TaxTMI 
TaxTMI 
2015 (7) TMI 1421
X X X X Extracts X X X X
X X X X Extracts X X X X
....various health products including male contraceptives (Condoms). It is pleaded that the petitioner in W.P. No.7705/2013 manufactures and markets "condoms" under the brand name "Durex‟ and "Kohinoor‟, whereas the petitioner in W.P. No.2245/2014 manufactures and markets under the brand name "Kamasutra‟. 3. Prior to coming into force of the Drugs (Prices Control) Order, 2013 (DPCO, 2013) with effect from 15.05.2013, no ceiling price was fixed for sale of the condoms. However, by order dated 05.11.2013, the National Pharmaceutical Pricing Authority, Department of Pharmaceuticals, Ministry of Chemicals and Fertilizers, Government of India, in exercise of the powers conferred by Paragraph 4, 11 and 14 of the Drugs (Prices Control) Order, 2013, fixed the ceiling price of the condoms at Rs.6.56/- per unit (one condom). 4. The petitioners, who claim that the cost price of the branded condoms manufactured/marketed by them is much higher than the ceiling price of Rs.6.56/- fixed by the National Pharmaceutical Pricing Authority (NPPA) are therefore aggrieved and accordingly these two writ petitions are filed with a prayer to declare the inclusion of male contraceptive (cond....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the writ petition. Hence, we are of the view that the proposed amendment is essential for the purpose of determining the real questions in controversy between the parties and accordingly we allow the amendment as proposed in CM No.10105/2014. 8. It may also be added that the respondents have filed their reply to the amended writ petition and the same has been on record. 9. Before proceeding further, it is necessary for us to notice the legal position relating to the power of the Central Government to control the prices of certain essential commodities. Essential Commodities Act, 1955 10. The Essential Commodities Act, 1955 (for short "EC Act, 1955) has been enacted for the control of the production, supply and distribution of and trade and commerce in certain commodities. Section 3(1) of the said Act empowers the Central Government to provide by order for regulating or prohibiting the production, supply and distribution of trade and commerce of any essential commodity, if it is of the opinion that it is necessary or expedient to do so for maintaining or increasing supplies of any essential commodity or for securing their equitable distribution and availability at fair prices o....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Drugs and Cosmetics Act, 1940. Drugs and Cosmetics Act, 1940 13. The Drugs and Cosmetics Act, 1940 has been enacted to regulate the import, manufacture, distribution and sale of drugs and cosmetics. Under Section 3(b) of the Drugs and Cosmetics Act, 1940, the word "drug‟ has been defined as under: "(b) "drug‟ includes - (i) all medicines for internal or external use of human beings or animals and all substances intended to be used for or in the diagnosis, treatment, mitigation prevention of any disease or disorder in human beings or animals, including preparations applied on human body for the purpose of repelling insects like mosquitoes; (ii) such substances (other than food) intended to affect the structure or any function of the human body or intended to be used for the destruction of vermin or insects which cause disease in human beings or animals, as may be specified from time to time by the Central Government by notification in the Official Gazette; (iii) all substances intended for use as components of a drug including empty gelatin capsules; and (iv) such devices intended for internal or external use in the diagnosis, treatment, mitigation or preventi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....drugs or any specified drug or class of drugs, the form of application for such licenses, the conditions subject to which such licenses may be issued and the matters incidental thereto. 17. In exercise of the powers so conferred by Sections 12 and 33 of the Drugs and Cosmetics Act, 1940, the Central Government made the Drugs and Cosmetics Rules, 1945. Part IV of the said Rules provides for licenses for import of drugs whereas Part VII provides for grant of or renewal of licenses for manufacture for sale of drugs other than homeopathic medicines. Schedule-A to the Rules prescribed the forms of applications for such grant or renewal of licenses. Part XII of the said Rules deals with the standards of drugs, substances, veterinary drug, patent of proprietary medicines, ophthalmic preparation and etc. Rule 125 contained in Part XII specifically prescribes the standards for substances intended to effect the structure or any function of human body-contraceptives. As per the said Rule, the standard for mechanical contraceptive shall be such as are laid down in Schedule-R to the Rules wherein various aspects including the description of the condoms, the material, the dimensions, the requir....
