Ronojit Kumar Mitra, J.
1. This was an appeal from an order dated June 26, 1992. The writ petitioners, who were the respondents in this appeal, were manufacturers of 'combiflam' tablets since 1984. Admittedly, the formulation of such tablets included two bulk drugs, being 'paracetamol' and 'ibuprofan'. In 1985 it came to the notice of the concerned authorities that the sales turnover of combiflam tablets exceeded Rs. 50 lac, and according to them, the respondent No. 1 became liable to obtain approval of the concerned authorities, regarding the fixation of the minimum retail price for the sale of the combiflam tablets.
2. The writ petitioners had contended, that M/s. Carews Pharmaceuticals Ltd. the respondent No. 1, hereinafter referred to as 'the company', was a lawfully registered owner of the trade mark 'COMBIFLAM', and that it had been marketing the product under its trade name, independently and entirely on its own, as a small scale unit. The company, it was contended, was consequently entitled to be exempted from obtaining approval of the concerned authorities as regards the fixation of the minimum price of the product. Such exemption, according to the respondents had been allowed under the provisions contained in the Notification dated July 21, 1988, issued by the Ministry of Industries, Department of Chemicals and Petro Chemicals. It was their case, that the Notification dated July 21, 1988 had been made upon the promulgation of a new set of rules, stipulated under the Drugs (Prices Control) Order 1987, which came into effect on August 26, 1987. I shall refer to the Drugs (Prices Control) Order, 1987 as DPCO for short, in this judgment. It was submitted by counsel for the respondents that in accordance with sub-clause (iii), in relation to formulations of drugs, as specified in Category II of the Third Schedule of the Drugs, (Prices Control) Order, 1987, the company had duly furnished the necessary declaration, and had claimed that the company was exempted from the operation of any of the provisions of the DPCO, 1987 in so far as they related to the specified formulations of drugs. According to the petitioners, for the purpose of marketing facilities and quick payment, there were certain arrangements with Roussel India Limited, and that prices were to be agreed from time to time between them.
3. It was argued, by counsel for the appellants, that in addition to the liability of the respondents for failure to obtain price approval as their sales turnover had crossed the sum of Rs. 50 lac, they were in deliberate violation of the provisions of the Drugs (Prices Control) Order dated 1979 as 1987. He submitted that an order dated December 12, 1988, had been issued by the concerned authorities on the basis that the respondents had been marketing their product combiflam without the necessary price approval, and directed the company to show cause as to why action should not be taken against it. According to the appellants, at the time of the publication of the said Notification dated 21st July, 1988 and also at the time of the submission of the Declaration on 22nd August, 1988 'paracetamol' was specified as Category I and 'ibuprofan' as Category II bulk drugs. Combiflam tablets, therefore, according to them, contained bulk drugs specified in both Categories I & II, and in terms of the proviso to paragraph 7(b) of the Drugs (Prices Control) Order, 1987 the formulation would be regarded as being a Category I drug, and consequently the company was not entitled to the exemption from obtaining the approval of the minimum retail price.
4. It appears to have been found as admitted, in the judgment dated June 26, 1992 from which this appeal has been preferred that. ' 'combiflam' contained 'Ibuprofan' and 'Paracetamol' and that the bulk drugs admittedly fell in Category II and formulas specified in Category II of the Third Schedule.' It would also appear to have been held, as admitted by the Hon'ble Judge that, 'the writ-petitioner No. 1 cannot but be an independent unit or a company'. The case of the appellants had been rejected on the ground that, 'the trade mark belonged to the writ petitioner No. l, with all rights attached thereto and the sale of the product through distributors and the retail outlets is in complete domain of the manufacturer and as such there cannot be any amount of control from any of the quarter. ' It had also been held, that the writ petitioner No. l had satisfied all the conditions attached to the Notification dated July 21, 1988, and that the refusal of the exemption by the authorities' does not and Cannot arise'.
