Namdev Genba Parthe Through vs State Of Maharashtra & Ors
2013 Latest Caselaw 110 Bom

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               IN THE HIGH COURT OF JUDICATURE AT BOMBAY
                      CIVIL APPELLATE JURISDICTION




                                                                              
                      WRIT PETITION NO. 8529 OF 2013




                                                      
          Namdev Genba Parthe through
          M/s. Kulswami Medical & General Stores ..            Petitioner
                vs.
          State of Maharashtra & Ors.            ..            Respondents




                                                     
          Mr. G. S. Hegde i/b. Ms. P. M. Bhansali for Petitioner.
          Mr. P. G. Sawant - AGP for State - Respondents.

                                   CORAM :      M. S. SONAK, J.

Date of Reserving the Order:

ig 18.10.2013 Date of Pronouncing the order: 28.10.2013

JUDGMENT :-

1] Rule. With the consent of the learned counsel for the parties,

Rule is made returnable forthwith.

2] By this petition under Articles 226 and 227 of the Constitution

of India petitioner challenges the following orders:

(a) An order dated 31.08.2012 passed by the Assistant

Commissioner (Zone-1) Mumbai, Food and Drugs

Administration - respondent no. 2 declining the licence to the

petitioner for a sale of retail drugs from the premises bearing

photopass no. 0113030 situate at 188, Ambedkar Nagar, T. L.

Vaswani Marg, Cuffe Parade, Mumbai 400005, hereafter

referred to as "the said premises"; and

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(b) An order dated 17.04.2013 passed by the Minister

(Food and Drugs Administration), State of Maharashtra

(respondent no. 1), rejecting appeal against aforesaid order

dated 31.08.2012.

Aforesaid two orders shall for the purposes of this petition be

referred to as impugned orders.

3] In order to appreciate the challenges raised by the petitioner,

at the very outset reference is required to be made to the following

two circumstances:

(A) From out of the said premises, one Mr. Ravindra

Dattatray Gaikwad (Ravindra) a qualified Pharmacist was

operating a medical store under the name and style of

"Dattakrupa Medical & General Stores" in pursuance of

licence issued by respondent no.2 in Form 20, 20C and 21

appended to the Drugs and Cosmetics Rules, 1945 (said

Rules). The authorities upon satisfaction that Ravindra

was involved in the unauthorised large scale sale of

Rexcof Cough Syrup containing a Codeine Phosphate

from the said premises, had cancelled his licence by order

dated 02.01.2012 made effective from 16.02.2012. It was

submitted that a Codeine Phosphate is substance which

has potential to induce addiction; and

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(B) On 13.02.2012, i.e., even prior to the cancellation of

licence taking effect, one Sushma Lahote applied for

licence to commence a medical store from the said

premises. Sushma Lahote placed reliance upon a 'Leave

and Licence Agreement' from Ravindra in respect of said

premises. The application for licence was refused by the

respondent Nos.1 and 2 inter alia on the ground that

Sushma Lahote was nothing but a 'front' for Ravindra.

Sushma Lahote did not carry the matter any further.

4] The petitioner applied for licence under the said Rules to

respondent No.2 on 16.07.2012. In compliance with the principles of

natural justice as well as in pursuance of powers vested by him

under Rules 64 and 65A of the said Rules, respondent No.2 issued

show cause notice dated 14.08.2012 to the petitioner, requiring the

petitioner to show cause as to why his application be not rejected

upon the prima facie grounds referred to in the show cause notice.

5] The petitioner submitted his response on 21.8.2012

contending that he was in no manner related to or concerned with

Ravindra. The said premises were genuinely taken on leave and

licence basis from Ravindra simply to avail the goodwill associated

with the premises and because the said premises, otherwise meet

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with the prescribed specifications.

6] By order dated 31.8.2012, Respondent No.2 declined licence

to the petitioner. This order has been upheld by the appellate

authority (respondent no.1) on 17.4.2013. The rejection is primarily

upon the following grounds:

(a) The petitioner's response to show cause notice is

not satisfactory.

(b) There was no material produced on record by the

petitioner to establish that Ravindra was in fact owner of

said premises and had authority to grant the said premises

on leave and licence basis. In fact there was material on

record to suggest that premises were owned by one

Shakuntala Jagdale.

(c) Ravindra, from whom the petitioner has purported to

take premises on leave and lience basis, was only the

proprietor of 'Dattakrupa Medical & General Stores' and

not the said premises.

