Orissa High Court revokes Blanket Suspension of Drug Licenses, Orders Fresh Review Based on Natural Justice.

Orissa High Court revokes Blanket Suspension of Drug Licenses, Orders Fresh Review Based on Natural Justice.

M/s Puja Enterprises v State of Odisha

WP(C)/2345/2023

Dated: May 23, 2025

In the present case, the petitioner a drug license holder, who is a sub-wholesaler involved in distribution of medicines distribution and sale of pharmaceutical drugs across India, and the proprietress holds a valid drug license. procured medicines, namely, Telma- 40 and Telma-AM from M/s Balaji Drug Point, Gaya which were offered to them in May 2022 by Alok Mishra who represented Balaji Drug Point.

Further, on 6th September,2022 Drug Inspector, Cuttack, visited the petitioner’s premises and enquired about several drugs, Telma-40, Ultracet and Zerodol SP with respective batch details and on 8th September, 2022 froze the same and then, issued Form-15 directing the petitioner not to sell any medicines from the said stock until further instructions.

An FIR was lodged and accordingly, a case was registered as Purighat P.S No.222 of 2022 under Sections 420, 326, 336, 483 and 486 read with Section 34 IPC and thereafter, the husband of the proprietress of the petitioner was arrested and was released on bail on 2nd November, 2022. The petitioner, as it is further stated, was issued with a show cause notice a to reply alleging that she sold and distributed Telma-40 tablets labelled as manufactured by M/s Glenmark Pharmaceuticals Private Limited found to be spurious as defined under Section 17B (e) of the Drugs and Cosmetic Act, 1940 and also contravened Section 18(a)(i). In response the petitioner on 22nd September 2022), claimed protection under Section 19(3) of the Act. drug licenses (Forms 20-B, 21-B, and 20-G) were suspended on 29th September 2022.

The petitioner claimed for revocation of the suspension of drug licenses but it was rejected by the learned Commissioner-cum-Secretary to Govt. of India. The order of suspension by the Drug Controller was upheld.

Aggrieved by such order, the Petitioner approached the High Court of Orissa via a writ petition.

It was argued by the Petitioner that she to protection under Section 19(3) of the Drugs and Cosmetics Act,1940 and that tablets in question are ‘Schedule-H’ drugs and covered under the drug license in Form-20-B and therefore, suspension of all the licenses is illegal and arbitrary as it has resulted in blanket suspension without sufficient cause or reason and that the authorities failed to provide a reasoned order and did not consider her response to the show cause notice.

On the other hand, Opposite party argued that that found in the custody of the petitioner, shall have to be held as spurious in view of Section 17B(e) of the Act.

Decision

After hearing both the parties the High Court observed that the petitioner was having all the rights to advance a plea in terms of Section 19(3) of the Act.

The Court referred the case of M/s Techno Prints Vs. Chhattisgarh Textbook Corporation and Anr in Civil Appeal No.2362 of 2025 arising out of SLP(C) No.10042 of 2023 dated 12th February,2025 wherein it was held and observed that “a final decision by an order is not to travel beyond the scope of the show cause notice.”

Similarly, it was held in M/s Samsung India Electronics Private Limited v. State of Uttar Pradesh and others Writ Tax No.777 of 2022 wherein, it is held that “any attempt by an Authority to expand the scope of enquiry beyond what is articulated in the show cause notice would constitute violation of principles of natural justice.”

Finally, the Orissa High Court opined as under:

Para 17: Taking into account the case laws discussed, it has to be held that all such aspects have not been looked into and examined at threadbare by learned authorities below before directing suspension of licenses of the proprietress of the petitioner. It is to be borne in mind that taking away licenses at one go is a punitive action having serious consequences. Such a decision must be preceded by compelling circumstances and not in normal course of action, a Licensing Authority shall have to deal with cancellation or suspension of licence with utmost seriousness regard being had to the extenuating as well as aggravating circumstances. But, without examining each and every aspect of a case with proper judicial application of mind, any decision as a result is certainly to fall flat and susceptible to review. That apart, to debar a licence holder to run the business entirely even by cancellation of licence, in the humble view of the Court, is like leaving him to die, while still alive and therefore, the Licensing Authority must have to be extremely cautious in taking a decision in that regard. Merely on the basis of a report received and without application of judicial mind to the materials on record and plea of the licensee, it is not expected from an authority having powers to exercise in cancelling or suspending licenses, which is certainly an onerous responsibility, hence, not to be lightly taken, instead is needed to be discharged with great sincerity. Taking a decision overwhelmed by the analysis reports is not advisable. A decision to cancel or suspend licence must be demonstrated in a manner that leads to an impression about the exercise being undertaken and followed by the action to be justified with no other conclusion one could have ever reached. Having said that, the Court reaches at a conclusion that opposite party No.2 was not right in cancelling all the licenses of the petitioner, inasmuch as, the alleged drugs relate to licence in Form-20-B and not Form-21-B and From- 20-G and it has again been confirmed by opposite party No.1 without any justification, therefore, the cancellation of said two licenses shall have to be restored. At the same time, the Court is of the further conclusion that the plea advanced by the petitioner with reference to the materials on record and in accordance with the provisions of the Act and Rules is needed to be freshly examined by opposite party No.2 vis-à-vis drugs licence in Form-20-B as all such aspects discussed hereinbefore have not been attended to and dealt with.

Therefore, the Court issued a direction to opposite party to revoke the order of suspension with respect to the drug licenses in Form-21-B and From-20-G and restore the same forthwith and immediately, to consider the plea of the petitioner as regards revocation of the other license in Form-20-B and thereafter, to take a decision thereon or in the alternative, to consider suspension either wholly or only vis-a-vis the subject drugs alleged to be found ‘not of standard quality’ and ‘spurious’ as the case may be concluding the above exercise upon providing an opportunity of hearing to the petitioner followed by a reasoned order at the earliest and preferably within six weeks from the date of communication of this judgment regard being had to the observations made herein above and the settled position of law. The writ petition was accordingly disposed off by the Orissa High Court.

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