{"id":11778,"date":"2009-05-15T00:00:00","date_gmt":"2009-05-14T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/ms-aventish-pharma-ltd-thr-it-vs-state-of-jharkhand-ors-on-15-may-2009"},"modified":"2016-02-09T15:56:02","modified_gmt":"2016-02-09T10:26:02","slug":"ms-aventish-pharma-ltd-thr-it-vs-state-of-jharkhand-ors-on-15-may-2009","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/ms-aventish-pharma-ltd-thr-it-vs-state-of-jharkhand-ors-on-15-may-2009","title":{"rendered":"M\/S Aventish Pharma Ltd Thr It vs State Of Jharkhand & Ors on 15 May, 2009"},"content":{"rendered":"
Jharkhand High Court<\/div>\n
M\/S Aventish Pharma Ltd Thr It vs State Of Jharkhand & Ors on 15 May, 2009<\/div>\n
                    IN THE HIGH COURT OF JHARKHAND AT RANCHI.\n                            W.P.(C) No. 5771 of 2008\n                                        ...\n          M\/s Aventis Pharma Limited                 ...      Petitioner\n                              -V e r s u s-\n          The State of Jharkhand & Others            ...      Respondents\n                                      ...\nCORAM: - HON'BLE MR. JUSTICE D.G.R. PATNAIK.\n                                      ...\n          For the Petitioner          : - Mr. Anil Kr. Sinha, Sr. Advocate.\n          For the Respondents         : - Mr. A. Allam, Sr. Advocate\n                                      ...\n    C.A.V on : 08.05.2009                          Pronounced on : 15.05.2009\n\n5\/15.05.2009<\/pre>\n
          Heard Sri A.K.Sinha, learned senior counsel for the petitioner and
\n               Sri A. Allam, learned senior counsel for the respondents. With the consent
\n               of the learned counsel, this case is taken up for disposal at the stage of
\n               admission.\n<\/p>\n
               2.     Challenge in this writ application is to the order dated 06.08.2008
\n               (Annexure-11) passed by the State Drug Controller and Licensing
\n               Authority (Respondent No. 3) whereby the license granted to the
\n               petitioner under the provisions of Drugs & Cosmetics Act, 1940 and the
\n               Rules thereunder, has been cancelled. Challenge also is to the order dated
\n               20.09.2008 (Annexure-15) passed by the Appellate Authority whereby the
\n               petitioner’s appeal filed against the impugned order of the Respondent
\n               No. 3 was rejected.\n<\/p>\n
                      Besides praying for quashing of the two impugned orders, the
\n               petitioner has also prayed for an order staying the operation of the
\n               impugned orders and in the alternative, to direct the respondents to allow
\n               the petitioner to sell and distribute in the State of Jharkhand, the other
\n               drugs manufactured by the company, except the drug which is alleged to
\n               have been found not up to standard, till final disposal of this writ
\n               application.\n<\/p>\n
               3.     The petitioner is a company registered under the Companies Act,
\n               carrying on the business of manufacturing, selling and distributing Drugs
\n               and Pharmaceutical preparations and Active Pharmaceutical Ingredients
\n               and holds all the relevant licences required under the Drugs & Cosmetics
\n               Act, 1940 and the Rules thereunder for wholesale trade of its drugs in the
\n               State of Jharkhand.\n<\/p>\n
                      The petitioner’s company manufactures as many as 130 drugs
\n               under its various licences, one of which is Tarivid, I.V. 100 ml.\n<\/p>\n
                           -2-<\/span><\/p>\n
4.     The Drugs Inspector, Ranchi, under letter No. 316 dated 08.03.2008,
\nforwarded copies of the Test Reports No. NW\/6430, 6433 and 6436 of the
\nGovernment Analyst, Central Drug Laboratory, Kolkata in respect of the
\nlaboratory tests of samples of Ofloxacin Infusion of Batch No. 237007,
\n236015 and 236019 manufactured by the petitioner-company and stating
\ntherein that the drug was not found to be of standard quality.\n<\/p>\n
5.     Pursuant to the report, the Drugs Inspector, by his letter dated
\n12.03.2008, had directed the petitioner to withdraw the aforesaid drug
\nfrom the market and had asked the petitioner to send the details of
\npurchase and sale of the said product in the State.\n<\/p>\n
6.     The petitioner replied by his letter dated 14.03.2008, controverting
\nthe finding of the Government Analyst and assuring that the reference
\nsamples of the drug of all the three batches, were tested by the petitioner’s
\ncompany at its own laboratory and the same were found to be of standard
\nquality with the contents of Ofloxacin therein within prescribed limits.
