ISHAAN LABS PVT. LTD. Vs. UNION OF INDIA

JUDGEMENT

(1.) PETITIONERS are seeking for declaration that notification, dated 11 -7 -2003 - Annexure -H is erroneous, bad in law and contrary to Drug (Prices) Control Order, 1995 (DPCO) and for quashing of the said notification and for a further direction to the respondents to fix the norms for calculating the packing material costs as required under Paragraph 7 of DPCO -1995 and to fix/revise the norms for calculating the process loss, conversion costs and packing charges as required under Paragraph 7 of DPCO -1995. Further declaration is also sought that notification dated 3 -9 -2003, Annexure -A which fixes the ceiling prices in respect of "Glipizide" Formulations as contrary to provisions of DPCO -1995 and seek for quashing of the same. Petitioner No. 1 is a company incorporated under the Companies Act, and is registered as a small scale industrial unit under the provisions of Industrial Development Regulations Act It is contended in the writ petition that it carries on the business of manufacture and sale of drugs and other pharmaceutical products. It is also engaged in the manufacture and selling of both single and multiple ingredient Formulations containing bulk drug 'Glipizide', Petitioner commenced commercial production in 1998. Petitioner interalia manufactures and sells both single and multiple ingredient Formulation containing bulk drug Glipizide and prior to 03.09.2003. Petitioner could sell the said product freely as no ceiling price had been fixed.

(2.) THE National Pharmaceutical Pricing Authority (hereinafter referred to as 'NPPA' for brevity) has issued a notification/order S.O. 1019(E) by virtue of powers conferred under sub Paragraphs (1) & (2) of Paragraph 9 and Paragraph 11 of Drugs (Prices Control) Order, 1995 (referred to as DPCO -1995' hereinafter) by fixing the ceiling price in respect of Glipizide Formulation. This notification is under challenge. NPPA had also notified the norms for conversion cost, packing charges and process loss by notification No. S.O. 518(E) dated 13th July 1999 which was duly published in the Gazette in compliance of Paragraph 7 of DPCO -1995 and validity of said notification was extended. from time to time and in 2003 by notification/Order dated 11th July 2003 the notification dated 13.07.99 came to be extended vide Annexure -H and same is also under challenge in this Writ Petition. We have heard the learned Advocates appearing for the parties and perused the writ papers together with statement of objections.

(3.) THE contention of learned counsel appearing for petitioners is that in terms of DPCO - 1995 the Central Government can fix ceiling price in respect of a scheduled Formulation only in accordance with formula laid down in Paragraph 7 of DPCO - 1995 and the ceiling price fixed in respect of Glipizide Formulation is contrary to the formula laid down in Paragraph 7 and therefore illegal and arbitrary. He would elaborate his submissions by contending under Paragraph 7 of DPCO - 1995, the Government is required to fix norms for calculating the process loss, conversion costs, packing material costs and for packing charges on year to year basis by notifying the same in Official Gazette and contends that before fixing a ceiling price, such norms are required to be notified and then only these charges are to be calculated before fixing ceiling price and if ceiling price is fixed without these norms, it would be contrary to DPCO - 1995. It is further contended that retail price has been fixed without taking into account the cost factor pertaining to packing materials which was required to be computed after duly notifying and challenge to the impugned notification is laid on the ground that year after year retail price is fixed without any change right from the year 1999 and without independently collecting various data under the different heads and then arriving at the retail price in parity with contemporary pricing norms is erroneous; that first respondent has failed to notify the norms under various heads as contemplated under Paragraph 7 of DPCO -1995 as such, the formula devided by the respondent is wrongly applied year after year and fixation of price made in 1999 has not been revised despite wide range increase in the Indices; the packing material cost which had to be taken into account has been totally excluded while notifying 'Glipizide' Formulation under impugned notification; respondents have failed to take into consideration the disparities pointed out by Organisations of pharmaceutical producers of India and Indian Drug Manufacturers' Association and sale of said product as per ceiling price would affect industrialists like petitioners. On these grounds petitioners seek for allowing the writ petition.