Court’s Decision
The Bombay High Court quashed the stop-production orders issued by the Food and Drug Administration (FDA) and upheld by the Minister of Food and Drugs, Maharashtra, against two pharmaceutical companies. The Court held that issuing such orders without giving an opportunity to show cause under Rule 85(2) of the Drugs and Cosmetics Rules, 1945 was a “flagrant violation of statutory requirements.” It emphasised that “where hearing is obligated by statute, failure to comply with such duty is fatal.” The Court, however, clarified that the competent authority is free to proceed afresh on the show cause notices in accordance with law.
Facts
Two pharmaceutical companies, both licensed manufacturers under the Drugs and Cosmetics Act, 1940, were producing a variety of medicines for export and domestic supply. In February 2025, the Central Drugs Standard Control Organization (CDSCO) issued a directive withdrawing permissions for manufacturing all combinations of Tapentadol and Carisoprodol, citing their potential for abuse, especially after a BBC report revealed exports to West African countries.
The petitioners promptly surrendered their licences for these specific drug combinations. Shortly thereafter, joint inspections were carried out by CDSCO and the State FDA, which allegedly revealed discrepancies in compliance. On the very next day, stop-production orders were issued by the Joint Commissioner, FDA, directing complete cessation of all manufacturing activities—not just of Tapentadol and Carisoprodol, but of all medicines. These orders were passed before issuing show cause notices under Rule 85(2).
Appeals filed before the Minister of Food and Drugs were dismissed, leading the petitioners to approach the High Court.
Issues
- Whether the stop-production orders issued by FDA without giving prior opportunity of hearing under Rule 85(2) of the Drugs and Cosmetics Rules, 1945, are valid.
- Whether subsequent issuance of a show cause notice could cure the defect of passing an order beforehand.
- Whether considerations of public health and potential abuse of drugs can override statutory procedural safeguards.
Petitioner’s Arguments
The petitioners argued that the stop-production orders were passed in blatant violation of Rule 85(2), which mandates a pre-decisional hearing before suspension or cancellation of licence, or before directing stoppage of production. The orders were issued on the very day the petitioners were asked to furnish documents, and even prior to the issuance of show cause notices.
They submitted compliance reports (CAPA) and replies, yet no permission to resume operations was granted. They stressed that while they had already surrendered licences for Tapentadol and Carisoprodol, the FDA’s order unlawfully extended to all medicines, crippling their entire manufacturing activity and impacting hundreds of employees.
Reliance was placed on:
- Nawabkhan Abbaskhan v. State of Gujarat (1974) 2 SCC 121 – holding that failure to provide hearing where statute mandates it renders the order void ab initio.
- Santokba-The Pharmacy (Rajasthan High Court, 2019) – holding that licensing authority must provide notice and opportunity before suspending or cancelling licences under the Rules.
- M/s Intermed v. Director of Drugs Control (Madras High Court, 2022) – where stop-manufacture orders issued simultaneously with show cause notices were struck down as contrary to Rule 85(2).
Respondent’s Arguments
The State and CDSCO defended the orders, citing urgent public health concerns. They argued that inspections revealed serious deficiencies and diversion of restricted drugs to local markets. Considering the abuse potential of Tapentadol and Carisoprodol and their harmful impact, immediate action was justified. The respondents contended that subsequent show cause notices and appeals provided the petitioners with adequate opportunity to contest the orders.
Analysis of the Law
The Court examined Rule 85(2) of the 1945 Rules, which empowers the licensing authority to cancel, suspend, or direct stoppage of manufacture, but only “after giving the licensee an opportunity to show cause.” Such an order must also be in writing with recorded reasons.
The Court held that the Rule embodies the principles of natural justice and that pre-decisional hearing is a mandatory safeguard. Passing a stop-production order first and issuing a show cause notice later is contrary to law and renders the action void.
Precedent Analysis
- Nawabkhan Abbaskhan (Supreme Court, 1974): Failure to provide a hearing where mandated by law is unconstitutional and makes the order void ab initio.
- Santokba Case (Rajasthan HC, 2019): Even in cases involving serious violations, authorities cannot dispense with show cause requirements.
- Intermed Case (Madras HC, 2022): Licensing authority cannot combine show cause notice with a stop-production order; doing so violates Rule 85(2).
The Court held these precedents directly applicable, reiterating that compliance with statutory due process cannot be sacrificed even for urgent concerns.
Court’s Reasoning
The Court observed that the petitioners had already surrendered their licences for Tapentadol and Carisoprodol. The impugned orders, however, extended to all medicines, thereby affecting unrelated products and business operations.
It noted: “The endeavour of respondents to salvage the position by issuing a show cause notice two days after the stop-production order is too fragile to merit countenance.” The Court stressed that considerations of public health, however grave, cannot justify bypassing statutory safeguards when fundamental rights and livelihoods are at stake.
The Court concluded that the stop-production orders were “in clear violation of the statutory requirements” and could not be sustained.
Conclusion
The writ petitions were allowed. The High Court quashed the stop-production orders as well as the appellate orders passed by the Minister. However, it clarified that the authorities remain free to proceed under the pending show cause notices, strictly in accordance with law, to determine if suspension or cancellation of licence is warranted.
Implications
This ruling reinforces the importance of due process and natural justice in regulatory actions, even in sensitive matters concerning drug control and public health. Regulatory authorities must adhere strictly to Rule 85(2), ensuring pre-decisional hearing before issuing coercive orders. Pharmaceutical companies are protected from arbitrary suspension of operations, though compliance obligations remain intact. The judgment provides a strong precedent against “rolled-up” or pre-emptive administrative orders.
FAQs
Q1. Can FDA stop a drug manufacturer’s operations without notice under Rule 85(2)?
No. The Bombay High Court held that Rule 85(2) mandates a pre-decisional hearing. Orders passed without giving an opportunity to show cause are void ab initio.
Q2. Does public health exigency override statutory safeguards in drug regulation?
The Court ruled that while public health is important, it cannot justify bypassing statutory requirements of due process. Authorities must act within the framework of law.
Q3. What happens next for the pharmaceutical companies in this case?
Though the stop-production orders were quashed, the competent authority is free to proceed with the pending show cause notices. The final outcome will depend on compliance and subsequent proceedings.