Laborate Pharmaceuticals India Limited v. Union of India through Secretary, New Delhi
2025-04-04
DEEPAK ROSHAN
body2025
DigiLaw.ai
JUDGMENT : DEEPAK ROSHAN, J. 1. Heard learned counsel for the parties. 2. The instant writ application has been preferred by the petitioner for the following reliefs: (i) For issuance of an appropriate writ(s), order(s) or direction(s), particularly a writ of certiorari, for quashing/setting aside the notification contained in memo no.1587 (D) dated 28.09.2022 (Annexure-2) signed on 23.09.2022 by Joint Secretary, Department of Health & Family Welfare, Government of Jharkhand, whereby and whereunder the storage and sale of medical drugs used for treatment of certain diseases, which are manufactured, stored and sold by the petitioner has been regulated /restricted. (ii) Upon quashing of the above notification contained in memo no.1587 (D) dated 28.09.2022 (Annexure-2) this Hon'ble Court may be pleased to hold and declare that in terms with the power prescribed under Section 26A of the Drugs and Cosmetics Act, 1940 only Central Government can regulate, restrict and/or prohibit the use of drugs. (iii) For issuance of further writ/order/direction as Your Lordships may deem fit and proper for doing conscionable justice to the petitioner. 3. From perusal of the notification it transpires that the notification aims to regulate the sale of certain drugs listed in the schedule, citing the presence of narcotic or psychotropic substances as a significant concern. The notification outlines specific restrictions on the sale of the drugs namely Codeine Phosphate containing cough syrup; Diphenhydramine containing cough syrup; Tab. Dizapam, Larazepam, Clonazepam, Nitrazepam including their combination with other medication and their injection; Alprazolam and its combination with other medication; Ketamine and its combination with other medication and injection; Phenobarbitone and its combination with other medication; Pentazocine Injection; Buprenorphine Injection; Tramadol and its combination with other medication and Injection (hereinafter referred to as “specified drugs”) mentioned in the schedule. The primary method of regulation involves placing caps on the quantity of sale at various stages. These stages include: ? Manufacturer to Wholesaler: Limits on the quantity that manufacturers can sell to wholesalers. ? Wholesaler to Retailer: Restrictions on the amount wholesalers can distribute to retailers. 4. Learned counsel for the petitioner submits that the notification oversteps the legal boundaries and infringes upon the rights of various stakeholders in the pharmaceutical industry. He contends that the regulation imposes undue restrictions that could adversely impact the business operations of manufacturers, wholesalers, and retailers.
? Wholesaler to Retailer: Restrictions on the amount wholesalers can distribute to retailers. 4. Learned counsel for the petitioner submits that the notification oversteps the legal boundaries and infringes upon the rights of various stakeholders in the pharmaceutical industry. He contends that the regulation imposes undue restrictions that could adversely impact the business operations of manufacturers, wholesalers, and retailers. Moreover, the petitioner highlights potential issues related to the notification's consistency with existing laws governing drug sale and distribution.He further contended that the power to prohibit, regulate and restrict drugs under the Drugs and Cosmetics Act is reserved with the Central Government, in view of the provisions of Section 26A of the Drugs and Cosmetics Act. Therefore, it has been argued that the action of the State Government in issuing the impugned notification is without jurisdiction and is liable to be quashed. 5. In response to the petition, the Government of Jharkhand defends the notification by emphasising the necessity of regulating the sale of drugs with narcotic or psychotropic substances. The Government argues that the measures are crucial to curbing drug abuse and protecting public health. They maintain that the restrictions are reasonable and proportionate, considering the potential harm caused by the unregulated sale of such specified drugs. The notification dated 28 September 2022 is part of a broader effort by the State of Jharkhand to address the increasing misuse and abuse of the specified drugs with narcotic or psychotropic contents. These substances, known for their potential to cause addiction and severe health consequences, have prompted the State to take stringent measures to control their distribution. 6. Learned counsel for the respondent-State has referred to and relied upon the communication made by the Central Government dated 20 January 2022, by which the Drugs Controller General of India had directed the State Government/Union Territories to issue similar directions as was issued by the State of Bihar by Office Order dated 17 February 2016 to curb the misuse of codeine based cough syrups and consequently, by referring to the provisions of section 33P of the Drugs and Cosmetics Act, the State of Jharkhand would contend that the Central Government in exercise of its powers to give directions has issued the above letter date 20 January 2022, and therefore it is only executing the said direction by issue of the impugned notification. 7.
