Research › Search › Judgment

Gujarat High Court · body

2024 DIGILAW 1576 (GUJ)

UNION OF INDIA v. CLARIS LIFESCIENCES LIMITED

2024-07-18

PRANAV TRIVEDI, SUNITA AGARWAL

body2024
ORDER : 1. Draft amendment is formal in nature. The amendment sought to be made is, thus, granted. Necessary incorporation be made in the array of parties within 48 hours. 2. Present appeals preferred under Clause-15 of the Letters Patent assail the correctness and validity of the judgment dated 26.12.2017 passed by the learned Single Judge in SCA No. 11459/2008 as well as SCA No. 13797/2011. As the issue arise in both the writ-petitions is common, we are taking the facts of SCA No. 13797 of 2011 as a lead matter to adjudicate the matter. 3. The prayers as made in the writ-petition preferred by the respondent-original petitioner was to issue a writ of certiorari or any other writ or direction to quash and set-aside the impugned order dated 25.5.2011 as well as praying for direction restraining the appellant from applying notification S.O 725(E) dated 27.8.1998 and the prices fixed therein to the product of the petitioner being Sodium Chloride/Dextrose Injection IP (0.9% W/V) 500 ml packed in NON-PVC “UNIBAG.” 4. Learned Single Judge after hearing the contentions raised by both the parties was pleased to allow the writ- petition by observing that the issue involved in the petition regarding demand of the notices with regard to penalty cannot be sustained. It is this order of the learned Single Judge which is assailed in the present Letters Patent Appeal. 5. Factual matrix which has led to filing of the writ- petition is that by order No. S.O 725 (E) dated 27.8.1998, the respondent in exercise of powers conferred under Sub-Para-(b) of Para-10 of the Drugs (Price Control) Order, 1995 (hereinafter referred to as “order”) fixed the retail prices (and not the ceiling prices) excluding excise duty and local taxes of the Non-Scheduled formulation of IV Fluids packed either in Plastic bottles or Glass bottles as per the details given therein. 6. Petitioner is a Pharmaceutical Company with product offering comprises of 113 products across multiple markets and therapeutic areas. In May, 2007, the petitioner started manufacturing and marketing of Non-Scheduled Formulation being Sodium Chloride Injection IP (0.9% W/V) 500 ml and Dextrose Injection in special bag in NON PVC “UNIBAG” (hereinafter referred to as 'the product'). It was the case of the petitioner that NON-PVC bags have special advantages for patients as compared to IV Fluids available in plastic or glass bottle. It was the case of the petitioner that NON-PVC bags have special advantages for patients as compared to IV Fluids available in plastic or glass bottle. It was the case of the petitioner that material used for making of the packages of the product by the petitioner is completely different from the material that is taken as the basis for fixing the price and, therefore, that could not form basis for fixing the price in notification of 1998. As the product is different and distinct from the 'plastic bottles' or 'glass bottles' in terms of the material and in terms of the technology used thereof, the cost incurred for making of the said package was higher. 7. In view of the special distinction between material used and technology with regard to products, the petitioner vide its letter dated 4.4.2006, submitted its price-list in Form-V to the respondent and indicated the retail prices of the product. It is an undisputed fact that the respondent has never responded to the communication dated 4.4.2006 initiated by the petitioner. On 1.7.2008, i.e. nearly after a span of 2 years, respondent informed the petitioner that as per the information available with the respondent it was observed that the petitioner company was not following the price fixed by NPPA/Government in respect of the formulation of Dextrose Injection provided in notification of 1998. Therefore, petitioner was given show-cause notice and called upon to explain the reasons for non-compliance of the ceiling prices. The communication dated 1.7.2008 referred to the petitioner as a Scheduled formulation despite it being a Non-Scheduled Formulation. 8. Pursuant to the communication dated 1.7.2008, petitioner gave clarification on 30.7.2008 and also provided explanation to the queries raised in communication dated 1.7.2008. Despite the explanation given by the petitioner, the respondent by way of impugned demand order dated 25.5.2011 held that the petitioner was liable to pay the amount of over charging in accordance with the provisions of Para-13 of the Drugs (Price Control) Order, 1995 (hereinafter referred to as 'the order') read with Section 7(A) of the Essential Commidities Act, 1955. 