X X X X Extracts X X X X
X X X X Extracts X X X X
....istrators to ensure abundant availability of such drugs in the country. The drugs included in this list are generally safe and effective, and are approved by the Drugs Controller General, India, and are currently available at affordable prices to the general public." 20. The review of National Essential Drugs List 1996 was taken up in the year 2003. Since the word "drug‟ is globally being considered to have a different (narcotic) connotation, the Expert Core Committee thought it fit to replace the word "drug‟ with the word "medicine‟, a term which is more widely used to describe therapeutic pharmaceutical substance. Accordingly, the said List was titled "National List of Essential Medicines, 2003‟. The said List included the following three components, viz., definition, description of the selection criteria and description of the purpose for which the said List was developed. Definition: Essential medicines are those that satisfy the priority health care needs of the population. Selection criteria: Essential medicines are selected with due regard to disease prevalence, evidence on efficacy and safety, and comparative cost-effectiveness. Purpose: Essentia....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ozen with effect from 01.04.1963. Thereafter, a series of price control regimes were notified through various orders in the country from time to time based on different principles, in which the span of control of prices as well as the nature of control of prices varied from order to order as per the disposition of the respective Drug Policies. These were the Drugs (Prices Control) Order of 1966, the Drugs (Prices Control) Order of 1970 - issued under the Essential Commodities Act, 1955 by declaring drugs to be essential commodities under the EC Act, 1955. Thereafter, the Drugs (Prices Control) Order of 1979 and Drugs (Prices Control) Order, 1987 were issued following the declaration of Drug Policy, 1978 and Drug Policy 1986. All these Policies were broadly based on the principle of effecting control over prices of essential drugs and later bulk drugs, as well as availability of drugs while at the same time attending to the requirements of the indigenous industry for growth cost effective production, innovation and strengthening of capacity. The Drug Policy of 1994 was introduced in the context of the liberalization of economy and the abolishment of industrial licensing as well as a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....es for regulation of prices in NPPP, 2012 has been mentioned as "essentiality of drugs‟, which is different from the academic criteria/market share principle adopted in the Drug Policy of 1994. The reasons for adoption of the principle of "essentiality‟ as a key criteria have been mentioned in NPPP 2012 as under: "(i) The "Essentiality" criteria for drugs under the NPPP-2012 is to be met by considering the List of medicines specified in the National List of Essential Medicines as revised from time to time and most recently declared by the Ministry of Health and Family Welfare, Government of India. (ii) The NLEM has been prepared by an Expert Core Committee constituted by the Director General of Health Services (DGHS) out of the WHO model list of essential medicines, Essential Drugs Lists of various States, medicines used in various National Health Programmes and Emergency Care Drugs. (iii) The NLEM contains such medicines that satisfy the priority health needs of the country‟s population. (iv) The NLEM medicines are required to be made available within the context of a functioning health system at all times in adequate quantities in the appropriate dosage ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ovisions, etc. All essential medicines enumerated in NLEM, 2011 are included in the First Schedule to DPCO, 2013 and they are declared as "scheduled formulations" under Para 2(1)(zb) of DPCO, 2013. 31. "Condoms‟ were included in the NELM, 2011 at Item-18.3.3 describing the same as medicines under the category of P, S, T, i.e., Primary, Secondary and Tertiary levels respectively and the same has been incorporated in the First Schedule to DPCO, 2013 at Entry 18.3.3. It may be mentioned that Section 18 of the First Schedule deals with "Hormones, other endocrine medicines and contraceptives‟ and "condoms‟ have been included at Entry 18.3.3 under the caption "Barrier Methods‟. Entry 18.3.3 of the First Schedule to DPCO 2013 may be reproduced hereunder for ready reference: 18.3.3: Barrier Methods Medicines Category Route of Administration/ Dosage Form Strengths Condoms P,S,T 32. The expressions "drug‟ and "medicine‟ have not been defined under DPCO, 2013. However, Para 2(2) of DPCO, 2013 provides that all other words and expressions used in DPCO, 2013 and not defined but defined in Essential Commodities Act, 1955 or the Drugs &....
