IMPORTANT POINTS
Actual norms and price fixing on the basis of the norms are not within purview of judicial review.
Scope of judicial review in a case of price fixation having its origin on non-statutory materials is far less.
Mere errors in the expert body reports are not subject to judicial review.
Question of judicial scrutiny of expert body reports and acceptance of their recommendations by Government does not arise.
Re-notification of same norms year after year per se not impermissible.
Price (norm) fixation is an action legislative in nature, but its proper operation is amenable to judicial review.
Prescribing Norms every year is not required to be done mechanically as a ritual if there is no occasion to change or modify prevailing rates.
Issuance of notification under Paragraph 9 is a Legislative exercise. Contention that notification was issued to deny benefit of exemption to small scale manufacturers cannot be given any credence.
Exercise of power by a Delegate of a power would be ultra vires if exercised in excess of delegated power or in bad faith or contrary to Constitutional provisions.
Where efficacious alternative remedy is available, writ petition may not be entertained.
Forum shopping is not permissible.
A party is liable to be non-suited for suppression of filing similar writ petition in another High Court.
Practice of filing scanty material before the High Court but filing volumes of documents before Supreme Court discouraged. For the better adjudication of disputes it would be more appropriate for all litigants to place on record all the material before the court of first instance.
Interim order staying implementation of Notification fixing the price of a formulation under the DPCO ought not to be made by a Court.