9. Pursuant to the initial order of 2008 making the petitioner liable for overcharging, a writ-petition came to be filed before this Hon'ble Court. The writ-petition came to be numbered as SCA No. 11459 of 2008 wherein ex- parte interim relief came to be granted on 15.9.2008. 9. Pursuant to the initial order of 2008 making the petitioner liable for overcharging, a writ-petition came to be filed before this Hon'ble Court. The writ-petition came to be numbered as SCA No. 11459 of 2008 wherein ex- parte interim relief came to be granted on 15.9.2008. On 26.11.2010, this Hon'ble Court was pleased to admit the writ-petition being SCA No. 11459 of 2008 and was further pleased to stay the action of recovery against the writ-petitioner. 10. Despite the stay operating in SCA No. 11459 of 2008, respondent issued notice on 26.11.2010 for two products being Dextrose Injection and Sodium Injection. Such action of the respondent resulted in the petitioner filing writ-petition being SCA No. 16625 of 2010. This Hon'ble Court after detailed argument was pleased to direct the petitioner to make a representation to the respondent and also directed the respondent to decide the representation. 11. Pursuant to such observation, the petitioner made a detailed representation. However, by way of demand order on 25.5.2011, the respondent rejected the representation made by the petitioners. Such rejection of the representation has culminated into filing of the writ- petitions being SCA No. 13797 of 2011. By way of the order dated 26.12.2017, this Hon'ble Court was pleased to allow writ-petition being SCA No. 11489 of 2008 as well as SCA No. 13797 of 2011. This common order dated 26.12.2017 is assailed in the present writ-petition. 12. We have heard Mr. Harsheel D. Shukla, learned advocate for the appellant and Mr. Parthsarthi A. Mehd, learned advocate for the respondent. 13. Mr. Harsheel Shukla, learned advocate for the appellant submitted that the prices were notified by the Government of India of the products and the respondents were charging more than the ceiling price, meaning thereby, they were over-charging. There was a demand notice because the ceiling price was Rs.17 whereas respondents were charging Rs.65. Therefore, demand notice was for over-charing for the period from 2002 to 2011. It was further submitted that ceiling charges were notified for packaging in glass bottles and plastic bottles. Mr. Shukla, learned advocate further submitted that as per sub-para (6) of Para-8 of the order specifically provides that if an manufacturer wants to change or amend anything with regard to prices, then they will have to approach the authority and only with a prior permission of the authority, they can change the prices. Mr. Shukla, learned advocate further submitted that as per sub-para (6) of Para-8 of the order specifically provides that if an manufacturer wants to change or amend anything with regard to prices, then they will have to approach the authority and only with a prior permission of the authority, they can change the prices. As per sub-para (3) of Para (9) of the order, a manufacturer has to intimate with regard to price change. After 60 days of such intimation, he can release the formulation pack. As per Mr. Shukla, such exercise is not done by the respondent and, therefore, they are in total breach of provisions of paras 8 and 9 of the order. It was further submitted by Mr. Shukla that the ceiling prices were revised on 20.9.2011 and, therefore, the demand notice was with regard to year 2002 to 2011. To support his submissions, Mr. Shukla has placed reliance on the judgment of Hon'ble Apex Court in case of M/s. T.C. Healthcare Pvt. Ltd. v. Union of India, (2020) 15 SCC 117 . 14. Per contra, Mr. Parthsarthi Medh, learned advocate for the respondent has submitted the respondent had already intimated about the price change to the appellant on 4.4.2006. Such intimation was not responded by the appellant. It was only after such intimation, the respondent has started selling of the product. Further, the demand of notice was a wrong demand that the product was a Scheduled formulation. After two years of the above-mentioned intimation, show-cause notice was given in the year 2008. The respondent has categorically responded to the notice and informed that the product is not a Scheduled formulation. Therefore, initiation of the proceedings on the basis of a Scheduled formulation is completely wrong. Further, the appellant themselves had revised the prices in the year 2011. Therefore, the product which is having UNI-BAG packaging system definitely requires a higher ceiling price which was even accepted by the appellant though in the year 2011. Once the revised prices is given, the respondent has completely adhered to such revised price list. Therefore, according to Mr. Parthsarthi Mehd learned advocate for the respondent, the notice itself is not tenable as it is on a wrong assumption. In view of the same, he has urged to reject the present appellant. 