Introduction:

In Tridoss Laboratories Pvt. Ltd. & Anr. v. Union of India & Ors. [2026 LiveLaw (Bom) 197], the Bombay High Court, through a Division Bench comprising Justice Manish Pitale and Justice Shreeram V. Shirsat, delivered a significant judgment addressing the interplay between price control regulations and principles of administrative fairness, holding that authorities cannot equate “sustained release” (SR) formulations with “controlled release” (CR) formulations in the absence of a specific statutory notification and that belated demands raised after an inordinate delay, without explanation and without affording an opportunity of hearing, are violative of principles of natural justice; the dispute arose under the Drugs (Price Control) Order, 1995 issued under the Essential Commodities Act, 1955, wherein the petitioners challenged a demand notice issued in 2016 by the Department of Pharmaceuticals alleging overcharging of a drug formulation, along with a consequential recovery notice under Section 267 of the Maharashtra Land Revenue Code, 1966, contending that their product was not covered under the relevant price control order during the period in question and that the action initiated after more than a decade was arbitrary, unjust, and legally unsustainable, ultimately leading the Court to quash the impugned notices and reaffirm the importance of timely and fair administrative action.

Arguments of the Petitioners:

The petitioners, Tridoss Laboratories Pvt. Ltd. and another, challenged the impugned demand notices on multiple grounds, asserting that the entire action of the authorities was fundamentally flawed both procedurally and substantively, beginning with the contention that their product, a controlled release (CR) variant of Theophylline 300 mg tablets, was not covered under the Drugs (Price Control) Order, 1995 during the relevant period when it was manufactured and sold, and therefore there was no requirement for them to seek prior price approval or adhere to any ceiling price; it was emphasized that the CR formulation was expressly brought within the ambit of price control only in the year 2006 through a specific notification, by which time the petitioners had already discontinued production of the said product, thereby making any retrospective application of price control provisions impermissible; the petitioners further argued that the authorities had initially alleged non-compliance with the requirement of seeking price approval but later shifted their stand to accuse the petitioners of overcharging, thereby demonstrating inconsistency and lack of clarity in the basis of the demand; a significant plank of the petitioners’ case was the inordinate and unexplained delay in initiating action, pointing out that the first notice was issued nearly nine years after the relevant period and the demand notice followed after more than ten years, during which time the petitioners had legitimately destroyed their records in accordance with standard retention policies, thereby severely prejudicing their ability to defend themselves; they contended that such belated action violated the doctrine of reasonable time, which requires authorities to act within a reasonable period even in the absence of a prescribed limitation, and that the delay had effectively deprived them of a fair opportunity to contest the allegations; the petitioners also argued that the principles of natural justice were grossly violated, as no proper hearing was granted before issuing the demand and no reasons were recorded to justify the action, rendering the decision arbitrary and unsustainable; on merits, the petitioners strongly opposed the authorities’ attempt to equate sustained release (SR) formulations with controlled release (CR) formulations, asserting that the two are distinct pharmaceutical technologies with different release mechanisms and cannot be treated as interchangeable without a specific statutory basis, and that the authorities’ reliance on prices applicable to SR formulations to determine alleged overcharging for CR products was legally untenable; they submitted that if both formulations were indeed equivalent, there would have been no need for a separate notification in 2006 to include CR formulations within the scope of price control, and therefore the entire basis of the demand was flawed, leading them to seek quashing of the impugned notices.

Arguments of the Respondents:

The respondents, represented by the Union of India through the Department of Pharmaceuticals, defended the impugned action by contending that the petitioners had failed to comply with the regulatory framework governing drug pricing and had thereby overcharged consumers, justifying the issuance of the demand notices; it was argued that the Drugs (Price Control) Order, 1995 was intended to regulate the prices of essential drugs in the interest of public welfare, and that manufacturers were obligated to adhere to its provisions, including seeking price approval where required; the respondents sought to justify the demand by treating the controlled release (CR) formulation manufactured by the petitioners as equivalent to the sustained release (SR) formulation, which was already covered under the price control regime, and contended that the petitioners had effectively circumvented the pricing regulations by marketing a formulation that was functionally similar but labeled differently; on the issue of delay, the respondents did not provide a satisfactory explanation but appeared to suggest that the absence of a prescribed limitation period allowed them to initiate action even after several years, and that the demand was based on findings of overcharging that came to light during subsequent scrutiny; the respondents also maintained that the petitioners were aware of the regulatory requirements and could not claim prejudice merely on account of the passage of time, and that the recovery proceedings initiated under the Maharashtra Land Revenue Code were in accordance with law; however, their position was weakened by the lack of evidence demonstrating timely service of notices or adherence to procedural safeguards, and by the inconsistency in their approach regarding the basis of the demand, which shifted from non-application for price approval to alleged overcharging, thereby raising questions about the fairness and legality of their actions.

Court’s Judgment:

The Bombay High Court, after a comprehensive analysis of the facts and legal principles, allowed the writ petition and quashed the impugned demand notices, holding that the action of the respondents was vitiated by inordinate delay, violation of natural justice, and a fundamentally flawed approach on merits; the Court first addressed the issue of delay and observed that the initial notice was issued nearly nine years after the relevant period, followed by a demand notice after more than ten years, and that the respondents had failed to provide any explanation for such delay or to demonstrate that any earlier notice had been served on the petitioners, thereby rendering the action arbitrary and unreasonable; the Court emphasized that even in the absence of a statutory limitation period, administrative actions must be initiated within a reasonable time, failing which they become unsustainable, particularly when the delay causes prejudice to the affected party, as was the case here where the petitioners had lost access to relevant records due to the passage of time; the Court further held that the principles of natural justice had been violated, as the petitioners were not afforded a proper opportunity of hearing and no reasons were recorded before issuing the demand, underscoring that administrative decisions affecting rights must be fair, transparent, and reasoned; on the substantive issue, the Court rejected the respondents’ attempt to equate SR and CR formulations, holding that such equivalence could not be presumed in the absence of a specific notification under the Drugs (Price Control) Order, and that the inclusion of CR formulations through a separate notification in 2006 clearly indicated that they were not previously covered, thereby invalidating the basis of the demand; the Court observed that if SR and CR formulations were indeed equivalent, there would have been no need for a distinct notification, and therefore the respondents’ approach was legally untenable; it also took note of the shifting stand of the respondents, which further undermined the credibility of their case, and concluded that the impugned notices were unsustainable in law, leading to their quashing and setting aside, thereby reinforcing the principles that regulatory authorities must act within a reasonable time, adhere to procedural fairness, and base their decisions on clear statutory authority rather than assumptions or administrative convenience.