M/S Panikulam Pharma v. The Drugs Controller and Others

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT:** ## **THE HONOURABLE MR. JUSTICE A.MUHAMED MUSTAQUE** **FRIDAY, THE 8TH DAY OF APRIL 2016/19TH CHAITHRA, 1938** ## **WP(C).No. 26595 of 2015 (Y)** **----------------------------** **PETITIONER:** ## **------------------** **M/S PANIKULAM PHARMA, X/391, JAIHIND BUILDING, NEW CHURCH STREET, THRISSUR-680 001, REPRESENTED BY MANAGING PARTNER, SONNY A.T.** **BY ADVS.SRI.DILIP J. AKKARA SRI.K.JAJU BABU (SR.)** **RESPONDENTS:** **----------------------** **1. THE DRUGS CONTROLLER, OFFICE OF THE DRUGS CONTROLLER, RED CROSS ROAD,THIRUVANANTHAPURAM-695 035.** **2. ASSISTANT DRUGS CONTROLLER, OFFICE OF THE ASSISTANT DRUGS CONTROLLER, THRISSUR CIRCLE, CHEMBUKKAVU, THRISSUR-680 020.** **3. M/S.MANKIND PHARMA LTD., 236, OKHLA INDUSTRIAL ESTATE, PHASE-III, NEW DELHI-110020, REPRESENTED BY, M/S.ANUJITH ASSOCIATES, STADIUM LINK ROAD, KALOOR, COCHIN-682 017.** ## **R3 BY ADV. SRI.PREMJIT NAGENDRAN R1 BY ADV. GOVERNMENT PLEADER:SRI. MANOJ KUNJACHAN.** **THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 29-10-2015, ALONG WITH WPC. 39471/2015, WPC. 8374/2016, WPC. 8402/2016, THE COURT ON 0804-2016, DELIVERED THE FOLLOWING:** **WP(C).No. 26595 of 2015 (Y)** **----------------------------** ## **APPENDIX** **PETITIONER(S)' EXHIBITS -------------------------------------** **EXHIBIT-P1:PHOTOCOPY OF PETITIONER'S CERTIFICATE OF RENEWAL OF DRUG LICENCE NO.KL TSR-8/151&8/152 DATED 2.7.13 ISSUED BY 2ND RESPONDENT.** **EXHIBIT-P2: PHOTOCOPY OF PETITIONER'S CERTIFICATE OF REGISTRATION UNDER KERALA VALUE ADDED TAX RULES TIN NO.32080548475C DATED 7.6.07.** **EXHIBIT-P3: PHOTOCOPY OF STOCKISTSHIP ORDER DATED NIL ISSUED BY 3RD RESPONDENT APPOINTING PETITIONER AS STOCKIST.** **EXHIBIT-P4: PHOTOCOPY OF ORDER FOR SUPPLY OF DRUGS DATED 29.6.15 WITH CHEQUE NO.030312 OF DHANALAKSHMI BANK PLACED BEFORE 3RD RESPONDENT.** **EXHIBIT-P5: PHOTOCOPY OF REPRESENTATION DATED 29.7.15 SUBMITTED BEFORE 1ST RESPONDENT.** **EXHIBIT-P6: PHOTOCOPY OF ORDER DATED 7.8.15 IN WP(C) 23942/2015 P.** **RESPONDENT(S)' EXHIBITS:NIL** **----------------------------------------** **//TRUE COPY//** **PA TO JUDGE** **skr** **“C.R.”** ## **A.MUHAMED MUSTAQUE, J.** ~~~~~~~~~~~~~~~~~~~~~~~~~ **W.P.(C).Nos.26595/2015, 39471/2015, 8374/2016 & 8402/2016** ~~~~~~~~~~~~~~~~~~~~~~~~~ Dated this the 8[th] Day of April, 2016 ## **J U D G M E N T** The petitioners, in all these writ petitions are engaged in the business of purchase and sale of drugs and, can be termed as “dealers” as defined under the Drugs (Price Control) Order, 2013 (hereinafter referred to as the “Drugs Control Order”). They have approached this Court seeking relief against the manufacturer/distributor for withholding sale or refusing to sell drugs to them without any reason. 2. The stand of the manufacturer/distributor who has been arrayed as a party respondent is that they have appointed C&F Agents/stockists/retailers and the petitioners are free to obtain the supply from the aforesaid entities. It is their case that a commercial arrangement made by them cannot be disrupted by making unlawful demands in terms of the Drugs Control Order. The petitioners plea is now premised on the Drugs Control Order. The Drugs Control Order defines “dealers” as follows: “(e) " **dealer** " means a person carrying on the business of purchase or sale of drugs, whether as a wholesaler or retailer and includes his agent.” It also defines “distributor” as follows: “(f) " **distributor** " means a person engaged in the work of distribution of drugs and includes an agent or a stockist for stocking drugs for sale to a dealer.” It defines “manufacturer” as follows: (n) " **manufacturer** " for the purpose of this Order means any person who manufactures, imports and markets drugs for distribution or sale in the country.” Under para.28 of the Drugs Control Order, it is stipulated as follows: **28. Manufacturer, distributor or dealer not to refuse sale of drug.