the aim of reducing the typical theophylline side-effects, without affecting antibronchospastic and bronchodilator effects that are the main pharmacological activities of methylxanthines useful for the therapy of asthma."
From the expert opinion of IISc and NIPER which has been submitted by the appellants, details enclosed by the respondent Mars Therapeutics Ltd. with their Form 44, and the stand taken in their application for registration, we find and hold that Doxofylline is a derivative of Theophylline."
25. Upon the aforesaid discussion based on the technical aspect, the Apex Court observed thus :-
"35. The difference between "bulk drug" [Para 2(a)], "scheduled bulk drug" [Para 2(u)] and "scheduled formulation"
[Para 2(v)] has already been noticed in the preceding paragraphs. As per the definition, the bulk drug should conform to the pharmacopoeial or other standards specified in the Second Schedule to the Drugs and Cosmetics Act, 1940. On the other hand, to find out whether a drug is a "scheduled bulk drug" within the meaning of Para 2(u) or "scheduled formulation" within the meaning of Para 2(v), one has to find out whether the bulk drug is specified in the First Schedule of 1995 DPCO, individually or in combination with other drugs.
36. Theophylline is a bulk drug shown at Serial No. 34 of the First Schedule of the 1995 DPCO. It is also not in dispute that Theophylline is shown in the Indian Pharmacopoeia and conforms to the standard as per the Second Schedule to the Drugs and Cosmetics Act, 1940. Therefore, Theophylline comes within the meaning of "bulk drug" as defined in Para 2( a) and also comes within the meaning of "scheduled bulk drug" [Para 2(u)] and "scheduled formulation" [Para 2(v)]."
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26. Reliance was also placed upon the expert opinion of IISc, Bangalore and NIPER, Punjab and the opinion enclosed with Form 44 submitted by Mars Therapeutics Ltd., to conclude that Doxofylline is derivative of Theophylline and since Theophylline is bulk drug, by virtue of being derivative of Theophylline, Doxophylline, ipso facto, itself is a bulk drug. In conclusion, the Apex Court concluded thus :-
"39. In view of the definition of "bulk drug" [Para 2(a)] and our finding as recorded above, we hold that if any pharmaceutical, chemical, biological or plant product conforms to pharmacopoeial or other standards accepted under the Drugs and Cosmetics Act, 1940, and thus comes within the meaning of "bulk drug", as defined in Para 2(a), all salts, esters, stereoisomers and derivatives of such bulk drug are, ipso facto, deemed to be conforming to the pharmacopoeial or other standards accepted under the Drugs and Cosmetics Act and are deemed to be "bulk drug" within the meaning of Para 2(a) of the 1995 DPCO.
40. We have already held that Doxofylline is a derivative of Theophylline and admittedly, Theophylline is a bulk drug shown in the First Schedule (Item 34) of the 1995 DPCO and is conforming to pharmacopoeial and other standards specified in the Drugs and Cosmetics Act. We hold that Doxofylline is deemed to be a bulk drug within the meaning of Para 2(a) conforming to pharmacopoeial and other standards specified in the Second Schedule to the Drugs and Cosmetics Act. Further, in view of the definition of "bulk drug"
[Para 2(a)], Theophylline if used as such (i.e. Theophylline) or as an ingredient (i.e. Doxofylline) in any formulation, it will deem to be a "bulk drug" within the meaning under Para 2(a)."
27. In light of the aforesaid authoritative pronouncement, when we are called upon to determine whether Silver Sulphadiazine is a derivative of Sulphadiazine, which is a bulk drug, we have given our anxious consideration to the molecular formula of the two, as set out in the affidavit. ::: Uploaded on - 04/05/2026 ::: Downloaded on - 09/05/2026 04:43:59 :::
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From the aforesaid, it is evident that Silver
Sulphadiazine (C10H9AgN4O2S) is derived from Sulphadiazine (C10H10N4O2S), as there is substitution of the hydrogen atom H 10 by silver atom 'Ag', and, since the derivative as per chemical lexicon is the compound that arises from or is actually synthesized from a parent compound by replacement of one atom with another atom or group of atoms, we have no hesitancy in holding that Silver Sulphadiazine is a derivative of Sulphadiazine. Apart from this, as per the medical lexicon, Silver Sulphadiazine is defined as "silver derivative of Sulfadiazine used externally as tropical antibacterial agent in preventing and treating infections in burns".
For a derivative, with the variation in the atom/molecule (single or multiple), the properties of a derivative can differ from the main compound from which it is derived, but in any case, that is not a relevant factor, as 'bulk drug' would mean ::: Uploaded on - 04/05/2026 ::: Downloaded on - 09/05/2026 04:43:59 ::: 29/34 903 WP-2069-22.odt any derivative, which is conforming to pharmacopoeial or other standards specified in Second Schedule to the Drugs and Cosmetics Act, 1940 and this being used as an ingredient in any formulation, it would also amount to a 'bulk drug'.
28. Mr.Seervai has relied upon Indian Pharmacopoeia 2022, which has referred to Sulphadiazine (C10H10N4O2S), with its category set out as 'antibacterial'. As per the Indian Pharmacopoeia, it may exist in form of Sulphadiazine Tablets containing not less than 95.0 per cent and not more than 105.0 per cent of Sulphadiazine. From the Pharmacopoeia, it is thus clear that Sulphadiazine possess antibacterial qualities. Even the National Formulary of India, Indian Pharmacopoeia Commission has identified Sulphadiazine with its indications as, 'Prevention of recurrences of rheumatic fever; toxoplasmosis; prophylaxis of meningococcal infections'.
