PRAKASH NARAIN ( 1 ) THE primary question to be decided in this petition under Article 226 of the Constitution of India, filed by Ambalal Sarabhai Enterprises Limited and another, is whether a sale effected in excess of the retention price, fixed under the Drugs (Prices Control) Order, 1979, thereinafter referred to as the DPCO) in the absence of any maximum, common or pooled price being fixed, would be violative of Clauses 3 and 4 of the DPCO. ( 2 ) THE facts of the case, so far as the same are relevant to decide the above issue, may first be noticed. ( 3 ) THE first petitioner is a company registered under the Companies Act and is engaged in the manufacture of various bulk drugs, pharmaceuticals and other products, including the bulk drug Vitamin C. It is not disputed that the company is a wholly Indian company with petitioner No. 2 being not only its principal officer but also a shareholder and a Director. The predecessor-in-interest of the first petitioner, M/s. Sarabhai Merek Limited, commenced production of Vitamin c in or about 1961. In due course of time petitioner No. 1 took over the said activity and has thus been manufacturing Vitamin C continuously since 1961. M/s. Jayant Vitamins Limited (for short hereinafter referred to as JVL) also started manufacturing the bulk drug Vitamin C after establishing a factory in or about Sept. , 1970 and commencing production from 1974. M/s. Hindustan Antibiotics Ltd. (for short HAL), a Government of India undertaking also started manufacturing the bulk drug Vitamin C but it is common case that it has almost discontinued the production of this bulk drug. Thus, the only two companies which manufacture bulk drug Vitamin C in India are the first petitioner and JVL. The petitioner s plant is in Baroda and JVL s plant is in Pune. ( 4 ) INASMUCH as drugs and pharmaceuticals, at least most of them, are considered to be commodities the production, supply and distribution of and trade and commerce in which are considered of great interest for the welfare of the general public, the Central Government invoked in respect of the drugs and, in particular, the bulk drug Vitamin C, the provisions of the Essential Commodities Act, 1955. In consequence, by virtue of the power vested in the Central Government by Section 3 of the Essential Commodities Act, 1955, the Central Government issued a DPCO (Drugs Prices Control Order) in 1970 which has since been superseded by the DPCO of 1979. Vitamin C is included in the said DPCO as an essential bulk drug within the meaning and for the purposes of the said DPCO. ( 5 ) UNDER the DPCO of 1970, by virtue of para 4. the Central Government could fix, by a notification published in the Official Gazette, the maximum price at which any essential bulk drug could be sold. In exercise of the said powers the Central Government issued notifications from time to time fixing the selling price of various bulk drugs, including Vitamin C. It is not disputed that by a notification dated May 25, 197 6 the maximum selling price of Vitamin C was fixed at Rs. 104. 00 per kg. ( 6 ) THE scheme of regulation and control has been somewhat changed under the DPCO of 1979. We are concerned in the present case with this DPCO and the orders, directions and notifications issued thereunder or purporting to be in furthherauce of the policy spelt out by it. It is, therefore, necessary that we read some of the provisions of the DPCO at this stage. ( 7 ) CLAUSE (a) of para 2 defines what is a "bulk drug". The commudity with which we are concerned is, admittedly, a bulk drug. Para 2 (f) defines "formulation". It "means a medicine processed out of, or containing use of any pharmaceutical aids for internal or external use for or in the diagnosis, treatment, mitigation or prevention of disease in human beings or animals, but shall not include : (i ). . . . . . . . . (ii ). . . . . . . . . (iii ). . . . . " It is common case that neither the first petitioner nor JVL, as far as the points in the present case are concerned, are engaged in making formulations though a sister concern of the petitioner does make formulations. Under para 2 (h) "government" means the Central Government. . . . . . . . (iii ). . . . . " It is common case that neither the first petitioner nor JVL, as far as the points in the present case are concerned, are engaged in making formulations though a sister concern of the petitioner does make formulations. Under para 2 (h) "government" means the Central Government. Para 2 (j) defines "leader price" as a price fixed by the Government for formulations specified in Category I, Category II or Category III of the Third Schedule, in accordance with the provisions of paras 10 and 11 keeping in view the cost or efficiency or both. of major manufacturers of such formulations. ( 8 ) PARA 2 (o) defines "pooled price" and reads : " pooled price in relation to a bulk drug means the price fixed under para" Para 2 (r) defines "retail price" to he the retail price of a drug arrived at or fixed in accordance with the provisions of this Order and includes a leader price. "retention price" is defined by para 2 (t) which reads : " retention price in relation to a bulk drug, means the price fixed under paras 4 and 7 for individual manufacturers, or importers, or distributors, of such bulk drugs. " ( 9 ) PARAS 3 and 4, which specifically come up for consideration in the present case, may be read in full. These read as under : "3. Power to fix the maximum sale price of indigenously manufactured bulk drugs specified in First Schedule or Second Schedule (1) The Government may, with a view to regulating the equitable distribution of an indigenously manufactured bulk drug specified in the. First Schedule or the Second Schedule and making it available at a fair price and subject to theprovisions contained in sub-paragraph (2) and after making such enquiry as it deems fit fix, from time to time, by notification in the Official Gazette, the maximum price at which such bulk drug shall be sold. (2) While fixing the price of a bulk drug under sub-para (1), the Government may take into account the average cost of production of such bulk drug manufactured by an efficient manufacturer and allow a reasonable return on networth. (2) While fixing the price of a bulk drug under sub-para (1), the Government may take into account the average cost of production of such bulk drug manufactured by an efficient manufacturer and allow a reasonable return on networth. Explanation.-- In this sub-paragraph, the expression efficient manufacturer means a manufacturer : (i) whose production of such bulk drug in relation to the total production of such bulk drug in the country is large or (ii) who employs efficient technology in the production of such bulk drug. (3) No person shall sell a bulk drug at a price exceeding the price notified under sub- paragraph (1), plus local taxes, if any, payable : Provided that until the price of a bulk drug is so notified, the price of such bulk drug shall be the price which prevailed immediately before the commencement of this Order and the manufacturer of such bulk drug shall not sell such bulk drug at a price exceeding the price which prevailed as aforesaid. (4) (a) Where (after the commencement of this Order) any manufacturer commences production of a bulk drug specified in the First Schedule or the Second Schedule the price of which has already been notified by the Government, he may sell the bulk drug at a price not exceeding the price so notified. (b) Where, the price of a bulk drug has not been notified by the Government, the manufacturer shall, within fourteen days of the commencement of the production of such bulk drug, make an application to the Government in Form I and intimate Government the price at which he intends to sell the bulk drug and the Government may, after making such