Bombay High Court
Cipla Limited vs State Of Maharashtra Thr. Gp And Ors on 1 April, 2025
Author: G.S. Kulkarni
Bench: G. S. Kulkarni
2025:BHC-AS:15010-DB
6. WP 6054-2023-CIPLA.doc
Digitally signed
by PALLAVI
MAHENDRA
PALLAVI WARGAONKAR
MAHENDRA
WARGAONKAR Date:
2025.04.01
21:08:45
+0530
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
WRIT PETITION NO.6054 OF 2023
CIPLA Ltd.
A company incorporated under the provisions
of the Companies Act, 1913 and having its
registered office address at Cipla House, Peninsula
Business Park, Ganpatrao Kadam Marg,
Lower Parel, Mumbai-400 013 and its loan license
manufacturing unit located at Cipla Ltd. C/o.
Kamla Life Sciences Limited, Plot No.G-84/1,
MIDC, Tarapur, Boisar (West),
Dist. Palghar-401 506. ... Petitioner
Versus
1. State of Maharashtra
Through the Government Pleader,
Hon'ble Bombay High Court, Fort,
Mumbai-400 032.
2. Licensing Authority & Joint Commissioner,
Drugs (Konkan Division)
Food & Drug Administration M.S.
Vardan (MIDC), Road No.16, Wagle
Estate, Thane (West)-400 604.
3. Honourable Minister of Food and Drug
Administration, Mantralaya,
Mumbai-400 032. ... Respondents
__________
Mr. Aabad Ponda, Senior Advocate a/w Mr. Sumit Krishna Kumar Tiwari i/b
Mr. Ashish R. Raghuvanshi for Petitioner.
Mr. A.I. Patel, Addl. G.P. a/w Ms. P.J. Gavhane, A.G.P. for Respondent No.1-
State.
__________
CORAM : G. S. KULKARNI &
ADVAIT M. SETHNA, JJ.
DATE : 1 APRIL 2025
Rajesh Chittewan, PS Page 1 of 14
::: Uploaded on - 01/04/2025 ::: Downloaded on - 01/04/2025 22:19:43 :::
6. WP 6054-2023-CIPLA.doc
JUDGMENT :
(Per G.S. Kulkarni, J.)
1. This petition under Article 226 of the Constitution of India
challenges the order dated 17 March 2022 passed by Respondent No. 2-
Licensing Authority & Joint Commissioner, Drugs (Konkan Division),
whereby the petitioner's licence, granted under Form 28-A of The Drugs
Rules, 1945 (for short, "Drugs Rules") and under the provisions of Rule
78-A, is suspended for a period of one month with effect from 21 June
2022 to 20 July 2022. Under such license, the petitioner was permitted to
manufacture "Remdesivir Injection 100mg/20ml (for short "the said
drug"), which was being administered to the patients infected with the
COVID-19 virus. The impugned suspension dated 17 March 2022 was
assailed by the petitioner before the Respondent No.3/Appellate
Authority i.e. the State Government/the Hon'ble Minister for Food and
Drug (for short "the Appellate Authority") who has passed the impugned
order dated 23 March 2023, by which the petitioner's appeal had been
rejected. Consequent thereto, respondent no.2 by an order 13 April 2023
issued as a consequence of the dismissal of the appeal a fresh period of
suspension of the petitioner's licence being the period from 8 May 2023
to 6 June 2023 was communicated to the petitioner. These orders are
assailed in the present proceedings.
2. The case of the petitioner is to be noted :- The petitioner was issued
6. WP 6054-2023-CIPLA.doc
a licence under Rule 28-A of the Drugs Rules on 27 July 2020. Thereafter
on 13 August 2020, the petitioner entered into a loan license agreement
with one M/s Kamla Lifesciences Limited ("Kamla" for short) for the
manufacture of the said drug. Kamla was granted a licence under Form 28
of the Drugs Rules by Respondent No.2/Licensing Authority. A copy of
the license granted to Kamla is placed on record, which indicates that the
license being issued on 22 October 2019, was valid from 1 September
2019 to 31 August 2024. Accordingly, under the loan license agreement as
entered between the petitioner and Kamla, the said drug was
manufactured by Kamla.
