IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE P.R.RAMACHANDRA MENON WEDNESDAY, THE 8TH APRIL 2009 / 18TH CHAITHRA 1931 WP(C).No. 29601 of 2006(Y) ------------------------------------- PETITIONER(S): ----------------------- M/S.GEO PAUL & COMPANY, PHARMACEUTICAL DISTRIBUTORS, FLOWER JUNCTION, T.D.ROAD, ERNAKULAM, COCHIN-682 035, REP. BY ITS MANAGING PARTNER MRS.ELSY PAUL. BY ADVS. SMT.PREETHY KARUNAKARAN SMT.MEENA.A. SMT.M.R.MINI MR.JAYKAR.K.S. RESPONDENT(S): ------------------------- 1. THE STATE OF KERALA, REP. BY THE SECRETARY TO GOVERNMENT, HEALTH & FAMILY WELFARE DEPARTMENT, SECRETARIAT, THIRUVANANTHAPURAM-695 001. 2. THE DRUGS CONTROLLER OF KERALA, NEAR EYE HOSPITAL, GENERAL HOSPITAL JUNCTION, THIRUVANANTHAPURAM-695 001. 3. THE ASSISTANT DRUGS CONTROLLER, ERNAKULAM, CIVIL STATION, KAKKANAD P.O., COCHIN-682 030. 4. THE ASSISTANT DRUGS CORPORATION, THRISSUR, CHEMBUKKAVU P.O., THRISSUR-680 020. 5. THE DRUG INSPECTOR, PALAKKAD, NEAR DANCE MARKET, MARKET ROAD, PALAKKAD-678 014. W.P.(C) NO.29601/2006 6. THE DISTRICT COLLECTOR, ERNAKULAM. 7. THE INDIAN DRUG MANUFACTURERS ASSOCIATION, 102 B, POONAM CHAMBERS, DR.A.B.ROAD, WORLI, MUMBAI-400 018, MAHARASHTRA, REP. BY ITS SECRETARY GENERAL. 8. ALL KERALA CHEMISTS & DRUGGISTS ASSN., CHEMIST BHAVAN, CHAVARA CENTRE ROAD, OPPOSITE SOUTH RAILWAY STATION, ERNAKULAM, COCHIN-682 016, REP. BY ITS STATE SECRETARY SRI.T.RAVINDRAN. 9. A.N.MOHAN, POONAM MEDICALS, MANNATH LANE, THRISSUR-680 001. 10. T.RAVINDRAN, D.T.ASSOCIATES, METTUPALAYAM STREET, PALAKKAD-678 001. 11. K.I.SUNNY, CHERUPUSHPAM MEDICALS, 44/1805, L.F.C.ROAD, POTTAKKUZHY JUNCTION, KALOOR, COCHIN-682 017. 12. A.G.MURALI, DHANUSH PHARMA, 41/954, "DEVI KRIPA", PULLEPADY ROAD, ERNAKULAM, COCHIN-682 018. 13. SABU JOHN, REENA MEDICALS, S.N.JUNCTION, THRIPUNITHURA, ERNAKULAM DISTRICT, PIN-682 301. 14. SAIJU ABRAHAM, TRAVANCORE PHARMA, 41/1148-C, PULICKAL HOUSE, PULLEPPADY ROAD, ERNAKULAM, COCHIN-682 018. 15. JOSHY ANTONY, VAYALUMKAL MEDICALS, 40/296, MUNDUPARAMBIL BUILDINGS, PALARIVATTOM, ERNAKULAM, COCHIN-682 025. 16. P.D.GIRIDHARAN, NADAKKAL MEDICALS, 18/2289-A, KOOTTUNGAL LANE, KOCHUPALLY ROAD, THOPPUMPADY P.O., ERNAKULAM DISTRICT, PIN-682 005. 17. M.P.RAJESH KUMAR, GEO PHARMA, R.C.ROAD, KARUVELIPADY, COCHIN-682 005. W.P.(C) NO.29601/2006 18. HERBERT LOPEZ, MEDIMATE MEDICALS, LISSIE HOSPITAL ROAD, ERNAKULAM, COCHIN-682 018. 19. JAWAHAR T., CHAITHRAM MEDICALS, A.M.ROAD, PERUMBAVOOR P.O., ERNAKULAM DISTRICT, PIN-683 542. 20. R.RAMANATHAN, UNICARE ENTERPRISES, 4/135, ELOOR ROAD, NORTH KALAMASSERY P.O., ERNAKULAM DISTRICT, PIN-683 104. 21. P.M.EBRAHIM, M.S.MEDICALS, NEHRU PARK, MARKET P.O., MOOVATTPUZHA, ERNAKULAM DISTRICT, PIN-686 673. 22. YAKOVE K.T., KALARICKAL MEDICALS, EAST FORT GATE, THRIPUNITHURA, ERNAKULAM DISTRICT, PIN-682 301. 23. P.S.VINOD, AMRITHA MEDICALS, OPP. GOVERNMENT HOSPITAL, AYYAMPILLY P.O., VYPEEN, ERNAKULAM DISTRICT, PIN-682 501. BY GOVT. PLEADER MR.V.TEKCHAND FOR R1 TO R6 MR.P.JACOB VARGHESE, SENIOR ADVOCATE FOR R8, R11 TO 23 SRI.V.MANOJ KUMAR FOR R11 TO R23 SRI.VARUGHESE M EASO FOR R11 TO R23 SRI.VIVEK VARGHESE P.J. FOR R11 TO R23 SMT.PRAISHEEL PRAKASAM FOR R11TO R23 SRI.K.B.ARUN FOR R11 TO R23 SRI.K.JAYAKUMAR SRI.P.B.KRISHNAN THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 08/04/2009, ALONG WITH WPC NO. 29048 OF 2007 AND CONNECTED CASES THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: W.P.