Holding

The Court referred the matter to a larger bench to determine the legality, constitutional validity, and nature (legislative or executive) of the Central Government's power under Section 26A of the Drugs and Cosmetics Act.

Summary

The Supreme Court examined the validity of a 27 April 2018 notification issued under Section 26A of the Drugs and Cosmetics Act that restricted the domestic manufacture of oxytocin to public‑sector undertakings, excluding private manufacturers, while allowing export by both sectors. The petitioners (Union of India) argued that the power under Section 26A is legislative, that the notification is a reasonable public‑health measure, and that it does not violate Articles 19(1)(g) and 14 of the Constitution. The respondents (private oxytocin manufacturers) contended that the notification creates an unlawful monopoly, lacks sufficient material basis, and is ultra‑violet to the Essential Commodities Act and the National List of Essential Medicines. The Court identified seven substantial questions of law, including whether an essential medicine can be regulated under Section 26A, the constitutional validity of the monopoly, and whether the power exercised is legislative or executive. Finding the issues of far‑reaching importance, the Court referred the matter to a larger bench for a definitive ruling.

Issues considered

Whether a drug included in the National List of Essential Medicines under the Drugs (Prices Control) Order, 2013 and the Essential Commodities Act, 1955 is subject to Section 26A of the Drugs and Cosmetics Act, 1940.
Whether the impugned notification creates a monopoly favouring public‑sector companies and, if so, whether it is protected by Article 19(6)(ii) read with Article 14 of the Constitution.
Whether the classification between public‑sector and private‑sector manufacturers under the notification effectively prevents unregulated and illegal use of oxytocin.
Whether restricting domestic manufacture of a life‑saving drug to a single public‑sector undertaking is in the public interest, given high maternal mortality rates.
Whether the Central Government had relevant and objective material to be satisfied that a restriction under Section 26A was necessary.
Whether the objective of curbing clandestine manufacture and misuse of oxytocin, covered by Section 18 of the Act, can be achieved by invoking Section 26A to ban private manufacturers.
Whether the exercise of power under Section 26A is legislative or executive in nature.

Legislation cited

Drugs and Cosmetics Act, 1940s. 26A
Drugs and Cosmetics Rules, 1945s. Rule 65, s. Rule 96, s. Rule 97
Drugs (Prices Control) Order, 2013
Essential Commodities Act, 1955s. 3, s. 6

Subjects

oxytocinessential medicinesSection 26ADrugs and Cosmetics Actmonopolypublic healthconstitutional lawArticle 19Article 14Essential Commodities Actlarger bench referral

Judgment

170 SUPREME[2019]
COURT 11 S.C.R.
[2019] 11 S.C.R.
REPORTS1 170 [2019] 11 S.C.R.

A UNION OF INDIA & ANR. ETC.
v.
BGP PRODUCTS OPERATIONS GMBH AND HAGENE
IMMERMATT WEG. & ANR. ETC.
B (Civil Appeal Nos.6588-6591 of 2019)
AUGUST 22, 2019
[ABHAY MANOHAR SAPRE AND
INDU MALHOTRA, JJ.]

C Drugs and Cosmetics Act, 1940: s.26-A – Notification dated
27.04.2018 issued under s.26A of the Act by the Ministry of Health
and Family Welfare – Validity of Notification challenged in these
appeals – Impugned Notification restricts the manufacture of
Oxytocin formulations for domestic use, only by public sector
undertakings or companies, to the complete exclusion of the private
D sector companies while the manufacture of the drug for export
purposes is kept open to both public and private sector companies
– Held: These appeals raise serious issues having far reaching
implications – The substantial questions of law which arose for
consideration are: Whether a drug included in the National List of
E Essential Medicines published under Schedule 1 of the Drugs (Prices
Control) Order, 2013 notified under s.3 of the Essential Commodities
Act, 1955 would be subject to the provisions of s.26A of the Act;
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
F be protected by Art.19(6)(ii) r/w Art.14 of the Constitution; 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 –
G Whether it would be in public interest to restrict the manufacture of
a life-saving 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; Whether there was relevant and objective material
before the Central Government to form the basis of satisfaction to
H
170
UNION OF INDIA v. BGP PRODUCTS OPERATIONS GMBH AND HAGENE 171
IMMERMATT WEG.

