TaxTMI 
TaxTMI 
2015 (7) TMI 1421
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....panies engaged in manufacturing/marketing of 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 ....
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....quent developments that took place during the pendency of 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 securi....
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.... for the purposes of the said Schedule, "drugs‟ has the meaning assigned to it in clause (b) of Section 3 of the 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 incl....
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....s) and such Rules may inter alia prescribe the forms of licenses 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, 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 ....
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....mplies that the drugs included in it are adequate to meet the common contemporary health needs of the general population of the country and general obligation of the health administrators 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....
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....se aggression with the promulgation of the Drugs (Display of Prices) Order, 1962 and the Drugs (Control of Prices) Order, 1963. These were promulgated under the Defence of India Act. With these orders, the prices of drugs were frozen 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 ind....
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....ork for pricing of drugs so as to ensure availability of the essential medicines at reasonable prices even while providing sufficient opportunity for innovation and competition to support the growth of industry. One of the key principles 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 ....
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....es Control) Order 2013 vide S.O.1221(E) dated 15.05.2013 to regulate the prices of drugs and providing inter alia the list of price controlled drugs, procedures for fixation of prices of drugs, method of implementation of prices fixed by the Government, penalties for contravention of provisions, 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 ....
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.... the challenge in the writ petitions is to the inclusion of condoms within the purview of DPCO 2013 for the following among other grounds: 35.1 DPCO, 2013 to the extent of including "condoms‟ in Entry 18.3.3 of First Schedule is ultra vires Section 3 of the EC Act, 1955 apart from being contrary to the National 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 co....
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....ich is illogical and irrational, has resulted in an absurd situation. 35.9 Premium condoms manufactured/marketed by the petitioners cannot be treated at par with basic condoms because of the method of manufacture, the technology involved, the ingredients used and research and development preceding the manufacture of such products. The NPPA failed to take into consideration 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 o....
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....and aimed at promulgating the principles for pricing of essential drugs as laid down in NLEM, 2011. One of the objectives of NPPP-2012 is to put in place a regulatory framework for pricing of drugs so as to ensure availability of essential medicines at reasonable prices. 36.3 Key principles for regulation of prices in NPPP, 2012 include "essentiality of drugs‟, which criteria is to be met by considering 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 dist....
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.... prevent as many as 850,000 deaths per year amongst children under age five. (d) Furthermore, every year there are an estimated 120 million unwanted pregnancies, resulting in 46 million abortions, 20 percent of which are unsafe and lead to severe morbidity and mortality for women. For example, unsafe abortion accounts for 13 percent of maternal deaths. (e) The spread of HIV has a tremendous impact on both national economies and household income. Households 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 cond....
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....ty‟ under Section 2A of EC Act read with the Schedule thereto. Therefore, inclusion of condoms in the First Schedule to DPCO, 2013 is ultra vires the EC Act. (a) Elaborating the above contention, it is submitted by Shri Kapil Sibal, the learned Senior Counsel that the expression "drug‟ as defined under Section 3 (b) of Drugs and Cosmetics Act, 1940 covers four categories namely (i) all medicines used for internal and external use of human beings and animals and all substances intended to be used for diagnosis, treatment, 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. ....
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....ng reliance upon a subsequent Office Order dated 09.07.2014, it is contended by the learned Senior Counsel that the earlier Notification dated 20.04.2010 stood modified and "condom‟ can no longer be considered as a notified device. The learned Senior Counsel would also contend that by virtue of the order dated 09.07.2014, "condoms‟ cannot even be regulated under the Drugs and Cosmetics Act, 1940 with effect from 09.07.2014 and therefore renewal of licenses obtained under the Drugs and Cosmetics Act, 1940 is also not necessary. (g) For the aforesaid reasons, it 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,....
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....oners, the essential pre-condition for issuing a Control Order providing for controlling the price of the condoms in exercise of the powers under Section 3 of the Essential Commodities Act, 1955 is not satisfied at all. 37.4 Since the scope of DPCO, 2013 is restricted to "formulations‟ as defined in Para 2 (1) (i) which means a medicine processed out of or containing in one or more drugs, "condom‟ which is only a barrier device but can under no circumstances be considered as a medicine does not fall within the definition of "formulation‟ and consequently inclusion of the condoms in the First Schedule 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 mecha....