(C) NO.29601/2006 APPENDIX PETITIONER'S EXHIBITS P1:- COPY OF THE LICENCE DT. 8.4.92 ISSUED TO THE PETITIONER BY THE ASSISTANT DRUGS CONTROLLER, ERNAKULAM UNDER RULE 61(1) OF THE DRUGS COSMETICS RULES , 1945. P1(a):- COPY OF THE LICENCE DT. 8.4.92 ISSUED TO THE PETITIONER BY THE ASSISTANT DRUGS CONTROLLER, ERNAKULAM UNDER RULE 61(2) OF THE DRUGS & CONSMETICS RULES, 1945. P2:- COPY OF THE CERTIFICATE OF RENEWAL DT. 17.2.03 ISSUED BY THE ASSISTANT DRUGS CONTROLLER, ERNAKULAM UNDER RULE 63 A OF THE DRUGS & COSMETICS RULES, 1945, RENEWING EXT.P1 LICENCE. P2(a):- COPY OF THE CERTIFICATE OF RENEWAL DT. 17.2.03 ISSUED BY THE ASSISTANT DRUGS CONTROLLER , ERNAKULAM UNDEDR RULE 63 A OF THE DRUGS & COSMETICS RULES 1945, RENEWING EXT.P1 (a) LICENCE. P3:- COPY OF THE RULES OF THE ALL KERALA CHEMISTS & DRUGGISTS ASSOCIATION. P4:- COPY OF THE LETTER DT. 25.6.05 SENT BY THE SECRETARY, ERNAKULAM DISTRICT EXECUTIVE COMMITTEE TO THE MEMBERS OF THE ALL KERALA CHEMISTS & DRUGGISTS ASSOCIATION. P5:- COPY OF THE LETTER DT. 1.2.06 ISSUED BY THE GENERAL SECRETARY, ALL KERALA CHEMISTS & DRUGGISTS ASSOCIATION TO ALL THE MEMBERS. P6:- COPY OF THE LETTER DT. 1.2.06 ISSUED BY THE GENERAL SECRETARY, ALL KERALA CHEMISTS & DRUGGISTS ASSOCIATION TO THE SECRETARIES OF ALL THE DISTRICT EXECUTIVE COMMITTEE OF ALL KERALA CHEMISTS & DRUGGISTS ASSOCIATION. P7:- COPY OF THE NEWS REPORT IN THE NEW INDIAN EXPRESS DAILY, COCHIN EDITION DT. 28.9.06. P8:- COPY OF THE NEWS REPORT IN THE MATHRUBHOOMI DAILY, COCHIN EDITION DT. 29.9.06. P9:- COPY OF THE LETTER DT. 4.10.06 SENT BY THE SECRETARY, ERNAKULAM DISTRICT EXECUTIVE COMMITTEE OF THE ALL KERALA CHEMISTS & DRUGGISTS ASSOCIATION TO THE PETITIONER. P10:- COPY OF THE CAVEAT LODGED BY THE ALL KERALA CHEMISTS & DRUGGISTS ASSOCIATION IN THE COURT OF THE MUNSIFF OF ERNAKULAM. P11:- COPY OF THE CAVEAT LODGED BY THE ERNAKULAM DISTRICT EXECUTIVE COMMITTEE OF THE ALL KERALA CHEMISTS & DRUGGISTS ASSOCIATION IN THE COURT OF THE MUNISFF OF ERNAKULAM. W .P.(C) NO.29601/2006 P12:- COPY OF THE CAVEAT LODGED BY THE ERNAKULAM DISTRICT EXECUTIVE COMMITTEE OF THE ALL KERALA CHEMISTS & DRUGGISTS ASSOCIATION IN THE COURT OF THE SUBORDINATE JUDGE OF ERNAKULAM. P13:- COPY OF THE REPRESENTATION DT. 5.10.06 SENT BY THE PETITIONER FIRM TO THE SECRETARY TO GOVERNMENT OF KERALA, HEALTH & FAMILY WELFARE DEPARTMENT. P14:- COPY OF THE REPRESENTATION DT. 5.10.06 SENT BY THE PETITIONER FIRM O THE DRUGS CONTROLLER OF KERALA, THIRUVANANTHAPURAM. P15:- COPY OF THE REPRESENTATION DT. 5.10.06 SENT BY THE PETITIONER FIRM TO RESPONDENTS 3 TO 5. P16:- COPY OF THE LETTER DT. 5.10.06 SENT BY THE PETITIONER TO THE DISTRICT COLLECTOR, ERNAKULAM ENCLOSING A COPY OF EXT.P14 REPRESENTATION. P17:- COPY OF THE LETTER DT. NIL SENT BY THE PETITIONER FIRM TO THE SECRETARY, ERNAKULAM DISTRICT EXECUTIVE COMMITTEE OF THE ALL KERALA CHEMISTS & DRUGGISTS ASSOCIATION IN REPLY TO EXT.P9 LETTER. P18:- COPY OF THE LETTER DT. NIL SENT BY THE SECRETARY, ERNAKULAM DISTRICT EXECUTIVE COMMITTEE OF THE ALL KERALA CHEMISTS & DRUGGISTS ASSOCIATION TO THE PETITIONER. TRUE COPY P.S. TO JUDGE TSS P.R. RAMACHANDRA MENON, JJ. ........................................................................ W.P.