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TMI Blog2015 (7) TMI 1421X X X X Extracts X X X X X X X X Extracts X X X X ..... CO-2013 - It is evident from the First Schedule that it contains the formulations of which strength and dosage have been specified as well as the formulations of which strength and dosage have not been specified. Para 2(1)(zb) defines scheduled formulations as formulation included in the First Schedule whether referred to by generic versions or brand name. Thus, it is clear that all formulations that are included in the First Schedule, irrespective of specification of strength and dosages, are scheduled formulations . In other words, scheduled formulations include non-scheduled formulations. On a combined reading of Para 4, Para 2(1)(d) and Para 2(1)(zb), it appears that the specification of dosage and strength in the First Schedule has a specific bearing with regard to fixation of ceiling price under DPCO-2013. The words in the definition of ceiling price under Para 2(1)(d) i.e. in accordance with the provisions of this order make the intention of the Legislature abundantly clear and that the same shall be given due weight while implementing the provisions of DPCO-2013 - It is pertinent to note that DPCO-2013 contains a different method of regulation so far as non-scheduled formul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #39;BLE THE CHIEF JUSTICE AND HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW For the Appellant : Mr. Kapil Sibal & Mr. Arvind Nigam, Sr. Advs. with Mr. Jawahar Lal, Mr. Amar Gupta and Mr. Raghav G., Advs. For the Respondent : Mr. Sanjay Jain, ASG with Mr.Akshay Makhija, Mr. Kirtiman Singh, Mr.Vidur Mohan, Mr.Gyanesh Bhardwaj, Mr.Mansimran Singh, Ms. Noor Anand, Mr.Waize Ali Noor, Ms. Mahima Bahl and Mr.Rohitendra Deb, Advs. for UOI. ORDER MS. G. ROHINI, CHIEF JUSTICE 1. Whether fixation of ceiling price under the provisions of the Drugs (Prices Control) Order, 2013 for male contraceptives (condoms) is in conformity with the powers vested under the Essential Commodities Act, 1955 read with the Drugs and Cosmetics Act, 1940 is the question that requires consideration in these two writ petitions. 2. The petitioners in both the writ petitions are the companies engaged in manufacturing/marketing of various health products including male contraceptives (Condoms). It is pleaded that the petitioner in W.P. No.7705/2013 manufactures and markets "condoms" under the brand name "Durex‟ and "Kohinoor‟, whereas the petitioner in W.P. No.2245/2014 manufactures and markets under the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve remedy of Review is available under Paragraph 31 of DPCO, 2013. 7. Both the objections raised by the respondents, according to us, are untenable since the order dated 10.07.2014 came to be passed during the pendency of the writ petition, particularly in terms of the liberty granted by this Court to the petitioner to file the Review under Paragraph 31 of the DPCO, 2013. That apart, the main contention in the writ petition is that the very inclusion of the "condoms‟ within the purview of DPCO, 2013 is beyond the powers conferred under the Essential Commodities Act, 1955 apart from being contrary to the National Pharmaceutical Pricing Policy, 2012. Apparently, by virtue of the proposed amendment, the nature of the writ petition has not been altered in any manner whatsoever. Moreover, the proposed amendment is only on account of subsequent developments that took place during the pendency of the writ petition. Hence, we are of the view that the proposed amendment is essential for the purpose of determining the real questions in controversy between the parties and accordingly we allow the amendment as proposed in CM No.10105/2014. 8. It may also be added that the respondents h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed food-crops and for otherwise maintaining or increasing the cultivation of food-crops generally, or of specified food-crops; (c) for controlling the price at which essential commodity may be bought or sold; (d) xxx xxx xxx (e) xxx xxx xxx......................... " 12. The word "essential commodity‟ was initially defined under Section 2(a) of the EC Act, 1955. However, by Amendment Act 54 of 2006, Clause (a) to Section 2 was omitted and Section 2A was inserted providing that the essential commodity means a commodity specified in the Schedule. By virtue of the said amendment, a Schedule was also added to the EC Act, 1955 enumerating the essential commodities. "Drugs‟ is one of the commodities included in the Schedule to the EC Act, 1955 and it is explained that for the purposes of the said Schedule, "drugs‟ has the meaning assigned to it in clause (b) of Section 3 of the Drugs and Cosmetics Act, 1940. Drugs and Cosmetics Act, 1940 13. The Drugs and Cosmetics Act, 1940 has been enacted to regulate the import, manufacture, distribution and sale of drugs and cosmetics. Under Section 3(b) of the Drugs and Cosmetics Act, 1940, the word "drug‟ has been d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; & (xiv) Internal Prosthetic Replacements. 