15. We have heard learned advocate for the parties and perused the material on record. 16. Therefore, according to Mr. Parthsarthi Mehd learned advocate for the respondent, the notice itself is not tenable as it is on a wrong assumption. In view of the same, he has urged to reject the present appellant. 15. We have heard learned advocate for the parties and perused the material on record. 16. From the first argument taken by Mr. Shukla, learned advocate for the appellant, the respondent has breached the provisions of Para-9 of the order. Such argument of Mr. Shukla is absolutely fellacious, inasmuch as, the applicability of Para-9 and sub-para (3) of Para-9 is for a Scheduled formulation and not for Non-Scheduled formulation. Further, even the demand notice stipulates that notice is for Scheduled formulation. Therefore, the initiation of the proceedings along with the submissions by the learned advocate for the appellant are absolutedly on a false premise and, therefore, not tenable. 17. The other aspect is the notification of the year 1998. It is true that the price ceiling of Dextrose formulation as well as Sodium Chloride formulation were restricted to Rs.17 for plastic bottles and Rs.21 for glass bottles in the said notification, but pertinent is to note that the price fixation was for glass bottle packages and plastic bottle packages. The present product is having a special UNI- BAG packaging. The specialised UNI-BAG can be heated upto 121 degree celcius and the whole process of manufacturing of packaging bag is very different. The UNI-BAG pack itself is a sealed unit where the fluid is filled packed itself is heated at 121 degree for 15 minutes, which is an universal standard of sterilisation. Further, technology of UNI-BAG packaging was totally different from the glass packaging, which was used for Dextrose formulation and Sodium Chloride formulation. In the glass bottle, a hole is to be made by injection which would have a huge impact on infection and sterilisation. In the UNI-BAG technology, there is no need to make hole. Therefore, the question of infection or sterilisation would not come. The hole which was done in the glass bottle can make a passage for air to go into body. Such incident which can be fatal to human body, came to be negated by way of UNI-BAG technology packaging. To make the packaging full-proof and technologically advance, the prices were increased. Therefore, the question of infection or sterilisation would not come. The hole which was done in the glass bottle can make a passage for air to go into body. Such incident which can be fatal to human body, came to be negated by way of UNI-BAG technology packaging. To make the packaging full-proof and technologically advance, the prices were increased. Therefore raising the demand for equating UNI-BAG packaging with glass packaging, was a colourable exercise undertaken by the authorities. 18. To substantiate it further, even the appellant realised that the product formulation with a different packaging had to have a different price ceiling. In such situation, they themselves revised the price in the year 2011. Therefore, they cannot equate product with formulation in UNI-BAG packaging with that of packaging in glass or plastic packaging. In such situation, the submission made by the learned advocate for the appellant cannot be accepted. As far as the reliance placed by learned advocate for the appellant on M/s. T.C. Healthcare Pvt. Ltd. v. Union of India (supra) then it has to be observed that the factual aspect of that judgment to the facts in the present case are totally different. The judgment was relied on was for a Scheduled drug. It was further contemplated that if a different technology was used for a Scheduled drug, then the charges were to be undertaken as per Para-9 of sub-para (3). In the present case, the formulation is a Non-Scheduled formulation and, therefore, there is no applicability of Para-9 of sub-para (3). However, despite being non-scheduled formulation, the respondent has categorically intimated to the authorities with regard to the difference in technology as well as with regard to factor which was responded by the authority. Therefore, the ratio as laid down in the judgment in case of M/s. T.C. Healthcare Pvt. Ltd. v. Union of India (supra), would not be applicable to the facts of the present case. Therefore, all the arguments, as canvassed by Mr. Shukla learned advocate for the appellant fails and are required to be rejected. 19. In view of the observations made hereinabove, we see no reason to interfere with the order passed by the learned Single Judge. The appeal being devoid of merits is hereby rejected. No order as to costs. Consequently, the connected Civil Applications also stand disposed of.