M/S Apex Laboratories Pvt. Ltd. v. Deputy Commissioner of Income Tax, Large Tax Payer Unit - Ii

The Order of the Court was passed by S. RAVINDRA BHAT, J. 1. Leave granted. The appellant (hereinafter, “Apex”) is aggrieved by a judgment of the High Court of Judicature of Madras1, wherein the Division Bench upheld an order of the Income Tax Appellate Tribunal2 (hereinafter, “ITAT”), which in turn upheld an order of the Commissioner of Income Tax (Appeals)3 (hereinafter, “CIT(A)”).The CIT(A) had partly allowed an appeal from an order of the respondent Deputy Commissioner of Income Tax4, which partially allowed amounts claimedby Apexas ‘business expenditure’ under Section 37(1) of the Income Tax Act, 1961 (hereinafter, “IT Act”). 2. The facts in brief are as follows: On 01.08.2012, the Central Board of Direct Taxes (hereinafter, “CBDT”) issued a circular5, which clarified that expenses incurred by pharmaceutical and allied health sector industries for distribution of incentives (i.e., “freebies”) to medical practitioners are ineligible for the benefit of Explanation 1 to Section 37(1), which denies the application of the benefit for any purpose which is an ‘ offence’ or ‘prohibited by law ’. 3. After the circular was issued, on 22.11.2012, Apex was issued a notice under Section 142(1) of the IT Act, to explain why the expenditure of 4,72,91,159/- incurred towards gifting freebies such as hospitality, , conference fees, gold coins, LCD TVs, fridges, laptops, etc. to medical practitioners for creating awareness about the heal th supplement ‘Zincovit’, should not be added back to the total income of Apex. 4. The reason for only a partial allowance by the auth orities below was that an amendment6 to the Medical Council Act, 1956 (now 1 Tax Case Appeal No. 723 of 2018, dated 18.03.2019. 2 IT ACT No. 1153/Mds/2014, dated 29.01.2018. 3 I.TA. No. 10/13-14/LTU(A), dated 29.01.2014. 4 G.I. No./PAN AAACA5174G, dated 21.03.2013. 5 Circular No. 5/2012 [F. No. 225/142/2012-ITA.II]. 6 No. MCI-211(1)/2009(Ethics)/5567. M/S APEX LABORATORIES PVT. LTD. v. DEPUTY COMMISSIONER OF INCOME TAX, LARGE TAX PAYER UNIT- II repealed) through the Indian Medical Council (Professio nal Conduct, Etiquette and Ethics) Regulations, 2002 (hereinafte r, “2002 Regulations”), published in the Official Gazette on 14.12.2009, disallowed medical practitioners from accepting emoluments in the form of inter alia gifts, travel facilities, hospitality, cash or monetary grants.7 Acceptance of such freebies could result in a range of sanctions against the medical practitioners, from ‘censure’ for incent ives received up to 5,000/-, to removal from the Indian Medical Register or State Medical Register for periods ranging from three months to one year.8 Therefore, only the expenses incurred till 14.12.2009 were eligible for the benefit of Section 37(1), and not for the entirety of the Assessment Year 2010- 2011, as claimed by Apex. Contentions of Apex 5. It was argued by the counsel for Apex, Mr. S. Ganesh, Senior Advocate, that the amended 2002 Regulations were not applicable to Apex, i.e., pharmaceutical companies were not bound by them. Whi le medical practitioners were expressly prohibited from accepting freebies, no corresponding prohibition in the form of any binding norm was imposed on the pharmaceutical companies gifting them. In the absenc e of any express prohibition by law, Apex could not be denied the benefit of seeking exclusion of the expenditure incurred on supply of such freebies under Section 37(1). 6. Counsel placed reliance on rulings by different High Court to establish that the 2002 Regulations were enforceable only against medical practitioners and not the donors, i.e., pharmaceutical companies. In Max Hospital Pitampura v. Medical Council of India 9 (hereinafter, “Max Hospital”)the Delhi High Court held that the Medical Council of India (hereinafter, “MCI”) had no jurisdiction to pa ss any orders against the appellant hospital, and adverse observa tions made against the hospital by MCI were quashed. Equally, in Dr. Anil Gupta v. Addl. Commissioner of Income Tax10, a Division Bench of the Rajasthan High Court gave benefit of Section 37(1) to the appellant as Explanation 7 Id., Regulation 6.8, Code of Conduct for Doctors in thei r Relationship with Pharmaceutical and Allied Health Sector Industry. 8 Regulation 6.8.1, inserted by Notification No. MCI- 211(1)/2010(Ethics)/163013, issued on 01.02.2016. 9 W.P. (C) No. 1334/2014 / ILR (2014) 1 Delhi 620, dated 10.01.2014. 10 Income Tax Appeal No. 485/2008, decided on 18.07.2017. 131 1 could not be raised by the respondent for the first time at an appellate stage, observing: “Even otherwise in income tax proceedings the medical ethics will not be taken into consideration. At the most even if it is a professional misconduct, it is to be dealt with by Medical Council of India. The income tax authority cannot decide the medical ethics when the original authority has partly allowed the expenses. ” The Counsel urged that as these decisions were not challenged by the revenue authorities, and thereby accepted by them, t he present matter was not open for reconsideration. 11 7. The Counsel further submitted that it was not open to t he revenue to deny a tax benefit on the ‘nature’ of expenses incurred. This Court, in T.A. Quereshi v. Commissioner of Income Tax, Bhopal 12 (hereinafter, “T.A. Quereshi”) allowed the appellant to deduct the cost of heroin seized as a business loss, holding that: “In our opinion, the High Court has adopted an emoti onal and moral approach rather than a legal approach. We ful ly agree with the High Court that the assessee was committin g a highly immoral act in illegally manufacturing and s elling heroin. However, cases are to be decided by the court on leg al principles and not on one’s own moral views. Law is different from morality, as the positivist jurists Bentham an d Austin pointed out .” 8. It was argued that similarly, in Commissioner of Income Tax v. M/s Khemchand Motilal Jain 13, a Division Bench of the Madhya Pradesh High Court allowed ransom money paid to the kidnappers of an employee of the respondent company on a business trip as busines s expenditure under Section 37(1), holding that: “The aforesaid section provides that kidnapping a person for ransom is an offence and any person doing so or compelling 11 See Berger Paints Ltd. v Commissioner of Income Tax ,(2004)12 SCC 42 and South India Bank Ltd. v Commissioner of Income Tax, Civil Appeal No. 9606 of 2011 / 2021 SCCOnline SC 692, dated 09.09.2021. 12 (2007) 2 SCC 759. 