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2010 DIGILAW 992 (HP)

Hemma Herbs Pvt. Ltd. v. Union of India

2010-07-29

DEEPAK GUPTA, RAJIV SHARMA

body2010
JUDGMENT: Per Deepak Gupta, J 1. The petitioner No.1 is a Company duly incorporated under the Indian Companies Act, 1956. Petitioner No.2 is the director of the said company. He also holds a power of attorney of the company and is duly authorized to file the present petition. The petitioner has filed the present writ petition praying for the grant of the following amongst other reliefs:- (a) A writ of or in the nature of a Mandamus or appropriate directions do issue commanding and directing the respondents to withdraw, recall and cancel the said purported Orders dated February, 2008 and 15th April, 2008 included in Annexure P-5 and Annexure P6 and the purported show cause notice dated 8.9.2008 and purported order dated 13.10.2008 (Annexure P-8 (Colly) hereto and to forbear from giving any effect thereto or acting in terms thereof: (b) A Writ of or in the nature of a prohibition or appropriate directions do issue prohibiting the respondents from giving any effect or further effect to the said purported Orders dated 4th February, 2008 and 15th April, 2008 included in Annexure P-5 and P-6 and 15th April, 2008 “and the purported show cause notice dated 8.9.2008 and the purported order dated 13.10.2008” (Annexure P-8 colly) hereto and from taking any steps pursuant thereto or acting in terms thereof. 2. The undisputed facts are that the petitioner herein is manufacturing a Ayurvedic formulation known as Chyawanprash at the factory of the company at Industrial Area, Barotiwala, District Solan, H.P. 3. The petitioner initially applied for and obtained a license in terms of Drugs and Cosmetics Act, 1940 (hereinafter referred to as the Act) for the manufacture of Ayurvedic formulations including Balm/Ointment, Awaleha, Oil drops and Pearls sections only. This license was valid from 21.5.2005 to 20.5.2008. It is not disputed before us that Chyawanprash is a species of Awaleha. It is also not disputed that thereafter the petitioner Company applied for grant of license for the manufacture of additional items, namely, “New Himani Sona Chandi Chyawanprash”. In the application for the grant of licence to manufacture the additional item (namely Chywanprash) the petitioner claimed that this is a proprietary Ayurvedic medicine and alongwith the application, the petitioner filed an annexure giving composition of the said Chyawanprash. For our purpose, it will be fruitful to mention that two of the ingredients mentioned in the annexure are silver foil and gold foil. For our purpose, it will be fruitful to mention that two of the ingredients mentioned in the annexure are silver foil and gold foil. This application was allowed and the licence to manufacture New Himani Sona Chandi Chyawanprash was issued by the Director of Ayurveda cum-Licensing Authority, Himachal Pradesh on 15th September, 2005. 4. On 4th February, 2008, the Central Government issued a communication banning the use of prefixes and suffixes with classical Ayurvedic, Sidha and Unani (ASU) Drugs. The gist of the letter was that by putting prefixes and suffixes to the classical names, the consumers are being misled. Thereafter, another communication was issued by the Government of India, Department of Ayurveda on 15th April, 2008 vide which the earlier communication, dated 4th February, 2008, was partly modified and the Companies were permitted to prefix and suffix the name of the Company only with the classical name of the medicine but were not permitted to use any other prefix or suffix. The petitioner in relation to the proprietary medicine i.e. Chyawanprash was using the prefix “Sona Chandi” and, therefore, filed the present writ petition before this Court challenging the validity of the aforesaid two communications. 5. During the pendency of the writ petition, a notice was issued to the petitioner Company by the Director Ayurveda-cum-Licensing Authority, Himachal Pradesh on 8th September, 2008. In this notice, the petitioner Company was informed that the Government of India, vide the aforesaid two communications, had decided that no prefix or suffix could be added to the classical name of ASU drugs even in respect of patent and proprietary drugs. The petitioner was asked to explain why it had not complied with the aforesaid two communications. The petitioner filed its reply. The respondent-State, vide order, dated 13th October, 2008, prohibited the petitioner from manufacturing and selling the product under the above license. In this order, reference has been made to the communications of the Central Government, dated 4th February, 2008 and 15th April, 2008, but one of the main grounds, which appears to have weighed with the Licensing Authority is that by prefixing or suffixing the word ‘Sona Chandi’ to the name of the classical drug i.e. Chyawanprash, there is misbranding in terms of Section 33-E(c) of the Act. It would be pertinent to mention that this was not a ground mentioned in the original show cause notice. 6. It would be pertinent to mention that this was not a ground mentioned in the original show cause notice. 6. Thereafter, the petitioner amended the writ petition and sought permission to challenge the validity of the notice dated 8th September, 2008 and the order dated 13th October, 2008. 7. We have heard Shri S.K.Kapoor and Shri R.L.Sood, learned senior counsel appearing on behalf of the petitioners, Mr.Sandeep Sharma, learned Assistant Solicitor General of India for respondents No.1 and 2 and Mr. Vivek Singh Thakur, Additional Advocate General for the respondent No.3. 