inquiry, as it deems fit, by order, fix a provisional price at which such bulk drug shall be sold. (c) The manufacturer referred to in this sub-paragraph shall, within six months of the commencement of such production, make a further application to the Government in Form I and the Government may, after making such inquiry as it deems fit, by notification in the Official Gazette, fix the price of such bulk drug. 4. (c) The manufacturer referred to in this sub-paragraph shall, within six months of the commencement of such production, make a further application to the Government in Form I and the Government may, after making such inquiry as it deems fit, by notification in the Official Gazette, fix the price of such bulk drug. 4. Power to fix retention price and common sale price: Notwithstanding anything contained in para 3 the Government may, if it considers necessary or expedient so to do for increasing the production of an indigenously manufactured bulk drug specified in the first schedule or the Second Schedule, by order fix :- (a) a retention price of such bulk drug; (b) a common sale price for such bulk drug, taking into account the weighted average of the retention price fixed under Clause (a ). " ( 10 ) PARA 7 which also has some bearing on the case reads as under: "7. Power to fix retention price and pooled price for the sale of bulk drugs specified in First Schedule or Second Schedule indigenously manufactured as well as imported. (1) Where a bulk drug specified in the First Schedule or the Second Schedule is manufactured indigenously and is also imported, the Government may, having regard to the sale prices prevailing from time to time in respect of indigenously manufactured bulk drugs and those of imported bulk drugs, by order, fix after such adjustments as the Government may consider necessary; (a) retention prices for individual manufacturers, importers, or distributors of such bulk drug: (b) a pooled price for the sale of such bulk drug. (2) Where a manufacturer of formulations utilises in his formulations any bulk drug, either from his own production or procured by him from any other source, the price of such bulk drug being lower than the price allowed to him in the price of his formulations, the Government may require such manufacturer (a) to deposit into the Drug Prices Equalisation Account referred to in para 17 the excess amount to be determined by the Government; or (b) to sell tine formulations at such prices as may be fixed by the Government. " ( 11 ) maximum sale price or sale price , as such are not denned in the DPCO. We do, however, find reference to these terms in some of the Paras of the DPCO. " ( 11 ) maximum sale price or sale price , as such are not denned in the DPCO. We do, however, find reference to these terms in some of the Paras of the DPCO. Para 5 confers power on the Government to fix maximum sale price of a new bulk drug. A new bulk drug under para 2, Clause (n) means a bulk drug manufactured within the country for the first time after the commencement of the DPCO of 1979. Similarly, power is conferred upon the Government to fix the maximum sale price of an imported bulk drug specified in the First or Second Schedule of the DPCO. Vitamin c manufactured by the first petitioner or JVL is not covered by either Para 5 or Para 6. ( 12 ) PARA 9 of the DPCO confers power on the Government to direct manufacturers of bulk drugs to sell bulk drugs to manufacturers of formulations either by a general or a special order, as may be specified in the respective order. Before passing such an order the Government is enjoined to have regard to all or any of the following factors, namely : (a) the requirements for captive consumption of such manufacturer; (b) the requirements of other manufacturers of formulations; (c) the planned growth of the pharmaceutical industry in conformity with the policy of the Government from time to time. ( 13 ) RETAIL price can be fixed only of a formulation. It is to be calculated in accordance with the prescribed formula, as provided by Para 10. The formula is: "r. P. = (M. C. +c. C. +p. M. +p. C.) X MU 1 + + ED 100 r. P. means retail price. mc means material cost and includes the cost of drugs and other pharmaceutical aids used including overages, if any, and process loss thereon in accordance with such norms as may be specified by the Government from time to time by notification in the Official Gazette in this behalf. c. C. means conversion cost worked out in accordance with such norms as may be specified by the Government from time to time by notification in the Official Gazette in this behalf. c. C. means conversion cost worked out in accordance with such norms as may be specified by the Government from time to time by notification in the Official Gazette in this behalf. p. M. means the cost of packing material including process loss thereon worked out in accordance with such norms as may be specified by the Government from time to time by notification in the Gazette in this behalf. p. C, means packing charges worked out in accordance with such norms as may be specified by the Government from time to time by notification in the Official Gazette in this behalf. m. U. means mark-up referred to in para- graph 11. e. D. means excise duty : There are certain provisos in applying the above formula but with those we are not concerned. ( 14 ) MARK-UP, referred to in the above formula, includes the distribution cost, outward freight, promotional expenses, manufacturers margin and the trade commission. These, however, shall not exceed, as provided by Para 11, by certain percentage in each category. ( 15 ) THE leader price can be fixed by the Government of a formulation specified in Categories 1 and 2 under Para 12 of the Third Schedule of the DPCO. Para 13 empowers the Government to fix retail price of formulations specified in Category III of the Third Schedule. Prices of formulations may be revised by virtue of power contained in Para 15. ( 16 ) PARA 17 is important. It reads as under: "17. Drug Prices Equalisation Account: (1) The Government shall maintain an Account to be known as the Drugs Prices Equalisation Account to which shall be credited (a) by the manufacturer, importer or distributor, as the case may be-- (i) the amount determined under sub-paragraph (2) of paragraph 17; (ii) the excess of the common selling price or, as the case may be, pooled price over his retention price; (b) such other sums of money as the Central Government may, after due appropriation made by Parliament by law in this behalf, grant from time to time. (2) The amount credited under sub-paragraph (1) shall be spent only: (a) for paying to the manufacturer, importer or distributor as the case may be, the short-fall between his retention price and the common selling price or, as the case may be, the pooled price for the purpose of increasing the production or securing the equitable distribution and availability at fair prices, of drugs; (b) for expenses incurred by the Government in discharging the functions under this paragraph. (3) Every manufacturer, importer or distributor may, if he has any claim -under Clause (a) of sub-paragraph (2), make an application to the Government and the Government may, in settling the claim require, the manufacturer, importer or distributor, as the case may be, to furnish such details as may be specified by it in this behalf. (4) The Government shall maintain account of all moneys credited to and expended from out of, the Drag Price Equalisation Account and such other reports and returns. as it may consider necessary relating to the said account. " ( 17 ) PARA 23- lays down that no manufa cturer, distributor or dealer shall refuse the sale of a drug without good and sufficient reasons to a customer wanting to purchase such drug. Para 26 gives power of entry, search and seizure to a gazetted officer of the Central Government or State Government, authorised by a general or special order by the Government concerned with a view to securing compliance with the provisions of the DPCO or to satisfy himself that the provisions of the DPCO have been complied with. The provisions of Section. 