IN THE HIGH COURT OF JHARKHAND AT RANCHI.
W.P.(C) No. 5771 of 2008
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M/s Aventis Pharma Limited ... Petitioner
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The State of Jharkhand & Others ... Respondents
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CORAM: - HON'BLE MR. JUSTICE D.G.R. PATNAIK.
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For the Petitioner : - Mr. Anil Kr. Sinha, Sr. Advocate.
For the Respondents : - Mr. A. Allam, Sr. Advocate
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C.A.V on : 08.05.2009 Pronounced on : 15.05.2009
5/15.05.2009
Heard Sri A.K.Sinha, learned senior counsel for the petitioner and
Sri A. Allam, learned senior counsel for the respondents. With the consent
of the learned counsel, this case is taken up for disposal at the stage of
admission.
2. Challenge in this writ application is to the order dated 06.08.2008
(Annexure-11) passed by the State Drug Controller and Licensing
Authority (Respondent No. 3) whereby the license granted to the
petitioner under the provisions of Drugs & Cosmetics Act, 1940 and the
Rules thereunder, has been cancelled. Challenge also is to the order dated
20.09.2008 (Annexure-15) passed by the Appellate Authority whereby the
petitioner’s appeal filed against the impugned order of the Respondent
No. 3 was rejected.
Besides praying for quashing of the two impugned orders, the
petitioner has also prayed for an order staying the operation of the
impugned orders and in the alternative, to direct the respondents to allow
the petitioner to sell and distribute in the State of Jharkhand, the other
drugs manufactured by the company, except the drug which is alleged to
have been found not up to standard, till final disposal of this writ
application.
3. The petitioner is a company registered under the Companies Act,
carrying on the business of manufacturing, selling and distributing Drugs
and Pharmaceutical preparations and Active Pharmaceutical Ingredients
and holds all the relevant licences required under the Drugs & Cosmetics
Act, 1940 and the Rules thereunder for wholesale trade of its drugs in the
State of Jharkhand.
The petitioner’s company manufactures as many as 130 drugs
under its various licences, one of which is Tarivid, I.V. 100 ml.
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4. The Drugs Inspector, Ranchi, under letter No. 316 dated 08.03.2008,
forwarded copies of the Test Reports No. NW/6430, 6433 and 6436 of the
Government Analyst, Central Drug Laboratory, Kolkata in respect of the
laboratory tests of samples of Ofloxacin Infusion of Batch No. 237007,
236015 and 236019 manufactured by the petitioner-company and stating
therein that the drug was not found to be of standard quality.
5. Pursuant to the report, the Drugs Inspector, by his letter dated
12.03.2008, had directed the petitioner to withdraw the aforesaid drug
from the market and had asked the petitioner to send the details of
purchase and sale of the said product in the State.
6. The petitioner replied by his letter dated 14.03.2008, controverting
the finding of the Government Analyst and assuring that the reference
samples of the drug of all the three batches, were tested by the petitioner’s
company at its own laboratory and the same were found to be of standard
quality with the contents of Ofloxacin therein within prescribed limits.
The petitioner had also informed about the steps taken by him to recall the
aforementioned three batches of the drug from the market. The petitioner
had also submitted a copy of the manufacturing licence and all relevant
documents, as desired by the Drugs Inspector. The petitioner had also
requested the Drugs Inspector to send counter parts of the said three
samples for physical and chemical verification. However, the counter
parts of the samples were not supplied to the petitioner.
7. Thereafter the petitioner received another letter dated 19.07.2008
from the Drugs Inspector under which the petitioner was called upon to
furnish certain additional informations and documents. The petitioner
promptly supplied all the required informations annexing all the
documents and submitted the same by his covering letter dated 24.07.2008
and 29.07.2008.
8. In addition to the aforesaid letter, by another letter dated
25.07.2008, the Drugs Inspector called upon the petitioner to furnish
certain clarifications in respect of five queries raised by him, as stated in
his letter. The petitioner promptly responded by furnishing all the details
of informations on the five points of queries.
9. Thereafter the petitioner did not hear any further from the Drugs
Inspector till he received the impugned letter dated 06.08.2008 by which
he was informed that the petitioner’s licence No. RAN/291/01 and
RAN/291A/2001 in form 20B and 21B, were cancelled with immediate
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effect and later, the petitioner was informed that the Drugs Inspector,
Ranchi had lodged a criminal complaint in the Court of Chief Judicial
Magistrate, Ranchi against the petitioner and others in respect of the same
issue.
10. Being aggrieved by the impugned order of cancellation, the
petitioner preferred an appeal under the provisions of Rule 66(2) of the
Drugs and Cosmetics Rules, 1945 (hereinafter referred to as Rules) vide
Appeal No. 1 of 2008.
However, the petitioner’s appeal was dismissed by the appellate
authority namely the Respondent No. 2 vide the impugned order dated
28.09.2008.
