Content Provider | Supreme Court of India |
---|---|
e-ISSN | 30484839 |
Language | English |
Access Restriction | NDLI |
Subject Keyword | Drugs (Prices Control) Order |
Content Type | Text |
Resource Type | Law Judgement |
Jurisdiction | India |
Act(s) Referred | Constitution of India |
Case Type | Appeal |
Court | Supreme Court of India |
Disposal Nature | Appeal Allowed |
Headnote | Drugs (Prices Control) Order, 1979: Paragraphs 3, 12, 13 & 27: Bulk Drugs-Price fixation of--Whether legislative activity-Principles of natural justice whether applicable to-Cost of production-Whether can be determined by a subordinate legislating Body-Price fixation-Review-Nature of-Formulations--Fixation of retail prices-Whether to await the result of review application. Constitution of India Articles 32 & 226-Essential Commodities-Price fixation of-Whether matter for investigation and interference by Court. Practice and Procedure: Essential Commodities-Price fixation of-Interim order staying implementation of notification fixing prices-Courts not to pass orders which would be against public interest. Constitution of India, Article 39(b)-Material resources of the community-Distribution of to sub-serve common good-Obligations of State. Paragraph 3 of the Drugs (Prices Control) Order, 1979 made by the Central Government in exercise of powers under s. 3(2)(c) of the Essential Commodities. Act, 1955 empowers the Government; after making such enquiry as it deems fit, to fix the maximum price at which the indigenously manufactured bulk drug shall be sold. Clause (2) of Paragraph 3 provides that while so fixing the price of a bulk drug, the Government may take into account the average cost of production of such bulk drug manufactured by a efficient manufacturer and allow a reasonable return on net worth. Paragraph 12 empowers the Government to fix leader prices of formulations of categories I and II, while paragraph 13 empowers the Government to fix retail prices of formulations of category III. Paragraph 27 enables any person aggrieved by any notification or order under the various paragraphs aforesaid to appeal to the Government for a review: The Central Government issued notifications under paragraph 3 of the 1979 Order fixing the maximum prices at which various indigenously manufactured hulk drugs could he soId. The manufacturers first filed review applications under paragraph 27 of the Order and thereafter writ petitions under Art. 226 of the Constitution challenging the notifications. The High Court quashed those notifications on the ground of failure to observe the principles of natural justice. Since prices of formulations are primarily dependent on prices of bulk drugs, the notifications fixing the retail prices of formulations issued during the pendency of review petitions were also quashed. In the appeal by the Union of India, it was contended that the fixation of maximum price under paragraph 3 of the Order was a legislative activity and, therefore, not subject to any principle of natural justice, that paragraph 27 of the Order gave a remedy to the manufacturers to seek a review of the order fixing the maximum price under paragraph 3, that such review did not partake the character of a judicial or quasi-judicial proceedings, and that at the time of the bearing of the review application the matter underwent thorough and detailed discussion between the parties and the Government as well as the Bureau of Industrial Costs and Prices, and that the prices had not been fixed in an arbitrary manner. For the respondents, it was contended that unlike other price control legislations, the Drugs (Prices Control) Order was designed to induce better production by providing for a fair return to the manufacturers; that the provision for an enquiry proceeding the determination of the price of a bulk drug, the prescription in paragraph 3, clause 2 that the average cost of production of the bulk drug manufactured by an efficient manufacturer should be taken into account and that a reasonable return on net worth should be allowed, and the provision for a review of the order determining the price, established that price- fixation under the Order was a quasi-judicial activity obliging the observance of the rules of natural justice; that the review, for which provision is made by paragraph 27, was certainly of quasi-judicial character and, therefore, it was necessary that the manufacturers should be informed of the basis for the fixation of the price, that the price had hen fixed in an arbitrary manner and the Government was not willing to disclose the basis on which the prices were fixed On the pretext that it may involve disclosure of matters of confidential nature; that since the price of formulations were dependent on the prices of bulk drugs, these should not have been prescribed until the review application was disposed of, that the undertaking given by the parties before the High Court while obtaining ex-parte interim order to maintain the status-quo on the prices of bulk drugs and formulations prevailing before the issue of notifications, and in case of dismissal of their petitions to deposit the difference in the prices of the formulations in the Court, lapsed with the disposal of the writ petition and it could no longer be enforced; and that the delay in filing special leave petitions against other manufacturers should not be condoned as the Government was well versed litigant as compared to private litigants. |
Judge | Hon'ble Mr. Justice O. Chinnappa Reddy |
Neutral Citation | 1987 INSC 100 |
Petitioner | Union Of India & Anr. |
Respondent | Cynamide India Lid. & Anr. |
SCR | [1987] 2 S.C.R. 841 |
Judgement Date | 1987-04-10 |
Case Number | 1603 |
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