The Bombay High Court has allowed a writ petition filed by Pharmed Limited and another, setting aside the basis on which the National Pharmaceutical Pricing Authority (NPPA) had sought recovery of alleged overcharged amounts relating to the pharmaceutical formulation Cartigen Forte.
A Division Bench comprising Justice Manish Pitale and Justice Shreeram V. Shirsat held that the ceiling price mechanism under the Drugs (Prices Control) Order, 1995 (DPCO 1995) had to be followed in the manner prescribed by the statutory formula.
Background
Pharmed manufactures and markets pharmaceutical formulations. The dispute concerned Cartigen Forte Tablets, a formulation used for the treatment of osteoarthritis.
The controversy arose from two NPPA notifications dated September 27, 2007 and January 30, 2009. The first notification fixed ceiling prices for multivitamin and mineral tablets and capsules. The second stated that formulations containing any scheduled drug would be subject to the applicable price ceiling unless a specific price had subsequently been fixed.
NPPA later alleged that Pharmed had sold Cartigen Forte above the applicable ceiling price and issued demands for recovery. The initial show-cause notice sought recovery of about Rs. 10.97 crore. After subsequent proceedings, the claimed amount increased substantially, with interest also being added.
Pharmed argued that Cartigen Forte was not a multivitamin or mineral formulation and that no specific ceiling price had ever been fixed for it by following the mechanism prescribed under DPCO 1995.
The Court examined the composition of the formulation before and after January 2010. Before January 2010, Cartigen Forte contained, among other ingredients, Vitamin C and Vitamin E. From January 2010, those ingredients were no longer part of the formulation. Its principal active ingredients included Glucosamine Sulfate Potassium Chloride, Chondroitin Sulfate Sodium and Methyl Sulfonyl Methane.
The Bench observed that although Vitamin C and Vitamin E were listed in the First Schedule to DPCO 1995, their presence in small quantities did not by itself mean that the ceiling price notified for an entirely different multivitamin and mineral formulation could be applied to Cartigen Forte.
The Court explained that a ceiling price had to be specifically fixed for the scheduled formulation by following the formula prescribed under paragraph 7 of DPCO 1995. That formula considered factors including material cost, conversion cost, packaging material, packing charges, allowable post-manufacturing expenses and excise duty.
The Bench found that the January 30, 2009 notification was drafted so broadly that it effectively bypassed the statutory method for calculating the ceiling price.
The Court held:
“The impugned notification dated 30.01.2009 is clearly over broad, expansive and it operates in the teeth of the paragraphs of DPCO 1995 itself. In other words, it is beyond the power vested in respondent No.2-NPPA to issue such kind of notification. As a matter of fact, it indicates abdication of the responsibilities and obligations cast upon the Central Government and the NPPA to specifically fix ceiling price under paragraph 9 of DPCO 1995 read with the rigorous formula specified in paragraph 7 thereof. We find substance in the contentions raised on behalf of the petitioners in this regard to hold that the impugned notification dated 30.1.2009 is indeed ultra vires DPCO 1995.”
The Court further noted that no specific ceiling-price exercise had been undertaken for Cartigen Forte using the prescribed formula. Consequently, the foundation for alleging that Pharmed had overcharged its customers was not established on the basis of the impugned notifications.
The Bombay High Court allowed the writ petition. It quashed the September 27, 2007 notification to the extent that it was applied to Pharmed's Cartigen Forte formulation and quashed the January 30, 2009 notification in its entirety.
As a consequence, the Court directed that the respondents shall not act upon the impugned demand notices against the petitioners.
Pending applications and the Chamber Summons were also disposed of.
Case Details
Case Title: M/s. Pharmed Limited & Anr. v. Union of India & Ors.
Case Number: Writ Petition No. 595 of 2017
Judge: Justice Manish Pitale and Justice Shreeram V. Shirsat
Decision Date: September 22, 2026