16. Section 12 of the Drugs and Cosmetics Act, 1940 empowers the Central Government to make Rules for the purpose of giving effect to the provisions of Chapter III of the said Act (providing for import of drugs) and such Rules inter alia may specify the drugs or classes of drugs for the import of which a license is required and prescribe the form and conditions of such licenses, the authority empowered to issue the same, the fees payable therefor and etc. Similarly, Section 33 of the Drugs and Cosmetics Act, 1940 empowers the Central Government to make Rules for the purposes of giving effect to the provisions of Chapter IV (which provides for manufactures, sale and distribution of drugs and cosmetics) and such Rules may inter alia prescribe the forms of licenses for the manufacture for sale or for distribution, for the sale and for the distribution of drugs or any specified drug or class of drugs, the form of application for such licenses, the conditions subject to which such licenses may be issued and the matters incidental thereto. 17. In exercise of the powers so conferred by Sections 12 and 33 of the Drugs and Cosmetics Act, 1940, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... List is not intended as an imposition on the rights of State Governments, Government institutions, or private health care providers. It is meant to be used as a guideline to the concept of rational therapeutics and as an indicator of availability in the country. While the drugs selected are considered adequate to treat diseases common to most parts of the country, it is appreciated that specific regional requirements for drugs to treat diseases of local importance may not be available in the National List, and in such instances it will be appropriate for the State Health Administration (adopting the National List) to include drugs as may be considered adequate to treat these diseases. The National Essential Drugs List implies that the drugs included in it are adequate to meet the common contemporary health needs of the general population of the country and general obligation of the health administrators to ensure abundant availability of such drugs in the country. The drugs included in this list are generally safe and effective, and are approved by the Drugs Controller General, India, and are currently available at affordable prices to the general public." 20. The review of Nati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... medicines have been categorized as follows: - P, S and T denote essentiality at Primary, Secondary and Tertiary levels respectively while P, S, T (U in NLEM 2003) indicates essentiality at all the levels. A total of 348 medicines (excluding repetitions) are present in NLEM 2011. In the NLEM 2011, 181 medicines fall under the category of P, S and T, 106 medicines fall under the category of S, T while 61 medicines are categorized as T only. In comparison to NLEM 2003, number of medicines deleted is 47 and 43 medicines have been added." National Pharmaceuticals Pricing Policy 23. Price control over drugs was first introduced in the country in the aftermath of the Chinese aggression with the promulgation of the Drugs (Display of Prices) Order, 1962 and the Drugs (Control of Prices) Order, 1963. These were promulgated under the Defence of India Act. With these orders, the prices of drugs were frozen with effect from 01.04.1963. Thereafter, a series of price control regimes were notified through various orders in the country from time to time based on different principles, in which the span of control of prices as well as the nature of control of prices varied from order to order a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not propose to implement the Drug Policy, 2002. Accordingly, the SLP was disposed of by the Supreme Court on 31.03.2011. 25. Thereafter, the Union of India, Ministry of Chemicals and Fertilizers, Department of Pharmaceuticals published a fresh policy called the National Pharmaceuticals Pricing Policy, 2012 (NPPP, 2012) vide notification dated 07.12.2012 in continuation of the 1994 Policy. 26. The principles for pricing the essential drugs as laid down in the National List of Essential Medicines, 2011 have been promulgated in the NPPP, 2012. It is also specifically laid down in the NPPP, 2012 that the objective of the policy is to put in place a regulatory framework for pricing of drugs so as to ensure availability of the essential medicines at reasonable prices even while providing sufficient opportunity for innovation and competition to support the growth of industry. One of the key principles for regulation of prices in NPPP, 2012 has been mentioned as "essentiality of drugs‟, which is different from the academic criteria/market share principle adopted in the Drug Policy of 1994. The reasons for adoption of the principle of "essentiality‟ as a key criteria have be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y may be bought or sold. In exercise of the powers so conferred by Section 3 of the EC Act, 1955, the Central Government issued the Drugs Prices Control Orders from time to time regulating the prices of drugs following the Drug Policies declared by the Ministry of Chemical and Fertilizers, Department of Pharmaceuticals. 