SC pulls up Ranbaxy for delayed raising of refund issue

The Supreme Court has admonished drug major Ranbaxy Laboratories Ltd for not raising on the relevant occasion the issue of refunding Rs 1 crore penalty the government had imposed on it for allegedly overcharging drug prices.

A Bench headed by Justice V S Sirpurkar, while hearing the Centre’s plea, flayed Ranbaxy for not raising the issue when the matter was decided in May last year in the apex court.

“Why did you keep quiet at the time when the final orders were passed? You failed to raise the issue and now you want refund ... You were sleeping then or you were in coma?” Justice Sirpurkar said.

However, the Court permitted the company to move an application seeking the refund.

The Ranbaxy counsel sought refund of Rs 1 crore with interest more than a year after the Supreme Court upheld the firm’s position in May 2008.

The Supreme Court in January this year dismissed the review plea filed by the Centre challenging its decision of May 12 last year, wherein it had held that exemption from the Drug Prices (Control) Order shall relate to drugs just manufactured in the period of exemption and these need not be sold also during the interval.

The Supreme Court Bench in its May 2008 verdict observed that a manufacturer is not in a position to know when a drug will be sold.

“(The firm’s) control over the drug would end when it is dispatched to the wholesaler ... The manufacturer cannot supervise or oversee as to how others would be dealing with its product ...” it said.

The Delhi High Court in May 2006 had asked the firm to pay the penalty of Rs one crore and had directed that the money would either be refunded or paid, with interest in each case, depending on the verdict.

The High Court upheld Ranbaxy’s position, holding that the words used in the exemption notification are not “manufactured and sold” but only “manufactured”.

The government’s position was that Ranbaxy, which manufactured bulk drug Pentazocine four months prior to the expiry of the exemption period, was required to apply for price fixation and it was obliged to follow an existing notified price for bulk drug or a ceiling price for formulation on the expiry of the exemption.