UNION OF INDIA versus GLAXO INDIA LTD. & ANR.

Citation: [2011] 4 S.C.R. 50 · Decided: 30-03-2011 · Supreme Court of India · Bench: R.V. RAVEENDRAN · Disposal: Appeal(s) allowed

Judgment (excerpt)

A 
B 
[2011) 4 S.C.R. 50 
UNION OF INDIA 
v. 
GLAXO INDIA LTD. & ANR. 
(Civil Appeal No. 6497 of 2002) 
MARCH 30, 2011 
[R.V. RAVEENDRAN AND H.L. DATTU, JJ.] 
DRUG (PRICE CONTROL) ORDER, 1979 : 
c 
Paragraphs 3, 12, 13 and 27 - Price Fixation of bulk 
drugs - Central Government fixing the price of scheduled bulk 
drugs by Notification dated 2.1.1989 superseding the earlier 
Notification dated 12.5.1981 - Demand raised towards the 
difference between the formulation prices fixed in the price 
0 
fixation orders and the actual prices charged by company for 
the period 12.5.1981 to 25.8.1987 to be deposited in DRUG 
PRICES EQUILASITAION ACCOUNT - Held : When fresh 
notification was issued on 2. 1. 1989, the earlier notifications 
were superseded and, therefore, it cannot be said that they 
become non est for all purposes - The earlier notific.ation, 
E fictionally must be held to have subsisted and were operative 
from such points of time of commencement upto the date it 
was superseded -The Central Government is well within its 
rights to raise demands for making deposit into DPEA on the 
basis of prices shown in Notification dated 20. 11. 1986 - The 
F demand raised by the Central Government is confirmed. 
Para 27 - Review - Concept of - Explained - Held : 
Once a review petition filed by the manufacturer of a bulk drug 
is considered and a fresh notification is issued, the same 
G would be prospective and it does not relate back to the 
notification fixing the price of bulk drugs issued earlier -
Administrative Law - Subordinate Legislation. 
H 
50 
.... -
UNION OF INDIA v. GLAXO INDIA LTD. & ANR. 
51 
DRUG PRICES EQUALISATION ACCOUNT: 
A 
Drug manufacturing company required to deposit in 
DPEA the excess of the common selling price over retention 
price -Held :The provision is a beneficial one -This provision 
applies equally both to indigenously manufactured drugs as 
8 
well as the drugs imported so as to maintain uniformity in the 
price of bulk drug. 
WORDS AND PHRASES : 
Expression 'supersession' - Connotation of in the c 
context of drugs price fixation. 
The respondent-company was engaged in 
manufacture and sale of three bulk drugs, namely, BA, 
BV and BP and formulations based thereon. The Central 
Government, in exercise of power under Para 3(1) of the 
D 
Drug (Price Control) Order, 1979 (DPCO, 1979) fixed the 
maximum price of the three bulk drugs by its order dated 
12.5.1981. The respondent-company challenged the order 
before the High Court in CWP No. 1551 of 1981. The High 
Court stayed implementation of the order dated 12.5.1981 
E 
in view of the undertaking of the respondent company 
to maintain the prices of the bulk drugs and its 
formulations prior to the notification dated 12.5.1981, and 
directed the parties for settlement in view of the petition 
for review of the order dated 12.5.1981 filed by the 
F 
respondent company. The Central Government re-fixed 
the price of the bulk drugs by order dated 20.11.1986 with 
retrospective effect from 12.5.1981. The High Court 
disposed of the writ petition by its judgment dated 
31.8.1987. It did not quash the price fixation order dated 
G 
20.11.1986, but directed the respondent company to file 
review petition before the Central Government. The 
Central Government constituted 'Murthy Committee' 
which gave its report dated 12.10.1988. 
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52 
SUPREME COURT REPORTS 
(2011] 4 S.C.R. 
A 
The Central Government, issued price fixation order 
dated 2.1.1989 under DPCO 1989 fixing the price for the 
three bulk drugs higher than that fixed under order dated 
20.11.1986, and, by letters dated 18.6.1990 and 16.11.1990 
raised a demand of Rs. 71.2 crores, as difference between 
B the formulation prices fixed and the actual price charged 
by the company for the period 12.5.1981 to 25.8.1987, to 
be deposited in Drug Prices Equalisation Account 
(DPEA). The company filed another writ petition (CWP No. 
2170/90). The High Court allowed the writ petition holding, 
c inter alia, that the demands raised were contrary to the 
directions of the High Court in earlier writ petition (CWP 
No. 1551/81); that the price fixation order was 
retrospective in its operation and related back to the 
order dated 12.5.1981; and that the demands raised were 
0 
in violation of Para 7(2) (a) of DPCO 1979 inasmuch as it 
was not based on "common selling prices" and 
"retention prices of bulk drugs" but was based on 
"common selling price and the price of formulators". The 
High Court a

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