13 2011 (4) MPLJ 691. M/S APEX LABORATORIES PVT. LTD. v. DEPUTY COMMISSIONER OF INCOME TAX, LARGE TAX PAYER UNIT- II [S. RAVINDRA BHAT, J. ] to pay is liable for the punishment as provided in the Sectio n, but nowhere it is provided that to save a life of the pe rson if a ransom is paid, it will amount to an offence. No provision i s brought to our notice that payment of ransom is pro hibited by any law. In absence of it, the Explanation of sub -section (1), section 37 will not be applicable in the present case .” *** “Sukhnandan Jain remained in custody for a period of nearabout 20 days. The police were also informed and aft er waiting 20 days for the police action. If the respond ents to save his life paid the aforesaid amount, then the a foresaid amount cannot be treated as an action, which prohib ited under the law. No provision could be brought to our not ice that payment of ransom is an offence. In absence of which, the contention of the petitioner that it is prohibi ted under Explanation of section 37(1) of the Income Tax Act has no substance . The entire tour of Sukhnandan Jain was for purchase of Tendu leaves of quality and for this pu rpose, he was on business tour and during his business tou r, he was kidnapped and for his release the aforesaid amo unt was paid .” (emphasis supplied) 9. Counsel brought this Court’s attention to the Memorandum Explaining the Provisions of the Finance (No. 2) Bill, 1998 which stated that the introduction of Explanation 1 to Section 37(1) would disallow tax payers from claiming “ protection money, extortion, hafta, bribes, etc.” as business expenditures,14 from which it could be inferred that the intention of the Parliament was to only bring into the ambit of Explanation 1 ‘illegal’ activities which were deigned as ‘offences’ under relevant statutes. The IT Act not being a social reform statute, neede d to be interpreted strictly, and not in a wide manner so as to include in its scope an act by a pharmaceutical company not recognized as ‘illegal’ by any statute – doing so would be against the canons of public law. 14 Memorandum Explaining the Provisions of the Finance (No. 2) Bill, 1998, Section 15.Later adopted by CBDT Circular No. 772 ([1999] 2 35 ITR (St.) 35, 53), dated 23.12.1998. 133 10. Finally, Counsel submitted that the CBDT circular dated 01.08.2012 enlarged the scope of the 2002 Regulations, and made it operable beyond medical practitioners, i.e., to pharmaceutical companies and allied health sector industries, which, in the absence of any enabling provision, was outside its dominion. Arguendo, if the CBDT circular had to be brought into effect, it could be done so only ‘prospectively’, and not ‘retrospectively’, i.e., from the date of publication of the CBDT circular on 01.08.2012, and not the date of publication of the 2002 Regulations on 14.12.2009. Reliance was placed on various decisions of this Court to show that beneficial circulars had to be applied retrospectively, however oppressive circulars could only be applied prospectively.15 Contentions of Revenue Authorities 11. Mr. Sanjay Jain, Additional Solicitor General appearing for the respondent revenue authorities, submitted that whil e the act of pharmaceutical companies gifting freebies to medical practitioners for promotion of their products may not be classified as an ‘offence’ under any statue, it was squarely covered within the scope of Explanation 1 to Section 37(1) by use of the words “ prohibited by law ”, as it was specifically prohibited by the amended 2002 Regulations. While Apex could not be ‘punished’, it should not be allowed to benefit by claiming a tax exemption on the freebies distributed. 12. Further, the ASG submitted that Parliament’s intention to disincentivize the practice of receiving extravagant freebies in exchange for prescribing expensive branded medication over its equally effective generic counterparts, thereby burdening patients with unnecessary costs, was apparent not only from the amended 2002 Regulations, but also the Prevention of Corruption Act, 1988 (hereinafter, “PC Act”). A government doctor receiving any illegal gratification amounting to malpractice or any other offence was liable to be charged under PC Act and the Indian Penal Code, 1860 (hereinafter, “IPC”). 16 13. In the present instance, the medical practitioners were provided expensive gifts such as hospitality, conference fees, gol d coins, LCD TVs, fridges, laptops, etc. by Apex to promote its nutri tional health 15 See for e.g.,Director of Income-tax v. S.R.M.B Dairy Farming (P. ) Ltd., (2018) 13 SCC 239. 16 Kanwarjit Singh Kakkar v. State of Punjab , (2011) 13 SCC 158. M/S APEX LABORATORIES PVT. LTD. v. DEPUTY COMMISSIONER OF INCOME TAX, LARGE TAX PAYER UNIT- II [S. RAVINDRA BHAT, J. ] supplement ‘Zincovit’. It was argued that receiving these , clearly - in letter and spirit, constituted professional misconduct on part of the medical practitioner. The scope of the 2002 Regulations was not limi ted to a finite list of instances of professional misconduct, but broad enough to cover those instances not specifically enumerated as well.17 The menace of prescribing expensive branded medication as a quid pro quo arrangement had a direct bearing on public policy, which was implicit in the 2002 Regulations itself. 14. To elucidate the same, reliance was placed on two High Court decisions. In Commissioner of Income-Tax v. Kap Scan and Diagnostic Centre P. Ltd.,18 a Division Bench of the Punjab and Haryana High Court disallowed the benefit of the exemption for commission provided to doctors engaged in private practice for referring their patients to the assessee’s diagnostic centre, holding that: “It, thus, emerges that an assessee would not be en titled to deduction of payments made in contravention of law. Similarl y, payments which are opposed to public policy being i n the nature of unlawful consideration cannot equally be recognized. It cannot be held that businessmen are entitled to conduct their business even contrary to law and cla im deductions of payments as business expenditure, notwithstanding that such payments are illegal or opposed to public policy or have pernicious consequences to the societ y as a whole.” *** “If demanding of such commission was bad, paying it was equally bad. Both were privies to a wrong. Therefore, such commission paid to private doctors was opposed to p ublic policy and should be discouraged. The payment of commission by the assessee for referring patients to it cannot by any stretch of imagination be accepted to be legal or as per public polic y. Undoubtedly, it is not a fair practice and has to be termed a s against the public policy.” *** 17 See regulation 8 of the 2002 Regulations. 18 (2012) 344 ITR 476 (P&H HC). 135 Further, the High Court referred to Section 23 of the Contrac t Act, 1872 (hereinafter, “Contract Act”) to hold the consideration or object of the agreement between the assessee and private doctors as unlawful, and the agreement therefore void, as it was opposed to public policy. 