the unregulated and clandestine manufacture of the
drug Oxytocin, which is reportedly misused in milch animals;
and on the other hand, the continued supply of an essential
lifesaving drug, which is used as the first line drug for
33
prevention and treatment of postpartum haemorrhage at the
time of childbirth. The following substantial questions of law arise for
consideration:
(i) Whether a drug included in the National List of Essential
Medicines published under Schedule 1 of the Drugs
(Prices Control) Order, 2013 notified under Section 3 of
the Essential Commodities Act, 1955 would be subject to
the provisions of Section 26A of the Drugs and Cosmetics
Act, 1940? (ii) Whether the impugned notification has resulted in
creating a monopoly in favour of public sector companies,
to the complete exclusion of private sector companies, and
if so, whether it would be protected by Article 19(6)(ii) read
with Article 14 of the Constitution?
(iii)Whether the classification made by the impugned
notification between licensed public sector and private
sector companies, in the manufacture of the drug
Oxytocin for domestic use, would achieve the object and
purpose of preventing the unregulated and illegal use of
the drug?
34
(iv)Whether it would be in public interest to restrict the
manufacture of a lifesaving drug for domestic use, to a
single public sector undertaking, to the complete
exclusion of the private sector companies, particularly in
view of the high maternal mortality rates in the country? (v) Whether there was relevant and objective material before
the Central Government to form the basis of satisfaction
to exercise the power to prohibit the manufacture of the
drug by the private sector companies for domestic use,
under Section 26A of the Drugs and Cosmetics Act, 1940? (vi)Whether the object of curbing the clandestine
manufacture and unregulated use of the drug Oxytocin,
which is covered by Section 18 of the Drugs and
Cosmetics Act, 1940, can be achieved by taking recourse
to Section 26A by imposing a ban on the manufacture of
licensed drugs by private sector companies?
(vii) Whether the exercise of power by the Central Government
under Section 26A of the Drugs and Cosmetics Act, 1940
is legislative or executive in nature?
35
13. We are of the considered view that this is a fit case to refer
the matter to a larger Bench of three Judges to consider the
aforesaid questions of law, and authoritatively pronounce
upon the same. Accordingly, we direct the Registry to place
the present group of appeals before the Hon’ble Chief
Justice of India for necessary directions.
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
Civil Appeal Nos.65886591 of 2019
(Arising out of SLPs (Civil) Nos. 32963299 Of 2019)
UNION OF INDIA & ANR. ETC APPELLANTS
Versus
BGP PRODUCTS OPERATIONS GMBH
AND HAGENE IMMERMATT WEG. & ANR. ETC. RESPONDENTS
J U D G M E N T
INDU MALHOTRA, J.
Leave granted.
1. The issue which arises for consideration in the present appeals
is the validity of the Notification dated 27.04.2018 issued under
Section 26A of the Drugs and Cosmetics Act, 1940 (hereinafter
referred to as the “Act”) by the Ministry of Health and Family
Welfare.
The impugned notification restricts the manufacture of
Oxytocin formulations for domestic use, only by public sector
1
undertakings or companies, to the complete exclusion of the
private sector companies. However, the manufacture of the drug
for export purposes is open to both public and private sector
companies.
It was notified that the notification would come into force on
01.07.18.
By a subsequent notification dated 29.06.2018, the date was
extended to 01.09.18.
2. Till the issuance of the impugned notification, Oxytocin was
being manufactured by private sector companies to meet the
entire need in the country.
After the issuance of the impugned notification, Karnataka
Antibiotics & Pharmaceuticals Ltd. (“KAPL”), a public sector
company has commenced the manufacture of Oxytocin in May
2018.
3. The Active Pharmaceutical Ingredient (“API”) or the bulk drug is
manufactured in India only by one private sector company in
India, viz. Hemmo Pharmaceuticals Pvt Ltd. (“Hemmo Pharma”).
4. The impugned Notification dated 27.04.2018 was challenged in
a group of Writ Petitions by various private sector companies
who are inter alia manufacturing the drug Oxytocin in W.P.(C)
No. 6084/2018, W.P.(C) No. 8555/2018, W.P.(C) No. 8666/2018
and W.P.(C) No. 9601/2018 before the Delhi High Court on
various grounds. The Delhi High Court granted stay of the
operation of the impugned notification vide Interim Order dated
31.08.2018. The order of stay was extended by subsequent
2
Orders, which remained in force till 15.12.2018. The Delhi High
Court vide a detailed Judgment and Order dated 14.12.2018
has quashed the impugned notification. As a consequence, the
impugned notification did not come into force at all.
5. The AppellantUnion of India has filed the present Special Leave
Petitions before this Court, to challenge the judgment passed by
the Delhi High Court.
6. The subject matter of the present appeals is the drug Oxytocin,
which is notified as an essential drug by the World Health
Organization (WHO) Model List of Essential Medicines since
2002. The concept of “Essential Medicines” was first introduced
by the WHO in 1977, and has now been adopted by many
countries, NGOs and international nonprofit supply agencies.
Oxytocin continues to be notified in the 21st edition of the WHO
Model List of Essential Medicines published in 2019. It is listed
under the head “Medicines For Reproductive Health And
Perinatal Care” and the recommended form of dosage is
“Injection: 10 IU in 1 mL”.
6.1. Oxytocin is an essential lifesaving drug, which is included
in the National List of Essential Medicines, 2011 (“NLEM”).
It continues to be listed at S.No. 26.1.5 in the latest
notification published in 2015. The NLEM is published
under the 1st Schedule to the Drugs (Prices) Control Order,
2013 (“DPCO”) under Section 3 of the Essential
Commodities Act, 1955 (“EC Act”).
The NLEM specifies the recommended dosage and
strength of Oxytocin injection as 5IU per 1 ml and 10IU per
3
1 ml. Oxytocin injection in the form of “5 IU per ml in 1ml
ampoule pack” is included in the “Essential Drug List for
the year 20162018” at Serial No. 228 published by the
National Health Mission, Department of Health and Family
Welfare, Government of Himachal Pradesh.
6.2. The objective of the National List of Essential Medicines
(NLEM) is that the drugs included in it are adequate to
meet the contemporary health needs of the general
population of the country.1
It is one of the key instruments
in balanced healthcare delivery system of a country. The
first NLEM was prepared and released in 1996. This list
was subsequently revised in 2003, 2011 and 2015.
NLEM contains those essential medicines “that satisfy
the primary health needs of the country‘s population.” NLEM
medicines are required to be made available at all times in
adequate quantities in the appropriate dosage forms to
serve the larger public interest. The primary purpose of the
NLEM is to promote rational use of medicines considering
three important aspects i.e cost, safety and efficacy. The
list is considered to include the most costeffective
medicines for a particular indication.
The criteria for the inclusion of a medicine in the
NLEM inter alia includes that the medicine should be
approved/licensed in India; the medicine should have
1 Press Release on “Essential Drugs” dated 15.03.2013 by the Press Information Bureau,
Government of India, Ministry of Health and Family Welfare.
4
proven efficacy and safety profile based on valid scientific
evidence; the medicine should be cost effective etc.2
The NLEM is prepared by an Expert Core Committee
constituted by the Director General of Health Services
(DGHS) out of the World Health Organization (WHO) Model
List of Essential Medicines, Essential Drugs Lists of
various States, and medicines used in various National
Health Programmes and Emergency Care Drugs.3
6.3. Oxytocin is recommended as the first line drug for
prevention and treatment of postpartum haemorrhage
(excess bleeding immediately after childbirth).4
Oxytocin is
the drug of choice used for pregnant women to induce or
augment labour at the time of delivery, to control postpartum bleeding and uterine hypotonicity and is placed
under Schedule H1 of the said Act.5
Oxytocin is also
included in the Indian Pharmacopoeia published in 2010,
2014, and 2018.
6.4. The misuse of Oxytocin has been the subject matter of
discussion because of rampant misuse of the drug on
milch animals. The issue was under deliberation by the
Drugs Technical Advisory Board (“DTAB”) and the Drugs
Consultative Committee (“DCC”), which are statutory
bodies constituted under the said Act.
2 Executive Summary, Report of the Core Committee for Revision of the National List of
Essential Medicines published in 2015.
3 Paragraph 3.1(ii) of the National Pharmaceuticals Pricing Policy, 2012 (NPPP2012) dated
07.12.12 published by the Ministry of Chemicals and Fertilizers, Government of India
4 World Health Organisation Recommendations For The Prevention And Treatment Of
Postpartum Haemorrhage, 2012
5 FiftyNinth Report Of Parliamentary Standing Committee On Health And Family Welfare
On The Functioning Of Central Drugs Standard Control Organization
5
The DTAB is a statutory body established under
Section 5 of the said Act. The DTAB consists of technical
experts to advise the Central Government and State
Governments on technical issues arising under the said
Act.
The DCC has been constituted under Section 7 of the
said Act, which consists of representatives of the Central
Government, and one representative of each of the State
Governments to advise the Central and State Governments,
and the DTAB, on any matter relating to secure uniformity
in the administration of the Act.
6.5. The deliberations on the issue of rampant misuse of the
drug commenced from 1997 onwards.
It is necessary to advert to the deliberations of the
meetings of these statutory bodies to understand the
background in which the impugned notification was
passed.
6.6. The misuse of Oxytocin came up for discussion first in the
31st meeting of the DCC held on 21.08.1997 and
22.08.1997. The DCC noted that it had received several
complaints on the misuse/abuse of Oxytocin in veterinary
practice. Oxytocin injections were being misused to
artificially extract milk from cows and buffaloes. The
members of the Committee were requested to collect more
information on the issue.
6.7. At the 48th meeting of the DTAB held on 08.07.1999, the
DTAB discussed the misuse of Oxytocin in milch animals
6
and the deleterious effects due to consumption of such
milk on consumers. The DTAB considered the suggestion
of imposing a general ban on the manufacture of Oxytocin.
However, 11 members opined that as the drug is
“essential” in the medical field, and is included in the
“Essential Drug list”, the same could not be prohibited.
The Joint Secretary, Ministry of Food Processing, an
invitee to the meeting mooted a suggestion that “perhaps
restricting the manufacture of Oxytocin to PSUs, and
thereafter keeping a track on its distribution” may be
considered.
The representative of the Department of Consumer
Affairs agreed that the whole issue of use and misuse of
Oxytocin injection requires an indepth examination and
suggested that a detailed paper be prepared based on the
outcome of such study.
6.8. At the 36st meeting of the DCC held on 23.07.05 and
24.07.05, the DCC advised not to ban Oxytocin injection
since it formed a part of the NLEM. The DCC noted that the
sale of Oxytocin had been regulated by amending the
package size of Oxytocin to “single blister packs”, as
against the earlier prescribed larger packaging of 50100
ampoules.
6.9. At the 40th Meeting of the DCC held on 29.06.2009, it was
observed that the misuse of Oxytocin injection had been
reported in many parts of the country, and a strong
vigilance was required to stop the clandestine manufacture
7
of the drug. The DCC observed that the drug has a definite
place in medical treatment, and is used by gynaecologists
universally. The DCC urged the members/representatives
of each State to ensure that the clandestine manufacture of
the drug under their jurisdiction is curbed through
extensive surveys and raids.
6.10. At the 43rd meeting of the DCC held on 14.11.2011, the
DCC observed that there was an increasing misuse of the
drug by dairy owners, because of the clandestine supply of
the drug through illegal channels, and recommended that
its misuse can only be curbed through increased
surveillance.
6.11. At the 44th meeting held on 20.07.2012, the DCC noted the
importance of continuous surveillance to stop the misuse
of the Oxytocin. After deliberations, it was agreed that
diversion of the bulk drug to illegal channels could be
curtailed to a large extent, if it was ensured that the bulk
drug is sold to licensed manufacturers only.
6.12. On 12.11.2013, the DCC convened its 46th meeting,
wherein the misuse of oxytocin injections to milch animals
came up for further discussion.
After deliberations, the DCC recommended that the
manufacture and sale of Oxytocin injections should be
banned for veterinary use under Section 26A of the Act
coupled with the condition that the manufacturers of the
bulk drug Oxytocin should supply the Active
8
Pharmaceutical Ingredient (“API”) only to licensed
manufacturers of Oxytocin formulations for human use.
6.13. At the 65th meeting of the DTAB held on 25.11.2013, the
misuse of Oxytocin by dairy owners to extract milk from
milch animals and its harmful effects on animals and
human consumption was deliberated upon. While
acknowledging that Oxytocin had proven medical use for
inducing labour, and to control postpartum bleeding and
uterine hypotonicity, the DTAB recognized the abundant
availability and use of the drug in a clandestine manner,
which was a matter of great concern for public health. In
spite of the action taken by the authorities to place the
drug under Schedule H of the Drugs & Cosmetics Rules,
1945, which requires the drug to be dispensed only on the
prescription of a Registered Medical Practitioner, the
manufacture and sale of the drug in a clandestine manner
in large quantities, and its misuse by the farmers or dairy
owners was rampant.
The opinion of the Department of Animal Husbandry,
Dairying and Fisheries, Ministry of Agriculture, was sought
with respect to the proposal for banning Oxytocin for
Animal use. It was opined that ban on the production and
use of Oxytocin for veterinary purposes, was not
recommended, since the drug has therapeutic application
in case of expulsion of foetus, and retention of placenta
even in animals.
9
After deliberations, the DTAB noted that since the drug
has a definite use for therapeutic purposes, it need not be
prohibited. It was, however, opined that the manufacturer
of the bulk drug should supply the API only to licensed
manufacturers of the drug and veterinary hospitals. It was
further recommended that the State Drugs Controllers be
asked to curb the misuse of the drug through increased
surveillance and raids conducted on the possible hideouts
of clandestine manufacture and sale of the drug, and take
strict action against the offenders.
