Delhi High Court sets aside PCI's 5-year moratorium on opening new pharmacy colleges

The Delhi High Court on Monday set aside a 5-year ban on opening new pharmacy colleges, which had been notified by the Pharmacy Council of India (PCI) with effect from the academic year 2020-21 [Shaheed Teg Bahadur College of Pharmacy vs Pharmacy Council of India]..Justice Prateek Jalan said that regulatory decisions with far-reaching consequences upon citizens require scientific study and supporting data."The PCI has justified the moratorium inter alia on the ground of vacancy in pharmacy colleges. However, the PCI’s communication dated 26.09.2019, contemplates an addition of 2,00,000 pharmacists to the workforce every year. There is prima facie an inconsistency in these considerations, to the extent that it is unclear whether such an addition would occur despite the vacancies in pharmacy colleges ... despite the grounds used to justify the moratorium, the PCI has, in fact, granted permission for addition of 34,800 seats in exempted institutions in the year 2020-21," the single-judge noted. .It was clarified by the court that it has not gone into the question "whether the imposition of a moratorium is otherwise ultra vires the powers of the PCI." Apart from the prima facie inconsistency in the PCI's stand regarding the moratorium, the Court made the following other observations:- Regulatory decisions which have far reaching consequences upon citizens require scientific study and supporting data. The regulator must have sufficient material to support its decisions and correlate the objective of the decision with the material before it. The expectation is not of comprehensive or granular empirical data in every case, but of material which can demonstrate the reasonableness of the assumptions made and the decision taken. While acknowledging that the regulatory bodies are comprised of experts with relevant experience, it is necessary to emphasise that sufficient factual basis of the decision must be available, so that the authority is able to show due application of mind.- The exemptions granted by the impugned communication dated 09.09.2019 are also, by their very nature, antithetical to the objectives of the moratorium. They must therefore bear close scrutiny. Even where such classifications are required, they must be reasonable and have a rational nexus with the objective of the decision maker. In the present case, for example, the exemption granted to the States with less than 50 pharmacy colleges is independent of the size of the State. Consequently, it bears no correlation to the pharmacist-to-population ratio prevailing in the State, or to any other metric which has been used to justify the moratorium in the first place. Similarly, the exemptions granted to existing institutions for increase in number of seats is also unsupported by any material on record.- As a matter of practice, regulatory bodies entrusted with decisions which affect the establishment of institutions, such as the present case, would do well to consider whether it is possible to make their decisions known some time before they come into effect. Although Mr. Singh submitted that the petitioners have not laid any factual basis for their argument that they have expended any amount by way of infrastructure, such grievances can be minimised if such far-reaching decisions are made effective after a reasonable lapse of time, rather than immediately upon announcement." .The batch of 88 petitions was filed challenging a communication by the Pharmacy Council of India to State governments and Union Territory Administrations. By way of the same, the PCI informed that a decision taken in 2019 to impose a moratorium on the opening of new pharmacy colleges for a period of five years, will come into effect from the academic year 2020-21..The petitioners in the matter claimed that they had already procured the land and physical infrastructure required prior to submission of their applications for new pharmacy colleges. In normal course, they would have been required to submit applications for establishment of colleges in the year 2020-21 in October/November of the preceding year. However, their applications could not be submitted due to the said decision of the PCI..The petitioners argued that they have a right to establish an educational institution which is a fundamental right guaranteed by Article 19(1)(g) and the same cannot be abrogated except in compliance with Article 19(6) of the Constitution.They said that the decisions of the PCI are, at best, in the nature of an executive action, and do not constitute ‘law’ within the meaning of Article 19(6) read with Article 13, it was contended.They argued that the communication by PCI is ultra vires the statutory powers of the PCI, and cannot be traced to any authority conferred upon it by statute, and the basis on