exercise the power to prohibit the manufacture of the drug by the A
private sector companies for domestic use, under s.26-A of the Act;
Whether the object of curbing the clandestine manufacture and
unregulated use of the drug Oxytocin, which is covered by s.18 of
the Act, can be achieved by taking recourse to s.26-A by imposing
a ban on the manufacture of licensed drugs by private sector
B
companies; Whether the exercise of power by the Central
Government under s.26-A of the Act is legislative or executive in
nature – Matter is referred to a larger Bench to consider these
questions of law.
Drugs and Cosmetics Act, 1940: s.26-A – Power of Central
C
Government under – Notification dated 27.04.2018 issued under
s.26-A by the Ministry of Health and Family Welfare – Legality of
Notification – Held: There is no decision so far on issue as to whether
the nature of powers exercised by the Central Government under
s.26-A of the Act is legislative or executive – If the exercise of power
under s.26-A is held as being legislative in nature, the parameters D
to examine the legality of the impugned notification would be
different whereas if it is held to be executive in nature, the parameters
would be somewhat different than the former one – 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
E
rights and health of the teenage girls, pregnant females and milching
animals – In effect, it will not be a judgment inter party but it will be
in rem laying down the law on the questions – Public Health
Administration. (Abhay Manohar Sapre, J.)
Referring the matter to larger Bench, the Court
F
HELD:
Per INDU MALHOTRA, J.
1. 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 G
clandestine manufacture of the drug Oxytocin, which is reportedly
misused in milch animals; and on the other hand, the continued
supply of an essential life-saving drug, which is used as the first
line drug for prevention and treatment of post-partum
haemorrhage at the time of childbirth. The following substantial H
172 SUPREME COURT REPORTS [2019] 11 S.C.R.

A questions of law arose for consideration: 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? Whether the impugned notification
B
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? Whether the
classification made by the impugned notification between licensed
C 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? Whether it would be in public interest to restrict the
manufacture of a life-saving drug for domestic use, to a single
public sector undertaking, to the complete exclusion of the private
D
sector companies, particularly in view of the high maternal
mortality rates in the country? 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
E domestic use, under Section 26A of the Drugs and Cosmetics
Act, 1940? 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
F
companies? 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? This is a fit case to
refer the matter to a larger Bench of three Judges to consider
these questions of law. [Paras 12, 13] [204-B-H; 205-A-C]
G Narang Medical Store v. Union of India [W.P.(C) No.
7135/2014] ; Akadasi Pradhan v. State of Orissa AIR
1963 SC 1047 : [1963] Supp (2) SCR 691 ; State of
T.N. v. P. Krishnamurthy (2006) 4 SCC 517 : [2006] 3
SCR 396 ; UOI v. Cynamide India Pvt. Ltd. 1987 (2)
H SCC 720 : [1987] 2 SCR 841 ; E Merck (India) Limited
UNION OF INDIA v. BGP PRODUCTS OPERATIONS GMBH AND HAGENE 173
IMMERMATT WEG.