3. It so happened that one sample of the said drug purportedly
manufactured by Kamla being Batch No. R310019, D/M Mar 2021, D/E-
Nov 2021 was seized by the said authorities from the market and the same
was sent to a laboratory, RDTIL, Chandigarh, which examined the said
sample and made a report dated 16 July 2021, which reads thus:
"The Sample does not confirm to claim as per the patent
and proprietary in respect to the identification. Remark
As desired sample was tested for the presens of pipfracillin
and tazobactam and found posi for piperalilin and
tazobatam."
It is on such premise the petitioner as also Kamla was issued a show cause
notice dated 5 October 2021, calling upon to show cause as to why their
license should not be cancelled, for violation of the rules under which it
6. WP 6054-2023-CIPLA.doc
was issued. The petitioner responded to the said show cause notice,
however, as the reply was not found to be satisfactory, respondent no. 2 on
17 March 2022 passed the impugned order, suspending the petitioner's
license for the initial period of one month as noted by us hereinabove.
Against such order passed by Respondent No. 2/licensing authority, the
petitioner preferred an appeal before the Appellate Authority/State
Government as per the provisions of Rule 85(3) of the Drugs Rules. The
case of the petitioner as also Kamla before the Appellate Authority is that
the sample, which was seized, was neither manufacture by the petitioner
nor Kamla and it was a counterfeit manufacture by a third party. Kamla
also filed an appeal against the order surrendering its license.
4. On 16 June 2022, an ad-interim stay was granted by the State
Government to the said order dated 17 March 2022. Thereafter, Kamla's
appeal was taken up for hearing, on which the Appellate Authority passed
an order dated 28 June 2022, allowing Kamla's appeal, whereby the order
dated 17 March 2022 surrendering Kamla's license passed against Kamla
was set aside, with a caution being given to Kamla that such incidents
ought not to happen in future.
5. However, insofar as the petitioner was concerned, by the impugned
order dated 23 March 2023 passed by the Appellate Authority, the
petitioner's appeal has been rejected on the ground that the petitioner has
breached the provisions of Rule 78 and more particularly Rules 78(a)(i),
6. WP 6054-2023-CIPLA.doc
78(c), 78(e), 78(f), 78(h) and 78(p) of the Drugs Rules. Accordingly, the
petitioner suffers a suspension of its license for the period commencing
from 8 May 2023 to 6 June 2023, in view of the consequential order
passed by respondent no. 2 dated 23 March 2023. It is on such
conspectus, the petitioner has filed this petition.
6. By an order dated 3 May 2023, a co-ordinate Bench of this Court
had granted ad-interim relief to the petitioner whereby the impugned
order was stayed. Such protection has continued to operate till date.