6.14. Pursuant to the recommendations made by the DTAB in
the 65th meeting, the Ministry of Health and Family Welfare
issued a Notification G.S.R 29(E) dated 17.01.2014
restricting the manufacture and sale of Oxytocin as under:
“Whereas the Central Government is satisfied that the drug Oxytocin has a
definite therapeutic use in certain medical conditions;
And whereas the Central Government is satisfied that it is necessary and
expedient to regulate and restrict the manufacture, sale and distribution of
the said drug in the country to prevent its misuse in public interest.
Now, therefore, in exercise of the powers conferred by Section 26A of the
Drugs and Cosmetics Act, 1940 (23 of 1940), the Central Government
hereby directs that the drug oxytocin shall be manufactured for sale or for
distribution or sold in the manner specified below, in addition to the
provisions contained in the said Act and Rules made thereunder, namely:
1. The manufacturers of bulk oxytocin drug shall supply the active
pharmaceutical drug only to the manufacturers licensed under the Drugs
and Cosmetics Rules, 1945 for manufacture of formulations of the said
drug.
2. The formulations meant for veterinary use shall be sold to the veterinary
hospitals only.”
(emphasis supplied)
6.15. The validity of the aforesaid Notification dated 17.01.2014
was challenged before the Punjab & Haryana High Court in
Narang Medical Store v. Union of India [W.P.(C) No.
10
7135/2014], inter alia on the ground that it was not in
consonance with the provisions of Section 26A of the Act.
The High Court vide judgment and order dated 28.01.2016,
upheld the validity of the Notification, to avoid the misuse
of the bulk drug or Active Pharmaceutical Ingredient used
in Oxytocin injections.
6.16. At the 67th meeting of the DTAB held on 01.04.14, the
DTAB once again recognized that the drug Oxytocin has a
definite role in the medical field for both humans and
animals, and as such the legitimate manufacture and sale
of the drugs cannot be stopped by banning the drug. Even
if the domestic manufacturers are prohibited from
manufacturing the drug, the bulk drug is liable to be
smuggled from the neighbouring countries for illegal use.
Misuse can only be contained by enhanced surveillance by
the regulatory authorities, followed by strict action against
the violators.
After deliberations, the DTAB recommended that at the
time of sale of oxytocin by retail chemists, the name and
address of the purchaser, the name of the patient, and the
quantity supplied shall be recorded. Such records shall be
maintained for three years, and shall be kept open for
inspection. This would help in not only maintaining the
legitimate supply of the drug, but also to curb misuse of
the drug through the legitimate sale channels.
6.17. The recommendations of DTAB came to be given statutory
effect by an amendment to Rule 65 of the Drugs and
11
Cosmetics Rules,1945 vide Notification dated 30th August
2013 published by the Ministry of Health and Family
Welfare.
6.18. On 05.11.2014, a meeting was convened by the Minister
for Women and Child Development Ministry (MWCD),
which was attended by Secretaries from various other
Ministries. In this meeting, a suggestion was mooted that
on account of the rampant misuse of Oxytocin, which led
to cows and animals contracting diseases, and the illegal
use for increasing milk production, could be effectively
controlled if a “Government of India owned company may
be allowed for production of this drug in the country and the
private companies may be prohibited for the same.”
6.19. At the 69th DTAB meeting held on 22.04.15, the DTAB
reiterated its earlier recommendation that Oxytocin “need
not be prohibited as it has definite use for therapeutic
purposes. Shri A. K. Tiwari of IVRI stated that the drug
oxytocin is an essential drug in the veterinary practice. He
added that the Department of animal husbandry had also
earlier given his opinion that the ban on production and use
of oxytocin for veterinary used is not recommended.” The
DTAB observed that the misuse of the drug can be
controlled by stricter control over the manufacture and sale
of the drug, especially through clandestine channels. The
DTAB noted that “Constant surveillance by the State Drug
Regulatory Authorities and other regulatory authorities can
only curb the misuse of the drug.”
12
6.20. In its 70th meeting dated 18.08.15, the DTAB was informed
that dairy owners were getting the drug manufactured at
dubious premises from unscrupulous suppliers. The DTAB
noted that the raw material or the bulk drug was being
clandestinely smuggled into the country from the border
States, which was then being crudely manufactured
clandestinely and sold to dairy owners at a very cheap rate.
The DTAB reiterated its recommendation that “the drug
legitimately manufactured is required for medical purposes
and as such cannot be prohibited. The misuse of the drug in
a crude form, can only be curbed through constant
surveillance by the Regulatory Authorities.”
6.21. On 16.10.2015, the DCC in its 49th Meeting discussed the
rampant misuse of Oxytocin through clandestine channels.
It was inter alia recommended that officials from the State
Drug Regulatory Authority must conduct periodic raids
with the assistance of the Police at suspected outlets; and
that the manufacture and sale of oxytocin formulations by
the licenced manufacturers in the State, should be
monitored regularly.
6.22. On 12.02.2018, the DTAB in its 78th meeting considered
the proposal to restrict the supply of Oxytocin formulations
for human use only to registered hospitals and clinics in
public and private sector to prevent misuse of the drug.
The members deliberated upon the matter and “agreed on
a draft notification for regulating, restricting the Oxytocin
13
formulations for human use to be supplied only to registered
hospitals and clinics in public and private sector.”
The DTAB accepted in principle the proposal to amend
Rule 96 of the Drugs and Cosmetics Rules, 1945 to ensure
that barcoding system is adopted for the manufacture and
sale of Oxytocin formulations so as to ensure track and
traceability of the product, to avoid its misuse.
The DTAB had further agreed to prohibit the import of
Oxytocin formulations under Section 10A of the said Act
for human as well as animal use.
6.23. On 09.04.2018, the DCC at the 53rd meeting was informed
about the recommendations of the 78th DTAB meeting held
on 12.02.2018 to address the misuse of Oxytocin. The
DCC, in principle, agreed with the recommendations of the
DTAB.
6.24. On 18.04.2018, The Ministry of Health and Family Welfare,
issued a Notification, containing “Draft Rules” viz. the
“Drugs and Cosmetics (Amendment) Rules, 2018, on which
objections and suggestions were invited to within 45 days.
The Draft Rules proposed to amend Rule 96 of the Drugs
and Cosmetics Rules, 1945 to ensure that a 3tier barcoding system is adopted by licensed manufacturers of
Oxytocin formulations to facilitate and trace their products.
The relevant extracts of Rule 1 and 2 are extracted
hereinbelow for ready reference:
DRAFT RULES
“1. (1) These rules may be called the Drugs and Cosmetics ( Amendment) Rules,
2018.
14
(2) These rules shall come into effect after one hundred eighty days of the publication
of the final rules in the Gazette of India. 2. In the Drugs and Cosmetics Rules, 1945,
in rule 96, in sub-rule (1), after clause (xii) the following clause shall be inserted,
namely:-
"(xiii) (A) The manufacturers of drug formulations of oxytocin shall print the details
specified below to facilitate tracking and tracing of their products, namely:-
a. at primary level packaging of two dimensional barcode encoding unique and
universal global product identification code in the 14 digits Global Trade Item
Number format along with batch number, expiry date and a unique serial number of
the primary pack;
b. at secondary level packaging of one or two dimensional barcode encoding unique
and universal global product identification code in the 14 digits Global Trade Item
Number format along with batch number, expiry date and a unique serial number of
the secondary pack;
c. at tertiary level packaging of one dimensional barcode encoding unique and
universal global product identification code in the 14 digits Global Trade Item
Number format along with batch number, expiry date and a unique serial number of
the Tertiary pack.
(B) The manufacturer of drug formulation shall maintain the data in the parent —
child relationship for all three level of packaging and their movement in its supply
chain.
(C) The data referred to in sub-rule (2) shall be uploaded on the central portal of the
Central Government by the manufacturer or its designated agency before release of
the drugs for sale or distribution. (D) The responsibility of the correctness,
completeness and ensuring timely upload of data on the Central portal shall be that of
the manufacturer.”
The Central Government did not proceed with these
Draft Rules, since the Impugned Notification came to be
passed on 27.04.2018. As a consequence, the Draft Rules
lapsed.
6.25. On 24.04.18, the Ministry of Health and Family Welfare in
exercise of its powers under Section 10A of the Act issued a
Notification completely prohibiting the import of ‘Oxytocin
and its formulation in any name or manner’ into India.
6.26. On 27.04.18, the Ministry of Health and Family Welfare in
exercise of its powers under Section 26A of the Act issued
the Impugned Notification, which superseded the
Notification dated 17.01.2014, and directed that the drug
Oxytocin shall be manufactured only by public sector
undertakings or companies for domestic use. However, the
manufacture of Oxytocin formulations for export purposes
shall be open to both public and private sector companies.
15
The impugned Notification date 27.04.2018 is extracted
herein below for ready reference:
“G.S.R. 411(E).—Whereas the Hon’ble High Court of Himachal Pradesh,
Shimla, has, in its judgment dated 15.3.2016 in CWPIL No. 16 of 2014
titled ‘Court on its own motion’ versus State of Himachal Pradesh and
others, observed that there is large scale clandestine manufacture and
sale of the drug Oxytocin leading to its grave misuse, which is harmful to
animals and humans;
And whereas, the said Hon’ble High Court also observed that the
feasibility of restricting the manufacture of Oxytocin only in public sector
companies and also restricting and limiting the manufacture of Oxytocin
by companies to whom licenses have already been granted should be
considered;
And whereas, the Drugs Technical Advisory Board constituted under
section 5 of the Drugs and Cosmetics Act, 1940 (23 of 1940) considered
the said issue in its meeting held on the 12th February 2018 and
recommended that Oxytocin formulations for human use be regulated
and restricted to be supplied only to registered hospitals and clinics in
public and private sector to prevent misuse of the said drug;
And whereas, the Central Government, on the basis of the
recommendations of the said Board and after examination of the matter,
is satisfied that unregulated and illegal use of the drug Oxytocin is likely
to involve risk to human beings or animals and that in the public interest
it is necessary and expedient to regulate and restrict the manufacture,
sale and distribution of the drug Oxytocin in the country to prevent its
misuse by unauthorised persons or otherwise;
Now, therefore, in exercise of the powers conferred by section 26A of the
said Act, and in supersession of the notification number G.S.R. 29(E)
dated 17th January, 2014, the Central Government hereby directs that
the drug Oxytocin shall be manufactured for sale or for distribution or
sold in the manner specified below, namely:
(i) The manufacture of Oxytocin formulations for domestic use shall
be by public sector undertakings or companies only and the label of the
product shall bear barcodes.
(ii) The manufacture of Oxytocin formulations for export purposes
shall be open to both public and private sector companies and the packs
of such manufacture for exports shall bear barcodes.
(iii) The manufacturers of active pharmaceutical ingredient of
Oxytocin shall supply the active pharmaceutical ingredient only to the
public sector manufacturers licensed under the Drugs and Cosmetics
Rules, 1945 for manufacture of formulations of the said drug for domestic
use.
(iv) The manufacturers of active pharmaceutical ingredient of
Oxytocin shall supply the said active pharmaceutical ingredient to the
manufacturers in public and private sector licensed under the Drugs and
Cosmetics Rules, 1945 for manufacture of formulations of the said drug
for export purpose.
(v) The Oxytocin formulations manufactured by the public sector
companies or undertakings licensed under the Drugs and Cosmetics
Rules, 1945 for domestic use shall supply the formulations meant for
human and veterinary use only,
16
(a) to the registered hospitals and clinics in public and private sector
directly; or (b) to the Pradhan Mantri Bhartiya Janaushadhi Pariyojana
(PMBJP) and Affordable Medicines and Reliable Implants for Treatment
(AMRIT) outlets or any other Government entity which may be specified
by the Central Government for this purpose in the country which shall
further supply the drug to the registered hospitals and clinics in public
and private sector.
(vi) The Oxytocin in any form or name shall not be allowed to be sold
through retail Chemist.”
(emphasis supplied)
6.27. On 25.07.18, the DTAB in its 80th meeting recommended
the amendment of the Impugned Notification by deleting
Clause (v) and Clauses (vi) of the impugned Notification
dated 27.04.18, so as to ensure availability of the drug for
human use.
6.28. The Impugned Notification was subsequently amended by
Notification dated 21.08.18. The Notification dated
21.08.18 substituted clauses (v) and (vi), with the following
amended clause (v),
“(v) The Oxytocin formulations manufactured by the public sector
companies or undertakings licensed under the Drugs and Cosmetics
Rules, 1945 shall be distributed or sold in accordance with such
rules.”
As a consequence of this amendment, the effect of the
impugned notification was diluted, and Oxytocin
formulations could be sold and distributed by the public
sector companies or undertakings in accordance with the
Drugs and Cosmetics Rules, 1945 as against the earlier
restriction wherein Oxytocin formulations could only be
supplied to the registered hospitals and clinics in public
and private sector directly; or through the Pradhan Mantri
Bhartiya Janaushadhi Pariyojana (PMBJP) and Affordable
17
Medicines and Reliable Implants for Treatment (AMRIT)
outlets.
6.29. On 30.07.2018, the DCC convened the 54th meeting where
the Chairman of the DCC apprised the Committee of the
Notification dated 27.04.2018 (“Impugned Notification”) to
restrict the manufacture for sale, sale or distribution of
Oxytocin to only to public sector undertakings or
companies for domestic use.
