Cancellation of a drug licence for repeated prescription and recordkeeping violations was upheld. The court found the notices adequate and held that the licensee bore the burden of establishing protection under the proviso to Rule 66. The writ appeal was dismissed.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE THE CHIEF JUSTICE MR.S.MANIKUMAR
&
THE HONOURABLE MR. JUSTICE SHAJI P.CHALY
FRIDAY, THE 07TH DAY OF AUGUST 2020 / 16TH SRAVANA, 1942
WA.No.906 OF 2020
AGAINST THE JUDGMENT DATED 15.06.2020 IN WP(C) 34464/2019(G) OF HIGH COURT OF KERALA
APPELLANT/PETITIONER:
KOLAMBIL HAMZA HAJI AGED 62 YEARS
PROPRIETOR, MADEENA MEDICALS, BUS STAND, KOTTAKKAL, MALAPPURAM DISTRICT.
BY ADVS. SRI.GEORGE POONTHOTTAM (SR.) SMT.NISHA GEORGE
RESPONDENTS/RESPONDENTS:
SR GP SRI. SURIN GEORGE IPE FOR RESPONDENTS
THIS WRIT APPEAL HAVING BEEN FINALLY HEARD ON 07.08.2020, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
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'CR'
JUDGMENT
SHAJI P. CHALY, J
Writ petitioner is the appellant. The appeal is filed challenging the judgment dated 15.06.2020 of the learned single Judge in W.P.(C) No. 34464 of 2019, whereby the learned Single Judge refused to interfere with the action taken by the Drugs Controller cancelling the drug licence issued to the appellant under the Drugs and Cosmetics Act, 1940 ('the Act, 1940' for short) and the Drugs and Cosmetics Rules 1945 ('the Rules 1945' for short), and the order passed by the State Government in appeal against the order of the authority under the aforesaid Act and the Rules.
The appellant is the proprietor of a medical shop by name 'Madeena Medicals' at Kottakkal, Malappuram District. The shop was having the licence Nos. 129208 and 129209 valid upto 31.12.2020. According to the appellant, the shop was being run from the year 1992 without any legal issues till 2015. However, during 2015, at the instance of third persons, the licencing authority started to interfere with the business and issued orders suspending licence of the
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appellant for a period of 10 days, which was challenged by the appellant. Matters being so, on 10.07.2018, the Drugs Inspector, Malappuram District again conducted an inspection at the shop and 6 items of medicines were seized on the allegation that they are included in Schedule H to the Rules and it was sold without prescription and maintaining proper records in terms of law, consequent to which the Drugs Controller, Thiruvananthapurm, the second respondent herein, issued show cause notice calling upon the appellant to explain as to why the licence should not be cancelled. The appellant submitted a detailed reply to the show cause notice explaining the alleged discrepancies and refuting the allegations raised in the show cause notice. Anyhow, the Drugs Inspector again conducted another inspection on 13.11.2018, and consequent to which yet another show cause notice was issued by the Drugs Controller, Thiruvananthapuram on 29.01.2019, which was also replied by the appellant on 13.02.2019 stating that appellant is innocent and has not violated any of the provisions of the Act and the Rules. According to the appellant, thereafter the Drugs Controller has issued the impugned order dated 03.06.2019 cancelling the licence issued to the appellant holding that the appellant has not produced any document to substantiate the contentions raised by the appellant in the replies filed to the show cause notices. It is relevant to note that in the order issued by the
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second respondent, it is specified that the licence of the appellant was suspended during the years 2014, 2015 and 2017 consequent to the discrepancies found out under the very same circumstances. One of the cases projected by the appellant is that the licence was cancelled also taking into account the suspensions made during the yester years. Anyhow, the appellant preferred an appeal before the State Government and the same was dismissed as per Ext.P10 order dated 17.11.2019. It is evident from Ext.P10 that the appellant and the Assistant Drugs Controller, Thiruvananthapuram were heard by the Additional Secretary, Health and Family Welfare Department on 15.10.2019 and it was taking into account the explanations offered by the appellant alone, the appeal was dismissed.
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considered by the learned Single Judge and has held that the appellant is not entitled to get the benefit of the proviso contained to Rule 66(1), since the appellant has failed to prove that, on previous occasions also, the appellant was not liable for violating the licence conditions.