X X X X Extracts X X X X
X X X X Extracts X X X X
....l Pharmaceutical Pricing Policy, 2012 (NPPP-2012) enunciated by the Central Government. 35.2 Since NPPP 2012 intends to regulate the price of "formulations‟ only and that as per para 2(1)(i) of DPCO 2013 "formulation‟ has been defined as a medicine, it is clear DPCO 2013 is intended to regulate the price of medicines only and not medical devices like "condoms‟. It is further contended that "condom‟ which acts only as a physical barrier and does not have any "active pharmaceutical ingredient‟ (API) as defined in Para 2(1)(b) of DPCO 2013 or any other medicinal substance is only a medical device but under no circumstances can be considered as a "medicine‟. Therefore, "condoms‟ are not "formulations‟ and consequently their prices cannot be controlled by the DPCO 2013. 35.3 Without prejudice to the contention that Condom is not a formulation as defined in Para 2 (1) (i) of the DPCO, 2013, it is further contended that it is not a scheduled formulation but only a non-scheduled formulation as defined in Para 2 (1) (v) and therefore Para 4 providing for fixation of ceiling price is not applicable at all. 35.4 The price of condoms, which....
X X X X Extracts X X X X
X X X X Extracts X X X X
....on that basic condoms are distributed free or at highly subsidised prices by the Governmental agencies whereas the condoms sold in market by the petitioners are of high end sophisticated version. Hence, the fixation of common ceiling price is violative of Article 14 of the Constitution of India. Though the petitioners in their Review Petition have pointed out the said distinction between the two categories, the NPPA failed to appreciate the same. 35.10 Since a large extent of condoms marketed by the petitioner which have a shelf life of three years have already been in the market with the previous MRP, it is practically impossible for the petitioner to withdraw the same from the market so as to implement the ceiling price fixed under the impugned orders within 45 days. 35.11 In the light of the ceiling price fixed under the impugned orders, the petitioners would have no option but to discontinue the sale of the branded condoms or sell them at huge loss. Therefore, the action of the respondents is violative of Article 19 (1)(g) of the Constitution of India. The case of the respondents 36. In the counter filed in response to the writ petitions, the respondent No.2 - NPPA conten....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the list of medicines specified in the NLEM, 2011. 36.4 Accordingly, the new Drug Prices Control Order i.e. DPCO, 2013 was notified on 15.05.2013 covering a large number of essential/life saving drugs in larger public interest. Thus, all formulations included in NLEM, 2011 have been included in the First Schedule to DPCO, 2013 and they are declared as "scheduled formulations" under Para 2(1)(zb) of DPCO, 2013. 36.5 So far as the inclusion of condoms under DPCO, 2013 is concerned, it is explained that the condoms have been included in DPCO, 2013 for securing their equitable distribution and availability at fair prices. 36.6 Even assuming but not admitting that the assertion made by the petitioner that 55% of the condoms used in India are distributed free or at highly subsidized rate is correct, there is still a huge gap of 45% of the demand which has to be met at fair prices considering the fact that India is among the countries with highest number of HIV/AIDS affected population. This fact can be confirmed by the UNAIDS Report on the Global AIDS Epidemic, 2013. The importance of condoms has been highlighted in the "PATH, the World Health Organization, and the United Nations ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s affected by HIV infection and AIDS are more likely to be poor than those not affected. The care and treatment of individuals with HIV, as well as the lost income when complications of AIDS make it impossible for the infected individual to work, can shrink household income by 66 to 80 percent. (f) If essential reproductive health medicines are available, affordable, of good quality, and properly used, they can significantly reduce reproductive health problems. One way to reverse this trend is to mandate that reproductive health medicines be included on EMLs and that EMLs be used to guide public expenditures and policies related to access. (g) There is compelling evidence that the male latex condom, when used consistently and correctly, protects against unwanted pregnancy and the transmission of HIV, the virus that causes AIDS. Condoms also protect against several other STIs, although the level of protection has not been quantified for each specific STI. 36.7 It is also contended that the price control on essential commodities being a policy decision of the Government warrants no interference in exercise of jurisdiction under Article 226. 36.8 It is also contended that in a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nt, mitigation or prevention of any disease or disorder, (ii) such substances which are intended to effect the structure or function of the human body or intended to be used for destruction of vermin or insects as may be notified by the Central Government in the Official Gazette (iii) all substances which are intended to be used as components of a drug like gelatin capsules, and (iv) such devices which are intended for internal or external use for diagnosis, treatment, mitigation or prevention of disease or disorder as may be notified by the Central Government in the Official Gazette and that condoms do not fall in any one of the said categories. (b) It is sought to be contended that "condom‟ is not a medicine for internal or external use to treat or prevent disease in human beings, and that it does not have any active pharmaceutical ingredient as defined in Para-2(1) (b) of DPCO, 2013 or any other medicinal properties. On the other hand, "condoms‟ act only as physical barrier and protect from Sexually Transmitted Infections (STI) and unwanted pregnancy. Pointing out that even in the First Schedule to DPCO, 2013 at Entry 18.3.3 "condoms‟ have been mentioned unde....