100 of the Code of Criminal Procedure relating to search and seizure, shall, in such cases, apply, so far as may be. Para 28 gives power to the Government from time to time to issue such directions consistent with the provisions of the DPCO to any manufacturer or importer, as the case may be, to carry out the provisions of the DPCO and such manufacturer or importer is enjoined to comply with such directions. A contravention of any of the provisions of the DPCO is declared to be punishable in accordance with the provisions of the Essential Commodities Act by virtue of Clause 29. The powers exercisable by the. A contravention of any of the provisions of the DPCO is declared to be punishable in accordance with the provisions of the Essential Commodities Act by virtue of Clause 29. The powers exercisable by the. Government under the DPCO can only be delegated by a notification in the Official Gazette to such officer or authority subordinate to the Central Government or State Government, as may be mentioned in the notification. The powers contained in Paras 27, 28, 30 and 31 exercisable by the Government cannot, however, be delegated. ( 18 ) TURNING now to the provisions of the Essential Commodities Act, we may notice some of its provisions. As already observed earlier, the DPCO has been issued by virtue of the powers conferred by Section 3 of the said Act. There is no challenge to the issue of the said DPCO. Section 6-A of the said Act lay down that where any essential commodity is seized in pursuance of an order made under Sec. 3 in relation thereto, a report regarding the seizure shall be made without unreasonable delay to the Collector of the District or the Presidency Town in which seizure takes place and whether or not a prosecution is instituted for the contravention of soch order, the Collector may, if he thinks it expedient so to do, direct the essential commodity so seized to be produced for inspection before him, and if he is satisfied that there has been a co-contravention of the order may, inter alia, order confiscation of the said commodity. If the commodity seized is, subject to speedy and natural decay, the Collector may even order its sale. Under Section 6-B of the Act it is necessary to issue a show cause before confiscation. The order of confiscation is subject to confirmation in appeal under S. 6-C. Section 7 of the Act provides for the penalties for contravention of an. order under S. 3. The penalties may be fine or imprisonment or both depending upon circumstances mentioned in the section. In offences alleged to have been committed, by contravention of See. 3i of the Act, by a company every person who at th time of the alleged contravention was in charge and was. responsible to the company for the conduct of the business, of the company as well as the company shall be liable to be proceeded against and punished. In offences alleged to have been committed, by contravention of See. 3i of the Act, by a company every person who at th time of the alleged contravention was in charge and was. responsible to the company for the conduct of the business, of the company as well as the company shall be liable to be proceeded against and punished. Section 10-A oi the Act makes the offences. under the Act cognizable offences within the. meaning of that term in the Code of Criminal Procedure. Section 10-B empowers a Court to publish the name, place of business etc. of a company convicted under the Act. Section 10-C lays down that in any prosecution for any offence under the Act which requires a culpable mental state on the part of the accused, the Court shall presume the existence of such mental state but it shall be open as a defence for the accused to prove as a fact that he had no sach mental state with respect to the act charged as an offence in that prosecution. Section 12-A of the Act rays down that in a given set of circumstances the Central Govrrmnent may, by a notification in the Official Gazette, specify the types of cases covered by the Act in which summary trial may be held. ( 19 ) THE first petitioner is alleged to have transgressed and violated orders or directions which may be regarded as culpable and, therefore, actionable under the provisions of the Essential Commodities Act either by way of search and seizure orprosecution This has led the petitioners to file the present petition under Article 226 of the Constitution for issue of a writ of certiorari quashing some of the orders and communications received by it and for issuing a mandamus restraining the respondents from proceeding against the petitioners, as allegedly threatened. ( 20 ) BEFORE we proceed further with. the case, we may notice one more fact. M/s. State Chemicals and Phannaceuticals CORPORATION of India is a subsidiary of the State Trading Corporation of India and is a wholly Government owned concern. Under the aegis of this Corporation an informal distribution system was evolved for distribution of the bulk drug Vitamin C to diverse formulators of the formulations made from bulk drug Vitamin C. This informal distribution system, it is common case, is not a statutory distribution system. Under the aegis of this Corporation an informal distribution system was evolved for distribution of the bulk drug Vitamin C to diverse formulators of the formulations made from bulk drug Vitamin C. This informal distribution system, it is common case, is not a statutory distribution system. Release orders were issued by the aforesaid Corporation to the first petitioner or JVL of the quantities allocated to an individual formulator. On the basis of these allocations the first petitioner and JVL used to release the bulk drug to the individual formulators. It is not in dispute that prior to the impugned action 60 per cent allocations by the Corporation went to the share of JVL and 40 per cent to the first petitioner. Now 100 per cent allocations go to JVL, HAL being out of the picture. The release or allocation orders issued by the said Corporation used to indicate the price as well. It is the challenge made by the first petitioner to the price at which it was asked to sell that has resulted in certain actions being taken qua it which has compelled the petitioner to come to Court. ( 21 ) IN the above context it will be necessary to notice some of the communications exchanged between the parties and relevant orders etc. issued vis-a-vis the points that arise for consideration. On October 18, 1979 the Government of India issued an order in exercise of powers conferred by para 4 of the DPCO of 1979 as it was "of opinion that it is necessary and expedient so to do for increasing the production of Vitamin c plain and coated, indigenously manufactured bull drug specified in the second schedule to the said order" fixing both the retention price and the common sale price for manufacturers. For Vitamin C plain for the petitioners the retention price fixed was Rs. 104. 00 and the common selling price Rs. 118,40, for JVL Rs. 128. 00 and Rs. 118. 40. For Vitamin c coated the petitioners retention price was fixed at Rs 110. 00 and JVL s at Rs. 134. 00 and the common selling price Rs. 124,40 for both. The retention price of the petitioners and JVL was revised by anohter order dated Dec. 29, 1980 and was fixed at Rs. 115. 48 and Rs. 144,81 respectively. In the order of 29th Dec. 00 and JVL s at Rs. 134. 00 and the common selling price Rs. 124,40 for both. The retention price of the petitioners and JVL was revised by anohter order dated Dec. 29, 1980 and was fixed at Rs. 115. 