–** Subject to the provisions of the Drug and Cosmetics Act, 1940 (23 of 1940) and the rules made thereunder, - - (a) no manufacturer or distributor shall withhold from sale or refuse to sell to a dealer any drug without good and sufficient reasons; - (b) no dealer shall withhold from sale or refuse to sell any drug available with him to a customer intending to purchase such drug. **“** Therefore, the stand of the petitioners is that in the light of the para. 28, the manufacturer/distributor cannot refuse the supply whenever it is demanded unless for valid reasons. 3. The foremost point that arises for consideration in these writ petitions are regarding maintainability. Though, several judgments are referred by parties, in none of the judgments, the question regarding maintainability has been thrust upon. Therefore, this Court is of the view that it is appropriate to decide the question relating to maintainability of the writ petitions. 4. The Drugs Control Order is issued by the Central Government invoking Section 3 of the Essential Commodities Act, 1955 (hereinafter referred to as the “EC Act”). It is appropriate to refer the background of the EC Act. Under Article 369 of the Constitution of India, the Parliament was given power for a period of five years to make laws with respect to trade and commerce within a State. It is to be noted that some of the matters referred in the Article 369 would have otherwise come under Entries 26 and 27 of the State List. Therefore, the Constitution has given power to the Parliament to enact legislation on those matters. This is essentially in the wake of shortage and scarcity of food stuffs during the second world war. In exercise of the power as above, the Parliament made the Essential Supplies (Temporary Powers) Amendment Act, 1950 (LII of 1950) and the Supply and Prices of Goods Act, 1950 (LXX of 1950). Thereafter, Entry 33 of List III, as originally enacted, was replaced in 1954 by the following Entry: “Entry 33 of List III .-- Trade and commerce in, and the production, supply and distribution of, (a) the products of any industry where the control of such industry by the Union is declared by Parliament by law to be expedient in the public interest and imported goods of the same kind as such products; (b) food stuffs including edible oilseeds and oils; (c) cattle fodder including oil cakes and other concentrates; (d) raw cotton, whether ginned or unginned and cotton seeds; and (e) raw jute.” Thus, on expiry of the 5 years, the concurrent legislative power is conferred on the Parliament by amending Entry 33 of List III. 5. As seen from Entry 33 of List III the enactment was in a public interest to have a control over certain goods and food stuffs. This is to cartelisation or essentially safeguard against monopolisation of goods and to interfere with black marketing that denies the common man products and food stuffs on a reasonable prices without any hindrance. As seen from Section 3 of the EC Act, 1955, it is enacted to increase supply of any commodities for securing equitable distribution and availability at fair prices. Thus, public interest is a paramount interest protected in terms of EC Act and orders issued thereunder: 6. The Drugs Control Order is an order issued under the EC Act to ensure the availability of drugs at fair prices. Therefore, para.28 of Drugs Control Order has to be understood in the backdrop of the Legislative Scheme. 7. The Public Interest necessarily creates a public right. In law, a “Right” means an interest protected by law. Therefore, a person who has a right can enforce such right against whom such right is enforceable. That means, a person against whom the right is enforceable has a legal duty to honour the right of the person protected under law. 8. It is on the above assimilation of law, para.28 of Drugs Control Order has to be understood. The purpose of EC Act as well as Drugs Control Order is to protect public interest. The reference in para.28 that no manufacturer/distributor shall withhold from sale or refuse to sell a dealer any drugs without sufficient reasons, has to be understood as a protection to the public, that on account of withholding drugs supply, the public shall not suffer. It is nowhere indicated in para.22, to protect any