Delhi High Court
Swiss Garnier Life Sciences & Others vs The Union Of India & Another on 3 December, 2009
Author: Sanjiv Khanna
Bench: Sanjiv Khanna
3.
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ W.P.(C) 12958/2009
% Date of decision : 03rd December, 2009.
SWISS GARNIER LIFE SCIENCES AND ORS. ..... Petitioners
Through Mr. S. Ganesh, Sr. Advocate with Mr.
Chiradeep Balooni, Advocate.
versus
THE UNION OF INDIA AND ANR. ..... Respondents
Through Mr. Gaurav Duggal, Advocate.
CORAM:
HON'BLE MR. JUSTICE SANJIV KHANNA
ORDER
CM No. 14677/2009 Learned senior advocate, who appears for the petitioners, has raised three contentions:
(a) Doxofylline is not a bulk drug specified in the second schedule to the Drugs and Cosmetics Act, 1940 and, therefore, price fixation under paragraph 9 of the Drugs (Prices Control) Order, 1995 is illegal.
(b) Doxofylline is not a derivative of Theophylline and, therefore, paragraph 9 of the Drugs (Prices Control) Order, 1995 is not applicable. In this connection, it is submitted that the order dated 30 th September, 2009 passed by revisionary authority accepts that Doxofylline is not a derivative of Theophylline.
(c) Doxofylline is an entirely new drug and is outside the control of the Drugs (Prices Control) Order, 1995.
2. Learned counsel appearing for the respondents, on the other hand, has pointed out the distinction between the Drugs (Prices Control) Order, 1995 WPC No.12958/2009 Page 1 issued under the Essential Commodities Act, 1995 and the Drugs and Cosmetics Act, 1940.
3. The object and purpose of Essential Commodities Act, 1995 and the Drugs (Prices Control) Order, 1995 is to regulate and control prices of essential commodities including drugs. The object and purpose behind the Drugs and Cosmetics Act, 1940 is to regulate import, manufacture and sale of drugs.
4. Learned counsel appearing for the respondents in this connection has drawn my attention to the definition of the term "bulk drug" in Clause 2(a) of the Drugs (Prices Control) Order, 1995 and submits that the term "bulk drug"
as defined in the Second Schedule to the Drugs and Cosmetics Act, 1940 is extremely wide and includes drugs included in the Indian pharmacopeial as well as drugs not included in the Indian pharmacopeial but are included in the official pharmacopeial of any other country. He further states that for the purpose of the Drug (Prices Control) Order, 1995 all derivatives of the bulk drugs are bulk drugs. It is not necessary that the derivatives, salts, esters, etc. should be specifically mentioned in any pharmacopeial.
5. Prima facie the contention of the learned counsel for the respondents in this regard appears to be correct. The term "bulk drug" has been very widely defined to include pharmacopeial of India or official pharmacopeial of any other country or other standards specified in the Second Schedule and as per Clause 2(a) of the Drug (Prices Control) Order, 1995 the term "bulk drug" will also include salt, esters, derivatives, etc. conforming to pharmacopeial or other standards mentioned in the Second Schedule.
6. Learned counsel for the respondents has also pointed out that after the matter was remanded back by the Revisionary Authority, the petitioner and other manufacturers were asked to submit details and particulars. It is pointed out that the petitioner is misreading the order of the revisionary authority dated 30th September, 2009 and no finding that Doxofylline is not a derivative of Theophylline has been recorded. The reason for remand was to re-examine the claim of the petitioner on fixation of cost/price. It is stated that Cadila Health WPC No.12958/2009 Page 2 Care Limited, which is a manufacturer of bulk drug Doxofylline had submitted the available data and information but none of the other parties had submitted the said data. It is stated at bar on instructions that Cadila Health Care Limited manufactures Doxofylline from Theophylline. It is further pointed out that the Doxofylline is being produced in bulk in China at a very low cost and without any licence. This drug is imported and sold at high prices to generate abnormal profits and in these circumstances the respondents had to intervene.
7. Learned counsel for the respondents has also drawn my attention to paragraph 10 of the Drugs (Prices Control) Order, 1995 under which price fixation is possible in cases of even non-schedule formulation. My attention is drawn to the paragraphs 2(o) and 2(p) of the aforesaid drug order.
8. Under the original price fixation order, the price fixed was Rs.512/- per kg but after remand the price fixation has been made at Rs.1487/- per kg. My attention is drawn to paragraph 7 of the Drugs (Prices Control) Order, 1995 under which the price fixation formula is prescribed. The said formula takes into consideration cost of manufacture which includes the trade margin and margin for manufacture and maximum allowable post manufacturing expenses, which are 100% of the cost of manufacture.
9. It may be noticed here that the impugned order, which is subject matter of challenge in the writ petition, is the remand order passed by the Revisionary Authority dated 30th September, 2009 and the contention raised by the petitioner is that the Revisionary Authority did not adjudicate and decide certain aspects. It cannot be said that the respondents have acted in a manner, which is contrary to the Essential Commodities Act, 1995 and the Drugs (Prices Control) Order, 1995, which requires interference at an interim stage. It may be noticed that the respondents have along with the reply filed written opinions of experts to justify their claim that Doxofylline is a derivative of Theophylline. The petitioners themselves are not manufacturers but procure Doxofylline from third parties. The respondents have therefore raised substantial contentions in defence to the pleas raised by the petitioner. I am not WPC No.12958/2009 Page 3 satisfied that the petitioners have been able to make out a prima facie case which justifies grant of interim stay. Larger public interest and balance of convenience also does not justify grant of stay. The main writ petition may be taken up for hearing in the first part of 2010.
10. By the last order dated 23rd November, 2009, it was clarified that the petitioners are at liberty to challenge the order dated 17th November, 2009 on merits relating to price fixation before the Revisionary Authority. It is open to the petitioners to challenge the price fixation before the Revisionary Authority in case there is violation of any of the standards prescribed in paragraph 7 of the Drugs (Prices Control) Order, 1995.
11. It is clarified that the observations made in this order are prima facie and tentative and for the purpose of disposing of the interim application. The writ petition will be disposed of on merits without being influenced by the said observations. There will be no order as to costs.
CM No. 14676/2009The application in the present form is not maintainable. The petitioner- applicant will file an appropriate application mentioning the amendments prayed for and enclose therewith the proposed amended writ petition.
The application is disposed of with liberty to the petitioner to file a fresh application, if so advised.
SANJIV KHANNA, J.
DECEMBER 03, 2009
VKR/P
WPC No.12958/2009 Page 4