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....in case of condoms which are medical devices the raw material, process, features and etc., would differ, the learned Senior Counsel would contend that the methodology prescribed in Paragraph-4 is unworkable. It is also contended that while fixing the ceiling price by the impugned orders none of the mandatory provisions of DPCO, 2013 were followed. It is further contended that in respect of medical devices like condoms, no collated data was available with IMS Health while issuing the impugned price fixation orders. 37.7 Since the branded condoms manufactured and marketed by the petitioners are pleasure/poly isoprene condoms, i.e. an advanced version of pleasure 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 b....
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....acture of drugs and that Rule 125 (set out in Part XII) read with Schedule-R of the said Rules specifies the standards of drugs as well as the standards to be observed in the manufacture of contraceptive. It is submitted by the learned ASG that the petitioners being the licensees for manufacture/marketing of condoms granted under the Drugs and Cosmetics Act and the Rules made thereunder cannot now contend that the very product in respect of which they have sought and obtained permission from time to time is not a drug. 38.2 Referring to Chimmanlal Jagjivandas Seth vs. State of Mahara, AIR 1963 SC 665 wherein gauze was held to be a "drug‟ and Ponds Ind. Limited vs. CIT, (2008) 8 SCC 369 wherein 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 th....
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....23;. 38.9 It is further contended that in examining any price fixation order, the primary consideration shall be that of the interests of the consumer and as such interference by this Court is warranted only where Control Order is vitiated by palpable unreasonableness or arbitrariness. 38.10 Rebutting the contention on behalf of the petitioners that issuance of Control Order is not warranted for price fixation of the condoms under Section 3 of the EC Act, it is contended that as per Section 3(1) of EC Act, the shortage of a product is not the sine qua non for exercise of the power to issue the control orders. Thus, it is submitted that the fact that 55% of the condoms used in India are either distributed free of cost or at highly subsidised rates 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; Gl....
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.... having regard to the fact that even empty gelatin capsules are to be treated as drugs under Section 3(b)(iii) and various uses of condoms include mitigation and prevention of diseases or disorders in human beings. Pointing out that "condoms‟ have been included in the National List of Essential Medicines (NLEM) from the year 2003 onwards treating the same as essential medicines the learned ASG would further contend that the contraceptives in the form of condoms play a crucial role both for increasing the reproductive health and decreasing and preventing innumerable life threatening diseases and therefore they are always considered to be "medicines‟. The learned ASG has also pointed out that the petitioners are holders of the licences for manufacturing/marketing and import of drugs 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 incor....
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....ctorate General of Health Services, Ministry of Health and Family Welfare and it is sought to be contended that by virtue of the said Office Order "condom" has to be treated as a non-notified device w.e.f. 09.07.2014 and thus it can no longer be considered as a drug under Section 3(b)(iv) of the Drugs and Cosmetics Act, 1940 and it cannot even be regulated under the said Act. 46. Having carefully gone through the two orders dated 20.04.2010 and 09.07.2014 relied upon by the petitioners, we are unable to hold that the said orders are the notifications issued under Section 3(b)(iv) of the Drugs and Cosmetics Act. On a perusal of the same, it appears to us that the said orders were issued by the Central Drugs Standards Control Organization, Directorate General of Health Services, Ministry of Health and 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 the....
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....nistration/ Dosage Form Strengths 18.3 Contraceptives 18.3.1 Hormonal Contraceptives Ethinylestradiol + Levonorgesterol U Tablets .03 mg + 0.15 mg Ethinylestradiol + Norethisterone U Tablets 0.035 mg + 1.0 mg Hormone Releasing IUD T Levonorgesterol Releasing IUD 18.3.2 Intrauterine Devices IUD containing Copper U 18.3.3 Barrier Methods Condoms U 18.3.4 Non Hormonal Contraceptive Centchroman U Tablets 30 mg (b) Evidently, condom is one of the forms of contraceptives. Similarly "intra uterine device" included in Entry 18.3.2 is another form of contraceptive. "Hormonal contraceptives" and "non-hormonal contraceptives" which are in the form of tablets are included in Entries 18.3.1 & 18.3.4. Irrespective of the fact 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 effecti....
