Chhattisgarh High Court Quashes 5 Year Ban Imposed By Pharmacy Council Of India On Opening Of New Pharmacy Colleges

The Background of the Case

It may be noted that the PCI had in the year 2020, post-approval from GOI, imposed a blanket moratorium order on the opening of new Pharmacy Institutions across the country for the next 5 years.

This ban was imposed on the ground that the Pharmacy Institutions have mushroomed up in thousands across the country and thus the quality had been compromised and the number of graduates of Pharma Courses was much in excess of the demand in the sector.

The PCI has taken this decision after getting a go-ahead from the Department of Health, GOI in the said regard. Against this backdrop, the colleges had challenged the 5-yr ban order on multiple grounds, the same being outside the purview and powers delegated by the Pharmacy Council of India Act.

The colleges challenged it on the ground that the PCI exceeded its delegated powers whilst imposing the ban and thus neither the GOI nor the PCI possesses the power as the delegatee of the Statute to put a moratorium like this.

It was also contended that these orders imposing a blanket prohibition were never published in the Official Gazette to be enforceable and thus were non-est and nullity being contrary to the mandate of the PCI Act.

It was also argued that the orders were issued without proper consultation with the State Government, which is a necessary stakeholder under the PCI enactment, and that the State and the University had to the contrary granted NOC for the opening of all these new colleges in the State wherein there is an acute need of Pharmacist, especially in the post-pandemic era.

The Petitioner Institutions had also contended that the ban creates a monopoly in favor of existing colleges, and is discriminatory and violative of Article 14 of the Constitution of India. The ban operates only on the opening of new colleges, whilst allowing existing colleges to go for an increase in intake or addition of the courses upto an unlimited extent.

PCI's & GOI's Stand Before the Court

The GOI and PCI led by ASG Mr. Ramakant Mishra had argued that the power to impose a ban on the opening of new institutions is inherent in the regulatory power conferred by the parent act [Pharmacy Act, 1948].

They had argued that it is not a ban, but a temporary suspension on the grant of permissions, which by its very nature cannot be treated as a ban. The ASG had further argued that temporary suspensions and prohibitions have always been affirmed as a regulatory measure of control by the Supreme Court and thus do not strictly qualify to be a prohibition.

The PCI had further argued before the High Court that in view of the unchecked, unregulated, and mushrooming of Pharmacy Colleges in the country, there has been a serious compromise with norms and standards, due to which restrictions on the opening of new colleges had to be imposed.

They had also referred to a report relating to excess supply of Pharmacy graduates being churned out by the existing institutions, but being left unemployed unaccommodated in the economy of the country.

The Court in its Final Judgment pronounced on 22.04.22 held broadly as follows:

• The parent act of the Pharmacy Act 1948 doesn't contain any substantive provision empowering the PCI to impose a ban or a moratorium of the kind imposed by it. The PCI as a delegatee of the Statute has to act within the four corners of the parent enactment and that it has acted ultra-vires the same whilst imposing the said ban.
• The ban must be treated as a 'prohibitory order', and not a mere 'regulatory order' since it seeks to suspend the opening of new institutions for a long period of 5-yrs that too only for specific category of colleges, viz. the new colleges whilst leaving the existing colleges untouched. The Court in this regard distinguished between the 'power to regulate' and the 'power to prohibit' conferred by the parent enactment and when the Court can treat a 'power to regulate', as not including the 'power to prohibit'.
• The ban had been imposed by way of executive instructions, without any specific conferment by the parent act. Thus the Fundamental Right to open and run educational institutions stands through these executive instructions. The Court held that Fundamental Rights cannot be taken through executive instructions, which do not qualify to be 'law' under Article 13(3)(a) of the Constitution of India. And thus on this score also the Resolutions imposing the ban are bound to fail.
• The 5-yr ban imposed by the PCI is 'monopolistic' and 'anti-competitive' in nature. It debars new colleges from coming in the field and competing with the existing colleges without any plausible justification for the same. Provisions creating a monopoly and anti-competitive environment are themselves per se violative of Article 14 of the Constitution of India, unless and until justified by the twin test of reasonable differentia and nexus with the object sought to be achieved
• The ban imposed by the PCI is also disproportionate, unreasonable, and fails to qualify the 2 litmus tests for testing the validity of executive action, viz. 'the balancing test' and 'the necessity test'. It is not supported by adequate statistics justifying the imposition of ban only on new institutions, whilst allowing the existing ones to continue and increase their seats unabated. Since it fails to qualify and pass the twin litmus tests of reasonability under Articles 14 and 19, therefore it is liable to be struck down.