Full Judgment Text
* IN THE HIGH COURT OF DELHI AT NEW DELHI
nd
Date of decision: 02 JULY, 2024
IN THE MATTER OF:
+ W.P.(C) 6292/2022 & CM APPL. 18956/2022
COLOPLAST INDIA PRIVATE LIMITED ..... Petitioner
Through: Mr. R. Jawahar Lal, Mr. Siddharth
Bawa and Mr. Anuj Garg, Advocates.
versus
UNION OF INDIA AND ANR. ..... Respondents
Through: Mr. Anurag Ahluwalia, CGSC with
Ms. Avshreya Pratap Rudy, Advocate
for R-1 and 2.
CORAM:
HON'BLE MR. JUSTICE SUBRAMONIUM PRASAD
JUDGMENT
1. Petitioner has approached this Court seeking a direction to the
Respondents to declare that Surgical Bandages/Dressings do not fall within
the scope of regulation monitoring under Para 20 of the Drug Price Control
Order, 2013 ( hereinafter referred to as „the DPCO‟ ). The Petitioner also
seeks for quashing of Demand Notice No. F. No.
20(8)/16/2018/Div.III/OC/NPPA dated 11.03.2022 issued by Respondent
No. 1 on the ground that it is without jurisdiction vested under Para 20 of the
DPCO, 2013.
2. The facts, in brief, as stated in the Writ Petition, reveals that the
Petitioner is a company incorporated under the Companies Act and is an
affiliate of Coloplast Group, a Denmark-based multinational and a market
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leader in Wound and Skin Care products including specialized Surgical
Dressings. It is stated that on 08.01.2018, a Show Cause Notice was issued
by the NPPA to the Petitioner stating that the Petitioner has violated Para 20
of the DPCO by increasing the MRP for the eight categories/variants of
Surgical Dressings by 12% to 43% during the year 2016 in comparison to
the preceding year i.e., 2015. Vide the said Show Cause Notice the NPPA
had further directed the Petitioner to furnish the batch-wise
production/import and sales details of the eight variants of the surgical
dressings with corresponding MRP for the years 2014-15, 2015-16, 2016-
17, and 2017-18 duly certified by a Chartered/Cost and Management
Accountant to see as to whether the Petitioner has acted contrary to Clause
20 of DPCO.
3. It is the contention of the Petitioner that the surgical dressings are not
covered within the ambit of DPCO. The short issue which arises for
consideration is as to whether the NPPA has the jurisdiction to issue a Show
Cause Notice to the Petitioner herein for surgical dressings on the ground
that the surgical dressings are covered under Para 20 of the DPCO or not.
4. At this juncture, it is apposite to reproduce paragraph No.20 of the
DPCO and the same reads as under:
“ 20. Monitoring the prices of non-scheduled
formulations.
(1) The Government shall monitor the maximum retail
prices (MRP) of all the drugs, including the non-
scheduled formulations and ensure that no manufacturer
increases the maximum retail price of a drug more than
ten percent of maximum retail price during preceding
twelve months and where the increase is beyond ten
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percent of maximum retail price, it shall reduce the same
to the level of ten percent of maximum retail price for
next twelve months.
(2) The manufacturer shall be liable to deposit the
overcharged amount along with interest thereon from the
date of increase in price in addition to the penalty.”
5. A perusal of paragraph No.20 of the DPCO indicates that the
Government has the power to monitor the MRP of all the drugs, including
the non-scheduled formulations and ensure that no manufacturer increases
the MRP of a drug more than ten percent of maximum retail price during
preceding twelve months. The issue as to whether surgical dressings would
be covered under the definition of drugs or not came up for consideration
before the Apex Court in Chimanlal Jagjivan Das Sheth v. State of
Maharashtra, AIR 1963 SC 665 , wherein the Apex Court held that surgical
dressings would come under the purview of drugs.
6. Material on record indicates that on 20.04.2010 the Ministry of Health
and Family Welfare, Government of India, notified about 14 medical
devices, including surgical dressings, to be considered as drugs under
Section 3(b)(iv) of the Drugs & Cosmetics Act, 1940 ( hereinafter referred
to as „the D&C Act‟ ). It is stated that on 31.10.2012 a guidance note was
issued by the Central Drugs Standard Control Organization ( hereinafter
referred to as „the CDSCO‟ ) wherein surgical dressings have been referred
to as products which are regulated as Drugs under the D&C Act.