30. In tune with NPPP 2012 which seeks to promulgate the principles for pricing of essential drugs as laid down in the NLEM 2011, the Central Government in exercise of the powers conferred by Section 3 of the EC Act, and in supersession of the Drugs (Prices Control) Order, 1995 made the Drugs (Prices Control) Order 2013 vide S.O.1221(E) dated 15.05.2013 to regulate the prices of drugs and providing inter alia the list of price controlled drugs, procedures for fixation of prices of drugs, method of implementation of prices fixed by the Government, penalties for contravention of provisions, etc. All essential medicines enumerated in NLEM, 2011 are included in the First Schedule to DPCO, 2013 and they are declared as "scheduled formulations" under Para 2(1)(zb) of DPCO, 2013. 31. "Condoms‟ were included in the NELM, 2011 at Item-18.3.3 describing the same as me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nancy are "devices‟ and that by virtue of the notification dated 20.04.2010 issued in terms of Section 3(b)(iv) of the Drugs and Cosmetics Act, 1940, by the Ministry of Health and Family Welfare, Government of India "condoms‟ have been declared as "notified medical devices" and are brought within the definition of "drug‟ under the D&C Act, 1940. In the light of the same, it is pleaded in the writ petitions that though there is no controversy with regard to the position that "condom‟ is a drug within the meaning of Drugs and Cosmetics Act, 1940, the challenge in the writ petitions is to the inclusion of condoms within the purview of DPCO 2013 for the following among other grounds: 35.1 DPCO, 2013 to the extent of including "condoms‟ in Entry 18.3.3 of First Schedule is ultra vires Section 3 of the EC Act, 1955 apart from being contrary to the National Pharmaceutical Pricing Policy, 2012 (NPPP-2012) enunciated by the Central Government. 35.2 Since NPPP 2012 intends to regulate the price of "formulations‟ only and that as per para 2(1)(i) of DPCO 2013 "formulation‟ has been defined as a medicine, it is clear DPCO 2013 is intended to regula ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me was issued on 10.07.2014. 35.8 The average sale price to retailers of the Durex brand condoms is Rs.41.67/- whereas its ceiling price was fixed at Rs.6.56/-. Thus, the petitioner incurs a huge loss. Since the pricing mechanism prescribed in DPCO 2013 does not take into consideration the variation in the raw material used, additional ingredients, processes, additional features, applicable taxes, absence of generic version, etc., the ceiling price fixed for the brands of condoms marketed by the petitioners, which is illogical and irrational, has resulted in an absurd situation. 35.9 Premium condoms manufactured/marketed by the petitioners cannot be treated at par with basic condoms because of the method of manufacture, the technology involved, the ingredients used and research and development preceding the manufacture of such products. The NPPA failed to take into consideration that basic condoms are distributed free or at highly subsidised prices by the Governmental agencies whereas the condoms sold in market by the petitioners are of high end sophisticated version. Hence, the fixation of common ceiling price is violative of Article 14 of the Constitution of India. Though the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssued by the Supreme Court in Union of India vs. K.S. Gopinath (decided on 31.03.2011), revised the National List of Essential Medicines and accordingly, NLEM, 2011 which contains 348 formulations was published by Notification dated 08.06.2011. 36.2 Subsequently, the Central Government enunciated the National Pharmaceuticals Pricing Policy, 2012 (for short "NPPP, 2012‟) which came into effect on 07.12.2012. The said policy is in continuation of the Drug Policy, 1994 and aimed at promulgating the principles for pricing of essential drugs as laid down in NLEM, 2011. One of the objectives of NPPP-2012 is to put in place a regulatory framework for pricing of drugs so as to ensure availability of essential medicines at reasonable prices. 36.3 Key principles for regulation of prices in NPPP, 2012 include "essentiality of drugs‟, which criteria is to be met by considering the list of medicines specified in the NLEM, 2011. 