The Indian Pharmacopoeia 2022, on the other hand, has described the Silver Sulphadiazine (C10H9AgN4O2S) and has classified it into anti infective category and with its existence in form of Silver Sulphadiazine cream, containing not less than 90.0 per cent and not more than 110.0 per cent of C10H9AgN4O2S, it is considered as a different composition. Further, the National Formulary of India has also separately ::: Uploaded on - 04/05/2026 ::: Downloaded on - 09/05/2026 04:43:59 ::: 30/34 903 WP-2069-22.odt listed Silver Sulphadiazine with its indication prophylaxis and treatment of infection in burns, and hence, we have no doubt in our mind that the two products are different and may be used for different purposes on account of its chemical compositions. However, the question before us is, whether Silver Sulphadiazine is a derivative of Sulphadiazine and since we have recorded that Silver Sulphadiazine ( C10H9AgN4O2S) is derived from Sulphadiazine (C10H10N4O2S) by substituting one Hydrogen atom (H10 - H9) by a silver item 'Ag', and as we are concerned with the properties or indications of the product in order to find out, whether it is a derivative and in light of the guidance from the Hon'ble Apex Court in Union of India & Anr. Vs. Swiss Garnier Life Sciences & Ors. (supra), we are of the opinion that Silver Sulphadiazine is a derivative and, therefore, would be a 'bulk drug', though not specifically set out in the First Schedule of the 1995 DPCO, since, 'Bulk Drug' also include the 'derivatives'. We are, therefore, of the view that Silver Sulphadiazine is a scheduled bulk drug and the Central Government/NPPA is authorised to fix the ceiling price of the scheduled formulation Sulphadiazine as well as Silver Sulphadiazine.
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29. Reliance placed by Mr.Seervai on the decision in the case of T.C.Healthcare Private Limited & Anr. Vs. Union of India & Anr.2, is clearly distinguishable, as we find that the appellants contended that by notification of 1995, they were exempted from the regime of price fixation under the DPCO 1995, it being a small-scale unit and if at all the Central Government was to fix the price of any bulk drug, being used by the manufacturer to prepare a formulation, the manufacturer must apply under Form III for price revision of such formulation and upon which the Central Government may fix or revise the price of the formulation.
In light of the exemption which was availed at the relevant time, though the appellant was manufacturing several drug formulations, including Diucontin K prepared from the bulk drug Frusemide and petitioner No.2-Modi Mundipharma (P) Ltd. manufacturing Unicontin derived from bulk drug Theophylline, the ceiling price was fixed by notification of 11/07/2006.
The contention of the petitioner before the High Court was as regards the price fixation exercise being undertaken arbitrarily and without application of mind and that the notification overlooked the cost and efficiency of major 2 (2020) 15 SCC 117 ::: Uploaded on - 04/05/2026 ::: Downloaded on - 09/05/2026 04:43:59 ::: 32/34 903 WP-2069-22.odt manufacturers. The High Court negatived the challenge to the notification by observing that the material brought on record by the Central Government justified the fixation of the price and the High Court refuted the charge by the appellants that the absence of any notice, permitting their participation in the drug price fixation process, vitiated it.
In an appeal before the Apex Court, where it was urged that High Court had erred in overlooking the factors relevant for price fixation and the process adopted was contrary to law, it is held that the appellants did not approach NPPA for specific price, or contended that their products contain special features. On the other hand, they only made reference to 'sustained release' and drug delivery systems and referring to Pharmacopoeias and US Food and Drug Administration's definitions, the use of the term 'sustained release', denoted the systems that maintain the rate of drug release, it was held that if the appellants desired to state that the systems used by them were unique or different, they ought to have demonstrated it, but since they omitted to do so, it no way affected their obligations to follow the pricing norms and ceiling prices fixed by the impugned notifications. ::: Uploaded on - 04/05/2026 ::: Downloaded on - 09/05/2026 04:43:59 :::
33/34 903 WP-2069-22.odt The finding recorded by the High Court, therefore, found to be not warranting any interference and the appeal was dismissed.
In our view, the said decision, no way take the case of the Petitioner ahead.
30. Since, we are guided by the decision of the Apex Court in Union of India & Anr. Vs. Swiss Garnier Life Sciences & Ors. (supra), we do not find any fault in the action of the Respondent No.1-the National Pharmaceutical Pricing Authority, in issuing the Standing Order as well as raising the Demand Notice upon the Petitioner, as it failed to comply with the requirement of forwarding necessary information, since it noticed that the Petitioner was overcharging the product 'Burnheal cream 15 gm' and, since it was covered by First Schedule as a 'Scheduled formulation' and the price for which was already determined by the notification issued by the NPPA, in our view, there is no reason for our interference, as the action of the Respondents is based on the Drugs (Prices Control) Order, 1995 and the Standing Order dated 01/08/2007 issued by it, purportedly fixing the price of the formulation, which included the product of the Petitioner.
For this reason, we dismiss the Writ Petition. ::: Uploaded on - 04/05/2026 ::: Downloaded on - 09/05/2026 04:43:59 :::
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Rule is discharged.
Easy on costs.
(MANJUSHA DESHPANDE, J.) (BHARATI DANGRE, J.)
31. At this stage, learned counsel Mr.Seervai, makes a request that the Respondents shall not take any coercive steps for recovery of the amount for a period of eight (8) weeks.
32. Considering the fact that the demands are raised after a gap of time, when the show cause notice was issued and the same was adjudicated, we direct that impugned notices alongwith the reminders claiming the amount mentioned therein from the Petitioner shall not be coercively implemented for a period of eight (8) weeks from the date of uploading of this Judgment.
(MANJUSHA DESHPANDE, J.) (BHARATI DANGRE, J.) ::: Uploaded on - 04/05/2026 ::: Downloaded on - 09/05/2026 04:43:59 :::