Important Points
1. Monopoly as contemplated under Article 19(6) of the Constitution is something to the exlcusion of others creation of a small captive market in favour of a state owned undertaking out of a large market can hardly be termed as creation of monoply as contemplated under Article 19(6).
2. Policy decision of states to purchase certain medicines for Government Hospitals from public sector manufacturers only.........

Headnote:Constitution of India-Articles 19(1)(g), 19(6) read with Articles 14 and 162-Freedom of trade and profession-Monopoly-Creation by State-State Governments policy decision to purchase certain medicines used in Government hospitals and dispensaries from public sector manufacturers only-Not violates Article 19(1)(g) or 14-Monopoly as contemplated under Article 19(1)(g) or 14-Monopoly as contemplated under Article 19(1)(g) or 14-Monopoly as contemplated under Article 19(6) is something to the total exclusion of others-Creation of a small captive market in favour of state owned undertakings out of large market cannot be termed as monopoly as contemplated under Article 19(6).
       Held : We have perused the impugned policy whereby the State Government had directed the authorities concerned to purchase certain medicines only from public sector undertakings or their dealers. In our opinion, the impugned policy only directs that certain drugs are to be purchased from the specified manufacturers. This does not preclude the other manufacturers or their dealers from either manufacturing or selling their products to other customers. It is of common knowledge that the requirement of drugs is not the need of the Government hospitals and dispensaries only. As a matter of fact, the need of the Government hospitals and dispensaries must be only a fraction of the actual demand in the market which demand is open to be met by the manufacturers like the appellants. Monopoly as contemplated under Article 19(6) of the Constitution is something to the total exclusion of others. Creation of a small captive market in favour of a State owned undertaking out of a larger market can hardly be termed as creation of monopoly as contemplated under Article 19(6) of the Constitution, more so because this captive market consists only of State owned hospitals and dispensaries. Thus, no facts, we agree with the High Court that there is no monopoly created by the impugned policy. (Para 7)
       A decision which would partially affect the sale prospects of a company, cannot be equated with creation of monopoly. The policy restrictions, as discussed above, can be imposed by exercise of executive power of the State under Article 162 of the Constitution. Therefore, the contention of the appellants in regard to creation of monopoly and violation of the fundamental right under Articles 19(1)(g) and 19(6) should fail. There was no creation of any monopoly nor is there any violation of Articles 14, 19(1)(g) or 19(6) of the Constitution. (Para 15)

Judgment

Santosh Hegde, J.-C.A. Nos. 4550-51/89 :

In these civil appeals, identical questions arise for our consideration.

2. Before the High Court of Punjab and Haryana in civil Writ Petition No. 6144/87, the petitioners challenged the constitutional validity of the policy decisions of the Government of Punjab whereby directions were issued to the purchasing authorities that certain medicines used in the Government hospitals and dispensaries were to be purchased from public sector manufacturers only. The High Court was pleased to allow the petition and quashed the said policy decision by a judgment dated 3.6.1988. Being aggrieved by the said judgment and order of the High Court, the State of Punjab has preferred C.A. No. 3723/88 before this Court and some of the aggrieved respondents have preferred C.A. No. 3744/88.

3. The writ petitions challenging almost similar policy decisions taken by the State of Rajasthan were also filed before the High Court of Rajasthan in D.B. Civil W.P. No. 697/88 and other connected matters. The High Court of Rajasthan negatived the petitioners contention and dismissed the said writ petition. The aggrieved petitioners have filed C.A. Nos. 4550-51/89.

4. Since respondents in C.A. Nos. 3723/88 and 3744/88 who were the original writ petitioners before the High Court of Punjab and Haryana, are not represented before us and we have heard only the counsel for the appellants in those matters and whereas all the contesting respondents in CA Nos. 4550-51/89 i.e. the matters arising out of the judgment of the Rajasthan High Court are represented before us through their counsel and we have heard the arguments of both sides, we deem it proper that we should deal with the Rajasthan cases first.

5. As stated above, C.A. Nos. 4550-51/89 are preferred against the judgment of the Rajasthan High Court dated 24.11.1988 made in D.B. civil Writ Petition No. 697/89 and other connected matters. In these writ petitions, the petitioners had challenged the policy decision of the State of Rajasthan dated 10.3.88 whereby the State of Rajasthan had decided to purchase certain medicines for use in the hospitals, dispensaries and other institutions run by the State only from public sector companies or the companies in which State of Rajasthan had substantial interest. The challenges in these petitions were based primarily on the ground that it created a monopoly in favour of these public sector companies which is in violation of Articles 14 and 19(1)(g) of the Constitution of India, and also on the ground that these policies having been made under the executive power derived under Article 162 of the Constitution, the same being not a law, is opposed to the provisions of Article 19(6) of the Constitution. The High Court of Rajasthan rejected the contention of the writ petitioners holding that in fact there was no monopoly created in favour of the public sector undertakings. The High Court also came to the conclusion that if at all the policy only restricts the Government departments from purchasing certain drugs from public sector undertakings only, and the same cannot be equated with a monopoly as contemplated under Section 19(6) of the Constitution. On facts, the High Court came to the conclusion that out of about 306 items of drugs, the Government institutions purchased about 286 drugs from private manufacturers or their dealers and only 26 drugs were purchased from public sector undertakings. Even in regard to the complaint of disparity in rates the High Court on facts came to the conclusion that there was no substance in the said arguments.

5. In these appeals before us, learned counsel appearing for the appellants have reiterated the arguments that were addressed before the High Court. The main contentions of the appellants are : (a) that by the impugned policy the State has created a monopoly in favour of the public sector undertakings and since the said monopoly is created not by an Act or a Statute but by an executive o

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1999 Supreme(SC) 389

Cases Referred (7)