5. Admittedly, the appellants had intimated the respondents that the sales turnover of the respondent No. l had exceeded Rs. 50 lac as early as in 1985. The appellants had directed the company to obtain price approval under DPCO, 1979 as its turnover had crossed Rs. 50 lac. The company was further directed by a letter dated January 17, 1990 to obtain price approval under DPCO, 1987 as because one of the two Ingredients of combiflam tablets being 'paracetamol' was in Category I formulation and the other 'ibuprofan' in Category II. The appellants had also alleged, in the letter, that the company was not entitled to the exemption from price approval also because the company was not marketing its manufactured product independently and solely by itself. The company had been issued with a showcause notice dated May 11, 1990, as to why action should not be taken against it for violating the price control notification. The company was given a hearing and by a letter dated January 11, 1991, it was charged with contravention of the provisions of DPCO, 1979/1987 and of the Essential Commodities Act 1955, and an opportunity had been given to the company to deposit the overcharged amount with penal interest at the rate of 15% with effect from November 5, 1986 and also to render accounts without a reasonable period. The company filed a writ petition on February 4, 1991 and prayed for withdrawal and cancellation of the order dated January 11, 1991. The appellant No. 3, issued a further letter on January 24, 1991, requiring the company to deposit a sum of Rs. 71027427/- which included interest at the rate of 15% for overcharging in the price of combiflam. The respondents filed a further writ petition and challenged the letter dated January 24, 1991.
6. The respondents had moved this petition on April 24, 1992 when directions for affidavits had been given, though no one was in Court on behalf of the appellants. The reason for non appearance of the advocates for the appellants was that advocates of the Court had ceased work on that date, on account of the death of Mr. Satyajit Ray, the renouned Indian film director. According to the appellants, by a letter dated May 6, 1992 the advocates for the respondents intimated them as to the directions of the Court in respect to the filing of affidavits. The writ-petition appeared in the list for hearing on June 26, 1992 when prayer was made on behalf of the appellants for extension of time to file their affidavit-in-opposition and that both the writ-petitions may be taken up and disposed of upon being heard analogously. The prayers made by counsel on behalf of the appellants, was not entertained by the Court. The writ application had been disposed of after hearing the advocates for the parties.
7. It would appear to me, that within a period of one year of the commencement of the manufacture of 'combiflam' tablets by the company, the sales turnover had crossed Rs. 50 lac. The company had been duly intimated in that respect by a letter dated April 1, 1986 and in fact the appellants had proposed to initiate action in terms of the Drugs (Prices Control) Order 1979. By an order dated November 1, 1986 retail price of 'combiflam' tablets had been fixed by the concerned authorities at Rs. 7.68 per strip of ten tablets. The DPCO, 1979 was replaced by DPCO, 1987. The Government of India Issued the Notification dated July 21, 1988 and every small scale drug manufacturing unit was exempted from the operation of the provisions contained in DPCO, 1987 relating to formulations specified in Category II of the Third Schedule of the Order, which provided :
(a) 'It is an independent unit/company and not a subsidiary or owned or centralised in any manner by any other undertaking which is not as exempted from provisions of Drugs (Prices Control) Order, 1987.'
(b) 'The formulations are marketed by the concerned unit/company in their own brand names and trade marks or in the brand or trade name of any other small scale industry unit.'
(c) 'Prescribed declaration is submitted within 60 days from the date of the said notification in the case of existing units'.
The Notification dated July 21, 1988 had been clarified by the Government of India by its Circular dated October 31, 1988, in the following terms :
'It is therefore, clarified that as per condition (ii) of the said Order, the products are to be marketed by the concerned SSI units themselves and marketing by other organised sector companies in any manner, is strictly prohibited.'
As regards categorisation of formulations, it had been provided in paragraph 7(b) of the DPCO, 1987 that :
'For the purpose of categorisation of a formulation, it shall be deemed as
(i) 1 formulation, if it contains any bulk drug either individually or in combination, specified for Category 7 formulations;
(ii) Category II formulation, if it contains any bulk drug either individually or in combination, specified for Category 7 formulations;
Provided that in case the formulation contains bulk drugs specified in both Categories I and II, it shall be deemed a Category I formulation'.
Indeed 'paracetamol' had been transferred from Category I to Category II classification with effect from January 18, 1989 and thereafter 'combiflam' tablets are categorised as Category II formulation.