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t is contended that condoms not being essential commodities, inclusion of condoms within DPCO, 2013 is ultra vires the EC Act, 1955. 37.2 Without prejudice to the above submission, it is contended that "condoms‟ cannot be considered as "drugs‟ even in terms of Section 3(b)(iv) of the Drugs and Cosmetics Act, 1940 since by the date of the amendment to the EC Act by Act 30 of 1974 inserting drugs within the definition of "essential commodity‟ under Section 2(a)(iv a) read with the Explanation thereto, the definition of "drug‟ under Section 3 (b) of the Drugs and Cosmetics Act, 1940 did not include "devices‟. (a) It is sought to be explained by the learned Senior Counsels that by 29.08.1974 with effect from which "drugs‟ were included within the definition of "essential commodities‟ by amendment to the E.C. Act, 1955 by Act 30 of 1974 adopting the meaning assigned to "drugs" in Section 3 (b) of Drugs and Cosmetics Act, 1940, the definition of "drug‟ under Section 3 of Drugs and Cosmetics Act, 1940 did not contain clause (iv) providing for "notified devices‟ and that the same was incorporated only at a later date with effect fro....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hedule to DPCO, 2013 is contrary to NPPP-2012. (a) It is contended that DPCO, 2013 does not include all "drugs‟ as defined under Section 3 (b) of Drugs and Cosmetics Act, 1940, within the scope of price control/regulation but the scope is restricted only to "formulations‟ as defined in Para-2 (1) (i) of DPCO, 2013. It is also submitted that since "condom‟ is not a medicine, it is not a formulation. Referring to Para-3.2 (iv) of NPPP-2012, the learned Senior Counsel submitted that as per the policy decision, the proposed price control mechanism is only in respect of formulations to ensure more specific pricing control of the required medicine in the interest of the consumer from the point of view of the actual prescription by the Doctor. The learned Senior Counsel would submit that "condom‟ not being a prescriptive drug, inclusion of the same in the First Schedule to DPCO, 2013 is contrary to the public policy of the Union of India. (b) It is sought to be explained by the learned Senior Counsel that "condoms‟ are included in NLEM-2011 only with an intention to address the priority health care needs of majority of population but not for the purpose o....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... condoms and thus form a distinct and separate class from the basic/utility condoms, fixation of a common ceiling for both the categories is violative of Article 14 of the Constitution of India. (a) The learned senior counsel further submitted that even assuming without conceding that the inclusion of the condoms within the purview of DPCO, 2013 is permissible under law, the action of the DPPA in fixing a common ceiling price for both the basic/utility condoms and the pleasure condoms manufactured/ marketed by the petitioners ignoring the fact that they belong to two distinct and separate classes is violative of Article 14 of the Constitution of India. (b) In this regard, the learned senior counsel has drawn the attention of this court to the specific pleading in the writ petition that basic/utility condoms are primarily used to act as a physical barrier against unintended pregnancy and sexually transmitted infections whereas pleasure condoms are targetted at increasing the pleasure element for the consumers during intercourse by providing features like ribbed, dotted, lubricated, scented, etc. and thus pleasure condoms constitute a distinct class as opposed to basic condoms fr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n Vaseline Petroleum Jelly was held to be a drug, the learned ASG contended that the definition of "drug‟ under the Drugs and Cosmetics Act must be construed widely and extensively in view of the inclusive nature of the legislative mandate and keeping in mind the objective of the statute. 38.3 In view of Section 3(2)(c) of the Essential Commodities Act, which provides that without prejudice to the generality of the powers conferred by Section 3(1), an order made thereunder may provide for controlling the price at which essential commodity may be bought or sold, the learned ASG would submit that contraceptives which are identified as essential medicines in NLEM 2011 have been rightly included in Section 18 of the First Schedule to DPCO 2013. 38.4 It is also pointed out that the central objective of NPPP 2012 being promulgating the principles necessary for pricing of essential drugs as laid down in NLEM 2011, the ceiling price for condoms has been rightly fixed under DPCO 2013 which is based upon NPPP 2012. 38.5 First Schedule to DPCO 2013 specifically deals with contraceptives under Section 18 and "condoms‟ are included at Entry 18.3.3 as medicines. Since the price....
