CYANAMID INDIA LIMITED Vs. R N WAS

JUDGEMENT

(1.) The challenge in this and the connectedwrit petitions is to the fixation of maximum sale price of thebulk drugs and of the retail prices of formulation, which priceshave been fixed from time to time, under the provisions ofthe Drugs Prices (Display and Control.) Order, 1979 (hereinafterreferred to as DPCO of 1979").

(2.) Though a number of writ petitions were heard together,the main arguments were addressed by the counsel in Civil WritNo. 820 of 1981 (Cyanamid India Limited Vs. Sh. R.N.Das),hereinafter referred to as 'the petitioners'. The contentions raisedare common to all the other writ petitions except that in somecases additional points have been taken which will be dealt withseparately. It is, therefore, necessary to set-out the relevant factsin Cyanamid's case in some detail.

(3.) Before 1962 there was no statutory control on the pricesof drugs. For the first time control was brought about whenDrugs (Control of Prices) Order, 1963 was promulgated, underthe Defence of India. Act, whereby orders were issued freezingthe prices of drug's as from 1/04/1962. Thereafter TariffCommission was appointed to go into the cost structure of 17bulk drugs, 34 single drug formulations and 15 multiple drugformulations. The Tariff Commission submitted its report in1968, inter alia, recommending 15 per cent pre-tax return oncapital employed for bulk drugs. For formulations it recommended ex-factory cost plus 15 per cent selling expenses plus 15 percent mark up of total cost of sales.