15. A Division Bench of the Himachal Pradesh High Court decided along similar lines in Confederation of Indian Pharmaceutical Industry (SSI) v. Central Board of Direct Taxes19(hereinafter, “Confederation”), holding: “This regulation is a very salutary regulation which is in the interest of the patients and the public. This court is not oblivious to the increasing complaints that the med ical practitioners do not prescribe generic medicines and prescribe branded medicines only in lieu of the gifts and other freebies granted to them by some particular pharmaceutical industries. Once this has been prohibited by the Medical Council under the powers vested in it, section 37(1) of the Income -tax Act comes into play” The High Court also upheld the legality of the CBDT circular dated 01.08.2012, stating that it was for the assessee to establish to the Assessing Officer that the expenditure incurred was not in violation of 2002 Regulations: “Shri Vishal Mohan, advocate, on behalf of the petit ioner, contends that the circular goes beyond the section its elf. We are not in agreement with this submission. The Explanation to section 37(1) makes it clear that any expenditure incurred b y an assessee for any purpose which is prohibited by law shall not be deemed to have been incurred for the purpose of business or profession. The sum and substance of the circular is also the same. In case the assessing authorities are not properly understanding the circular then the remedy lies for each individual assessee to file appeals under the Income- tax Act but the circular which is totally in line wit h section 37(1) cannot be said to be illegal. In fact paragraph 4 of the circular quoted hereinabove itself clarifies that th e value of the freebies enjoyed by the medical practitioner is also t axable 19 (2013) 353 ITR 388 (HP HC). M/S APEX LABORATORIES PVT. LTD. v. DEPUTY COMMISSIONER OF INCOME TAX, LARGE TAX PAYER UNIT- II [S. RAVINDRA BHAT, J. ] as business income or income from other sources dependi ng on the facts of each case. Therefore, if the assessee s atisfies the assessing authority that the expenditure is not in viola tion of the regulations framed by the Medical Council then it may legitimately claim a deduction, but it is for the ass essee to satisfy the Assessing Officer that the expense is not in violation of the Medical Council Regulations referred to above”. (emphasis supplied) 16. Lastly, the ASG submitted that had the Assessing Off icer allowed Apex to claim tax benefit, the authorities would have been deprived of revenue in the form of tax amount leviable on 4,72,91,159/ -, which was a crucial omission. Thus, on a holistic reading of the statutes and regulations, Apex could not be allowed to claim deduction under Section 37(1). Analysis and Conclusions 17. Anexamination of the relevant provisions is first necess ary. Section 37 of the IT Act states as follows: Section 37.General .—(1) Any expenditure (not being expenditure of the nature described in Sections 30 to 36 and not being in the nature of capital expenditure or p ersonal expenses of the assessee), laid out or expended who lly and exclusively for the purposes of the business or pro fession shall be allowed in computing the income chargeable un der the head “Profits and gains of business or professio n”. [Explanation 1].—For the removal of doubts, it is h ereby declared that any expenditure incurred by an assess ee for any purpose which is anoffence or which is prohibited b y law shall not be deemed to have been incurred for the purpose of business or profession and no deduction or allowance sha ll be made in respect of such expenditure.] (emphasis supplied) Section 37 is a residuary provision. Any business or professional expenditure which does not ordinarily fall under Sections 30-36, and which are not in the nature of capital expenditure or personal expenses, can claim the benefit of this exemption. But the same is not a bsolute. Explanation 1, which was inserted in 1998 with retrospective effect from 01.04.1962, restricts the application of such exemption for “any purpose 137 which is an offence or which is prohibited by law ”. The IT Act does not provide a definition for these terms. Section 2(38) of the General Clauses Act, 1897 defines ‘offence’ as “ any act or omission made punishable by any law for the time being in force ”. Under the IPC, Section 40 defines it as “ a thing punishable by this Code ”, read with Section 43 which defines ‘illegal’ as being applicable to “everything which is an offence or which is prohibited by law, or which furnishes ground for a civil action ”. It is therefore clear that Explanation 1 contains within its ambit all such activities which are illegal/prohibited by law and/or punishable. 18. Regulation 6.8. of the 2002 Regulations states as follows: “6.8. Code of conduct for doctors in their relationship with pharmaceutical and allied health sector industry. 6.8.1 In dealing with Pharmaceutical and allied health sector industry, a medical practitioner shall follow and ad here to the stipulations given below:— (a) Gifts: A medical practitioner shall not receive any gift from any pharmaceutical or allied health care industry and their sales people or representatives. (b) Travel facilities: A medical practitioner shall not accept any travel Facility inside the country or outside, including rail, road, air, ship, cruise tickets, pa id vacation, etc. from any pharmaceutical or allied healthcare industry or their representatives for self a nd family members for vacation or for attending conferences, seminars, workshops, CME Programme, etc. as a delegate.] (c) Hospitality: A medical practitioner shall not a ccept individually any hospitality like hotel accommodatio n for self and family members under any pretext. (d) Cash or monetary grants: A medical practitioner shall not receive any cash or monetary grants from any pharmaceutical and allied healthcare industry for individual purpose in individual capacity under any pretext. Funding for medical research, study etc. c an only be received through approved institutions by M/S APEX LABORATORIES PVT. LTD. v. DEPUTY COMMISSIONER OF INCOME TAX, LARGE TAX PAYER UNIT- II [S. RAVINDRA BHAT, J. ] modalities laid down by law / rules / guidelines adopted by such approved institutions, in a transparent manner. It shall always be fully disclosed.” The regulation further lays down corresponding action or sanction which can be taken against, or imposed upon, the medical practitioner for violation of each stipulation, based on the monetary value of the same. Thus, acceptance of freebies given by pharmaceutical companies is clearly an offence on part of the medical practitioner, punishable with varying consequences. 19. The CBDT circular dated 01.08.2012 is set out below: 1. It has been brought to the notice of the Board that some pharmaceutical and allied health sector Industries are providing freebees (freebies) to medical practition ers and their professional associations in violation of the regulations issued by Medical Council of India (the ‘Council’) which is a regulatory body constituted under the Medical Council Act, 1956. 2. The council in exercise of its statutory powers amende d the Indian Medical Council (Professional Conduct, Etiquette and Ethics) Regulations, 2002 (the regulations) on 10-12-2009 imposing a prohibition on the medical practitioner and their professional associations fr om taking any Gift, Travel facility, Hospitality, Cash or monetary grant from the pharmaceutical and allied health sector Industries. 3. Section 37(1) of Income Tax Act provides for deduction of any revenue expenditure (other than those failin g under sections 30 to 36) from the business Income i f such expense is laid out/expended wholly or exclusively for the purpose of business or profession. However, t he explanation appended to this sub-section denies clai m of any such expense, if the same has been incurred for a purpose which is either an offence or prohibited b y law. Thus, the claim of any expense incurred in providin g above mentioned or similar freebees in violation of the provisions of Indian Medical Council (Professional Conduct, Etiquette and Ethics) Regulations, 2002 shall 139 be inadmissible under section 37(1) of the Income Tax Act being an expense prohibited by the law. This disallowance shall be made in the hands of such pharmaceutical or allied health sector Industries o r other assessee which has provided aforesaid freebees and claimed it as a deductable expense in its accounts against income. 