v. UOI 2001 (90) DLT 16 ; Macleods Pharmaceuticals A
Limited v. UOI 2012 SCC Online Mad 1735 ; Drug
Controller General of India v. West Bengal Small Scale
Manufacturers AIR 2000 Cal 133 ; Uni-San
Pharmaceuticals Ltd.& Anr. v. UOI AIR 2002 Ker 72 :
(2001) 1 KLJ 822 ; Union of India v. Pfizer Ltd.(2018)
B
2 SCC 39 : [2017] 12 SCR 179 ; Khoday Distilleries
Ltd. v. State of Karnataka (1996) 10 SCC 304 : [1995]
6 Suppl. SCR 759 ; Shimnit Utsch India (P) Ltd. v.
West Bengal Transport Infrastructure Development Ltd.
& Ors. (2010) 6 SCC 303 : [2010] 6 SCR 1110 ;
Directorate of Film Festivals v. Gaurav Ashwin Jain & C
Ors. (2007) 4 SCC 737 : [2007] 5 SCR 7 ; Academy of
Nutrition Improvement v. Union of India (2011) 8 SCC
274 : [2011] 8 SCR 680 ; Vincent Panikurlangara v.
Union of India (1987) 2 SCC 165 : [1987] 2 SCR 468
; Systopic Laboratories v. Dr. Prem Gupta (1994) Suppl.
D
1 SCC 160 : [1993] 2 Suppl. SCR 385 ; Akadasi
Pradhan v. State of Orissa [1963] Supp 2 SCR 691 :
AIR 1963 SC 1047 Khoday Distilleries Ltd. v. State of
Karnataka (1995) 1 SCC 574 : [1994] 4 Suppl. SCR
477 ; Daruka & Co v. Union of India & Ors. (1973) 2
SCC 617 : [1974] 1 SCR 570 ; Indian Drugs & E
Pharmaceuticals Ltd. v. Punjab Drugs Manufacturers
Assn. (1999) 6 SCC 247 ; Municipal Committee,
Amritsar v. State of Punjab (1966) 1 SCC 475 : [1969]
3 SCR 447 ; Court On Its Own Motion v. State of
Himachal Pradesh CWPIL No. 16 of 2014 Rai Sahab
F
Ram Jawaya Kapur & Ors. v. State of Punjab [1955] 2
SCR 225 – referred to.
Per ABHAY MANOHAR SAPRE, J. (Concurring)
1. Having regard to the nature of controversy and the
myriad issues, which arose in these appeals, they have far reaching G
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 26-
A of the Drugs and Cosmetics Act, whether it is legislative or
executive, because there is no decision of this Court so far on H
174 SUPREME COURT REPORTS [2019] 11 S.C.R.

A this issue. Secondly, what are the essential ingredients for
invoking the powers under Section 26-A of the Drugs and
Cosmetics Act in relation to any Drug and whether such power is
in conflict with the exercise of powers conferred under the
Essential Commodities Act. Thirdly, whether issuance of
B 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. Lastly, depending upon the answer to the
nature of exercise of powers under Section 26-A of the Drugs
and Cosmetics Act, whether material relied on by the Central
C
Government can be held as sufficient to sustain the impugned
action. [Paras 3-6] [205-F-H; 206-A-B]
Union of India vs Pfizer Ltd.(2018) 2 SCC 39 : [2017]
12 SCR 179 – relied on
D 2. If the exercise of power under Section 26-A 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 impugned notification
E would be somewhat different than the former one. 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
F the Central Government under Section 26-A 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.
In effect, it will not be a judgment inter party but it will be in rem
laying down the law on the questions. [Paras 7-9] [206-C-E]
G
Case Law Reference
Per Indu Malhotra, J.
[1963] Supp (2) SCR 691 referred to Para 10.2
H [2006] 3 SCR 396 referred to Para 10.2
UNION OF INDIA v. BGP PRODUCTS OPERATIONS GMBH AND HAGENE 175
IMMERMATT WEG.

[1987] 2 SCR 841 referred to Para 10.2 A
2001 (90) DLT 16 referred to Para 10.2
AIR 2000 Cal 133 referred to Para 10.2
AIR 2002 Ker 72 referred to Para 10.2
[2017] 12 SCR 179 referred to Para 10.3 B
[1995] 6 Suppl. SCR 759 referred to Para 10.3
[2010] 6 SCR 1110 referred to Para 10.3
[2007] 5 SCR 7 referred to Para 10.3
C
[2011] 8 SCR 680 referred to Para 10.3
[1987] 2 SCR 468 referred to Para 10.3
[1993] 2 Suppl. SCR 385 referred to Para 10.3
[1963] Supp 2 SCR 691 referred to Para 10.7
D
[1994] 4 Suppl. SCR 477 referred to Para 10.7
[1974] 1 SCR 570 referred to Para 10.7
(1999) 6 SCC 247 referred to Para 10.7
[1969] 3 SCR 447 referred to Para 10.7
E
[1955] 2 SCR 225 referred to Para 11.10
Per Abhay Manohar Sapre, J.
[2017] 12 SCR 179 relied on Para 3
CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 6588- F
6591 OF 2019.
From the Judgment and Order dated 14.12.2018 of the High
Court of Delhi at New Delhi in W.P. (C) No. 6084 of 2018 connected
with W.P.(C) Nos. 8555, 8666 and 9601 of 2018
Tushar Mehta, SG, Vikramjit Banerjee, ASG, Kapil Sibal, S. Ganesh, G
Colin Gonsalves, Ms. Meenakshi Arora, Sr. Advs., Kanu Agrawal,
Ms.Seema Bengani, Rishi Sharma, Ms. Swati Ghildiyal, B. K. Satija,
Anas Zaidi, Rishi Kant Singh, Ayush Anand, G. S. Makker, Ms. Gayatri
Roy, Ms. Soumili Das, Amit Panigrahi, Raghav Tankha, Pratyush Pandey,
Ms. Anushka Sachdev, Anuj Bhandari, Phiroze Palkhivala, Ravikesh K. H
176 SUPREME COURT REPORTS [2019] 11 S.C.R.

