UNION OF INDIA Vs. SYNBIOTICS LIMITED

JUDGEMENT

(1.) THE present appeal by the Central Government (described as such, or as the "Union Government") impugns a judgment and order of a learned Single Judge by which the respondents' writ petition challenging a demand made in terms of the Drugs (Prices Control) Order (DPCO) of 1979 was allowed.

(2.) THE Respondent No.1 is a manufacturer of various drugs and pharmaceutical products, including streptomycin and Respondent No.2 is its Director. The respondents herein, contended before the learned Single Judge that a manufacturer of a bulk drug like it cannot be compelled to sell its product only at the pooled price and not for lower price. It also argued that as manufacturer of bulk drugs it could not be compelled to deposit into the Drug Prices Equalisation Account excess amounts constituting the difference between the pooled price and the retention price particularly when such excess amount is not realized if the manufacturer sells the bulk drug at retention price.

(3.) ON 02.04.1979 the Central Government issued an order fixing the pooled price for streptomycin and also the retention price for the writ petitioners (respondents herein) and other manufacturers. The pooled price for streptomycin was fixed at Rs.475 per k.g. and retention price was fixed at Rs.449.71 per k.g. for first respondent and Rs.498 for other manufacturers. The Central Government by circular dated 19.11.1979 required further information in view of the representation from the manufacturers of drugs and pharmaceuticals for granting an immediate price increase for bulk drug and formulation in order to compensate for the rapid increase in the price of input materials, particularly petroleum based products. It was claimed ­ by the respondents herein that w.e.f. 01.07.1979 they had started selling all the streptomycin manufactured by them to M/s. Sarabhai Chemicals, a division of Ambalal Sarabhai at the rate of Rs.449.71 per k.g. which was retention price allowed to the respondents herein, by order dated 02.04.1979. Sarabhai Chemicals manufactured formulations out of the said streptomycin supplied by M/s. Synbiotics Ltd. On 10.06.1980 the Central Government called upon the respondents - M/s. Synbiotics Ltd. to pay into the Drugs Prices Equalisation Account an amount calculated at Rs.25.29 per k.g. on the entire produce of streptomycin sold by it after commencement of the said order. Arguing on behalf of the M/s. Synbiotics Ltd., learned counsel has contended that as no excess amount was collected by it, nothing was to be paid to the Drug Prices Equalisation Account. On 06.10.1980 in exercise of the power conferred by paragraph 7 (1) of the said order, the Central Government revised the respondents' [M/s. Synbiotics Ltd.'s] retention price from Rs.449.71 per k.g. downward to Rs.429.00 per k.g. The pooled price of streptomycin was, on the other hand, raised from Rs.475 per k.g. to Rs.660 per k.g. At the same time, retention price of streptomycin for other manufacturers were raised from Rs.498 to Rs.660.75, so that it was equal to the pooled price.