TaxTMI 
TaxTMI 
2017 (12) TMI 1737
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.... Technical Advisory Board (DTAB) set up under Section 5 of the said Act. It must be stated that the learned single Judge differed from judgments of the Karnataka and Madras High Courts in this regard, wherein two other learned single Judges of two other High Courts have held that such consultation with the DTAB is not mandatory before exercise of such power under Section 26A. Since we are concerned only with this narrow question that has been decided by the learned single Judge of the Delhi High Court, we are not going into any other contentions that have been raised by learned counsel for the parties. 3. The issue regarding the prevalence of many Fixed Dose Combinations (hereinafter referred to "FDCs") that were flooding the Indian market and had not been tested for efficacy or safety was considered by the Parliamentary Standing Committee on Health and Family Welfare in its 59th Report in May, 2012. The Standing Committee observed that some of the State Licensing Authorities have issued manufacturing licenses for a very large number of FDCs without prior clearance from the Central Drugs Standard Control Organization (CDSCO). Such FDCs can pose significant risks to persons and nee....
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....c interaction, dosage compatibilities of FDCS vis-a-vis that of single ingredients present in the FDC, available literature/evidence, clinical experience and other data available. d. Those FDCs which may be considered as rational, based on present data and knowledge available. However, data in post market scenario is required to be generated within a period of 1 to 2 years to confirm the same. e. All the FDCs falling, under category "b" above would be referred to the respective Expert Committee out of 10 Expert Committees already constituted. Composition of Expert Committee for examining the safety & efficacy of Fixed Dose Combinations (FDCs) is as under: S.No. Name of Expert Name & Address of Institutions Qualification Status in the Committee 1 Prof. Chandrakant Kokate Vice-Chancellor, KLE University, Belgaum, Karnataka & Ex-President of Pharmacy Council of India. M. Pharm, Ph.D. Chairman 2 Dr. C.L. Kaul Former Director, NIPER, 432, Ph.D. Mahatma Society, Koth Road, Pune-38. B. Pharm, Member 3 Prof. Sanjay Singh Deptt. of Pharmaceutics, IIT, BHU, Varanasi. M. Pharm, Ph.D. Member 4 Dr. C.D. Tripathi Prof. & HOD (Pharmacology), Safdarjung Hospital, N....
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....hat by notifications dated 10.3.2016 issued under Section 26A, the Central Government banned manufacture and sale of 344 FDCs. 7. In March 2016, a large number of writ petitions were filed in the Delhi High Court against the aforesaid notifications. The impugned judgment then followed on 1.12.2016 disposing of 454 petitions, followed by an order dated 21.12.2016, in which the Delhi High Court disposed of 51 further writ petitions in terms of the judgment dated 1.12.2016. 8. Letters Patent Appeals were filed before the Delhi High Court. Meanwhile, the Union of India filed transfer petitions in this Court. This is how these matters have been heard by us in civil appeals arising out of SLPs against the judgment of the single Judge dated 1.12.2016 and in transfer cases in which the LPAs pending before the Delhi High Court have been transferred to us. 9. Ms. Pinky Anand, learned Additional Solicitor General, took us through various provisions of the Drugs Act, and emphasized that Section 26A does not expressly refer to the DTAB. According to her, a large number of provisions of the Drugs Act expressly refer to the DTAB in various contexts and, therefore, it is not permissible for the....
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....nd not the Central Government. He further referred to the Drugs and Cosmetics Rules, 1945 (hereinafter referred to as the "Drugs Rules"), in particular Rules 21, 68A, 122A, 122D and 122DA, to buttress his submission that a detailed filtration process has to be gone through before a drug can be manufactured and put on the market and that the Central Government cannot ban such drug without consulting the technical expert under the Drugs Act namely, the DTAB, that is set up under Section 5. He also argued that Sections 10A and 26A were introduced by way of an amendment in 1982 and this being so, it is clear that it is assumed by Parliament that Section 5 of the Drugs Act will be read along with both of them so as to make the DTAB a mandatory consultee before action is taken under Section 26A. 11. Shri Vashisht, learned senior counsel appearing for some of the respondents, adverted to Section 5 and stated that it was in two parts, the first being advice to the Central Government on all technical matters arising out of the administration of the Drugs Act and the second (and distinct part) being to carry out other functions assigned to it by the Drugs Act. It is clear, therefore, that i....
