JUDGMENT

A. INTRODUCTION

1. These three writ petitions which revolve around Para 20 of the Drugs (Price Control) Order, 20131 assail demand notices issued by the respondent National Pharmaceutical Pricing Authority holding the petitioners guilty of overcharging and thus liable to deposit the overcharged amount together with interest thereon. Bharat Serums the petitioner in W.P.(C) 7946/2018 and 8190/2018 challenges the demand notices dated 26 June 2018 and 05 July 2018. The two demand notices relate to non-scheduled formulations named Histoglob and U-Tryp. Bard the petitioner in W.P.(C) 9090/2020 has challenged identical demand notices dated 07 November 2019 and 22 October 2020 in respect of 82 medical devices which were produced and distributed by the said petitioner.

2. Insofar as Bharat Serums is concerned, the respondents have held it to be in violation of Para 20 with respect to the sale and distribution of Histoglob for the period February 2014 to July 2018. The allegation of overcharging in respect of U-Tryp covers the period May 2015 to July 2018. Insofar as Bard is concerned, the respondents allege that medical devices were overcharged during the period January 2015 to January 2018.

3. In order to appreciate the issues which arise, it would, at the outset, be apposite to advert to the provisions of Para 20 which reads thus: -

'20. Monitoring the prices of non-scheduled formulations.-(1) The Government shall monitor the maximum retail prices (MRP) of all the drugs, including the non-scheduled formulations and ensure that no manufacturer increases the maximum retail price of a drug more than ten per cent of maximum retail price during preceding twelve months and where the increase is beyond ten per cent of maximum retail price, it shall reduce the same to the level of ten per cent of maximum retail price for next twelve months. (2) The manufacturer shall be liable to deposit the overcharged amount along with interest thereon from the date of increase in price in addition to the penalty.'

4. Bharat Serums has been found to have overcharged and thus liable for penal action under Para 20 in respect of the two non-scheduled formulations noticed above. It asserts that in the period under scrutiny, it had not overcharged prices and had merely rounded off the price of its drug. Insofar as Bard is concerned, it has taken the stand that the overcharging of medical devices occurred on account of a lack of clarity in respect of the format in which price disclosures were to be made and that the overcharging was neither deliberate nor intentional. Both the writ petitioners have also challenged the interpretation accorded to Para 20 by the respondents and the consequential quantification of overcharging by NPPA. Bard has also questioned the levy of interest asserting that it would be liable to pay the same on the overcharged amount only from the date of the demand being raised as opposed to the date when the overpricing occurred.

5. Both the writ petitioners assail the correctness of the view taken by the respondents that in case a manufacturer is found to have overcharged and thus acted in breach of Para 20, it would stand denuded of the right to claim a periodic increase which is envisaged under the said provision of the 2013 DPCO. As would be evident from a reading of Para 20 of the 2013 DPCO, a manufacturer of a non-scheduled formulation is entitled to increase the Maximum Retail Price of a drug provided that such increase does not exceed 1