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....ing the fact that condoms are being regulated under the Drugs and Cosmetics Act by way of licensing and prescribing the standards. Rule 125 in fact prescribes the standards for substances which are intended to affect the structure or any function of human body and included contraceptives in that category. As pleaded by the petitioners themselves, condoms act as a physical barrier and thus protect from STI, unwarranted pregnancy and etc. That itself shows that condom affects the functions of human body. Therefore, it is difficult for us to agree with the contention of the petitioners that condoms are different from the mechanical contraceptives described under Rule 125 of the Drugs and Cosmetics Rules, 1945. In this regard, we may refer to the decision in Chhimanlal Jagjivandas Sheth (supra) wherein absorbent cotton wool, roller bandages and gauze were held to be "drugs" within the meaning of Section 3(b) of the Drugs and Cosmetics Act, 1940. While 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 use....
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....medicine which is used for external use of human beings, but if used for prevention of any disease or disorder in human being, shall also come within the purview thereof. The said definition is an extensive one. It even applies to preparations applied on human body for the purpose of killing insects like mosquitoes, which per se does not have any medicinal or any value for curing any disease or disorder in human beings." (f) In the light of legal position noticed above, it can safely be concluded that condoms are medicines as well as substances for use of human beings for mitigation or prevention of a disease or disorder in human beings as provided under Section 3(b)(i) of the Drugs and Cosmetics Act, 1940. 51. In view of our conclusion that Section 3(b)(i) of the Drugs and Cosmetics Act, 1940 is attracted and not Section 3(b)(iv) it is not necessary for us to go into the further contention of the petitioners that no device can be brought within the definition of "essential 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 "drug....
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.... 1955 is not satisfied at all. In other words, the contention is that an order under Section 3 of E.C. Act can be issued only where the Central Government is of the opinion that it is necessary or expedient so to do for maintaining or increasing the supplies of any essential commodity or for securing their equitable distribution and availability at fair prices. The contention of the petitioners is that none of the circumstances specified in Section 3 is existing so far as condoms are concerned. 57. The said contention is sought to be rebutted by the learned ASG contending that even assuming that the plea of the petitioners that 55% of the condoms are distributed free in India or at highly subsidized rate is correct, there is still a huge gap of 45% of the demand and the same has to be met at fair prices considering the fact that India is among the countries with highest number of HIV/AIDS affected population. Placing reliance upon NPPP-2012, the learned ASG further contended that the policy 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 bee....
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....to recovery, duration, size and age of the units and capital cost per tonne of output, without regard to their location, as recommended by the BICP, is again a matter for the Central Government to decide. What is best for the sugar industry and in what manner the policy should be formulated and implemented, bearing in mind the fundamental object of the statute, viz., supply and equitable distribution of essential commodity at fair prices in the best interest of the general public, is a matter for decision exclusively within the province of the Central Government. Such matters do not ordinarily attract the power of judicial review." 61. In Dhampur Sugar (Kashipur) Ltd. v. State of Uttaranchal, (2007) 8 SCC 418 the scope of judicial review in policy matters has been reiterated observing:- "63. In our judgment, it is well settled that public authorities must have liberty and freedom in framing policies. No doubt, the discretion is not absolute, unqualified, unfettered or uncanalised and judiciary has control over all executive 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 ....
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.... diagnosis, treatment, mitigation or prevention of disease and, but shall not include - (i) any medicine included in any bona fide Ayurvedic (including Sidha) or Unani (Tibb) systems of medicines; (ii) any medicine included in the Homeopathic system of medicine; and (iii) any substance to which the provisions of the Drugs and Cosmetics Act, 1940 (23 of 1940) do not apply. 2(1)(v) "non-scheduled formulation‟ means a formulation, the dosages and strengths of which are not specified in the First Schedule. 2(1)(zb) "scheduled formulation‟ means any formulation, included in the First Schedule whether referred to by generic versions or brand name." 65. Paragraph 4 of the DPCO 2013 which provides for calculation of ceiling price of a scheduled formulation and Paragraph 14 which provides for fixation of ceiling price of scheduled formulation may also be reproduced hereunder: "4. Calculation of ceiling price of a scheduled formulation.- (1) The ceiling price of a scheduled formulation of specified strengths and dosages as specified under the First Schedule shall be calculated as under: Step 1. First the A....