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....rence to the DTAB in Section 26A is deliberate. She also went on to state that Rule 66 of the Drugs Rules, which deals with cancellation of individual licenses and which requires compliance with natural justice, should be contrasted with Section 26A of the Drugs Act which, according to her, is a legislative power as opposed to an administrative power. 14. Having heard learned counsel for the parties, it is first important to set out some of the provisions of the Drugs Act. "5. The Drugs Technical Advisory Board.- (1) The Central Government shall, as soon as may be, constitute a Board (to be called the Drugs Technical Advisory Board) to advise the Central Government and the State Governments on technical matters arising out of the administration of this Act and to carry out the other functions assigned to it by this Act. (2) The Board shall consist of the following members, namely:- (i) the Director General of Health Services, ex officio, who shall be Chairman; (ii) the Drugs Controller, India, ex officio; (iii) the Director of the Central Drugs Laboratory, Calcutta, ex officio; (iv) the Director of the Central Research Institute, Kasauli, ex officio; (v) the Direc....
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....Secretary of the Board and shall provide the Board with such clerical and other staff as the Central Government considers necessary. 6. The Central Drugs Laboratory.- (1) The Central Government shall, as soon as may be, establish a Central Drugs Laboratory under the control of a Director to be appointed by the Central Government, to carry out the functions entrusted to it by this Act or any rules made under this Chapter: Provided that, if the Central Government so prescribes, the functions of the Central Drugs Laboratory in respect of any drug or class of drugs or cosmetic or class of cosmetics shall be carried out at the Central Research Institute, Kasauli, or at any other prescribed Laboratory and the functions of the Director of the Central Drugs Laboratory in respect of such drug or class of drugs or such cosmetic or class of cosmetics shall be exercised by the Director of that Institute or of that other Laboratory, as the case may be. (2) the Central Government may, after consultation with the Board, make rules prescribing- (a) the functions of the Central Drugs Laboratory; ******** (d) the procedure for the submission of the said Laboratory under Chapter IV or Chap....
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...., and in accordance with, such licence; (d) any patent or proprietary medicine, unless there is displayed in the prescribed manner on the label or container thereof the true formula or list of active ingredients contained in it together with the quantities thereof; (e) any drug which by means of any statement, design or device accompanying it or by any other means, purports or claims to cure or mitigate any such disease or ailment, or to have any such other effect, as may be prescribed; (ee) any cosmetic containing any ingredient which may render it unsafe or harmful for use under the directions indicated or recommended; (f) any drug or cosmetic the import of which is prohibited by rule made under this Chapter: Provided that nothing in this section shall apply to the import, subject to prescribed conditions, of small quantities of any drug for the purpose of examination, test or analysis or for personal use: Provided further that the Central Government may, after consultation with the Board, by notification in the Official Gazette, permit, subject to any conditions specified in the notification, the import of any drug or class of drugs not being of standard quality. 12. ....
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....to have any such other effect as may be prescribed; (v) any cosmetic containing any ingredient which may render it unsafe or harmful for use under the directions indicated or recommended; and (vi) any drug or cosmetic in contravention of any of the provisions of this Chapter or any rule made thereunder; (b) sell, or stock or exhibit or offer for sale, or distribute any drug or cosmetic which has been imported or manufactured in contravention of any of the provisions of this Act or any rule made thereunder; (c) manufacture for sale or for distribution, or sell, or stock or exhibit or offer for sale, or distribute any drug or cosmetic, except under, and in accordance with the conditions of, a licence issued for such purpose under this Chapter: Provided that nothing in this section shall apply to the manufacture, subject to prescribed conditions, of small quantities of any drug for the purpose of examination, test or analysis: Provided further that the Central Government may, after consultation with the Board, by notification in the Official Gazette, permit, subject to any conditions specified in the notification, the manufacture for sale, or for distribution, sale, stock....
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....prescribe the forms of licences for the manufacture for sale or for distribution, for the sale and for the distribution of drugs or any specified drug or class of drugs or of cosmetics or any specified cosmetic or class of cosmetics, the form of application for such licences, the conditions subject to which such licences may be issued, the authority empowered to issue the same, the qualifications of such authority and the fees payable therefor; and provide for the cancellation or suspension of such licences in any case where any provision of this Chapter or the rules made thereunder is contravened or any of the conditions subject to which they are issued is not complied with; (ee) prescribe the records, registers or other documents to be kept and maintained under section 18B; (eea) prescribe the fees for the inspection (for the purposes of grant or renewal of licences) of premises, wherein any drug or cosmetic is being or is proposed to be manufactured; (eeb) prescribe the manner in which copies are to be certified under sub-section (2A) of section 22; (f) specify the diseases or ailments which a drug may not purport or claim to prevent, cure or mitigate and such other eff....