(C) Nos. 29601 & 33190 OF 2006, 29157 OF 2007, 29048, 36287 AND 37739 OF 2008. ......................................................................... Dated this the 8th April, 2009 J U D G M E N T The issue involved in all these Writ Petitions is one and the same. The petitioners have approached this Court challenging the alleged refusal on the part of the Manufacturers of various drugs to effect the supply, ignoring the requirements and indent made by the persons like the petitioners, who are stated as Distributors/Dealers pursing the trade by virtue of the licence issued by the concerned authorities under the Drugs and Cosmetics Act and Rules (hereinafter referred to as the 'Act' and 'Rules”). Some of the petitioners have also approached the departmental authorities seeking to initiate appropriate action against the concerned Manufacturers who have violated the relevant provisions of law in maintaining the prompt and effective supply of drugs. W.P.(C) Nos. 29601 & 33190 OF 2006, 29157 OF 2007, 29048, 36287 AND 37739 OF 2008. 2 2. The case of the petitioners is that they are the 'Distributors' of the drugs, as defined under Clause 2(e) of the 'Drugs (Prices Control )Order' as well as 'Dealers' as defined under Clause 2(d) thereunder. It is stated, after necessary inspection and satisfaction of the credentials, the competent authority under the Act and Rules has issued the requisite licence, enabling the petitioners to pursue their trade in distributing/dealing with the drugs, on the basis of which the trade/business is being carried out by the petitioners for the past several years. 3. While so, allegedly, the office bearers of the All Kerala Chemists & Druggists Association('AKCDA' in short), which is a Society registered under the Travancore-Cochin Literary, Scientific and Charitable Societies Registration Act, 1955 accumulated much bargaining power over the Manufacturers and started dictating terms with them. In furtherance to this, the Association won over some Manufacturers and attempted to stall the supply of drugs to “Neethi Medical Stores” which is a project implemented by the State of Kerala for ensuring prompt W.P.(C) Nos. 29601 & 33190 OF 2006, 29157 OF 2007, 29048, 36287 AND 37739 OF 2008. 3 and uninterrupted supply of medicines at a lesser price, mainly to the less affluent sector of the State at a lesser price. This move, reportedly, was since the “Neethi Medical Stores” declined to accede to the terms stipulated by the Association and in turn the supply to the “Neethi Medical Stores” was sought to be interrupted giving instructions to the Distributors/Dealers who are the Members of the said Association not to supply the Drugs to the “Neethi Medical Stores”. Notwithstanding the instructions given by the Association, the petitioners, considering their role and objectives behind the Act and the Rules, effected supply to the “Neethi Medical Stores”, which was to the chagrin of the Association, who took steps to outcast the petitioners in W.P.(C) No. 29601 of 2006 and 33190 of 2006. Simultaneously, the said Association, on the basis of their higher bargaining power with the Manufacturers gave instructions to the latter, not to supply medicines to the outcasted petitioners and such other Distributors/Dealers. This made the petitioner in W.P.(C) 29601 of 2006 to file necessary proceedings before the statutory authorities for taking appropriate action against the concerned W.P.(C) Nos. 29601 & 33190 OF 2006, 29157 OF 2007, 29048, 36287 AND 37739 OF 2008. 4 Manufacturers for refusing to supply drugs in spite of the statutory mandate to ensure prompt supply. The very same petitioner has also filed W.P.(C)No.33190 of 2006 for appropriate reliefs including for ensuring prompt and adequate supply of requisite medicines by the Manufacturers. Similar Writ Petitions have been filed by others as well, for giving appropriate directions to the Manufacturers to continue the supply of medicines . 4. Mr. G. Shrikumar, learned counsel for the petitioners in W.P.