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from the records maintained in his shop , and since the shop was closed by the authority, the appellant could not procure details from the shop and was unable to contest the proceedings in accordance with law. Therefore, the sum and substance of the contention advanced by the learned counsel is that the adjudication process of the drugs authority as well as the Government was clearly violative of the principles of natural justice. So also, the learned senior counsel has reiterated the contentions with respect to the benefit enjoyed by the appellant under Rule 66(1) of the Rules, 1945 and contended that the appellant was not responsible for the violations, if any, and no enquiry was conducted by the authority to find out whether the appellant was really involved or the employee was liable for the consequences of non-compliance of the licence conditions. Learned counsel has also invited our attention to the judgment of the Apex Court in Commissioner of Central Excise, Bangalore v. M/s. Brindavan Beverages (P) Ltd. [2007 (5) SCC 388]
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that as per Rule 66(1) of the Rules, 1945, the drugs authority is only duty bound to issue a show cause notice to the appellant pointing out the discrepancies and the violation of the licence conditions and it is for the appellant to file a reply and prove that the appellant was not responsible for any shortcomings on the part of the employee in order to secure the benefit available under the proviso to Rule 66. That apart, it is pointed out that the entire objections raised by the appellant in the replies to the show cause notices were taken into account by the Drugs Controller as well as the State Government and therefore, the allegations put forth by the appellant that no proper opportunity was provided to the appellant to substantiate his case cannot be sustained. It is also submitted that the appellant had sufficient time to prepare the details after the issuance of the show cause notices and before the closing of the shop by the drugs authority and the contention advanced by the appellant that he did not get sufficient opportunity to refer to the documents maintained by him, also cannot be sustained under law.
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and sale of drugs and cosmetics. It is also evident from the preamble of the Act that the Legislatures of all the Provinces have passed resolutions in terms of Section 103 of the Government of India Act, 1935 in relation to the matters specified above and the matters ancillary thereto as are enumerated in List II of the Seventh Schedule to the Act 1935.
“ (i) all medicines for internal or external use of human beings or animals and all substances intended to be used for or in the diagnosis, treatment, mitigation or prevention of any disease or disorder in human beings or animals, including preparations applied on human body for the purpose of repelling insects like mosquitoes;
(ii) such substances (other than food) intended to affect the structure or any function of the human body or intended to be used for the destruction of [vermin] or insects which cause disease in human beings or animals, as may be specified from time to time by the Central Government by notification in the Official Gazette;]
(iii) all substances intended for use as components of a drug including empty gelatin capsules; and
(iv) such devices intended for internal or external use in the diagnosis, treatment, mitigation or prevention of disease or disorder in human beings or animals, as may be specified from time to time by the Central Government by notification in the Official Gazette, after consultation with the Board;”
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“18. Prohibition of manufacture and sale of certain drugs and cosmetics.—From such date as may be fixed by the State Government by notification in the Official Gazette in this behalf, no person shall himself or by any other person on his behalf—
(a) [manufacture for sale or for distribution, or sell, or stock or exhibit or offer for sale,] or distribute—
[(i) any drug which is not of a standard quality, or is misbranded, adulterated or spurious;
[(ii) any cosmetic which is not of a standard quality or is misbranded, adulterated or spurious;]
[(iii) any patent or proprietary medicine, unless there is displayed in the prescribed manner on the label or container thereof [the true formula or list of active ingredients contained in it together with the quantities thereof]
(iv) any drug which by means of any statement design or
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device accompanying it or by any other means, purports or claims [to prevent, cure or mitigate] any such disease or ailment, or to have any such other effect as may be prescribed;
[(v) any cosmetic containing any ingredient which may render it unsafe or harmful for use under the directions indicated or recommended;
(vi) any drug or cosmetic in contravention of any of the provisions of this Chapter or any rule made thereunder;]
(b) [sell or stock or exhibit or offer for sale,] or distribute any drug [or cosmetic] which has been been imported or manufactured in contravention of any of the provisions of this Act or any rule made thereunder;
(c) [manufacture for sale or for distribution, or sell, or stock or exhibit or offer for sale,] or distribute any drug [or cosmetic], except under, and in accordance with the conditions of, a licence issued for such purpose under this Chapter:
Provided that nothing in this section shall apply to the manufacture, subject to prescribed conditions, of small quantities of any drug for the purpose of examination, test or analysis :
Provided further that the [Central Government] may, after consultation with the Board, by notification in the Official Gazette, permit, subject to any conditions specified in the notification, the [manufacture for sale or for distribution, sale, stocking or exhibiting or offering for sale] or distribution of any drug or class of drugs not being of standard quality.”