7. Mr. Ponda, learned senior counsel for the petitioner, in supporting
the challenge as made in the petition, would submit that this is a clear case
where respondent no. 2 has acted without jurisdiction for the reason that
when the petitioner was holding a license under Form 28-A, there was a
question of respondent no. 2-Licensing Authority alleging the breach of
Rule 78 which was per se not applicable, insofar as the loan license
agreement was concerned, to manufacture for sale, being the beneficiary,
under the license under Form 28-A. Mr. Ponda has taken us through the
licenses granted to the petitioner in Form-28A, dated 28 July 2020
(Exhibit 'F') as also Rule 78 of the Drugs Rules, a breach of which has
been invoked against the petitioner, adherence of which being one of the
conditions of the license, who are granted licenses in Form 28, Form 28-B
and Form D and not Form 28-A, as in the case of the petitioner. In other
words, Mr. Ponda's submission is that the conditions of license, which are
6. WP 6054-2023-CIPLA.doc
attributed to the licensees who fall under a different category, than the
petitioner are sought to be applied to the petitioner, when breach of Rule
78 is being alleged against the petitioner. His contention is that once a
license was admittedly granted to the petitioner under Rule 28-A,
necessarily, any breach attributed to the petitioner could only be the
conditions of license as prescribed under Rule 78-A, which is not the case
as alleged in the show cause notice or any other materials on record. It is
accordingly his submission that once respondent no. 2 has applied the
rules which are not applicable, and compliance of which is not expected
and/or mandated by law qua the petitioner, the authorities could not have
proceeded to adjudicate the show cause notice, which itself was per se
without jurisdiction. It is his submission that such basic consideration has
been completely overlooked by respondent no. 2 as also by the Appellate
Authority, in passing the impugned order, dismissing the petitioner's
appeal. He submits that apart from the issue of jurisdiction which goes to
the root of the matter, the Authority has acted arbitrarily inasmuch as
there was no procedure followed in the sample being gathered in the case
of the petitioner, as also in case of Kamla, as it was a counterfeit
manufacture. Insofar as the sample was concerned, neither Kamla nor the
petitioner had manufactured such drug corresponding to the sample, and
all such issues which are considered in the appropriate perspective and /or
inquired or investigated in passing the original order surrendering the
6. WP 6054-2023-CIPLA.doc
petitioner's license.
8. Mr. Ponda would also submit that in so far as Kamla is concerned,
the Appellate Authority has set aside the order of suspension of its license,
who was in fact the regular manufacturer of the drug subject matter of the
counterfeit sample under the license as availed by Kamla under Form 28
and in pursuance of the agreement as entered between the petitioner and
Kamla. It is thus submitted that it would be too far-fetched that the
petitioner is held guilty of any breach of what has been charged against the
petitioner under the show cause notice. It is his submission that on all such
issues, the impugned order deserves to be quashed and set aside.
9. On the other hand, Ms. Gavhane, learned A.G.P. has supported the
impugned orders. She has referred to the reply affidavit filed on behalf of
the respondents to buttress her submissions in contending that in fact, it
was the petitioner who was in breach of all the terms and conditions
attributed to the license and under the Drugs Rules, as clearly held in the
observations which are made by respondent no. 2 as also by the Appellate
Authority. Ms. Gavhane, however, would fairly submit that it cannot be
disputed that the petitioner was granted license under Form 28-A and for
which the relevant rule as applicable would be Rule 78-A. She has also
made submissions on the basis of the report which was received from the
competent authority in respect of the sample, which is the contention on
merits.
6. WP 6054-2023-CIPLA.doc
10. We have heard learned counsel for the parties. We have also perused
the record.
11. At the outset, we may observe that it is an admitted position that
the petitioner was granted license in Form 28-A, which would necessarily
imply that the conditions of license as prescribed under Rule 78-A became
applicable and such conditions are contained in Rule 78-A (1) to (9). We
also find that the license which was granted to Kamla is admittedly in
Form 28 and in respect of which the conditions which should be
incorporated and required to be complied would be conditions as
applicable under Rule 78, which are contained in sub-rules (a) to (r).
Perusal of Rules 78 and 78-A, clearly shows that their compliances are
different, insofar as these categories of licensees are concerned. Rules 78
and 78-A of the Drugs Rules, read thus :-
"78. Conditions of license.
- A license in Form 28, Form 28-B or Form 28-D shall be subject to the special
conditions, if any, set out in Schedule F or Schedule F(I), as the case may be,
which relate to the substance in respect of which the license is granted and to the
following general conditions:-
(a) (i)The licensee shall provide and maintain an adequate staff and adequate
premises and plant for the proper manufacture and storage of the substances in
respect of which the license is issued;
(ii)without prejudice to the generality of the foregoing requirement, every holder
of a license who for any purpose engaged in the culture or manipulation of
pathogenic spore-bearing micro-organisms shall provide to the satisfaction of the
licensing authority separate laboratories and utensils and apparatus required for
the culture or manipulation of such micro-organisms, the laboratories, utensils
and apparatus so provided not being used for the manufacture of any other
substance;
(b) The licensee shall provide and maintain staff, premises and equipment as
specified in rule 76;
(c) (i) The licensee shall maintain records of manufacture as per particulars given in
Schedule U.