8. Before dealing with the various points raised before us it would be relevant to refer to certain provisions of the Act. Namely Sections 3(a), 3(h), 33E, and 33P.: 3(a) “Ayurvedic, Siddha or Unani drug” includes all medicines intended for internal or external use for or in the diagnosis, treatment, mitigation or prevention of (disease or disorder in human beings or animals, and manufactured) exclusively in accordance with the formulae described in, the authoritative books of (Ayurvedic, Siddha and Unani Tibb system of medicine), specified in the first schedule. 3(h) “patent or proprietary medicine” means- (i) In relation to Ayurvedic, Siddha or Unani Tibb systems of medicine all formulations containing only such ingredients mentioned in the formulae described in the authoritative books of Ayurveda, Siddha or Unani Tibb systems of medicine specified in the First Schedule, but does not include a medicine which is administered by parenteral route and also a formulation included in the authoritative books as specified in clause (a); 33E. Misbranded drugs. For the purposes of this chapter, an Ayurvedic, Siddha or Unani drug shall be deemed to be misbranded- (a) If it is so coloured, coated, powdered or polished that damage is concealed, or it is made to appear of, better or greater therapeutic value than it really is; or (b) If it is not labelled in the prescribed manner; or (c) If its label or container or anything accompanying the drug bears any statement, design or device, which makes any false claim for the drug or which is false or misleading in any particular. 33P. Power to give directions. The Central Government may give such directions to any State Government as may appear to the Central Government to be necessary for carrying into execution in the State any of the provisions of this Act or of any rule or order made thereunder. 9. 33P. Power to give directions. The Central Government may give such directions to any State Government as may appear to the Central Government to be necessary for carrying into execution in the State any of the provisions of this Act or of any rule or order made thereunder. 9. The relevant rules relating to grant, renewal, suspension and cancellation of a licence for the manufacture of an Ayurvedic Drug or Medicine are the following:- 154: Form of licence to manufacture Ayurvedic (including Siddha) or Unani drugs.- (1) Subject to the conditions of rule 157 being fulfilled, a licence to manufacture for sale any Ayurvedic (including Siddha) or Unani drugs shall be issued in Form 25D. The licence shall be issued within a period of three months from the date of receipt of the application. (2) A licence under this rule shall be granted by the licensing authority after consulting such expert in Ayurvedic (including Siddha) or Unani systems of medicine, as the case may be, which the State Government may approved in this behalf. 158: Condition of licence.-A licence in Form 25D shall be subject to the conditions stated therein and to the following further conditions, namely:- (a) The licensee shall maintain proper records of the details of manufacture and of the tests, if any, carried out by him or by any other person on his behalf of the raw materials and finished products. (b) The licensee shall allow an Inspector appointed under the Act to enter any premises where the manufacturer of a substance in respect of which the licence is issued is carried on, to inspect the premises, to take samples of the raw materials as well as the finished products, and to inspect the records maintained under these rules. (c) The licensee shall maintain an Inspection Book in Form 35 to enable an Inspector to record his impressions and the defects noticed. 159. (c) The licensee shall maintain an Inspection Book in Form 35 to enable an Inspector to record his impressions and the defects noticed. 159. Cancellation and suspension of licences.- (1) The licensing authority may after giving the licensee an opportunity to show cause, within a period which shall not be less than fifteen days from the date of receipt of such notice, why such an order should not be passed, by an order in writing stating the reasons therefor, cancel a licence issued under this Part or suspend it for such period as he thinks fit, either wholly or in respect of some of the drugs to which it relates, if in his opinion, the licensee has failed to comply with any of the conditions of the licence or with any provisions of the Act or the rules made thereunder. (2) A licensee whose licence has been suspended or cancelled may appeal to the State Government within a period of three months from the date of receipt of the order which shall after considering the appeal decide the same. 10. Admittedly, the petitioner Company was granted license to manufacture Chyawanprash under the name and style “Himani Sona Chandi Chyawanprash” as far back as September, 2005. Till date, there is no objection by the respondents to the addition of gold and silver foil in the formulation of Chyawanprash by the petitioner Company. The main objection of the respondents is that by prefixing the words ‘Sona Chandi’ with the word ‘Chyawanprash’, the petitioner Company is misleading the general public. 