IMPORTANT POINT
Definitions of ‘distributor’ and ‘dealer’ under DPCO are not mutually exclusive in Drugs (Price Control) Order, 1995.

JUDGMENT :

Sanjay Kumar, J.

Having failed before the Delhi High Court at both levels, the appellant approached this Court.

2. Noting that the appellant had already paid a sum of Rs. 1.25 crores towards the demand made by the respondent authorities, this Court directed status quo to be maintained in relation to recovery of the remaining sum payable by the appellant, vide order dated 10.11.2014.

3. Challenge in W.P.(C) No. 10700 of 2005, filed by the appellant before the Delhi High Court, was to the demand notices dated 08.02.2005 and 13.06.2005. By order dated 13.07.2005, a learned Judge dismissed the said writ petition. The appellant, thereupon, filed L.P.A. No. 1629 of 2005 but the appeal met with the same fate when a Division Bench of the High Court dismissed it by the impugned judgment dated 06.08.2014.

4. The issue for consideration is whether the National Pharmaceutical Pricing Authority (for brevity, 'the NPPA'), Government of India, was justified in raising a demand against the appellant to recover the higher price charged in relation to Roscilox, a brand of a Cloxacillin-based drug formulation, than that fixed by the Government under the provisions of the Drugs (Price Control) Order, 1995 (for brevity, 'the DPCO').

5. In this regard, the NPPA addressed demand notice dated 08.02.2005 to the appellant, directing it to deposit the overcharged principal amount of Rs. 2,15,62,077/- for the period April, 1996 to July, 2003. The notice made it clear that the NPPA was also empowered to recover the interest due on the said amount. Pursuant thereto, the NPPA issued demand notice dated 13.06.2005, quantifying the interest payable on the overcharged amount as Rs. 2,49,46,256/-, and the appellant was directed to deposit the overcharged amount with interest, aggregating to Rs. 4,65,08,333/-.

6. Recovery of the excess price charged was sought to be effected by the NPPA in exercise of power under Paragraph 13 of the DPCO.

Paragraph 13 is titled 'Power to recover Overcharged Amount' and it reads as follows:

'Notwithstanding anything contained in this order, the Government shall by notice, require the manufacturers, importers or distributors, as the case maybe, to deposit the amount accrued due to the charging of prices higher than those fixed or notified by the Government under the provisions of Drugs (Price Control) Order, 1987 and under the provisions of this Order.'

Certain definitions in the DPCO may be noted at this stage.

Paragraph 2(d) of the DPCO defines 'dealer' as under:

''Dealer' means a person on the business of purchase or sale of drugs, whether as a wholesaler or retailer and whether or not in conjunction with any other business and includes his agent.'

Paragraph 2(e) of the DPCO defines 'distributor' thus:

“'Distributor' means a distributor of drugs or his agent or a stockist appointed by a manufacturer or an importer for stocking his drugs for sale to a dealer.'

Paragraph 2(y) defines "wholesaler" as follows:

“Wholesaler' means a dealer or his agent or a stockist appointed by a manufacturer or an importer for the sale of his drugs to a retailer, hospital, dispensary, medical, educational or research institution purchasing bulk quantities of drugs.'

A bare perusal of the aforestated definitions demonstrates that there is some overlapping inasmuch as a 'wholesaler', as defined in Paragraph 2(y), would include not only a 'dealer', as defined in Paragraph 2(d), but also a stockist appointed by a manufacturer or an importer, who would fall within the ambit of a 'distributor' under Paragraph 2(e). There is, thus, no clear and absolute delineation amongst the definitions. However, the so-called distinction in the defined categories was the basis for the claim of the appellant that it could not be proceeded against under Paragraph 13 of the DPCO. It asserted that it was not a manufacturer or an importer or a distributor and, therefore, it stood beyond the grasp of Paragraph 13.

7. Though an attempt was made before us by the learned counsel for