(d) The licence issued to Ravindra in respect of

'Dattakrupa Medical & General Stores' to operate from very

same premises had been cancelled on grounds of

unauthorised large scale sale of drugs and breaches of the

provisions of the Drugs and Cosmetics Act 1940 and Rules

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made thereunder.

(e) Taking into consideration the entire case history and

antecedents, it is reasonable to conclude that the petitioner

is only a 'front' for Ravindra and in case licence is issued,

possibility of unauthorised sale of drugs cannot be ruled

out.

7] Mr. G. S. Hegde, learned counsel appearing for the petitioner

made the following submissions in support of this petition:

(A) That the findings recorded and the conclusions

arrived at in the impugned order are perverse and

accordingly warrant interference in exercise of judicial

review;

(B) There was absolutely no material on record to

warrant any finding that the petitioner was a 'front' for

Ravindra or that this was an indirect attempt on the part of

Ravindra to recommence the medical store, despite

cancellation of licence. The findings/conclusions are

therefore in the nature of conjectures and surmises;

(C) The Minister (Food and Drug Administration) in

virtually identical circumstances has allowed Appeal

No.256 of 2012 in the case of M/s. Sana Chemist.

Respondent No.2 has accepted and perhaps implemented

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this decision. In the circumstances, there is no reason for

the respondents to adopt an unequal yardstick in

petitioner's case. This infringes petitioner's fundamental

rights as guaranteed by Article 14 and 19(1)(g) of the

Constitution of India.

8] Mr. P. G. Sawant, learned AGP appearing for the respondents

pointed out that the respondents after afford of adequate

opportunity to the petitioner, have returned concurrent findings of

fact. Such findings are based upon cogent material on record. The

petitioner is merely a 'front' for Ravindra, who is making every

attempt to achieve indirectly what the earlier cancellation of licence

has condemned him to suffer directly. The scope of judicial review in

such matters is extremely limited and in the facts and

circumstances of the present case, the petitioner deserves no relief.

9] In order to evaluate the rival contentions, a brief reference to

the licencing provisions contained in the Drugs and Cosmetics Act,

1940 and Rules made thereunder may not be out of place.

10] The Act was enacted to regulate import, manufacture,

distribution and sale of drugs and cosmetics. The State has

assumed responsibility in this regard in order to ensure supply of

safe and potent drugs to a populace susceptible to ailments and

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largely ignorant of health hazards. The paramount purpose of the

enactment is to set in motion a vigilant medical watch over proper

protection of drugs and medicines and the verification of the expiry

of their life and the spuriousness of the products1.

11] In exercise of powers conferred by Sections 6,12, 33 and

33N of the Drugs and Cosmetics Act (said Act), the Central

Government has framed the Drugs and Cosmetics Rules, 1945

(said Rules). Rule 64, 65A and 67C which provide for licensing,

read as follows:

"Rule 64. Conditions to be satisfied before a license in [Form 20, 20-B, 20-F,20-G, 21 or 21 B] is granted [or renewed].

(1) A license in Form 20, 20-B, 20-F, 20-G, 21 or

21-B to sell, stock, exhibit or offer for sale or distribute drugs shall not be granted or renewed to any person unless the authority empowered to grant the license is

satisfied that the premises in respect of which the license is to be granted or renewed are adequate, equipped with proper storage accommodation for preserving the properties of the drugs to which the license applies and

are in charge of a person competent in the opinion of the licensing authority to supervise and control the sale, distribution and preservation of drugs :

Provided that in the case of a pharmacy a license in Form 20 or 21 shall not be granted or renewed unless the licensing authority is satisfied that the requirements

prescribed for a pharmacy in Schedule N have been complied with:

Provided further that license in Form 20-F shall be granted or renewed only to a pharmacy and in areas where a pharmacy is not operating, such license may be granted or renewed to a chemist and druggist.

Explanation.--- For the purpose of this rule the term 'Pharmacy' shall be held to mean to include every store or 1 Swantaraj Vs. State of Maharashtra, (1975) 3 SCC 322

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shop or other place : (1) where drugs are dispensed, that is, measured or weighed or made up and supplied ; or (2) where prescriptions are compounded; or (3) where drugs

are prepared; or (4) which has upon it or displayed within it, or affixed to or used in connection with it, a sign bearing the word or words "Pharmacy", "Pharmacist",

"Dispensing Chemist" or "Pharmaceutical Chemist"; or (5) which, by sign, symbol or indication within or upon it gives the impression that the operations mentioned at (1), (2) and (3) are carried out in the premises; or (6) which is

advertised in terms referred to in (4) above.

