Case: Wallace Pharmaceuticals Limited &amp; Another Vs. Union of India, Through The Secretary, Ministry of Chemicals &amp; Fertilizers, Department of Chemicals &amp; Fertilizers &amp; Others

27.10.1986. However, it is sought to be contended that the import price of the bulk drug fixed from time to time in respect of the period prior to 27.10.1986 could be taken into account, in fixing the leader price of the formulations made from the said bulk drug. As it is an anti-tubercular drug and falls under category III of Schedule III and therefore the Government is empowered to fix the leader price in terms of paragraph 13(6) of the DPCO 1979.32. The stand of the respondent that there was no need for notifying the procurement price of the bulk drug allowed in fixing the leader price of formulations prepared out of the bulk drug as it was being imported prior to 1986, is not a contention that is supported by any legal provision. No such presumption arises from reading of the Scheme of the DPCO 1979. The respondent seeking to read paragraph 13(6) of the DPCO 1979 in isolation to trace the power of the Government to fix the leader price of a formulation falling under Category III of Schedule III does not meet the requirement of the price of the bulk drug being notified even if imported. No such presumption that the price of the bulk drug ought to be taken as the price at which it is imported be taken into account in the petitioner proceeding to find its own alleged liability.33. In the absence of any determination of the liability of the petitioner in terms of the DPCO 1979 prior to its repeal no liability can be fastened on the petitioner on the strength of paragraph 14 of the DPCO 1987.Accordingly, the petitions deserve to be allowed.The writ petitions ie WP.26118/2005 and WP 9463/2006 are hereby allowed.Annexures S.V, AA, CC and DD in WP.26118/2005 are hereby quashed.Annexures M and HH in WP 9463/2006 are hereby quashed.Ordered accordingly.11. In our view, the ratio of the said judgment of the Karnataka High Court clearly applies to the facts of the present case. It is an admitted position that the said judgment and order of the Karnataka High Court has, so far, not been challenged by the respondents, in the Apex Court and, as such, as of today, the finding given by the Karnataka High Court has become final. The ratio of the said Judgment clearly applies to the facts of the present case, and, as such, the contention of the learned Counsel appearing on behalf of the petitioners will have to be accepted.12. Learned Counsel for the respondents has relied on the judgment of the Bombay High Court in Indian Drugs Manufactures Association and ors. vs. Union of India and ors., (supra). In our view, the ratio of the said judgment would not apply to the facts of the present case, since the question which fell for consideration before the Division Bench of Bombay High Court was, whether, after repeal of the provisions of para 7(2) and 17 of the DPCO, 1979 with effect from 26th August, 1987, the show cause notices could have been issued for the recovery of the amount which had actually accrued during the continuance of the DPCO, 1979 In paragraphs 1 and 2, the issue involved before the Division Bench has been succinctly mentioned. Paragraphs 1 and 2, read as under:The question which arises for consideration in the above petition is whether the respondents have the power and authority to issue the impugned notices invoking paragraph 7(2) of the Drugs (Prices Control) Order, 1979 read with paragraph 14 of the Drugs (Prices Control) Order, 1987 and para 12 of the Drugs (Prices Control) Order, 1995 after the repeal of the Drug (Prices Control) Order, 1979.2. The main substantive reliefs sought in the above petition are prayer clauses (a) and (b) of the petition which read as under:(a) For the following declaration of this Honble Court:(i) that on a true construction of the DPCO, 1979 read with the DPCO, 1987 and DPCO, 1995, only those amounts which had been finally determined to be due and payable by a manufacturer and which had actually accrued during the continuance of the DPCO, 1979, and which satisfied the tests of Constitutional and Essential Commodities Act requirements, can be recovered from the concerned manufacturer for deposit in the DPEA;(ii) that under no other circumstances can the respondents purport to invoke the provisions of Paras 7(2) and 17 of the DPCO, 1979, after its repeal with effect from 26th August, 1987;(iii) that the impugned Notice (Specimen copy Exhibit A hereto) and all similar notices issued by the respondents to the members of the 1st and 3rd petitioners are all issued without the authority of law, being ex facie ultra vires the DPCO, 1979, 1987 and 1995, ultra vires Articles 14, 265 and 300-A of the Constitution of India and are null and void and of no legal effect whatsoever;(iv) That the respondents are not authorised or entitled in law to issue to the members of the 1st and 3rd petitioners such notices in the future;(b) For a writ of certiorari or a writ in the nature of certiorari or any other appropriate writ, order or direction under Article 226 of the Constitution of India calling for the records of the case and after going into the legality of the same, quashing and setting aside the impugned notice Exhibit -A- hereto as also all similar notices issued by the respondents to the members of the 1st and 3rd petitioners.13. Perusal of the said observations reveal that the challenge in the said petition was on a totally different ground and, as such, the observations which are made in the context of paragraph 7(2) would strictly not apply to the facts of the present case and the learned Counsel appearing on behalf of the respondents was unable to point out any observations which were either directly contrary to the ratio of the judgment of the Karnataka High Court or in favour of the arguments advanced by the respondents in the present case.

Court's decision (1 = petition accepted / positive for appellant, 0 = rejected / negative): 1

Reasoning from the judgment:
1[ds]11. In our view, the ratio of the said judgment of the Karnataka High Court clearly applies to the facts of the present case. It is an admitted position that the said judgment and order of the Karnataka High Court has, so far, not been challenged by the respondents, in the Apex Court and, as such, as of today, the finding given by the Karnataka High Court has become final. The ratio of the said Judgment clearly applies to the facts of the present case, and, as such, the contention of the learned Counsel appearing on behalf of the petitioners will have to be accepted.In our view, the ratio of the said judgment would not apply to the facts of the present case, since the question which fell for consideration before the Division Bench of Bombay High Court was, whether, after repeal of the provisions of para 7(2) and 17 of the DPCO, 1979 with effect from 26th August, 1987, the show cause notices could have been issued for the recovery of the amount which had actually accrued during the continuance of the DPCO, 1979  In paragraphs 1 and 2, the issue involved before the Division Bench has been succinctly mentioned.Perusal of the said observations reveal that the challenge in the said petition was on a totally different ground and, as such, the observations which are made in the context of paragraph 7(2) would strictly not apply to the facts of the present case and the learned Counsel appearing on behalf of the respondents was unable to point out any observations which were either directly contrary to the ratio of the judgment of the Karnataka High Court or in favour of the arguments advanced by the respondents in the present case.