X X X X Extracts X X X X
X X X X Extracts X X X X
....es cannot be a valid ground to contend that there cannot be price fixation for the products of the petitioners. 38.11 Finally, it is submitted by the learned ASG that no price control orders can be held to be vitiated merely on account of the alleged loss caused to an individual stakeholder. In support of his submission, the learned ASG cited Union of India & Anr. vs. Cynamide India Ltd. & Anr., (1987) 2 SCC 720; Glaxosmithkline Pharmaceuticals Ltd. vs. Union of India & Ors., (2014) 2 SCC 753; Sree Meenakshi Mills Ltd. vs. Union of India, (1974) 1 SCC 468 and Prag Rice & Oil Mills vs. Union of India, (1978) 3 SCC 459. Points for consideration 39. In the light of the rival contentions noticed above, the following questions arise for consideration: (i) Whether "condoms‟ can be considered as "drugs‟ so as to be covered by Section 2-A read with Item-1 of the Schedule to the EC Act, 1955 and whether inclusion of condoms in the First Schedule to DPCO, 2013 is ultra vires the provisions of the Essential Commodities Act, 1955? (ii) Whether issuance of a Control Order for price fixation of condoms is permissible under law and whether the ceiling price fixed by NPPA by or....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... under the Drugs and Cosmetics Act, 1940 read with the Rules made thereunder and that they have been manufacturing/marketing the condoms treating the same as "drugs‟. 42. Thus, it is vehemently contended by the learned ASG that the assertion on the part of the petitioners that condoms are neither medicines nor medical substances but they are only non-medical devices is completely incorrect. 43. The said argument is sought to be rebutted by the learned counsel for the petitioners contending that the respondents have always maintained that "condom" is a device as specified under Section 3(b)(iv) of the Drugs & Cosmetics Act, 1940. It is submitted by the learned counsel for the petitioners that in view of the undisputed fact that condoms are to be regulated under the Drugs & Cosmetics Act, no doubt the licensing requirements and specifications of standards under Rule 125 are applicable for manufacture and sale of the condoms, however, the respondents have no power or authority to control the prices of the same. The learned counsel would also reiterate the new plea raised during the hearing that condoms cannot even be regulated now in view of the notification dated 09.07.2014 i....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Family Welfare in a different context for the purpose of regulation of import and manufacture, sale or distribution of the drugs. 47. It may be added that the respondents never pleaded that condoms are notified devices under Section 3(b)(iv) and thus fall within the definition of "drugs" under the Drugs and Cosmetics Act, 1940. On the other hand, it was specifically pleaded by them that the petitioners have always treated the condoms as drugs and that the petitioners who are holding licences for manufacturing/marketing of the condoms under the provisions of the Drugs and Cosmetics Act, 1940 read with Rule 69 of the Rules made thereunder are bound by the standards prescribed under Rule 125 read with Schedule R for contraceptives. 48. It is also specifically pleaded by the respondents that condom is a "medicine" and thus fall within the definition of "drug" under Section 3(b)(i) of the Drugs and Cosmetics Act, 1940. The said plea is sought to be substantiated by referring to the fact that condoms have been included in the List of Essential Medicines from the year 2003 onwards treating the same as essential medicine. 49. The plea of the respondents that condoms are covered by Clau....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t whether contraceptives are in the form of devices or in the form of tablets, all of them are treated as medicines since the purpose of all forms of contraceptives is reproductive and fertility regulation and safe motherhood. The importance of condoms as effective contraceptives has been highlighted by various International Health Organizations and adopting the guiding principles laid down by them, the expert body thought it fit to include contraceptives as essential medicines in the National List of Essential Medicines, 2003. It may also be added that so far as the condoms are concerned, indisputably the same are being used not only as contraceptives but they are also widely in use all over the world for protection against transmission of HIV - the virus that causes AIDS - as well as several other Sexually Transmitted Infections (STI). Therefore, condoms have been rightly considered as Essential Medicines and are included in the NLEM so as to ensure affordable health care to a majority of population and also to improve accessibility of drugs for anti-HIV etc. through special assistance scheme for subsidizing the prices especially for BPL & APL families. (c) It is not in dispute....