\nThe petitioner had also informed about the steps taken by him to recall the
\naforementioned three batches of the drug from the market. The petitioner
\nhad also submitted a copy of the manufacturing licence and all relevant
\ndocuments, as desired by the Drugs Inspector. The petitioner had also
\nrequested the Drugs Inspector to send counter parts of the said three
\nsamples for physical and chemical verification. However, the counter
\nparts of the samples were not supplied to the petitioner.\n<\/p>\n
7.     Thereafter the petitioner received another letter dated 19.07.2008
\nfrom the Drugs Inspector under which the petitioner was called upon to
\nfurnish certain additional informations and documents. The petitioner
\npromptly supplied all the required informations annexing all the
\ndocuments and submitted the same by his covering letter dated 24.07.2008
\nand 29.07.2008.\n<\/p>\n
8.     In addition to the aforesaid letter, by another letter dated
\n25.07.2008, the Drugs Inspector called upon the petitioner to furnish
\ncertain clarifications in respect of five queries raised by him, as stated in
\nhis letter. The petitioner promptly responded by furnishing all the details
\nof informations on the five points of queries.\n<\/p>\n
9.     Thereafter the petitioner did not hear any further from the Drugs
\nInspector till he received the impugned letter dated 06.08.2008 by which
\nhe was informed that the petitioner’s licence No. RAN\/291\/01 and
\nRAN\/291A\/2001 in form 20B and 21B, were cancelled with immediate
\n                             -3-<\/span><\/p>\n
effect and later, the petitioner was informed that the Drugs Inspector,
\nRanchi had lodged a criminal complaint in the Court of Chief Judicial
\nMagistrate, Ranchi against the petitioner and others in respect of the same
\nissue.\n<\/p>\n
10.      Being aggrieved by the impugned order of cancellation, the
\npetitioner preferred an appeal under the provisions of Rule 66(2) of the
\nDrugs and Cosmetics Rules, 1945 (hereinafter referred to as Rules) vide
\nAppeal No. 1 of 2008.\n<\/p>\n
         However, the petitioner’s appeal was dismissed by the appellate
\nauthority namely the Respondent No. 2 vide the impugned order dated
\n28.09.2008.\n<\/p>\n
11.      Assailing the impugned orders, Sri A.K.Sinha, learned counsel for
\nthe petitioner raises inter-alia the following grounds :-\n<\/p>\n
         (i)     The order of cancellation has been passed without issuing
\n                 any show cause notice to the petitioner to offer his
\n                 explanation against the proposed cancellation of licence and
\n                 without informing as to which of the conditions of the
\n                 licence did the petitioner violate and thus, the impugned
\n                 orders have been passed in total violation of the provisions
\n                 of Rule 66 of the Drugs & Cosmetics Rules, 1945.\n<\/p><\/blockquote>\n
         (ii)    The impugned order of cancellation of the licence as a whole
\n                 is also illegal and arbitrary and not in consonance with the
\n                 provisions of Rule 66 of the Rules in as much as, though the
\n                 purported defect as pointed out in the report of the
\n                 Government Analyst relates to only one drug namely
\n                 Tarivid I.V., yet the licence as a whole has been cancelled
\n                 although under the licence, the petitioner was granted
\n                 authority for wholesale trade of as many as 129 other drugs
\n                 in respect of which no fault was ever found or alleged.\n<\/p><\/blockquote>\n
         (iii)   The inspection has not been carried out by the Drugs
\n                 Inspector by following the mandatory procedure as laid
\n                 down under the provisions of Section 23 of the Drugs and
\n                 Cosmetics Act.\n<\/p><\/blockquote>\n
12.      Elaborating the first and second grounds, Sri A.K.Sinha would
\nargue that the provisions of Rule 66 of the Drugs and Cosmetics Rule,
\n1945 vests upon the licensing authority power to cancel and suspend the
\nlicence wholly or in respect of some of the substance to which it relates. As
\n                             -4-<\/span><\/p>\n
per the provisions of the Rule, the licence can be cancelled or suspended
\nonly if the licensee has failed to comply with any of the conditions of
\nlicence or any of the provisions of the Act or Rules framed thereunder.
\nThe Rules also stipulate that before canceling or suspending the licence,
\nthe licensee should be given an opportunity to show cause as to why such
\nan order should not be passed. Furthermore, the order of cancellation has
\nto assign reasons for the cancellation and also reason as to why the licence
\nas a whole is cancelled and not in respect of some of the substances to
\nwhich it relates.\n<\/p>\n
          Learned counsel explains that the petitioner was never issued any
\nwritten show cause notice as required under the aforesaid Rules nor was
\ninformed about the proposed cancellation of the licence and neither was
\nany opportunity afforded to the petitioner to explain as to why the licence
\nshould not be cancelled.\n<\/p>\n
          Learned counsel submits further that even otherwise, the petitioner
\nhas not been accused of either manufacturing or selling any spurious
\ndrug. The only accusation, as would appear from the criminal complaint,
\nis that the report of the Government analyst had indicated that the
\nquantity of Ofloxacin was not of the standard quality. Such a defect, if
\nany, could have been remedied by the manufacturer but no opportunity
\nwas ever given to the petitioner for remedying the defect, if any. Learned
\ncounsel adds that the cancellation of the licence as a whole is by way of an
\nextreme punishment highly disproportionate to the gravity of the alleged
\ndefect.\n<\/p>\n
13.       In reply to this issue, Sri A.Allam, learned counsel for the
\nrespondents,      by referring to the several paragraphs of the counter
\naffidavit, would explain that in the informations sought for from the
\npetitioner, the Drug Inspector had not only communicated the report of
\nthe Government Analyst but had also called upon the petitioner to furnish
\ndetails of certain informations sought for by him and had in the same
\nletters, stated that legal actions have been contemplated against the
\npetitioner on the basis of the report of the Government Analyst. This
\naccording to the learned counsel is by way of sufficient compliance of the
\nrequirements under Rule 66 of the Rules.\n<\/p>\n
14.       Rule 66 of the Drugs and Cosmetics Rules, 1945 which deals with
\ncancellation and suspension of licence, reads as follows :-\n<\/p>\n
                            -5-<\/span><\/p>\n
       “(1) The licensing authority may, after giving the licensee an
\n       opportunity to show cause why such an order should not be passed
\n       by an order in writing stating reasons therefore, cancel a licence
\n       issued under this Part or suspend it for such period as he thinks fit,
\n       either wholly or in respect of some of the substance to which it
\n       relates, if in his opinion, the licensee has failed to comply with any
\n       of the conditions of the licence or with any provisions of the Act or
\n       rules there under :-\n<\/p><\/blockquote>\n
              Provided that where such failure or contravention is the
\n       consequence of an act or omission on the part of an agent or
\n       employee, the licence shall not be cancelled or suspended if the
\n       licensee proves to the satisfaction of the licensing authority –\n<\/p><\/blockquote>\n
       a)     that an act or omission was not instigated or connived at by
\n              him or, if the licensee is a firm or company, by a partner of
\n              the firm or a Director of the Company, or\n<\/p><\/blockquote>\n
       b)     that he or his agent or employee had not been guilty of any
\n              similar act or omission within twelve months before the
\n              date on which the act or omission in question took place, or
\n              where his agent or employee had been guilty of any such act
\n              or omission, the licensee had not or could not reasonably
\n              have had, knowledge of that previous act or omission, or\n<\/p><\/blockquote>\n
       c)     if the act or omission was a continuing act or omission, he
\n              had not or could not reasonably have had knowledge of that
\n              previous act or omission, or\n<\/p><\/blockquote>\n
       d)     that he had used due diligence to ensure that the conditions
\n              of the licence or the provisions of the Act or the rules