48 and Rs. 144,81 respectively. In the order of 29th Dec. , 1980 it was not stated as to why the retention price was revised but, presumably, this was merely a modification of the earlier order of Oct. 18, 1979. By an order dated Feb. 25, 1981, again without giving any reasons, the retention prices of Vitamin c plain and Vitamin c coated of the petitioners and JVL, as also HAL, were revised. The retention price for the petitioners was fixed at Rupees 127,54 for Vitamin c plain and Rs. 133,54 for Vitamin c coated. For JVL and HAL it was fixed at Rs. 156,87 for plain and Rs. 162,87 for coated. There was no mention of common selling price in the orders dated Dec. 29, 1980 and Feb. 25, 1981. No common selling price was also fixed. It is, however, contended that the petitioners and other manufacturers were required to sell their bulk drug at prices indicated in release orders to be issued by M/s. State Chemicals and Phannaceuticals Corporation of India without the common sale price having been fixed under the DPCO. The petitioners being aggrieved by the retention price, as fixed for ttiem by a letter dated Feb. 6. 1981, represented to the Central Government to revise the retention price by raising it in their case to Rs. 153-99. la consequence, there was a somewhat upward revision by the order of Feb. 25, 1981 but still there was a lot of difference between the retention price of the petitioner and JVL. In the mean- white by a communication dated Feb. 153-99. la consequence, there was a somewhat upward revision by the order of Feb. 25, 1981 but still there was a lot of difference between the retention price of the petitioner and JVL. In the mean- white by a communication dated Feb. 18, 1981 the petitioner, JVL and HAL were informed that there would be no common sale price for Vitamin c and the manufacturers of Vitamin c would be required to sell this drug at the price indicated in the release orders issued on them by the State Chemicals and Phannaceuticals Corporation of India Ltd. It was further stated in the said letter that since there was no common sale price being fixed, sales would be effected by the individual units at their respective retention prices and there was no liability on the Government to pay any subsidy to any of the units effective Dec. 29, 1980 in respect of Vitamin c plain and effective Jan. 28, 1981 in respect of Vitamin c coated. Thus. the two subsequent orders could not be regarded as mere amendments to the order of Oct. 18, 1979. The petitioners sent a long telegram on Sept. 1, 1981 to the Central Government as a consequence of interim orders passed in a petition they had filed in the Gujarat High Court for revision of their retention prices. This telegram specifically mentioned that as there was to be no common sale price and sale of bulk Vitamin c had to be made on prices indicated in the release orders it would be unfair on the petitioners if they were not allowed to sell at a higher price. It was further pointed out that since no common selling price had been fixed under the DPCO it was open to the petitioners to sell at a price higher than the retention price. The petitioners lodged a strong protest at the stand taken by the Central Government. The fixation of retention price was contended to be contrary to law and direction to sell at prices indicated in release orders without a common sale price being fixed was contended to be arbitrary and discriminatory. This telegram was followed up by a letter of Oct. 7, 1981. The petitioner No. 1 states it was advised that legally it was entitled to sell Vitamin c at a price higher than the retention price of Rs. 127. This telegram was followed up by a letter of Oct. 7, 1981. The petitioner No. 1 states it was advised that legally it was entitled to sell Vitamin c at a price higher than the retention price of Rs. 127. 54 fixed by the Government with effect from Feb. 25, 1981. The petitioner, accordingly, proceeded to act on this advice. A telegram dated Oct. 17, 1981 was then received by the petitioner that it was not permissible for it to sell the bulk drug at a price higher than Rs. 127,54 per kg. as under sub-para (3) of para 3 of DPCO of 1979 a manufacturer was prohibited from selling at a price higher than the price fixed by the Government. This telegram was replied to by the petitioner contending that it was unable to find any warrant in law for any threatened action against it in the above circumstances. This was followed up by a letter of Nov. 4, 1981 taking the same stand. As the respondents were intending to prosecute the petitioners and also to make the petitioners incompetent to sell at a price higher than the retention price by diverting all the allocation to JVL, the petitioners filed the present petition on Nov. 12, 1981 against the Union of India. ( 22 ) BY this petition under Art. 226 of the Constitution the petitioners prayed for a declaration that the action and threat contained in the Central Government s telegram dated Oct. 17, 1981 be held to be without authority of law and ultra vires the power of the Central Government. A writ of prohibition was also sought against Central Government for enforcing the decision and the threat contained in the said communication dated Oct. 17, 1981. A writ of mandamus was prayed for directing the respondents, their agents, subordinates and servants to withdraw and cancel the decision contained in the communication dated Oct. 17, 1981 and desist from taking action, as threatened therein. ( 23 ) NOTICE was issued by a Bench of this Court to the Union of India to show cause why rule nisi be not issued. In the meanwhile by an interim order action for prosecution was stayed. ( 24 ) THE petition was allowed to be amended by an order dated Jan. 4, 1982. By the amended petition the petitioners, in addition to the challenge made to the communication dated Oct. In the meanwhile by an interim order action for prosecution was stayed. ( 24 ) THE petition was allowed to be amended by an order dated Jan. 4, 1982. By the amended petition the petitioners, in addition to the challenge made to the communication dated Oct. 17, 1981 and the reliefs earlier sought in regard thereto, also challenged the various actions of the Central Government consequent to the issue of the communication dated Oct. 17, 1981 by the Central Government and prayed for quashing nor only the said order/communication but also the show cause notice issued to the petitioners on Nov. 13, 1981 calling upon the petitioners to show cause why action be not taken against them under para 4 after going through the procedure, as specified in para 3 of the DPCO and for violating the provisions of paras 3 and 4 of the Drugs (Prices Control) Order, 1979. They were also asked to show cause why action be not taken against them for unilateral increase in price in violation of the provisions of DPCO and the Essential Commodities Act. ( 25 ) ONE other fact needs to be noticed. The petitioners filed a petition under Article 226 of the Constitution in the Gujarat High Court challenging the price fixation, validity of the DPCO, the demands for payment into the Drugs Prices Equalisation Account, and praying for refixation of prices. This petition was admitted by the Gujarat High Court on Jan. 15, 1981. Some interim relief was also granted to the petitioners by means of a stay order. The interim order was vacated by the Gujarat High Court on Feb. 10, 1981 but a direction was given to the Government to consider the cost data furnished by (he petitioners and decide one way or the other the representation made by the petitioners to the Central Government on Feb. 6, 1981 for an upward revision of the retention price. The petitioner filed a Special Leave Petition in the Supreme Court against the order vacating the interim stay. The Supreme Court issued notice to the