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ile holding that the said articles are "substances" used for or in the treatment within the meaning of Section 3(b) and that the definition of "drug" is comprehensive enough to take in not only medicines but also substances intended to be used for or in the treatment of diseases of human beings or animals, the Supreme Court observed - "This artificial definition introduces a distinction between medicines and substances which are not medicines strictly so-called. The expression "substances", therefore, must be something other than medicines but which are used for treatment. The part of the definition which is material for the present case is "substances intended to be used for or in the treatment". The appropriate meaning of the expression "substances" in the section is "things". It cannot be disputed, and indeed it is not disputed, that absorbent cotton wool, roller bandages and gauze are "substances" within the meaning of the said expression. If so, the next question is whether they are used for or in "treatment". The said articles are sterilized or otherwise treated to make them disinfectant and then used for surgical dressing; they are essential materials for treatment in surg....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ntial commodities‟ under Section 2(a) (iva) of the EC Act, 1955 since Clause (iv) to Section 3(b) of the Drugs and Cosmetics Act, 1940 was not existing as on 29.08.1974, i.e., the date on which "drugs‟ were included in the definition of "essential commodity‟ under EC Act, 1955. 52. For the aforesaid reasons, we answer point No.1 holding that condoms are drugs within the definition of Section 3(b) of the Drugs and Cosmetics Act, 1940 as well as Item 1 of Schedule to EC Act, 1955 and thus the same are also the "essential commodities‟ within the meaning of Section 2A of the EC Act, 1955. Hence, the inclusion of condom in DPCO-2013 cannot be held to be ultra vires the provisions of Essential Commodities Act, 1955. Point No.2 53. Having held that "condom" falls within the definition of "drug" under Section 3(b) of the Drugs and Cosmetics Act, 1940 read with Item 1 of Schedule to the Essential Commodities Act, 1955, we shall now proceed to consider whether a control order can be issued under Section 3 of EC Act, 1955 for price fixation of condoms and whether the ceiling price fixed for condoms by NPPA by the impugned orders is in accordance with law. 54. DPCO,....
X X X X Extracts X X X X
X X X X Extracts X X X X
....decision of the Government to control the ceiling price of all the essential medicines included in NLEM-2011, including condoms, warrants no interference. 58. Admittedly DPCO, 2013 has been issued in tune with the policy decision of the Central Government vide NPPP-2012. The judicial review with such policy matters is unwarranted as held by the Apex Court in various decisions. 59. For the purpose of the present case, we may specifically refer to the following two decisions where the Supreme Court dealt with issues relating to price fixation. 60. In Shri Sitaram Sugar Co. Ltd. v. Union of India, (1990) 3 SCC 223, while holding that price fixation is not within the province of the Courts, it is observed : "57. Judicial review is not concerned with matters of economic policy. The court does not substitute its judgment for that of the legislature or its agents as to matters within the province of either. The court does not supplant the "feel of the expert" by its own views. When the legislature acts within the sphere of its authority and delegates power to an agent, it may empower the agent to make findings of fact which are conclusive provided such findings satisfy the test of re....
X X X X Extracts X X X X
X X X X Extracts X X X X
....cutive actions. At the same time, however, it is well established that courts are ill-equipped to deal with these matters. In complex social, economic and commercial matters, decisions have to be taken by governmental authorities keeping in view several factors, and it is not possible for courts to consider competing claims and conflicting interests and to conclude which way the balance tilts. There are no objective, justiciable or manageable standards to judge the issues nor such questions can be decided on a priori considerations." 62. In the light of the settled legal position, we are of the view that the policy decision of the Government to control the price of the condom which is admittedly an essential commodity having been taken keeping in view various social, economic and commercial factors is not amenable for judicial review by this Court. What is the best in the interest of the general public is a matter for decision exclusively within the province of the Central Government. It is no doubt true that before making a Control Order it is mandatory for the Central Government to form an opinion that it is necessary or expedient to make an order for the purpose of maintaining ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... under the First Schedule shall be calculated as under: Step 1. First the Average Price to Retailer of the scheduled formulation i.e. P(s) shall be calculated as below: Average Price to Retailer, P(s) = (Sum of prices to retailer of all the brands and generic versions of the medicine having market share more than or equal to one per cent of the total market turnover on the basis of moving annual turnover of that medicine)/(Total number of such brands and generic versions of the medicine having market share more than or equal to one per cent of total market turnover on the basis of moving annual turnover for that medicine.) Step 2. Thereafter, the ceiling price of the scheduled formulation i.e. P(c) shall be calculated as below: P(c) = P(s).(1+M/100), where P(s) = Average Price to Retailer for the same strength and dosage of the medicine as calculated in step 1 above. M = % Margin to retailer and its value = 16 (2) The ceiling price calculated as per sub-paragraph (1) and notified by the Government shall be applicable to scheduled imported formulations also. 14. Fixation of ceiling price of scheduled formulations.- (1) The Government shall fix and notify the ceili....