36.4 Accordingly, the new Drug Prices Control Order i.e. DPCO, 2013 was notified on 15.05.2013 covering a large number of essential/life saving drugs in larger public interest. Thus, all formulations included in NLEM, 2011 have been included in the Firs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in many developing countries, the need for family planning and reproductive health medicines and services persists. At least 200 million women of reproductive age worldwide would like to prevent or space their births but are not using effective contraception. It also has been estimated that expanding contraceptive services to meet the needs of couples who wish to avoid pregnancy but currently are not using contraception could prevent as many as 850,000 deaths per year amongst children under age five. (d) Furthermore, every year there are an estimated 120 million unwanted pregnancies, resulting in 46 million abortions, 20 percent of which are unsafe and lead to severe morbidity and mortality for women. For example, unsafe abortion accounts for 13 percent of maternal deaths. (e) The spread of HIV has a tremendous impact on both national economies and household income. Households affected by HIV infection and AIDS are more likely to be poor than those not affected. The care and treatment of individuals with HIV, as well as the lost income when complications of AIDS make it impossible for the infected individual to work, can shrink household income by 66 to 80 percent. (f) If es ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioners 37. We have heard Shri Kapil Sibal, Shri Arvind Nigam and Shri Arvind Datar, the learned Senior Counsels appearing for the petitioners at length, and their submissions are as follows. 37.1 "Condoms‟ are not "drugs‟ as defined under the Drugs and Cosmetics Act, 1940 and consequently the same cannot be considered as "Essential Commodity‟ under Section 2A of EC Act read with the Schedule thereto. Therefore, inclusion of condoms in the First Schedule to DPCO, 2013 is ultra vires the EC Act. (a) Elaborating the above contention, it is submitted by Shri Kapil Sibal, the learned Senior Counsel that the expression "drug‟ as defined under Section 3 (b) of Drugs and Cosmetics Act, 1940 covers four categories namely (i) all medicines used for internal and external use of human beings and animals and all substances intended to be used for diagnosis, treatment, mitigation or prevention of any disease or disorder, (ii) such substances which are intended to effect the structure or function of the human body or intended to be used for destruction of vermin or insects as may be notified by the Central Government in the Official Gazette (iii) all substances which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tracted since "condom‟ is only an end product. (f) Coming to Section 3(b)(iv), the pleading in the writ petitions was that condom, which is a device, has been specified as a "drug‟ by notification dated 20.04.2010 issued by the Ministry of Health & Family Welfare, Government of India. However, placing reliance upon a subsequent Office Order dated 09.07.2014, it is contended by the learned Senior Counsel that the earlier Notification dated 20.04.2010 stood modified and "condom‟ can no longer be considered as a notified device. The learned Senior Counsel would also contend that by virtue of the order dated 09.07.2014, "condoms‟ cannot even be regulated under the Drugs and Cosmetics Act, 1940 with effect from 09.07.2014 and therefore renewal of licenses obtained under the Drugs and Cosmetics Act, 1940 is also not necessary. (g) For the aforesaid reasons, it is contended that condoms not being essential commodities, inclusion of condoms within DPCO, 2013 is ultra vires the EC Act, 1955. 37.2 Without prejudice to the above submission, it is contended that "condoms‟ cannot be considered as "drugs‟ even in terms of Section 3(b)(iv) of the Drugs an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ready been addressed since the Government itself distributes 55% of the condoms free or at highly subsidised prices. It is also contended that 93.97% of condoms are available at below ceiling price even before the issuance of DPCO, 2013. Therefore, according to the petitioners, the essential pre-condition for issuing a Control Order providing for controlling the price of the condoms in exercise of the powers under Section 3 of the Essential Commodities Act, 1955 is not satisfied at all. 37.4 Since the scope of DPCO, 2013 is restricted to "formulations‟ as defined in Para 2 (1) (i) which means a medicine processed out of or containing in one or more drugs, "condom‟ which is only a barrier device but can under no circumstances be considered as a medicine does not fall within the definition of "formulation‟ and consequently inclusion of the condoms in the First Schedule to DPCO, 2013 is contrary to NPPP-2012. (a) It is contended that DPCO, 2013 does not include all "drugs‟ as defined under Section 3 (b) of Drugs and Cosmetics Act, 1940, within the scope of price control/regulation but the scope is restricted only to "formulations‟ as defined in