1. The issue arising in these three writ petitions revolve around the validity of a Circular dated 04.09.2024 issued by the Office of the Drugs Controller. One of the writ petitions seeks implementation of the said circular, while the other two, seeks to quash it. Though these writ petitions claim contradictory reliefs, since the questions are interconnected, they are disposed of by this common judgment.

2. By the impugned Circular, the Drugs Controller issued a direction, stipulating that the applicants for drug licence must incorporate a statement in the affidavit submitted along with their respective applications, an undertaking that the licensee will not exhibit any discount boards in their shops and shall also replace the words ‘misleading claims’ with 'as discount board related to' in the affidavit. Petitioners in W.P.(C) No. 41978 of 2024 and W.P.(C) No.39706 of 2024 have challenged the circular, while the petitioner in W.P.(C) No.1447 of 2025 wants it to be implemented. Further reliefs, to declare the lack of any authority for the Drugs Controller to issue prohibitory orders preventing the medical shop owners from selling the drugs below the maximum retail price and also for a declaration that the drug dealers are entitled to display discount sale boards in front of their pharmacy outlets have also been sought.

3. Petitioners are dealers engaged in the business of sale of medicines and a drug licence is necessary for such sales. Petitioners allege that the Office of the Drugs Inspector informed them that, to obtain a new licence, they must, in the existing format of the affidavit to be submitted along with the application, incorporate certain additional words as has been notified in the Circular dated 04.09.2024. The terms of the impugned Circular stipulate that the applicants for licence must undertake that they shall not exhibit any display boards showing discounts being offered at the pharmacy and further, that the existing words in the affidavit, which stipulated that misleading claims about drugs will not be published, should be replaced by the words ‘discount boards related to’.

4. Petitioners assert that they serve the public good at large, by offering medicines at reduced rates, forgoing a portion of their profit and selling them at a price lesser than the Maximum Retail Price (for short 'MRP'), shown in the packets. Petitioners allege that they are selling the drugs with due transparency regarding the discounts/rebates offered by them on each of the medicines, by publicly providing a booklet containing details of medicines and the percentage of discounts offered, which booklet is even kept in their pharmacies. Petitioners further stated that there is no prohibition under the Drugs and Cosmetics Act, 1940 (for short ‘the Act’) or the Drugs Rules, 1945 (for short ‘the Rules’) to sell any drug below the MRP or from disclosing such discounts offered by the dealers to the public in a transparent and open manner. Thus the petitioners in W.P.(C) No. 41978 of 2024 and W.P.(C) No.39706 of 2024, alleged that the Circular is contrary to the provisions and is without any authority or jurisdiction.

5. W.P.(C) No.1447 of 2025 is filed by a person aggrieved by the various advertisement boards erected in front of medical shops at Chalakkudy Municipal area, which according to him, is misleading the public and therefore insists on implementing the Circular.

6. In the counter affidavit, it is stated that the second respondent is the controlling authority and the person responsible for ensuring the proper implementation of the provisions of the Drugs and Cosmetics Act, 1940, Drugs and Magic Remedies (Objectionable Advertisements) Act 1954, and the Drugs Price, Control Order 2013. According to the said respondent, the department is striving to eliminate unhealthy practices in the pharmaceutical industry and reforms are being implemented in a phased manner with such an objective. The respondent has also averred in his affidavit that, no dealer or retailer can sell drugs at a price higher than the MRP but there is no regulation or statutory bar regarding the discounts that can be offered. The Drugs Controller asserted in the affidavit that the department is not against discounts being offered to the customers, which in fact make it affordable to the general public, but their concern is against the misleading advertisement boards about discounts being displayed. These false claims displayed on discount boards entice innocent customers, especially since the advertisements project discounts of even upto 80% being offered.

7. The first respondent has further averred in his counter affidavit that the source of few drugs offered in some of the shops are from outside the State with its quality itself in question. According to the said respondent, in a meeting convened on his behest, it was decided to have an Action Plan and that, as per paragraph 24(4) and 25(3) of the Drugs Price Control Order, 2013, every retailer or dealer is bound to display the price list as furnished by the manufacturer and not a board which merely announces the discount sale. It is 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. The first respondent has also stated that the Circular is only a practical way of bringing in reforms and does not prevent the retailers from displaying details of drugs sold at discount rates and all that is restricted is exhibiting vague discount percentages. It is asserted in the counter affidavit that the department is only intending to avoid exploitation of the common man. In the counter affidavit dated 25.03.2026, it is stated that the Department has not taken any action so far, but has decided to rephrase the undertaking to be given by the licensees.

8. Sri. Babu Karukapadath, who led the arguments on behalf of the petitioners, submitted that the petitioners’ right to do business is being infringed by the impugned Circular, as they are prevented from advertising the discounts offered by them. Referring to paragraph 26 and 24 of the Drugs Price Control Order, 2019, it was submitted that the Ceiling Price and MRP, which are defined in rule 2(d) and rule 2(r) of the Rules, only restricts sale of medicines above the maximum retail price. According to the learned counsel, insisting on the dealers/retailers not to display any discount boards is indirectly compelling the petitioners not to sell the medicines at a reduced price. The learned counsel further submitted that, only by the discount boards, which are displayed for the benefit of the public, would they become aware about the discounts offered and therefore no restriction can be imposed on such retailers to sell medicines at the price of their choice, as long as it is below the MRP. In support of his contentions, the learned counsel relied upon the decisions in Ganapati Singhji v. State of Ajmir and Another (AIR 1955 SC 188), Kharak Singh v. State of UP and Others (AIR 1963 SC 1295) and Self Financing Para Medical Managements Association, Thrissur and Others v. State of Kerala (2014 (3) KLT 943).

