Drugs and Cosmetics Act, 1940: s.26-A – Notification dated 27.04.2018 issued under s.26A of the Act by the Ministry of Health and Family Welfare – Validity of Notification challenged in these appeals – Impugned Notification restricts the manufacture of Oxytocin formulations for domestic use, only by public sector undertakings or companies, to the complete exclusion of the private sector companies while the manufacture of the drug for export purposes is kept open to both public and private sector companies – Held: These appeals raise serious issues having far reaching implications – The substantial questions of law which arose for consideration are: Whether a drug included in the National List of Essential Medicines published under Schedule 1 of the Drugs (Prices Control) Order, 2013 notified under s.3 of the Essential Commodities Act, 1955 would be subject to the provisions of s.26A of the Act; Whether the impugned notification has resulted in creating a monopoly in favour of public sector companies, to the complete exclusion of private sector companies, and if so, whether it would be protected by Art.19(6)(ii) r/w Art.14 of the Constitution; Whether the classification made by the impugned notification between licensed public sector and private sector companies, in the manufacture of the drug Oxytocin for domestic use, would achieve the object and purpose of preventing the unregulated and illegal use of the drug – Whether it would be in public interest to restrict the manufacture of a life-saving drug for domestic use, to a single public sector undertaking, to the complete exclusion of the private sector companies, particularly in view of the high maternal mortality rates in the country; Whether there was relevant and objective material before the Central Government to form the basis of satisfaction to exercise the power to prohibit the manufacture of the drug by the private sector companies for domestic use, under s.26-A of the Act; Whether the object of curbing the clandestine manufacture and unregulated use of the drug Oxytocin, which is covered by s.18 of the Act, can be achieved by taking recourse to s.26-A by imposing a ban on the manufacture of licensed drugs by private sector companies; Whether the exercise of power by the Central Government under s.26-A of the Act is legislative or executive in nature – Matter is referred to a larger Bench to consider these questions of law.
Drugs and Cosmetics Act, 1940: s.26-A – Power of Central Government under – Notification dated 27.04.2018 issued under s.26-A by the Ministry of Health and Family Welfare – Legality of Notification – Held: There is no decision so far on issue as to whether the nature of powers exercised by the Central Government under s.26-A of the Act is legislative or executive – If the exercise of power under s.26-A is held as being legislative in nature, the parameters to examine the legality of the impugned notification would be different whereas if it is held to be executive in nature, the parameters would be somewhat different than the former one – The decision either way on any of these questions will have its far reaching effect on the rights and health of public at large and especially on the rights and health of the teenage girls, pregnant females and milching animals – In effect, it will not be a judgment inter party but it will be in rem laying down the law on the questions – Public Health Administration. (Abhay Manohar Sapre, J.)
Referring the matter to larger Bench, the Court
HELD:
Per INDU MALHOTRA, J.
1. The present group of appeals raise serious issues having far reaching implications. The twin issues which arise for consideration are on the one hand, the unregulated and clandestine manufacture of the drug Oxytocin, which is reportedly misused in milch animals; and on the other hand, the continued supply of an essential life-saving drug, which is used as the first line drug for prevention and treatment of post-partum haemorrhage at the time of childbirth. The following substantial questions of law arose for consideration: Whether a drug included in the National List of Essential Medicines published under Schedule 1 of the Drugs (Prices Control) Order, 2013 notified under Section 3 of the Essential Commodities Act, 1955 would be subject to the provisions of Section 26A of the Drugs and Cosmetics Act, 1940? Whether the impugned notification has resulted in creating a monopoly in favour of public sector companies, to the complete exclusion of private sector companies, and if so, whether it would be protected by Article 19(6)(ii) read with Article 14 of the Constitution? Whether the classification made by the impugned notification between licensed public sector and private sector companies, in the manufacture of the drug Oxytocin for domestic use, would achieve the object and purpose of preventing the unregulated and illegal use of the drug? Whether it would be in public interest to restrict the manufacture of a life-saving drug for domestic use, to a single public sector undertaking, to the complete exclusion of the private sector companies, particularly in view of the high maternal mortality