Kerala High Court Upholds Drugs Controller's Power To Restrict Misleading Discount Boards At Medical Shops

The Kerala High Court has upheld the authority of the State Drugs Controller to require pharmacy licence applicants and renewal applicants to undertake that they will not display misleading discount boards relating to the sale of medicines. [2026 LiveLaw (Ker) 337]The Court further held that such a condition is a valid regulatory measure aimed at protecting consumers and does not unlawfully restrict the right to conduct business.Justice Bechu Kurian Thomas delivered the judgment in a batch of writ petitions challenging a circular issued by the Drugs Controller on September 4, 2024.One of the writ petitions sought the implementation of the said circular, while the other two, sought to quash it. The circular directed applicants for drug licences to furnish an affidavit undertaking not to display discount boards and proposed changes to the wording of the standard affidavit submitted with licence applications.The circular stated that the existing words in the affidavit, which stipulated that misleading claims about drugs will not be published, should be replaced by the words 'discount boards related to'. The Court examined whether the Drugs Controller, acting as the licensing authority under the Drugs and Cosmetics regulatory framework, possesses the power to impose conditions relating to discount advertisements as part of the licensing process, despite the absence of an express statutory prohibition on selling medicines below the Maximum Retail Price (MRP).The petitioning pharmacy owners argued that neither the Drugs and Cosmetics Act, 1940, nor the Drugs and Cosmetics Rules, 1945, prohibit retailers from selling medicines below the MRP or informing customers about discounts. They contended that the circular effectively curtailed their right to advertise legitimate discounts and interfered with their freedom to conduct business.The respondent, Drugs Controller maintained that the circular was not intended to prohibit discounts but to prevent misleading discount claims that could deceive consumers. According to the Drugs Controller, advertisements promising discounts of up to 80% often created false impressions and induced customers to visit pharmacies without adequate transparency regarding actual pricing.It was also asserted in an affidavit filed before the Court that the Department is not against discounts being offered to the customers, but their concern is against the misleading advertisement boards about discounts being displayed. It was also submitted that the source of few drugs offered in some of the shops are from outside the State with its quality itself in question. It was further asserted that the lack of transparency in the business with the public being misled by the offer of discounts and ending up paying the MRP itself had prompted the circular. It was also submitted that the circular does not prevent the retailers from displaying details of drugs sold at discount rates and all that is restricted is exhibiting vague discount percentages.The Court first examined the legal framework governing drug pricing under the Drugs Price Control Order, 2013. It noted that while the law prohibits the sale of medicines above the MRP, there is no restriction on retailers offering medicines at prices below the MRP.The Court observed that the impugned circular did not prevent pharmacies from granting discounts to customers; rather, it sought to regulate potentially misleading promotional boards.“The contention of the petitioners that respondents are attempting to compel the petitioners to sell medicines, without providing any discount, is not legally tenable or factually correct, since nowhere has the respondents insisted that the petitioners should refuse discounts to customers. The action of the respondents is aimed only at preventing misleading display boards or advertisements relating to discounts.” the Court said. The Court held that when statutory authority is conferred upon a licensing body, it carries with it incidental powers necessary to achieve the objectives of the regulatory scheme. Accordingly, the Drugs Controller could require licence applicants to undertake not to engage in misleading discount advertising as part of the licensing process.“Since the licensing authority has all the powers to ensure that the licensee carries on the business without misleading the public, the insistence on the addition of certain words in the affidavit to be filed while applying for license or for renewal, cannot be said to be a restriction on their right to conduct business.” Court added. The Court further emphasised that regulatory authorities must be afforded a degree of flexibility in carrying out their statutory functions. “The regulatory authority will have a 'play in the joints', to step in to regulate and prevent the myriad illegalities by issuing directions, in public interest. Unless the rights of the licensees are infringed severely, the regulatory directives issued by the controlling officer should not...

Kerala High Court Upholds Drugs Controller's Power To Restrict Misleading Discount Boards At Medical Shops

Anamika MJ

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Anamika MJ

Kerala High Court Upholds Drugs Controller's Power To Restrict Misleading Discount Boards At Medical Shops

Anamika MJ

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Anamika MJ

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