The Secretary, Ministry of Health & Family Welfare
requested the State Drug Controllers to ensure the
availability of Oxytocin in their respective States by placing
purchase orders in time with Karnataka Antibiotics &
Pharmaceuticals Ltd. (“KAPL”).
6.30. The Ministry of Health and Family Welfare issued another
Notification on the same date i.e. 21.08.18, wherein
Oxytocin, which was included under Entry No. 382 of
Schedule ‘H’ of the Drugs and Cosmetics Rules,1945 was
now shifted to Schedule ‘H1’ at Entry No. 47. Schedule H1
refers to Rules 65 and 97 of the Drugs and Cosmetics
Rules,1945.
As per the said Rules, Schedule H1 prescription drugs
provide for stricter control and additional precautions
when compared with Schedule H drugs.
The relevant extracts of the Rules are set out herein
below for ready reference:
“65. Conditions of licences. Licences in Forms 20, 20A, 20B, 20F,
20G, 21 and 21B shall be subject to the conditions stated therein and
to the following general conditions18
….
(3)(1) The supply of any drug [other than those specified in Schedule X]
on a prescription of a registered medical practitioner shall be recorded
at the time of supply in a prescription register specially maintained for
the purpose and the serial number of entry in this regard shall be
entered on the prescription. The following particulars shall be entered in
the register:
(a) serial number of the entry,
(b) the date of supply,
(c) the name and address of the prescriber,
[(d) the name and address of the patient, or the name and address of
the owner of the animal if the drug supplied is for veterinary use,]
(e) the name of the drug or preparation and the quantity or in the case of
a medicine made up by the licensee, the ingredients and quantities
thereof,
(f) in the case of a drug specified in Schedule C or Schedule H and
Schedule H1, the name of manufacturer of the drug, its batch number
and the date of expiry of potency, if any,
(g) the signature of the [registered Pharmacist] by or under whose
supervision the medicine was made up or supplied
…..
(h) the supply of a drug specified in Schedule H1 shall be
recorded in a separate register at the time of the supply giving
the name and address of the prescriber, the name of the patient,
the name of the drug and the quantity supplied and such
records shall be maintained for three years and be open for
inspection.
….
(6) The licensee shall produce for inspection by an Inspector appointed
under the Act on demand all registers and records maintained under
these Rules, and shall supply to the Inspector such information as he
may require for the purpose of ascertaining whether the provisions of
the Act and Rules thereunder have been observed.
(7) Except where otherwise provided in these Rules, all registers and
records maintained under these Rules shall be preserved for a period of
not less than two years from the date of the last entry therein.
(8) Notwithstanding anything contained in this Rule it shall not be
necessary to record particulars in a register specially maintained for the
purpose if the particulars are recorded in any other register specially
maintained under any other law for the time being in force.
9) (a) Substances specified in Schedule H and Schedule H1 or
Schedule X shall not be sold by retail except on and in
accordance with the prescription of a Registered Medical
Practitioner and in the case of substances specified in Schedule X, the
prescriptions shall be in duplicate, one copy of which shall be retained
by the licensee for a period of two years.
(b) The supply of drugs specified in Schedule H and Schedule H1
or Schedule X to Registered Medical Practitioners, Hospitals,
Dispensaries and Nursing Homes shall be made only against the
signed order in writing which shall be preserved by the licensee
for a period of two years.
19
….
(11) The person dispensing a prescription containing a drug specified in
Schedule H and Schedule H1 and Schedule X shall comply with the
following requirements in addition to other requirement of these rules.
(a) the prescription must not be dispensed more than once unless the
prescriber has stated thereon that it may be dispensed more than once;
(b) if the prescription contains a direction that it may be dispensed a
stated number of times or at stated intervals it must not be dispensed
otherwise than in accordance with the directions;
(c) at the time of dispensing there must be noted on the prescription
above the signature of the prescriber the name and address of the seller
and the date on which the prescription is dispensed.
…..
(11A) No person dispensing a prescription containing substances
specified in Schedule H and Schedule H1 or X, may supply any other
preparation, whether containing the same substance or not, in lieu
thereof.
97. Labelling of medicines.— 1 [(1) The container of a medicine for
internal use shall—
(b) if it contains a substance specified in Schedule H, be labelled with
the symbol Rx and conspicuously displayed on the left top corner of the
label and shall also be labelled with the following words in legible black
coloured font size in completely red rectangular box:
‘Schedule H Prescription Drug Caution: Not to be sold by retail without
the prescription of a Registered Medical Practitioner’
(e) if it contains a drug substance specified in Schedule H1, be
labelled with the symbol Rx, which shall be in red and
conspicuously displayed on the left top corner of the label, and
shall also be labelled with the following words in legible black
coloured font size in completely red rectangular box:
“SCHEDULE H1 PRESCRIPTION DRUG – CAUTION. –
It is dangerous to take this preparation except in
accordance with the medical advice.
Not to be sold by retail without the prescription of a
Registered Medical Practitioner.
(emphasis supplied)
7. The Impugned Notification dated 27.04.18 was challenged by
the Respondents – BGP Products Operations GmBH, Mylan
Pharmaceuticals Pvt. Ltd., All India Drug Action Network, Neon
Laboratories Ltd. and Ciron Drugs And Pharmaceuticals Pvt. Ltd
before the Delhi High Court in May 2018.
20
8. The Delhi High Court vide the Impugned Judgment dated
14.12.2018 quashed the impugned Notification as being
arbitrary and unreasonable. It was held there was no scientific
basis, and insufficient data to support the conclusion that the
existing availability or manner of distribution of Oxytocin posed
a risk to human life or animals, which is one of the preconditions for exercise of power under Section 26A of the Act.
The High Court held that the trigger and catalyst to the passing
of the impugned Notification was the decision of the High Court
of Himachal Pradesh, Shimla dated 15.03.2016 in Court On Its
Own Motion vs State of Himachal Pradesh6
, which did not
consider that Oxytocin was an essential drug which was
included in the NLEM. It was further held that the Central
Government did not adequately weigh the danger to the lives of
the users of Oxytocin i.e pregnant women and young mothers,
nor did it consider the deleterious effect to the public generally
and women particularly, of the possible restricted supply of a
lifesaving drug, if the manufacture is confined to one single
public sector enterprise, namely Karnataka Antibiotic and
Pharmaceuticals Ltd. (“KAPL”), which admittedly has no prior
experience in manufacturing the drug. The High Court opined
that the risk of such a consequence can be drastic since the
scarcity of the drug, or even a restricted availability can lead to
increased maternal fatalities during childbirth, impairing lives of
thousands of innocent young mothers. It was held that there is
no provision in the Act, including Section 26A, which authorized
the Central Government to create a State monopoly in favour of
6 CWPIL No. 16 of 2014
21
one licensee, which did not fall within the protective ambit of
Article 19(1)(6)(ii).
9. We have heard the learned Counsel for the parties, and perused
the pleadings and written submissions filed by the parties.
10. Mr. Tushar Mehta, Learned Solicitor General and Mr.
Vikramjeet Banerjee, Learned Additional Solicitor General of
India appeared on behalf of the AppellantUnion of India.
The Senior Counsel for the Union of India assailed the
impugned Judgment on the ground that the High Court had
exceeded its jurisdiction by reviewing the sufficiency of the
material relied upon by the Central Government in exercise of
its legislative powers under Section 26A of the Act. The Counsel
for the Union of IndiaAppellants submitted as follows:
10.1. The exercise of power under Section 26A being
legislative in nature, the grounds for judicial review are
limited. The Court should exercise judicial restraint in
review of policy matters and cannot sit in appeal over a
policy decision. Since the impugned notification
creates a general restriction with respect to all licensed
manufacturers, it would not amount to an executive
action.
10.2. It was further submitted that there is a
presumption in favour of constitutionality or validity of a
subordinate legislation and the burden is upon the
Respondents to show that it is invalid. Reliance was
placed on Akadasi Pradhan vs State of Orissa7
, State of
7 1963 Supp (2) SCR 691 : AIR 1963 SC 1047
22
T.N. v. P. Krishnamurthy8
, UOI v. Cynamide India Pvt.
Ltd9
; E Merck (India) Limited v. UOI10; Macleods
Pharmaceuticals Limited v. UOI11
, Drug Controller General
of India vs West Bengal Small Scale Manufacturers12
, UniSan Pharmaceuticals Ltd.& Anr. v UOI13
10.3. It was further argued that the Court cannot
exercise judicial review over a legislative act on the
basis of sufficiency or insufficiency of material. The
Court cannot weigh and sift through evidence or material
relied upon by the Central Government in exercise of its
powers under Section 26A. The Court cannot substitute its
wisdom in place of the wisdom of the Central
Government, particularly, in matters of public health
and public interest. Reliance was placed on Union of
India vs Pfizer Ltd.14, Khoday Distilleries Ltd. v State of
Karnataka15, Shimnit Utsch India (P) Ltd. v West Bengal
Transport Infrastructure Development Ltd. & Ors.16
,
Directorate of Film Festivals v. Gaurav Ashwin Jain & Ors.17
,
Academy of Nutrition Improvement v Union of India18
,
Vincent Panikurlangara v Union of India19
, Systopic
Laboratories v Dr. Prem Gupta20
.
8 (2006) 4 SCC 517
9 1987 (2) SCC 720
10 2001 (90) DLT 16
11 2012 SCC Online Mad 1735
12 AIR 2000 Cal 133
13 AIR 2002 Ker 72: (2001) 1 KLJ 822
14 (2018) 2 SCC 39
15 (1996) 10 SCC 304
16 (2010) 6 SCC 303.
17 (2007) 4 SCC 737
18 (2011) 8 SCC 274
19 (1987) 2 SCC 165
20 (1994) Suppl. 1 SCC 160
23
10.4. It was submitted that Section 26A confers wide
powers on the Central Government to either regulate,
restrict or prohibit the manufacture, sale or distribution of
a drug, if the Central Government is “satisfied” that the
conditions mentioned in Section 26A exist.
Section 26A of the Act reads as under:
26A. Powers of Central Government to prohibit manufacture, etc., of
drug and cosmetic in public interest.Without prejudice to any other
provision contained in this Chapter, if the Central Government is
satisfied, that the use of any drug or cosmetic is likely to involve any
risk to human beings or animals or that any drug does not have the
therapeutic value claimed or purported to be claimed for it or contains
ingredients and in such quantity for which there is no therapeutic
justification and that in the public interest it is necessary or
expedient so to do, then, that Government may, by notification in the
Official Gazette, regulate, restrict or prohibit the manufacture, sale or
distribution of such drug or cosmetic.”
The Central Government was not bound by
recommendations of the DTAB or the DCC. The Central
Government could independently arrive at a satisfaction
with regard to the factum of misuse of the drug.
10.5. The misuse of Oxytocin was consistently
deliberated by the DCC and DTAB since the past 21 years
from 1997 onwards, and formed the basis of the impugned
Notification. The minutes of the meetings of the DTAB and
DCC reveal the factum of misuse of Oxytocin and its
harmful effects on milch animals and humans through
consumption of such milk. The subjective “satisfaction” of
the Central Government was arrived at after considering
24
the factum of misuse which was deliberated by the DTAB
and DCC. Reliance was placed on a Chart on Oxytocin Data
Compilation from April 2015 to August 2018, which showed
that licensed manufacturers were manufacturing far more
Oxytocin than the legitimate national requirement, and
there was a considerable amount of “leakage” in the
production. The licensed manufacturers were responsible
for this leakage as they were supplying the bulk drug or API
manufactured by Hemmo Pharma to small illegal local
units for production of spurious Oxytocin. The Central
Government in public interest decided to strike a balance
between two competing interests i.e animal and human
health, and issued the impugned notification.
10.6.The impugned Notification does not violate or
extinguish the right to carry on any trade or business or
occupation of the RespondentManufacturers under Article
19(1)(g). The Impugned Notification does not create a
State Monopoly in favour of KAPL, since the Respondentmanufacturers still have a right to export Oxytocin and sell
their products overseas. They are restricted only insofar as
domestic manufacture and distribution of Oxytocin is
concerned. The Impugned Notification merely regulates the
manufacture of Oxytocin, and does not completely prohibit
it.
Even otherwise, the High Court in the impugned
judgment has held in favour of the Appellants to the extent
that the power to restrict or prohibit under Section 26A
can be used to “partially ban the manufacture of a drug i.e
25
prohibit its production by private manufacturers, and
reserve it, so to speak for the public sector”.
Such a measure cannot be said to be ultra vires the
power under the statute.
10.7.The Impugned Notification is protected under Article
19(6) of the Constitution of India. It was contended that
Article 19(6)(ii) of the Constitution empowers the State to
enact laws with regard to any trade, business, industry or
service, to the complete or partial exclusion of citizens
and private entities.
In the alternative, even if the impugned notification
does create a State monopoly, there is no requirement
under Article 19(6) to enact legislation for the creation of
the same. Restrictions on trade can be created by way of
notification as well. Such a measure should be presumed
to be reasonable and constitutional. Reliance was placed
on Akadasi Pradhan vs State of Orissa21
, Khoday
Distilleries Ltd. v State of Karnataka22, Daruka & Co v Union
of India & Ors.23, Indian Drugs & Pharmaceuticals Ltd. v.
Punjab Drugs Manufacturers Assn.24, Municipal Committee,
Amritsar v State of Punjab25
.