4. It is also clarified that the sum equivalent to valu e of freebees enjoyed by the aforesaid medical practitione r or professional associations is also taxable as business income or income from other sources as the case may be depending on the facts of each case. The Assessing Officers of such medical practitioner or profession al associations should examine the same and take an appropriate action . This may be brought to the notice of all the office rs of the charge for necessary action. (emphasis supplied) The CBDT circular being clarificatory in nature, was i n effect from the date of implementation of Regulation 6.8 of the 2002 Regulations, i.e., from 14.12.2009. 20. In Dy. CIT 8(2) Mumbai v PHL Pharma P. Ltd. 20 the ITAT reiterated Max Hospital’s(supra) decision to conclude that the 2002 Regulations were inapplicable to pharmaceutical companies, and that in absence of requisite jurisdiction, it could not be said that the pharmaceutical companies had violated any law or regulation. Further, it held that there was no enabling provision to allow the CBDT to bring pharmaceutical companies within the fold of the 2002 Regulations, and even if such an act were to be permitted, it could be only be done so prospectively: “Adverting to the contention of the Ld. CIT DR that CBDT is well empowered to issue such clarification, it is seen that the CBDT Circular dated 01.08.2012 (supra) in its clarific ation has enlarged the scope and applicability of ‘Indian M edical Council Regulation 2002’ by making it applicable to the 20 ITA No. 4605/Mum/2014, dated 12.01.2017. M/S APEX LABORATORIES PVT. LTD. v. DEPUTY COMMISSIONER OF INCOME TAX, LARGE TAX PAYER UNIT- II [S. RAVINDRA BHAT, J. ] pharmaceutical companies or allied health care sect or industries. Such an enlargement of scope of MCI regul ation to the pharmaceutical companies by the CBDT is without any enabling provisions either under the provisions of Income Tax Law or by any provisions under the Indian Medic al Council Regulations. The CBDT cannot provide casus omissus to a statute or notification or any regulation whic h has not been expressly provided therein. The CBDT can tone down the rigours of law and ensure a fair enforcement of the provisions by issuing circulars and by clarifying the statut ory provisions. CBDT circulars act like ‘contemporanea expositio’ in interpreting the statutory provisions and to asce rtain the true meaning enunciated at the time when statute was enacte d. However the CBDT in its power cannot create a new impairment adverse to an assessee or to a class of as sessee without any sanction of law. The circular issued by the CBDT must confirm to tax laws and for purpose of giving administrative relief or for clarifying the provisi ons of law and cannot impose a burden on the assessee, leave a lone creating a new burden by enlarging the scope of a di fferent regulation issued under a different act so as to imp ose any kind of hardship or liability to the assessee. In any cas e, it is trite law that the CBDT circular which creates a bu rden or liability or imposes a new kind of imparity, same cann ot be reckoned retrospectively. The beneficial circular m ay apply retrospectively but a circular imposing a burden ha s to be applied prospectively only . Here in this case the CBDT has enlarged the scope of ‘Indian Medical Council Regula tion, 2002’ and made it applicable for the pharmaceutical companies. Therefore, such a CBDT circular cannot b e reckoned to have retrospective effect. The same CBDT ci rcular had come up for consideration before the co-ordinate Bench of the ITAT, Mumbai Bench in the case of Syncom Formulations (I) Ltd. (in ITA Nos. 6429 & 6428/Mum/20 12 for A.Ys. 2010-11 and 2011-12, vide order dated 23.12.2015), wherein Tribunal held that CBDT circular would not be not be applicable in the A.Ys. 2010-11 and 2011-12 as i t was introduced w.e.f. 1.8.2012.” (emphasis supplied) 141 21. PHL Pharma (supra) further discussed the High Court decisions of Kap Scan and Confederation (supra), holding the even though they were decided against the assessee, they did not lay down a blanket ban on pharmaceutical companies claiming tax benef it under Section 37(1), and made it subject to the satisfaction of the Assessing Officer on a case-to-case basis. Subsequent decisions by ITATs across states have placed heavy reliance on PHL Pharma to grant relief to the assessee pharmaceutical companies. 22. This Court is of the opinion that such a narrow interpretation of Explanation 1 to Section 37(1) defeats the purpose for which it was inserted, i.e., to disallow an assessee from claiming a tax benefit for its participation in an illegal activity. Though the memorandum to the Finance Bill, 1998 elucidated the ambit of Explanation 1 to include “protection money, extortion, hafta, bribes, etc. ”, yet, ipso facto, by no means is the embargo envisaged restricted to those examples. It is but logical that when acceptance of freebies is punishable by the MCI (the range of penalties and sanction extending to ban imposed on the medical practitioner), pharmaceutical companies cannot be granted the tax benefit for providing such freebies, and thereby (actively and with full knowledge) enabling the commission of the act which attracts such opprobrium. 23. The illogicality and completely misconceived nature of such an interpretation was dealt with in a similar interpretation of the provisions of PC Act, by a Constitution Bench of this Court in P.V. Narasimha Rao v. State (CBI/SPE)21. Prior to the 2018 amendment 22, the PC Act only punished the bribe-taker who was a public servant, and not the bribe- giver. Reliance was placed on this to acquit the appellant bribe-giver. Rejecting such an interpretation, this Court held: “145. Mr Rao submitted that since, by reason of the provisions of Article 105(2), the alleged bribe-tak ers had committed no offence, the alleged bribe-givers had also committed no offence. Article 105(2) does not provi de that what is otherwise an offence is not an offence when it is committed by a Member of Parliament and has a connection with his speech or vote therein. What is provided the reby is that a Member of Parliament shall not be answerable in a 21 (1998) 4 SCC 626. 