rates in the country? Whether there was relevant and objective material before the Central Government to form the basis of satisfaction to exercise the power to prohibit the manufacture of the drug by the private sector companies for domestic use, under Section 26A of the Drugs and Cosmetics Act, 1940? Whether the object of curbing the clandestine manufacture and unregulated use of the drug Oxytocin, which is covered by Section 18 of the Drugs and Cosmetics Act, 1940, can be achieved by taking recourse to Section 26A by imposing a ban on the manufacture of licensed drugs by private sector companies? Whether the exercise of power by the Central Government under Section 26A of the Drugs and Cosmetics Act, 1940 is legislative or executive in nature? This is a fit case to refer the matter to a larger Bench of three Judges to consider these questions of law. [Paras 12, 13] [204-B-H; 205-A-C] Narang Medical Store v. Union of India [W.P.(C) No. 7135/2014] ; Akadasi Pradhan v. State of Orissa AIR 1963 SC 1047 : [1963] Supp (2) SCR 691 ; State of T.N. v. P. Krishnamurthy (2006) 4 SCC 517 : [2006] 3 SCR 396 ; UOI v. Cynamide India Pvt. Ltd. 1987 (2) SCC 720 : [1987] 2 SCR 841 ; E Merck (India) Limited v. UOI 2001 (90) DLT 16 ; Macleods Pharmaceuticals Limited v. UOI 2012 SCC Online Mad 1735 ; Drug Controller General of India v. West Bengal Small Scale Manufacturers AIR 2000 Cal 133 ; Uni-San
Pharmaceuticals Ltd.& Anr. v. UOI AIR 2002 Ker 72 : (2001) 1 KLJ 822 ; Union of India v. Pfizer Ltd.(2018)
2 SCC 39 : [2017] 12 SCR 179 ; Khoday Distilleries Ltd. v. State of Karnataka (1996) 10 SCC 304 : [1995]
6 Suppl. SCR 759 ; Shimnit Utsch India (P) Ltd. v. West Bengal Transport Infrastructure Development Ltd. & Ors. (2010) 6 SCC 303 : [2010] 6 SCR 1110 ; Directorate of Film Festivals v. Gaurav Ashwin Jain & Ors. (2007) 4 SCC 737 : [2007] 5 SCR 7 ; Academy of Nutrition Improvement v. Union of India (2011) 8 SCC
274 : [2011] 8 SCR 680 ; Vincent Panikurlangara v. Union of India (1987) 2 SCC 165 : [1987] 2 SCR 468 ; Systopic Laboratories v. Dr. Prem Gupta (1994) Suppl.
1 SCC 160 : [1993] 2 Suppl. SCR 385 ; Akadasi Pradhan v. State of Orissa [1963] Supp 2 SCR 691 : AIR 1963 SC 1047 Khoday Distilleries Ltd. v. State of Karnataka (1995) 1 SCC 574 : [1994] 4 Suppl. SCR
477 ; Daruka & Co v. Union of India & Ors. (1973) 2 SCC 617 : [1974] 1 SCR 570 ; Indian Drugs &
Pharmaceuticals Ltd. v. Punjab Drugs Manufacturers Assn. (1999) 6 SCC 247 ; Municipal Committee, Amritsar v. State of Punjab (1966) 1 SCC 475 : [1969]
3 SCR 447 ; Court On Its Own Motion v. State of Himachal Pradesh CWPIL No. 16 of 2014 Rai Sahab Ram Jawaya Kapur & Ors. v. State of Punjab [1955] 2 SCR 225 – referred to.
Per ABHAY MANOHAR SAPRE, J. (Concurring)
1. Having regard to the nature of controversy and the myriad issues, which arose in these appeals, they have far reaching consequences on the rights of the citizens qua State and, in particular, the abstract legal issues such as what is the nature of powers exercised by the Central Government under Section 26A of the Drugs and Cosmetics Act, whether it is legislative or executive, because there is no decision of this Court so far on this issue. Secondly, what are the essential ingredients for invoking the powers under Section 26-A of the Drugs and Cosmetics Act in relation to any Drug and whether such power is in conflict with the exercise of powers conferred under the Essential Commodities Act. Thirdly, whether issuance of impugned notification has resulted in creating monopoly (whether partial or full) in favour of the State and, if so, whether it has satisfied the rigor of Article 14 read with Article 19(6)(ii) of the Constitution of India. Lastly, depending upon the answer to the nature of exercise of powers under Section 26-A of the Drugs and Cosmetics Act, whether material relied on by the Central Government can be held as sufficient to sustain the impugned action. [Paras 3-6] [205-F-H; 206-A-B]
Union of India vs Pfizer Ltd.(2018) 2 SCC 39 : [2017]
12 SCR 179 – relied on
2. If the exercise of power under Section 26-A of the Drugs and Cosmetics Act is held as being legislative in nature, the parameters to examine the legality of the impugned notification would be different whereas if it is held to be executive in nature, the parameters to examine the legality of impugned notification would be somewhat different than the former one. The decision either way on any of these questions will have its far reaching effect on the rights and health of public at large and especially on the rights and health of the teenage girls, pregnant females and milching animals. It will also decide the scope of the powers of the Central Government under Section 26-A of the Drugs and Cosmetics Act qua the rights of the persons, who are engaged in business of manufacture and sale of Drugs specified under the Drugs and Cosmetics Act read with Essential Commodities Act. In effect, it will not be a judgment inter party but it will be in rem laying down the law on the questions. [Paras 7-9] [206-C-E]
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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