\n              thereunder were observed.\n<\/p><\/blockquote>\n
       (2)    A licensee whose licence has been suspended or cancelled
\n       may, within three months of the date of order under sub-rule (1),
\n       prefer an appeal against that order to the Stat Government, which
\n       shall decide the same”.\n<\/p><\/blockquote>\n
15.    From a bare reading of the provisions of this Rule, it would be
\nmanifest that the Rule lays down a mandatory procedure under which,
\nbefore canceling the licence, the licensing authority has to give a written
\nshow cause notice declaring the proposal to cancel the licence, stating
\nreasons for the same and calling upon the licensee to explain by way of
\nreplies as to why the licence should not be cancelled.\n<\/p>\n
       The provision also lays down that the licensing authority may
\ncancel or suspend the licence either wholly or in respect of some of the
\nsubstances to which it relates, if in his opinion, the licensee has failed to
\ncomply with any of the conditions of the licence or of any provisions of
\nthe Act or Rules thereunder. This implies that the licensing authority has
\nto first identify the specific condition of the licence or the provisions of the
\nAct or Rules under the Act which the licensee has allegedly violated and
\nmust inform the licensee accordingly. Furthermore, the licensing authority
\nhas also to decide upon as to whether the licence should be
\ncancelled\/suspended either wholly or in respect of some of the substances
\nto which it relates and has to assign his reasons upon such decision.\n<\/p>\n
                            -6-<\/span><\/p>\n
16.    Admittedly, no such show cause notice was issued to the petitioner
\nand neither does the impugned order specify the reasons for cancellation
\nof the licence nor any discussion as to why the licence as a whole which
\nrelates to several drugs, has been cancelled or even indicate as to which of
\nthe conditions did the petitioner violate for inviting such drastic action.\n<\/p>\n
       The letters referred to by Sri A.Allam, even on a bare reading,
\nwould indicate that they are merely demand for certain explanations of
\ncertain queries made by the Drugs Inspector. Such queries have
\napparently been made in course of conducting the preliminary enquiry by
\nthe Drugs Inspector as required under the provisions of Rule 51 of the
\nRules and any final decision can be taken only upon obtaining the
\nanswers from the licensee on the queries made. In my opinion, by no
\nstretch of Act, such letter be construed as show cause notice as envisaged
\nin Rule 66 of the Rules.\n<\/p>\n
17.    In the light of the above discussions, the impugned order of
\ncancellation of the licence, does not stand the test of legality and as such
\ncannot be sustained.\n<\/p>\n
       Sri A.K.Sinha would want to elaborate the third ground by
\nreferring to the provisions of Section 23 of the Act which lays down the
\nmandatory procedure to be complied by the Drugs Inspector for taking
\nany sample of any drug. Learned counsel explains that whereas the
\nprocedure mandates that at the time of taking the sample, the Inspector
\nshall tender the fair price of the sample and obtain a written
\nacknowledgement therefore. The sample has to be collected in presence of
\nthe person from whose possession the sample is taken and shall intimate
\nsuch person that he is collecting the sample for the purpose of chemical
\nanalysis. The procedure also mandates that the Inspector, upon taking the
\nsample, shall divide the sample into four portions and suitably seal and
\nmark the same and permit the person to add his own seal and mark to all
\nor any of the portions so sealed and marked. The Inspector is also
\nrequired to restore one portion of a sample so divided, to the person from
\nwhom he takes it and out of the remaining, he may forward one sample to
\nthe Government Analyst for test or analysis. Learned counsel submits that
\nin the instant case, none of the required mandatory procedures was
\nadopted by the Drugs Inspector at the time of taking the sample of the
\ndrug under reference and neither was the sample divided in the number
\nof portions and sealed in presence of any authorized representative of the