10.8. It was further submitted that the impugned
notification was issued in furtherance of legitimate
public interest towards protection of bovine heath,
21 1963 Supp (2) SCR 691 : AIR 1963 SC 1047
22 (1995) 1 SCC 574
23 (1973) 2 SCC 617
24 (1999) 6 SCC 247
25 (1966) 1 SCC 475
26
maintenance of animal husbandry standards and
protection of the environment. The impugned notification is
also aimed to prevent the ill effects of Oxytocin, which
may affect human life due to prolonged consumption of
milk from milch animals injected with the drug. The
Appellants placed reliance on Articles 48, 48A and
51A(g) of the Constitution, which form part of the Directive
Principles of State Policy.
11. Mr. Kapil Sibal, Mr. Colin Gonsalves and Mr. S. Ganesh, Senior
Advocates appeared on behalf of the Respondents. Ms.
Meenakshi Arora, Senior Advocate appeared for the Federation
of Obstetric and Gynaecological Societies of India, and Mr.
Jayant Mehta, Advocate appeared on behalf of the Indian
Medical Association (Intervenors).
The Respondents submitted as follows:
11.1 The Respondents – BGP Products Operations GmBH,
Mylan Pharmaceuticals Pvt. Ltd., and Ciron Drugs And
Pharmaceuticals Pvt. Ltd have been manufacturing
Oxytocin injections I.P. 5IU per 1 ml under a license issued
under Part VII of the Drugs and Cosmetics Rules, 1945 for
over three decades in India. They manufacture the drug
only for domestic use. It was submitted that the
Respondents have at least 50% of the market share in
terms of manufacturing the drug. It was submitted that the
Respondentmanufacturers do not sell the drug directly to
the end consumer and only sell by way of wholesale dealing
to licensed distributors and licensed retail chemists, and
use the very same chain of distribution that KAPL uses.
27
The license issued to the manufacturers under Part VII
of the Act also carries with it the license to sell by way of
wholesale dealing within the territory of India.
As a consequence of the Impugned Notification, the
license issued to these Respondents, for all practical
purposes, stood cancelled and terminated.
The impugned Notification impinges and violates
Article 19(1)(g) of the Constitution in as much as it has
completely prohibited the Respondents from
manufacturing Oxytocin as they do not have a license to
export the drug.
11.2 It was submitted that the Act provides for a level playing
field in relation to the manufacture, distribution and sale of
drugs by any person. Reliance was placed on Section 16
read with Schedule II of the Act, to contend that the Act is
concerned with “what” is manufactured, distributed or
sold; and, not with “who” is the manufacturer or
distributor or seller of the drug.
11.3 It was submitted that there was no relevant material or
evidence placed before the Central Government for it to
arrive at a “satisfaction” to completely prohibit the
manufacture and sale of the drug by the RespondentManufacturers. It was submitted that neither the DCC nor
DTAB had recommended or approved the complete
prohibition of manufacture of Oxytocin by private
licensees. It was further submitted that the statutory
bodies had never recommended that the manufacture of
28
Oxytocin for domestic use be exclusively reserved for the
public sector.
11.4 It was submitted that the basis of the impugned
Notification was the decision of the High Court of Himachal
Pradesh, Shimla dated 15.03.2016 in Court On Its Own
Motion vs State of Himachal Pradesh26, which was
completely irrelevant for forming a “satisfaction” while
issuing the Impugned Notification.
11.5 The RespondentManufacturers had never been prosecuted
or even issued a ShowCause Notice under the Act for any
misuse or abuse of the drug, or violation of any provisions
of the Act. There was no material or evidence to show any
illegal or clandestine manufacture of Oxytocin by the
Respondentmanufacturers who are licensed in accordance
with law. The Chart on Oxytocin Data Compilation from
April 2015 to August 2018 relied on by the Central
Government to show unutilised quantity of the bulk drug
or the API is wholly irrelevant, and was only prepared in
August 2018, much after the impugned Notification was
passed.
11.6 It was submitted that at the 78th meeting of the DTAB
dated 12.02.18, which forms the basis of the Impugned
Notification, the DTAB did not recommend to restrict the
manufacture of Oxytocin to public sector companies only,
nor did it determine that Oxytocin is likely to pose a risk to
animals or humans.
26 CWPIL No. 16 of 2014
29
Rather, the DTAB agreed on a draft notification for
regulating and restricting the supply of Oxytocin
formulations only through registered hospitals and clinics
in the ‘public and private sector’.
11.7 It was submitted that the Draft Rules published by the
Ministry of Health and Family Welfare on 18.04.2018
suggested and recommended a 3tier system of barcoding of
all Oxytocin formulations manufactured by licensed
manufacturers “so as to ensure track and traceability of the
product to avoid its misuse”. The Central Government after
10 days i.e., on 27.04.2018, took the drastic course of
prohibiting the manufacture of the drug by all private
sector licensees, and arbitrarily issued the impugned
notification.
It was submitted that there is no material on record to
show on what basis the Central Government suddenly
changed its stand between 18.04.2018 and 27.04.2018
from a 3tier system of barcoding to that of complete
prohibition on the manufacture of the drug by licensed
private sector manufacturers.
11.8 It was submitted that the impugned notification is
arbitrary, unreasonable and issued with complete nonapplication of mind. The power under S. 26A cannot be
used in respect of a licensed drug, or in respect of a
spurious, misbranded, adulterated and illegally or
clandestinely manufactured drug. The “use of any drug” as
used in Section 26A means its use only for the intended,
30
declared and avowed purpose, and does not cover its
misuse. Therefore, Section 26A could not have been
invoked to prohibit/regulate/restrict the misuse of an
essential and licensed drug.
11.9 Section 26A cannot be invoked where the manufacture,
sale or distribution of a drug is already “prohibited” under
Section 18 of the Act. The Act and the accompanying Rules
provide for a robust mechanism for countering any
contravention of the Act by licensed manufacturers.
Therefore, there was no public necessity to completely
prohibit all licensed manufacturers from manufacturing
the drug.
11.10 The exercise of power under Section 26A cannot be said to
be legislative in nature, since it is based on the
“satisfaction” of the Central Government alone. The Central
Government in exercise of its executive/administrative
powers under Section 26A, cannot create a State monopoly
in the manufacture for domestic sale of a drug, and claim
the protection of Article 19(6) of the Constitution. Reliance
was placed on Rai Sahab Ram Jawaya Kapur & Ors. v
State of Punjab27
.
11.11 It was further submitted that Memorandum of Delegated
Legislation accompanying the Bill No.65 of 1982
introducing insertion of Section 26A in the Act, makes no
reference to the exercise of powers under Section 26A as a
form of delegated legislation.
27 (1955) 2 SCR 225
31
11.12 It was submitted that the Impugned notification
discriminates between private sector licensed
manufacturers and public sector manufacturers as a State
monopoly has been created in favour of one public sector
company, viz. KAPL. It was submitted that the impugned
notification is hit by Article 14 of the Constitution of India
as being arbitrary, unreasonable, discriminatory and
disproportionate.
11.13 By virtue of the Impugned Notification, only one public
sector company viz. Karnataka Antibiotic and
Pharmaceuticals Ltd. (“KAPL”), would be allowed to
manufacture the drug for domestic purposes. This would
create a monopoly in favour of a public sector corporation,
which could have a disastrous effect on the supply and
availability of the drug to hospitals and patients in the
country. It was further submitted that KAPL is completely
inexperienced, since it obtained a license to manufacture
the drug as recently as in April 2018 i.e. a couple of weeks
before the impugned notification was passed. It was
submitted that the manufacturing activity commenced in
May 2018, after the impugned notification was passed.
11.14 It was further submitted that the Drug Control
Department, Drug Testing Laboratory Karnataka had
found that several drugs manufactured by KAPL, as
recently as in October 2018 were of NonStandard Quality
(NSQ).
32
11.15 It was further submitted that on 01.11.2017, the Cabinet
Committee on Economic Affairs had given its inprinciple
approval for the strategic disinvestment of the Central
Government’s 100% equity stake in KAPL though an
auction sale. Since the Central Government owns at least
51% equity stake in KAPL, this would mean that upon
such disinvestment KAPL would no longer be a public
sector company/undertaking.
11.16 It was contended that the Central Government could not
have invoked Section 26A of the Act, since Oxytocin is an
“essential drug” enlisted under the NLEM. The NLEM is
listed in the 1st Schedule to the DPCO notified by the
Central Government in exercise of its powers under Section
3 of the Essential Commodities Act, 1955. It was submitted
that power under Section 26A cannot be exercised in
respect of NLEM drugs. Section 6 of the EC Act gives the
DPCO an overriding effect over other statutes. The
impugned notification issued under Section 26A is ultra
vires the said provision since it runs counter to the DPCO
and the Section 6 of the Essential Commodities Act, 1955.
12. After having heard the Senior Counsel appearing for parties
on both sides, we are of the view that the present group of
appeals raise serious issues having far reaching implications.
The twin issues which arise for consideration are on the one
hand, the unregulated and clandestine manufacture of the
drug Oxytocin, which is reportedly misused in milch animals;
and on the other hand, the continued supply of an essential
lifesaving drug, which is used as the first line drug for
33
prevention and treatment of postpartum haemorrhage at the
time of childbirth.
The following substantial questions of law arise for
consideration:
(i) Whether a drug included in the National List of Essential
Medicines published under Schedule 1 of the Drugs
(Prices Control) Order, 2013 notified under Section 3 of
the Essential Commodities Act, 1955 would be subject to
the provisions of Section 26A of the Drugs and Cosmetics
Act, 1940?
(ii) Whether the impugned notification has resulted in
creating a monopoly in favour of public sector companies,
to the complete exclusion of private sector companies, and
if so, whether it would be protected by Article 19(6)(ii) read
with Article 14 of the Constitution?
(iii)Whether the classification made by the impugned
notification between licensed public sector and private
sector companies, in the manufacture of the drug
Oxytocin for domestic use, would achieve the object and
purpose of preventing the unregulated and illegal use of
the drug?
34
(iv)Whether it would be in public interest to restrict the
manufacture of a lifesaving drug for domestic use, to a
single public sector undertaking, to the complete
exclusion of the private sector companies, particularly in
view of the high maternal mortality rates in the country?
(v) Whether there was relevant and objective material before
the Central Government to form the basis of satisfaction
to exercise the power to prohibit the manufacture of the
drug by the private sector companies for domestic use,
under Section 26A of the Drugs and Cosmetics Act, 1940?
(vi)Whether the object of curbing the clandestine
manufacture and unregulated use of the drug Oxytocin,
which is covered by Section 18 of the Drugs and
Cosmetics Act, 1940, can be achieved by taking recourse
to Section 26A by imposing a ban on the manufacture of
licensed drugs by private sector companies?
(vii) Whether the exercise of power by the Central Government
under Section 26A of the Drugs and Cosmetics Act, 1940
is legislative or executive in nature?
35
13. We are of the considered view that this is a fit case to refer
the matter to a larger Bench of three Judges to consider the
aforesaid questions of law, and authoritatively pronounce
upon the same. Accordingly, we direct the Registry to place
the present group of appeals before the Hon’ble Chief
Justice of India for necessary directions.
.......................................J.
(ABHAY MANOHAR SAPRE)
...…...............………………J.
(INDU MALHOTRA)
New Delhi;
August 22, 2019.
36
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL Nos.65886591 OF 2019
(Arising out of S.L.P.(C) Nos.32963299 of 2019)
Union of India & Anr. Etc.Etc. ….Appellant(s)
VERSUS
BGP Products Operations GMBH
& Hagene Immermatt Weg. & Anr.
Etc.Etc. ….Respondent(s)
J U D G M E N T
Abhay Manohar Sapre, J.
1. I have had the advantage of going through an
elaborate drafted judgment proposed by my learned
sister Justice Indu Malhotra. I entirely agree with the
reasoning and the conclusion arrived at by her.
2. I need not set out the facts and submissions of
learned counsel for the parties as the same have been
succinctly set out by my learned sister in her draft
judgment.
1
3. Indeed, having heard very learned and persuasive
arguments of Mr. Tushar Mehta, learned Solicitor
General for the appellants and Mr. Kapil Sibal, learned
senior counsel for the respondents at length and on
perusal of the record, I am also of the considered
opinion that having regard to the nature of controversy
and the myriad issues, which arise in the appeals,
they have far reaching consequences on the rights of
the citizens qua State and, in particular, the abstract
legal issues such as what is the nature of powers
exercised by the Central Government under Section
26A of the Drugs and Cosmetics Act, whether it is
legislative or executive, because we find that there is
no decision of this Court so far on this issue. (see
observations of this Court in Union of India & Anr.
vs. Pfizer Ltd. & Ors., 2018 (2) SCC 39)
4. Secondly, what are the essential ingredients for
invoking the powers under Section 26A of the Drugs
and Cosmetics Act in relation to any Drug and
2
whether such power is in conflict with the exercise of
powers conferred under the Essential Commodities
Act.
5. Thirdly, whether issuance of impugned
notification has resulted in creating monopoly
(whether partial or full) in favour of the State and, if
so, whether it has satisfied the rigor of Article 14 read
with Article 19 (6)(ii) of the Constitution of India.
6. Lastly, depending upon the answer to the nature
of exercise of powers under Section 26A of the Drugs
and Cosmetics Act, whether material relied on by the
Central Government can be held as sufficient to
sustain the impugned action.
7. In my opinion, if the exercise of power under
Section 26A of the Drugs and Cosmetics Act is held
as being legislative in nature, the parameters to
examine the legality of the impugned notification
would be different whereas if it is held to be executive
in nature, the parameters to examine the legality of
3
impugned notification would be somewhat different
than the former one.
