JUDGMENT

SUDHANSU JYOTI MUKHOPADHAYA, J.

Leave granted. These appeals are preferred by the Union of India and others against the common judgment dated 15th March, 2011 passed by the Division Bench of the Delhi High Court in LPA No. 634 of 2010 with LPA No.790 of 2010. By the impugned judgment the Division Bench affirmed the order dated 19th May, 2010 passed by the learned Single Judge of the Delhi High Court in W.P.(C)No.10277 with W.P.(C)No.12958 of 2009 and dismissed the appeals preferred by the appellants.

2. The respondents filed the aforesaid two writ petitions challenging the price fixation Notifications dated 30th April, 2009 and 17th November, 2009 whereby the Government had fixed the prices of “Doxofylline formulations” in exercise of power conferred under paras 9 and 11 of the Drugs (Prices Control) Order, 1995 (hereinafter referred to as ‘DPCO, 1995’ for short). Learned Single Judge set aside the Notifications aforesaid and held that ‘Doxofylline’ is not a bulk drug within the meaning ascribed to it under para 2(a) of the DPCO, 1995.

3. The factual matrix of the case is as follows: On 14th May, 2008 an article appeared in the Newspaper ‘THE HINDU’, regarding the sale of ‘Doxofylline formulations’ as a part of tactics to replace less profitable price controlled products i.e. ‘Theophylline’ with huge profitable alternatives of the same class. The article captioned – ‘Drug companies chasing profits, cheating patients; Costlier asthma drugs duck curb, hit market’ wherein the Editor of the Medical Journal, Monthly Index of Medical Specialties, Dr. C.M. Gulati, while giving various reasons for the real reason for ‘Doxofylline’ entry into the country, stated that ‘Doxofylline’ was being offered as a more profitable alternative to Theophylline. Further, by successive orders in 2006, all loopholes to sell Theophylline products at high profit margins have been closed by the National Pharmaceutical Pricing Authority (NPPA), the body that monitors medicine prices in India. Therefore, nearly all companies selling Theophylline formulations have been scouting for similar molecules outside the price control system irrespective of whether they are similar, better or even worse than their current brands. It was alleged that the core issue is profits, not patients.

4. In the light of aforesaid newspaper report and complex of consideration implied in the DPCO, 1995, on 22nd July, 2008, the appellants wrote to all the Doxofylline formulation manufactures asking them to provide reasons as to why ‘Doxofylline’ should not be classified as derivative of Theophylline. Since the requisite information was not furnished by the manufacturers /formulators, including the respondents herein, and Industry Associations even after a lapse of substantial time, and the matter being significant, they were once again reminded by the appellants vide letter dated 16th September, 2008 to furnish the reply latest by 30th September, 2008.

5. The matter was then considered by Technical Committee of the NPPA(2nd appellant). The Technical Committee decided to seek the experts opinion of the Indian Institute of Science, Bangalore (IISc for short) on whether ‘Doxofylline’ is a derivative of ‘scheduled bulk drug’ Theophylline. The IISc, Bangalore, vide their letter dated 23rd January, 2009, informed the appellants that ‘Doxofylline’, is in fact, a derivative of scheduled bulk drug - Theophylline.

6. On the advice of the IISc, Bangalore, it was decided by the 2nd appellant to fix the price of ‘Doxofylline formulations’. A letter dated 17th February, 2009 was addressed by 2nd appellant to all known manufacturers of the Doxyfylline formulations seeking details of the purchase price of the bulk drug ‘Doxofylline’ necessitated for fixation of price of the ‘Doxofylline formulation’. As per provisions and paras 4 and 5 of the DPCO, 1995, all the manufacturers of the bulk drugs are required to furnish details of manufacture, sales and cost of different bulk drugs including