7. It is the contention of the learned Counsel for the Petitioner that on
09.07.2014 the CDSCO issued an Order listing medical devices which have
been notified and in that Order "Surgical Dressing" is not listed as a medical
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device notified as a „drug‟ and the reference to “regulation” of Surgical
Dressing under the D&C Act has been removed. He further submits that
vide Notice dated 29.06.2017 the CDSCO clarified that only 14 devices
mentioned in the Schedule alone would be included in the definition of
drugs under Section 3(b)(iv) of the D&C Act and any device other than
those 14 devices do no require regulation. Learned Counsel for the
Petitioner, therefore, submits that in view of the clarification issued by the
CDSCO, surgical dressings cannot be included under the definition of drugs.
It is stated by the learned Counsel for the Petitioner that vide notification
dated 31.03.2020, issued by the NPPA it was notified that Medical Devices
intended for use in human beings or animals have been notified as Drugs
with effect from 01.04.2020 and all medical devices shall accordingly be
governed under the provisions of the DPCO. He, therefore, states that the
Show Cause Notice issued to the Petitioner is prior to 01.04.2020 and is
beyond the jurisdiction of the NPPA as the surgical bandages is not covered
under the DPCO.
8. Per contra , learned Counsel for the Respondent contends that the
surgical dressings comes under the purview of drugs and there is no dispute
on this because of the Judgment of the Apex Court in Chimanlal Jagjivan
Das Sheth (supra). He further states that surgical devices are regulated as
drugs under the DPCO and they have always been regulated as drugs. He
places reliance on OM Dated 12.05.2017, issued by the NPPA, wherein
surgical dressings have been included in drugs for monitoring the price
movement and, therefore, surgical dressings are covered under the paragraph
No.20 of the DPCO. Learned Counsel for the Respondent states that the
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notification dated 09.07.2014 cannot be relied on for the reason that the
Judgment of the Apex Court in Chimanlal Jagjivan Das Sheth (supra) has
always read surgical dressings as drugs. Learned Counsel for the
Respondent also places reliance on Rules 69, 69A, 75, 75A and 76 read with
Schedule M-III of the Drugs and Cosmetics Rules, 1945 to contend that
surgical dressings are regulated as drugs.
9. Heard the Counsels for the parties and perused the material on record.
10. Paragraph No.20 of the DPCO gives power to the Government to
monitor the MRP of all the drugs, including the non-scheduled formulations
and ensure that no manufacturer increases the MRP of a drug more than ten
percent of maximum retail price during preceding twelve months.
11. Section 3(b) of the D&C Act defines Drugs and the same reads as
under:
“ (b) "drug" includes—
(i) all medicines for internal or external use of human
beings or animals and all substances intended to be used
for or in the diagnosis, treatment, mitigation or
prevention of any disease or disorder in human beings or
animals, including preparations applied on human body
for the purpose of repelling insects like mosquitoes;
(ii) such substances (other than food) intended to affect
the structure or any function of the human body or
intended to be used for the destruction of vermin or
insects which cause disease in human beings or animals,
as may be specified from time to time by the Central
Government by notification in the Official Gazette;
(iii) all substances intended for use as components of a
drug including empty gelatin capsules; and
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(iv) such devices intended for internal or external use in
the diagnosis, treatment, mitigation or prevention of
disease or disorder in human beings or animals, as may
be specified from time to time by the Central Government
by notification in the Official Gazette, after consultation
with the Board;”
12. A perusal of Section 3(b)(iv) of the D&C Act shows that all devices
intended for internal or external use in the diagnosis, treatment, mitigation or
prevention of disease or disorder in human beings are included as Drugs.
13. The Apex Court in Chimanlal Jagjivan Das Sheth (supra) while
interpreting Section 3(b)(iv) of the D&C Act has observed as under:
“3. Though an attempt was made to argue that the said
articles were had been proved to be below the prescribed
standard, it was subsequently given up. The only question
that was argued is whether the said articles are drugs
within the meaning of Section 3(b) of the Act. The said
section reads:
“„drug‟ includes:
(i) all medicines for internal or external use of
human beings or animals and all substances
intended to be used for or in the treatment,
mitigation or prevention of disease in human
beings or animals other than medicines and
substances exclusively used or prepared for use in
accordance with the Ayurvedic or Unani systems
of medicine, and
(ii) such substances (other than food) intended to
affect the structure or any function of the human
body or intended to be used for the destruction of
vermins or insects which cause disease in human
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beings on animals as may be specified from time to
time by the Central Government by notification in
the Official Gazette.”
The said definition of “drugs” is comprehensive enough
to take in not only medicines but also substances
intended to be used for or in the treatment of diseases of
human beings or animals. This artificial definition
introduces a distinction between medicines and
substances which are not medicines strictly so-called.