A Sinha, Abhijat P. Medh, Shashi Kant, Ms.Tanya Agarwal, Satya Mitra,
Amit Karkhanis, Kapil Joshi, Ms. Manju Sharma, Jetley, M/s KNC, Ashish
Prasad, Ms. Mukta Dutta, Akshay Nagarajan, Rohan Roy, Mahfooz A
Nazki, Rajesh R., M. P. Devanath, Abhishek Agarwal, Advs., for the
appearing parties.
B The Judgments of the Court were delivered by
INDU MALHOTRA, J.
Leave granted.
1. The issue which arises for consideration in the present appeals
C 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 undertakings or
D 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.
E
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
F 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.
G 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
H inter alia manufacturing the drug Oxytocin in W.P.(C) No. 6084/2018,
UNION OF INDIA v. BGP PRODUCTS OPERATIONS GMBH AND HAGENE 177
IMMERMATT WEG. [INDU MALHOTRA, J.]

W.P.(C) No. 8555/2018, W.P.(C) No. 8666/2018 and W.P.(C) No. 9601/ A
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 Orders, which remained in force till 15.12.2018. The Delhi
High Court vide a detailed Judgment and Order dated 14.12.2018 has B
quashed the impugned notification. As a consequence, the impugned
notification did not come into force at all.

5. The Appellant-Union of India has filed the present Special Leave
Petitions before this Court, to challenge the judgment passed by the
Delhi High Court. C

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 D
has now been adopted by many countries, NGOs and international non-
profit 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-
E
mL”.

6.1. Oxytocin is an essential life-saving 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 F
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 G
per 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 2016-2018” at Serial No. 228 published by the
National Health Mission, Department of Health and Family
Welfare, Government of Himachal Pradesh. H
178 SUPREME COURT REPORTS [2019] 11 S.C.R.

A 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
B 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
C 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 cost-
D effective 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 proven efficacy
and safety profile based on valid scientific evidence; the
E 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)
F Model List of Essential Medicines, Essential Drugs Lists
of various States, and medicines used in various National
Health Programmes and Emergency Care Drugs.3

G 1
Press Release on “Essential Drugs” dated 15.03.2013 by the Press Information Bureau,
Government of India, Ministry of Health and Family Welfare.
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 (NPPP-2012)
dated 07.12.12 published by the Ministry of Chemicals and Fertilizers, Government of
H India
UNION OF INDIA v. BGP PRODUCTS OPERATIONS GMBH AND HAGENE 179
IMMERMATT WEG. [INDU MALHOTRA, J.]

6.3. Oxytocin is recommended as the first line drug for prevention A
and treatment of post-partum haemorrhage (excess bleeding
immediately after child-birth).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 hypo-tonicity and is placed under Schedule H1 of B
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 C
Technical Advisory Board (“DTAB”) and the Drugs
Consultative Committee (“DCC”), which are statutory
bodies constituted under the said Act.
The DTAB is a statutory body established under Section
5 of the said Act. The DTAB consists of technical experts D
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 E
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. F

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 G
31st meeting of the DCC held on 21.08.1997 and 22.08.1997.

4
World Health Organisation Recommendations For The Prevention And Treatment Of
Postpartum Haemorrhage, 2012
5
Fifty-Ninth Report Of Parliamentary Standing Committee On Health And Family
Welfare On The Functioning Of Central Drugs Standard Control Organization H
180 SUPREME COURT REPORTS [2019] 11 S.C.R.

