Case Note & Summary
The writ petition was filed by Indian Drugs Manufacturers Association and Organization of Pharmaceutical Producers of India, acting on behalf of their member drug manufacturers, challenging show cause notices issued by the Union of India. The notices, issued under paragraph 7(2) of the Drugs (Prices Control) Order, 1979 (DPCO 1979) read with DPCO 1987 and 1995, demanded details for determination of liabilities to the Drug Prices Equalisation Account (DPEA) for the period 1979-1987. Petitioners contended that after the repeal of DPCO 1979 by DPCO 1987 on 26 August 1987, no power survived to issue such notices or recover amounts. The DPCOs were framed under Section 3 of the Essential Commodities Act, 1955, for price control of bulk drugs and formulations. The 1979 order required manufacturers to deposit excess amounts between selling price and retention price into DPEA. The 1987 and 1995 orders contained recovery and savings clauses. Petitioners argued that the impugned notices were without authority of law, ultra vires the DPCOs and violative of Articles 14, 265, and 300A of the Constitution. Respondents claimed that liabilities accrued during the currency of DPCO 1979 survived its repeal and could be recovered under the savings provisions of later orders, relying on the Supreme Court decision in Union of India v. Cynamide India Limited upholding the validity of DPCO 1979. The court heard arguments and reserved judgment on 30 September 2011, pronouncing it on 22 December 2011. The provided text does not contain the final decision or ratio decidendi.
Issue of Consideration
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.
Law Points
- Interpretation of savings and repeal clauses of successive DPCOs
- scope of power to recover amounts under para 7(2) of DPCO 1979 after its repeal
- authority to issue show cause notices under repealed law
- constitutional validity of recovery notices under Articles 14
- 265
- 300A
Case Details
2011 LawText (BOM) (12) 73
Writ Petition No. 2368 of 1996 along with Notices of Motion Nos. 354 of 1998, 375 of 1998, 1 of 1999 and 271 of 2009
P.B. Majmudar, R.M. Savant
N.H. Seervai, Sharan Jagtiani, Gulnar Mistry, Shaukat Merchant instructed by M/s. M & M Legal Ventures for petitioners; Parag Tripathi, Additional Solicitor General, Dr. G.R. Sharma, Amar Ahluwalia, Kunal Bahri, Vinod Joshi, Purnima Awasthi for respondents
Indian Drugs Manufacturers Association & Ors.
Subscribe to unlock Case Details (Citation, Judge, Date & more)
Subscribe Now
Nature of Litigation
Writ petition under Article 226 of Constitution of India challenging the legality of show cause notices issued by Respondents to members of Petitioners under paragraph 7(2) of Drugs (Prices Control) Order, 1979, after its repeal, seeking information for determination of liability to deposit amounts in the Drug Prices Equalisation Account.
Remedy Sought
Petitioners sought declaration that the impugned notices are without authority of law, ultra vires the DPCOs and Constitution, and sought quashing of such notices under Article 226.
Filing Reason
Respondents issued multiple show cause notices to drug manufacturers (members of Petitioner associations) demanding details for determination of alleged liabilities under DPCO 1979 for period 1979-1987; Petitioners contended that after repeal of DPCO 1979, no power survived to issue such notices and recover amounts.
Previous Decisions
Not mentioned in the provided text. However, reference made to Union of India v. Cynamide India Limited, (1987) 2 SCC 720, wherein Supreme Court upheld validity of DPCO 1979 and price fixation, leading Government to claim recoveries.
Issues
Whether Respondents have power and authority to issue notices under paragraph 7(2) of DPCO 1979 read with DPCO 1987/1995 after repeal of DPCO 1979
Whether recovery of amounts under DPCO 1979 can be enforced after its repeal in light of savings clauses in subsequent DPCOs
Whether impugned notices violate Articles 14, 265, and 300A of Constitution
Submissions/Arguments
Petitioners: Impugned notices are without authority of law as DPCO 1979 repealed, recovery cannot be initiated; notices are ultra vires Constitution.
Respondents: Liabilities accrued under DPCO 1979 survived repeal; Government entitled to recover undisputed amounts under savings provisions of subsequent DPCOs.
Judgment Excerpts
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.
By the said notice, which is in the nature of a show cause notice, the members were directed to furnish details in the enclosed format for the purposes of determining the liability of the concerned Company, if any, under paragraph 7 (2) of the DPCO, 1979.
Procedural History
Writ Petition No. 2368 of 1996 filed; Respondents filed affidavit-in-reply dated 29 July 1998; Notices of Motion Nos. 354/1998, 375/1998, 1/1999, 271/2009 filed; Judgment reserved on 30 September 2011; pronounced on 22 December 2011.
Acts & Sections
- Essential Commodities Act, 1955: Section 3
- Drugs (Prices Control) Order, 1979: paragraphs 7(2), 10, 17, 25, 33
- Drugs (Prices Control) Order, 1987: paragraphs 14, 22, 30
- Drugs (Prices Control) Order, 1995: paragraphs 12, 20, 27
- Constitution of India: Articles 14, 265, 300A
- Companies Act, 1956: Section 25
- Societies Registration Act, 1860:
- Bombay Public Trusts Act, 1950:
