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

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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

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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

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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.  

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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  post­

partum 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

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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

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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

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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

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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.  

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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.

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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

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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.”

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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

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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  bar­

coding 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.

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(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.

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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,­  

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(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

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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 conditions­

18

….

(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 pre­

conditions 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,  Uni­

San 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 Respondent­

manufacturers 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 Respondent­

Manufacturers. 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 non­

application 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

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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

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