(2) In granting or renewing a license under sub-rule (1) the authority empowered to grant it shall have regard

(i) to the average number of licenses granted or renewed during the period of 3 years

immediately preceding, and

(ii) to the occupation, trade or business ordinarily

carried on by such applicant during the period aforesaid :

Provided that the licensing authority may refuse to grant or renew a license 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 license granted or renewed thereunder, he is not a fit person to whom a license should be granted or renewed under this

rule. Every such order shall be communicated to the licensee as soon as possible:

Provided further that in respect of an application for the grant of a license in Form 20-B or Form 21-B or both, the licensing authority shall satisfy himself that the premises in respect of which a wholesale license is to be granted or renewed are:-

(i) of an area of not less than ten square meters; and

(ii) in the charge of a competent person, who--

                        (a)    is a Registered Pharmacist, or
                        (b)    has passed the matriculation

examination or its equivalent examination

from a recognised Board with four years' experience in dealing with sale of drugs, or

(c) holds a degree of a recognised University with one year's experience in dealing with drugs:

Provided also that,

(i) in respect of an application for the grant of a license in Form 20 or Form 21 or both, the licensing authority shall satisfy itself that the premises are of

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an area of not less than 10 square meters, and

(ii) in respect of an application for the grant of a license

(A) In Form 20 or Form 21 or both, and (B) In Form 20 B or Form 21B or both, the licensing authority shall satisfy itself that the premises

are of an area not less than 15 square meters:

Provided also that the provisions of the preceding proviso shall not apply to the premises for which licenses have been issued by the licensing authority before the

commencement of the Drugs and Cosmetics (1st Amendment) Rules, 1997.

(3) Any person who is aggrieved by the order passed by the licensing authority in sub-rule (1) may, within 30 days from the date of receipt of such order, appeal to the State Government and the State Government may, after

such enquiry into the matter as it considers necessary and after giving the appellant an opportunity for

representing his views in the matter, make such an order in relation thereto as it thinks fit.

Rule 65A. Additional information to be furnished by an applicant for liscence or a licensee to the licensing authority. The applicant for the grant of a license or any person granted a license under this Part shall, on demand, furnish to the licensing authority, before the grant of the

license or during the period the license is in force, as the case may be, documentary evidence in respect of the

ownership of occupation or rental or other basis of the premises, specified in the application for license or in the license granted, constitution of the firm, or any other relevant matter which may be required for the purpose of verifying the correctness of the statements made by the

applicant or the licensee, while applying for or after obtaining the license, as the case may be.

Rule 67 C. Form of licences to sell drugs - A licence to sell, stock, exhibit or offer for sale or distribute

Homeopathic medicines by retail or by wholesale shall be issued in Form 20C or Form 20D as the case may be."

12] Analysis of the Rules would indicate that licence to

commence a medical store shall not be granted unless the licencing

authority is of the opinion that the premises in respect of which the

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licence is applied are in charge of a person competent to supervise

and control the sale, distribution and preservation of drugs. For this

purpose the competence of the applicant who professes to assume

charge over the premises is a valid and relevant consideration.

Further from the phraseology employed in the rule, the licencing

authority is enjoined to ensure that de facto charge of the premises

is not with a person who has already been adjudged as incompetent

to supervise and control the sale, distribution and preservation of

drugs. Such incompetence may arise on account of a host of factors

including, but not limited to previous conviction for offence under the

said Act or said Rules or the previous cancellation or suspension of

any licence granted thereunder. Sub-rule (2) of Rule 64 requires the

licensing authority to have regard to the average number of licences

granted or renewed during the period of three years immediately

preceding and the occupation, trade or business ordinarily carried

on by such applicant during the said period. The range of

circumstances and parameters which the Rules enjoin the licensing

authority to consider and have regard to, are indeed and advisedly

wide. If one considers the mischief which such enactment intended

to suppress, then sufficient though not unfettered discretion ought to

be conceded to the licencing authority in matters of determination of

competence of an applicant seeking licence to set up a medical

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store. The entire scheme contained in Rules 64 to 66A is for the

purposes of ensuring that licenses for sale or distribution or drugs is

granted to a person about whose competence and antecedents

there are no reasonable doubt or issues. In matters such as these,

the legislature as laid special emphasis upon verification of

competence and antecedents, particularly as any laxity in this

regard can have disastrous consequences upon a poor, sick and

ignorant populace.