11. Assailing the impugned orders, Sri A.K.Sinha, learned counsel for
the petitioner raises inter-alia the following grounds :-
(i) The order of cancellation has been passed without issuing
any show cause notice to the petitioner to offer his
explanation against the proposed cancellation of licence and
without informing as to which of the conditions of the
licence did the petitioner violate and thus, the impugned
orders have been passed in total violation of the provisions
of Rule 66 of the Drugs & Cosmetics Rules, 1945.
(ii) The impugned order of cancellation of the licence as a whole
is also illegal and arbitrary and not in consonance with the
provisions of Rule 66 of the Rules in as much as, though the
purported defect as pointed out in the report of the
Government Analyst relates to only one drug namely
Tarivid I.V., yet the licence as a whole has been cancelled
although under the licence, the petitioner was granted
authority for wholesale trade of as many as 129 other drugs
in respect of which no fault was ever found or alleged.
(iii) The inspection has not been carried out by the Drugs
Inspector by following the mandatory procedure as laid
down under the provisions of Section 23 of the Drugs and
Cosmetics Act.
12. Elaborating the first and second grounds, Sri A.K.Sinha would
argue that the provisions of Rule 66 of the Drugs and Cosmetics Rule,
1945 vests upon the licensing authority power to cancel and suspend the
licence wholly or in respect of some of the substance to which it relates. As
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per the provisions of the Rule, the licence can be cancelled or suspended
only if the licensee has failed to comply with any of the conditions of
licence or any of the provisions of the Act or Rules framed thereunder.
The Rules also stipulate that before canceling or suspending the licence,
the licensee should be given an opportunity to show cause as to why such
an order should not be passed. Furthermore, the order of cancellation has
to assign reasons for the cancellation and also reason as to why the licence
as a whole is cancelled and not in respect of some of the substances to
which it relates.
Learned counsel explains that the petitioner was never issued any
written show cause notice as required under the aforesaid Rules nor was
informed about the proposed cancellation of the licence and neither was
any opportunity afforded to the petitioner to explain as to why the licence
should not be cancelled.
Learned counsel submits further that even otherwise, the petitioner
has not been accused of either manufacturing or selling any spurious
drug. The only accusation, as would appear from the criminal complaint,
is that the report of the Government analyst had indicated that the
quantity of Ofloxacin was not of the standard quality. Such a defect, if
any, could have been remedied by the manufacturer but no opportunity
was ever given to the petitioner for remedying the defect, if any. Learned
counsel adds that the cancellation of the licence as a whole is by way of an
extreme punishment highly disproportionate to the gravity of the alleged
defect.
13. In reply to this issue, Sri A.Allam, learned counsel for the
respondents, by referring to the several paragraphs of the counter
affidavit, would explain that in the informations sought for from the
petitioner, the Drug Inspector had not only communicated the report of
the Government Analyst but had also called upon the petitioner to furnish
details of certain informations sought for by him and had in the same
letters, stated that legal actions have been contemplated against the
petitioner on the basis of the report of the Government Analyst. This
according to the learned counsel is by way of sufficient compliance of the
requirements under Rule 66 of the Rules.
14. Rule 66 of the Drugs and Cosmetics Rules, 1945 which deals with
cancellation and suspension of licence, reads as follows :-
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“(1) The licensing authority may, after giving the licensee an
opportunity to show cause why such an order should not be passed
by an order in writing stating reasons therefore, cancel a licence
issued under this Part or suspend it for such period as he thinks fit,
either wholly or in respect of some of the substance to which it
relates, if in his opinion, the licensee has failed to comply with any
of the conditions of the licence or with any provisions of the Act or
rules there under :-
Provided that where such failure or contravention is the
consequence of an act or omission on the part of an agent or
employee, the licence shall not be cancelled or suspended if the
licensee proves to the satisfaction of the licensing authority –
a) that an act or omission was not instigated or connived at by
him or, if the licensee is a firm or company, by a partner of
the firm or a Director of the Company, or
b) that he or his agent or employee had not been guilty of any
similar act or omission within twelve months before the
date on which the act or omission in question took place, or
where his agent or employee had been guilty of any such act
or omission, the licensee had not or could not reasonably
have had, knowledge of that previous act or omission, or
c) if the act or omission was a continuing act or omission, he
had not or could not reasonably have had knowledge of that
previous act or omission, or
d) that he had used due diligence to ensure that the conditions
of the licence or the provisions of the Act or the rules
thereunder were observed.
(2) A licensee whose licence has been suspended or cancelled
may, within three months of the date of order under sub-rule (1),
prefer an appeal against that order to the Stat Government, which
shall decide the same”.
15. From a bare reading of the provisions of this Rule, it would be
manifest that the Rule lays down a mandatory procedure under which,
before canceling the licence, the licensing authority has to give a written
show cause notice declaring the proposal to cancel the licence, stating
reasons for the same and calling upon the licensee to explain by way of
replies as to why the licence should not be cancelled.