(C) 29048 and 29157 of 2007 and 36287 and 37739 of 2008 submits that Ext.P1 licence has been issued to the petitioners to carry out the trade as Distributor/Dealer and that all the petitioners in the four cases come within the purview of the definition of the term 'Dealer' as well as 'Distributor' as defined under Clause 2(d) and 2(e) of the 'Drugs (Prices Control) Order, 1995', as extracted below: “(d) “dealer” means a person carrying 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. W.P.(C) Nos. 29601 & 33190 OF 2006, 29157 OF 2007, 29048, 36287 AND 37739 OF 2008. 5 (e) “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”. The learned counsel further refers to the statutory duty cast upon the Manufacturers, Distributors and Dealers to ensure prompt supply of medicines, so as to have it reached the ultimate beneficiaries i.e., patients who are in requirement of the medicines. Para 18 of the above 'Order' which deals with the duty as aforesaid is extracted below: “18. Manufacturer, distributor or dealer not to refuse sale of drug:- Subject to the provisions of the Drugs and Cosmetics Act, 1940 (23 of 1940) and the Rules framed thereunder:- (a) no manufacturer or distributor shall withhold from sale or refuse to sell to a dealer any drug without good and sufficient reasons; (b) no dealer shall withhold from sale or refuse to sell any drug available with him to a customer intending to purchase such drug. “ By virtue of the clear mandate in para 18 of the 'Order', it is W.P.(C) Nos. 29601 & 33190 OF 2006, 29157 OF 2007, 29048, 36287 AND 37739 OF 2008. 6 submitted by the learned counsel for the petitioners that the stand taken by the Manufacturers, dancing with the tune of the 'Association', refusing to effect necessary supply of medicines, is liable to be taken cognizance of, by the departmental authorities, particularly in view of the stipulation in Para 24 of the 'Order' prescribing 'Penalties'. 5. Adv. Shri K. Jayakumar, the learned counsel for the petitioners in W.P.(C)No.29601 and 33190 of 2006, with reference to the specific pleadings raised in the Writ Petitions, submits that the course being pursued by the Manufacturers is prevalent only in the State of Kerala and that too, because of the involvement of the 'Association', who is wielding very high influence over the Manufacturers. The sequence of events, which led to removal of the said petitioners from the Association and the subsequent events leading to the refusal to effect supply of medicines at the instance of the 'Association' are sought to be highlighted; simultaneously referring to the statutory duty cast upon the Manufacturers to effect uninterrupted supply of medicines, unless satisfactory explanation is offered for refusal W.P.(C) Nos. 29601 & 33190 OF 2006, 29157 OF 2007, 29048, 36287 AND 37739 OF 2008. 7 as contemplated under the statute. The learned counsel further submits that, so long as the petitioners are holders of valid licence issued by the Departmental Authorities and in so far as there is a statutory duty on the Manufacturers as well as the Distributors/Dealers to ensure such supply of medicines as required, the refusal can only be on exceptional circumstances for sufficient reasons. The learned counsel asserts that the petitioners never insist that the supply of medicines as sought for should be effected to them directly by the Manufacturers. It is also pointed out that the requirement will be satisfied if necessary medicines, as sought for, are made available through the Stockists/Distributors appointed by the Manufacturers and that there is absolutely no intent to exclude such persons or the commission/consideration payable to such Stockists/Distributors appointed by the Manufacturers. It is further pointed out that the sole intention of the petitioners is to ensure that the medicines, particularly, the life saving drugs, which are being manufactured only by a very few manufacturers, are made available to the patients who are the ultimate W.P.