Patna High Court
Union Of India (Uoi) vs Jaiswal Medical Hall, Sisai And Ors. And ... on 14 February, 1997
Equivalent citations: 1997(2)BLJR1088
Author: D.P. Wadhwa
Bench: D.P. Wadhwa
JUDGMENT D.P. Wadhwa, C.J. and S.K. Chattopadhyaya, J.
1. These two appeals are directed against the judgment and order dated August 18, 1987, and that dated April 10, 1989, passed by the learned Single Judges in two separate writ petitions challenging the notification dated July 18, 1980, issued under the Drugs and Cosmetics Act, 1940 (For short 'the Act') amending the Drugs and Cosmetic Rules, 1945 (For short 'the Rules') enhancing the fees payable for different licences granted under the Rules.
2. As the preamble of the Act would show, it is an Act to regulate the import, manufacture, distribution and sale of drugs and cosmetics. Sections 12, 18 and 33 of the Act empower the Central Government to make rules for the purpose of giving effect to the provisions of the Act. Under Clause (e) of Sub-section (2) of Section 33 of the Act, the Central Government has power to make rule prescribing the forms of licences for various categories like manufacture for sale or for distribution of any specific drug or class of drugs or cosmetics etc. It is also empowered to fix fees payable therefor and to provide for the cancellation or suspension of such licences. Conditions have also been prescribed under which licences are to be issued or cancelled for contravention thereof.
3. Before the impugned notification, under Sub-rule (2) of Rule 59 of the Rules an application for grant or renewal of a licence to sell, stock or distribute the drugs was to be made in forms 19 or 19 A as the case may be and was to be accompanied with a fees of Rs. 20/-. It further provided that if the applicant applied for renewal of the licence after the expiry of the period but within a period, of six months of such expiry, the fee payable for the renewal of such licence shall be Rs. 20/- Plus an additional fee at the rate of Rs. 20/- per month or part thereof. It may be noted that there are various other forms of licences for which different fees have been prescribed but in present case we are concerned only with the licence prescribed under Rule 59 of the Rules and the fees payable therefore. The impugned notification, in relevant part, is as under:
"Department of Health"
New Delhi, the 18th July, 1980 NOTIFICATION G.S.R. 779.--
Whereas certain draft rules further to amend the Drugs and Cosmetics Rules, 1945, were published, as required by Sections 12, 18 and 33 of the Drugs and Cosmetics Act, 1940 (23 of 1940), hereinafter referred to as the said Act) at pages 841 to 844 of the Gazette of India Part II, Section 3, Sub-section (i), dated the 20th June, 1979, under the notification of the Government of India in the Ministry of Health and Family Welfare (Department of Health) No. GSR 385 (E) dated the 20th June, 1979, inviting objections and suggestions from all persons likely to be affected thereby, before the expiry of 90 days from the date on which the copies of the Official Gazette containing the said notification were made available to the public;
And whereas Copies of the said Gazette were made available to the public on the 10th July, 1979, And whereas the objections and suggestions received from the public on the said draft have been considered by the Central Government;
Now, therefore, in exercise of the powers conferred by Section 12, 18, and 33 of the Act, the Central Government after consultation with the Drugs Technical Advisory Board, hereby makes the following rules further to amend the Drugs and Cosmetics Rules, 1945, namely:
1. (1) These rules may be called the Drugs and Cosmetics (Second Amendment) Rules, 1980.
(2) They shall come into force on the date of their publication in the Official Gazette.
2. In the Drugs and Cosmetic Rules, 1945,-
(A) in rule 59,--
(i) in Sub-rule (2), for the words" a fee of rupees twenty", the words "a fee of rupees forty" shall be substituted.
(ii) in the proviso to Sub-rule (2), for the words "a fee of rupees five", the words "a fee of rupees ten" shall be substituted;
(iii) in Sub-rule (3) for the words "a fee of rupees five", the words "a fee of rupees six" shall be substituted.
(iv) in Sub-rule (3) for the words "a fee of rupee one and twenty five paise", the words "a fee of rupees two" shall be substituted;
(v) in the proviso to Sub-rule (3), for the words "rupees twenty plus an additional fee at the rate of rupees twenty per month or part thereof", the following shall be substituted, namely:
rupees forty plus an additional fee at the rate of rupees thirty per month or part thereof.
(vi) in the proviso to Sub-rule (3), for the words "rupees five plus an additional fee at the rate of rupees five per month or part thereof" the following shall be substituted, namely:
rupees ten plus an additional fee at the rate of rupees eight per month of part thereof. (B) in rule 67-A...
4. Rule 63 provides for duration of licence and reads as under--
63. Duration of licence--An original licence or a renewed licence to sell drugs, unless sooner suspended or cancelled, shall be valid up to the 31st December of the year following the year in which it is granted or renewed:
Provided that if the application for renewal of licence in force is made before its expiry or if the application is made within six months of its expiry, after payment of additional fee, the licence shall continue to be in force until orders are passed on the application. The licence shall be deemed to have expired if application for its renewal is not made within six months after its expiry.