6. WP 6054-2023-CIPLA.doc
(ii) The licensee shall either in his own laboratory or in any laboratory approved by
the licensing authority under Part XV(A) to these rules test each batch or lot of
the raw material used by him for the manufacture of his product and also each
batch of the final product and shall maintain records or registers showing the
particulars in respect of such tests as specified in Schedule U. The records or
registers shall be retained in the case of a substance for which a potency date is
fixed for a period of two years from the expiry of such date, and in the case of
other substances for a period of five years from the date of manufacture;
(d) The licensee shall allow an Inspector appointed under the Act, to enter, with or
without prior notice, any premises where the manufacture is carried on and to
inspect the premises, and in the case of substances specified in Schedules C and
C(1), to inspect the plant and the process of manufacture and the means
employed for standardizing and testing the substance;
(e) The licensee shall allow an Inspector, appointed under the Act, to inspect all
registers and records maintained under these rules and to take samples of the
manufactured product and shall supply to such Inspector such information as he
may require for the purpose of ascertaining whether the provisions of the Act and
rules thereunder have been observed;
(f) The licensee shall from time to time report to the licensing authority any changes
in the expert staff responsible for the manufacture or testing of the substance and
any material alterations in the premises or plant used for that purpose which have
been made since the date of the last inspection made on behalf of the licensing
authority before the issue of the license;
(g) The licensee shall on request furnish to the licensing authority or controlling
authority or to such authorities as the licensing authority or the controlling
authority may direct, from every batch of drugs as the licensing authority or the
controlling authority may from time to time specify, a sample of such quantity as
may be considered adequate by such authority for any examination and, if so
required, also furnish full protocols of the tests which have been applied.
(h) If the licensing authority or the controlling authority so directs, the licensee shall
not sell or offer for sale any batch in respect of which a sample is, or protocols are
furnished under the last preceding sub-paragraph until a certificate authorizing
the sale of the batch has been issued to him by or on behalf of the licensing
authority or the controlling authority;
(i) The licensee shall on being informed by the licensing authority or the controlling
authority that any part of any batch of the substance has been found by the
licensing authority or the controlling authority not to conform with the standards
of strength, quality or purity specified in these rules and on being directed so to
do, withdraw the remainder of that batch from sale and so far as may in the
particular circumstances of the case be practicable recall all issues already made
from that batch;
(j) No drug manufactured under the license shall be sold unless the precautions
necessary for preserving its properties have been observed throughout the period
after manufacture;
(k) The licensee shall comply with the provisions of the Act and of these rules and
with such further requirements, if any, as may be specified in any rules
subsequently made under Chapter IV of the Act, provided that where such
further requirements are specified in the rules, these would come into force four
months after publication in the Official Gazette;
(l) The licensee shall maintain an Inspection Book in Form 35 to enable an
Inspector to record his impressions and defects noticed;
(m) The licensee shall maintain reference samples from each batch of the drugs
manufactured by him in a quantity which is at least twice the quantity of the drug
6. WP 6054-2023-CIPLA.doc
required to conduct all the tests performed on the batch. In case of drugs bearing
an expiry date on the label the reference samples shall be maintained for a period
of three months beyond the date of expiry of potency. In case of drugs where no
date of expiry of potency is specified on the label, the reference samples shall be
maintained for a period of three years from the date of manufacture;
(n) The licensee, who has been granted a license in Form 28-B shall-
(i) forward to the licensing authority of the concerned States of manufacture and
supply of drug a statement of the sales effected to the manufacturers, wholesalers,
retailers, hospitals, dispensaries, Nursing Homes and Registered Medical
Practitioners every three months;
(ii) maintain accounts of all transactions giving details as indicated below in a register
bound and serially page numbered, and such records shall be retained for a period
of five years or one year after the date of expiry of potency, whichever is later.
