UNION OF INDIA Vs. CAREWS PHARMACEUTICALS

JUDGEMENT

(1.) This was an appeal from an order dated June 26, 1992. The writ petitioners, who were the respondents in this appeal, were manufacturers of 'combiflam' tablets since 1984. Admittedly, the formulation of such tablets included two bulk drugs, being 'paracetamol' and 'ibuprofan'. In 1985 it came to the notice of the concerned authorities that the sales turnover of combiflam tablets exceeded Rs. 50 lac, and according to them, the respondent No.1 became liable to obtain approval of the concerned authorities, regarding the fixation of the minimum retail price for the sale of the combiflam tablets.

(2.) The writ petitioners had contended, that M/s. Carews Pharmaceuticals Ltd. the respondent No.1, hereinafter referred to as "the company", was a lawfully registered owner of the trade mark "combiflam", and that it had been marketing the product under its trade name, independently and entirely on its own, as a small scale unit. The company, it was contended, was consequently entitled to be exempted from obtaining approval of the concerned authorities as regards the fixation of the minimum price of the product. Such exemption, according to the respondents had been allowed under the provisions contained in the Notification dated July 21, 1988, issued by the Ministry of Industries, Department of Chemicals and Petro Chemicals. It was their case, that the Notification dated July 21, 1988 had been made upon the promulgation of a new set of rules, stipulated under the Drugs (Prices Control) Order 1987, which came into effect on August 26, 1987. I shall refer to the Drugs (Prices Control) Order, 1987 as DPCO for short, in this judgment. It was submitted by counsel for the respondents that in accordance with sub-clause (iii), in relation to formulations of drugs, as specified in Category II of the Third Schedule of the Drugs (Prices Control) Order, 1987, the company had duly furnished the necessary declaration, and had claimed that the company was exempted from the operation of any of the provisions of the DPCO, 1987 in so far as they related to the specified formulations of drugs. According to the petitioners, for the purpose of marketing facilities and quick payment, there were certain arrangements with Roussel India Limited, and that prices were to be agreed from time to time between them.

(3.) It was argued, by counsel for the appellants, that in addition to the liability of the respondents for failure to obtain price approval as their sales turnover had crossed the sum of Rs.50 lac, they were in deliberate violation of the provisions of the Drugs (Prices Control) Order dated 1979 as 1987. He submitted that an order dated December 12, 1988, had been issued by the concerned authorities on the basis that the respondents had been marketing their product combiflam without the necessary price approval, and directed the company to show cause as to why action should not be taken against it. According to the appellants, at the time of the publication of the said Notification dated 21st July, 1988 and also at the time of the submission of the Declaration on 22nd August, 1988 'paracetamol' was specified as Category I and 'ibuprofan' as Category II bulk drugs. Combiflam tablets, therefore, according to them, contained bulk drugs specified in both Categories I & II, and in terms of the proviso to paragraph 7(b) of the Drugs (Prices Control) Order, 1987 the formulation would be regarded as being a Category I drug, and consequently the company was not entitled to the exemption from obtaining the approval of the minimum retail price.