13]

Rule 65A provides that the application for grant of a licence or

any person granted a licence under this Part shall on demand,

furnish to the licensing authority, before the grant of the licence or

during the period the licence is in force, as the case may be,

documentary evidence in respect of the ownership or occupation

on rental or other basis of the premises, specified in the application

for licence or in the licence granted, constitution of the firm, or any

other relevant matter which may be required for the purpose of

verifying the correctness of the statements made by the applicant or

the licensee which applying for or after obtaining the licence, as the

case may be.

The show cause notice dated 14.08.2012 issued to the

petitioner, apart from being a measure of procedural fairness

adopted by the licensing authority, was in pursuance of the

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provisions of Rule 65A of the said Rules.

14] In the case of Swantraj (supra), the Supreme Court has

indicated the rules of statutory interpretation to be employed in the

context of Drugs and Cosmetics Act, 1940 and the rules made

thereunder. Where either contentions have some claim to

acceptance, what must tilt the balance is the purpose of the statute,

its potential frustration and judicial avoidance of the mischief

whereby the means of licensing meet the ends of ensuring pure and

potent remedies for the people. Quoting Maxwell2, it is observed

that the 'office of the Judge' is to make such construction as will

suppress the mischief and advance the remedy. To carry out

effectually the object of a statute, it must be so construed as to

defeat all attempts to do, or avoid doing, in an indirect or circuitous

manner that which it has prohibited or enjoined: quando aliquid

prohibetur, prohibetur et omne per quod devenitur ad illud.

This manner of construction has two aspects. One is that the

Courts, mindful of the mischief rule, will not be astute to narrow the

language of a statute so as to allow persons within its purview to

escape its net. The other is that the statute may be applied to the

substance rather than the mere form of transactions, thus defeating

any shifts and contrivances which the parties may have devised in

2 Magdalen College Case (1616) 11 Rep 66b

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the hope of thereby falling outside the Act. When the Courts find an

attempt at concealment, they will, in the words of Wilmot, C. J.

'brush away the cobweb varnish, and shew the transactions in their

true light.'

15] In evaluating the challenges raised in this petition, therefore,

regard shall have to be had to the materials on record, the

provisions of the said Act and said Rules, the purpose of enactment,

and finally the rules of statutory interpretation as enunciated by the

Supreme Court in the case of Swantraj (supra). Considering that the

petitioner seeks interference with concurrent findings of facts and

exercise of discretion, principles of judicial review shall also have to

be adverted to.

16] Applying the aforesaid principles, in my judgment, I find no

grounds to interfere with the impugned orders.

17] The findings/conclusions in the impugned orders are

substantially borne from the material on record. There is no doubt

that the applicant has applied for licence in respect of premises

wherein Ravindra earlier operated 'Dattakrupa Medical & General

Stores'. The licence for this establishment was cancelled as

Ravindra was found to have indulged in unauthorised large scale

sale of drugs. Even before the cancellation could be effective,

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Ravindra made an attempt to obtain licence in name of Sushma

Lahote, which attempt was not successful. Sushma Lahote had also

relied upon a leave and licence from Ravindra. The petitioner,

despite opportunity has failed to establish his independent

credentials. The respondents have held that the petitioner has failed

to establish that Ravindra was the owner of the said premises or

that he had any authority to execute a leave and licence agreement

in respect of said premises. They have referred to material on

record which suggests that the said premises are registered in the

name of one Shakuntala A. Jagdale. They have referred to Ravindra

executing the leave and licence agreement in his capacity as

proprietor of 'Dattakrupa Medical & General Stores' , in respect of

which the licence was cancelled by order dated 02.01.2012. In

these circumstances, the findings/conclusions recorded by the

respondents with regard to the competence of the petitioner or the

possibility of large scale unauthorised sale of drugs from the said

premises recurring, cannot be faulted. The findings/conclusions

certainly cannot be categorised as perverse as to warrant any

interference in exercise of powers of judicial review.

18] Mr. Hegde, appearing for the petitioner has produced a

compilation of documents at the stage of hearing assuring me that

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such documents, except perhaps one certificate, forms the part of

records before the licencing and appellate authorities. The

documents far from assist the case of the petitioner. There is a

ration card which indicates the income of the petitioner as being

Rs.14,400/- per annum. Even if some allowance is made for the

circumstance, that this may have been income at the stage of

issuance of ration Card, the petitioner has produced no material

whatsoever to indicate his financial capacity, from which the

licencing authority would have assessed the petitioner's claims to

independent credentials. The licence fees indicated in the leave and

licence agreement are Rs.10,000/- per month for a term of five

years. Curiously, there is no enhancement clause. There is

commitment to pay the Pharmacist Rahul Khare Rs.10,000/- per

month. Investment would be necessary to set up the medical store.