A. Account of the drugs specified in Schedule X used for the
manufacture :-
1. Date of issue.
2. Name of the drug.
3. Opening balance of stock on the production day.
4. Quantity received, if any, and source from where received.
5. Quantity used in manufacture
6. Balance quantity on hand at the end of the production day.
7. Signature of the person in charge
B. Account of production:-
1. Date of manufacture.
2. Name of the drug.
3. Batch Number.
4. Quantity of raw material used in manufacture.
5. Anticipated yield.
6. Actual yield.
7. Wastage.
8. Quantity of the manufactured goods transferred to stock.
C. Accounts of the manufactured drugs:-
1. Date of manufacture.
2. Name of the drug.
3. Batch Number.
4. Opening Balance.
5. Quantity manufactured.
6. Quantity sold.
7. Name of the purchaser and his address.
8. Balance quantity at the end of the day.
(o) The licensee shall store drugs specified in Schedule X in bulk form and when any
such drug is required for manufacture it shall be kept in a separate place under
direct custody of a responsible person;
6. WP 6054-2023-CIPLA.doc
(p) The licensee shall comply with the requirements of "Good Laboratory Practices"
as laid down in Schedule L-I and "Good Manufacturing Practices" as laid down
in Schedule M"
(q) No advertisement of the drugs specified in Schedule H, Schedule H1 and
Schedule X shall be made except with the previous sanction of the Central
Government.
(r) the applicant shall submit the result of bio-equivalence study referred to in
Schedule Y, along with the application for grant of a licence of oral dosage form
of drugs specified under category II and category IV of the bio-pharmaceutical
classification system.
78-A. Conditions of license in Form 28A or Form 28DA.
(1) The license in Form 28A or Form 28DA shall be deemed to be canceled or
suspended, if the license owned by the licensee in Form 28 or Form 28DA
whose manufacturing facilities have been availed of by the licensee is canceled
or suspended, as the case may be, under these rules.
(2) The licensee shall comply with the provisions of the Act, and of these rules and
with such further requirements if any, as may be specified in any rules
subsequently made under Chapter IV of the Act, provided that where such
further requirements are specified in the rules, those would come into force four
months after publication in the Official Gazette.
(3) The licensee shall test each batch or lot of the raw material used by him for the
manufacture of his products and also each batch of the final product and shall
maintain records or registers showing the particulars in respect of such tests as
specified in Schedule U. Records or registers shall be retained, in the case of a
substance for which a potency date is fixed, for a period of two years from the
expiry of such date and in the case of other substances, for a period of five years
from the date of manufacture. The licensee shall allow an Inspector to inspect
all registers and records maintained under these rules and shall supply to the
Inspector such information as he may require for the purpose of ascertaining
whether the provisions of the Act and these rules have been observed.
(4) The licensee shall either (i) provide and maintain to the satisfaction of the
licensing authority adequate staff and adequate laboratory facilities for carrying
out tests of the strength, quality and purity of the substances manufactured by
him, or (ii) make arrangements with some institution approved by the licensing
authority for such tests to be regularly carried out on his behalf by the
institution.
(5) The licensee shall furnish to the licensing authority, if required to do so, data on
the stability of drugs which are likely to deteriorate for fixing the date of expiry
which would be printed on the labels of such drugs on the basis of the date so
furnished.
(6) The licensee shall maintain reference samples from each batch of the drugs
manufactured by him in a quantity which is at least twice the quantity of the
drug required to conduct all the tests performed on the batch. In case of drugs
bearing an expiry date on the labels, the reference samples shall be maintained
for a period of three months beyond the date of expiry of potency. In case of
drugs where no date of expiry of potency is specified on the label, the reference
samples shall be maintained for a period of three years from the date of
manufacture.