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“18B. Maintenance of records and furnishing of information. —Every person holding a licence under clause (c) of section 18 shall keep and maintain such records, registers and other documents as may be prescribed and shall furnish to any officer or authority exercising any power or discharging any function under this Act such information as is required by such officer or authority for carrying out the purposes of this Act.”
“24. Persons bound to disclose place where drugs or cosmetics are manufactured or kept. — Every person for the time being in charge of any premises whereon any drug [or cosmetic] is being manufactured or is kept for sale or distribution shall, on being required by an Inspector so to do, be legally bound to disclose to the Inspector the place where the drug [or cosmetic] is being manufactured or is kept, as the case may be.”
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person has to secure a necessary licence under law in order to carry on with the sale of medicines in terms of the provisions of the Act. Section 33 of the Act deals with the power of the Central Government to make rules. Clause (e) of Sub-Section (2) of Section 33 prescribes the the forms of licences for the manufacture for sale or for distribution, for the sale and for the distribution of drugs or any specified drug or class of drugs or of cosmetics or any specified cosmetic or class of cosmetics, the form of application for such licences, the conditions subject to which such licences may be issued, the authority empowered to issue the same, the qualifications of such authority and the fees payable therefor; and provide for the cancellation or suspension of such licences in any case where any provision of Chapter IV or the rules made thereunder is contravened or any of the conditions subject to which they are issued is not complied with. Clause (ee) thereto prescribes the records, registers or other documents to be kept and maintained under section 18B. Therefore, the Rules, 1945 was made by virtue of the power conferred under Section 33 of the Act, 1940.
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“59.(1) The State Government shall appoint licensing authorities for the purpose of this Part for such areas as may be specified.
(2) Application for the grant or renewal of a licence [to sell, stock, exhibit or offer for sale or distribute] drugs, other than those included in Schedule X, [shall be made in Form 19 accompanied by a fee of rupees one thousand and five hundred or in Form 19A accompanied by a fee of rupees five hundred, as the case may be, or in the case of drugs included in Schedule X shall be made in Form 19C accompanied by a fee of rupees five hundred, to the licensing authority:]
Provided that in the case of an itinerant vendor or an applicant who desires to establish a shop in a village or town having population of 5,000 or less, the application in Form 19A shall be accompanied by a fee of rupees ten.
(3) [A fee of rupees one hundred and fifty] shall be paid for a duplicate copy of a licence [to sell, stock, exhibit or offer for sale or distribute] drugs, other than those included in Schedule X, or for a licence to sell, stock, exhibit for sale or distribute drugs included in Schedule X, if the original is defaced, damaged or lost:
Provided that in the case of itinerant vendor or an applicant who desires to establish a shop in a village or town having a population of 5,000 or less, the fee for a duplicate copy of a
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licence if the original is defaced, damaged or lost, shall be rupees two.
(4) Application for renewal of a licence [to sell, stock, exhibit or offer for sale or distribute] drugs, after its expiry but within six months of such expiry [shall be accompanied by a fee of rupees one thousand and five hundred plus an additional fee at the rate of rupees five hundred per month or part thereof in Form 19, rupees five hundred plus an additional fee at the rate of rupees five hundred per month or part thereof in Form 19A and rupees five hundred plus an additional fee at the rate of rupees two hundred fifty per month or part thereof in Form 19A and rupees five hundred plus an additional fee at the rate of rupees two hundred and fifty per month or part thereof in Form 19C:]
Provided that in the case of an itinerant vendor or an applicant desiring to open a shop in a village or town having a population of 5,000 or less, the application for such renewal shall be accompanied by a fee of rupees ten, plus an additional fee at the rate of rupees eight per month or part thereof.]”