which they have reached the conclusion is unsupported. The 5-year ban does not satisfy the tests of reasonableness and proportionality, which must attach to any decision of state authorities, more particularly one that concerns the exercise of citizens’ fundamental rights.Apart from the above, they argued that the exemptions provided to certain institutes (some States and those who had submitted applications) fail the constitutional test of classification, as they are based neither upon intelligible differentia, nor bear any rational nexus with the objective of the decision. .Counsel for the PCI argued that the petitioners have not made out any factual basis for the reliefs sought, and that the moratorium is referrable to the power of the PCI to “regulate” the pharmacy sector, which is conferred by the Act, and therefore constitutes “law” within the meaning of Article 13 of the Constitution. He tried to clarify that the moratorium is not a prohibition but rather a suspension, which is contemplated within the power of PCI to regulate."In a statutory scheme, where an expert regulator has been established, particularly one dealing with human health, the views of the regulator are determinative, even when power vests in the Union of India. The decisions of the PCI have been duly communicated to the UoI as well as to all State Governments, and no objections have been raised thereto. In fact, the composition of the PCI itself includes representatives of all relevant authorities, including the UoI and State Governments," it was submitted.It was further argued that the moratorium is supported by ample empirical data, which has been considered by the expert regulator, and has not been challenged. It has been imposed keeping in mind the statutory obligation of the PCI to ensure minimum standards."Each of the exemptions notified in the communication dated 09.09.2019 is based upon a reasonable classification which bears a nexus with the objectives of the PCI," it was argued. .The Court noted that in the present case, the requirements of Section 10(3) i.e. inviting comments of State governments, Section 10(4) i.e. publication in the Official Gazette and Section 18(4) i.e. laying of the regulations before parliament, have admittedly not been fulfilled.The High Court relied on a judgement passed by it in the case of Krupanidhi Education Trust (Regd.) And Anr. vs. The Secretary, Pharmacy Council of India and said that the Division Bench in that matter had specifically held that the policy decision in question would have to form part of the Education Regulations, and compliance with the requirements of Section 10 of the Act would be necessary.The same will apply to the present case too, the Court made it clear. .The single-judge said that PCI cannot claim the authority to issue the notifications based on the Statement of Objects and Reasons, or the Preamble to the Act. Such a reading would clothe the PCI with a general power to regulate the profession, and the establishment of educational institutions, unlimited by the substantive provisions of the statute."The Statement of Objects and Reasons extracted above also does not indicate the width of power which the PCI claims and in any event, cannot control the meaning of clear substantive provisions, such as Sections 10 and 18 of the Act, which confer regulation making power upon the PCI. In the case of the preamble to the statute, which uses the word “regulate”, the position is similar. The preamble cannot be interpreted to read such a power into the Act, but only to aid in the resolution of any ambiguity in construction," the Court said. .The High Court held that the petitioners’ fundamental rights under Article 19(1)(g) are implicated by the decisions, and so the arguments made by the petitioners cannot be accepted..The Court while accepting the wide powers of the PCI as laid down in several judgments, emphasised that the power must be exercised in a manner consistent with the statutory scheme.Restriction on the fundamental right to establish and administer an institution by way of an executive order is impermissible, the judgment underscored..In the present case, the exercise of executive authority by the PCI was in excess of its powers, the Court concluded. It, therefore, allowed the petition and set aside the decision of the PCI..Advocates Sanjay Sharawat, RK Ruhil, Sumit Bishnoi, Mayank Manish, Ravi Kant, Abhishek Singh, Madavaram Priyanka, Shivam Singh, Sahil Raveen, Jaideep Khanna, Vidur Dwivedi, Harpreet Singh Gupta, Harsh Choudhary, Chandrashekhar Singh, Amitesh Kumar, Priti Kumari, Binisa Mohanty, Laksh Khanna, Mehul M Gupta, and Smriti Maheshwari appeared for the petitioners. The respondents were represented by Senior Advocate Maninder Singh, and advocates Zoheb Hossain, Prabhas Bajaj, Vivek Gurnani, Piyush Goyal, Ram Niwas Buri and Rishabh Sharma.[Read Judgment]