9. Sri. Anil Kumar M. Sivaraman, the learned counsel for the petitioner in W.P.(C) No.1447/2025 on the other hand, submitted that the advertisements erected or affixed in front of various medical shops offering discounts/rebates at 50% to 60% of MRP are generally false information, intended to manipulate and mislead the customers. According to the learned counsel, induced by huge discounts displayed on the advertisement boards, a customer approaches the medical shop and invariably, a minor discount is offered or not at all, and unless these misleading advertisements are prohibited, the innocent customers will be seriously prejudiced. According to the learned counsel, the Circular dated 04.09.2024 ought to be implemented and those violating the same must be taken to task.

10. Sri. Sreejith V.S. and Smt. Laya Mary Joseph, the learned Government Pleaders submitted that the licensing authority under the Act has never prohibited or prevented any discounts being given to the customers, and on the other hand, the Circular only insists that the boards offering a large percentage of discounts ought not to be displayed or exhibited. It was submitted that as per Clause 24 of the Drugs Price Control Order, such a stipulation can be insisted upon. Reliance was placed on the decision in Akshay N. Patel v. Reserve Bank of India and Another [(2022) 3 SCC 694], in support of the contentions. It was also submitted that the stipulation is applicable for fresh licensees as well, at the time of renewal of existing licenses.

11. While considering the rival contentions, it is necessary to comprehend the terms ‘ceiling price’ and ‘maximum retail price’ which are defined in clauses 2(d) and 2(r) of the Drugs Price Control Order 2013, and extracted below:

                  “(d) "ceiling price" means a price fixed by the Government for Scheduled formulations in accordance with the provisions of this Order;”

                  (r) “maximum retail price” means the ceiling price or the retail price plus local taxes and duties as applicable, at which the drug shall be sold to the ultimate consumer and where such price is mentioned on the pack;”

12. It is evident on a reading of the above provisions that as per rule 26 and rule 2(r) of the Rules, no person is entitled to sell a drug at a value in excess of the maximum retail price. However, there is no restriction on reducing the selling price. 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.

13. The statutory authorities are bound to act within the four corners of the statute and no restriction can be imposed without a corresponding law. However, in the instant cases, the applicants for fresh licenses or for renewal of licenses are required to submit an affidavit, undertaking to comply with certain conditions regarding display of advertisement boards, intended to avoid misleading the public. When a power is conferred upon an authority, it has all the incidental powers thereto. The purpose for exhibiting boards containing statements regarding discounts is to enable the public to be informed of the existence of such discounts. However, as there is a possibility of misleading advertisements, causing prejudice to the innocent customers, the licensing authority found it appropriate to stipulate certain words to be incorporated in the affidavit to be submitted as a condition for the grant of licence. 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.

14. Courts have often held that the right, liberty and freedom conferred under the Constitution of India ought not to become a weapon at the hands of private businesses to indulge in any type of conduct, under the shield of those rights. 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 be interfered with by this Court. The ground realities, the need of the hour and various other factors will have to be borne in mind by such an authority. The nature of the business and the nature of the authority, issuing such regulatory directives, do have significance, while appreciating the validity of such directives. Unless such directives of the regulatory body are so pervasive, and has no apparent benefit for the public and on the contrary, curtails the right of the licensee to carry on a business, it is not proper for the Court under Article 226 of the Constitution of India to interfere, with such stipulations. The Drugs Controller has a significant role in the matter of drug licensing. Hence, his wisdom in requiring incorporation of a condition in the agreement/affidavit for the public benefit cannot be said to be a ground for interference by this Court.

15. In Akshay N. Patel v. Reserve Bank of India and Another [(2022) 3 SCC 694], the Supreme Court had noticed the special position the RBI holds in the financial sector and refused to interfere. The observations in the said decision are relevant in the present context as well.

16. In this context, it needs to be noted that the Department has rephrased the words of the undertaking to be submitted by the licensees and the present statement reads as follows:

                  “We undertake that we shall not display any discount boards containing misleading or vague claims regarding the price of drugs”.

                  The above stipulation and undertaking cannot prejudice any right of the petitioners and on the other hand, is an obligation of the retailers and dealers of every drug.

17. Taking note of the above circumstances, this Court is of the view that the power of the licensing authority to stipulate certain conditions while submitting applications for the grant of a licence cannot be said to be arbitrary or warranting an interference by this Court.

18. As far as W.P.(C) No.1447 of 2025 is concerned, the said writ petition seeks for a direction to implement the Circular and as the Circular has not been interfered with, necessarily the respondents will be at liberty to initiate appropriate action, if the stipulation of the licensing authority as per the Circular or as suggested in the affidavit dated 25.03.2026 (as extracted in paragraph 16 above) is not complied with.

Hence W.P.(C) No. 39706 of 2024 and W.P.(C) No.41978 of 2024 are dismissed, while W.P.(C) No.1447 of 2025 is allowed as above.