Delhi High Court
M/S. Seagull Pharmaceuticals ... vs Union Of India & Ors. on 12 April, 2018
$~9
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Judgement Pronounced on: 12.04.2018
+ W.P.(C) 2407/2014
M/S. SEAGULL PHARMACEUTICALS PVT. LTD. ..... Petitioner
Through: Mr.Niraj Kr. Singh with Mr.Ankur Singh
Advs.
versus
UNION OF INDIA & ORS. ..... Respondents
Through: Mr. Deepak Kikhari, Adv. for R-4.
CORAM:
HON'BLE MR. JUSTICE RAJIV SHAKDHER
RAJIV SHAKDHER, J (ORAL)
1. This is a writ petition in which the following substantive prayers have been
made:
"1. Issue a writ/direction in the nature of Mandamus
or Certiorari or any other Writ thereby quashing the notices
issued by respondent No.2, dated 11.02.204, 05.10.2011,
09.05.2011, 23.03.2011 & 14.12.2010, to meet the ends of
justice.
2. Restrain respondent Nos.1 and 2 from initiating
any coercive action, pursuant to impugned notice, for effecting
recovery of amount till the disposal of present petition, against
the petitioner to serve the ends of justice.
3. Direct the respondent No.1 and 2 to delete the
name of petitioner from the array of the parties against whom
recovery are sought to be effected in terms of notices on
conditions, just and fair, in the interest of justice".
2. The petitioner‟s case is that it was engaged in the business of
manufacturing and distribution of drugs (generic formulations) of various
descriptions.
3. The petitioner claims that it made a request on 30.08.2006 to the
Government of Rajasthan, Department of Drug Controller, for surrendering its
license Nos.1862 and 1863 dated 12.05.1998.
3.1 It is also the petitioner‟s case that based on its application for cancellation
of its license, vide order dated 08.09.2006, the concerned Licensing Authority
cancelled the license issued to the petitioner company.
3.2. The petitioner further claims that, thereafter, it entered into an agreement
with respondent No.4, whereby, it permitted the said entity to market/manufacture
generic drugs under registered marks owned by it.
3.3. The aforesaid agreement was executed between the petitioner and
respondent No.4 on 11.09.2008. As per this agreement, the petitioner received a
fixed royalty.
4. It appears that several notices were issued to the petitioner between
14.12.2010 and 11.02.2014 by respondent No.2/NPPA. The burden of these
notices was that the petitioner along with respondent No.3 and 4 had been
manufacturing the scheduled formulation under the brand name SEADOX 100
tabs at a price higher than the selling price as notified under Drug (Price Control)
Order („DPCO‟), 1995. More particularly, the accusation levelled was that the
petitioner had over-charged by breaching the selling price. It was alleged that this
infraction had occurred between October 2009 and July 2010.
5. The record shows that to begin with, the demand on this account raised on
the petitioner was in the sum of Rs.26,99,040/- which along with interest was
enhanced to Rs.46,75,966/-. This aspect of the matter is reflected in the last
demand notice served on the petitioner, which is, dated 11.02.2014.
6. The petitioner claims that it has been religiously responding to the demand
notices raised upon it. In this behalf, the petitioner refers to replies addressed to
respondent No.2/NPPA between 29.12.2010 and 22.02.2014.
7. In sum, the stand taken by the petitioner is that it did not manufacture the
drug in issue during the period for which the demand notices had been issued. The
petitioner claims that it is respondent Nos.3 and 4 who are engaged in
manufacturing and/or marketing the drug qua which the demand notices have been
issued by respondent No.2/NPPA.
8. A perusal of the impugned notice shows that the only reason why the
impugned demand is sought to be sustained against the petitioner is that the
packaging of the subject drug carries the endorsement "manufactured under the
technical collaboration of the petitioner".
9. According to the petitioner, that by itself, cannot be a reason for respondent
No.2/NPPA to come to a conclusion that the petitioner is a manufacturer or the
entity which marketed the drug during the relevant period.
9.1 In support of this submission, learned counsel relies upon the judgment
dated 27.01.2010, passed in W.P(C) 11656/2009, tilted: Morepen Laboratories
Ltd. Vs. UOI.
10. A perusal of the impugned notices shows that respondent No.2/NPPA is
seeking to enforce the demand based on the provisions of clause 13 of the DPCO,
1995. For the sake of convenience, the said provision is extracted hereafter:
"Power of recover Overcharged Amount:
Notwithstanding anything contained in this order, the
Government shall by notice, require the manufactures,
importers or distributors, as the case may be, to deposit the
amount accrued due to charging of prices higher than those
fixed or notified by the Government under the provisions of
Drugs (Prices Control) Order, 1987 and under the provisions of
this Order".
(emphasis is mine)
11. Upon a plain reading of the said provision, what emerges is that Clause 13
is applicable only in the case of manufacturers, marketers, importers and
distributors.
12. Insofar as the petitioner is concerned, it claims that after 08.09.2006, it has
not manufactured the subject drug i.e. SEADOX 100 tabs. The impugned notices
also suggest that because respondent Nos.3 and 4 who were said to be the
manufacturer and the marketeer had not responded to the demand notice served on
them, the concerned authority though it fit to conclude that the petitioner was
working in connivance with them.
13. According to me, unless there is material on record to show connivance, the
ipse dixit of the concerned authority i.e. the Director NPPA would not suffice. In
fact, while issuing the impugned notices, there is no discussion of the stand taken
by the petitioner that it had got its license cancelled as far back as on 08.09.2016.
Having regard to the facts & circumstances, I am of the view that there is merit in
the stand of the petitioner that the demand notices are based on surmises and
conjectures and that there is no material on record to suggest that the petitioner
was either the manufacturer or the entity which marketed the subject drug i.e.
SEADOX 100 tabs and, therefore, should have been held liable for overcharging.
14. Thus, as prayed, the impugned notices are quashed. The writ petition is
allowed.
15. No costs.
RAJIV SHAKDHER, J
APRIL 12, 2018
neelam