7. Learned counsel for the Union of India, in its counter affidavit, contended that the matter regarding the diversion and trafficking of codeine-based cough syrup had been deliberated in various Drugs Consultative Committee (DCC) meetings. Consequently, the Central Drugs Standard Control Organization (CDSCO) communicated to all state governments and union territories to periodically report to the Drugs Controller General of India regarding the quantity of certain drugs supplied to psychiatric clinics and hospitals.Following the first apex-level meeting of the Narco Coordination Centre held on 19 November 2019, a recommendation was made to all state governments and union territories to adopt the Bihar model. As a result, a letter dated 20 January 2022 was issued by the Drugs Controller General of India to curb the trafficking of codeine-based cough syrup only.However, the Union of India clarified that the letter dated20 January 2022 was not issued under the exercise of powers provided by Section 26A of the Drugs and Cosmetics Act. Furthermore, the letter did not mention that it was issued under the exercise of powers provided by Section 33P of the Drugs and Cosmetics Act. 8. Having heard learned counsel for both sides, it appears that the primary issue raised by the petitioner is the competence of the State Government to issue directives as contained in the impugned notification dated 28 September2022, regulating the sale of the specified drugs. 9. The authority to issue directions in the form of restriction, prohibition, or regulation under the Drugs and Cosmetics Act is traceable to Section 26A of the Drugs and Cosmetics Act. The said provision reads as under: “26A. Powers of Central Government to prohibit manufacture, etc., of drug and cosmetic in public interest — Without prejudice to any other provision contained in this Chapter, if the Central Government is satisfied, that the use of any drug or cosmetic is likely to involve any risk to human beings or animals or that any drug does not have the therapeutic value claimed or purported to be claimed for it or contains ingredients and in such quantity for which there is no therapeutic justification and that in the public interest it is necessary or expedient so to do, then, that Government may, by notification in the Official Gazette, regulate, restrict or prohibit the manufacture, sale or distribution of such drug or cosmetic.” 10.
This provision was scrutinized by the Hon’ble Supreme Court of India in Union of India v. Pfizer Ltd. (2018) 2 SCC 39 , wherein paragraphs 23 and 24 it was held as under: “23. An argument was made that unless the provisions of Section 5 requiring consultation with the DTAB are read into Section 26-A, the said section would be arbitrary. In our opinion, there are sufficient indicators in the section to eschew any ground of arbitrariness. The power can only be exercised based on satisfaction of material that is relevant to form an opinion that the drug in question falls within any of the three categories outlined by the section and that, further, it is necessary or expedient to either regulate, restrict or prohibit manufacture, sale or distribution of the said drug in public interest. Indeed, this is made explicit in Section 33-EED of the Drugs Act, wherein a similar power is given to the Central Government qua Ayurvedic, Siddha or Unani drugs, where the section states: “… the Central Government is satisfied on the basis of any evidence or other material available before it that ….” 24. If the power under Section 26-A is exercised on the basis of irrelevant material or on the basis of no material, the satisfaction itself that is contemplated by Section 26-A would not be there and the exercise of the power would be struck down on this ground. Further, it is argued that the provision may be read down to make it constitutionally valid, but in so doing, words cannot be added as a matter of constitutional doctrine.” 11. Recently, the Supreme Court of India in M/s Bhagwati Medical Hall and Another v. Central Drugs Standard Control Organisation and others, 2024 INSC 1048 held that if, upon gathering evidence and seeking expert advice, authorities believe that drugs pose health risks significant enough to warrant prohibition, the appropriate course of action is to petition the Central Government to consider exercising its powers under Section 26A of the Drugs and Cosmetics Act. Until such a notification is issued by the Central Government, the drug cannot be banned at the local level. The relevant extracts of the above judgment are as follows: “8.