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....se, from all or any of the provisions of this Chapter or the rules made thereunder, of any specified drug or class of drugs or cosmetic or class of cosmetics; and (r) sum which may be specified by the Central Government under section 32-B. 33EED. Power of Central Government to prohibit manufacture, etc., of Ayurvedic, Siddha or Unani drugs in public interest.- Without prejudice to any other provision contained in this Chapter, if the Central Government is satisfied on the basis of any evidence or other material available before it that the use of any Ayurvedic, Siddha or Unani drug is likely to involve any risk to human beings or animals or that any such drug does not have the therapeutic value claimed or purported to be claimed for it and that in the public interest it is necessary or expedient so to do then, that Government may, by notification in the Official Gazette, prohibit the manufacture, sale or distribution of such drug. 33N. Power of Central Government to make rules.- (1) The Central Government may, after consultation with, or on the recommendation of, the Board and after previous publication by notification in the Official Gazette, make rules for the purpo....
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....or other documents to be kept and maintained under section 33 KB; and (h) any other matter which is to be or may be prescribed under this Chapter." 15. Having heard learned counsel for the parties, it is clear that Section 26A has been introduced by an amendment in 1982. A bare reading of this provision would show, firstly, that it is without prejudice to any other provision contained in this Chapter (meaning thereby Chapter IV). This expression only means that apart from the Central Government's other powers contained in Chapter IV, Section 26A is an additional power which must be governed by its own terms. Under Section 26A, the Central Government must be "satisfied" that any drug or cosmetic is likely to involve (i) any risk to human beings or families; or (ii) that any drug does not have the therapeutic value claimed or purported to be claimed for it; or (iii) contains ingredients in such quantity for which there is no therapeutic justification. Obviously, the Central Government has to apply its mind to any or all of these three factors which has to be based upon its "satisfaction" as to the existence of any or all of these factors. The power exercised under Section 26A must....
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.... answer is no inasmuch as the Central Government's satisfaction is based upon relevant material, namely, the fact that 50 nations have banned the aforesaid drug, which in turn is based on expert committee reports taken in each of those nations. Take another example. Suppose the Central Government were to ban an FDC on the ground that, in the recent past, it has been apprised of the fact that the FDCs taken over a short period of time would lead to loss of life, which has come to the notice of the Central Government through reports from various district authorities, in let us say, a majority of districts in which the said FDC has been consumed. Could not the Central Government then base its ban order on material collected from district authorities which state that this particular drug leads to human mortality and ought, therefore, to be prohibited? The obvious answer again is yes for the reason that the Central Government has been satisfied on relevant material that it is necessary in public interest to ban such drug. Examples of this nature can be multiplied to show that the width of the power granted under Section 26A cannot be cut down by artificially cutting down the language ....
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.... an advisory body. No doubt, it would be desirable for the Central Government to take its advice on technical matters arising out of the administration of the Drugs Act, but this does not lead to the conclusion that if such advice is not taken power under Section 26A cannot be exercised. Indeed, the Central Government's satisfaction may be based on a number of factors, one of which may be advice tendered to it by the DTAB under Section 5. There is no warrant to read Section 26A to constrict the wide powers granted to the Central Government by a so-called harmonious construction of the statute. Another argument made is that Section 5 makes it clear that the DTAB alone can constitute sub-committees which may have persons who are not members of the Board on them. We are afraid that this again does not lead us very far. It is clear that the reason for Section 5(5) is completely different. Sub-committees may be appointed for such periods not exceeding three years or temporarily for the consideration of particular matters. Such sub-committees may be set up in the wisdom of the DTAB for short periods of time or temporarily to consider certain matters and make reports which the DTAB may th....
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....clear that the said maxim should be very carefully applied and when misapplied would turn out to be a "dangerous master" as opposed to a "useful servant". This has also been held in Assistant Collector of Central Excise, Calcutta Division v. National Tobacco Co. of India Ltd., (1972) 2 SCC 560 at 575 as follows: "The High Court's view was based on an application of the rule of construction that where a mode of performing a duty is laid down by law it must be performed in that mode or not at all. This rule flows from the maxim: "Expressio unius ast exclusio alterius". But, as was pointed out by Wills, J., in Colguoboun v. Brooks [(1888) 21 QBD 52, 62] this maxim "is often a valuable servant, but a dangerous master....". The rule is subservient to the basic principle that Courts must endeavour to ascertain the legislative intent and purpose, and then adopt a rule of construction which effectuates rather than one that may defeat these." This argument, therefore, also need not detain us. 23. It was also argued that Section 26A had no non obstante clause to keep Section 5 out of harm's way. On our construction of Section 26A, it is clear that no such non obstante clause was nece....
