GLAXOSMITHKLINE PHARMACEUTICALS LIMITED (FORMERLY KNOWN AS SMITHKLINE BEECHAM PHARMACEUTICALS (INDIA) LIMITED) versus UNION OF INDIA & ORS.

Citation: [2013] 12 S.C.R. 1120 · Decided: 09-12-2013 · Supreme Court of India · Bench: RAJENDRA MAL LODHA · Disposal: Disposed off

Cited by 1 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

[2013] 12 S.C.R. 1120 
A 
GLAXOSMITHKLINE PHARMACEUTICALS LIMITED 
(FORMERLY KNOWN AS SMITHKLINE BEECHAM 
PHARMACEUTICALS (INDIA) LIMITED) 
v. 
UNION OF INDIA & ORS. 
8 
(Civil Appeal No. 1939 of 2004) 
DECEMBER 09, 2013 
' 
[R.M. LODHA AND KURIAN JOSEPH, JJ.] 
C 
DRUGS (PRICES CONTROL) ORDER, 1995: 
Para 14 (1) and 16 -
Fixation of price of bulk drug or 
formulation - Compliance of - Held: Once the Government 
exercises power and fixes maximum sale price of bulk drugs 
D specified in the First Schedule, there is ban to sell a bulk drug 
at a price exceeding the maximum sale price so fixed plus 
local taxes, if any -
True import of paragraph 14(1) is that 
once the price notification is gazettec1, it takes effect 
immediately though its enforcement is postponed by fifteen 
E days to enable the manufacturers and others to make suitable 
arrangements with regard to unsold stocks -
During the 
period of fifteen days, it is not open to the manufacturer to 
manufacture and clear bulk drug or formulation at pre-
notification prices - Period of 15 days is simply a grace 
period or cooling period allowed to manufacturers to adjust . 
F their business in a manner where appropriate arrangements 
are maoc with regard to unsold stocks in distribution chain -
Drugs (Price Control) Orders, 1987 - Para 16(3). 
Fixation of price of bulk drug or formulation - Nature and 
G object of- Held: Price fixation by Central Government under 
DPCO is in the nature of legislative measure and dominant 
object and purpose of such price fixation is equitable 
distribution and availability of commodities at fair price. 
H 
1120 
GLAXOSMITHKLINE PHARMACEUTICALS LTD. v. UNION OF 1121 
INDIA 
Circulars: 
A 
Circular issued by Department - Held: If departmental 
circular provides an interpretation which runs contrary to the 
provisions of law, such interpretation cannot bind the court -
The 1979 circular falls in such category - Circular dated 
B 
28.4.1979 issued by the Ministry of Petroleum, Chemicals 
and Fertilizers, Department of Chemicals and Fertilizers, 
Government of India -
Interpretation of statutes -
Contemporanea expositio. 
The instant appeals arose out of the judgments of the C 
High Courts of Karnataka and Delhi wherein they took 
diametrical opposite views on the question whether the 
prices fixed under the Drugs (Prices Control) Order 
('DPCO') in respect of drugs/formulations would be 
operative in respect of all sales subsequent to 15 days 
D 
from the date of the notification by the Government in the 
official gazette/receipt of the price fixation order by the 
manufacturer. 
Writ petitions were filed before the Karnataka High 
E 
Court challenging the notices issued by the Inspector of 
Drugs pursuant to the explanatory notice dated 
10.03.1998 issued by the National Pharmaceutical Pricing 
Authority (NPCA) clarifying that "the notification reduces 
the existing prices and the manufacturers must make 
effective the prices so fixed/revised, within 15 days (from 
F 
the date of the notification in the official gazette or receipt 
of the order of the NPCA) as required under para 14(1) 
of the DPC0,1995 and also issue necessary revised price 
lists as required under para 14(3) of that Order." The 
Karnataka High Court held that every manufacturer and G 
distributor would be duty bound to issue a revised price 
list within 15 days from the date of the notification issued 
by the Government under para 9 of the DPC Order. 
The Delhi High Court in the writ petition aris.ing out H 
1122 
SUPREME COURT REPORTS 
(2013] 12 S.C.R. 
A of the price fixation order dated 17.3;1988 issued under 
para 9(1) of the DPCO, 1987, said to have been received 
by the manufacturer on 21.3.1988, did !)Ot agree with the 
view adopted by the Karnataka High Court, and relying 
upon the circular dated 28.4.1979 allowed the writ petition 
B and quashed the seizure memo whereby the goods had 
been seized. 
Disposing of the appeals, the Court 
HELD: 1.1. Under the respective Para 3 of DPCO 
C 1995, the Central Government is empowered to fix price 
of the bulk drugs for regulating the equitable distribution 
of indigenously manufactured bulk drugs and the 
maximum price at which the bulk drug shall be sold. 
Such fixation of maximum sale price of bulk drugs 
D specified in the First Schedule has to be done by 
notification in the official gazette. Once the Government 
exercises the power and fixes maximum sale price of bulk 
drugs specified in the First Schedule, the

Excerpt shown. Read the full judgment & AI analysis in Lexace.