8. In my considered opinion, the decision either way
on any of these questions will have its far reaching
effect on the rights and health of public at large and
especially on the rights and health of the teenage girls,
pregnant females and milching animals. It will also
decide the scope of the powers of the Central
Government under Section 26A of the Drugs and
Cosmetics Act qua the rights of the persons, who are
engaged in business of manufacture and sale of Drugs
specified under the Drugs and Cosmetics Act read with
Essential Commodities Act.
9. In effect, in my opinion, it will not be a judgment
inter party but it will be in rem laying down the law on
the questions.
10. It is for all these reasons, we have formulated the
questions for being answered on their respective
4
merits in paragraph 12 of my sister’s drafted
judgment.
11. Let the matter, therefore, be placed before
Hon’ble the Chief Justice of India under Rule VI (2) of
the Supreme Court Rules for being dealt with by the
larger bench for their authoritative pronouncement on
the questions framed and for the disposal of the
appeals accordingly.
12. Since I have also formed an opinion to refer the
matter to be dealt with by the larger bench under VI
(2) of the Supreme Court Rules, I also do not consider
it necessary to give my opinion in detail on the
questions formulated.
……...................................J
[ABHAY MANOHAR SAPRE]
New Delhi;
August 22, 2019
5
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
Civil Appeal Nos.65886591 of 2019
(Arising out of SLPs (Civil) Nos. 32963299 Of 2019)
UNION OF INDIA & ANR. ETC APPELLANTS
Versus
BGP PRODUCTS OPERATIONS GMBH
AND HAGENE IMMERMATT WEG. & ANR. ETC. RESPONDENTS
J U D G M E N T
INDU MALHOTRA, J.
Leave granted.
1. The issue which arises for consideration in the present appeals
is the validity of the Notification dated 27.04.2018 issued under
Section 26A of the Drugs and Cosmetics Act, 1940 (hereinafter
referred to as the “Act”) by the Ministry of Health and Family
Welfare.
The impugned notification restricts the manufacture of
Oxytocin formulations for domestic use, only by public sector
1
undertakings or companies, to the complete exclusion of the
private sector companies. However, the manufacture of the drug
for export purposes is open to both public and private sector
companies.
It was notified that the notification would come into force on
01.07.18.
By a subsequent notification dated 29.06.2018, the date was
extended to 01.09.18.
2. Till the issuance of the impugned notification, Oxytocin was
being manufactured by private sector companies to meet the
entire need in the country.
After the issuance of the impugned notification, Karnataka
Antibiotics & Pharmaceuticals Ltd. (“KAPL”), a public sector
company has commenced the manufacture of Oxytocin in May
2018.
3. The Active Pharmaceutical Ingredient (“API”) or the bulk drug is
manufactured in India only by one private sector company in
India, viz. Hemmo Pharmaceuticals Pvt Ltd. (“Hemmo Pharma”).
4. The impugned Notification dated 27.04.2018 was challenged in
a group of Writ Petitions by various private sector companies
who are inter alia manufacturing the drug Oxytocin in W.P.(C)
No. 6084/2018, W.P.(C) No. 8555/2018, W.P.(C) No. 8666/2018
and W.P.(C) No. 9601/2018 before the Delhi High Court on
various grounds. The Delhi High Court granted stay of the
operation of the impugned notification vide Interim Order dated
31.08.2018. The order of stay was extended by subsequent
2
Orders, which remained in force till 15.12.2018. The Delhi High
Court vide a detailed Judgment and Order dated 14.12.2018
has quashed the impugned notification. As a consequence, the
impugned notification did not come into force at all.
5. The AppellantUnion of India has filed the present Special Leave
Petitions before this Court, to challenge the judgment passed by
the Delhi High Court.
6. The subject matter of the present appeals is the drug Oxytocin,
which is notified as an essential drug by the World Health
Organization (WHO) Model List of Essential Medicines since
2002. The concept of “Essential Medicines” was first introduced
by the WHO in 1977, and has now been adopted by many
countries, NGOs and international nonprofit supply agencies.
Oxytocin continues to be notified in the 21st edition of the WHO
Model List of Essential Medicines published in 2019. It is listed
under the head “Medicines For Reproductive Health And
Perinatal Care” and the recommended form of dosage is
“Injection: 10 IU in 1 mL”.
6.1. Oxytocin is an essential lifesaving drug, which is included
in the National List of Essential Medicines, 2011 (“NLEM”).
It continues to be listed at S.No. 26.1.5 in the latest
notification published in 2015. The NLEM is published
under the 1st Schedule to the Drugs (Prices) Control Order,
2013 (“DPCO”) under Section 3 of the Essential
Commodities Act, 1955 (“EC Act”).
The NLEM specifies the recommended dosage and
strength of Oxytocin injection as 5IU per 1 ml and 10IU per
3
1 ml. Oxytocin injection in the form of “5 IU per ml in 1ml
ampoule pack” is included in the “Essential Drug List for
the year 20162018” at Serial No. 228 published by the
National Health Mission, Department of Health and Family
Welfare, Government of Himachal Pradesh.
6.2. The objective of the National List of Essential Medicines
(NLEM) is that the drugs included in it are adequate to
meet the contemporary health needs of the general
population of the country.1
It is one of the key instruments
in balanced healthcare delivery system of a country. The
first NLEM was prepared and released in 1996. This list
was subsequently revised in 2003, 2011 and 2015.
NLEM contains those essential medicines “that satisfy
the primary health needs of the country‘s population.” NLEM
medicines are required to be made available at all times in
adequate quantities in the appropriate dosage forms to
serve the larger public interest. The primary purpose of the
NLEM is to promote rational use of medicines considering
three important aspects i.e cost, safety and efficacy. The
list is considered to include the most costeffective
medicines for a particular indication.
The criteria for the inclusion of a medicine in the
NLEM inter alia includes that the medicine should be
approved/licensed in India; the medicine should have
1 Press Release on “Essential Drugs” dated 15.03.2013 by the Press Information Bureau,
Government of India, Ministry of Health and Family Welfare.
4
proven efficacy and safety profile based on valid scientific
evidence; the medicine should be cost effective etc.2
The NLEM is prepared by an Expert Core Committee
constituted by the Director General of Health Services
(DGHS) out of the World Health Organization (WHO) Model
List of Essential Medicines, Essential Drugs Lists of
various States, and medicines used in various National
Health Programmes and Emergency Care Drugs.3
6.3. Oxytocin is recommended as the first line drug for
prevention and treatment of postpartum haemorrhage
(excess bleeding immediately after childbirth).4
Oxytocin is
the drug of choice used for pregnant women to induce or
augment labour at the time of delivery, to control postpartum bleeding and uterine hypotonicity and is placed
under Schedule H1 of the said Act.5
Oxytocin is also
included in the Indian Pharmacopoeia published in 2010,
2014, and 2018.
6.4. The misuse of Oxytocin has been the subject matter of
discussion because of rampant misuse of the drug on
milch animals. The issue was under deliberation by the
Drugs Technical Advisory Board (“DTAB”) and the Drugs
Consultative Committee (“DCC”), which are statutory
bodies constituted under the said Act.
2 Executive Summary, Report of the Core Committee for Revision of the National List of
Essential Medicines published in 2015.
3 Paragraph 3.1(ii) of the National Pharmaceuticals Pricing Policy, 2012 (NPPP2012) dated
07.12.12 published by the Ministry of Chemicals and Fertilizers, Government of India
4 World Health Organisation Recommendations For The Prevention And Treatment Of
Postpartum Haemorrhage, 2012
5 FiftyNinth Report Of Parliamentary Standing Committee On Health And Family Welfare
On The Functioning Of Central Drugs Standard Control Organization
5
The DTAB is a statutory body established under
Section 5 of the said Act. The DTAB consists of technical
experts to advise the Central Government and State
Governments on technical issues arising under the said
Act.
The DCC has been constituted under Section 7 of the
said Act, which consists of representatives of the Central
Government, and one representative of each of the State
Governments to advise the Central and State Governments,
and the DTAB, on any matter relating to secure uniformity
in the administration of the Act.
6.5. The deliberations on the issue of rampant misuse of the
drug commenced from 1997 onwards.
It is necessary to advert to the deliberations of the
meetings of these statutory bodies to understand the
background in which the impugned notification was
passed.
6.6. The misuse of Oxytocin came up for discussion first in the
31st meeting of the DCC held on 21.08.1997 and
22.08.1997. The DCC noted that it had received several
complaints on the misuse/abuse of Oxytocin in veterinary
practice. Oxytocin injections were being misused to
artificially extract milk from cows and buffaloes. The
members of the Committee were requested to collect more
information on the issue.
6.7. At the 48th meeting of the DTAB held on 08.07.1999, the
DTAB discussed the misuse of Oxytocin in milch animals
6
and the deleterious effects due to consumption of such
milk on consumers. The DTAB considered the suggestion
of imposing a general ban on the manufacture of Oxytocin.
However, 11 members opined that as the drug is
“essential” in the medical field, and is included in the
“Essential Drug list”, the same could not be prohibited.
The Joint Secretary, Ministry of Food Processing, an
invitee to the meeting mooted a suggestion that “perhaps
restricting the manufacture of Oxytocin to PSUs, and
thereafter keeping a track on its distribution” may be
considered.
The representative of the Department of Consumer
Affairs agreed that the whole issue of use and misuse of
Oxytocin injection requires an indepth examination and
suggested that a detailed paper be prepared based on the
outcome of such study.
6.8. At the 36st meeting of the DCC held on 23.07.05 and
24.07.05, the DCC advised not to ban Oxytocin injection
since it formed a part of the NLEM. The DCC noted that the
sale of Oxytocin had been regulated by amending the
package size of Oxytocin to “single blister packs”, as
against the earlier prescribed larger packaging of 50100
ampoules.
6.9. At the 40th Meeting of the DCC held on 29.06.2009, it was
observed that the misuse of Oxytocin injection had been
reported in many parts of the country, and a strong
vigilance was required to stop the clandestine manufacture
7
of the drug. The DCC observed that the drug has a definite
place in medical treatment, and is used by gynaecologists
universally. The DCC urged the members/representatives
of each State to ensure that the clandestine manufacture of
the drug under their jurisdiction is curbed through
extensive surveys and raids.
6.10. At the 43rd meeting of the DCC held on 14.11.2011, the
DCC observed that there was an increasing misuse of the
drug by dairy owners, because of the clandestine supply of
the drug through illegal channels, and recommended that
its misuse can only be curbed through increased
surveillance.
6.11. At the 44th meeting held on 20.07.2012, the DCC noted the
importance of continuous surveillance to stop the misuse
of the Oxytocin. After deliberations, it was agreed that
diversion of the bulk drug to illegal channels could be
curtailed to a large extent, if it was ensured that the bulk
drug is sold to licensed manufacturers only.
6.12. On 12.11.2013, the DCC convened its 46th meeting,
wherein the misuse of oxytocin injections to milch animals
came up for further discussion.
After deliberations, the DCC recommended that the
manufacture and sale of Oxytocin injections should be
banned for veterinary use under Section 26A of the Act
coupled with the condition that the manufacturers of the
bulk drug Oxytocin should supply the Active
8
Pharmaceutical Ingredient (“API”) only to licensed
manufacturers of Oxytocin formulations for human use.
6.13. At the 65th meeting of the DTAB held on 25.11.2013, the
misuse of Oxytocin by dairy owners to extract milk from
milch animals and its harmful effects on animals and
human consumption was deliberated upon. While
acknowledging that Oxytocin had proven medical use for
inducing labour, and to control postpartum bleeding and
uterine hypotonicity, the DTAB recognized the abundant
availability and use of the drug in a clandestine manner,
which was a matter of great concern for public health. In
spite of the action taken by the authorities to place the
drug under Schedule H of the Drugs & Cosmetics Rules,
1945, which requires the drug to be dispensed only on the
prescription of a Registered Medical Practitioner, the
manufacture and sale of the drug in a clandestine manner
in large quantities, and its misuse by the farmers or dairy
owners was rampant.
The opinion of the Department of Animal Husbandry,
Dairying and Fisheries, Ministry of Agriculture, was sought
with respect to the proposal for banning Oxytocin for
Animal use. It was opined that ban on the production and
use of Oxytocin for veterinary purposes, was not
recommended, since the drug has therapeutic application
in case of expulsion of foetus, and retention of placenta
even in animals.
9
After deliberations, the DTAB noted that since the drug
has a definite use for therapeutic purposes, it need not be
prohibited. It was, however, opined that the manufacturer
of the bulk drug should supply the API only to licensed
manufacturers of the drug and veterinary hospitals. It was
further recommended that the State Drugs Controllers be
asked to curb the misuse of the drug through increased
surveillance and raids conducted on the possible hideouts
of clandestine manufacture and sale of the drug, and take
strict action against the offenders.
6.14. Pursuant to the recommendations made by the DTAB in
the 65th meeting, the Ministry of Health and Family Welfare
issued a Notification G.S.R 29(E) dated 17.01.2014
restricting the manufacture and sale of Oxytocin as under:
“Whereas the Central Government is satisfied that the drug Oxytocin has a
definite therapeutic use in certain medical conditions;
And whereas the Central Government is satisfied that it is necessary and
expedient to regulate and restrict the manufacture, sale and distribution of
the said drug in the country to prevent its misuse in public interest.
Now, therefore, in exercise of the powers conferred by Section 26A of the
Drugs and Cosmetics Act, 1940 (23 of 1940), the Central Government
hereby directs that the drug oxytocin shall be manufactured for sale or for
distribution or sold in the manner specified below, in addition to the
provisions contained in the said Act and Rules made thereunder, namely:
1. The manufacturers of bulk oxytocin drug shall supply the active
pharmaceutical drug only to the manufacturers licensed under the Drugs
and Cosmetics Rules, 1945 for manufacture of formulations of the said
drug.