(C) Nos. 29601 & 33190 OF 2006, 29157 OF 2007, 29048, 36287 AND 37739 OF 2008. 8 beneficiaries; which alone is the objective behind the statute, ensuring such prompt and uninterrupted supply; specifically providing that the refusal to effect supply of medicines will amount to offences, leading to penal consequences. 6. Mr. Bechu Kurian Thomas, learned counsel for the Manufacturers in W.P.(C)Nos.29048 and 29157 of 2007, referring to the counter affidavit filed by the respondents No.4 and 5 in W.P.(C) 29048 of 2007 submits that the concerned petitioners are not at all Stockists or Distributors appointed by the Manufacturers and that such petitioners cannot insist for supply of medicines directly by the Manufacturers, without the involvement of the Distributors/Stockists appointed by the Manufacturers. Referring to the terminology used in Para 2(e) of the 'Order' defining the term “distributor”, the learned counsel submits that such Distributor shall be a person appointed by the Manufacturer and that in the instant case, the petitioners having not been appointed by the Manufacturers as Distributors, the case put forth by the petitioners does not deserve to be considered . W.P.(C) Nos. 29601 & 33190 OF 2006, 29157 OF 2007, 29048, 36287 AND 37739 OF 2008. 9 7. With regard to the submission made from the part of the petitioners that their idea is only to procure the requisite medicines through the Distributors/Stockists appointed by the Manufacturers and not directly from the Manufacturers ( sparing the involvement of the Stockists/Distributors appointed by the Manufacturers), the stand of the Manufacturers is made clear in paragraphs No.13,14 and 15 of the counter affidavit, which are extracted below: “13. Petitioners can be supplied medicines only through the distributors or agents/stockists appointed by the Manufacturer/Sole Selling Agent for the respective local area. The attempt of the petitioners is to obtain supply of medicines directly from the manufacturer so as to be treated as a distributor. This cannot be permitted and law does not envisage such an arrangement. 14. The statements contained in paragraphs 1 to 4 of the writ petition are not entirely correct and are hence denied. Petitioners are not authorized distributors of the 4th respondent and 4th respondent has no arrangement with W.P.(C) Nos. 29601 & 33190 OF 2006, 29157 OF 2007, 29048, 36287 AND 37739 OF 2008. 10 petitioners . The statement in paragraph No.2 that petitioners are distributors of drugs as defined in Clause 2(e) is false and totally incorrect.. The 4th and 5th respondents have not appointed petitioners as distributors and on the contrary they have appointed other distributors through out the State, from whom any dealer, including the petitioners can obtain supply of the drugs manufactured by the 4th respondent. Ext.P1 and P2 are licences issued for being a wholesale dealer. The attempt of the petitioners is to project themselves as distributors so as to compel the 4th respondent to treat the petitioners as distributors . 