commercial interest between manufacturer/distributor with a dealer, unless such commercial interest embodies a public interest. The interest that is to be protected is public interest and not the private interest of the manufacturer/distributor or that of the dealer. If any public interest exists, the manufacturer/distributor is bound to supply goods to the dealer. The public interest in the context means that, if drugs are not available in the market at fair prices, certainly, a dealer can demand for supply from the manufacturer/distributor. This is a pre-requisite to invoke para.28 of Drugs Control Order. In the absence of any such existence of public interest, no dealer can demand supply of drugs from the manufacturer or distributor. It is to be noted that in none of the cases, the Drugs Controller has found out any reason of public interest. It is only when public interest is involved, if at all the manufacturer or distributor wants to withhold supply, they can justify refusal on good or sufficient reason. When there is no involvement of public interest, the manufacturer or distributor is not even expected to demonstrate any reason for non supply to a dealer. 9. In all these cases, there are commercial arrangements made by the manufacturer/distributor with stockists. The petitioners can lift the drugs from the stockists. Therefore, the factual situation would also indicate that there is no circumstances warranting invocation of public interest to interfere. 10. It is to be noted that no writ of mandamus would lie against a private body even if such a body has a statutory duty to discharge unless a corresponding right is conferred on the writ petitioner in relation to the statutory duty sought to be enforced. The petitioners have approached this Court to protect his commercial interest and not to enforce any public interest. No writ would lie to protect any commercial interest of a dealer de hors public interest against the manufacturer/distributor based on para.28 of the Drugs Control Order. In the backdrop of any statutory duty to be enforced against the manufacturer or distributor, the petitioners cannot be allowed to seek a relief to protect his commercial interest. No doubt, the petitioners would be entitled to file writ petitions when they are able to demonstrate existence of public interest. The writ petitions would be maintainable against private body when they discharges statutory duty in relation to the right claimed by the writ petitioners. In **Binny Ltd. v. V.Sadasivan [(2005) 6 SCC 657]** , the Hon'ble Supreme Court held in para.11 as follows: “.......A body is performing a “public function” when it seeks to achieve some collective benefit for the public or a section of the public and is accepted by the public or that section of the public as having authority to do so. Bodies therefore exercise public functions when they intervene or participate in social or economic affairs in the public interest...” 11. The pre-requisite of public right to enforce statutory duty against manufacturer/distributor is totally absent in the claim made by the petitioners before this Court. 12. If in the event, the Drugs Controller finds that on account of withholding supply to the Dealers, the public interest is affected, certainly, the petitioners are free to approach this Court seeking a mandamus against the manufacturer/distributor. Therefore, all the writ petitions fail and accordingly, the writ petitions are dismissed. Sd/- ## **A.MUHAMED MUSTAQUE, JUDGE** ## ms The words **“Order 28”** wherever mentioned in the 3[rd] page of the common judgment dated 08/04/2016 in W.P.(C). No.26595/2015 and connected cases are _suo motu_ corrected and substituted by the words **“para.28”** as per order dated 29/04/2016 in W.P.(C).No.26595/2015 and connected cases. Registrar (Judicial) The words **“para 22”** recorded in paragraph (8) at page 8 of the common judgment dated 08/04/2016 in W.P.(C). No.26595/2015 and connected cases are _suo motu_ corrected and substituted by the words **“para.28”** as per order dated 03/08/2016 in W.P.(C).No.26595/2015 and connected cases. Registrar (Judicial)