2. The formulations meant for veterinary use shall be sold to the veterinary
hospitals only.”
(emphasis supplied)
6.15. The validity of the aforesaid Notification dated 17.01.2014
was challenged before the Punjab & Haryana High Court in
Narang Medical Store v. Union of India [W.P.(C) No.
10
7135/2014], inter alia on the ground that it was not in
consonance with the provisions of Section 26A of the Act.
The High Court vide judgment and order dated 28.01.2016,
upheld the validity of the Notification, to avoid the misuse
of the bulk drug or Active Pharmaceutical Ingredient used
in Oxytocin injections.
6.16. At the 67th meeting of the DTAB held on 01.04.14, the
DTAB once again recognized that the drug Oxytocin has a
definite role in the medical field for both humans and
animals, and as such the legitimate manufacture and sale
of the drugs cannot be stopped by banning the drug. Even
if the domestic manufacturers are prohibited from
manufacturing the drug, the bulk drug is liable to be
smuggled from the neighbouring countries for illegal use.
Misuse can only be contained by enhanced surveillance by
the regulatory authorities, followed by strict action against
the violators.
After deliberations, the DTAB recommended that at the
time of sale of oxytocin by retail chemists, the name and
address of the purchaser, the name of the patient, and the
quantity supplied shall be recorded. Such records shall be
maintained for three years, and shall be kept open for
inspection. This would help in not only maintaining the
legitimate supply of the drug, but also to curb misuse of
the drug through the legitimate sale channels.
6.17. The recommendations of DTAB came to be given statutory
effect by an amendment to Rule 65 of the Drugs and
11
Cosmetics Rules,1945 vide Notification dated 30th August
2013 published by the Ministry of Health and Family
Welfare.
6.18. On 05.11.2014, a meeting was convened by the Minister
for Women and Child Development Ministry (MWCD),
which was attended by Secretaries from various other
Ministries. In this meeting, a suggestion was mooted that
on account of the rampant misuse of Oxytocin, which led
to cows and animals contracting diseases, and the illegal
use for increasing milk production, could be effectively
controlled if a “Government of India owned company may
be allowed for production of this drug in the country and the
private companies may be prohibited for the same.”
6.19. At the 69th DTAB meeting held on 22.04.15, the DTAB
reiterated its earlier recommendation that Oxytocin “need
not be prohibited as it has definite use for therapeutic
purposes. Shri A. K. Tiwari of IVRI stated that the drug
oxytocin is an essential drug in the veterinary practice. He
added that the Department of animal husbandry had also
earlier given his opinion that the ban on production and use
of oxytocin for veterinary used is not recommended.” The
DTAB observed that the misuse of the drug can be
controlled by stricter control over the manufacture and sale
of the drug, especially through clandestine channels. The
DTAB noted that “Constant surveillance by the State Drug
Regulatory Authorities and other regulatory authorities can
only curb the misuse of the drug.”
12
6.20. In its 70th meeting dated 18.08.15, the DTAB was informed
that dairy owners were getting the drug manufactured at
dubious premises from unscrupulous suppliers. The DTAB
noted that the raw material or the bulk drug was being
clandestinely smuggled into the country from the border
States, which was then being crudely manufactured
clandestinely and sold to dairy owners at a very cheap rate.
The DTAB reiterated its recommendation that “the drug
legitimately manufactured is required for medical purposes
and as such cannot be prohibited. The misuse of the drug in
a crude form, can only be curbed through constant
surveillance by the Regulatory Authorities.”
6.21. On 16.10.2015, the DCC in its 49th Meeting discussed the
rampant misuse of Oxytocin through clandestine channels.
It was inter alia recommended that officials from the State
Drug Regulatory Authority must conduct periodic raids
with the assistance of the Police at suspected outlets; and
that the manufacture and sale of oxytocin formulations by
the licenced manufacturers in the State, should be
monitored regularly.
6.22. On 12.02.2018, the DTAB in its 78th meeting considered
the proposal to restrict the supply of Oxytocin formulations
for human use only to registered hospitals and clinics in
public and private sector to prevent misuse of the drug.
The members deliberated upon the matter and “agreed on
a draft notification for regulating, restricting the Oxytocin
13
formulations for human use to be supplied only to registered
hospitals and clinics in public and private sector.”
The DTAB accepted in principle the proposal to amend
Rule 96 of the Drugs and Cosmetics Rules, 1945 to ensure
that barcoding system is adopted for the manufacture and
sale of Oxytocin formulations so as to ensure track and
traceability of the product, to avoid its misuse.
The DTAB had further agreed to prohibit the import of
Oxytocin formulations under Section 10A of the said Act
for human as well as animal use.
6.23. On 09.04.2018, the DCC at the 53rd meeting was informed
about the recommendations of the 78th DTAB meeting held
on 12.02.2018 to address the misuse of Oxytocin. The
DCC, in principle, agreed with the recommendations of the
DTAB.
6.24. On 18.04.2018, The Ministry of Health and Family Welfare,
issued a Notification, containing “Draft Rules” viz. the
“Drugs and Cosmetics (Amendment) Rules, 2018, on which
objections and suggestions were invited to within 45 days.
The Draft Rules proposed to amend Rule 96 of the Drugs
and Cosmetics Rules, 1945 to ensure that a 3tier barcoding system is adopted by licensed manufacturers of
Oxytocin formulations to facilitate and trace their products.
The relevant extracts of Rule 1 and 2 are extracted
hereinbelow for ready reference:
DRAFT RULES
“1. (1) These rules may be called the Drugs and Cosmetics ( Amendment) Rules,
2018.
14
(2) These rules shall come into effect after one hundred eighty days of the publication
of the final rules in the Gazette of India. 2. In the Drugs and Cosmetics Rules, 1945,
in rule 96, in sub-rule (1), after clause (xii) the following clause shall be inserted,
namely:-
"(xiii) (A) The manufacturers of drug formulations of oxytocin shall print the details
specified below to facilitate tracking and tracing of their products, namely:-
a. at primary level packaging of two dimensional barcode encoding unique and
universal global product identification code in the 14 digits Global Trade Item
Number format along with batch number, expiry date and a unique serial number of
the primary pack;
b. at secondary level packaging of one or two dimensional barcode encoding unique
and universal global product identification code in the 14 digits Global Trade Item
Number format along with batch number, expiry date and a unique serial number of
the secondary pack;
c. at tertiary level packaging of one dimensional barcode encoding unique and
universal global product identification code in the 14 digits Global Trade Item
Number format along with batch number, expiry date and a unique serial number of
the Tertiary pack.
(B) The manufacturer of drug formulation shall maintain the data in the parent —
child relationship for all three level of packaging and their movement in its supply
chain.
(C) The data referred to in sub-rule (2) shall be uploaded on the central portal of the
Central Government by the manufacturer or its designated agency before release of
the drugs for sale or distribution. (D) The responsibility of the correctness,
completeness and ensuring timely upload of data on the Central portal shall be that of
the manufacturer.”
The Central Government did not proceed with these
Draft Rules, since the Impugned Notification came to be
passed on 27.04.2018. As a consequence, the Draft Rules
lapsed.
6.25. On 24.04.18, the Ministry of Health and Family Welfare in
exercise of its powers under Section 10A of the Act issued a
Notification completely prohibiting the import of ‘Oxytocin
and its formulation in any name or manner’ into India.
6.26. On 27.04.18, the Ministry of Health and Family Welfare in
exercise of its powers under Section 26A of the Act issued
the Impugned Notification, which superseded the
Notification dated 17.01.2014, and directed that the drug
Oxytocin shall be manufactured only by public sector
undertakings or companies for domestic use. However, the
manufacture of Oxytocin formulations for export purposes
shall be open to both public and private sector companies.
15
The impugned Notification date 27.04.2018 is extracted
herein below for ready reference:
“G.S.R. 411(E).—Whereas the Hon’ble High Court of Himachal Pradesh,
Shimla, has, in its judgment dated 15.3.2016 in CWPIL No. 16 of 2014
titled ‘Court on its own motion’ versus State of Himachal Pradesh and
others, observed that there is large scale clandestine manufacture and
sale of the drug Oxytocin leading to its grave misuse, which is harmful to
animals and humans;
And whereas, the said Hon’ble High Court also observed that the
feasibility of restricting the manufacture of Oxytocin only in public sector
companies and also restricting and limiting the manufacture of Oxytocin
by companies to whom licenses have already been granted should be
considered;
And whereas, the Drugs Technical Advisory Board constituted under
section 5 of the Drugs and Cosmetics Act, 1940 (23 of 1940) considered
the said issue in its meeting held on the 12th February 2018 and
recommended that Oxytocin formulations for human use be regulated
and restricted to be supplied only to registered hospitals and clinics in
public and private sector to prevent misuse of the said drug;
And whereas, the Central Government, on the basis of the
recommendations of the said Board and after examination of the matter,
is satisfied that unregulated and illegal use of the drug Oxytocin is likely
to involve risk to human beings or animals and that in the public interest
it is necessary and expedient to regulate and restrict the manufacture,
sale and distribution of the drug Oxytocin in the country to prevent its
misuse by unauthorised persons or otherwise;
Now, therefore, in exercise of the powers conferred by section 26A of the
said Act, and in supersession of the notification number G.S.R. 29(E)
dated 17th January, 2014, the Central Government hereby directs that
the drug Oxytocin shall be manufactured for sale or for distribution or
sold in the manner specified below, namely:
(i) The manufacture of Oxytocin formulations for domestic use shall
be by public sector undertakings or companies only and the label of the
product shall bear barcodes.
(ii) The manufacture of Oxytocin formulations for export purposes
shall be open to both public and private sector companies and the packs
of such manufacture for exports shall bear barcodes.
(iii) The manufacturers of active pharmaceutical ingredient of
Oxytocin shall supply the active pharmaceutical ingredient only to the
public sector manufacturers licensed under the Drugs and Cosmetics
Rules, 1945 for manufacture of formulations of the said drug for domestic
use.
(iv) The manufacturers of active pharmaceutical ingredient of
Oxytocin shall supply the said active pharmaceutical ingredient to the
manufacturers in public and private sector licensed under the Drugs and
Cosmetics Rules, 1945 for manufacture of formulations of the said drug
for export purpose.
(v) The Oxytocin formulations manufactured by the public sector
companies or undertakings licensed under the Drugs and Cosmetics
Rules, 1945 for domestic use shall supply the formulations meant for
human and veterinary use only,
16
(a) to the registered hospitals and clinics in public and private sector
directly; or (b) to the Pradhan Mantri Bhartiya Janaushadhi Pariyojana
(PMBJP) and Affordable Medicines and Reliable Implants for Treatment
(AMRIT) outlets or any other Government entity which may be specified
by the Central Government for this purpose in the country which shall
further supply the drug to the registered hospitals and clinics in public
and private sector.
(vi) The Oxytocin in any form or name shall not be allowed to be sold
through retail Chemist.”
(emphasis supplied)
6.27. On 25.07.18, the DTAB in its 80th meeting recommended
the amendment of the Impugned Notification by deleting
Clause (v) and Clauses (vi) of the impugned Notification
dated 27.04.18, so as to ensure availability of the drug for
human use.
6.28. The Impugned Notification was subsequently amended by
Notification dated 21.08.18. The Notification dated
21.08.18 substituted clauses (v) and (vi), with the following
amended clause (v),
“(v) The Oxytocin formulations manufactured by the public sector
companies or undertakings licensed under the Drugs and Cosmetics
Rules, 1945 shall be distributed or sold in accordance with such
rules.”
As a consequence of this amendment, the effect of the
impugned notification was diluted, and Oxytocin
formulations could be sold and distributed by the public
sector companies or undertakings in accordance with the
Drugs and Cosmetics Rules, 1945 as against the earlier
restriction wherein Oxytocin formulations could only be
supplied to the registered hospitals and clinics in public
and private sector directly; or through the Pradhan Mantri
Bhartiya Janaushadhi Pariyojana (PMBJP) and Affordable
17
Medicines and Reliable Implants for Treatment (AMRIT)
outlets.
6.29. On 30.07.2018, the DCC convened the 54th meeting where
the Chairman of the DCC apprised the Committee of the
Notification dated 27.04.2018 (“Impugned Notification”) to
restrict the manufacture for sale, sale or distribution of
Oxytocin to only to public sector undertakings or
companies for domestic use.
The Secretary, Ministry of Health & Family Welfare
requested the State Drug Controllers to ensure the
availability of Oxytocin in their respective States by placing
purchase orders in time with Karnataka Antibiotics &
Pharmaceuticals Ltd. (“KAPL”).
6.30. The Ministry of Health and Family Welfare issued another
Notification on the same date i.e. 21.08.18, wherein
Oxytocin, which was included under Entry No. 382 of
Schedule ‘H’ of the Drugs and Cosmetics Rules,1945 was
now shifted to Schedule ‘H1’ at Entry No. 47. Schedule H1
refers to Rules 65 and 97 of the Drugs and Cosmetics
Rules,1945.
As per the said Rules, Schedule H1 prescription drugs
provide for stricter control and additional precautions
when compared with Schedule H drugs.
The relevant extracts of the Rules are set out herein
below for ready reference:
“65. Conditions of licences. Licences in Forms 20, 20A, 20B, 20F,
20G, 21 and 21B shall be subject to the conditions stated therein and
to the following general conditions18
….