Para-2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ms do not have dosage and strength. (a) Having regard to the admitted fact that the strength and dosages are not prescribed in respect of condoms in the First Schedule to DPCO, 2013, particularly in view of the fact that in case of condoms which are medical devices the raw material, process, features and etc., would differ, the learned Senior Counsel would contend that the methodology prescribed in Paragraph-4 is unworkable. It is also contended that while fixing the ceiling price by the impugned orders none of the mandatory provisions of DPCO, 2013 were followed. It is further contended that in respect of medical devices like condoms, no collated data was available with IMS Health while issuing the impugned price fixation orders. 37.7 Since the branded condoms manufactured and marketed by the petitioners are pleasure/poly isoprene condoms, i.e. an advanced version of pleasure condoms and thus form a distinct and separate class from the basic/utility condoms, fixation of a common ceiling for both the categories is violative of Article 14 of the Constitution of India. (a) The learned senior counsel further submitted that even assuming without conceding that the inclusion of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... powers conferred by the Drugs and Cosmetics Act, 1940, Rules called Drugs and Cosmetics Rules are made laying down the conditions for obtaining the licenses and renewals for the manufacture of drugs and that Rule 125 (set out in Part XII) read with Schedule-R of the said Rules specifies the standards of drugs as well as the standards to be observed in the manufacture of contraceptive. It is submitted by the learned ASG that the petitioners being the licensees for manufacture/marketing of condoms granted under the Drugs and Cosmetics Act and the Rules made thereunder cannot now contend that the very product in respect of which they have sought and obtained permission from time to time is not a drug. 38.2 Referring to Chimmanlal Jagjivandas Seth vs. State of Mahara, AIR 1963 SC 665 wherein gauze was held to be a "drug‟ and Ponds Ind. Limited vs. CIT, (2008) 8 SCC 369 wherein Vaseline Petroleum Jelly was held to be a drug, the learned ASG contended that the definition of "drug‟ under the Drugs and Cosmetics Act must be construed widely and extensively in view of the inclusive nature of the legislative mandate and keeping in mind the objective of the statute. 38.3 In v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of EC Act and DPCO, 2013 prohibits any sub-category in medicines on the basis of any consideration of "luxury‟ or "lifestyle‟. 38.9 It is further contended that in examining any price fixation order, the primary consideration shall be that of the interests of the consumer and as such interference by this Court is warranted only where Control Order is vitiated by palpable unreasonableness or arbitrariness. 38.10 Rebutting the contention on behalf of the petitioners that issuance of Control Order is not warranted for price fixation of the condoms under Section 3 of the EC Act, it is contended that as per Section 3(1) of EC Act, the shortage of a product is not the sine qua non for exercise of the power to issue the control orders. Thus, it is submitted that the fact that 55% of the condoms used in India are either distributed free of cost or at highly subsidised rates cannot be a valid ground to contend that there cannot be price fixation for the products of the petitioners. 38.11 Finally, it is submitted by the learned ASG that no price control orders can be held to be vitiated merely on account of the alleged loss caused to an individual stakeholder. In support o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng to the respondents the same is of no consequence to treat the condoms as a "drug‟ having regard to the fact that even empty gelatin capsules are to be treated as drugs under Section 3(b)(iii) and various uses of condoms include mitigation and prevention of diseases or disorders in human beings. Pointing out that "condoms‟ have been included in the National List of Essential Medicines (NLEM) from the year 2003 onwards treating the same as essential medicines the learned ASG would further contend that the contraceptives in the form of condoms play a crucial role both for increasing the reproductive health and decreasing and preventing innumerable life threatening diseases and therefore they are always considered to be "medicines‟. The learned ASG has also pointed out that the petitioners are holders of the licences for manufacturing/marketing and import of drugs under the Drugs and Cosmetics Act, 1940 read with the Rules made thereunder and that they have been manufacturing/marketing the condoms treating the same as "drugs‟. 