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only such drugs as are specified in the licence. Proviso to Rule 62B stipulates that the licensing authority may refuse to grant or renew a licence to any applicant or licensee in respect of whom it is satisfied that by reason of his conviction of an offence under the Act or these rules or the previous cancellation or suspension of any licence granted thereunder, he is not a fit person to whom a licence should be granted under the Rules. As per Rule 63, an original licence or a renewed licence to sell drugs, unless sooner suspended or cancelled, shall be valid for a period of five years on and from the date on which it is granted or renewed. Rule 65 deals with conditions of licences, the provisions relevant to the context read thus:
xxxxxxxxxxxxxxxxxxxxxxxxxx
“(3) (1) The supply of any drug [other than those specified in Schedule X] on a prescription of a Registered Medical Practitioner shall be recorded at the time of supply in a prescription register specially maintained for the purpose and the serial number of entry in the register shall be entered on the prescription. The following particulars shall be entered in the register:—
[(d) the name and address of the patient, or the name and address of the owner of the animal if the drug supplied is for veterinary use,]
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(e) the name of the drug or preparation and the quantity or in the case of a medicine made up by the licensee, the ingredients and quantities thereof,
(f) in the case of a drug specified in [Schedule C or Schedule H] the name of manufacturer of the drug, its batch number and the date of expiry of potency, if any,
xxxxxxxxxxxxxxxxxxxxxxxxxxxx
Provided that the Licensing Authority may require records to be maintained only in prescription register if it is satisfied that the entries in the carbon copy of the cash or credit memo book are not legible.]
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
[(9) (a) Substances specified in [Schedule H or Schedule H1[ or Schedule X shall not be sold by retail except on and in accordance with the prescription of a Registered Medical Practitioner and in the case of substances specified in Schedule X, the prescriptions shall be in duplicate, one copy of which shall be retained by the licensee for a period of two years.
(b) The supply of drugs specified in [Schedule H and Schedule H1] or Schedule X to Registered Medical Practitioners, Hospitals, Dispensaries and Nursing Homes shall be made only against the signed order in writing which shall be preserved by the licensee for a period of two years.]
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(10) For the purposes of clause (9) a prescription shall—
(a) be in writing and be signed by the person giving it with his usual signature and be dated by him;
[(b) specify the name and address of the person for whose treatment it is given, or the name and address of the owner of the animal if the drug is meant for veterinary use;]
(c) indicate the total amount of the medicine to be supplied and the dose to be taken.
(11) The person dispensing a prescription containing a drug specified in [Schedule H and Schedule H1] [and Schedule X] shall comply with the following requirements in addition to other requirements of these rules:—
(a) the prescription must not be dispensed more than once unless the prescriber has stated thereon that it may be dispensed more than once;
(b) if the prescription contains a direction that it may be dispensed a stated number of times or at stated intervals it must not be dispensed otherwise than in accordance with the directions;
(c) at the time of dispensing there must be noted on the prescription above the signature of the prescriber the name and address of the seller and the date on which the prescription is dispensed.
[(11A) No person dispensing a prescription containing substances specified in [Schedule H and Schedule H1] or X] may supply any other preparation, whether containing the same substances or not in lieu thereof.”
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“66. Cancellation and suspension of licences .— (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 the 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 substances 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 thereunder:
[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 the 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 State
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Government, which shall decide the same.]”
into the Rules dealing with various kinds of drugs and also the requirements that are to be followed etc. enabling the licensee to follow the conditions prescribed thereunder. The provisions of the Rules quoted above make it clear that the licensee under the Act and the Rules are bound to follow certain mandatory requirements under the law and failing which the authority under the Act and the Rules are vested with ample powers to take appropriate action against the licensee. It is quite clear and evident from Ext.P6 order passed by the Drugs Controller, Thiruvananthapuram that the licence of the appellant was suspended during the years 2014, 2015 and 2017. It is an admitted fact that in the writ petition filed, the appellant has only stated that an action was initiated against him in the year 2015 alone. However, at the same time, the suspension of the licence during the years 2014 and 2017 is not disputed by the appellant. It is clear from Ext.P6 that the first suspension of licence was on 23.05.2014 for a period of 10 days and it was on account of the reason that the licence was not displayed and Schedule H medicine handed over and sale of medicines was done without pharmacist, bill and prescription. On 04.03.2015, licence was suspended again for a period of 10 days for the reasons that the licence was not displayed, details not provided
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in bills, separate bill books not maintained for schedule C drugs, Schedule H drugs sold without bills and prescription, purchase bill not kept in ascending order and the purchase bill not produced. On 11.05.2017 also, the licence was suspended for a period of 10 days for the reasons that the licence was not displayed, purchase bills not stored in ascending order, medicines not separately labelled after the expiry date, details not given on bills, register mentioning details of purchase, stock and sales of H1 drugs not maintained, sales details of schedule H drugs not recorded, veterinary medicines not separately labelled, sales bills not signed by pharmacist and medicines that could be used as drugs being sold without prescription.