(3)(1) The supply of any drug [other than those specified in Schedule X]
on a prescription of a registered medical practitioner shall be recorded
at the time of supply in a prescription register specially maintained for
the purpose and the serial number of entry in this regard shall be
entered on the prescription. The following particulars shall be entered in
the register:
(a) serial number of the entry,
(b) the date of supply,
(c) the name and address of the prescriber,
[(d) the name and address of the patient, or the name and address of
the owner of the animal if the drug supplied is for veterinary use,]
(e) the name of the drug or preparation and the quantity or in the case of
a medicine made up by the licensee, the ingredients and quantities
thereof,
(f) in the case of a drug specified in Schedule C or Schedule H and
Schedule H1, the name of manufacturer of the drug, its batch number
and the date of expiry of potency, if any,
(g) the signature of the [registered Pharmacist] by or under whose
supervision the medicine was made up or supplied
…..
(h) the supply of a drug specified in Schedule H1 shall be
recorded in a separate register at the time of the supply giving
the name and address of the prescriber, the name of the patient,
the name of the drug and the quantity supplied and such
records shall be maintained for three years and be open for
inspection.
….
(6) The licensee shall produce for inspection by an Inspector appointed
under the Act on demand all registers and records maintained under
these Rules, and shall supply to the Inspector such information as he
may require for the purpose of ascertaining whether the provisions of
the Act and Rules thereunder have been observed.
(7) Except where otherwise provided in these Rules, all registers and
records maintained under these Rules shall be preserved for a period of
not less than two years from the date of the last entry therein.
(8) Notwithstanding anything contained in this Rule it shall not be
necessary to record particulars in a register specially maintained for the
purpose if the particulars are recorded in any other register specially
maintained under any other law for the time being in force.
9) (a) Substances specified in Schedule H and Schedule H1 or
Schedule X shall not be sold by retail except on and in
accordance with the prescription of a Registered Medical
Practitioner and in the case of substances specified in Schedule X, the
prescriptions shall be in duplicate, one copy of which shall be retained
by the licensee for a period of two years.
(b) The supply of drugs specified in Schedule H and Schedule H1
or Schedule X to Registered Medical Practitioners, Hospitals,
Dispensaries and Nursing Homes shall be made only against the
signed order in writing which shall be preserved by the licensee
for a period of two years.
19
….
(11) The person dispensing a prescription containing a drug specified in
Schedule H and Schedule H1 and Schedule X shall comply with the
following requirements in addition to other requirement of these rules.
(a) the prescription must not be dispensed more than once unless the
prescriber has stated thereon that it may be dispensed more than once;
(b) if the prescription contains a direction that it may be dispensed a
stated number of times or at stated intervals it must not be dispensed
otherwise than in accordance with the directions;
(c) at the time of dispensing there must be noted on the prescription
above the signature of the prescriber the name and address of the seller
and the date on which the prescription is dispensed.
…..
(11A) No person dispensing a prescription containing substances
specified in Schedule H and Schedule H1 or X, may supply any other
preparation, whether containing the same substance or not, in lieu
thereof.
97. Labelling of medicines.— 1 [(1) The container of a medicine for
internal use shall—
(b) if it contains a substance specified in Schedule H, be labelled with
the symbol Rx and conspicuously displayed on the left top corner of the
label and shall also be labelled with the following words in legible black
coloured font size in completely red rectangular box:
‘Schedule H Prescription Drug Caution: Not to be sold by retail without
the prescription of a Registered Medical Practitioner’
(e) if it contains a drug substance specified in Schedule H1, be
labelled with the symbol Rx, which shall be in red and
conspicuously displayed on the left top corner of the label, and
shall also be labelled with the following words in legible black
coloured font size in completely red rectangular box:
“SCHEDULE H1 PRESCRIPTION DRUG – CAUTION. –
It is dangerous to take this preparation except in
accordance with the medical advice.
Not to be sold by retail without the prescription of a
Registered Medical Practitioner.
(emphasis supplied)
7. The Impugned Notification dated 27.04.18 was challenged by
the Respondents – BGP Products Operations GmBH, Mylan
Pharmaceuticals Pvt. Ltd., All India Drug Action Network, Neon
Laboratories Ltd. and Ciron Drugs And Pharmaceuticals Pvt. Ltd
before the Delhi High Court in May 2018.
20
8. The Delhi High Court vide the Impugned Judgment dated
14.12.2018 quashed the impugned Notification as being
arbitrary and unreasonable. It was held there was no scientific
basis, and insufficient data to support the conclusion that the
existing availability or manner of distribution of Oxytocin posed
a risk to human life or animals, which is one of the preconditions for exercise of power under Section 26A of the Act.
The High Court held that the trigger and catalyst to the passing
of the impugned Notification was the decision of the High Court
of Himachal Pradesh, Shimla dated 15.03.2016 in Court On Its
Own Motion vs State of Himachal Pradesh6
, which did not
consider that Oxytocin was an essential drug which was
included in the NLEM. It was further held that the Central
Government did not adequately weigh the danger to the lives of
the users of Oxytocin i.e pregnant women and young mothers,
nor did it consider the deleterious effect to the public generally
and women particularly, of the possible restricted supply of a
lifesaving drug, if the manufacture is confined to one single
public sector enterprise, namely Karnataka Antibiotic and
Pharmaceuticals Ltd. (“KAPL”), which admittedly has no prior
experience in manufacturing the drug. The High Court opined
that the risk of such a consequence can be drastic since the
scarcity of the drug, or even a restricted availability can lead to
increased maternal fatalities during childbirth, impairing lives of
thousands of innocent young mothers. It was held that there is
no provision in the Act, including Section 26A, which authorized
the Central Government to create a State monopoly in favour of
6 CWPIL No. 16 of 2014
21
one licensee, which did not fall within the protective ambit of
Article 19(1)(6)(ii).
9. We have heard the learned Counsel for the parties, and perused
the pleadings and written submissions filed by the parties.
10. Mr. Tushar Mehta, Learned Solicitor General and Mr.
Vikramjeet Banerjee, Learned Additional Solicitor General of
India appeared on behalf of the AppellantUnion of India.
The Senior Counsel for the Union of India assailed the
impugned Judgment on the ground that the High Court had
exceeded its jurisdiction by reviewing the sufficiency of the
material relied upon by the Central Government in exercise of
its legislative powers under Section 26A of the Act. The Counsel
for the Union of IndiaAppellants submitted as follows:
10.1. The exercise of power under Section 26A being
legislative in nature, the grounds for judicial review are
limited. The Court should exercise judicial restraint in
review of policy matters and cannot sit in appeal over a
policy decision. Since the impugned notification
creates a general restriction with respect to all licensed
manufacturers, it would not amount to an executive
action.
10.2. It was further submitted that there is a
presumption in favour of constitutionality or validity of a
subordinate legislation and the burden is upon the
Respondents to show that it is invalid. Reliance was
placed on Akadasi Pradhan vs State of Orissa7
, State of
7 1963 Supp (2) SCR 691 : AIR 1963 SC 1047
22
T.N. v. P. Krishnamurthy8
, UOI v. Cynamide India Pvt.
Ltd9
; E Merck (India) Limited v. UOI10; Macleods
Pharmaceuticals Limited v. UOI11
, Drug Controller General
of India vs West Bengal Small Scale Manufacturers12
, UniSan Pharmaceuticals Ltd.& Anr. v UOI13
10.3. It was further argued that the Court cannot
exercise judicial review over a legislative act on the
basis of sufficiency or insufficiency of material. The
Court cannot weigh and sift through evidence or material
relied upon by the Central Government in exercise of its
powers under Section 26A. The Court cannot substitute its
wisdom in place of the wisdom of the Central
Government, particularly, in matters of public health
and public interest. Reliance was placed on Union of
India vs Pfizer Ltd.14, Khoday Distilleries Ltd. v State of
Karnataka15, Shimnit Utsch India (P) Ltd. v West Bengal
Transport Infrastructure Development Ltd. & Ors.16
,
Directorate of Film Festivals v. Gaurav Ashwin Jain & Ors.17
,
Academy of Nutrition Improvement v Union of India18
,
Vincent Panikurlangara v Union of India19
, Systopic
Laboratories v Dr. Prem Gupta20
.
8 (2006) 4 SCC 517
9 1987 (2) SCC 720
10 2001 (90) DLT 16
11 2012 SCC Online Mad 1735
12 AIR 2000 Cal 133
13 AIR 2002 Ker 72: (2001) 1 KLJ 822
14 (2018) 2 SCC 39
15 (1996) 10 SCC 304
16 (2010) 6 SCC 303.
17 (2007) 4 SCC 737
18 (2011) 8 SCC 274
19 (1987) 2 SCC 165
20 (1994) Suppl. 1 SCC 160
23
10.4. It was submitted that Section 26A confers wide
powers on the Central Government to either regulate,
restrict or prohibit the manufacture, sale or distribution of
a drug, if the Central Government is “satisfied” that the
conditions mentioned in Section 26A exist.
Section 26A of the Act reads as under:
26A. Powers of Central Government to prohibit manufacture, etc., of
drug and cosmetic in public interest.Without prejudice to any other
provision contained in this Chapter, if the Central Government is
satisfied, that the use of any drug or cosmetic is likely to involve any
risk to human beings or animals or that any drug does not have the
therapeutic value claimed or purported to be claimed for it or contains
ingredients and in such quantity for which there is no therapeutic
justification and that in the public interest it is necessary or
expedient so to do, then, that Government may, by notification in the
Official Gazette, regulate, restrict or prohibit the manufacture, sale or
distribution of such drug or cosmetic.”
The Central Government was not bound by
recommendations of the DTAB or the DCC. The Central
Government could independently arrive at a satisfaction
with regard to the factum of misuse of the drug.
10.5. The misuse of Oxytocin was consistently
deliberated by the DCC and DTAB since the past 21 years
from 1997 onwards, and formed the basis of the impugned
Notification. The minutes of the meetings of the DTAB and
DCC reveal the factum of misuse of Oxytocin and its
harmful effects on milch animals and humans through
consumption of such milk. The subjective “satisfaction” of
the Central Government was arrived at after considering
24
the factum of misuse which was deliberated by the DTAB
and DCC. Reliance was placed on a Chart on Oxytocin Data
Compilation from April 2015 to August 2018, which showed
that licensed manufacturers were manufacturing far more
Oxytocin than the legitimate national requirement, and
there was a considerable amount of “leakage” in the
production. The licensed manufacturers were responsible
for this leakage as they were supplying the bulk drug or API
manufactured by Hemmo Pharma to small illegal local
units for production of spurious Oxytocin. The Central
Government in public interest decided to strike a balance
between two competing interests i.e animal and human
health, and issued the impugned notification.
10.6.The impugned Notification does not violate or
extinguish the right to carry on any trade or business or
occupation of the RespondentManufacturers under Article
19(1)(g). The Impugned Notification does not create a
State Monopoly in favour of KAPL, since the Respondentmanufacturers still have a right to export Oxytocin and sell
their products overseas. They are restricted only insofar as
domestic manufacture and distribution of Oxytocin is
concerned. The Impugned Notification merely regulates the
manufacture of Oxytocin, and does not completely prohibit
it.
Even otherwise, the High Court in the impugned
judgment has held in favour of the Appellants to the extent
that the power to restrict or prohibit under Section 26A
can be used to “partially ban the manufacture of a drug i.e
25
prohibit its production by private manufacturers, and
reserve it, so to speak for the public sector”.
Such a measure cannot be said to be ultra vires the
power under the statute.
10.7.The Impugned Notification is protected under Article
19(6) of the Constitution of India. It was contended that
Article 19(6)(ii) of the Constitution empowers the State to
enact laws with regard to any trade, business, industry or
service, to the complete or partial exclusion of citizens
and private entities.
In the alternative, even if the impugned notification
does create a State monopoly, there is no requirement
under Article 19(6) to enact legislation for the creation of
the same. Restrictions on trade can be created by way of
notification as well. Such a measure should be presumed
to be reasonable and constitutional. Reliance was placed
on Akadasi Pradhan vs State of Orissa21
, Khoday
Distilleries Ltd. v State of Karnataka22, Daruka & Co v Union
of India & Ors.23, Indian Drugs & Pharmaceuticals Ltd. v.
Punjab Drugs Manufacturers Assn.24, Municipal Committee,
Amritsar v State of Punjab25
.
10.8. It was further submitted that the impugned
notification was issued in furtherance of legitimate
public interest towards protection of bovine heath,
21 1963 Supp (2) SCR 691 : AIR 1963 SC 1047
22 (1995) 1 SCC 574
23 (1973) 2 SCC 617
24 (1999) 6 SCC 247
25 (1966) 1 SCC 475
26
maintenance of animal husbandry standards and
protection of the environment. The impugned notification is
also aimed to prevent the ill effects of Oxytocin, which
may affect human life due to prolonged consumption of
milk from milch animals injected with the drug. The
Appellants placed reliance on Articles 48, 48A and
51A(g) of the Constitution, which form part of the Directive
Principles of State Policy.
11. Mr. Kapil Sibal, Mr. Colin Gonsalves and Mr. S. Ganesh, Senior
Advocates appeared on behalf of the Respondents. Ms.
Meenakshi Arora, Senior Advocate appeared for the Federation
of Obstetric and Gynaecological Societies of India, and Mr.
Jayant Mehta, Advocate appeared on behalf of the Indian
Medical Association (Intervenors).