11. Mr. Kapoor, learned senior counsel for the petitioners, has drawn our attention to various provisions of the Act. Under Section 3(a) of the Act, an ayurvedic drug is to be manufactured strictly in accordance with the formulae given in the ancient texts forming part of Schedule-I of the Act. Section 3(h) of the Act deals with patent and proprietary medicine. The provisions of Section 3(h) entitle the licensee to manufacture a drug using the ingredients mentioned in the ancient texts even though the licensee may not follow the formulae given in the said text. These drugs are known as proprietary medicines. The petitioner Company had applied for permission to manufacture Chyawanprash as a proprietary medicine. While applying for the licence, it had given the entire formulation and composition of the medicine. These drugs are known as proprietary medicines. The petitioner Company had applied for permission to manufacture Chyawanprash as a proprietary medicine. While applying for the licence, it had given the entire formulation and composition of the medicine. This application was allowed and they were granted permission to manufacture the Chyawanprash by addition of silver and gold foil though in miniscule quantities. The petitioner had also clearly stated that it would manufacture the Chyawanprash under the name and style of “New Himani Sona Chandi Chyawanprash”. 12. The contentions raised by the petitioner are that the Central Government could not have issued the directions which are beyond its competence and authority. According to the petitioner, as per Section 33P of the Act the Central Government has the power only to give directions in respect of the procedure to be followed but cannot redefine the law or make the provisions which affect the main sections of the Act or the Rule. According to the petitioner by giving the aforesaid directions the Central Government has varied the provisions of Section 3(e) and 3(h), which could not have done. As far as the action of the State is concerned according to the petitioner the State has not acted in accordance with the so called notice and the order dated 13.10.2008 is illegal and void. 13. On the other hand, Shri Sandeep Sharam, learned Assistant Solicitor General of India, and Shri Vivek Singh Thakur, learned Additional Advocate General has urged that the Central Government is entitled to give such directions and the State Government is bound to follow the same. 14. Relevant portion of the communication of the Central Government dated 4th February, 2008 reads as follows:- “In pursuance of the advice of the Ayurveda, Siddha and Unani Drugs Technical Advisory Board (ASUDTAB), Govt. 14. Relevant portion of the communication of the Central Government dated 4th February, 2008 reads as follows:- “In pursuance of the advice of the Ayurveda, Siddha and Unani Drugs Technical Advisory Board (ASUDTAB), Govt. of India in the Ministry of Health and Family Welfare, Department of AYUSH, issues directions under Section 33P of the Drugs and Cosmetics Act, 1940 (23 of 1940), that State Licensing Authorities for ASU medicines shall within 30 days of the issue of this Order undertake a review of all licenses issued by them for classical as well as Patent and Proprietary ASU product and wherever a prefix or suffix is in use with a Classical ASU drug name the concerned ASU Manufacturing units should be directed not to make any fresh batch under that name or brand and submit application for issue of a fresh license within 30 days either as the Classical ASU formulation or Patent & Proprietary formulation without using any prefix or suffix with classical ASU formulation name failing which the concerned license will be cancelled.” 15. The communication dated 15th April, 2008 is only in continuation of this communication and the relevant portion of it reads as follows:- “Companies manufacturing Chywanprash under P&P licence may switch over to classical license even if they have made some variations in the classical formula based on R&D and in order to make their products more palatable to consumers. AFI has already allowed substitution of Ashtwarg ingredients by ingredients like Ashwagandha and therefore there should be no problem in obtaining classical licenses. However, they must mention all the ingredients and their quantities on the label of the product. Keeping this in view the implementation of Department of AYUSH order No. K-11024/7/2002-DCC (AYUSH) dated 4th February, 2008 is deferred by 60 days and accordingly it will come into force on 30th June, 2008 onwards. Companies using classical names in P&P products should accordingly switch over to classical licenses during the above period. No other prefix or suffix shall be allowed with the classical name except the name of the company. For export purposes, the companies can continue to market their products as per existing registration as well as labels already approved in the importing countries till fresh registration or approval of labels is obtained by the company.” 16. No other prefix or suffix shall be allowed with the classical name except the name of the company. For export purposes, the companies can continue to market their products as per existing registration as well as labels already approved in the importing countries till fresh registration or approval of labels is obtained by the company.” 16. The relevant portion of the order of the State Government dated 13.10.2008 reads as follows:- “And whereas the existing licensee of above firm has expired on 20.5.2008 and an application has been received on 30.05.2008 to renew the license, but any request for the renewal of the licence in respect of this proprietary product “New Himani Sona Chandi Chyawanprash” with Prefix/Suffix with Classical drug “Chyawanprash” in view of Govt. of India orders Supra, under Section 33-E(c) (Misbranding of drugs) cannot be entertained, hence rejected and any further Manufacturing and sale of this product under the above license is ordered to be stopped forthwith.” 