Kerala High Court Upholds Ban on Misleading Pharmacy Discount Boards

The Kerala High Court has affirmed the authority of the Drugs Controller to prevent pharmacies from displaying misleading advertisement boards, ruling that regulatory directives aimed at protecting the public from vague discount claims do not infringe upon the constitutional right to conduct business.

In a significant judgment, Justice Bechu Kurian Thomas addressed a cluster of petitions involving a controversial Circular dated September 4, 2024. The bench was tasked with balancing the commercial interests of drug retailers against the state's responsibility to prevent deceptive trade practices in the pharmaceutical sector. The Court clarified that while there is no statutory bar on selling medicines below the Maximum Retail Price (MRP), the regulatory body possesses the incidental power to ensure that such discounts are not used to entice innocent customers through false or vague projections.

Court Validates Regulatory Play in the Joints

The Court, in its reasoning, observed: "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."

Addressing the specific challenge to the Drugs and Cosmetics Act, 1940 and the Drugs Rules, 1945, the Court noted that the Drugs Controller's role is pivotal in licensing. It held that the requirement for an undertaking in an affidavit stipulating that licensees will not exhibit vague or misleading discount boards was a reasonable exercise of power for public benefit.

Background: The Conflict Over Price Transparency

The legal battle arose when the Office of the Drugs Controller issued a Circular requiring drug license applicants to submit an affidavit undertaking not to exhibit discount boards. Petitioners in two writ petitions, represented by senior counsel, argued that this move indirectly compelled them to sell medicines at higher prices and infringed their right to advertise legitimate discounts offered to the public. They contended that since neither the Drugs and Cosmetics Act, 1940 nor the Drugs Rules, 1945 prohibits selling below MRP, they should be free to display such offers.

Conversely, a third petitioner sought the implementation of the Circular, alleging that medical shops were using boards claiming 50% to 90% discounts to manipulate customers, who often ended up paying the full price. The State maintained that it was not against discounts themselves but against the lack of transparency and vague claims that exploited the common man. The Court relied on the principles established in Akshay N. Patel v. Reserve Bank of India and Another ( "(2022) 3 SCC 694": 2021 CaseBase(SC) 348) regarding the special regulatory position of statutory bodies. Ultimately, the Court found the rephrased undertaking which specifically targets "misleading or vague claims" to be a valid obligation for every drug retailer.

Case Details:
Case No.: W.P.(C) Nos. 39706 of 2024, 41978 of 2024 & 1447 of 2025
NeutralCitation: 2026:KER:44187
Case Title: M/S. Pharmadude Pharmacy Vannappuram v. State of Kerala & Others
Appearances:
For the Petitioner(s): Smt. Karthika Maria, Sri. Babu Karukapadath, Sri. Anil Kumar M. Sivaraman, Smt. M.A. Vaheeda Babu, Smt. Lakshmisree P.S.
For the Respondent(s): Sri. Sreejith V.S. (Sr. Govt. Pleader), Smt. Laya Mary Joseph (Govt. Pleader), Smt. P. Ushakumari

Source: 2026 CaseBase(KER) 343