A 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.
B
6.7. At the 48th meeting of the DTAB held on 08.07.1999, the
DTAB discussed the misuse of Oxytocin in milch animals
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.
C
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
D
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
E
Oxytocin injection requires an in-depth 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
F
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 50-100 ampoules.
6.9. At the 40th Meeting of the DCC held on 29.06.2009, it was
G
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 of the
drug. The DCC observed that the drug has a definite place
in medical treatment, and is used by gynaecologists
H universally. The DCC urged the members/representatives
UNION OF INDIA v. BGP PRODUCTS OPERATIONS GMBH AND HAGENE 181
IMMERMATT WEG. [INDU MALHOTRA, J.]

of each State to ensure that the clandestine manufacture A
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 B
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 C
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 D
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 E
coupled with the condition that the manufacturers of the
bulk drug Oxytocin should supply the Active 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 F
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 post-partum bleeding and uterine hypotonicity,
G
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 H
182 SUPREME COURT REPORTS [2019] 11 S.C.R.

A 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
B 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.
C 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
D 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.

E 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
F 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
G 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
H or for distribution or sold in the manner specified
UNION OF INDIA v. BGP PRODUCTS OPERATIONS GMBH AND HAGENE 183
IMMERMATT WEG. [INDU MALHOTRA, J.]

below, in addition to the provisions contained in the A
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 B
formulations of the said drug.
2. The formulations meant for veterinary use shall
be sold to the veterinary hospitals only.”
(emphasis supplied)
C
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.
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, D
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 E
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 F
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
G
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. H
184 SUPREME COURT REPORTS [2019] 11 S.C.R.

A 6.17. The recommendations of DTAB came to be given statutory
effect by an amendment to Rule 65 of the Drugs and
Cosmetics Rules,1945 vide Notification dated 30th August
2013 published by the Ministry of Health and Family
Welfare.
B 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
C 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.”
D 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.
E 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
F 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.”
6.20. In its 70th meeting dated 18.08.15, the DTAB was informed
G 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
H clandestinely and sold to dairy owners at a very cheap rate.
UNION OF INDIA v. BGP PRODUCTS OPERATIONS GMBH AND HAGENE 185
IMMERMATT WEG. [INDU MALHOTRA, J.]

The DTAB reiterated its recommendation that “the drug A
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 B
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 C
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. D
The members deliberated upon the matter and “agreed on
a draft notification for regulating, restricting the
Oxytocin formulations for human use to be supplied
only to registered hospitals and clinics in public and
private sector.” E
The DTAB accepted in principle the proposal to amend
Rule 96 of the Drugs and Cosmetics Rules, 1945 to ensure
that bar-coding 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. F
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 G
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 H
186 SUPREME COURT REPORTS [2019] 11 S.C.R.

A 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 3-tier bar-coding
system is adopted by licensed manufacturers of Oxytocin
formulations to facilitate and trace their products.
B 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.
C
(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
D 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:-
E
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
F 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
G 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
H Trade Item Number format along with batch number,
UNION OF INDIA v. BGP PRODUCTS OPERATIONS GMBH AND HAGENE 187
IMMERMATT WEG. [INDU MALHOTRA, J.]

expiry date and a unique serial number of the Tertiary A
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. B
(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, C
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. D
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.
E
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 F
manufacture of Oxytocin formulations for export purposes
shall be open to both public and private sector companies.
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 G
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 H
188 SUPREME COURT REPORTS [2019] 11 S.C.R.

A 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
B 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
C 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
D
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
E
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;
F 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
G 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
H bear barcodes.
UNION OF INDIA v. BGP PRODUCTS OPERATIONS GMBH AND HAGENE 189
IMMERMATT WEG. [INDU MALHOTRA, J.]

(ii) The manufacture of Oxytocin formulations for A
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 B
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 C
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.
D
(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,-
E
(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
F
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
G
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 H
190 SUPREME COURT REPORTS [2019] 11 S.C.R.

A 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
B 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.”
C 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
D 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
Medicines and Reliable Implants for Treatment (AMRIT)
outlets.
E
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
F 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 &
G 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
H now shifted to Schedule ‘H1’ at Entry No. 47. Schedule
UNION OF INDIA v. BGP PRODUCTS OPERATIONS GMBH AND HAGENE 191
IMMERMATT WEG. [INDU MALHOTRA, J.]