42. Thus, it is vehemently contended by the learned ASG that the assertion on the part of the petitioners that condoms are neither me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e petitioners on the basis of the Office Order dated 09.07.2014 issued by the Directorate General of Health Services, Ministry of Health and Family Welfare and it is sought to be contended that by virtue of the said Office Order "condom" has to be treated as a non-notified device w.e.f. 09.07.2014 and thus it can no longer be considered as a drug under Section 3(b)(iv) of the Drugs and Cosmetics Act, 1940 and it cannot even be regulated under the said Act. 46. Having carefully gone through the two orders dated 20.04.2010 and 09.07.2014 relied upon by the petitioners, we are unable to hold that the said orders are the notifications issued under Section 3(b)(iv) of the Drugs and Cosmetics Act. On a perusal of the same, it appears to us that the said orders were issued by the Central Drugs Standards Control Organization, Directorate General of Health Services, Ministry of Health and Family Welfare in a different context for the purpose of regulation of import and manufacture, sale or distribution of the drugs. 47. It may be added that the respondents never pleaded that condoms are notified devices under Section 3(b)(iv) and thus fall within the definition of "drugs" under the Drugs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eptives Medicine Category Route of Administration/ Dosage Form Strengths 18.3 Contraceptives 18.3.1 Hormonal Contraceptives Ethinylestradiol + Levonorgesterol U Tablets .03 mg + 0.15 mg Ethinylestradiol + Norethisterone U Tablets 0.035 mg + 1.0 mg Hormone Releasing IUD T Levonorgesterol Releasing IUD 18.3.2 Intrauterine Devices IUD containing Copper U 18.3.3 Barrier Methods Condoms U 18.3.4 Non Hormonal Contraceptive Centchroman U Tablets 30 mg (b) Evidently, condom is one of the forms of contraceptives. Similarly "intra uterine device" included in Entry 18.3.2 is another form of contraceptive. "Hormonal contraceptives" and "non-hormonal contraceptives" which are in the form of tablets are included in Entries 18.3.1 & 18.3.4. Irrespective of the fact whether contraceptives are in the form of devices or in the form of tablets, all of them are treated as medicines since the purpose of all forms of contraceptives is reproductive and fertility regulation and safe motherhood. The importance of condoms as effective contraceptives has been highlighted by various International Health Organizations and adopting the guiding principles laid down by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the standards for substances which are intended to affect the structure or any function of human body and included contraceptives in that category. As pleaded by the petitioners themselves, condoms act as a physical barrier and thus protect from STI, unwarranted pregnancy and etc. That itself shows that condom affects the functions of human body. Therefore, it is difficult for us to agree with the contention of the petitioners that condoms are different from the mechanical contraceptives described under Rule 125 of the Drugs and Cosmetics Rules, 1945. In this regard, we may refer to the decision in Chhimanlal Jagjivandas Sheth (supra) wherein absorbent cotton wool, roller bandages and gauze were held to be "drugs" within the meaning of Section 3(b) of the Drugs and Cosmetics Act, 1940. While holding that the said articles are "substances" used for or in the treatment within the meaning of Section 3(b) and that the definition of "drug" is comprehensive enough to take in not only medicines but also substances intended to be used for or in the treatment of diseases of human beings or animals, the Supreme Court observed - "This artificial definition introduces a distinction between ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion is an extensive one. It even applies to preparations applied on human body for the purpose of killing insects like mosquitoes, which per se does not have any medicinal or any value for curing any disease or disorder in human beings." (f) In the light of legal position noticed above, it can safely be concluded that condoms are medicines as well as substances for use of human beings for mitigation or prevention of a disease or disorder in human beings as provided under Section 3(b)(i) of the Drugs and Cosmetics Act, 1940. 51. In view of our conclusion that Section 3(b)(i) of the Drugs and Cosmetics Act, 1940 is attracted and not Section 3(b)(iv) it is not necessary for us to go into the further contention of the petitioners that no device can be brought within the definition of "essential commodities‟ under Section 2(a) (iva) of the EC Act, 1955 since Clause (iv) to Section 3(b) of the Drugs and Cosmetics Act, 1940 was not existing as on 29.08.1974, i.e., the date on which "drugs‟ were included in the definition of "essential commodity‟ under EC Act, 1955. 