1991 (1) TMI 465 - SC - Indian Laws

Summary

Issues Involved:
1. Alleged contravention of para 21 read with para 18 of the Drugs (Prices Control) Order, 1979.
2. Correctness of the High Court's construction of the provisions of the Drugs (Prices Control) Order, 1979.
3. Applicability of para 21 to formulations not specified in the Third Schedule.
4. Definition and classification of 'bulk drug' and 'formulation'.
5. Appropriate course of action considering the lapse of time and other defenses.

Issue-wise Detailed Analysis:

1. Alleged Contravention of Para 21 Read with Para 18 of the Drugs (Prices Control) Order, 1979:
The respondents were found guilty by the trial court for selling medicines at prices exceeding the maximum retail price fixed under the Drugs (Prices Control) Order, 1979, which is punishable under Section 7 of the Essential Commodities Act, 1955. The trial court convicted the respondents, sentencing the firm to a fine and the managing partner and pharmacist to imprisonment. However, the High Court acquitted the respondents, concluding that the alleged contravention was not established under the said provisions.

2. Correctness of the High Court's Construction of the Provisions of the Drugs (Prices Control) Order, 1979:
The High Court held that the medicines in question, Largactil and Hipnotex, were bulk drugs and not formulations, and thus, the prohibition in para 21 did not apply. The Supreme Court found this interpretation incorrect, emphasizing the need to correctly construe the provisions of the Order for future guidance. The Supreme Court held that the High Court's construction was a mis-reading of the material provisions of the Order.

3. Applicability of Para 21 to Formulations Not Specified in the Third Schedule:
The Supreme Court clarified that para 18 of the Order makes the provisions applicable to formulations not specified in the Third Schedule, except for paragraphs 10 to 14. Therefore, para 21, which controls the sale prices of formulations, applies to all formulations, including those not specified in the Third Schedule. The contrary view would render the price fixation exercise futile.

4. Definition and Classification of 'Bulk Drug' and 'Formulation':
The Supreme Court analyzed the definitions provided in para 2 of the Order. A 'bulk drug' is any substance used as such or as an ingredient in any formulation. A 'formulation' is defined as any medicine processed out of or containing one or more bulk drugs. Thus, the definitions are broad, and the medicines in question, Largactil and Hipnotex, fall within the definition of 'formulation'. The High Court's view that these medicines were merely bulk drugs and not formulations was incorrect.

5. Appropriate Course of Action Considering the Lapse of Time and Other Defenses:
The Supreme Court acknowledged the lapse of several years since the alleged offense and the fact that the High Court did not consider other defenses raised by the respondents. It was deemed inappropriate to send the case back to the High Court for further consideration, as it would prolong the trial. The Supreme Court decided not to interfere with the acquittal but clarified the correct interpretation of the provisions for future cases.

Conclusion:
The Supreme Court rejected the High Court's construction of the provisions of the Drugs (Prices Control) Order, 1979, holding that the allegations, if proved, would amount to a contravention of para 21 read with para 18, punishable under Section 7 of the Essential Commodities Act, 1955. However, due to the lapse of time and other considerations, the Supreme Court did not interfere with the acquittal of the respondents. The appeal was disposed of accordingly.