X X X X Extracts X X X X
X X X X Extracts X X X X
....-2013 exclusively deal with "scheduled formulations‟, the learned senior counsels appearing for the petitioners contended that DPCO-2013 does not contemplate price fixation of "condoms‟ which are admittedly "non-scheduled formulations‟. It is also contended that the condom is not a generic name for a medicine but it is the name of a device and therefore, on that ground also it is not a "scheduled formulation‟, which is defined under Para 2(1)(zb) as any formulation included in the First Schedule whether referred to by the generic versions or brand name. 70. Per contra, it is contended by the learned ASG appearing for the respondents that under DPCO-2013 price fixation can be carried out for all the medicines listed in the First Schedule whether generic or branded. It is further submitted that dosage has been specified in the First Schedule only when that medicine is sold in that particular dosage and that merely on the ground that dosage and strength have not been specified, no product would cease to be a medicine. Pointing out that for many of the medicines included in the First Schedule, dosage and strength have not been specified, the learned ASG further....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n of ceiling price under DPCO-2013. We are of the view that the words in the definition of "ceiling price‟ under Para 2(1)(d) i.e. "in accordance with the provisions of this order‟ make the intention of the Legislature abundantly clear and that the same shall be given due weight while implementing the provisions of DPCO-2013. 76. It may be added that Para 5 which provides for calculation of retail price of a new drug for existing manufacturers of "scheduled formulations‟ and Para 6 which provides for "ceiling price of a scheduled formulations‟ in case of no deduction in price due to absence of competition specifically referred to the calculation in sub-paragraph (1) of Paragraph of 4, the scope of which is expressly restricted to "scheduled formulations‟ of specified strength and dosages‟. Similarly, Para 14 which provides for fixation of "ceiling price of scheduled formulations‟ states that the ceiling price shall be fixed and notified by the Government in accordance with the provisions of Para 4. 77. It is pertinent to note that DPCO-2013 contains a different method of regulation so far as "non-scheduled formulations‟ are concerne....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lso added that the Government exercising its delegated legislative power should make a real and earnest attempt to apply the criteria laid down by itself as a policy maker and that the delegated legislation that follows the policy formulation should be broadly and substantially in conformity with that policy, otherwise it would be vulnerable to attack on the ground of arbitrariness resulting in violation of Article 14. It was further held: "4.3 True, the breach of policy decision by itself is not a ground to invalidate delegated legislation. But, in a case like this, the inevitable fallout of the breach of policy decision which the Government itself treated as a charter for the resultant legislation is to leave an imprint of arbitrariness on the legislation. When the selection or classification of certain drugs is involved for the purpose of price control, such selection or classification should be on a rational basis and cannot be strikingly arbitrary. No doubt, in such matters, wide latitude is conceded to the legislature or its delegate. Broadly, the subordinate law-making authority is guided by the policy and objectives of the primary legislation disclosed by the preamble and....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ding "As we have held that the State of Tamil Nadu could not have promulgated an order under Section 3 of the EC Act in the purported exercise of the power delegated by the Central Government to make an order applicable to tea, by wrongly assuming tea to be a foodstuff. The several provisions of the Tamil Nadu Scheduled Articles (Prescription of Standards) Order, 1977, must be held to be ultra vires the power of the State Government to the extent to which it makes provisions in relation to tea. The said Order cannot apply to tea." 81. In the light of the legal position noticed above and for the reasons stated supra, we are of the view that the NPPA exceeded the powers conferred by Paras 4, 6 & 14 of DPCO-2013 while fixing the ceiling price for condoms. The language of Para 4 is unambiguous and makes clear the legislative intent that the ceiling price can be fixed only for scheduled formulations of specified strengths and dosages as specified under the First Schedule. Therefore, according to us, the provisions of Para 4 cannot be made applicable to "condoms‟ the dosage and strength of which have admittedly not been specified under the First Schedule. 82. It may be added th....