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....Act, 1940 is not attracted since "condom‟ is neither a medicine nor a substance has already been considered in detail and rejected in para 50 (supra). We have categorically held that "condoms‟ are medicines and, therefore, the same fall within the definition of "drugs‟ under Section 3(b)(i) of the Drugs and Cosmetics Act, 1940. In the light of the view we have already expressed that "condom‟ is a medicine, it has to follow that it is a "formulation‟ within the definition of Para 2(1)(i). 68. Then the next question would be whether ceiling price can be fixed for condoms under Para 4 of DPCO-2013 since the dosage and strength of the condoms have not been specified in Entry 18.3.3. 69. It is submitted by the learned counsels appearing on behalf of the petitioners that since dosage and strength have not been prescribed in the First Schedule for condoms, they can be considered only as "non-scheduled formulations‟ as defined in Para 2(1)(v) and therefore Para 4 of DPCO-2013 which provides for calculation of ceiling price of only "scheduled formulations‟ is not applicable at all. Pointing out that Paragraphs 4, 5, 6, 13 and 14 of DPCO-2013 e....
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.... of DPCO-2013. 73. It is evident from the First Schedule that it contains the formulations of which strength and dosage have been specified as well as the formulations of which strength and dosage have not been specified. Para 2(1)(zb) defines scheduled formulations as formulation included in the First Schedule whether referred to by generic versions or brand name. Thus, it is clear that all formulations that are included in the First Schedule, irrespective of specification of strength and dosages, are "scheduled formulations‟. In other words, scheduled formulations include non-scheduled formulations. 74. It may be added that though the definition of "ceiling price‟ under Para 2(1)(d) does not draw any distinction between "scheduled formulations‟ and "non-scheduled formulations‟, Para 4 makes it clear that the ceiling price thereunder can be fixed only for "scheduled formulations‟ of specified strength and dosages as specified under the First Schedule. 75. On a combined reading of Para 4, Para 2(1)(d) and Para 2(1)(zb), it appears to us that the specification of dosage and strength in the First Schedule has a specific bearing with regard to fi....
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....icines‟ at reasonable prices. It is also true that as per NPPP-2012, the regulation of prices of drugs would be on the basis of essentiality of drugs and the essentiality criteria is to be met by considering the list of medicines specified in the National List of Essential Medicines as revised from time to time. NPPP-2012 is sought to be implemented through DPCO-2013 and all the essential medicines that were listed in the NLEM-2011 have been included in the First Schedule to DPCO-2013 so as to regulate the prices of the same. However, the question that arises for consideration is whether ceiling price can be fixed by the NPPA for all the formulations/medicines included in the First Schedule to DPCO-2013 ignoring the legislative intention that the said power be not extended to some of the formulations. Considering an identical issue, the Supreme Court in Secretary, Ministry of Chemicals and Fertilizers, Government of India Vs. CIPLA Ltd (supra) held that the contents of the policy documents cannot be read and interpreted as statutory provisions and that too much of legalism cannot be imported in understanding the scope and meaning of the clauses contained in policy formulation....
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....vour to apply the criteria spelt out in the Drug Policy of 1994 before including the drugs in question in the First Schedule. The correctness of this contention should, of course, be examined." 79. The principle laid down in the above case has been reiterated in Clariant International Vs. SEBI, (2004) 8 SCC 524 holding that when any criterion is fixed by a statute or by a policy, an attempt should be made by the authority making the delegated legislation to follow the policy formulation broadly and substantially and in conformity therewith. 80. In S. Samuel Vs. Union of India, (2004) 1 SCC 256, the State of Tamil Nadu, in exercise of the powers delegated by the Central Government by issuing a notification under Section 5 of the Essential Commodities Act, promulgated TN Scheduled Articles (Prescription of Standards) Order, 1997 for the purpose of maintaining and raising the standards of quality of supply and sale of certain essential articles including Tea. The constitutional validity of the said order was challenged by the petitioners insofar as its applicability to Tea is concerned. Though the writ petition was dismissed by the High Court of Madras, the appeal was allowed by....