The expression “substances”, therefore, must be
something other than medicines but which are used for
treatment. The part of the definition which is material for
the present case is “substances intended to be used for or
in the treatment”. The appropriate meaning of the
expression “substances” in the section is “things”'. It
cannot be disputed, and indeed it is not disputed, that
absorbent cotton wool, roller bandages and gauze are
“substances” within the meaning of the said expression.
If so, the next question is whether they are used for or in
“treatment”. The said articles are sterilized or otherwise
treated to make them disinfectant and then used for
surgical dressing; they are essential materials for
treatment in surgical cases. Besides being aseptic these
articles have to possess those qualities which are utilized
in the treatment of diseases. Thus for instance, in the
case of guaze-one of the articles concerned in this appeal
— it has to conform to a standard of absorbency in order
that it might serve its purpose : otherwise the fluid which
oozes is left to accumulate at the site of the wound or
sore. The legislature designedly extended the definition
of “drug” so as to take in substances which are
necessary aids for treating surgical or other cases. The
main object of the Act is to prevent sub-standards in
drugs, presumably for maintaining high standards of
medical treatment. That would certainly be defeated if
the necessary concomitants of medical or surgical
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treatment were allowed to be diluted : the very same evil
which the Act intends to eradicate would continue to
subsist. Learned Counsel submitted that surgical
instrument would not fall within the definition and that
guaze and lint would fall within the same class. It is not
necessary for the purpose of this appeal to definie
exhaustively “the substances” falling within the
definition of “drugs”; and we consider that whether or
not surgical instruments are “drugs”, the articles
concerned in this case are. Learned counsel for the
appellant sought to rely upon a report of a high powered
committee consisting of expert doctors, who expressed
the opinion in the report that as the surgical dressings
did not come under the purview of the Drugs Act, no
control on their quality was being exercised. Obviously,
the opinion of the medical experts would not help us in
the construing a statutory provision. We, therefore, hold,
agreeing with the High Court, that the said articles are
substances used for or in the “treatment” within the
meaning of Section 3(b) of the Act.”
14. A perusal of the abovementioned paragraph shows that the Apex
Court has held that absorbent cotton wool, roller bandages and gauze are
substances within the meaning of drugs.
15. On 20.04.2010 Government of India issue a notification and the same
reads as under:
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16. A perusal of the said notification indicates that surgical dressings
were always regulated under the D&C Act.
17. Notification dated 09.07.2014, issued by the CDSCO, reads as under:
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18. The argument of the learned Counsel for the Petitioner that since only
14 medical devices have been sought to be regulated under the D&C Act
and, therefore, surgical dressings are outside the ambit of the D&C Act,
cannot be accepted for the reason that a perusal of the notification dated
20.04.2010 shows that all the 14 medical devices mentioned in the said
notification were always treated as drugs under the D&C Act. The fact that
surgical dressings is not covered in the 14 items mentioned in the
notification dated 09.07.2014 does not mean that it is not covered under the
meaning of drugs under the D&C Act. The Apex Court in Chimanlal
Jagjivan Das Sheth (supra) has held that Surgical Dressings would come
within the purview of drugs and the same is binding on this Court under
Article 141 of the Constitution of India.
19. Article 144 of the Constitution of India mandates that all the
authorities have to work in aid of the Apex Court and, therefore, the law laid
down by the Apex Court insofar as absorbent cotton wool, roller bandages
and gauze, including surgical dressings, would always be deemed to be
covered under the definition of drugs and, therefore, would be covered under
paragraph No.20 of the DPCO. The argument of the learned Counsel for the
Petitioner that the notification dated 31.03.2020 would only be prospective
and, therefore, the Show Cause Notice issued to the Petitioner be set aside,
cannot be accepted because the notification dated 31.03.2020 is only
clarificatory in nature and surgical dressings have always been covered
under the definition of Drugs under the D&C Act by virtue of the judgment
of the Apex Court in Chimanlal Jagjivan Das Sheth (supra).
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20. In view of the above, this Court does not find it expedient to interfere
with both the Show Cause Notice and the Demand Notice issued against the
Petitioner.
21. Accordingly, the Writ Petition is dismissed along with the pending
applications, if any.
22. It is made clear that the mode of calculation of charges would be as
per the Judgment of this Court in Union of India and Another v. Bharat
Serums and Vaccines Limited, 2023 SCC OnLine Del 7262 .
SUBRAMONIUM PRASAD, J
JULY 02, 2024
Rahul
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