52. For the aforesaid reasons, we answer point No.1 holding that condoms are drugs within the definiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so to do for maintaining or increasing the supplies of any essential commodity or for securing their equitable distribution and availability at fair prices. The contention of the petitioners is that none of the circumstances specified in Section 3 is existing so far as condoms are concerned. 57. The said contention is sought to be rebutted by the learned ASG contending that even assuming that the plea of the petitioners that 55% of the condoms are distributed free in India or at highly subsidized rate is correct, there is still a huge gap of 45% of the demand and the same has to be met at fair prices considering the fact that India is among the countries with highest number of HIV/AIDS affected population. Placing reliance upon NPPP-2012, the learned ASG further contended that the policy decision of the Government to control the ceiling price of all the essential medicines included in NLEM-2011, including condoms, warrants no interference. 58. Admittedly DPCO, 2013 has been issued in tune with the policy decision of the Central Government vide NPPP-2012. The judicial review with such policy matters is unwarranted as held by the Apex Court in various decisions. 59. For the purpos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stry and in what manner the policy should be formulated and implemented, bearing in mind the fundamental object of the statute, viz., supply and equitable distribution of essential commodity at fair prices in the best interest of the general public, is a matter for decision exclusively within the province of the Central Government. Such matters do not ordinarily attract the power of judicial review." 61. In Dhampur Sugar (Kashipur) Ltd. v. State of Uttaranchal, (2007) 8 SCC 418 the scope of judicial review in policy matters has been reiterated observing:- "63. In our judgment, it is well settled that public authorities must have liberty and freedom in framing policies. No doubt, the discretion is not absolute, unqualified, unfettered or uncanalised and judiciary has control over all executive actions. At the same time, however, it is well established that courts are ill-equipped to deal with these matters. In complex social, economic and commercial matters, decisions have to be taken by governmental authorities keeping in view several factors, and it is not possible for courts to consider competing claims and conflicting interests and to conclude which way the balance tilts. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; and (iii) any substance to which the provisions of the Drugs and Cosmetics Act, 1940 (23 of 1940) do not apply. 2(1)(v) "non-scheduled formulation‟ means a formulation, the dosages and strengths of which are not specified in the First Schedule. 2(1)(zb) "scheduled formulation‟ means any formulation, included in the First Schedule whether referred to by generic versions or brand name." 65. Paragraph 4 of the DPCO 2013 which provides for calculation of ceiling price of a scheduled formulation and Paragraph 14 which provides for fixation of ceiling price of scheduled formulation may also be reproduced hereunder: "4. Calculation of ceiling price of a scheduled formulation.- (1) The ceiling price of a scheduled formulation of specified strengths and dosages as specified under the First Schedule shall be calculated as under: Step 1. First the Average Price to Retailer of the scheduled formulation i.e. P(s) shall be calculated as below: Average Price to Retailer, P(s) = (Sum of prices to retailer of all the brands and generic versions of the medicine having market share more than or equal to one per cent of the total market turnover on the basis of moving annu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expressed that "condom‟ is a medicine, it has to follow that it is a "formulation‟ within the definition of Para 2(1)(i). 68. Then the next question would be whether ceiling price can be fixed for condoms under Para 4 of DPCO-2013 since the dosage and strength of the condoms have not been specified in Entry 18.3.3. 69. It is submitted by the learned counsels appearing on behalf of the petitioners that since dosage and strength have not been prescribed in the First Schedule for condoms, they can be considered only as "non-scheduled formulations‟ as defined in Para 2(1)(v) and therefore Para 4 of DPCO-2013 which provides for calculation of ceiling price of only "scheduled formulations‟ is not applicable at all. Pointing out that Paragraphs 4, 5, 6, 13 and 14 of DPCO-2013 exclusively deal with "scheduled formulations‟, the learned senior counsels appearing for the petitioners contended that DPCO-2013 does not contemplate price fixation of "condoms‟ which are admittedly "non-scheduled formulations‟. It is also contended that the condom is not a generic name for a medicine but it is the name of a device and therefore, on that ground also it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mulations that are included in the First Schedule, irrespective of specification of strength and dosages, are "scheduled formulations‟. In other words, scheduled formulations include non-scheduled formulations. 