\n                            -7-<\/span><\/p>\n
petitioner nor was a sample supplied to the petitioner. According to the
\nlearned counsel, the entire inspection and collection of the sample and
\neven the test report, would stand vitiated under the law on account of the
\nfailure on the part of the Drugs Inspector to adopt the mandatory
\nprocedure as laid down under Section 23 of the Act, as it has caused
\nserious prejudice to the petitioner in his defence.\n<\/p>\n
18.    In reply to this ground, Sri A.Allam would submit that the
\nprocedure as laid down under Section 23 of the Act is not applicable in the
\npresent case as because the drug in question is a sterile and sealed
\nproduct, manufactured under Form Fill Seal (FSS) technology. One the
\nseal is broken, the product will fail to retain its sterility and ultimately the
\nquality. Learned counsel adds that nevertheless, as required by the
\nprovisions of Section 23 textually, the procedure was observed for
\ncollection of sample pertaining to Batch No. 237007 of the same drug.\n<\/p>\n
19.    Learned counsel for the petitioner would controvert this stand of
\nthe respondents by declaring it as misconceived and misleading and by
\nasserting that if the sample was intended to be collected batch wise, then
\nas may samples ought to have been collected from the same batch and
\nthereafter, sealed and marked and one of the samples ought to have been
\nrestored to the person from whom the sample was collected.\n<\/p>\n
20.    As would appear from the rival submission, that this issue involves
\nadducing of specific evidence relating to the manner in which the sample
\nwas taken and the procedure which the Drugs Inspector had followed or
\nnot followed at the time of collecting the sample and would thus, involve
\ndispute of facts which, this Court would not feel inclined to go into. As I
\nhave already observed above, the impugned order by which the licence
\nwas cancelled, being contrary to the procedures laid down under Rule 66
\nof the Rules, cannot be sustained and is hereby set aside.\n<\/p>\n
18.    The impugned order of the appellate authority, as would be
\napparent from the bare perusal of the same, does not deal with the factual
\naspect of the case in proper perspective and has recorded erroneous
\nfinding that the petitioner had hastily withdrawn the drug from the
\nmarket with oblique motive, ignoring the petitioner’s claim that by his
\nletter, addressed to the petitioner, it was the Drugs Inspector who by his
\nletter, had directed the petitioner to withdraw the drug from the market
\nimmediately. The impugned order of the appellate authority, does
\n                                          -8-<\/span><\/p>\n
                apparently suffer from non-application of judicial mind and therefore, the
\n                findings recorded there cannot be sustained.\n<\/p>\n
                19.   In the light of the above discussions, I find merit in this application.
\n                Accordingly, this writ application is allowed. Both the impugned orders
\n                (Annexures- 11 & 15) are hereby set aside.\n<\/p>\n
                                                                    (D.G.R. Patnaik, J.)
\nBirendra\/N.A.F.R.<\/p>\n","protected":false},"excerpt":{"rendered":"
Jharkhand High Court M\/S Aventish Pharma Ltd Thr It vs State Of Jharkhand & Ors on 15 May, 2009 IN THE HIGH COURT OF JHARKHAND AT RANCHI. W.P.(C) No. 5771 of 2008 … M\/s Aventis Pharma Limited … Petitioner -V e r s u s- The State of Jharkhand & Others … Respondents … CORAM: […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[8,18],"tags":[],"class_list":["post-11778","post","type-post","status-publish","format-standard","hentry","category-high-court","category-jharkhand-high-court"],"yoast_head":"\nM\/S Aventish Pharma Ltd Thr It vs State Of Jharkhand & Ors on 15 May, 2009 - Free Judgements of Supreme Court & High Court | Legal India<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.legalindia.com\/judgments\/ms-aventish-pharma-ltd-thr-it-vs-state-of-jharkhand-ors-on-15-may-2009\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"M\/S Aventish Pharma Ltd Thr It vs State Of Jharkhand & Ors on 15 May, 2009 - 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