(7) The licensee shall maintain an Inspection Book in Form 35 to enable an
Inspector to record his impressions and the defects noticed.
(8) No advertisement of the drugs specified in Schedule H, Schedule H1 and
6. WP 6054-2023-CIPLA.doc
Schedule X shall be made except with the previous sanction of the Central
Government.
(9) the applicant shall submit the result of bio-equivalence study referred to in
Schedule Y, along with the application for grant of a licence of oral dosage form
of drugs specified under category II and category IV of the bio-pharmaceutical
classification system."
12. It is on such premise, we are required to consider as to what was the
nature of the show cause notice as issued to the petitioner. The show
cause notice clearly reveals in paragraph 1 that it is in respect of the said
sample which was manufactured by Kamla under the agreement as entered
between the petitioner and Kamla and which Kamla was authorised to
manufacture under its license granted to it by respondent no. 2 in Form
28. The show cause notice clearly alleges breach of Rules 78(c)(i), 78(e)
and 78(p) read with schedule 'M'. Schedule 'M' clearly refers to the
applicability of Rules 71, 74, 76 and 78 and not Rule 78-A in regard to
which the petitioner is concerned and which would be attributed to the
petitioner.
13. Thus, on such premise, when the allegations against the petitioner
are in regard to breach of Rule 78, certainly there is substance in the
contention of Mr. Ponda that the provision itself was not applicable insofar
as the petitioner is concerned, when admittedly the petitioner was holding
the license in Form 28-A and what was attributed to the petitioner was the
conditions of license under Rule 78-A. Thus, insofar as the petitioner is
concerned, respondents proceeded without jurisdiction by applying the
6. WP 6054-2023-CIPLA.doc
provisions which are per se not applicable to the license as granted to the
petitioner dated 28 July 2020 in Form 28-A. The impugned order dated
17 March 2022 would be required to be interfered on this count alone.
14. The jurisdictional defect however appears to have been not noticed
by the Appellate Authority in passing the impugned order dated 23 March
2023, having proceeded on the footing that a breach of Rule 78-A would
be relevant insofar as the petitioner's license granted under Form 28-A is
concerned. We find that both the Authorities have not applied their mind
to the contention that it is only in case of breach of conditions in Rule 78-
A, any action could be taken against the petitioner. In the show cause
notice in question any breach of Rule 78-A was not invoked and for such
reason, the appellate order would be also required to be held to be an order
replete with a jurisdictional defect and/or rather it confirms the illegalities
which were inherent in the order passed by the Licensing Authority dated
17 March 2022.
15. This apart, we find that admittedly the manufacturer of the seized
drug sample was Kamla. Kamla has succeeded in its appeal and if this be
so, we do not find any rationale in the Appellate Authority taking a
different view insofar as the petitioner was concerned and more
particularly on the premise that any breach would be required to be
attributed to the petitioner of the licensing conditions, as contained in the
agreement dated 13 August 2020 entered between the petitioner and
6. WP 6054-2023-CIPLA.doc
Kamla. Once the categories of license are defined which are
compartmentalized, and the obligations of the respective licenses are
different, there could not have been any vicarious liability on the
petitioner even under the agreement as entered between the petitioner
and Kamla. Thus, even on such count, we do not find that the respondent
Authorities were correct in their approach in passing the impugned orders.
16. In the light of above discussion, we are of the clear opinion that the
impugned orders cannot be sustained and they do not satisfy the test of
law as discussed by us. The petition needs to succeed. It is accordingly
allowed in the following terms:-
ORDER
i. The impugned suspension order dated 17 March
2022, the appellate order dated 23 March 2023
and the consequential order dated 13 April 2023
passed by respondent no. 3 are quashed and set
aside.
ii. Rule is made absolute in the aforesaid terms.
iii. No costs.
[ADVAIT M. SETHNA, J.] [G. S. KULKARNI, J.]