The provision also lays down that the licensing authority may
cancel or suspend the licence either wholly or in respect of some of the
substances to which it relates, if in his opinion, the licensee has failed to
comply with any of the conditions of the licence or of any provisions of
the Act or Rules thereunder. This implies that the licensing authority has
to first identify the specific condition of the licence or the provisions of the
Act or Rules under the Act which the licensee has allegedly violated and
must inform the licensee accordingly. Furthermore, the licensing authority
has also to decide upon as to whether the licence should be
cancelled/suspended either wholly or in respect of some of the substances
to which it relates and has to assign his reasons upon such decision.
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16. Admittedly, no such show cause notice was issued to the petitioner
and neither does the impugned order specify the reasons for cancellation
of the licence nor any discussion as to why the licence as a whole which
relates to several drugs, has been cancelled or even indicate as to which of
the conditions did the petitioner violate for inviting such drastic action.
The letters referred to by Sri A.Allam, even on a bare reading,
would indicate that they are merely demand for certain explanations of
certain queries made by the Drugs Inspector. Such queries have
apparently been made in course of conducting the preliminary enquiry by
the Drugs Inspector as required under the provisions of Rule 51 of the
Rules and any final decision can be taken only upon obtaining the
answers from the licensee on the queries made. In my opinion, by no
stretch of Act, such letter be construed as show cause notice as envisaged
in Rule 66 of the Rules.
17. In the light of the above discussions, the impugned order of
cancellation of the licence, does not stand the test of legality and as such
cannot be sustained.
Sri A.K.Sinha would want to elaborate the third ground by
referring to the provisions of Section 23 of the Act which lays down the
mandatory procedure to be complied by the Drugs Inspector for taking
any sample of any drug. Learned counsel explains that whereas the
procedure mandates that at the time of taking the sample, the Inspector
shall tender the fair price of the sample and obtain a written
acknowledgement therefore. The sample has to be collected in presence of
the person from whose possession the sample is taken and shall intimate
such person that he is collecting the sample for the purpose of chemical
analysis. The procedure also mandates that the Inspector, upon taking the
sample, shall divide the sample into four portions and suitably seal and
mark the same and permit the person to add his own seal and mark to all
or any of the portions so sealed and marked. The Inspector is also
required to restore one portion of a sample so divided, to the person from
whom he takes it and out of the remaining, he may forward one sample to
the Government Analyst for test or analysis. Learned counsel submits that
in the instant case, none of the required mandatory procedures was
adopted by the Drugs Inspector at the time of taking the sample of the
drug under reference and neither was the sample divided in the number
of portions and sealed in presence of any authorized representative of the
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petitioner nor was a sample supplied to the petitioner. According to the
learned counsel, the entire inspection and collection of the sample and
even the test report, would stand vitiated under the law on account of the
failure on the part of the Drugs Inspector to adopt the mandatory
procedure as laid down under Section 23 of the Act, as it has caused
serious prejudice to the petitioner in his defence.
18. In reply to this ground, Sri A.Allam would submit that the
procedure as laid down under Section 23 of the Act is not applicable in the
present case as because the drug in question is a sterile and sealed
product, manufactured under Form Fill Seal (FSS) technology. One the
seal is broken, the product will fail to retain its sterility and ultimately the
quality. Learned counsel adds that nevertheless, as required by the
provisions of Section 23 textually, the procedure was observed for
collection of sample pertaining to Batch No. 237007 of the same drug.
19. Learned counsel for the petitioner would controvert this stand of
the respondents by declaring it as misconceived and misleading and by
asserting that if the sample was intended to be collected batch wise, then
as may samples ought to have been collected from the same batch and
thereafter, sealed and marked and one of the samples ought to have been
restored to the person from whom the sample was collected.
20. As would appear from the rival submission, that this issue involves
adducing of specific evidence relating to the manner in which the sample
was taken and the procedure which the Drugs Inspector had followed or
not followed at the time of collecting the sample and would thus, involve
dispute of facts which, this Court would not feel inclined to go into. As I
have already observed above, the impugned order by which the licence
was cancelled, being contrary to the procedures laid down under Rule 66
of the Rules, cannot be sustained and is hereby set aside.
18. The impugned order of the appellate authority, as would be
apparent from the bare perusal of the same, does not deal with the factual
aspect of the case in proper perspective and has recorded erroneous
finding that the petitioner had hastily withdrawn the drug from the
market with oblique motive, ignoring the petitioner’s claim that by his
letter, addressed to the petitioner, it was the Drugs Inspector who by his
letter, had directed the petitioner to withdraw the drug from the market
immediately. The impugned order of the appellate authority, does
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apparently suffer from non-application of judicial mind and therefore, the
findings recorded there cannot be sustained.
19. In the light of the above discussions, I find merit in this application.
Accordingly, this writ application is allowed. Both the impugned orders
(Annexures- 11 & 15) are hereby set aside.
(D.G.R. Patnaik, J.)
Birendra/N.A.F.R.