22 Subs. Section 8, Act 16 of 2018, w.e.f. 26.07.2018. M/S APEX LABORATORIES PVT. LTD. v. DEPUTY COMMISSIONER OF INCOME TAX, LARGE TAX PAYER UNIT- II [S. RAVINDRA BHAT, J. ] court of law for something that has a nexus to his speech or vote in Parliament. If a Member of Parliament has, by his speech or vote in Parliament, committed an offence, he en joys, by reason of Article 105(2), immunity from prosecut ion therefor. Those who have conspired with the Member of Parliament in the commission of that offence have n o such immunity. They can, therefore, be prosecuted for it. *** 147. Mr Rao submitted that the alleged bribe-givers had breached Parliament’s privilege and been guilty of its contempt and it should be left to Parliament to deal with them. By the same sets of acts the alleged bribe-takers and the alleged bribe-givers committed offences under the criminal law and breaches of Parliament’s privileges and its contempt . From prosecution for the former, the alleged bribe-takers, Ajit Sin gh excluded, enjoy immunity. The alleged bribe-givers do not. The criminal prosecution against the alleged bribe- givers must, therefore, go ahead. For breach of Parliament ’s privileges and its contempt, Parliament may proceed again st the alleged bribe-takers and the alleged bribe-givers . *** 150. To repeat what we have said earlier, Mr Rao is right, subject to two caveats, in saying that Parliament has the power not only to punish its Members for an offence committe d by them but also to punish others who had conspired with them to have the offence committed : first, the actions that c onstitute the offence must also constitute a breach of Parlia ment’s privilege or its contempt; secondly, the action that Parliam ent will take and the punishment it will impose is for the breac h of privilege or contempt. There is no reason to doubt that t he Lok Sabha can take action for breach of privilege or contempt against the alleged bribe-givers and against the alleged b ribe- takers, whether or not they were Members of Parliament, bu t that is not to say that the courts cannot take cogni zance of the offence of the alleged bribe-givers under the c riminal law. (emphasis supplied) 143 24. Even if Apex’s contention were to be accepted - that it did not indulge in any illegal activity by committing an offence, as there was no corresponding penal provision in the 2002 Regulations applicable to it - there is no doubt that its actions fell within the purview of “prohibited by law” in Explanation 1 to Section 37(1). 25. Furthermore, if the statutory limitations imposed by the 2002 Regulations are kept in mind, Explanation (1) to Section 37(1) of the IT Act and the insertion of Section 20A of the Medical Council Act, 195623 (which serves as parent provision for the regulations), what is discernible is that the statutory regime requiring that a thing be done in a certain manner, also implies (even in the absence of any express te rms), that the other forms of doing it are impermissible. 26. In this regard the decision of this Court in Jamal Uddin Ahmad v. Abu Saleh Najmuddin & Anr 24 is of some relevance. There, the scope of Section 81 of the Representation of the People Act, 1951 was examined in the light of powers of the High Court to administer election petitions by invoking the rule of implied prohibition. The Court observed that: “Dealing with “Statutes conferring power; implied condit ions, judicial review”, Justice G.P. Singh states in the Princip les of Statutory Interpretation (Eight Edition 2001, at pp.333, 334 ) that a power conferred by a statute often contains express conditions for its exercise and in the absence of or in addi tion to the express conditions there are also implied co nditions for exercise of the power. An affirmative statute i ntroductive of a new law directing a thing to be done in a certa in way mandates, even if there be no negative words, that the thing shall not be done in any other way. This rule of im plied prohibition is subserved to the basic principle that the Court must, as far as possible, attach a construction whi ch effectuates the legislative intent and purpose. Fur ther, the rule of implied prohibition does not negative the p rinciple that an express grant of statutory power carries wi th it by necessary implication the authority to use all reas onable 23 Inserted vide Medical Council (Amendment) Act, 196 4. 24 (2003) 4 SCC 257. M/S APEX LABORATORIES PVT. LTD. v. DEPUTY COMMISSIONER OF INCOME TAX, LARGE TAX PAYER UNIT- II [S. RAVINDRA BHAT, J. ] means to make such grant effective. To illustrate, an A ct of Parliament conferring jurisdiction over an offence im plies a power in that jurisdiction to make out a warrant and secure production of the person charged with the offence; power conferred on Magistrate to grant maintenance under Secti on 125 of the Code of Criminal Procedure 1973 to preve nt vagrancy implies a power to allow interim maintenance; power conferred on a local authority to issue licences for holding ‘hats’ or fairs implies incidental power to fix days th erefore; power conferred to compel cane growers to supply ca ne to sugar factories implies an incidental power to ensure payment of price. In short, conferment of a power implies authority t o do everything which could be fairly and reasonably regarded as incidental or consequential to the power conferre d. *** Herbert Broom states in the preface to his celebrated work on Legal Maxims—”In the Legal Science, perhaps more frequently than in any other, reference must be made t o first principles.” The fundamentals or the first principles of law often articulated as the maxims are manifestly foun ded in reason, public convenience and necessity. Modern tr end of introducing subtleties and distinctions, both in legal reasoning and in the application of legal principles, formerly unknown, have rendered an accurate acquaintance with the fir st principles more necessary rather than diminishing the value s of simple fundamental rules. The fundamental rules ar e the basis of the law; may be either directly applied, or qualified or limited, according to the exigencies of the particular case and the novelty of the circumstances which present themsel ves. In Dhannalal vs. Kalawatibai and Ors. 25 this court has held that: “When the statute does not provide the path and the precedents abstain to lead, then sound logic, ratio nal reasoning, common sense and urge for public good pla y as guides of those who decide”.” 25 (2002) 6 SCC 16. 145 27. It is also a settled principle of law that no court will lend its aid to a party that roots its cause of action in an immoral or illegal act (ex dolo malo non oritur action) meaning that none should be allowed to profit from any wrongdoing coupled with the fact that statutory regimes should be coherent and not self-defeating. Doctors and pharmacists being complementary and supplementary to each other in th e medical profession, a comprehensive view must be adopted to regulat e their conduct in view of the contemporary statutory regimes and regulations. Therefore, denial of the tax benefit cannot be construed as pe nalizing the assessee pharmaceutical company. Only its participation in what is plainly an action prohibited by law, precludes the assessee from claiming it as a deductible expenditure. 