The Respondents submitted as follows:
11.1 The Respondents – BGP Products Operations GmBH,
Mylan Pharmaceuticals Pvt. Ltd., and Ciron Drugs And
Pharmaceuticals Pvt. Ltd have been manufacturing
Oxytocin injections I.P. 5IU per 1 ml under a license issued
under Part VII of the Drugs and Cosmetics Rules, 1945 for
over three decades in India. They manufacture the drug
only for domestic use. It was submitted that the
Respondents have at least 50% of the market share in
terms of manufacturing the drug. It was submitted that the
Respondentmanufacturers do not sell the drug directly to
the end consumer and only sell by way of wholesale dealing
to licensed distributors and licensed retail chemists, and
use the very same chain of distribution that KAPL uses.
27
The license issued to the manufacturers under Part VII
of the Act also carries with it the license to sell by way of
wholesale dealing within the territory of India.
As a consequence of the Impugned Notification, the
license issued to these Respondents, for all practical
purposes, stood cancelled and terminated.
The impugned Notification impinges and violates
Article 19(1)(g) of the Constitution in as much as it has
completely prohibited the Respondents from
manufacturing Oxytocin as they do not have a license to
export the drug.
11.2 It was submitted that the Act provides for a level playing
field in relation to the manufacture, distribution and sale of
drugs by any person. Reliance was placed on Section 16
read with Schedule II of the Act, to contend that the Act is
concerned with “what” is manufactured, distributed or
sold; and, not with “who” is the manufacturer or
distributor or seller of the drug.
11.3 It was submitted that there was no relevant material or
evidence placed before the Central Government for it to
arrive at a “satisfaction” to completely prohibit the
manufacture and sale of the drug by the RespondentManufacturers. It was submitted that neither the DCC nor
DTAB had recommended or approved the complete
prohibition of manufacture of Oxytocin by private
licensees. It was further submitted that the statutory
bodies had never recommended that the manufacture of
28
Oxytocin for domestic use be exclusively reserved for the
public sector.
11.4 It was submitted that the basis of the impugned
Notification was the decision of the High Court of Himachal
Pradesh, Shimla dated 15.03.2016 in Court On Its Own
Motion vs State of Himachal Pradesh26, which was
completely irrelevant for forming a “satisfaction” while
issuing the Impugned Notification.
11.5 The RespondentManufacturers had never been prosecuted
or even issued a ShowCause Notice under the Act for any
misuse or abuse of the drug, or violation of any provisions
of the Act. There was no material or evidence to show any
illegal or clandestine manufacture of Oxytocin by the
Respondentmanufacturers who are licensed in accordance
with law. The Chart on Oxytocin Data Compilation from
April 2015 to August 2018 relied on by the Central
Government to show unutilised quantity of the bulk drug
or the API is wholly irrelevant, and was only prepared in
August 2018, much after the impugned Notification was
passed.
11.6 It was submitted that at the 78th meeting of the DTAB
dated 12.02.18, which forms the basis of the Impugned
Notification, the DTAB did not recommend to restrict the
manufacture of Oxytocin to public sector companies only,
nor did it determine that Oxytocin is likely to pose a risk to
animals or humans.
26 CWPIL No. 16 of 2014
29
Rather, the DTAB agreed on a draft notification for
regulating and restricting the supply of Oxytocin
formulations only through registered hospitals and clinics
in the ‘public and private sector’.
11.7 It was submitted that the Draft Rules published by the
Ministry of Health and Family Welfare on 18.04.2018
suggested and recommended a 3tier system of barcoding of
all Oxytocin formulations manufactured by licensed
manufacturers “so as to ensure track and traceability of the
product to avoid its misuse”. The Central Government after
10 days i.e., on 27.04.2018, took the drastic course of
prohibiting the manufacture of the drug by all private
sector licensees, and arbitrarily issued the impugned
notification.
It was submitted that there is no material on record to
show on what basis the Central Government suddenly
changed its stand between 18.04.2018 and 27.04.2018
from a 3tier system of barcoding to that of complete
prohibition on the manufacture of the drug by licensed
private sector manufacturers.
11.8 It was submitted that the impugned notification is
arbitrary, unreasonable and issued with complete nonapplication of mind. The power under S. 26A cannot be
used in respect of a licensed drug, or in respect of a
spurious, misbranded, adulterated and illegally or
clandestinely manufactured drug. The “use of any drug” as
used in Section 26A means its use only for the intended,
30
declared and avowed purpose, and does not cover its
misuse. Therefore, Section 26A could not have been
invoked to prohibit/regulate/restrict the misuse of an
essential and licensed drug.
11.9 Section 26A cannot be invoked where the manufacture,
sale or distribution of a drug is already “prohibited” under
Section 18 of the Act. The Act and the accompanying Rules
provide for a robust mechanism for countering any
contravention of the Act by licensed manufacturers.
Therefore, there was no public necessity to completely
prohibit all licensed manufacturers from manufacturing
the drug.
11.10 The exercise of power under Section 26A cannot be said to
be legislative in nature, since it is based on the
“satisfaction” of the Central Government alone. The Central
Government in exercise of its executive/administrative
powers under Section 26A, cannot create a State monopoly
in the manufacture for domestic sale of a drug, and claim
the protection of Article 19(6) of the Constitution. Reliance
was placed on Rai Sahab Ram Jawaya Kapur & Ors. v
State of Punjab27
.
11.11 It was further submitted that Memorandum of Delegated
Legislation accompanying the Bill No.65 of 1982
introducing insertion of Section 26A in the Act, makes no
reference to the exercise of powers under Section 26A as a
form of delegated legislation.
27 (1955) 2 SCR 225
31
11.12 It was submitted that the Impugned notification
discriminates between private sector licensed
manufacturers and public sector manufacturers as a State
monopoly has been created in favour of one public sector
company, viz. KAPL. It was submitted that the impugned
notification is hit by Article 14 of the Constitution of India
as being arbitrary, unreasonable, discriminatory and
disproportionate.
11.13 By virtue of the Impugned Notification, only one public
sector company viz. Karnataka Antibiotic and
Pharmaceuticals Ltd. (“KAPL”), would be allowed to
manufacture the drug for domestic purposes. This would
create a monopoly in favour of a public sector corporation,
which could have a disastrous effect on the supply and
availability of the drug to hospitals and patients in the
country. It was further submitted that KAPL is completely
inexperienced, since it obtained a license to manufacture
the drug as recently as in April 2018 i.e. a couple of weeks
before the impugned notification was passed. It was
submitted that the manufacturing activity commenced in
May 2018, after the impugned notification was passed.
11.14 It was further submitted that the Drug Control
Department, Drug Testing Laboratory Karnataka had
found that several drugs manufactured by KAPL, as
recently as in October 2018 were of NonStandard Quality
(NSQ).
32
11.15 It was further submitted that on 01.11.2017, the Cabinet
Committee on Economic Affairs had given its inprinciple
approval for the strategic disinvestment of the Central
Government’s 100% equity stake in KAPL though an
auction sale. Since the Central Government owns at least
51% equity stake in KAPL, this would mean that upon
such disinvestment KAPL would no longer be a public
sector company/undertaking.
11.16 It was contended that the Central Government could not
have invoked Section 26A of the Act, since Oxytocin is an
“essential drug” enlisted under the NLEM. The NLEM is
listed in the 1st Schedule to the DPCO notified by the
Central Government in exercise of its powers under Section
3 of the Essential Commodities Act, 1955. It was submitted
that power under Section 26A cannot be exercised in
respect of NLEM drugs. Section 6 of the EC Act gives the
DPCO an overriding effect over other statutes. The
impugned notification issued under Section 26A is ultra
vires the said provision since it runs counter to the DPCO
and the Section 6 of the Essential Commodities Act, 1955.
12. After having heard the Senior Counsel appearing for parties
on both sides, we are of the view that the present group of
appeals raise serious issues having far reaching implications.
The twin issues which arise for consideration are on the one
hand, the unregulated and clandestine manufacture of the
drug Oxytocin, which is reportedly misused in milch animals;
and on the other hand, the continued supply of an essential
lifesaving drug, which is used as the first line drug for
33
prevention and treatment of postpartum haemorrhage at the
time of childbirth.
The following substantial questions of law arise for
consideration:
(i) Whether a drug included in the National List of Essential
Medicines published under Schedule 1 of the Drugs
(Prices Control) Order, 2013 notified under Section 3 of
the Essential Commodities Act, 1955 would be subject to
the provisions of Section 26A of the Drugs and Cosmetics
Act, 1940?
(ii) Whether the impugned notification has resulted in
creating a monopoly in favour of public sector companies,
to the complete exclusion of private sector companies, and
if so, whether it would be protected by Article 19(6)(ii) read
with Article 14 of the Constitution?
(iii)Whether the classification made by the impugned
notification between licensed public sector and private
sector companies, in the manufacture of the drug
Oxytocin for domestic use, would achieve the object and
purpose of preventing the unregulated and illegal use of
the drug?
34
(iv)Whether it would be in public interest to restrict the
manufacture of a lifesaving drug for domestic use, to a
single public sector undertaking, to the complete
exclusion of the private sector companies, particularly in
view of the high maternal mortality rates in the country?
(v) Whether there was relevant and objective material before
the Central Government to form the basis of satisfaction
to exercise the power to prohibit the manufacture of the
drug by the private sector companies for domestic use,
under Section 26A of the Drugs and Cosmetics Act, 1940?
(vi)Whether the object of curbing the clandestine
manufacture and unregulated use of the drug Oxytocin,
which is covered by Section 18 of the Drugs and
Cosmetics Act, 1940, can be achieved by taking recourse
to Section 26A by imposing a ban on the manufacture of
licensed drugs by private sector companies?
(vii) Whether the exercise of power by the Central Government
under Section 26A of the Drugs and Cosmetics Act, 1940
is legislative or executive in nature?
35
13. We are of the considered view that this is a fit case to refer
the matter to a larger Bench of three Judges to consider the
aforesaid questions of law, and authoritatively pronounce
upon the same. Accordingly, we direct the Registry to place
the present group of appeals before the Hon’ble Chief
Justice of India for necessary directions.
.......................................J.
(ABHAY MANOHAR SAPRE)
...…...............………………J.
(INDU MALHOTRA)
New Delhi;
August 22, 2019.
36
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL Nos.65886591 OF 2019
(Arising out of S.L.P.(C) Nos.32963299 of 2019)
Union of India & Anr. Etc.Etc. ….Appellant(s)
VERSUS
BGP Products Operations GMBH
& Hagene Immermatt Weg. & Anr.
Etc.Etc. ….Respondent(s)
J U D G M E N T
Abhay Manohar Sapre, J.
1. I have had the advantage of going through an
elaborate drafted judgment proposed by my learned
sister Justice Indu Malhotra. I entirely agree with the
reasoning and the conclusion arrived at by her.
2. I need not set out the facts and submissions of
learned counsel for the parties as the same have been
succinctly set out by my learned sister in her draft
judgment.
1
3. Indeed, having heard very learned and persuasive
arguments of Mr. Tushar Mehta, learned Solicitor
General for the appellants and Mr. Kapil Sibal, learned
senior counsel for the respondents at length and on
perusal of the record, I am also of the considered
opinion that having regard to the nature of controversy
and the myriad issues, which arise in the appeals,
they have far reaching consequences on the rights of
the citizens qua State and, in particular, the abstract
legal issues such as what is the nature of powers
exercised by the Central Government under Section
26A of the Drugs and Cosmetics Act, whether it is
legislative or executive, because we find that there is
no decision of this Court so far on this issue. (see
observations of this Court in Union of India & Anr.
vs. Pfizer Ltd. & Ors., 2018 (2) SCC 39)
4. Secondly, what are the essential ingredients for
invoking the powers under Section 26A of the Drugs
and Cosmetics Act in relation to any Drug and
2
whether such power is in conflict with the exercise of
powers conferred under the Essential Commodities
Act.
5. Thirdly, whether issuance of impugned
notification has resulted in creating monopoly
(whether partial or full) in favour of the State and, if
so, whether it has satisfied the rigor of Article 14 read
with Article 19 (6)(ii) of the Constitution of India.
6. Lastly, depending upon the answer to the nature
of exercise of powers under Section 26A of the Drugs
and Cosmetics Act, whether material relied on by the
Central Government can be held as sufficient to
sustain the impugned action.
7. In my opinion, if the exercise of power under
Section 26A of the Drugs and Cosmetics Act is held
as being legislative in nature, the parameters to
examine the legality of the impugned notification
would be different whereas if it is held to be executive
in nature, the parameters to examine the legality of
3
impugned notification would be somewhat different
than the former one.
8. In my considered opinion, the decision either way
on any of these questions will have its far reaching
effect on the rights and health of public at large and
especially on the rights and health of the teenage girls,
pregnant females and milching animals. It will also
decide the scope of the powers of the Central
Government under Section 26A of the Drugs and
Cosmetics Act qua the rights of the persons, who are
engaged in business of manufacture and sale of Drugs
specified under the Drugs and Cosmetics Act read with
Essential Commodities Act.
9. In effect, in my opinion, it will not be a judgment
inter party but it will be in rem laying down the law on
the questions.
10. It is for all these reasons, we have formulated the
questions for being answered on their respective
4
merits in paragraph 12 of my sister’s drafted
judgment.
11. Let the matter, therefore, be placed before
Hon’ble the Chief Justice of India under Rule VI (2) of
the Supreme Court Rules for being dealt with by the
larger bench for their authoritative pronouncement on
the questions framed and for the disposal of the
appeals accordingly.
12. Since I have also formed an opinion to refer the
matter to be dealt with by the larger bench under VI
(2) of the Supreme Court Rules, I also do not consider
it necessary to give my opinion in detail on the
questions formulated.
……...................................J
[ABHAY MANOHAR SAPRE]
New Delhi;
August 22, 2019
5