Until such a notification is issued by the Central Government, the drug cannot be banned at the local level. The relevant extracts of the above judgment are as follows: “8. Section 26A of the D&C Act, 1940 empowers the Central Government, if satisfied that the use of any drug involves risk to human beings or animals, or that it lacks the therapeutic value claimed, or that it contains ingredients 8 in a quantity for which there is no therapeutic justification, to regulate, restrict, or prohibit its manufacture, sale, or distribution by a notification in the Official Gazette. This is the sole statutory mechanism through which a drug, previously permissible, can be effectively taken off the market or subjected to special conditions. The provision ensures that any decision to restrict a drug stem from a central, uniform, and scientifically informed process, guided by expert advice, safety evaluations, and considered policy determinations. This centralized approach is deliberate, aimed at preventing arbitrary or inconsistent local measures that would fragment the national drug regulatory regime. 11. The Respondent authorities have attempted to justify their actions by relying on Section 22(1)(d) of the D&C Act, 1940. This provision empowers Inspectors, within the local limits of their jurisdiction, to exercise such powers as may be necessary for carrying out the purposes of the Chapter or any rules made thereunder. The scope of this provision is essentially procedural, intended to facilitate inspection, sampling, seizure of non-compliant drugs, and enforcement of existing statutory and regulatory requirements. It does not, however, confer authority to impose new prohibitions or to classify a duly licensed drug as contraband. Section 22(1)(d) is not a substitute for Section 26A of the D&C Act, 1940. While an Inspector may inspect premises, verify licenses, ensure proper record-keeping, and take action against specific offenses under the Act, the Inspector cannot supplant the Central Government’s prerogative by effectively banning a drug simply because of alleged misuse in certain quarters. 12. Similarly, even if the Respondent authorities are concerned about the high alcohol content of the tincture or its potential misuse by certain consumers, the D&C Act, 1940 and the rules framed thereunder provide mechanisms for addressing such issues without resorting to extra-statutory prohibitions.
12. Similarly, even if the Respondent authorities are concerned about the high alcohol content of the tincture or its potential misuse by certain consumers, the D&C Act, 1940 and the rules framed thereunder provide mechanisms for addressing such issues without resorting to extra-statutory prohibitions. For instance, the authorities may ensure that licensees maintain proper records as mandated by the relevant rules; they may verify that a qualified pharmacist is present at the time of sale; they may inspect the premises regularly and take penal action if any license conditions are breached. If, upon gathering evidence and seeking expert advice, the authorities believe that the drug poses health risks serious enough to warrant prohibition, their proper recourse is to move the Central Government to consider exercising its powers under Section 26A of the D&C Act, 1940. Until such a notification is issued, the drug cannot be unilaterally banned at the local level. 13. By endorsing the characterization of the aromatic tincture of cardamom as a “prohibited article” without any notification from the Central Government, the impugned orders of the High Court have effectively circumvented the legislative design. The High Court’s reasoning overlooks the clear distinction drawn by the D&C Act, 1940 between general regulatory authority and the special, centralized power to prohibit drugs. This approach also disregards the rights of a duly licensed trader who is entitled to carry on business in a product that remains lawful unless and until lawfully prohibited. Fundamental principles of administrative law, as well as the very structure of the D&C Act, 1940, demand that any restriction on a licensed medicinal preparation must rest on a firm statutory footing.” 12. This principle applies equally to regulating the sale of drugs. 13. Hence, the petitioners are correct in contending that the State of Jharkhand lacked the jurisdiction to issue the notification dated 28 September 2022 regulating the sale of the specified drugs. The appropriate course for the State of Jharkhand, or any other state, would have been to approach the Central Government with the identified issues and request the issuance of directions regulating the sale of such drugs. As held by the Apex Court in Bhagwati Medical Hall (supra), until a notification is issued by the Central Government, the state government does not possess the authority to prohibit, restrict, or regulate the sale of drugs. 14.
As held by the Apex Court in Bhagwati Medical Hall (supra), until a notification is issued by the Central Government, the state government does not possess the authority to prohibit, restrict, or regulate the sale of drugs. 14. Consequently, the impugned notification dated 28th September 2022 is liable to be quashed and is hereby quashed and set aside. 15. As a result, the instant writ application stands allowed. Pending I.As, if any also stands disposed of. No cost.