Government and posted the matter for hearing on Feb. 27, 1981. The Special Leave Petition was disposed of by the Supreme Court on Feb. 27, 1981. (Reported in 1981 Supp SCC 50 (1)) The Supreme Court granted stay of the demand for payment into the Equalisation Account, made against the petitioners, on the petitioner-Company paying Rs. 27, 1981. The Special Leave Petition was disposed of by the Supreme Court on Feb. 27, 1981. (Reported in 1981 Supp SCC 50 (1)) The Supreme Court granted stay of the demand for payment into the Equalisation Account, made against the petitioners, on the petitioner-Company paying Rs. 20 lakhs into the Account. The Supreme Court also requested the High Court to dispose of the writ petition within two months. The petitioner- Company thereafter amended its petition in the Gujarat High Court challenging the price fixation order dated Feb. 25, 1981. Before the petition could be taken up by the Gujarat High Court for final disposal, JVL moved that High Court for being impleaded as a respondent. This application was allowed. We are told that the petition has not yet been disposed of. Further, the Government has also not taken a final decision on the representation of the petitioners for upward revision of the retention price. As, however, the petitioners were being threatened with prosecution etc. , as noticed earlier, they were compelled to move this Court. ( 26 ) FROM a narration of the above facts it is obvious that the matter pending in the Gujarat High Court is with regard to the claim of the petitioners for upward revision of the retention price. The matter pending in this Court is with regard to the challenge made by the petitioners to the power of the Central Government to issue and the validity of the communications dated Oct. 17, 1981 and Nov. 14, 1981. Nevertheless a preliminary objection was raised on behalf of the respondents that the petitioner-Company is guilty of suppression of material facts and there has been an attempt to mislead by suggestion false. It is urged that two parallel proceedings cannot be continued by the petitioners. In this context our attention was invited to averments in the petition filed in the Gujarat High Court and the prayer by which the order dated Feb. 25, 1981 was sought to be quashed. It was submitted that the explanation given in the rejoinder cannot be regarded as sufficient. Mr. F. S. Nariman, learned counsel for the petitioners, made a statement that since the connection between the petition in this Court and the Gujarat High Court is established only because of the order of Feb. 25, 1981 was sought to be quashed. It was submitted that the explanation given in the rejoinder cannot be regarded as sufficient. Mr. F. S. Nariman, learned counsel for the petitioners, made a statement that since the connection between the petition in this Court and the Gujarat High Court is established only because of the order of Feb. 25, 1981, namely, the price order issued under para 4 of the DPCO fixing only the retention price for the petitioner, JVL and HAL, the petitioners will not press the challenge to the said order in the Gujarat High Court. It was stated that the challenge was preferred in the Gujarat High Court only by way of an amendment of the writ petition pending there and the said challenge will not be pressed. Therefore, it was likelihood of any conflict of decisions between the two High Courts and tihe petitioners cannot be blamed, as contended on behalf of the respondents, because they had to take up the plea in view of the developments. The apprehended conflict would have only come if the Gujarat High Court had dismissed the writ petition pending before it and we had allowed it. The effect could have been that Gujarat High Court would have upheld fixing of retention price Without fixing the sale price while we would have held to the contrary. Inasmuch as the petitioners have given up their challenge to the order dated Feb. 25, 1981 in the Gujarat High Court, we need not dwell on this aspect any further. ( 27 ) THE petitioner-Company s case is that it cannot be compelled to sell only on the retention price fixed without fixing a common sale price. The threat held out by the respondent is ultra vires its powers and completely illegal. The propositions which arise from this contention are as under: 1. Can retention price be equated to sale price? 2. Can retention price be fixed without maximum sale price being fixed? 3. Can the petitioner-Company be penalised for selling at a price higher than the retention price, if maximum sale price is not fixed? 4. Are the sale price and retention price closely interlinked, looking at the purposes of the Act, the DPCO and related circumstances ? 5. 2. Can retention price be fixed without maximum sale price being fixed? 3. Can the petitioner-Company be penalised for selling at a price higher than the retention price, if maximum sale price is not fixed? 4. Are the sale price and retention price closely interlinked, looking at the purposes of the Act, the DPCO and related circumstances ? 5. As the maximum sale price can only be of a new bulk drug to be fixed under para 5 of the DPCO, it is not to be confused with the common sale price. ( 28 ) AS against these contentions the respondent s case is that when retention price is fixed without fixing common sale price, the petitioner-Company is prohibited from charging a price other than the retention price. Assuming it is not so, even then the communication dated Feb. 14, 1981 and the telegrams asking the petitioner to sell at the retention price, constitute a direction within the meaning of para 28 of the DPCO, which will mean it will be a prohibition against charging of a price other than the retention price or the price mentioned in the allotment order. It is further contended that there was no lack of jurisdiction in issuing the impugned telegrams or communications; the diversion of the quota from the first petitioner to JVL could not be called arbitrary, indeed, it was justified, particularly due to the informal distribution system which is in the nature of a contract and, therefore, challenge to it is not possible by judicial review in writ jurisdiction. It is submitted that though common sale price cannot be fixed without retention price being fixed, the reverse proposition is not correct, namely, retention price can be fixed without fixing common sale price. ( 29 ) BEFORE we proceed to deal with the contention made in this case, we note that JVL was impleaded as respondent No. 3 and the State Chemicals and Pharmaceuticals Corporation of India, a wholly owned subsidiary of the State Trading Corporation of India, a Government of India Undertaking, was impleaded as respondent No. 2. Inasmuch as the informal distribution system and allocation is worked through respondent No. 2, its presence was necessary to decide some of the controversies raised before us. JVL. which has got 100 per cent allocation at the moment, was also interested in what we may hold on the issues raised by the petitioners. Inasmuch as the informal distribution system and allocation is worked through respondent No. 2, its presence was necessary to decide some of the controversies raised before us. JVL. which has got 100 per cent allocation at the moment, was also interested in what we may hold on the issues raised by the petitioners. Both JVL and the State Chemicals and Pharmaceuticals Corporation of India have supported the stand of the Union of India. It is not, therefore, necessary to notice the contentions raised by them separately except in so far as our hereafter noticing the additional submission made by Dr. Chitiey. who appears for JVL. ( 30 ) AS has been noticed by us herein- above. the DPCO was issued by virtue of the powers conferred by Section 3 of the Essential Commodities Act. The violation of