The Kerala High Court has upheld a circular issued by the State Drugs Controller requiring pharmacy licence applicants to undertake that they will not display misleading discount boards at their medical stores. The Court ruled that the licensing authority was acting within its regulatory powers to protect consumers and ensure transparency in the sale of medicines.
Justice Bechu Kurian Thomas delivered the judgment while deciding three connected writ petitions that challenged and supported the September 4, 2024 circular issued by the Drugs Controller.
Background of the Case
The dispute arose after the Drugs Controller directed applicants seeking fresh drug licences or licence renewals to submit an affidavit undertaking that they would not display discount boards at their pharmacies. The circular was later modified, and the undertaking was rephrased to prohibit only “misleading or vague claims” regarding drug prices.
Medical shop owners challenged the circular, arguing that there was no legal prohibition on selling medicines below the Maximum Retail Price (MRP) or informing customers about available discounts. They contended that discount boards helped consumers identify pharmacies offering medicines at lower prices.
On the other hand, another petitioner sought implementation of the circular, alleging that large discount claims displayed by some pharmacies often misled customers.
Arguments Before the Court
The petitioners opposing the circular argued that the condition interfered with their right to conduct business. They maintained that pharmacies are legally permitted to sell medicines below the MRP and that discount advertisements merely informed the public about those benefits.
The State, however, clarified that it was not against offering discounts. According to the Drugs Controller, the concern was only with vague and exaggerated advertisements claiming discounts as high as 80%, which could mislead customers. The State submitted that the objective was to ensure transparency and prevent unfair marketing practices.
Court’s Observations
The Court noted that while drug sellers cannot charge more than the MRP, there is no restriction on selling medicines below that price. At the same time, the Court observed that the circular did not prohibit pharmacies from offering discounts to customers. Instead, it sought to regulate potentially misleading discount advertisements.
Justice Thomas observed that statutory authorities must act within the law, but they also possess incidental powers necessary to effectively discharge their responsibilities.
The Court stated,
“The action of the respondents is aimed only at preventing misleading display boards or advertisements relating to discounts.”
The judgment further emphasized that regulatory authorities are entitled to take reasonable measures in public interest and that courts should ordinarily refrain from interfering unless such measures severely affect legal rights.
“The Drugs Controller has a significant role in the matter of drug licensing,”
the Court observed, adding that requiring an undertaking intended to protect the public could not be treated as an unreasonable restriction on business.
Decision
The Court held that the revised undertaking—which requires licensees not to display discount boards containing misleading or vague claims regarding drug prices—does not prejudice pharmacy owners and is consistent with their obligation to deal fairly with consumers.
Consequently, the High Court dismissed W.P.(C) Nos. 39706 of 2024 and 41978 of 2024, which had challenged the circular. It allowed W.P.(C) No. 1447 of 2025 and clarified that authorities would be free to take appropriate action if the conditions stipulated by the licensing authority are not complied with.
Case Details:
Case Title: M/s Pharmadude Pharmacy Vannappuram v. State of Kerala & Connected Cases
Case Number: W.P.(C) Nos. 39706 of 2024, 41978 of 2024 & 1447 of 2025
Judge: Justice Bechu Kurian Thomas
Decision Date: June 19, 2026