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was reported. The order passed by the Drugs Controller shows that there are intentional continuous illegalities as the sales were carried on by the appellant without abiding any Rules, and therefore, the business that was carried on by the appellant was not in the interest of public health. Anyhow, the Drugs Controller has stated that sufficient opportunity was given to the appellant to refine himself and comply with the conditions of licence. But, however, there was no improvement to the activities of the appellant and it was accordingly that the licence was cancelled. Anyhow, in the appeal preferred by the appellant before the State Government, a detailed order is passed by the State Government as per Ext.P10 from where we are satisfied that the entire aspects put forth by the appellant was taken into account, and after providing due consideration to the contentions advanced by the appellant alone, the findings were arrived at by the appellate authority.
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the appellant has raised a contention that the show cause notices issued were not explaining the details with respect to the violation of the licence conditions, having gone through the show cause notices, we are satisfied that sufficient details are provided to the appellant so as to enable him to file suitable reply, and in fact, the appellant has filed appropriate reply to both the show cause notices and he did not have a case that he was unable to provide suitable reply for want of any document in his possession. Moreover, as found by the learned Single Judge after issuance of the show cause notices , the appellant had sufficient time to issue a reply taking into account the records available with him before the closure of the shop.
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licensee proves to the satisfaction of the licensing authority (a) that the 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, and for other reasons stated thereunder.
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directed the learned Government Pleader to produce the details with respect to the inspection conducted and the show cause notices issued, and on going through the same, we have found that the appellant was personally present in the shop while inspections were conducted and it was in his presence, that the mahazars were prepared in accordance with law. We are also satisfied that the procedure prescribed under law for the preparation of mahazar and the issuance of show cause notices were also followed by the authority.
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without adhering to the provisions of the Act and the Rules and the licence conditions. It is evident from the documents produced and the order passed by the authority that sufficient opportunities were provided to the appellant to rectify and refine himself, apart from being explicit that the previous violations were similar and typical in nature, that the drugs were dispensed, without prescriptions and maintaining relevant records. Above all, the entire factual aspects and the contentions put forth by the appellant were considered by the appellate authority, and it was only on attaining absolute satisfaction that the appellant has violated the provisions of the Act and the Rules and also the licence conditions, that the drastic step of cancellation of the licence was undertaken by the statutory authority. It is well settled that a writ court while considering an order passed by a statutory authority need only to look into the manner in which the decision was taken and not the decision as such. It was after going through the orders passed by the statutory authorities, the learned Single Judge on facts and law found that they were passed in accordance with law after complying with the due procedures. We are also of the opinion that the judgment pressed into service by the learned senior counsel in M/s. Brindavan Beverages (P) Ltd. has no relevance to the facts and circumstances of the case at hand, since it was rendered as per the statutory requirements of the Customs Act, 1962.
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We also direct the registry to retain a copy of the inspection report, mahazar etc. produced in our direction, which shall form part of the record, and the original shall be returned to the Office of the Advocate General forthwith.
sd/-
S. MANIKUMAR, CHIEF JUSTICE.
sd/-
SHAJI P. CHALY, JUDGE.
Rv
3 issues framed by the court
Were the show cause notices sufficiently detailed to satisfy natural justice before cancellation of the drug licence?
Did Rule 66 require the authority to identify whether the licensee or an employee committed the violations?
Was interference with cancellation of the drug licence for repeated licence-condition violations warranted?
Colour shows how this judgement treated each authority
Commissioner of Central Excise, Bangalore v. M/s. Brindavan Beverages (P) Ltd.Distinguished¶167
[2007 (5) SCC 388] · Who else cites this
5 provisions across 3 enactments
KOLAMBIL HAMZA HAJI
STATE OF KERALA
THE DRUGS CONTROLLER
ASSISTANT DRUGS CONTROLLER
THE DRUGS INSPECTOR
S.MANIKUMAR
SHAJI P.CHALY
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