the DPCO would be an offence within the meaning of the said Act as Vitamin c manufactured by the petitioner and JVL is a bulk drug within the meaning of the term in para 2 (a) of the DPCO and the parties before us, admittedly, are completely covered by the said DPCO. ( 31 ) WE have already read S. 3 of the Act The power conferred by Sec. 3 is for the purpose of maintaining or increasing supply of any essential commodity or for securing its equitable distribution and availability at fair price. We are not concerned with securing etc. any essential commodity for the Defence of India or the efficient conduct of military operations. Therefore, the DPCO has to be read as having been issued for the purposes specified in Section 3 of the Act. In other words, in its applicability to bulk drug Vitamin c , the DPCO has to be viewed from the point of view of maintenance or increase in supplies of bulk drug Vitamin c or for securing its equitable distribution and availability at fair price. It is the respondent s case that the DPCO of 1979, which supersedes the DPCO of 1970, was necessitated to bring about some changes keeping in view the recommendations of the Hathi Commission on the drugs and pharmaceutical industry, as accepted by the Government of India in its new Drug Policy announced on March 29, 1979. The purpose underlying the issue of the DPCO was to remove bottlenecks, eradicate the short-comings and make up the deficiencies in the previous DPCO. The purpose underlying the issue of the DPCO was to remove bottlenecks, eradicate the short-comings and make up the deficiencies in the previous DPCO. The DPCO of 1979 was, it was thought, likely to impose an effective price control over the manufacturers, dealers and importers alike in the matter of purchase and sale of drugs. Effective price control over manufacture, purchase and sale of drugs was considered a dire necessity to cope with costs and the capacity of the consumer to pay, in the absence of which, the retailer, with whom basically the ordinary consumer is concerned, may dupe the consumer. The informal distribution system was also evolved by agreement to more effectively ensure the working of the DPCO. ( 32 ) PARAGRAPH 3 of the DPCO gives power to fix maximum sale price of indigenously manufactured bulk drugs specified in the First Schedule or the Second Schedule. The maximum sale price is to be fixed with a view to regulating the equitable distribution of an indigenously manufactured bulk drug. Under para 4 power is given to the Government to fix the retention price and common sale price. Thus, three types of prices are postulated, viz. , the maximum sale price, retention price and common sale price. What these three prices are is obvious from a reading of the definitions and the provisions of paras 3 and 4 of the DPCO which have been noticed earlier. There are, of course, other types of prices mentioned in the DPCO, namely, the retail price and the leader price. We are not really concerned with those, at least at this stage. ( 33 ) FOR equitable distribution and availability of a drug at fair price, it is understandable that a maximum sale price be fixed. The manufacturers would then have to sell at that price irrespective of its cost of production. None has been fixed in the present case. The obligation of a manufacturer to sell at the maximum sale price, fixed under para 3, arises only if the said maximum sale price is notified in the Official Gazette. If it is not fixed and/or is not notified as required by or under para 3, there is no obligation to sell at a particular price and the question of violation of any of the provisions of the DPCO or the Act would not arise. If it is not fixed and/or is not notified as required by or under para 3, there is no obligation to sell at a particular price and the question of violation of any of the provisions of the DPCO or the Act would not arise. ( 34 ) THE concepts of retention price and common sale price have to be viewed from an entirely different angle. These prices, namely, retention price and common sale price, can only be fixed if the purpose postulated by para 4 of DPCO is to be achieved, namely, if the Government considers it necessary or expedient for increasing the production of an indigenously manufactured bulk drug, it may fix the retention price and common sale price. Under para 7 of the DPCO retention price may be fixed for an individual manufacturer, importer or distributor of bulk drug. These are fixed by the Government if it considers it necessary or expedient for increasing production by having regard to the sale prices prevailing from time to time in respect of the particular inigenously manufactured bulk drugs and the sale prices of imported bulk drugs with such adjustment as the Government may consider necessary. The pooled price is also fixed for the same purpose and in the same manner as provided by para 7 of the DPCO. In this case we are not concerned with the fixations under para 7. We are concerned with exercise of power under para 4. The scheme of para 4 is this. Averages are worked out regarding cost of production. Some manufacturers have higher cost of production while others have lower cost of production. A retention price is fixed for each manufacturer or importer, as the case may be, keeping in view that manufacturers or importer s capacity and capability. The sale of the bulk drug, however, will have to be at the common sale price. This common sale price may be higher or lower than the retention price qua each of the manufacturers or importers. If the common sate price is higher, then the difference between the common sale price and the retention price is to be deposited by such manufacturer or importer into the Drug Prices Equalisation Account, postulated by para 17 of the DPCO. If the common sate price is higher, then the difference between the common sale price and the retention price is to be deposited by such manufacturer or importer into the Drug Prices Equalisation Account, postulated by para 17 of the DPCO. If the common sale price is lower than the retention price of a particular manufacturer or importer, he sells at the common sale price but the difference may be paid to him from the Drug Prices Equalisation Account. In other words, the bulk drug is sold at a fair price irrespective of the cost of production. If the common sale price is higher than the retention price, which is the fair price which the manufacturer or importer can retain, he pays to the Equalisation Account. In the converse situation he gets paid from the Equalisation Account so that the retention price is, in any case, received by the manufacturer or importer, as the case may be. Sale, therefore, has to be at the common sale price (or the maximum sale price contemplated by para 3 ). The DPCO does not provide for sale at the retention price. To contend to the contrary would be violative of the very concept of fair price to the consumer on the one hand and manufacturer or importer on the other. If it were a free market the consumer of a bulk drug would naturally buy the bulk drug from the manufacturer who offers it at the lowest price. This would drive the other manufacturers whose cost is higher out of the market. The retention price of the petitioner has throughout been lower than the retention price of JVL. But for the informal distribution system JVL may have been out of business because consumers of the bulk drug would have purchased their requirements from the first petitioner if retention price and sale price are considered to be the same. Further, if the retention price is regarded as the sale price, inequities arise because the same are fixed by the Government and there is no reason given why it is lower for the petitioner and higher for the JVL. Indeed, no matter bow one sees, retention price cannot be equated