Amkay Laboratories Pvt Ltd vs Union Of India And Anr

VIBHU BAKHRU, J

The petitioner has filed the present petition, inter alia, impugning the notification â€" S.O. No. 607(E) dated 27.05.2003 (hereafter “the impugned

notificationâ€) â€" issued by respondent no.2 (hereafter “NPPAâ€) fixing the ceiling price of Dexametosone plus Gentamycin Eye/Ear Drops. The

petitioner also impugns the order dated 27.11.2008 passed by

NPPA, inter alia, demanding a sum of Rs.26,536/- from the petitioner on account of charging a price in excess of the ceiling price fixed for the

formulation in question and further, to pay interest quantified at Rs.9,288/- on the aforesaid amount up to November, 2008.

The petitioner owns a Small Scale Industrial Unit located in the State of Uttar Pradesh and, on 04.12.1986, a license to this effect was issued to the

petitioner. In 1994, the petitioner was granted the license by the Drug Controller State of Uttar Pradesh for manufacture of Dexogen Eye/Ear Drops.

On 27.05.2003, the NPPA issued a price fixation order modifying an earlier order dated 19.02.1997 and 29.06.2000 wherein, the price for

formulations containing Dexamethasone Sodium Phosphate were fixed.

It is the petitionerâ€s case that since it is a Small Scale Industry, it is exempt from the rigors of the Drugs (Price Control) Order (here after “the

DPCOâ€) issued in exercise of the powers under the Essential Commodities Act, 1955. In is further contended by the petitioner that the formulation

manufactured by it â€" “Dexogen Eye/Ear Drops†(hereafter “the Productâ€) â€" is not covered under the impugned notification, as the

Product is not packaged in glass vial with a dropper but in a plastic bottle (FFS).

In addition, the petitioner contends that there is a substantial difference between the Product and the formulation for which the ceiling price has

been fixed in terms of the impugned notification.

The petitioner also impugns the ceiling price fixed under Paragraph 7 of the DPCO on the ground that the Central Government had not specified the

norms for costs as required in terms of Paragraph 7 of the DPCO.

The decision in Amkay Laboratories v. Union of India &Anr: W.P.(C) 12351/2009 delivered today, is also determinative of the issues raised in the

present petition.

In Amkay Laboratories (supra), this Court held that since the Product contains a drug specified in the Schedule to the DPCO, the same would fall

within the definition of the term “scheduled formulation†as defined in paragraph 2 (v) of the DPCO. Consequently, the petitioner is liable to pay

the price it has charged in excess of the ceiling price fixed for the formulation in question. However, while deciding on the issue of interest payable on

the impugned demand, this Court held that the liability to pay interest would arise only once a default is committed in making a payment of the

demanded amount within the time stipulated therein.

In the present case, the demand was raised for the first time by the impugned order dated 27.11.2008 and the petitioner was called upon to pay the

amount demanded within a period of fifteen days from the date of the said letter. Thus, the liability to pay interest would arise with effect from

12.12.2008 (that is, on expiry of fifteen days after the date of the impugned letter).

Thus, for the reasons stated in Amkay Laboratories (supra), the impugned order to the extent it seeks recovery of interest prior to the date of the

impugned order, is set aside.

The petition is disposed of in the above terms. Â