Several pharmaceutical companies who have defaulted in making payments against overcharging and having outstanding arrears for long periods, may face stringent action including attachment of immovable properties under the provisions of Land Recovery Act by the National Pharmaceutical Pricing Authority (NPPA).
After moving requests to the district magistrates for attachment of properties in five cases recently, the NPPA is learnt to be identifying more cases of the kind. The companies who have failed to pay the arrears for longer time and the cases which are outside the courts may face the axe soon.
Initiating legal procedures for the first time to get tougher with the defaulters, the NPPA had sought the recovery route with the help of revenue officials against three companies in Delhi and two in Maharahstra recently. The total arrears due by these companies amounted to Rs. 15 crore, sources said, while refusing to reveal the names of the companies as the matter had already gone into the legal phase.
The move was taken a couple of months back and the matter, now pending with the respective district magistrates, was being actively pursued by the NPPA. So far none of them have gone to the court seeking stay against the recovery move.
Meanwhile, the NPPA has so far sent notices in 56 cases from June 2007, based on the 10 per cent ceiling limit allowed in the increase of prices over a year. As many as 44 cases are active cases, while the rest were referred back to the department. It includes, 16 cases in which the companies had increased prices beyond 20 per cent limit and 28 cases were based on 10 per cent ceiling, which was made effective last year.
The NPPA has revised the guidelines, following pressure from the industry and as advised by the Chemicals Department, to make the 10 per cent capping effective only from April 1, 2007, instead of earlier deadline of January 1, 2007. However, it will have little impact as most of the companies, who got the notices during January-March period, had increased the prices above the 20 per cent limit, sources said.
As per the latest statistics, the NPPA has sent nearly 500 notices so far on overcharging, seeking to recover over Rs. 1430 crore. About Rs. 1330 crore is still pending for recovery from the defaulters. As many as 75 cases worth Rs. 1252.71 crore are still under litigation. Those cases outside the courts may now invite tougher action including attachment of properties.