74. It may be added that though the definition of "ceiling price‟ under Para 2(1)(d) does not draw any distinction between "scheduled formulations‟ and "non-scheduled formulations‟, Para 4 makes it clear that the ceiling price thereunder can be fixed only for "scheduled formulations‟ of specified strength and dosages as specified under the First Schedule. 75. On a combined reading of Para 4, Para 2(1)(d) and Para 2(1)(zb), it appears to us that the specification of dosage and strength in the First Schedule has a specific bearing with regard to fixation of ceiling price under DPCO-2013. We are of the view that the words in the definition of "ceiling price‟ under Para 2(1)(d) i.e. "in accordance with the provisions of this order‟ make the intention of the Legislature abundantly clear and that the same shall be given due weight while implementing the provisions of DPCO-2013. 76. It may be added that Para 5 which provides for calculat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t were listed in the NLEM-2011 have been included in the First Schedule to DPCO-2013 so as to regulate the prices of the same. However, the question that arises for consideration is whether ceiling price can be fixed by the NPPA for all the formulations/medicines included in the First Schedule to DPCO-2013 ignoring the legislative intention that the said power be not extended to some of the formulations. Considering an identical issue, the Supreme Court in Secretary, Ministry of Chemicals and Fertilizers, Government of India Vs. CIPLA Ltd (supra) held that the contents of the policy documents cannot be read and interpreted as statutory provisions and that too much of legalism cannot be imported in understanding the scope and meaning of the clauses contained in policy formulations. It was also added that the Government exercising its delegated legislative power should make a real and earnest attempt to apply the criteria laid down by itself as a policy maker and that the delegated legislation that follows the policy formulation should be broadly and substantially in conformity with that policy, otherwise it would be vulnerable to attack on the ground of arbitrariness resulting in vi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uthority making the delegated legislation to follow the policy formulation broadly and substantially and in conformity therewith. 80. In S. Samuel Vs. Union of India, (2004) 1 SCC 256, the State of Tamil Nadu, in exercise of the powers delegated by the Central Government by issuing a notification under Section 5 of the Essential Commodities Act, promulgated TN Scheduled Articles (Prescription of Standards) Order, 1997 for the purpose of maintaining and raising the standards of quality of supply and sale of certain essential articles including Tea. The constitutional validity of the said order was challenged by the petitioners insofar as its applicability to Tea is concerned. Though the writ petition was dismissed by the High Court of Madras, the appeal was allowed by the Supreme Court holding "As we have held that the State of Tamil Nadu could not have promulgated an order under Section 3 of the EC Act in the purported exercise of the power delegated by the Central Government to make an order applicable to tea, by wrongly assuming tea to be a foodstuff. The several provisions of the Tamil Nadu Scheduled Articles (Prescription of Standards) Order, 1977, must be held to be ultra v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ;-vis policy decision. 85. Accordingly, we declare that the Orders of NPPA dated 05.11.2013 and 10.07.2014 are illegal and unsustainable. In the result, both the said Orders are hereby set aside. 86. It appears that after we reserved the judgment, the Government of India, Ministry of Chemicals and Fertilizers, by Notification dated 09.03.2015 made an amendment to the DPCO-2013 by substituting the definition of "non-scheduled formulation‟ in Para 2(1)(v). The said fact was brought to our notice on 03.07.2015 by Shri Kirtiman Singh, the learned standing counsel for Union of India and a copy of the Notification dated 09.03.2015 has also been made available. As we could see, the Notification dated 09.03.2015 was published in the Gazette of India vide No. S.O.1221(E) dated 15.05.2015 and by virtue of the said amendment dated 09.03.2015, Para 2(1)(v) of DPCO-2013 reads as under: "(v) "non-scheduled formulation‟ means a formulation which is not included in Schedule-I." 87. In view of the undisputed fact that the said amendment has come into operation from the date of publication, i.e. 15.05.2015, the same has no bearing for determining the validity of the Orders impugned ..... X X X X Extracts X X X X X X X X Extracts X X X X
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