H1 refers to Rules 65 and 97 of the Drugs and Cosmetics A
Rules,1945.
As per the said Rules, Schedule H1 prescription drugs
provide for stricter control and additional precautions when
compared with Schedule H drugs.
B
The relevant extracts of the Rules are set out herein
below for ready reference:
“65. Conditions of licences. - Licences in Forms 20, 20-
A, 20-B, 20-F, 20-G, 21 and 21-B shall be subject to the
conditions stated therein and to the following general C
conditions-
….
(3)(1) The supply of any drug [other than those
specified in Schedule X] on a prescription of a
D
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:- E
(a) serial number of the entry,
(b) the date of supply,
(c) the name and address of the prescriber,
F
[(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, G
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, H
192 SUPREME COURT REPORTS [2019] 11 S.C.R.

A (g) the signature of the [registered Pharmacist] by or
under whose supervision the medicine was made up or
supplied
…..

B (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.
C
….
(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
D 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.

E (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
F 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
G 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
H licensee for a period of two years.
UNION OF INDIA v. BGP PRODUCTS OPERATIONS GMBH AND HAGENE 193
IMMERMATT WEG. [INDU MALHOTRA, J.]

(b) The supply of drugs specified in Schedule H and A
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.
B
….
(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. C
(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
D
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
E
name and address of the seller and the date on which
the prescription is dispensed.
…..
(11-A) No person dispensing a prescription containing
substances specified in Schedule H and Schedule H1 F
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—
G
(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: H
194 SUPREME COURT REPORTS [2019] 11 S.C.R.

A ‘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
B 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 –
C 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
D 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
E Laboratories Ltd. and Ciron Drugs And Pharmaceuticals Pvt. Ltd before
the Delhi High Court in May 2018.
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
F 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
G 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
6
H CWPIL No. 16 of 2014
UNION OF INDIA v. BGP PRODUCTS OPERATIONS GMBH AND HAGENE 195
IMMERMATT WEG. [INDU MALHOTRA, J.]

mothers, nor did it consider the deleterious effect to the public generally A
and women particularly, of the possible restricted supply of a life-saving
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
B
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 one licensee, which did not fall
within the protective ambit of Article 19(1)(6)(ii). C
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 Appellant-Union of India. D

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 India-Appellants submitted as E
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 F
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 G
legislation and the burden is upon the Respondents to show
that it is invalid. Reliance was placed on Akadasi Pradhan
v State of Orissa7, State of T.N. v. P. Krishnamurthy8,
7
1963 Supp (2) SCR 691 : AIR 1963 SC 1047
8
(2006) 4 SCC 517 H
196 SUPREME COURT REPORTS [2019] 11 S.C.R.

A 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
B 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.
C 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 Karnataka 15, Shimnit Utsch India (P) Ltd.
D 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.

E 10.4. It was submitted that Section 26-A 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 26-A exist.
F
9
1987 (2) SCC 720
10
2001 (90) DLT 16
11
2012 SCC Online Mad 1735
12
AIR 2000 Cal 133
13
G 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
H (1994) Suppl. 1 SCC 160
UNION OF INDIA v. BGP PRODUCTS OPERATIONS GMBH AND HAGENE 197
IMMERMATT WEG. [INDU MALHOTRA, J.]

Section 26-A of the Act reads as under: A
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 B
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 C
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 D
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 E
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 F
Government was arrived at after considering 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 G
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 H
198 SUPREME COURT REPORTS [2019] 11 S.C.R.

A 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
B the Respondent Manufacturers 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
C 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
D be used to “partially ban the manufacture of a drug i.e
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.
E
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
F 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
G as well. Such a measure should be presumed to be
reasonable and constitutional. Reliance was placed on
Akadasi Pradhan vs State of Orissa 21 , Khoday
Distilleries Ltd. v State of Karnataka22, Daruka & Co v
21
1963 Supp (2) SCR 691 : AIR 1963 SC 1047
H 22
(1995) 1 SCC 574
UNION OF INDIA v. BGP PRODUCTS OPERATIONS GMBH AND HAGENE 199
IMMERMATT WEG. [INDU MALHOTRA, J.]