Headnote:(a) Drugs (Prices Control) Order (DPCO) 1995 – Paragraph 7 – Judicial review – a Norms, required to be fixed ‘every year’, not fixed for four years 1995-1999 – Non cooperation of industry – Norms of 1998-99 continued till 2001-2003 – Industry insisting required data being available in their Cost Audit Report (CAR) – Actual norms or actually fixing the retail price or ceiling price of formulations under Paragraphs 8 and 9 not in issue – Norms prescribed and the formula given in Paragraph 7 thereof adhered to – Actual norms and price fixing on the basis of the norms not within purview of judicial review. (Para 82, 83)
       (b) Drugs (Prices Control) Order (DPCO) 1995 – Paragraph 7 – Price fixation governed by statutory considerations and price fixation governed by non-statutory considerations – Scope of judicial review – Far less in a case of price fixation having its origin on non-statutory materials. (Para 92)
       (2003) 1 SCC 341 – Relied upon
       (1987) 2 SCC 720 – Referred
       (c) Administration of justice – Judicial review – Report prepared by expert bodies – Challenge thereto not easy – Subject to lesser judicial scrutiny – Mere errors in the Reports are not subject to judicial review. (Para 95)
       (1978) 3 SCC 459 – Relied upon
       (d) Administration of justice – Judicial review – Reports of more than one expert committee – Government taking decision after considering the reports – Prescribing norms – Question of judicial scrutiny of such reports and acceptance of their recommendations by Government does not arise. (Para 97)
       (1990) 3 SCC 223 – Relied upon
       311 US 570, 85 L Ed 358, 362 – Referred
       (e) Drugs (Prices Control) Order (DPCO) 1995 – Paragraph 7 – Masood Committee not finding the information contained in CARs to be fully reliable – Cost Accounts Branch of the Department of Expenditure in the Ministry of Finance also not finding the CARs of particular use for the purposes of prescribing the norms – Drug industry declining to fill up the questionnaires sent to their member companies from time to time – Inexplicable – Government accepting these opinions – No infirmity. (Para 100, 101, 102, 106)
       (2013) 8 SCC 615; (2003) 7 SCC 1; (1990) 3 SCC 223 – Relied upon
       (f) Drugs (Prices Control) Order (DPCO) 1995 – Paragraph 7 – Re-notification of same norms year after year – Per se not impermissible – However reasons for re-notification ought to exist – re-notification should not be a short-cut method to be routinely employed – Instantly virtual non-cooperation from the drug industry creating a stalemate forcing Government to re-notify the same norms year after year – Held, re-notification of the prescribed norms in the period 2000 to 2003 not mechanical or without any application of mind – a (Para 109, 110, 112)
       (1994) 1 SCC 648 – Relied upon
       (g) Drugs (Prices Control) Order (DPCO) 1995 – Paragraph 7 – Fixing of norms – Price (norm) fixation is an action legislative in nature – Proper operation of paragraph 7 is amenable to judicial review – No allegation of considering irrelevant factors in fixation of norms – No interference warranted. (Para 114, 115)
       (1978) 3 SCC 459; (1987) 2 SCC 720; (2014) 2 SCC 753; (1974) 2 SCC 630 – Relied upon
       (h) Drugs (Prices Control) Order (DPCO) 1995 – Paragraph 8(5) r/w Paragraph 2(s), Paragraph 7, Paragraph 8(4) and Paragraph 22 – Retail price – Fixing ‘every year’ mandatory – Until fixed as per DCPO 1995, prevailing price immediately before to continue – Government not notifying prices for 1995-1996 to 1998-1999 due to non-cooperation of the industry and continuing with prevailing prices – Prevailing prices on every item of norms beneficial for industry – Had any notification been adverse to the interest of then industry, it could have been challenged under Paragraph 8(4) and Paragraph 22 – No such application moved – Government action, held, bona fide. (Para 117, 126, 128)
       (i) Drugs (Prices Control) Order (DPCO) 1995 – Paragraph 7 – Prescribing Norms every year – Not required to be done mechanically as a ritual if there is no occasion to change or modify prevailing rates – Formula given in Paragraph 7 must be adhered to mandatorily – However, requirement of prescribing the norms every year is discretionary – Would depend upon the exigencies of the situation. (Para 129,130)
       (j) Administration of justice – Change of pattern of prescribing norms from ‘time to time’ to ‘every year’ – Change not introduced to remedy any mischief – Not mandatory. (Para 132)
       [1584] EWHC Exch J36 – Referred
       (k) Drugs (Prices Control) Order (DPCO) 1987 – Paragraph 6 r/w Paragraph 7, Drugs (Prices Control) Order (DPCO) 1995 – Cost of packing material as norm – Not prescribed anytime – Sankaran Committee recommending adoption of the actual – No manufacturer or formulator making any grievance or complaint regarding failure of Government to prescribe the cost of packing material as a norm – No interference warranted. (Para 133, 136)
       (l) Drugs (Prices Control) Order (DPCO) 1995 – Paragraph 7, Paragraph 3 – Retail price – Contention that retail price or ceiling price cannot be fixed without fixing price of bulk drugs – Government not obliged to fix bulk price for drugs whether included in First Schedule or not. (Para 138)
       (m) Drugs (Prices Control) Order (DPCO) 1995 – Paragraph 9 – Issuance of notification – Legislative exercise – Contention that notification was issued to deny benefit of exemption to small scale manufacturers – Cannot be given any credence. (Para 139)
       (n) Administration of justice – Judicial propriety – Exercise of power by a Delegate of a power would be ultra vires if exercised in excess of delegated power or in bad faith or contrary to Constitutional provisions – In such condition action of a repository of power is also amenable to judicial review. (Para 140, 141, 142)
       (1990) 3 SCC 223; (2009) 14 SCC 85; (1989) 2 SCC 58; (1989) 3 SCC 132 – Relied upon
       (1948) 1 KB 223 : (1947) 1 All ER 498; 1905 AC 426,430 : 93 LT 143; 1966 Supp SCR 311; (1988) 4 SCC 59 – Referred
       (o) Constitution of India – Article 226 – Alternative remedy – DPCO 1995 providing for review and revision of prices fixed by Government – Remedy being efficacious, writ petitions ought not to have been entertained by the concerned High Courts. (Para 147)
       (p) Administration of justice – Judicial propriety – Forum shopping – Said to happen when a litigant approaches one Court for relief but does not get the desired relief and then approaches another Court for the same relief – Another form of forum shopping is taking advantage of a view held by a particular High Court in contrast to a different view held by another High Court – Another form of forum shopping is filing successive bail applications in the hope that one or the other Judge will grant bail – To curb this, Supreme court directed that all successive bail applications will be hear by the same Judge – Yet another form of forum shopping is approaching different Courts for the same relief by making a minor change in the prayer clause of the petition – In yet another form of forum shopping a litigant makes allegations of a perceived conflict of interest against a judge requiring the judge to recuse from the proceedings so that the matter could be transferred to another judge – Forum shopping not permissible – Functional test vis-à-vis the litigation and the litigant – Determines whether a litigant is indulging in forum shopping or not. (Para 150, 153, 154, 156, 157)
       (1999) 8 SCC 525; (2013) 15 SCC 790; (1998) 5 SCC 310; (2007) 6 SCC 769; (2014) 16 SCC 501; (2008) 1 SCC 560; (2016) 5 SCC 808 – Relied upon
       (q) Constitution of India – Article 226 – A party is liable to be non-suited for suppression of filing similar writ petition in another High Court. (Para 166)
       (r) Administration of justice – Judicial discipline – Union of India filing scanty material before the High Court – Filing volumes of documents before Supreme Court – Practice discouraged – For the better adjudication of disputes it would be more appropriate for all litigants to place on record all the material before the court of first instance. (Para 168)
       (s) Constitution of India – Article 226 – Notification fixing the price of a formulation under the DPCO – Interim order staying its implementation – Ought not to be made by a Court. (Para 170, 171)
       (1987) 2 SCC 720 – Relied upon
       Facts of the case:
       The core issue in this batch of appeals relates to the interpretation and application of Paragraph 7, 8 and 9 of the Drugs (Prices Control) Order (DPCO) 1995 – the extent of flexibility available to the Central Government in fixing the retail price and ceiling price of formulations and the rigidity expected by the statutory Order. The specific issue in these appeals relates to the validity of various notifications prescribing the norms for calculating the retail price of formulations under Paragraph 7 of the DPCO 1995 for the purposes of Paragraphs 8 and 9 of the DPCO 1995.
       Finding of the Court:
       The notifications were not arbitrarily issued nor were they discriminatory in any manner at all, nor were they issued mechanically nor could it be said that they were issued without any application of mind.
       Result: Appeals filed by Union of India allowed.