with sale price as the two are fixed entirely on different bases and denote two different concepts. Indeed, no matter bow one sees, retention price cannot be equated with sale price as the two are fixed entirely on different bases and denote two different concepts. The petitioners contend that retention price cannot be fixed by itself and has to be fixed along with common sale price. We agree with their contention. These two prices are fixed for a purpose which is stated by para 4 of the DPCO. These cannot be confused with the price notified under para 3 of the DPCO, that is the maximum sale price. ( 35 ) DR. Chitley, appearing for the JVL, contended that inasmuch as retention price is the actual consideration which a manufacturer is entitled to retain so, for him that is the real sale price for which he sells his bulk drug. The extra that he may collect, if the common sale price is higher, is for the purposes of payment to the Equalisation Account. There is, therefore, nothing inequitable in the insistence by the Government that the petitioner should sell the bulk drug only at its retention price. The argument on the face of it looks attractive but there is a fallacy. Apart from the contention of the pentitioner that the retention price fixed for it was too low, if the retention price is higher than the common sale price the manufacturer concerned may find itself in a position where it is unable to sell the goods it manufactures because another party will be selling at a lower price which will be the retention price of that party. If the retention price is lower, then the party who has the lower price would be at an advantage. Therefore, the party whose retention price is higher may have to reduce cost or stop production. That would certainly not be conducive to increasing the production of an indigenously manufactured bulk drug which is the avowed object of para 4 of the DPCO. It is also to be noted that if this contention was to be accepted, we will be confusing retention price with the maximum sale price. The maximum sale price, as noticed earlier, is fixed under para 3 of the DPCO and the object of fixing it is to make a drug available at a fair price and to ensure equitable distribution. The object is not, as in para 4, to increase production. The maximum sale price, as noticed earlier, is fixed under para 3 of the DPCO and the object of fixing it is to make a drug available at a fair price and to ensure equitable distribution. The object is not, as in para 4, to increase production. We, therefore, hold that in view of the scheme postulated by para 4 and some other paragraphs of the DPCO mere retention price cannot be fixed without fixing the common sale price. We further hold that retention price cannot be regarded as the maximum sale price. In the absence of either the common sale price being fixed or the maximum selling price being fixed, there can be no insistence to sell only at the retention price. That would be ultra vires the powers contemplated by the DPCO. If that be so, then obviously the provisions of the Essential Commodities Act for violation of any price fixed by the DPCO would not be attracted. ( 36 ) A contention is made that directions can be issued under para 28 of the DPCO and that the impugned directions were, therefore, valid. We do not agree. Directions can be issued under para 28 only if the same are consistent with the provisions of the DPCO and are necessary to carry out the provisions of the DPCO. Issuing a direction to sell at a particular price without fixing the maximum selling price or the common sale price is not contemplated by any of the provisions of the DPCO. Therefore, the impugned directions cannot be saved by invoking para 28 of the DPCO. ( 37 ) THE view that we have taken necessarily leads us to hold that there was complete lack of jurisdiction in issuing the impugned letters and telegrams, subject, of course, to our opinion on the other contentions raised, which we shall deal withhereafter. Mr. Mridul contends that Clause 4 of the DPCO stands by itself. That alone speaks of the purpose being to increase pro- duction. All other clauses of the DPCO are concerned with equitable distribution and fair price. Clause 17, according to him, is an alternative device to encourage production. It is not necessary that there should be an Equalisation Account to work out para 4 of the DPCO. That alone speaks of the purpose being to increase pro- duction. All other clauses of the DPCO are concerned with equitable distribution and fair price. Clause 17, according to him, is an alternative device to encourage production. It is not necessary that there should be an Equalisation Account to work out para 4 of the DPCO. In other words, retention price could be fixed without having an Equalisation Account, as postulated by para 17, and without fixing a common sale price or even a pooled price, as coniemplated by para 7 of the DPCO. The pooled price is just another method of working out the common sale price. There is no sense in having a retention price without having a pooled price or a common sale price. If that is done, as we have observed earlier, the retention price fixed would have to be viewed as maximum sale price. That, however, can only be fixed by a notified order and if the purpose is what is contemplated by para 3. Here the purpose avowedly is what is contemplated by para 4 of the DPCO and. therefore, the argument is of no avail. The maximum sale price of a bulk drug can only be by a notified order, as mentioned in para 3 and para 6 (2) (b ). Since that has not been done here, it cannot be urged that the retention price is the maximum sale price To either contend that or to enforce it would be wholly ultra vires. ( 38 ) ONE other aspect fortifies us in coming to the above conclusion, namely, that retention price cannot be regarded as the maximum selling price even if para 3 of the DPCO is not attracted. In other words, if with an intention to regulate equitable distribution of an indigenously manufactured bulk drug specified in the First or the Second Schedule and making it available at a fair price, maximum selling price is fixed, it would be under para 3 of the DPCO otherwise the maximum selling price may even be fixed under para 5 of the DPCO. This maximum selling price in para 5 can, however, be fixed only of a new bulk drug. Vitamin c , produced by the petitioner or JVL, is not a new bulk drug. This maximum selling price in para 5 can, however, be fixed only of a new bulk drug. Vitamin c , produced by the petitioner or JVL, is not a new bulk drug. Admittedly, it is not an imported bulk drug the maximum selling price of which may be fixed under para 6 of the DPCO. Therefore, no matter which way one looks at it, treating the retention price as the maximum sale price cannot be permitted. ( 39 ) DURING the course of hearing the petitioners applied for and were again permitted to amend their petition by an order dated April 12, 1982. Return was filed to this amended petition as well. The scope of the controversy was enlarged. Initially, the petitioners had only challenged the decision of the first respondent, contained in the communication dated Oct. 17, 1981 to the effect that in view of the provisions of sub- paragraph (3) of para 3 of the DPCO sale of Vitamin c" by the petitioner: at a price higher than title price fixed by the Government tantamounted to violation of DPCO. issued under Section 3 of the Essential Commodities Act which could make the petitioners liable for penal action under the said Act. The petitioner company was called upon to desist from effecting sale of Vitamin c at any price exceeding the price of Rs. 127. 54 per kg. , which was the retention price fixed by the Government. It was also called upon to explain the position in detail to enable the first respondent to proceed further in the matter. The petition was filed on Nov. 12. 