4th and 5th respondents have their own distributors/agents appointed in various areas from whom petitioners can obtain supply of the medicines. Pleadings contrary to the above are totally denied. 15. The statements contained in paragraphs 5 and 6 are also totally denied. The allegations in paragraph 5 are totally false and have no relevance to the present case. Petitioners cannot insist on supply of medicines directly from the Manufacturer. They can W.P.(C) Nos. 29601 & 33190 OF 2006, 29157 OF 2007, 29048, 36287 AND 37739 OF 2008. 11 obtain supply of medicines from the source provided by the manufacturer which is the distributor/stockist/agent”. From the above, the crux of the contentions raised in this regard is that the petitioners, though are not Distributors appointed by the Manufacturers, can very well acquire the requisite medicines by approaching the Stockists/Distributors of the Manufacturers in the respective area, on payment of the price as fixed. 8. Mr.M. Ramesh Chander, the learned counsel appearing on behalf of the respondents No.13, 22 and 24 in W.P.(C) No.33190 of 2006 and Smt. M. Deepa, the learned counsel on behalf of the respondent No.4 in W.P.(C)Nos. 36287 and 37739 of 2008 submit that they support the submissions made on behalf of the similarly situated respondents in the other cases who are the Manufacturers. Considering the merits and demerits of the relative submissions made from either side, the undisputed fact is that the petitioners are at liberty to procure the medicines from the Manufacturers through the concerned Stockists/Distributors appointed by the Manufacturers, on W.P.(C) Nos. 29601 & 33190 OF 2006, 29157 OF 2007, 29048, 36287 AND 37739 OF 2008. 12 payment of requisite price as fixed in respect of such medicines, notwithstanding the fact that the petitioners are not Distributors/Stockists appointed by the Manufacturers. It is pointed out that the Manufacturers will ensure that there will not be any interruption with regard to the supply of medicines on pursuing such a course and that every effort will be taken to give effect to the mandate prescribed under Para 18 of the 'Order' for ensuring supply of Drugs. 9. With regard to the prayer made by the petitioner in W.P (C)29601 of 2006 to prosecute the offenders, the learned Government Pleader submits that the prosecution proceedings have already been launched in respect of the offence stated as committed by the concerned persons in pursuing activities contrary to the statutory prescriptions. 10. In the above facts and circumstances, no further order is required to be passed but for recording the submissions made before the Court, from either side. Accordingly, it is made clear that the petitioners can procure the requisite medicines from the Manufacturers by approaching the Stockists/Distributors W.P.(C) Nos. 29601 & 33190 OF 2006, 29157 OF 2007, 29048, 36287 AND 37739 OF 2008. 13 appointed by the Manufacturers for distributing their products, on payment of the price fixed. The respondents shall ensure that the necessary supply of medicines to the petitioners is effected without any interruption, giving appropriate instructions to the Stockists/Distributors. Any contravention in this regard will invite penal consequences, which is liable to be taken cognizance of, as prescribed under the relevant provisions of the law. It is also made clear that all the remaining issues, are left open. The Writ Petitions are disposed of accordingly. P.R. RAMACHANDRA MENON, JUDGE. lk