R.F.NARIMAN,J. - (1.) The present appeal arises on the true construction of paragraph 28 of the Drugs (Prices Control) Order, 1987, read with exemption notification dated 28th February, 1992. Paragraph 28 of the DPCO, 1987, reads as under: "28. Power to exempt- (1) The Government may, having regard to the factors mentioned in sub-paragraph (2) and subject to such conditions, if any, as it may specify, by order in the Official Gazette, exempt any drug manufacturing unit or a class of such units from the operation of all or any of the provisions of this order and may, as often as may be, revoke or modify such order. (2) While granting exemption under sub-paragraph (1), the Government shall have regard to all or any of the following factors relating to the drug manufacturing unit or a class of such units, namely; a) Number of workers employed; b) Amount of capital invested; c) Range and type of products manufactured; d) Sales turnover; e) Production of bulk drug basic stage by process developed through indigenous Research and Development".
(2.) Under paragraph 28, an exemption notification was issued for the period mentioned to Glaxo India a manufacturer of a bulk drug which is Betamethasone Disodium Phosphate. The exemption notification with which we are directly concerned is set out hereunder: "S.O. 166 (E) - In exercise of the powers conferred by sub-paragraph (1) of Paragraph 28 of the Drugs (Prices Control) Order, 1987, the Central Government, having regard to the factors specified in clause (e) of sub-paragraph (2) of paragraph 28 of the said Order and also having been satisfied for the need to do so in public interest, hereby exempts the bulk drugs and formulations based, thereupon specified in column 2 of the Table below which is manufactured by the company specified in the corresponding entry in column 3 from the operation of price control stipulated in sub-paragraph (1) of Paragraph 3 and sub-paragraph (1) of paragraph 9 of the said Order, upto the period as indicated in column 4 thereof." JUDGEMENT_46_LAWS(SC)7_2017.html A lot of correspondence took place between the appellant before us and the Union of India which ultimately culminated in a show cause notice dated 10th June, 1997. The said show cause notice referred to an earlier letter written by the appellant, finding that there was a differential in the price charged for the goods manufactured during the exemption period stated thereunder. A sum of L 1.90 crores was payable in the following terms: "2. Government had exempted Betamethasone disodium Phosphate based formulations of your company for only the period 28.2.92 to 31.12.94 vide notification SO No. 166 dated 28.2.92. Accordingly, you were required to follow the prices fixed by the Government for the formulation pack immediately on expiry of the exemption period i.e. from 1.1.95. Your contention that an application for fresh cost study had been made in October 1994 itself, merely did not give the right to the company to charge own prices, a Government fixed price was prevailing as on that date. A case of violation of the provisions of the para 9(3) of the DPCO '87 has accordingly been established and it has been decided to invoke the provisions of para 13 of the DPCO'95, for recovery of overcharged amount as assessed below: JUDGEMENT_46_LAWS(SC)7_20171.html
(3.) This was replied to by the appellant, after which an order was passed on 9th April, 1999, by which the said show cause notice was confirmed, and a sum of L 2.04 crores including interest was demanded. Since the appellants were aggrieved by the said demand, they filed a Writ Petition No.1266 of 1999 before the High Court at Bombay, which culminated in the impugned judgment dated 16th February, 2004, dismissing the aforesaid writ petition.;