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.... judgment of the Federal Court in Hindu Women's Rights to Property Act, 1937, In re [Hindu Women's Rights to Property Act, 1937, In re, AIR 1941 FC 72]. In that judgment, the word "property" in Section 3 of the Hindu Women's Rights to Property Act was read down so as not to include agricultural land, which would be outside the Central Legislature's powers under the Government of India Act, 1935. This is done because it is presumed that the legislature did not intend to transgress constitutional limitations. While so reading down the word "property", the Federal Court held: "... If the restriction of the general words to purposes within the power of the legislature would be to leave an Act with nothing or next to nothing in it, or an Act different in kind, and not merely in degree, from an Act in which the general words were given the wider meaning, then it is plain that the Act as a whole must be held invalid, because in such circumstances it is impossible to assert with any confidence that the legislature intended the general words which it has used to be construed only in the narrower sense: Owners of SS Kalibia v. Wilson [(1910) 11 CLR 689 (Aust)], Vacuum Oil Co. Pty. L....
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....e remaking of the statute by the courts is to lead to its distortion that course is to be scrupulously avoided. One of the situations further where the doctrine can never be called into play is where the statute requires extensive additions and deletions. Not only it is no part of the court's duty to undertake such exercise, but it is beyond its jurisdiction to do so." (emphasis supplied) 52. Applying the aforesaid test to the impugned Regulation, it is clear that the language of the Regulation is definite and unambiguous - every service provider has to credit the account of the calling consumer by one rupee for every single call drop which occurs within its network. The Explanatory Memorandum to the aforesaid Regulation further makes it clear, in Para 19 thereof, that the Authority has come to the conclusion that call drops are instances of deficiency in service delivery on the part of the service provider. It is thus unambiguously clear that the impugned Regulation is based on the fact that the service provider is alone at fault and must pay for that fault. In these circumstances, to read a proviso into the Regulation that it will not apply to consumers who are at fault them....
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....out by the Parliament. This cannot be done by me and hence the first contention has to be rejected." 29. To similar effect is the judgment of a single Judge of the Karnataka High Court in Lundbeck India Pvt. Ltd. v Union of India, (2014) 5 Kant LJ 440. 30. We approve of these two judgments as having laid down the correct law on the construction of Section 26A of the Drugs Act. 31. Though arguments have been made as to whether Section 26A is legislative in nature and therefore excludes natural justice, we do not propose to go into the same inasmuch as since the learned single Judge's judgment is being set aside on one point and one point alone. In this view of the matter, we are of the opinion that the impugned judgment dated 1.12.2016 deserves to be set aside. 32. On the facts of these cases, a suggested course of action was stated by learned counsel appearing on behalf of the petitioners/appellants. This course is that instead of now remitting the matter back to the Delhi High Court for an adjudication on the other points raised in the writ petitions, the case of 344 FDCs that have been banned, plus another 5 FDCs that have been banned, which comes to 349 FDCs, (barring 15 FD....
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....e factors indicated above is attracted; (2) post such satisfaction, that in the larger public interest, it is necessary or expedient to (i) regulate, (ii) restrict, or (iii) prohibit the manufacture, sale or distribution of such FDCs. 35. The DTAB/Sub-Committee must also indicate in its report as to why, in case it prohibits a particular FDC, restriction or regulation is not sufficient to control the manufacture and use of the FDC. We request the DTAB/Sub-Committee to be set up for this purpose to afford the necessary hearing to all concerned, and thereafter submit a consolidated report, insofar as these FDCs are concerned, to the Central Government within a period of six months from the date on which this judgment is received by the DTAB. We may also indicate that the Central Government, thereafter, must have due regard to the report of the DTAB and to any other relevant information, and ultimately apply its mind to the parameters contained in Section 26A of the Drugs Act and, accordingly, either maintain the notifications already issued, or modify/substitute them or withdraw them. 36. With these directions given on the peculiar facts and circumstances of these cases, the appe....