28. This Court also notices that medical practitioners have a quasi- fiduciary relationship with their patients. A doctor’ s prescription is considered the final word on the medication to be availed by the patient, even if the cost of such medication is unaffordable or barely within the economic reach of the patient– such is the level of trust re posed in doctors. Therefore, it is a matter of great public importance and concern, when it is demonstrated that a doctor’s prescription can be manipulated, and driven by the motive to avail the freebies offere d to them by pharmaceutical companies, ranging from gifts such as gold coins, fridges and LCD TVs to funding international trips for vacations or to attend medical conferences. These freebies are technically not ‘ free’ – the cost of supplying such freebies is usually factored into the drug, driving prices up, thus creating a perpetual publicly injurious cycle. The threat of prescribing medication that is significantly marked up, over effective generic counterparts in lieu of such a quid pro quo exchange was taken cognizance of by the Parliamentary Standing Committee on Health and Family Welfare26 which made the following observations: “The Committee also notes that despite there being a code of ethics in the Indian Medical Council Rules introduc ed in December 2009 forbidding doctors from accepting any gif t, hospitality, trips to foreign and domestic destinations etc from healthcare industry, there is no let-up in this evil pract ice and the pharma companies continue to sponsor foreign tri ps of 26 45th Report on Issues Relating to Availability of Generic, Generic-Branded and Branded Medicines, their Formulation and Therapeutic Effica cy and Effectiveness), dated 04.08.2010. M/S APEX LABORATORIES PVT. LTD. v. DEPUTY COMMISSIONER OF INCOME TAX, LARGE TAX PAYER UNIT- II [S. RAVINDRA BHAT, J. ] many doctors and shower with high value gifts like air conditioners, cars, music systems, gold chains etc. to obli ging prescribers who then prescribe costlier drugs as quid pro q uo. Ultimately all these expenses get added up to the cost of drugs. The Committee’s attention was drawn to a news item in Times of India dated July 1, 2010 by Reema Nagarajan givi ng specific instances of violations of MCI code. The Comm ittee calls upon the Government to take strict and speedy action on such violations. Since MCI has no jurisdiction over drug companies, the Government should take parallel acti on through DCGI and the Income Tax Department to penal ize those companies that violate MCI rules by cancelling drug manufacturing licences and/or disallowing expenses on unethical activities. ” (emphasis supplied) Interestingly, a similar conclusion was arrived at b y the US Department of Health and Human Services Office of the Assistant Secretary for Planning and Evaluation, in a report c alled Savings Available Under Full Generic Substitution of Multiple Source B rand Drugs in Medicare Part D (dated 23.07.2018). 27 The report noticed inter alia, that an empirical study conducted in respect of 20 odd (out of the 600 drugs which were the subject matter of the research p aper) brand medications dispensed for a particular period, were cap able of generic substitution and would have resulted in substantial benefit to the patients: 27 Extracted from https://aspe.hhs.gov/reports/data-point-savings-available-under-full- generic-substitution-multiple-source-brand-drugs-me dicare accessed at 16:37 on 13.02.2022. The report states, inter alia, that: “More 600 brand name drugs were dispensed and paid for by Part D plans in 2016, despite the presence of generic competition. Plans and beneficiaries paid $8.7 billion for multiple source brands and $34.0 billion for generi cs. Full substitution of multiple source brands would have resulted in total spending on generic drugs of $39.9 billion, saving the Part D program and its beneficiaries $2.8 billion in 2016. These estimates do not account for manufacturer rebates paid to Part D plans or pharmacy benefit managers (PBMs) or statutory discounts paid by manufacturers for brand name drugs, and thus may overstate savings to the program after accounting for the effects that rebates often have on premiums. See Figure 1. *********** Of this $2.8 billion, $2.25 billion is for brand na me drugs that have faced generic competition for at least a full year (e.g. the firs t generic was available in 2015 or 147 “Beneficiaries could have saved over $600 million in ou t of pocket payments had they been dispensed generic equival ent drugs. A significant amount of this spending occurred among the top 20 multiple source brands. Substituting the se drugs for generic competitors at their median prices woul d have saved the program and beneficiaries $1.8 billion.” Likewise, in a previous study by ProPublica (an independent, non- profit newsroom that does investigative journalism) titled “Dollars for Doctors: Now There’s Proof: Docs who Get Company Cash Tend t o Prescribe More Brand-Name Meds” (dated 17.03.2016)28 stated that: “…doctors who receive payments from the medical indu stry do indeed tend to prescribe drugs differently than their colleagues who don’t. And the more money they recei ve, on average, the more brand-name medications they prescribe.” earlier). A further $584 million in savings is esti mated for substituting generics that were first launched in 2016 and therefore on the market for less than a full year. These 12 Single source includes payments for brand drugs prior to generic entry, e.g. $1.13 billion of Crestor spending in the example used in the Methods section. savings are likely to grow as additional generic competitors en ter the market. Beneficiaries spent $1.1 billion out-of-pocket in cost-sharing for bran d drugs with comparable generics, averaging twice as much out-of-pocket than for comparable generics. In 2016, multiple source brand drug cost-sharing averaged $39.15, whi le generic cost-sharing for substitutable products was $17.04. Beneficiaries could have saved over $600 million in out of pocket payments had they been dispensed generic equivalent drugs. A significant amount of this spending occurred among the top 20 multiple source brands. Substituting these drugs for generic competitors at their median prices would have saved the program and beneficiaries $1.8 billion. See Appendix Table A for these drugs, and figure 2 below for an example. In terms of beneficiary cost-sharing, we find similar results as for the overall calculation. Average per beneficiary spending is significantly higher for these brands than for the substitutable generics. (See Ap pendix Table A, also.) Brand drug cost-sharing averaged $30.69, compared to $22.41 fo r their generic equivalents. For 17 of the top 20 drugs, the ratio of brand to comparable generic out-of-pocket spending ranges from 117% (Namenda) to 1,476% (Lamictal) ind icating significant per-drug savings are available for beneficiaries. In three c ases (Abilify, Lovenox, and Tricor), beneficiary out-of-pocket costs are marginally high er for the generic than the brand drug. We believe this is due to the interaction of total drug costs and plan coverage in the coverage gap for generics (42% in 2016), meaning patients paid 58% coinsurance for generics that year. This compares to 25% plan cover age and a 50% statutory manufacturer discount for brand drugs in 2016.” 