NOVO NORDISK INDIA PRIVATE LIMITED, BANGALORE v. STATE OF KARNATAKA
2006-03-23
H.G.RAMESH
body2006
DigiLaw.ai
ORDER In this writ petition, the petitioners have challenged the constitutional validity of Clause 19 of the Drugs (Price Control) Order, 1995 ('the Control Order' for short) and alternatively have sought for a declaration that Clause 19(1) of the Control Order does not apply to the petitioners. Further, the petitioners have sought for quashing of the prosecution launched by the Drugs Controller in C.C. No. 20163 of 2002 before the Court of the IX Additional Chief Metropolitan Magistrate and have also sought for quashing of the instructions dated 31-1-2002 (Annexure-D) issued by the Drugs Controller, Bangalore to all the officers re-launching of prosecutions for contravention of Clauses 14(2) and 19(1) the Control Order. 2. I have heard Sri T. Suryanarayana, learned Counsel appearing for the petitioners, Sri Aravinda Kumar, learned Assistant Solicitor General of India for respondents 4 and 5 and Sri A.G. Shivanna, learned Additional Government Advocate for respondents 1 and 2. 3. Learned Counsel for the petitioners submits that Clause 19 of the Control Order is violative of Articles 14 and 19(1)(g) of the Constitution of India and without prejudice to the said contention, he submits that Clause 19(1) of the Control Order does not apply to the petitioners as they deal only in imported formulations and hence the prosecution launched by the Drugs Controller against the petitioners alleging contravention of Clause 19(1) of the Control Order is liable to be quashed. He referred to State of Rajasthan v Nath Mall, in support of his submission regarding validity of Clause 19 of the Control Order. 4. Learned Counsel appearing for the respondents brought to my notice the order passed by this Court dated 17-1-2006 dismissing a similar writ petition in W.P. No. 7721 and 2002 wherein the constitutional validity of Clause 19 of the Control Order was challenged. Relevant portion of the said order reads as follows.- "5. As noticed above, Clause 19 of the Control Order would only restricts a manufacturer, distributor or a wholesaler to sell a formulation to a retailer for a price so as to allow only 16% profit to the retailer in the case of scheduled drugs. This restriction cannot be said to be arbitrary or unreasonable so as to offend Article 14 or 19(1)(g) of the Constitution of India. On the contrary, the restriction imposed is in public interest".
This restriction cannot be said to be arbitrary or unreasonable so as to offend Article 14 or 19(1)(g) of the Constitution of India. On the contrary, the restriction imposed is in public interest". In view of the above, the challenge to the validity of Clause 19 of the Control Order as violative of Articles 14 and 19(1)(g) of the Constitution is liable to be rejected and is accordingly rejected. 5. The decision of the Supreme Court relied on by the learned Counsel for the petitioner is not applicable to the facts of this case. The nature of the provision that fell for consideration and declared as void by the Supreme Court is not comparable to Clause 19 of the Control Order. Except that both the Control Orders were issued under an enactment relating to Essential Commodities, the provisions are not comparable in any way including the nature of the restriction imposed is concerned. The provision which was declared as void in the aforesaid decision is violative of Articles 19(1)(g) and 31(2) of the Constitution of India provided for acquisition of foodgrains by the Government at any rate fixed by it which could be totally arbitrary. That is not the case here. 6. The other aspect to be considered is as to the applicability of Clause 19 of the Control Order to imported formulations. To examine this aspect, it is relevant to refer to Clause 19 of the Control Order and the definition of 'formulation' in the Control Order: Clause 19 of the Control Order reads as follows.- "19. Price of formulations sold to the dealer.-(1) A manufacturer, distributor or wholesaler shall sell a formulation to a retailer, unless otherwise permitted under the provisions of this Order or any order made there under, at a price equal to the retail price, as specified by an order or notified by the Government (excluding excise duty, if any), minus sixteen per cent thereof in the case of Scheduled Drugs. (2) Notwithstanding anything contained in sub-paragraph (1), the Government may by a general or special order, fix in public interest, the price of formulation sold to the wholesaler or retailer in respect of any formulation the price of which has been fixed or revised under this Order".
(2) Notwithstanding anything contained in sub-paragraph (1), the Government may by a general or special order, fix in public interest, the price of formulation sold to the wholesaler or retailer in respect of any formulation the price of which has been fixed or revised under this Order". 'Formulation' is defined in Clause 2(h) as under: " "formulation" means a medicine processed out of, or containing one or more bulk drug or drugs with or without the 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) any medicine included in any bona fide Ayurvedic (including sidha) or Unani (Tibb) systems of medicines; (ii) any medicine included in the Homoeopathic system of medicine; and (iii) any substance to which the provisions of the Drugs and Cosmetics Act, 1940 (23 of 1940) do not apply". As could be seen from the definition of 'formulation', an 'imported formulation' is not excluded from it if it otherwise falls within the definition of 'formulation' and an 'importer' is also not excluded from the definition of 'distributor', 'manufacturer' and 'wholesaler' defined in Clause 2(e), (m) and (y) of the Control Order. On the contrary, an 'importer' is specifically included in the definition of 'distributor' and 'wholesaler'. It is also not the case of the petitioners that they do not fall within the ambit of the definition of 'manufacturer' or 'distributor' or 'wholesaler' under the Control Order. Hence, I am unable to accede to the contention that Clause 19(1) of the Control Order does not apply to the petitioners. 7. Clause 19(1) of the Control Order applies to every manufacturer, distributor or a wholesaler who falls within the ambit of the respective definitions under the Control Order and who sells any formulation including an imported formulation falling within the definition of 'formulation' being a 'scheduled formulation' to a retailer unless otherwise permitted under the provisions of the Control Order or any order made thereunder. 8. It is relevant to state that an imported formulation is not excluded from the provisions of the Control Order. A reading of Clauses 8(7), 10, 11, 13, 14 and proviso to Clause 7 of the Control Order would show that the Government is empowered to fix retail price for an imported formulation. 9.
8. It is relevant to state that an imported formulation is not excluded from the provisions of the Control Order. A reading of Clauses 8(7), 10, 11, 13, 14 and proviso to Clause 7 of the Control Order would show that the Government is empowered to fix retail price for an imported formulation. 9. Since Clause 19 of the Control Order applies to the petitioners, I find no infirmity in launching of the prosecution against them. Whether the petitioners have offended the Control Order or not is a matter to be proved by the prosecution before the jurisdictional Criminal Court. I find no ground to warrant interference with the process of the Criminal Court in exercise of the extraordinary jurisdiction of this Court under Articles 226 and 227 of the Constitution of India. The law on this aspect is well-settled by the Supreme Court in several decisions. As both the contentions fail, the writ petition is liable to be dismissed and is accordingly dismissed. No costs.