Case: Union Of India Vs. M/S. Ranbaxy Laboratories Ltd.

3. The drug in question is one of the scheduled bulk drugs being at Sl. No.43 in the First Schedule.The Central Government in exercise of its powers conferred upon it by paragraph 23 of the 1995 Order issued guidelines for the purpose of grant of exemption in terms of paragraph 25 specifying that a manufacturer who had been given a price exemption for bulk drug should submit an application in prescribed forms for fixation of price of suck bulk drug and formulation four months before the expiry of the period of the exemption. It was furthermore stipulatedif there is an existing notified price for bulk drug or ceiling price for formulations, the manufacturer shall follow the same on the expiry of the exemption and obtain price approval for non-ceiling packs of formulation (s) based on that bulk drug.A similar provision has been made for grant of exemptions in respect of New Delivery System, in terms whereof a manufacturer is required, where there is an existing notified price, to follow the same on the expiry of the exemption.The exemption granted in favour of the first respondent had expired on 31st October,respondent was asked to show cause as to why an amount of Rs.2,59,76,070/- should not be recovered from it and why action should not be taken under paragraphs 21 and 24 of 1995 Order read with Section 10 of the 1955 Act by a notice dated 29th April, 2002. In response thereto the first respondent inter alia contended that it had not overcharged price from any customer and no amount towards any alleged over charge was payable by it. It was furthermore contended that the company had furnished all the informations, as and when asked for by the prescribed authorities of the appellant.As the said reply was found to be unsatisfactory, the first respondent was asked to deposit the alleged over charged amount with interest @ 15% per annum as provided under Section 7A of the 1955 Act.A writ petition was filed thereagainst by the first respondent before the Delhi High Court. The said writ petition was dismissed by a learned Single Judge of the said High Court by an order dated 20th May, 2004.A Letters Patent Appeal was filed thereagainst which has been allowed by a Division Bench of the said Court by reason of the impugned judgment and order dated 19th December,High Court opined that the exemption Notification dated 29th August, 1995 clearly show that the same related to drugs manufactured by 31st October, 1999 and thus the same would apply even if the drugs have been sold after the said date.

Court's reasoning:
The exemption granted is in respect of what. It is in respect of a drug manufactured by a company. What is marketed for sale is the drug manufactured. Manufacture of a drug is controlled by a different statute, namely the Drugs and Cosmetics Act, 1940. Process of marketing the 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.The contention of learned Additional Solicitor General that the drug could be manufactured upto 31st October, 1999 but on and from 1st November, 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 31st October, 1979, sometime 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.The Court while construing an exemption notification cannot lose sight of the ground realities inclduing the process of marketing and sale. The exemption order dated 29th August, 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 co related 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 despatched to the distributor. The distributor may despatch it to the whole seller. 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 light of the object and purport of the Act. Thus, the decision relied upon by the learned Additional Solicitor General in Union of India vs. Cynamide India Ltd. : (1987) 2 SCC 720 ; Prag Ince & Oil Mills vs. Union of India : (1978) 3 SCC 459  and Sree Meenakshi Mills vs. Union of India : (1973) 1 SCC 129 will have no application.It is true that 1995 Order was to control the price and not the manufacture. But there cannot be any doubt that the price is that of a manufacturedonly in terms of the Essential Commodities Act, 1955 but also under various others, for example Customs and Central Excise Act and Weights and Measures Act (if applicable) several informations are required to be furnished. If the submission of Mr. Gopal Subramaniam that the first respondent was bound not only to manufacture but also to sell at a price upto 31st October, 1999 is correct, the same in our opinion lead to an absurdity. Such an anomaly and absurdity must be avoided.Learned counsel wants us to apply the principle of purposive construction. It may be applied so as to give full effect to the exemption notification. The exemption notification must be construed to be a workableNew India Assurance Co. Ltd.. vs. Nusli Neville Wadia and another : 2007 (14) SCALE 556  this Court opinedBarak in his exhaustive work on `Purposive Construction explains various meanings attributed to the term "purpose". It would be in the fitness of discussion to refer to Purposive Construction in Baraksand Sachs also appear to treat "purpose" as a subjective concept. I say "appear" because, although Hart and Sachs claim that the interpreter should imagine himself or herself in the legislators shoes, they introduce two elements of objectivity: First, the interpreter should assume that the legislature is composed of reasonable people seeking to achieve reasonable goals in a reasonable manner; and second, the interpreter should accept the non-rebuttable presumption that members of the legislative body sought to fulfill their constitutional duties in good faith. This formulation allows the interpreter to inquire not into the subjective intent of the author, but rather the intent the author would have had, had he or she actedBarak, Purposive Interpretation in Law, (2007) at pg.referring to its decision in Oriental Insurance Co. Ltd. vs. Brij Mohan and others : 2007 (7) Scale 753  it applied the doctrine of purposive construction. Applying the principle of doctrine of purposive construction, we are of the opinion that meaningful purpose could be achieved only if the construction of the notification as indicated hereinbefore is adopted and no