Union of India and Anr. v. Cipla Limited

Delhi High Court · 15 Dec 2023 · 2023:DHC:9496-DB

Vibhu Bakhru; Subramonium Prasad

LPA 229/2023

2023:DHC:9496-DB

administrative petition_dismissed Significant

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The Delhi High Court dismissed Cipla's review petition, affirming that rounding off the MRP of non-scheduled drugs is limited to two decimal points as per NPPA guidelines and applies prospectively.

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LPA 229/2023
HIGH COURT OF DELHI
Date of Decision: 15.12.2023

LPA 229/2023
UNION OF INDIA AND ANR. ..... Appellant
Through: Mr Kirtiman Singh, CGSC with Ms Manmeet Kaur Sareen and Ms
Vidhi Jain, Advocates.

VERSUS

CIPLA LIMITED ..... Respondents
Through: Ms Archana Sahadeva, Advocate.

CORAM:

HON'BLE MR. JUSTICE VIBHU BAKHRU
HON'BLE MR. JUSTICE SUBRAMONIUM PRASAD SUBRAMONIUM PRASAD, J.

REVIEW PET. 345/2023

JUDGMENT

1. The instant Review Petition has been filed by the Respondent in LPA 229/2023, challenging the portion of the Common Judgment dated 08.11.2023 passed by this Court whereby this Court has granted the benefit of rounding off the MRP of non-scheduled drug formulations, up to only two decimal points as per general mathematical practice.

2. It is stated in the Review Petition that the Review Petitioner was not heard on the issue and that the question of rounding off was decided without hearing the Review Petitioner.

3. Paragraph Nos. 22 & 56 of the Judgment dated 08.11.2023 specifically record that the learned Counsel for the Respondent/Review Petitioner, in support of their arguments on the issue, had placed reliance on the interpretation and reasoning given by the learned Single Judge in the judgments rendered in W.P.(C) Nos. 7946/2018, 8190/2018, 9090/2020, 2521/2021, and 3358/2020. In view of the aforesaid observations made by the Court in its common judgment dated 08.11.2023, we reject the contention that the Review Petitioner was not heard on the issue of rounding-off.

4. W.P.(C) Nos. 7946/2018; 8190/2018; 9090/2020; 2521/2021; and 3358/2020 were filed by Pharmaceutical companies challenging the demand notices issued to them by the National Pharmaceutical Pricing Authority (“NPPA”) for contravening Paragraph 20 of the 2013 Drugs (Price Control) Order, 2013 in respect of certain drug formulations manufactured by them. While addressing the issue of rounding off, the learned Single Judge permitted the manufacturers to apply the principle of rounding off MRP, as applicable to scheduled drug formulations, to non-scheduled drug formulations as well. This Court upheld the same, however it was observed that the benefit of rounding-off of MRP of drug formulations shall be limited only up to two decimal points. The relevant observations of this Court in this regard are reproduced below:

“60. While the Appellants are correct in stating that Para 5.2 of the Minutes of the Meeting dated 12.04.2016 of the NPPA dealt with only scheduled formulations, this Court finds it difficult to accept

RAWAL the contention that the benefit of rounding-off cannot be extended to non-scheduled formulations. As has been stated above, there has been a conscious decision on part of the Union Government to exclude non-scheduled formulations from the rigors of price control and instead adopt a more lenient price monitoring system instead. This Court finds it difficult to find any rationale or justification as to why the benefit of rounding-off may be limited to only scheduled formulations, which are governed by a much stricter price control regime. The price monitoring system, as envisaged under Para 20 of the 2013 DPCO is more lenient, and there is no reasonable basis for not extending the benefit of rounding-off to non-scheduled formulations as well. In the considered opinion of this Court, limiting the applicability of the principle of rounding-off only to scheduled formulations would be unreasonable and arbitrary. To this extent, this Court finds no infirmity with the judgment of the learned Single Judge.

61. This Court however is in agreement with the contention of the Appellants that the benefit of rounding-off is permitted only up to two decimal points. Para 5.[2] of the Minutes of the Meeting dated 12.04.2016 of the NPPA clearly limits the benefit of rounding-off available to scheduled formulations to up to two decimal places as per general mathematical practice. Accordingly, even for nonscheduled formulations, the benefit of rounding-off must be limited to two decimal places as per general mathematical practice.

62. It is pertinent to note that the Rule 26 of the LMPC Rules clearly excludes both scheduled and non-scheduled formulations from its ambit, and therefore the mechanism provided therein for rounding-off will not be applicable to either RAWAL scheduled or non-scheduled formulations. This is also evident from the phrase “general mathematical practice” as used in Para 5.[2] of the Minutes of the Meeting dated 12.04.2016 of the NPPA. In order to demonstrate how prices of non-scheduled formulations may be rounded-off, the following the following illustrations may be referred to:

63. Therefore, while the principle of rounding-off is applicable to non-scheduled formulations as well as scheduled formulations, the benefit of roundingoff is extended only to two decimal places, and only when no other malafide intention on the part of the company is evident. This is in line with the view adopted by the NPPA in Para 5.[2] of the Minutes of the Meeting dated 12.04.2016.”

5. The Respondent/Review Petitioner has not been able to point out any error apparent on the face of record. It is well settled that review petitions can be entertained only where there is sufficient cause

S. No. Actual Figure Rounded-Off Figure

1. Rs. 123.45/- Rs. 123.45/-

2. Rs. 123.455/- Rs. 123.46/-

3. Rs. 123.456/- Rs. 123.46/-

4. Rs. 123.991/- Rs. 123.99/-

6,410 characters total

5. Rs. 123.999/- Rs. 124.00/-

6. Rs. 123.001/- Rs. 123.00/-

7. Rs. 123.111/- Rs. 123.11/- RAWAL and when there is an error apparent on the face of the record. A review petition is not an appeal where the case can be reargued. [refer: Haridas Das Vs. Usha Rani Bank (Smt) & Ors.: (2006) 4 SCC 78; State of West Bengal and Ors. Vs. Kamal Sengupta and Anr.: (2008) 8 SCC 612].

6. In view of the above, the review petition is liable to be rejected. However, it is material to note that the NPPA had, in its minutes of meeting dated 12.04.2016, decided that the NPPA will not pursue those overcharging cases which arose out of purely mathematical calculations due to rounding off of decimal points as per general mathematical practices and where no other malafide intention on the part of the company was evident. In order to avoid uncertainty on the issue and to avoid unwarranted prosecution, it is clarified that the benefit of the said circular, as interpreted by the learned Single Judge in his judgments in W.P.(C) Nos. 7946/2018; 8190/2018; 9090/2020; 2521/2021; and 3358/2020, would be available to the manufacturers till the date of the pronouncement of the judgment dated 08.11.2023 passed by this Court, and the same shall apply prospectively.

7. The Review Petition is disposed of with the above clarification.

SUBRAMONIUM PRASAD, J VIBHU BAKHRU, J DECEMBER 15, 2023 RAWAL

Union of India and Anr. v. Cipla Limited

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