GLAXO SMITHKLINE PHARMACEUTICALS LTD. & ANR. versus UNION OF INDIA & ORS.

Citation: [2017] 7 S.C.R. 894 · Decided: 18-07-2017 · Supreme Court of India · Bench: R.F. NARIMAN · Disposal: Appeal(s) allowed

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Judgment (excerpt)

(2017] 7 S.C.R. 894 
A 
GLAXO SMITHKLINE PHARMACEUTICALS LTD. & ANR. 
B 
v. 
UNION OF INDIA & ORS. 
(Civil Appeal No. 6178 of 2009) 
JULYl8,2017 
[R. F. NARIMAN AND SANJAY KISHAN KAUL, JJ.) 
Drugs (Prices Control) Order, 1987: 
Para 28 r/w Exemption Notification dated 28'" Febntary, 1992 
C 
- Exemption Notification issued to appellant (manufacturer of a 
bulk drug) for the period upto 31.12.1994 - Demand notice by 
revenue to the appellant finding that there was differential in the 
price charged for the goods manufactured during exemption period 
- Writ petition challenging the demand, dismissed by High Court -
D 
On appeal, held: The exemption only relates to manufacture and 
has no reference to sale - Therefore, demand is not justified. 
E 
F 
Allowing the appeal, the Court 
HELD: 1. In view of paragraph 28 of the Drugs (Price 
Control) Order, 1987 (DPCO), the exemption relates to drug 
manufacturing units or classes of such units. The very exemption 
order refers only to bulk drugs and formulations based thereupon 
which are "manufactured" by the company. Further, a reading of 
the Central Government Guidelines of 1989 also makes it clear 
that the exemption only relates to manufacture and has no 
reference to sale whatsoever. [Para 8) (899-C-D) 
2. It is not correct that in view of sub-clause (viii) of the 
1989 Guidelines, after the expiry of the period of exemption, the 
manufacturer has to submit an application for fixation of the price 
of a bulk drug under the provisions of the DPCO. Sub-clause 
(viii) cannot be read in isolation, but must be read as a part of the 
G entire scheme of the Guidelines. All that sub-clause (viii) says is 
that after the period of exemption, which is after the period which 
has reference to manufacture and not sale of goods, such goods 
as are manufactured after the exemption will be subject to the 
drill of sub-clause (viii). [Paras 9, 10] (901-C-E] 
H 
894 
GLAXO SMITHKLTNE PHARMACEUTICALS LTD. & ANR. v. 
895 
UNION OF INDIA & ORS. 
3. It is not correct to say that the period of 15 days is 
A 
mentioned in paragraph 16(3) of the DPCO to give effect to the 
price of bulk drug or formulation, so that one price may be fixed 
by the Government for each bulk drug and formulation from time 
to time, as there cannot be two prices for the same bulk drugs or 
formulation. There will only be one price that is fixed for all goods 
that are manufactured by the appellant upto 31'' December, 1994, 
and that price will be a price unilaterally determined by the 
appellant and will not be fixed under the DPCO. [Para 14) [904-
D-E] 
Union of India v. Ranbaxy Laboratories Limited and 
Ors. (2008) 7 SCC 502 : [2008) 8 SCR 315 - relied 
on. 
Glaxosmithkline Pharmaceuticals Ltd. v. Union of 
India and Ors. (2014) 2 SCC 753 : (2013] 12 SCR 
1120 -
distinguished. 
Case Law Reference 
(2008) 8 SCR 315 
relied on 
[2013) 12 SCR 1120 
distinguished 
Para6 
Para 7 
B . 
c 
D 
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 6178 
E 
of 2009. 
From the Judgment and Order dated 16.02.2004 of the High Court 
of Bombay in Writ Petition No. 1266of1999. 
S. Ganesh, Sr. Adv., U. A. Rana, Himanshu Mehta (for Gagrat 
and Co.), Advs. for the Appellants. 
F 
Rana Mukherjee, Sr. Adv., Merusagar Samantary, Prateek Jalan, 
Lhingneirah, Ms. Viddusshi, Ms. Anu Singh, B. Krishna Prasad, Advs. 
for the Respondents. 
The Judgment of the Court was delivered by 
R. F. NARIMAN, J. I. The present appeal arises on the true 
construction of paragraph 28 of the Drugs (Prices Control) Order, 1987, 
read with exemption notification dated 28'h February, 1992. Paragraph 
28 of the DPCO, 1987, reads as under: 
G 
"28. Power to exempt- (I) The Government may, having regard 
H 
896 
A 
B 
c 
SUPREME COURT REPORTS 
[2017] 7 S.C.R. 
to the factors mentioned in sub-paragraph (2) and subject to such 
conditions, if any, as it may specify, by order in the Official Gazette, 
exempt any drug manufacturing unit or a class of such units from 
the operation of all or any of the provisions of this order and may, 
as often as may be, revoke or modify such order. 
(2) While granting exemption under sub-paragraph (1), the 
Government shall have regard to all or any of the following factors 
relating to the drug manufacturing unit or a class of such units, 
namely; 
a) Number of workers employed; 
b) Amount of ca pi ta! invested; 
c) Range and type of products manufactured; 
d) Sales turnover; 
e) Production of bulk drug basic stage by process develope

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