28 https://www.propublica.org/article/doctors-who-take -company-cash-tend-to- prescribe-more-brand-name-drugs accessed at 16:45 on 13.02-2022 M/S APEX LABORATORIES PVT. LTD. v. DEPUTY COMMISSIONER OF INCOME TAX, LARGE TAX PAYER UNIT- II [S. RAVINDRA BHAT, J. ] Data is now available publicly, in the United States, by reason of the Physician Payment Sunshine Act, 2010 i.e., Section 6002 of t he Affordable Care Act, 2010. This law compels manufacturers of drugs, devices, biologics, and medical supplies covered by Medicare, Medicaid, or the Children’s Health Insurance Program to report to the Centers for Medicare & Medicaid Services on three broad categories of payme nts or “transfers of value”. These categories cover general p ayments or transfers of value such as meals, travel reimbursem ent, and consulting fees. These include expenses borne by manufacturers, such as speaker fees, travel, gifts, honoraria, entertai nment, charitable contribution, education, grants and research grants, etc. 29. The impugned judgment, along with the judgments of Punjab & Haryana High Court (Kap Scan) and Himachal Pradesh High Court (Confederation) (supra) have correctly addressed the important public policy issue on the subject of allowance of benefit for supply of freebies. The impugned judgment’s reasoning is quoted as follows: “A perusal of the decision of Co-ordinate Bench of this Tribunal in the assessee’s own case as also the decision of the Hon’ble Himachal Pradesh High Court clearly shows that the basic intention of the decision was that the receiving of the gifts/ freebies by Professionals is against public policy as also against the law in so far as the amendment by the Medical Council Act, 1956 to the Indian Medical Council (Professional Con duct, Etiquette and Ethics) Regulations, 2002, once receiving of such gifts have been held to be unethical obviously the corollary to this would also be unethical, being giving of such gifts or doing such acts to induce such Doctors and Medical Professiona ls to violate the Medical Council Act, 1956 .” (emphasis supplied) 30. Thus, one arm of the law cannot be utilised to defeat the other arm of law – doing so would be opposed to public policy and bring the law into ridicule. 29 In Maddi Venkataraman & Co. (P) Ltd. v. CIT 30, a fine imposed on the assessee under the Foreign Exchange Regul ation Act, 1947 was sought to be deducted as a business expenditure. Th is Court held: 29 Biharilal Jaiswal v. CIT, (1996) 1 SCC 443. 30 (1998) 2 SCC 95. 149 “Moreover, it will be against public policy to allow the benefit of deduction under one statute, of any expenditure incur red in violation of the provisions of another statute or any penalty imposed under another statute. In the instant case, if the deductions claimed are allowed, the penal provisions of FE RA will become meaningless”. (emphasis supplied) 31. It is crucial to note that the agreement betwee n the pharmaceutical companies and the medical practitioners in gifting freebies for boosting sales of prescription drugs is also violative of Section 23 of the Contract Act, 1872 (as also noted by the Punjab and Haryana High Court in Kap Scan (supra)). The provision is as follows: “23. What considerations and objects are lawful, and wh at not.—The consideration or object of an agreement is lawful, unless— it is forbidden by law; or is of such a nature that, if permitted, it would de feat the provisions of any law ; or is fraudulent; or involves or implies injury to the person or property o f another; or the Court regards it as immoral, or opposed to public policy. In each of these cases, the consideration or object of an agreement is said to be unlawful. Every agreement of which the object or consideration is unlawful, is void. (emphasis supplied) 32. Before us, Apex has continually stressed on the nee d to divorce interpretation of tax provisions from a perceive d immorality / violation of public policy. Apex repeatedly relied on T.A. Quereshi (supra), M/s K.M. Jain (supra) and CIT v. Pt. Vishwanath Sharma 31. We find that none of these judgments find much favour with the case of the appellant. T.A. Quereshi addressed a business ‘loss’, not a business ‘expenditure’ as envisioned under Section 37(1). In M/s K.M. 31 I.T.R. No. 27 of 1999, Allahabad HC, dated 21.02.20 08. M/S APEX LABORATORIES PVT. LTD. v. DEPUTY COMMISSIONER OF INCOME TAX, LARGE TAX PAYER UNIT- II [S. RAVINDRA BHAT, J. ] Jain, the ransom money paid to kidnappers of the employee of t he assessee company was allowed deduction primarily based on the fact that the assessee was helpless and coerced to pay the a mount in order to save its employee’s life. Thus, the assessee was not a wilful participant in commission of an offence or activity pr ohibited by law. The same is not applicable to the present facts. Ph armaceutical companies have misused a legislative gap to actively perpetuate the commission of an offence. In Pt. Vishwanath Sharma, a Division Bench of the Allahabad High Court was faced with the question of w hether payment of commission to government doctors could be exem pted under Section 37(1). At the time, there was no statut ory provision prohibiting doctors engaged in private practice from a ccepting such commission. Hence, the High Court held that while the Assessing Officer had correctly allowed such deduction for private doctors, the same could not be allowed for Government doctors: “In the present case, payment of commission to Governm ent Doctors cannot be placed on the same pedestal. A distinction has already been made by the authorities while allo wing deduction to the assessee in respect to commission which the assessee has paid to private doctors since in their case, payment of commission cannot be said to be an offence under any statute but in respect to Government doctors such payment could not have been allowed as it is an offence und er the Statutes as stated above.” *** “We are, therefore, clearly of the opinion that pay ment as commission to Government doctors for obtaining a fa vour therefrom by prescribing medicines in which the assessee was dealing cannot be said to be a “business expenditure ” and no deduction can be allowed thereof under the Act .” (emphasis supplied) The 2002 Regulations, applicable to all medical practitioner s (including doctors in private practice), was introduced w.e.f. 14.12.2009. 33. Thus, pharmaceutical companies’ gifting freebies to doctors, etc. is clearly “prohibited by law”, and not allowed to be claimed as a deduction under Section 37(1). Doing so would wholly undermine public policy. The well-established principle of interpretation of taxing statutes 151 – that they need to be interpreted strictly – cannot sustain when it results in an absurdity contrary to the intentions of the Parliament. A Bench of this Court in C.W.S. (India) Ltd. v. CIT32 held as follows: “While a literary construction may be the general r ule in construing taxing enactments, it does not mean that it should be adopted even if it leads to a discriminatory or incongruous result. Interpretation of statutes cannot be a mech anical exercise. Object of all the rules of interpretation is to give effect to the object of the enactment having regard to the language used”. Justice Oliver Wendell Holmes had once said: “A word is not a crystal, transparent and unchanged; it is the skin of a living thought and may vary greatly in colou r and content according to the circumstances and the time in which it is used.” 33 Holmes thus summed up the elusive nature of words, which lies at the heart of the many issues concerning interpretation of statutes. 