The petitioner despite being put on notice that his independent

credentials were in issue and that there were reasons to believe

that the petitioner was a proxy/front for Ravindra, has failed to

produce any material on record. On the contrary, the material

available on record was adequate to support the

findings/conclusions recorded in impugned orders.

19] Mr. Hegde produced, across the bar, a hand written certificate

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issued by Asshifa Chemists and Druggists. This certifies that the

petitioner was working from January 2004 to October 2010 in the

medical shop and that "he was well trends person and handled my

medical shop honestly". Such certificate hardly inspires any

confidence and in any case does not establish the competence of

the petitioner to independently assume charge of the said premises

and to supervise and control the sale, distribution and preservation

of the drugs.

20] It is well settled that the power of judicial review is neither

unqualified, nor unlimited. The court dealing with the exercise of

power of judicial review does not substitute its judgment for that of

the legislature or executive as to matters within the province of

either and that the court does not supplant 'the feel of expert' by its

own review. In all such cases, judicial examination is confined to

finding of whether the findings of fact have a reasonable basis and

whether the said findings are consistent with the laws of the land3.

21] The powers of judicial review vested in a Court are to be

exercised with great circumspection. The court is handcuffed in this

jurisdiction and cannot raise its hand against what it thinks is a

foolish choice. Wisdom in administrative action is the property of

3 Heinz India Private Limited vs State of Uttar Pradesh - (2012) 5 SCC 443

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the executive and judicial circumspection keeps the court lock

jawed save where the power has been polluted by oblique ends or

is otherwise void on well-established grounds. The constitutional

balance cannot be upset.4

22] In the case of Council of Civil Service Unions v. Minister for

the Civil Service5, Lord Diplock summed up the permissible grounds

of judicial review as being 'illegality, 'irrationality' and 'procedural

impropriety'. 'Illegality' ig would relate to the decision maker

understanding correctly the law that regulates his decision making

power and must give effect to it. 'Irregularity' would mean that the

decision is so outrageous in its defiance of logic or of accepted

moral standard that no sensible person who had applied to his mind

to the question could have arrived at it. "Irrationality' would also

mean 'Wednesbury6 unreasonableness' which in turn means a

decision passed on irrelevant considerations or upon failure to take

into account relevant considerations. 'Procedural impropriety' refers

to failure to observe Rules of natural justice and fair play.

23] Applying the aforesaid principles to the facts and

circumstances of this case, it is clear that there is no illegality,

4 State of Punjab V. Gurdial Singh, (1980) 2 SCC 471 5 1985 AC 374 6 Associated Provincial Picture Houses Ltd. Wednesbury Corpn. (1948) 1 KB 223

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irrationality or procedural impropriety. In the circumstances, the first

two challenges urged by Mr. Hegde, fail.

24] In so far as the third challenge which concerns the order

made by the appellate authority (respondent No.1) in case of M/s.

Sana Chemists is concerned, at the outset it needs to be stated that

the entire range of facts, which prompted the appellate authority to

issue licence, are not before this court. Accordingly, it is not possible

to hazard any guess as to what prompted the appellate authority to

make such an order. Secondly, there are no general observations in

the order made by the appellate authority to the effect that licence

can never be refused to applicant who takes premises on leave and

licence basis from a person who has suffered cancellation of licence

under Drugs and Cosmetics Act and Rules made thereunder. Even

if such a broad proposition were to have been laid down by the

appellate authority, certainly the same would in no manner influence

this court in exercising its writ jurisdiction under Article 226 and 227

of the Constitution of India. This is not a case where the petitioner

had urged any malafides against the respondents. In a given case,

issue of contradictory and inconsistent orders may be indicative of

arbitrariness, non-application of mind or even malafides. However,

this is certainly not one of those cases. In the circumstances, I am

unable to accede to the submission of the learned counsel for the

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petitioner that the impugned orders be interfered with based upon

some contrary view taken by the appellate authority in a case,

which according to learned counsel for the petitioner is identical to

the case of the petitioner.

25] In conclusion, there is no case made out to interfere with the

impugned orders. The petition is, accordingly dismissed. Rule is

discharged. There shall be no order as to costs.

                            ig                       (M. S. SONAK, J.)
                          
          dinesh