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B. Sudershan Reddy, J

1. These writ petitions are interconnected and require to be disposed of by a common order.

2. The petitioner, Dr. Reddy's Laboratories, inter alia, is a manufacturer of drug known as 'Norfloxacin', which is useful for treatment of urinary infections. The petitioner claims to be the largest manufacturer of 'Norfloxacin' as bulk drug in the country and also exports substantial quantities of the bulk drug,

3. The petitioner in these writ petitions challenges the decisions of the Government of India dated 13.12.1996 and 27.12.1995. The Government of India vide its impugned decision dated 13.12.1996, in exercise of the powers conferred by sub-paragraph (1) of Paragraph-3 of the Drugs (Price Control) Order, 1995 (for short "DPCO, 1995"), fixed the price of the bulk drug 'Norfloxacin' at Rs. 2162/- per kilogram. Likewise, in exercise of power under sub-paragraph (1) of Paragraph-9 of the DPCO, 1995 the Central Government fixed the prices of 'Norfloxacin' tablets as the selling prices exclusive of the excise duty and local tax and accordingly notified the same.

Relevant Clauses of DPCO, 1995:

4. There is no dispute, whatsoever, that the respondents have been vested with the powers under the DPCO, 1995 issued under the Essential Commodities Act, 1955 to fix the prices of all scheduled drugs listed in the First Schedule of the said Order after due enquiry contemplated under Paragraph 3(1) and on the formulations in accordance with the Paragraphs 7, 8 and 9 of the said Order. Paragraph-3 of the DPCO, 1995, which confers power to fix the maximum sale prices of the bulk drugs specified in the First Schedule itself reveals that such a power has been conferred upon the Government with a view to regulate the equitable distribution ad increasing supplies of bulk drugs specified in the First Schedule and making it available at a fair price, from different manufacturers, after making such enquiry as deemed fit. The Government is authorized to fix the prices from time to time by notification in the Official Gazette specifying the maximum sale prices at which such bulk drugs shall be sold. Likewise, Paragraph-8 of the DPCO, 1995 enables the Government to fix retail price of a formulation in accordance with the formula laid down in Paragraph-7 of the Order. Paragraph-7 provides the details of the formula for the purposes of calculation of the retail price to be fixed by the Government. There is an obligation on the manufacturers of the bulk drug with respect to which the enquiry is in progress, to furnish information as required by the Government. Paragraph-3 (2) of the DPCO, 1995 mandates the Government, while fixing the maximum sale price of a bulk drug, to take into consideration a post-tax return of 14% on net worth or a return of 22% of capital employed or in respect of a new plant an internal rate of return of 12% based on long term marginal costing depending upon the option for any of the specified rates of return that may be exercised by a manufacturer of a bulk drug. Sub-paragraph (3) of Paragraph-3 mandates that no person shall sell a bulk drug at a price exceeding the maximum sale price fixed under sub-paragraph (1) plus local taxes, if any.

15. A plain reading of Paragraph-11 of the DPCO, 1995 would reveal in clear and categorical terms that wherever a manufacturer or importer of a bulk drug or formulation either fails to submit application for price fixation or fails to furnish information as required under the DPCO within the time specified, the Government is entitled to fix the price in respect of such bulk drug or formulation on the basis of information available with it. In our considered opinion, whenever the Central Government is acting under Paragraph-11 of the DPCO, it is not bound to take the formula provided for under sub-paragraph (2) of Paragraph-3 of the DPCO. The enquiry contemplated under Paragraph-3 is required to be made for the purposes of fixing maximum sale price of bulk drugs on the basis of the information and additional information that may be provided by the manufacturer. The manufacturer is duty bound and under obligation to permit the team appointed by the Government for inspection of their manufacturing premises for verification through on the spot study of manufacturing processes facilities and records thereof. In the case on hand, the petitioner did not cooperate enabling the team to verify and study manufacturing processes and peruse the record. Some data furnished by the petitioner cannot be equated to the complete particulars required to be furnished in Form I by the manufacturer. The factors as provided in sub-paragraph (2) of Paragraph-3 of the DPCO are required to be taken into consideration only when the Government is acting under Paragraph-3(1) of the DPCO to fix the maximum sale price of bulk drugs specified in the First Schedule. Those parameters are not required to be taken into consideration in the absence of the information required to be furnished by the manufacturer and when the Central Government proceeds to fix the price under Paragraph-11 based on such information as may be available with it. The power under Paragraph-11 is available both for the purposes of fixation of price in respect of bulk drug or formulation thereof. In our considered opinion, Paragraph-3 and as well as Paragraph-7 of the DPCO shall have no application when the Central Government exercises its power under Paragraph-11 of the DPCO. That Paragraph-11 is special in its nature and confers power of fixation of price under certain circumstances. Those circumstances under which the Central Government is entitled to act are; (i) lack of information, and (ii) for failure to submit the application for price fixation or furnish information as required under the DPCO by the manufacturers. This is a clear case where the petitioner/manufacturer failed to furnish information as required in spite of repeated reminders by the Central Government. It is a clear case where the petitioner without any reason not only failed to furnish the required particulars but also did not facilitate the inspection team to verify the manufacture process by way of a spot study and did not co-operate with the team to inspect the records.

17. Section 3(2)(C) of the Essential Commodities Act, 1955 enables the Central Government, to make an order providing for controlling the price at which an essential commodity may be brought or sold. It is in pursuance of the power granted to the Central Government by Section 3 of the Essential Commodities Act, 1955 the Central Government made the Drugs (Prices Control) Order, 1995. A fair reading of the whole of the DPCO makes it abundantly clear that the said DPCO has been made with a view to regulate equitable distribution and increasing supplies of bulk drug price specified and with a view to make it available at a fair price. The DPCO imposes obligation on every manufacturer to furnish information and indicate the details of the cost of each of the such bulk drug. They are under obligation to furnish the details even in relation to non-scheduled bulk drugs. The Central Government is conferred with the power to fix ceiling price to the scheduled formulations and to fix retail price for scheduled formulations. Public interest is the paramount consideration whenever the Central Government exercises its power under the DPCO. Each of the paragraphs under the DPCO should receive construction at our hands, which advances the purposes for which the DPCO has been promulgated.