Union of India & Ors. 23, Indian Drugs & A
Pharmaceuticals Ltd. v. Punjab Drugs Manufacturers
Assn. 24, Municipal Committee, Amritsar v State of
Punjab 25 .
10.8. It was further submitted that the impugned notification was
issued in furtherance of legitimate public interest towards B
protection of bovine heath, 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 C
drug. The Appellants placed reliance on Articles 48, 4 8 A
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 D
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:
E
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 F
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
Respondent-manufacturers do not sell the drug directly to
the end consumer and only sell by way of wholesale dealing G
to licensed distributors and licensed retail chemists, and use
the very same chain of distribution that KAPL uses.
23
(1973) 2 SCC 617
24
(1999) 6 SCC 247
25
(1966) 1 SCC 475 H
200 SUPREME COURT REPORTS [2019] 11 S.C.R.

A 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
B 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.
C
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;
D 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
E 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 Oxytocin for
F
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 Pradesh 26, which was completely
G
irrelevant for forming a “satisfaction” while issuing the
Impugned Notification.
11.5 The Respondent-Manufacturers had never been prosecuted
or even issued a Show-Cause Notice under the Act for any
26
H CWPIL No. 16 of 2014
UNION OF INDIA v. BGP PRODUCTS OPERATIONS GMBH AND HAGENE 201
IMMERMATT WEG. [INDU MALHOTRA, J.]

misuse or abuse of the drug, or violation of any provisions A
of the Act. There was no material or evidence to show any
illegal or clandestine manufacture of Oxytocin by the
Respondent-manufacturers who are licensed in accordance
with law. The Chart on Oxytocin Data Compilation from
April 2015 to August 2018 relied on by the Central
B
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
C
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.
D
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 E
suggested and recommended a 3-tier 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 F
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 G
a 3-tier 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 H
202 SUPREME COURT REPORTS [2019] 11 S.C.R.

A 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, declared and avowed purpose,
and does not cover its misuse. Therefore, Section 26A could
B
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
C 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.
D
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
E
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.

F 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.
G 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
27
H (1955) 2 SCR 225
UNION OF INDIA v. BGP PRODUCTS OPERATIONS GMBH AND HAGENE 203
IMMERMATT WEG. [INDU MALHOTRA, J.]

hit by Article 14 of the Constitution of India as being A
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 B
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 C
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, D
Drug Testing Laboratory Karnataka had found that several
drugs manufactured by KAPL, as recently as in October
2018 were of Non-Standard Quality (NSQ).
11.15 It was further submitted that on 01.11.2017, the Cabinet
Committee on Economic Affairs had given its in-principle E
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. F

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 G
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 H
204 SUPREME COURT REPORTS [2019] 11 S.C.R.

A 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
B 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 life-saving drug, which is used as the first line drug for prevention
and treatment of post-partum haemorrhage at the time of childbirth.
C 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
D 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
E 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
F unregulated and illegal use of the drug?
(iv) Whether it would be in public interest to restrict the
manufacture of a life-saving 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
G 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
H Section 26A of the Drugs and Cosmetics Act, 1940?
UNION OF INDIA v. BGP PRODUCTS OPERATIONS GMBH AND HAGENE 205
IMMERMATT WEG. [INDU MALHOTRA, J.]

(vi) Whether the object of curbing the clandestine manufacture A
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?
B
(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?
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 C
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.
ABHAY MANOHAR SAPRE, J.
1. I have had the advantage of going through an elaborate drafted D
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. E
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 F
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 26-A 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 & G
Anr. vs. Pfizer Ltd. & Ors., 2018 (2) SCC 39)
4. Secondly, what are the essential ingredients for invoking the
powers under Section 26-A of the Drugs and Cosmetics Act in relation
to any Drug and whether such power is in conflict with the exercise of
powers conferred under the Essential Commodities Act. H
206 SUPREME COURT REPORTS [2019] 11 S.C.R.

A 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
B powers under Section 26-A 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 26-A of
the Drugs and Cosmetics Act is held as being legislative in nature, the
parameters to examine the legality of the impugned notification would
C be different whereas if it is held to be executive in nature, the parameters
to examine the legality of 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
D 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 26-A 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.
E
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 merits in paragraph 12 of my
sister’s drafted judgment.
F
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
G 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.

Devika Gujral Matter referred to larger Bench.
H