IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE T.R.RAMACHANDRAN NAIR THURSDAY, THE 18TH MARCH 2010 / 27TH PHALGUNA 1931 WP(C).No. 30867 of 2009(C) ---------------------------------------- PETITIONER(S): ------------------------ M/S.NEW CHEMISTS PHARMA, PALLIKULAM ROAD, THRISSUR, REPRESENTED BY ITS MANAGING PARTNER, T.V.GEORGE. BY ADVS.MR.G.SHRIKUMAR MR.SREEJITH S.NAIR SMT.KAVERY S THAMPI RESPONDENT(S): ------------------------ 1. STATE OF KERALA, REPRESENTED BY SECRETARY TO GOVERNMENT, DEPARTMENT OF HEALTH AND FAMILY WELFARE, SECRETARIAT, THIRUVANANTHAPURAM. 2. THE DRUGS CONTROLLER OF KERALA, OFFICE OF DRUGS CONTROLLER, THIRUVANANTHAPURAM. 3. THE ASSISTANT DRUGS CONTROLLER, OFFICE OF ASST.DRUGS CONTROLLER, KAKKANAD, COCHIN-682 030. 4. THE ASSISTANT DRUGS CONTROLLER, OFFICE OF ASST.DRUGS CONTROLLER, CHEMBUKAVU, THRISSUR. 5. M/S.SUN PHARMACEUTICAL LTD., ACME PLAZA, ANDHERI KURLA ROAD, ANDHERI, MUMBAI-400 059. 6. ADITHYA MEDISALES LTD., C & F AGENT OF M/S.SUN PHARMACEUTICAL LTD., 28/382, MANDOLLY BUILDING, KADAVANTHRA P.O., COCHIN. 7. M/S.ALEMBIC LTD., CANNONSHED ROAD, ERNAKULAM. R1 TO R4 BY GOVT. PLEADER MR.M.A.ASIF R5 , R6 & R7 BY ADVS. MR.BECHU KURIAN THOMAS THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 04/03/2010, ALONG WITH WPC NO. 32445 OF 2009 WPC NO. 34114 OF 2009 WPC NO. 36675 OF 2009 THE COURT ON 18/03/2010 DELIVERED THE FOLLOWING: W.P.(C) NO. 30867/2009 APPENDIX PETITIONER'S EXHIBITS P1:- COPY OF THE LICENSE NO.8/492/20B/2006 DTD. 23.11.06 ISSUED TO THE PETITIONER BY THE 4TH RESPONDENT. P1(a):- COPY OF THE LICENSE NO.8/493/20B/2006 DTD. 23.11.06 ISSUED TO THE PETITIONER BY THE 4TH RESPONDENT. P2:- COPY OF THE INTERIM ORDER DTD. 3.10.07 IN WPC. 29157/07. P3:- COPY OF THE JUDGMENT DTD. 8.4.09 IN WPC. 29157/07. P4:- COPY OF THE COMMUNICATION ISSUED TO THE PETITIONER BY RESPONDENTS 5 TO 7. TRUE COPY P.S. TO JUDGE tss T.R. Ramachandran Nair, J. - - - - - - - - - - - - - - - - - - - - - - - - W.P.(C) Nos. 30867/2009-C, 32445/2009-A, 34114/2009-H & 36675/2009-D of 2010 - - - - -- - - - - - - - - - - - - - - - - - - - - Dated this the 18th day of March, 2010. JUDGMENT In all these writ petitions, common questions have come up for consideration and therefore they are being disposed of by a common judgment. 2. The petitioners in these writ petitions are the licensed distributors of pharmaceutical products, who are doing wholesale business and are holders of valid licences issued under the provisions of Drugs and Cosmetics Rules, 1945 to sell, exhibit for sale or distribute by wholesale drugs other than homoeopathic medicines. Going by the pleadings in these cases, the petitioners are approaching this Court for a second time. 3. For convenience, I will refer to the pleadings in W.P.(C) No.30867/2009. Therein, the petitioner is a distributor in drugs which is having valid licence for conducting wholesale business, as evidenced by Exts.P1 and P1(a). These licences are issued under Part VI of the Drugs and Cosmetics Rules, 1945. According to the petitioner, it is a distributor of drugs as defined in clause 2(e) of the Drugs (Prices Control) Order 1995. wpc 30867, 32445, 34114 & 36675/09 2 Based on valid licence issued, the petitioner has been operating as a wholesale distributor/dealer of drugs manufactured by respondents 5 to 7 for several years. It is contended that the erstwhile office bearers of All Kerala Chemists and Druggists Association (AKCDA) started interfering even in the appointment of stockist/distributors by the drug manufacturers. Due to their illegal intervention, even though the petitioner was placing orders regularly with respondents 5 to 7, they started refusing to supply medicine to the petitioner which is in gross violation of the provisions of Drugs and Cosmetics Act, 1940 and the Drugs (Price Control) Order, 1995. Even though representations were filed, after failing to get any positive reply in the matter, the petitioner approached this Court by filing W.P.(C) No.29157/2007 which was disposed of by Ext.P3 judgment along with similar writ petitions. It is averred that in spite of the directions issued by this Court in the said judgment, respondents 5 to 7 are turning down the request of the petitioner for supply and directed the petitioner to approach other local distributors for supply of medicines. The said distributors, evidently, are not in a position to supply medicine to the petitioner at the rates applicable to the wholesale distributor. It is pointed out that by compelling the petitioner to approach the other distributors, respondents 5 wpc 30867, 32445, 34114 & 36675/09 3 to 7 want the petitioner to get medicine at the retail price which is not a permissible action. It is in these circumstances, the petitioner has approached this Court mainly seeking for a direction to respondents to 1 to 4 to compel respondents 5 to 7 to resume supply of drugs to the petitioner and continuing to do so, so long as the petitioner is having a valid licence. 4. In W.P.