8. In the light of the provisions contained in the DPCO, 1979 and 1987 read together with the relevant Notification and clarification mentioned above, there was little doubt that at the time of the publication of the Notification dated July 21, 1988 and the submission by the respondents of their declaration on August 22, 1988, 'paracetamol' had been classified as Category I formulation and ibuprofan as category II formulation and consequently, under the proviso to paragraph 7(b) to the DPCO, 1987, 'combiflam' tablets were 'deemed to be a Category I formulation.' Undeniably, combiflam tablets contained bulk drugs specified In both categories I and II and it was therefore a Category I formulation. Thus, the respondent No. 1 was not and could not be entitled to claim the exemption from price approval, as envisaged in DPSO, 1987 read with the Notification dated July 21, 1998 and the circular dated October 31, 1988.
9. Even if it was assumed for the sake of argument that the company was the lawful owner of the trade mark, as regards its right title and Interest was concerned, by virtue of the unregistered Deed of Assignment, yet nowhere in the next of Section 37 of the Trade & Merchandise Marks Act, 1958 has the transferee been referred to as the absolute owner of the trade mark when the goodwill had been retained by the transferor. Indeed transfer of the right, title and interest of a trade mark without the goodwill was permissible, but clearly such transfer could not and did not make the transferee an absolute owner. The holder of the goodwill must therefore, necessarily be recognised to have a lawful say as far as the trade mark was concerned, and there was no reason to assume that matters of marketing was excluded from such control. In fact, the respondents in their writ-petition admitted that, 'for ensuring marketing facilities and also quick payment against delivery of the goods, the petitioners made certain arrangements with Roussel India Limited of Bombay for selling the bulk of the production of the subject formulations, if not the whole, to the said company ............... at prices to be agreed from time to time between the two parties above-named.' Clearly therefore, Roussel India Limited on the admission of the respondents was not only a controlling factor as regards marketing and fixation of price, but it would appear to be the marketing agency for the company. No less significant was the writing, in very small print, on the body of the wrappers of the tablets which read:
'.32, Jannagar Road,Serampore, Hooghly. W.B.In co-operation withRoussel India LimitedDr. Annie Besant RoadWarli, Bombay 400 013.R. Registered Trade Mark.'
10. Once again an admission by the respondents and clear indication that the company was not marketing the product solely by itself, but in cooperation with another. In the absence of any evidence to the contrary there was no reason whatsoever to find that there was no control by Roussel India Limited in the marketing of the combiflam tablets, or that the company was marketing the product absolutely independently
11. In those circumstances I am inclined to hold, that in 1985 the sales turnover for combiflam tablets manufactured by the respondents did not exceed Rs. 50 lac had not at all been substantiated. In fact, respondent No. 1, the company, has been, be it under protest, complying with the price fixed by the concerned authorities. The evidence sought to have been relied on by, and the arguments of counsel for the respondents, in support of the company's entitlement to the exemption from price co approval, I am afraid were mere assertions, quite bereft of any reasoning or the force of law. The Company was the transferee of the right, title and interest to the trade mark, but not the goodwill. Some control of course had obviously been retained by the transferor, as regards the trade mark, and marketing and fixation of price did not appear to have been left in the exclusive domain of the company. Finally, the two bulk drugs required in the formulation of combiflam tablets. In accordance with the law in that respect, were specified in categories I & II respectively and as result at all material times the formulation was classified as Category I, which did not enjoy the exemption until January 18, 1989 when 'paracetamol' had been included in Category II.
12. For those reasons the appeal succeeds. The impugned order dated June 26, 1992 is set aside. There was no interim order made at the time of admitting this appeal. The Appellants shall be at liberty to take such steps and institute such proceedings in relation to the respondents as the appellants may be advised in accordance with law. There shall be no order as to costs.
Parties shall be at liberty to obtain xerox of this judgment and order duly counter-signed by the Assistant Registrar of this Court upon an undertaking by the advocates on record to obtain a certified xerox of this judgment at the earliest.
Ashok Kumar Mathur, C.J.
13. I agree.