Judgement Key Points

Certainly. Based on the provided information, here are the paragraphs numbered accordingly:

(!) Judicial decisions are generally considered public records:
"Such judicial decisions are generally considered public records and are part of the judicial record, which are not subject to copyright restrictions in most jurisdictions."

(!) Purpose of judicial opinions:
"The purpose of judicial opinions is to serve the public interest by providing clarity on the law and guiding future conduct."

(!) Copyright protection for compilations or editorial content:
"The compilation, selection, and presentation of case materials, including any annotations or editorial comments, may attract copyright protection if they meet the criteria of originality."

(!) Legal principles and reasoning are typically not protected:
"The core legal principles, reasoning, and findings of the court, as reflected in the text, are typically not protected by copyright."

(!) Usage rights of court judgments:
"The legal document as a court judgment is generally in the public domain and can be used freely for reference, citation, or reproduction, provided that proper attribution is given where applicable."

Let me know if you need further assistance.

JUDGMENT :

Madan B. Lokur, J.

(a) The issues that arise in this batch of appeals are as follows:

(i) Whether the notification dated 13th July, 1999 issued by the Central Government under Paragraph 7 of the Drugs (Prices Control) Order, 1995 prescribing the norms for conversion cost, packing charges and process loss of raw materials (other than packing materials in conversion) and packing and process loss of packing materials in packaging was issued mechanically and without any application of mind or is it valid in law?

(ii) Whether the notifications dated 12th July, 2000, 12th July, 2001, 12th July, 2002 and 11th July, 2003 issued by the Central Government under Paragraph 7 of the Drugs (Prices Control) Order, 1995 re-notifying the norms prescribed on 13th July, 1999 were issued mechanically, without any application of mind and without re-determining the norms every year as required by the Drugs (Prices Control) Order, 1995 and are valid in law?

(iii) Whether various notifications issued by the Central Government fixing the retail price or ceiling price of formulations under Paragraphs 8 and 9 (as the case may be) of the Drugs (Prices Control) Order, 1995 without determining the norm for cost of packing material as required by Paragraph 7 of the Drugs (Prices Control) Order, 1995 are valid in law?

(iv) Whether fixing the retail price of a formulation under Paragraph 8 of the Drugs (Prices Control) Order, 1995 without first fixing the sale price of a bulk drug under Paragraph 3 of the Drugs (Prices Control) Order, 1995 utilized in the manufacture of a formulation is valid in law?

2. We are primarily concerned with the Drugs (Prices Control) Order, 1995 (the DPCO 1995) and for historical reasons with the Drugs (Prices Control) Order, 1970 (the DPCO 1970), the Drugs (Prices Control) Order, 1979 (the DPCO 1979) and the Drugs (Prices Control) Order, 1987 (the DPCO 1987). All these Orders were issued by the Central Government in exercise of powers conferred by Section 3 of the Essential Commodities Act, 1955.

The appeals before us

3. The principal appeal before us and in which the leading submissions were made is Civil Appeal No. 329 of 2005 filed against Cipla. This appeal is directed against the judgment and order dated 3rd March, 2004 passed in Writ Petition (C) No.41214 of 2003 by the Division Bench of the Allahabad High Court.

4. The challenge in the writ petition was to notifications issued by the Central Government on 12th July, 2000, 12th July, 2001, 12th July, 2002 and 11th July, 2003 re-notifying the norms prescribed by notification dated 13th July, 1999 issued under Paragraph 7 of the DPCO 1995 on the basis of which the retail price of formulations is fixed under Paragraph 8 of the DPCO 1995. It was held by the High Court that these notifications were issued mechanically and without any application of mind.

5. The consequence of the decision of the Allahabad High Court is that about 40 notifications fixing the retail price and ceiling price of formulations have been invalidated.

6. The High Court also quashed the show cause notice dated 16th August, 2003 issued by the Inspector of Drugs in Varanasi alleging that Cipla had charged higher retail prices than those notified by various notifications. In view of this allegation, the Inspector of Drugs required Cipla to clarify whether it had any order from the National Pharmaceutical Pricing Authority exempting it from compliance with the price notifications and to give the quantities of the formulations sold during the period 1995 till date.

7. Civil Appeal No. 4005 of 2004 is directed against the judgment and order dated 27th April, 2002 passed by the Division Bench of the High Court of Punjab & Haryana at Chandigarh in C.W. P. No. 15677 of 1999 filed by M/s Martin & Harris Laboratories Ltd.

8. Three issues have been raised in this appeal. The first is whether the inclusion of the bulk drug Diosmin in the First Schedule to the DPCO 1995 is valid or not. The second is whether the ceiling pr

Click Here to Read the rest of this document

2016 Supreme(SC) 847

Cases Referred (21)