34. Interpretation of law has two essential purposes: one is to clarify to the people governed by it, the meaning of the letter of the law; the other is to shed light and give shape to the intent of the law maker. And, in this process the courts’ responsibility lies in discerning the social purpose which the specific provision subserves. Thus, the cold letter of the law is not an abstract exercise in semantics which practitioners are wont to indulge in. So viewed the law has birthed various ideas such as implied conditions, unspelt but entirely logical and reasonable obligations, implied limitations etc. The process of continuing evolution, refinement and assimilation of these concepts into binding norms (within the body of law as is understood and enforced) injects vitality and dyna mism to statutory provisions. Without this dynamism and contextualisation, laws become irrelevant and stale. 35. In Bihari Lal Jaiswal & Ors. v. Commissioner of Income Tax & Ors34, the issue of what is “ prohibited by law” was considered by this Court, in the context of interpretation of a condition in a statutory 32 1994 Supp (2) SCC 296. 33 Tomne v. Eispzer, 245 U.S. 418 (1918). 34 (1995) Supp (5) SCR 285. M/S APEX LABORATORIES PVT. LTD. v. DEPUTY COMMISSIONER OF INCOME TAX, LARGE TAX PAYER UNIT- II [S. RAVINDRA BHAT, J. ] license (for vending liquor) which prohibited transfer of the license by way of sub-letting or entering into a partnership agreement. While dealing with the recognition of such a partnership under the IT Act, this Court held that allowing the same would attract the very mischief sought to be avoided: “This object will be defeated if the licencee is perm itted to bring in strangers into the business, which would mean that instead of the licencee carrying on the business, it w ould be carried on by others - a situation not conducive to ef fective implementation of the excise law and consequently deleterious to public interest. It is for this very reason that transfer or sub-letting of licence is uniformly prohibited by several State Excise enactments. It, therefore, follows that any ag reement whereunder the licence is transferred, sub-let or a partne rship is entered into with respect to the privilege/busin ess under the said licence, contrary to the prohibition contained in the relevant excise enactment, is an agreement prohibited by law . The object of such an agreement must be held to be of such a nature that if permitted it would defeat the provisions of the excise law within the meaning of Section 23 of the Co ntract Act. Such an agreement is declared by Section 23 to be unlawful and void. The question is whether such an unlawful or void partnership can be treated as a genuine partnershi p within the meaning of Section 185(1) and whether registration can be granted to such a partnership under the provisions of the Income Tax Act and the Rules made thereunder. We think not. When the law prohibits the entering into a par ticular partnership agreement, there can be in law no partn ership agreement of that nature. The question of such an agreement being genuine cannot, therefore, arise. It is also a known principle that what cannot be done directly , cannot be achieved indirectly. As was said in Fox v. Bishop of Chester35 that it is a: “Well-known principle of law that the provisions of an Act of Parliament shall not be evaded by shift or contrivance” 35 (1824) 2 B&C 635, quoted and applied in Jagir Singh v. Ranbir Singh & Ors. 1979 (2) SCR 282. 153 And that: “To carry out effectually the object of a Statute, it must be construed as to defeat all attempts to do, or avoid doing, in an indirect or circuitous manner that which it has prohibited or enjoined” This Court, in an appeal arising from an action for s pecific performance, in G.T. Girish v. Y. Subba Raju (D) by L. Rs & Ors 36, held that giving the relief would imply doing something prohibited by law (bar against conveyance, for a specific period) – it had the effect of defeating the provisions of the law. It was held that: “Taking the agreement as it is, it necessarily would be in t he teeth of the obligation in law of the first Respondent to put up the construction. The agreement to sell involved clearly t erms which are impliedly prohibited by law in that the first Defendant was thereunder to deliver title to the site and prevented from acting upon the clear obligation under law. This is a clear case at any rate wherein enforcing the agreement unambiguously results in defeating the dictate of the law. T he ‘sublime’ object of the law, the very soul of it stood sac rificed at the altar of the bargain which appears to be a real estate transaction. It would, in other words, in allowing the agreement to fructify, even at the end of ten-year period of non-al ienation, be a case of an agreement, which completely defeats the l aw for the reasons already mentioned. 78. Going by the recital in the agreement entered into bet ween the Plaintiff and the first Defendant, possession i s handed over by the first Defendant to the Plaintiff. The o riginal Possession Certificate is also said to be handed over to the Plaintiff. The agreement, even according to the Pla intiff, contemplated that within three months of conveyance of the site in favour of the first Defendant, the first Defend ant was to convey her rights in the site to the Plaintiff. It is quit e clear that the parties contemplated a state of affairs wh ich is completely inconsistent with and in clear collision w ith the mandate of the law. On its term, it stands out as an affront t o the mandate of the law. 36 2022 SCC Online SC 60. M/S APEX LABORATORIES PVT. LTD. v. DEPUTY COMMISSIONER OF INCOME TAX, LARGE TAX PAYER UNIT- II [S. RAVINDRA BHAT, J. ] 79. The illegality goes to the root of the matter. It is quite clear that the Plaintiff must rely upon the illegal tran saction and indeed relied upon the same in filing the suit for spe cific performance. The illegality is not trivial or venia l. The illegality cannot be skirted nor got around. The Plai ntiff is confronted with it and he must face its consequence s. The matter is clear. We do not require to rely upon any parliamentary debate or search for the purpose beyon d the plain meaning of the law. The object of the law is set o ut in unambiguous term. If every allottee chosen after a proces s of selection under the Rules with reference to certain objective criteria were to enter into bargains of this nature , it will undoubtedly make the law a hanging (sic laughing) stock.” 36. In the present case too, the incentives (or “freebies ”) given by Apex, to the doctors, had a direct result of exposing the recipients to the odium of sanctions, leading to a ban on their practice of me dicine. Those sanctions are mandated by law, as they are embodied in the code of conduct and ethics, which are normative, and have legally b inding effect. The conceded participation of the assessee- i.e., the provider or donor- was plainly prohibited, as far as their receipt by t he medical practitioners was concerned. That medical practitioners were forbidden from accepting such gifts, or “freebies” was no less a prohibition on the part of their giver, or donor, i.e., Apex. 37. In view of the foregoing discussion, the impugned judgment cannot be faulted with. The appeal is dismissed without order on costs. Pending application(s), if any, also stand disposed of. Devika Gujral Appeal dismissed.