Case: Glaxo Smithkline Pharmaceuticals Ltd. and Ors Vs. Union of India (UOI) and Ors

drug as also the maximum price which can be charged have direct relation with manufacture and also the date thereof. The wrapper/foil/containers in which the drug is marketed contains several informations for the general public; one of them being the date of manufacture and the retail price. Various other informations are also required to be furnished. 26. The contention of the learned Additional Solicitor General that the drug could be manufactured up to 31/10/1999 but on and from 1/11/1999 it could be sold only at the price specified in the Order, in our opinion, cannot be accepted. If the first Respondent was entitled to avail the benefit of the exemption notification till the midnight of 31-10-1999, some time would be necessary for it to market the same. There must be some time-lag between the period the drug is manufactured and the actual sale by a retail dealer to the customer. 27. The court while construing an exemption notification cannot lose sight of the ground realities including the process of marketing and sale. The exemption order dated 29-8-1995 is clear and unambiguous. By reason thereof what has been exempted is the drug which was manufactured by the Company and the area of exemption is from the operation of the price control. They have a direct nexus. They are correlated with each other. While construing an exemption notification not only a pragmatic view is required to be taken but also the practical aspect of it. A manufacturer would not know as to when the drug would be sold. It has no control over it. Its control over the drug would end when it is dispatched to the distributor. The distributor may dispatch it to the wholesaler. A few others may deal with the same before it reaches the hands of the retailer. The manufacturer cannot supervise or oversee as to how others would be dealing with its product. All statutes have to be considered in the light of the object and purport of the Act. Thus, the decisions relied upon by the learned Additional Solicitor General in Union of India v. Cynamide India Ltd.; Brag Ice & Oil Mills v. Union of India, Shree Meenakshi Mills Ltd. v. Union of India and Panipat Coop. Sugar Mills v. Union of India will have no application. 28. It is true that the 1995 Order was to control the price and not the manufacture. But there cannot be any doubt that the price is that of a manufactured drug. 29. Not only in terms of the Essential Commodities Act, 1955 but also under various others, for example, Customs and Central Excise Act and the Weights and Measures Act (if applicable) several informations are required to be furnished. If the submission of Mr. Gopal Subramanium that the first Respondent was bound not only to manufacture but also to sell at a price up to 31-10-1999 is correct, the same in our opinion would lead to an absurdity. Such an anomaly and absurdity must be avoided. 12. Not to be deterred by the plain language of the aforesaid judgment, Shri Mukherjee referred us to a later judgment in the Glaxosmithkline case, referred to hereinabove. The issue in that case concerns a price notification issued under the later DPCO of 1995. In the course of arguments, counsel for the Appellants relied upon the Ranbaxy Laboratories case, in order to buttress his submission on the facts of that case. However, the Court distinguished the Ranbaxy judgment in paragraph-60 thereof as follows: 60. The issue before us is quite different and, in our view, the judgment of this Court in Ranbaxy Laboratories does not apply to the present controversy for more than one reason. First, in Ranbaxy Laboratories, the Court was concerned with the exemption notification issued under Para 25 of the 1995 DPCO whereas in the present matters, the issue centres around Paras 14, 16 and 19 of that DPCO. Second, the notification under consideration in Ranbaxy Laboratories was an exemption notification and not a notification for fixation of price. Third, the exemption notification is relatable to the manufacturer of the drugs whereas price fixation notification is related to sale of drug/formulation at a given price. 13. It can be seen that the issue that arose in the Glaxosmithkline case was completely different from the issue that arose in Ranbaxys case and the present case. Ranbaxys case and the present case are directly concerned only with an exemption notification, and not a notification for fixation of price. Also, what is relevant for an exemption notification is the manufacture of drugs, whereas what is relevant for a price fixation notification relates to sale and not manufacture. Obviously, therefore, the Glaxosmithkline decision would have no relevance to the facts of the present case. Coming to Shri Mukherjees arguments based on paragraph 16(3) of the DPCO of 1987, we first set out the said provision: 16(3)-Every manufacturer or importer shall give effect to the price of a bulk drug or formulation, as the case may be, as fixed by the government from time to time within 15 days from the receipt by such manufacturer or importer of the communication in this behalf from the government and issue a supplementary price list in this regard to the dealers, state drugs controllers and the government and indicate necessary reference to such price fixation. 14. Shri Mukherjee has based his argument on the fact that there cannot be two prices for the same bulk drugs or formulation, which is why the period of 15 days is mentioned in paragraph 16(3) so that one price may be fixed by the Government for each bulk drug and formulation from time to time. This argument also need not deter us, for the simple reason that there will only be one price that is fixed for all goods that are manufactured by the Appellant up to 31st December, 1994, and that price will be a price unilaterally determined by the Appellant and will not be fixed under the DPCO.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]8. Having heard learned Counsel for the parties, the point with which we are concerned is in a very narrow compass. If paragraph 28, which is set out hereinabove; is perused, it is clear that the exemption relates to drug manufacturing units or classes of such units. The very exemption order which has also been set out by us (supra) again refers only to bulk drugs and formulations based thereupon which are "manufactured" by the company. Further, a reading of the guidelines of 1989 also makes it clear that the exemption only relates to manufacture and has no reference to sale whatsoever9. It will be noticed that the reference is to the date of commencement of commercial production of a bulk drug which has reference to manufacture alone. However, Shri Mukherjee, referred us to Sub-clause (viii) of the aforesaid guidelines in order to argue that after the expiry of the period of exemption, the manufacturer has to submit an application for fixation of the price of a bulk drug under the provisions of the DPCO10. Sub-clause (viii) cannot be read in isolation but must be read as a part of the entire scheme of the guidelines. All that Sub-clause (viii) says is that after the period of exemption, which is after the period which has reference to manufacture and not sale of goods, such goods as are manufactured after the exemption will be subject to the drill of Sub-clause (viii). Read in this light, we do not find any difficulty in rejecting Shri Mukherjees arguments based on this sub-clause11. We are of the view that the matter is no longer res-Integra. In Ranbaxys case, cited by Shri Ganesh, the relevant exemption provision under the DPCO of 1995, referred to in paragraph 19 of the judgment, is almost a verbatim reproduction of the earlier exemption provision i.e. paragraph No. 28 of the DPCO of 1987, with which we are directly concerned13. It can be seen that the issue that arose in the Glaxosmithkline case was completely different from the issue that arose in Ranbaxys case and the present case. Ranbaxys case and the present case are directly concerned only with an exemption notification, and not a notification for fixation of price. Also, what is relevant for an exemption notification is the manufacture of drugs, whereas what is relevant for a price fixation notification relates to sale and not manufacture. Obviously, therefore, the Glaxosmithkline decision would have no relevance to the facts of the present casehis argument also need not deter us, for the simple reason that there will only be one price that is fixed for all goods that are manufactured by the Appellant up to 31st December, 1994, and that price will be a price unilaterally determined by the Appellant and will not be fixed under the DPCO.