1981. By the first amended petition, allowed to be filed, the petitioner had still restricted the challenge to the communication dated 17th Oct. . 1981. By the second amended petition, which the petitioner was allowed to file by an order of Jan. 4. 1982, noticed earlier, the scope was somewhat extended. Besides the challenge to the communication of Oct. 17, 1981, challenge was also made to the show cause notice issued on Nov. . 1981. By the second amended petition, which the petitioner was allowed to file by an order of Jan. 4. 1982, noticed earlier, the scope was somewhat extended. Besides the challenge to the communication of Oct. 17, 1981, challenge was also made to the show cause notice issued on Nov. 13, 1981, a telegram dated December 4, 1981 issued to the petitioner company and a circular purportee to have been issued by the State Chemicals and Pharmaceuticals , Corporation of India to consumers of the bulk drug Vitamin c to the effect that the allocations from the first petitioner have been transferred to JVL who would thereafter supply all their requirements of Vitamin c . The consumers had been advised by the said circular not to purchase Vitamin c from the first petitioner but to obtain their supplies from JVL. The petitioners contend that this is not permissible and amounts to hostile discrimination apart from the action being illegal and arbitrary. ( 40 ) A telegram dated Dec. 1, 1981 from the State Chemicals and Pharmaceuticals Corporation of India, addressed to the first petitioner, is to the effect that allocations made to it for supply of the bulk drug to M/s. Glaxo Laboratories was being cancelled The first petitioner was advised not to release the material against the earlier issued release orders. A. telegram dated Dec. 4, 1981 was issued by the first respondent to the first petitioner calling upon it to confirm telegraphically whether it was willing to sell Vitamin c to actual users on the State Chemicals and Pharmaceuticals Corporation of India s allocation orders at prices fixed by the Government for the first petitioner, i. e. Rs. 127. 54 per kg. for plain and Rupees 133,54 per kg. for coated Vitamin c . It was said in the telegram that if no reply was received it will be assumed that the petitioner was not interested to sell Vitamin c against the allocation orders by the aforesaid Corporation. The petitioners had protested against this action by telegrams dated Dec. 9, 1981, one addressed to the aforesaid Corporation protesting against tine cancellation of allocation and the other addressed to the Deputy Secretary to the Government of India asserting petitioners right to sell at aprice higher than the retention price. The petitioners had protested against this action by telegrams dated Dec. 9, 1981, one addressed to the aforesaid Corporation protesting against tine cancellation of allocation and the other addressed to the Deputy Secretary to the Government of India asserting petitioners right to sell at aprice higher than the retention price. We have already held that without fixing either a common sale price or maximum selling price and when only retention prices have been fixed, the petitioners could not be compelled to sell at the retention price treating it to be the maximum selling price fixed. Para 3 is not attracted at all because the order fixing the retention price had to be made under para 4 of the DPCO and, indeed, was so made. There was no violation of any of the provisions of para 3 of the DPCO. In consequence, merely because the first petitioner insisted upon its right to sell at a price higher than the retention price in the absence of a common sale price being fixed or the maximum selling price being fixed, the withdrawal of allocation from the first petitioner or transfer of the allocation from the first petitioner to JVL must be held to be arbitrary and in excess of the jurisdiction that the respondents had. Indeed, it is not understandable how transfer of the allocation to JVL, whose retention price was higher could even be regarded as in the interest of fair price qua the consumer. The consumer of the bulk drug would have to pay more and in the ultimate analysis the consumer of formulations would have to pay more. The retail prices are fixed on the basis of the formula contained in paragraph 10 of the DPCO. Price on which the formulator gets the bulk drug with the marks up allowed by the DPCO forms an important ingredient in arriving at the retail price. The impugned directions and orders are, therefore, violative of the entire scheme and purpose of the DPCO as well as S. 3 of the aforesaid Act. The action of the respondents would result not only in hostile discrimination against the petitioners but also higher price payable by the ultimate consumer. This could not have been the intent of the scheme contemplated by the DPCO, or the intent of Section 3 of the Act under which the DPCO was issued. The action of the respondents would result not only in hostile discrimination against the petitioners but also higher price payable by the ultimate consumer. This could not have been the intent of the scheme contemplated by the DPCO, or the intent of Section 3 of the Act under which the DPCO was issued. ( 41 ) IT was suggested that the informal distribution system is in the nature of a contract and, therefore, we should not interfere with the same in writ jurisdiction. Assuming that the informal distribution scheme worked through the agency of the aforesaid State Corporation was in the nature of an arrangement or an agreement or contract, it is an arrangement or a contract between the citizens on the one hand and the State on the other. The contract must be worked justly and fairly. The arrangement cannot be worked arbitrarily or to put in colloquial language result in twisting the arm of a party. That is precisely what is sought to be done. ( 42 ) IN the view that we have taken, we quash the impugned telegrams dated Oct. 17, 1981 and the show cause notice dated Nov. 13, 1981. We also declare of no effect the telegram dated Dec. 1, 1981 and the telegram dated Dec. 4, 1981. We also hold that the circular purported to have been issued is arbitrary and shall be of no effect or avail. The respondents 1 and 2 cannot discriminate against the petitioners. The allocation of 40 per cent in favour of the first petitioner must be restored and it is ordered accordingly. ( 43 ) REGARDING the tenability of the retention price fixed, we make no comment. Whether it should be more or less cannot be decided in the present matter. Regarding the price at which the first petitioner can sell in the absence of a maximum selling price being fixed or a pooled price being fixed or a common sale price being fixed, we find that nothing has been placed on the record by the respondents to contest the claim of the petitioner-company that it is entitled to sell the bulk drug Vitamin c at Rs. 154. 00 per kg. (plain) instead of Rs. 127. 54 per kg. and at Rs. 160. 00 per kg. instead of at Rs. 133. 54, for Vitamin c (coated), Rs. 127. 54 and Rs. 133. 154. 00 per kg. (plain) instead of Rs. 127. 54 per kg. and at Rs. 160. 00 per kg. instead of at Rs. 133. 54, for Vitamin c (coated), Rs. 127. 54 and Rs. 133. 54 being the prices for sale being insisted upon by respondents 1 and 2. The petitioner-company would be entitled to sell at Rs. 154. 00 per kg. as had been observed in our interim order of May 6, 1982. The leader price will have to be fixed accordingly. For the same reasons and to the same effect, the first petitioner would be entitled to sell Vitamin c coated at Rupees 160. 00 per kg. ( 44 ) THE rule is made absolute in the above terms. The petitioners would be entitled to their costs against respondent No. 1. Counsel s fee Rs. 1,000. 00. Rule made absolute.