5. It appears that after the impugned notification was issued, the Association of the petitioners represented to the State Government to annul and repeal the provisions for levy of late fees for the renewal of licence but that representation was turned down by letter dated 24.10.1981 and licence holders were directed to make application for renewal of their licences along with late fees within certain period. The immediate cause for filing the writ applications was the communication dated February 10, 1982, from the Civil Surgeon-cum-Chief Medical Officer, Ranchi, to the petitioners warning them that if they had failed to deposit the enhanced fees till November, 30 1981, their licences would be deemed to have stood cancelled with effect from January 1, 1981.
6. The petitioners have contended that element of quid pro quo is missing and that the licence fee could not have been enhanced. This plea was upheld by the learned Single Judge and by the impugned judgment the learned Single Judge has not only set aside the impugned notification but also quashed the two communications dated 24.10.1981 and 10.2.1982.
7. To us it appears that the whole judgment has proceeded on a wrong premise. In paragraph 9 of the judgment, it is mentioned that by reason of the impugned amendment as contained in the notification the fee of Rs. 20/- has been enhanced to a sum of Rs. 40/- and additional fee of Rs. 30/- per month. Then in paragraph 20 of the judgment, it is mentioned that in the instant case what is under challenge is not the levy of fees but enhancement thereof in terms of the impugned notification whereby and whereunder fee has been enhanced and, as such, it was obligatory on the part of the Rule making authority to satisfy the court that it was necessary in the facts and circumstances of the case to enhance the fees in the manner as has been sought to be done.
8. In the reasonings of the learned Single Judge, two errors are obvious. There is no additional fee at the rate of Rs. 30/- per month. If the fee originally levied is valid and, after a certain period, is enhanced there could certainly be no challenge. Let us correct the first error. Prior to the impugned notification, an application for renewal of licence to sell, stock or exhibit or offer for sale or distribute drugs after expiry of the period of licence is made within six months of such expiry, it shall be accompanied by a fee of Rs. 20/- plus an additional fee at the rate of Rs. 20/- per month, or part thereof. After amendment by the impugned notification, now such an application is to be accompanied by a fee of Rs. 40/- plus additional fee at the rate of Rs. 30/- per month or part thereof. It is not that the additional fee at the rate of Rs. 30/- per month is to be paid throughout the period of validity of the licence. A licence would be renewed if an application for renewal is made within six months of the expiry of the licence and for this a licence holder has to pay Rs. 40/- and additional fee at the rate of Rs. 30/- per month or part thereof. For example if the licence holder makes an application for renewal of the licence after three and half months of its expiry, he will have to pay Rs. 40/- plus Rs. 105/-. It is not, therefore, correct to say that an applicant for renewal of licence has to go on paying Rs. 30/- every month during the period his licence is valid.
9. It has been pointed out that originally the licence fee was fixed in the year 1957 which was considered very low in view of the fact that in about two decades there has been considerable increase in the cost of the commodities, stationery and wages as also establishment expenses. It was on the recommendation of the Drugs Consultative Committee that decision was taken to enhance the licence fee. The preamble of the impugned notification shows that the process for issuing notification as provided under the Act has been gone through. It is further to be noted that various kinds of services including inspection are performed by the authorities under the Act and the Rules and it could not also be said that element of quid pro quo was missing. Licensing authorities are also performing duties to check and control and to see that licence holders shall stock and sell drugs in accordance with the rules and that spurious drugs are not sold in the market. We do not think that there can be any dispute that proper control has to be exercised by the authorities under the Act and the Rules for sale of various types of drugs and for their stock. Services of various kinds are also being rendered by the authorities appointed under the Act to the licence holders and these include: (i) to provide professional and technical advice to the Drug manufacturers in order to improve the quality and standard of their products; (ii) to assist them in the expansion of their plant and to get them acquainted of the latest technique of manufacturing and to study and grant permission to new drugs for marketing; (iii) to prepare reference standards for most of the chemicals and to compile the same; to train officers and to increase the number of Drug Officers so that they are available to the licencees near their places of business etc. Therefore, Central Government has been empowered to fix fees for the licences to be granted. The fees are not confiscatory in nature. These are also not so excessive. In this view of the matter, it is not necessary for us to look into the authorities as to what are the para-meters for quid pro quo and if such factors could be imported while implementing the provisions of the Act and the Rules. It is certainly cannot the case that what has been enhanced by the impugned notification was not in the nature of fees or was in any way excessive.
10. Accordingly, the appeals are allowed and the impugned judgments and orders are set aside. However, in the circumstances of the case, there shall be no order as to costs.