(C) No.32445/2009 Exts.P1 and P1(a) are the licenses issued to the petitioner to conduct wholesale business under the relevant rules. The 4th respondent is the manufacturer against whom the petitioner is seeking reliefs in the writ petition. It is the case of the petitioner that the 4th respondent was supplying medicines to the petitioner as a wholesale distributor. But later, under the influence of AKCDS, it was disrupted. The petitioner is relying upon a common interim order produced in the writ petition as Ext.P4, wherein the manufacturers/distributors were directed not to withhold from sale or refuse to sell to the petitioners any drugs for which the petitioner has a dealership licence issued by the competent Controller of Drugs. 5. In W.P.(C) No.34114/2009, the petitioner is the Managing Director of a firm and is a licensed distributor of pharmaceutical products carrying on wholesale business. Exts.P1 and P1(a) are the licenses. The wpc 30867, 32445, 34114 & 36675/09 4 fourth respondent is the manufacturer of drugs with whom the petitioner had been doing business and the orders placed by the petitioner were being accepted also. Only because of the intervention of the AKCDS, the fourth respondent refused to supply medicines which compelled the petitioner to file W.P.(C) No. 36287/2008 which was disposed of by a common judgment, Ext.P3. Identical prayers have been made in the said writ petition. 6. In W.P.(C) No.36675/2009, the petitioner is the licensed wholesale distributor of Allopathic Medicines, doing business in the name and style of M/s. Poonam Medicals at Thrissur. Ext.P1 is the copy of the licence. Respondents 1 to 6 are stockists as well as manufacturers of medicine and identical contentions have been raised in this writ petition also. 7. Heard Shri P. Ravindran, learned Senior Counsel, Shri G.Sreekumar, and Shri Ramprasad Unni for the petitioners and Shri Bechu Kurian Thomas, Shri K. Anand and Shri P.Vijaya Bhanu, Shri Varghese Prem, Shri Raja Vijayaraghavan and learned Govt. Pleader for the respondents. 8. The contentions revolve round the alleged violation on the part of wpc 30867, 32445, 34114 & 36675/09 5 the manufacturers in supplying drugs to the petitioners who are entitled to do their business in terms of the licences procured by them under the relevant statutes and rules. Learned Counsel appearing for the petitioners submitted that the judgment Ext.P3, rendered by this Court in the earlier writ petitions has elaborately considered the contentions and declared the right of the petitioners to get uninterrupted supply of medicines whenever they placed orders. It is pointed out that the spirit of the judgment is not being adhered to by the party respondents and therefore the petitioners are compelled to approach this Court again in the matter seeking for various reliefs. Reliance is placed on Clause 18 of the Drugs (Price Control) Order which provides that there cannot be any refusal to sell drugs from the part of the manufacturer/distributor to a dealer without good and sufficient reasons. It is therefore submitted that the authorities are to be directed to take appropriate action in the matter against the manufacturers for failure to supply medicines to the petitioners on the basis of the orders placed by them. It is further pointed out that the petitioners are entitled to get the drugs at the wholesale price and now the petitioners are being compelled to approach other distributors who cannot supply medicine at the wholesale rate since they are the retail distributors. The petitioners cannot in turn wpc 30867, 32445, 34114 & 36675/09 6 supply medicine to other retail dealers at the same rate. Therefore, the manufacturers should see that the petitioners get the drugs and medicines in terms of the price fixed by them. 9. Learned counsel appearing for the respondents submitted that as far as manufacturers are concerned, they are entitled to have their own distributors and there is no failure on their part to comply with the provisins of the Drugs (Price Control) Order. It is submitted that what is projected in the writ petition is only disputes in the field of commercial transactions and hence the writ petitions are not maintainable. It is pointed out that the very same contentions were raised in the earlier batch of cases which were disposed of as per Ext.P3 and therefore the principles of res-judicata squarely applies. It is therefore prayed that the writ petitions may be dismissed. 10. The matter is governed by the provisions of Drugs (Price Control) Order. The definition of 'dealer' and 'distributor' provided under Clauses 2(d) and 2(e) of the Drugs (Price Control ) Order, is as follows: “2(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. wpc 30867, 32445, 34114 & 36675/09 7 2(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 term 'manufacture' is also defined under Section 2(l) of the Order apart from providing a definition for 'retail price' and 'wholesaler' under Sections 2(s) and 2(x) of the Order. Learned counsel for the petitioners relied upon clause 18 of the Order which is extracted below: “18. Manufacturer, distributor and 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.” Going by sub-clause (a), no manufacturer or distributor shall withhold from sale or refuse to sell to a dealer any drug without good and sufficient reasons. The formula for fixing the retail price is contained in clause 7 of the Order. Clause 24 provides for penalties which reads that “any contravention of any of the provisions of this Order shall be punished in accordance with the provisions of the Essential Commodities Act.” wpc 30867, 32445, 34114 & 36675/09 8 11. Before going further, it is apposite to refer to the findings rendered by this Court in Ext.P3 judgment produced in W.P.