17. The main issue which arises in this matter is with regard to the scope and ambit of the powers of the Central Government under Section 33P of the Act. A bare perusal of Section 33P of the Act shows that the Central Government is entitled to give directions to any State Government in furtherance of the provisions of the Act and of the Rules made thereunder. The directions have to be in consonance with the provisions of the Act and the Rules framed thereunder. Under the garb of this power the Central Government cannot give specific directions to the State to reject or allow any particular application. It would also be pertinent to mention that the directions issued under Section 33P must be in consonance with the provisions of the Act. Section 3(a) relates to the manufacture of classic Ayurvedic medicines. It specifically provides that the medicines should be manufactured strictly in accordance with the formulae prescribed in the authoritative books. The communication dated 15th April, 2008 permits even the manufacture of Chywanprash with some variations in the classical formulae even if license is a license under Section 3(a). This is totally contrary to the provisions of Section 3(a) of the Act which specifically provides that the drug should be manufactured strictly according to the classical formulae. 18. Under Section 3(h) a proprietary medicine can be one which includes all the ingredients mentioned in the classical formulae. This is totally contrary to the provisions of Section 3(a) of the Act which specifically provides that the drug should be manufactured strictly according to the classical formulae. 18. Under Section 3(h) a proprietary medicine can be one which includes all the ingredients mentioned in the classical formulae. The ingredients should be the same but the proportion may vary. In this behalf, it would also be pertinent to mention that in these two communications, it is mentioned that the manufacturers can add new ingredients to the ancient formulations but still must apply for license under Section 3(a) of the Act. This would be against the very provisions of the Act itself. On a plain reading of Section 3(a), it is apparent that for a medicine to fall within the purview of the said section, it must be manufactured by following the formulations given in the ancient texts mentioned in Schedule-I strictly. Though there is no definition of classical medicine in the Act, it can be presumed that the word ‘classical’ has been used in the context of medicines referred to in the ancient texts. Under Section 3(a) of the Act, the medicine, termed as a classical medicine, must be manufactured by strictly following the ancient texts. The ingredients, the quantity and the formulations should be strictly in accordance with the text applied. It is when these texts are not followed that the medicine will fall under Section 3(h). 19. It is the allegation of the Government that gold and silver do not form part of the classical formulae. Nothing in this regard has been brought to our notice. Once gold and silver is being added to the Chywanprash it cannot be said that the petitioner is misleading its customers by using words ‘Sona Chandi’ in the trade name. This will not amount to misbranding. 20. No doubt, the intention behind the Central Government notifications is laudable. The Central Government wants to prevent the misbranding of classical drugs especially Chywanprash and its intention is that the customers are not misled. This however, cannot be done by issuing advisories under Section 33P. This can only be done by making amendment to the relevant provisions of the Act, such as, Section 3(a) and 3(h) or the rules framed thereunder. The dominant legislation is the Act and the Rules. This however, cannot be done by issuing advisories under Section 33P. This can only be done by making amendment to the relevant provisions of the Act, such as, Section 3(a) and 3(h) or the rules framed thereunder. The dominant legislation is the Act and the Rules. The delegatee under the Act and the Rules cannot issue advisories or instructions which run counter to the Act and the rules themselves. The Central Government, if so advised can amend the provisions of the Act & Rules to ensure that the prefixing and suffixing of the nature mentioned in this petition are prohibited. However, this can only be done by amending the Act & Rules and not by issuing instructions under Section 33P. 21. Therefore, we are of the considered view that the communications dated 4th February and 15th April, 2008 in so far as they relate to the prefixing and suffixing of words are contrary to the provisions of the Act and are accordingly quashed. 22. As far as the action of the State Government is concerned, the same cannot be supported at all. The State Government has not applied its own mind and has blindly followed the writ of the Central Government without considering any other factor. It has also come to the conclusion that the action of the respondents amounts to misbranding within the meaning of Section 33E of the Act. This was not the allegations levelled in the notice issued to the Company and therefore, the order is beyond the scope of the notice itself. Therefore, no valid notice in terms of Rule 159 was issued to the Company before taking such action. The action of the State Government is, therefore, illegal and is accordingly quashed. 23. In view of the above discussion, the writ petition is allowed in the aforesaid terms with no order as to costs.