(C) No.30867/2009. After referring to the various aspects under the Drugs (Price Control) Order, this Court entered the following findings in para 8: “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 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.” It is clear from the above findings that the petitioners are at liberty to procure the medicines from the manufacturers or through the concerned distributors appointed by them, on payment of requisite price as fixed in respect of such medicines. The whole argument of the parties herein rests upon the expression “price as fixed.” While the petitioners contend that being wholesale distributors, they are to be supplied medicines at the price wpc 30867, 32445, 34114 & 36675/09 9 fixed by the manufacturer for wholesale distributors, it is the contention of the manufacturers that the petitioners should get medicine from the distributors who have been appointed by them. 12. The question is whether it is up to the official respondents to take appropriate action in the matter. 13. In the counter affidavit filed by the 8th respondent in W.P.(C) No.36675/2009, Asst. Drugs Controller, it is mentioned that on receipt of Ext.P7 representation therein, action has been initiated by the said respondent to verify whether there is any instance of withholding from supplying drugs as contemplated in clause 18 of the Drugs (Price Control) Order, 1995. It is further submitted therein that “if on verification of the records, it is found that there is willful denial on the part of the manufacturer to supply the drugs sought for by the petitioner, necessary action will be taken by this respondent as provided under Clause 18 of the Drugs Price Control Order 1995 as directed by this Hon'ble Court in W.P. (C) No.6838/09. Of course, Shri Varghese Prem, learned counsel appearing for the 5th respondent therein, submitted that the petitioner in that writ petition is not having licence which is disputed by learned Senior Counsel Shri P. Ravindran who submitted that the said matter is pending in a Writ wpc 30867, 32445, 34114 & 36675/09 10 Appeal before this Court, wherein this Court passed an interim order also. The counter affidavit filed by the second respondent therein is also on identical lines. 14. Now that the matter has already attained a finality by Ext.P3 judgment, it is not necessary for me to elaborately consider the matter, as the directions therein are binding on both parties. Therefore, what is necessary to consider is only to see whether the officials under the Drugs Controller are called upon to initiate any action for the alleged violation of Clause 18 of the Drugs (Price Control) Order. The question whether there had been any violation of Clause 18, is a matter to be considered after notice to both parties. It depends upon the orders placed, etc. and the action taken by the manufacturers in respect of the orders placed, and replies, if any, given by them and find out whether there is any good and sufficient reasons for refusal. 15. The authorities under the Drugs (Price Control) Order are therefore entitled to look into the question in the light of the contentions raised by the parties herein. It is only appropriate that the concerned officials look into the matter to find whether there is any violation of the provisions of the Drugs (Control) Order, especially Clause 18 and the other wpc 30867, 32445, 34114 & 36675/09 11 enactments like Essential Commodities Act and Drugs and Cosmetics Act. 16. In the light of the interim orders passed by this Court, it is submitted by the learned counsel for the petitioners that they are getting uninterrupted supply based on the orders placed even though learned counsel for the petitioner in W.P.(C) No.30867/2009 submitted that some of the orders have not been complied with by the manufacturers, viz. respondents 5 to 7 therein, for which the petitioner is initiating action under the Contempt of Courts Act. I am not going into such contentions in these writ petitions, since it is up to the authorities to consider all matters in accordance with law. Therefore, the writ petitions are disposed of with the following directions: It is open to the petitioners to file appropriate representations before the officials like the Drugs Controller and other Assistant Drugs Controllers concerned with regard to their grievances, if any, against the party respondents in these writ petitions as regards their right to get the supply of drugs and the alleged violations of the Drugs (Price Control) Order. The petitioners can file such representations along with a copy of this judgment, within one month from the date of receipt of a copy of this wpc 30867, 32445, 34114 & 36675/09 12 judgment and if such representations/complaints are received by the official respondents, they will consider the same and take appropriate action as enjoined by law, after hearing the parties, viz. Drugs (Price Control) Order and Essential Commodities Act, expeditiously. No costs. (T.R. Ramachandran Nair, Judge.) kav/