Delhi High Court
Mead Johnson Nutrition ... vs Bureau Of Indian Standards (Bis) on 2 July, 2012
Author: Manmohan Singh
* HIGH COURT OF DELHI: NEW DELHI
% Judgment pronounced on: 02.07.2012
+ WP(C) No.3752/2012 & C.M. No.7869/2012
MEAD JOHNSON NUTRITION (THAILAND) LTD ..... Petitioner
Through Mr. Sandeep Sethi, Sr. Adv. with
Ms. Krishna Sarma, Ms. Minakshi
Sarma, Ms. Vartika Sahay,
Mr. Navneet Kumar & Mr. Lovejeet
Singh, Advs.
versus
BUREAU OF INDIAN STANDARDS (BIS) ..... Respondent
Through Mr. Jos Chiramel, Adv. with
Mr. Ramesh Kumar and Mr. Daniel
James, Advs.
AND
+ WP(C) No.3751/2012 & C.M. No.7867/2012
MEAD JOHNSON NUTRITION (THAILAND) LTD ..... Petitioner
Through Mr. Sandeep Sethi, Sr. Adv. with
Ms. Krishna Sarma, Ms. Minakshi
Sarma, Ms. Vartika Sahay,
Mr. Navneet Kumar & Mr. Lovejeet
Singh, Advs.
versus
BUREAU OF INDIAN STANDARDS (BIS) ..... Respondent
Through Mr. Jos Chiramel, Adv. with
Mr. Ramesh Kumar and Mr. Daniel
James, Advs.
WP(C) Nos.3752/2012 & 3751/2012 Page No.1 of 26
CORAM:
HON'BLE MR. JUSTICE MANMOHAN SINGH
MANMOHAN SINGH, J.
1. The common order is being passed in the above-mentioned two
writ-petitions, as the issues involved in both the matters are the same.
However, the learned counsels for the parties have made their submissions
in WP(C) No.3752/2012.
2. The respondent has filed an affidavit in Court. Both the petitions
have been filed by the petitioner through its authorized Indian
Representative in Bombay, for quashing of notice dated 16th May, 2012 and
e-mail dated 14th May, 2012.
Petitioner's Case
3. The case of the petitioner in both the petitions is that the
petitioner-company is a manufacturer of more than 70 infant food products.
The petitioner has its presence in more than 50 countries. The Ministry of
Health and Family Welfare, Department of Health vide Notification GSR
No.257(E) dated 3rd May, 1991 notified standard for Milk-cereal base
weaning foods under the Prevention of Food Adulteration Act, 1954.
4. In 2006, a checklist for documents to be submitted in the list along
with the application for grant of licence under the respondent‟s certification
scheme for foreign manufacturer was available on the respondent‟s website.
5. Therefore, on April 02, 2007, based on the above checklist, an
application was submitted by the petitioner before the respondent for grant
of licence under respondent‟s certification scheme IS 14433. Along with
the application, (i) a covering letter was filed indicating the process of
WP(C) Nos.3752/2012 & 3751/2012 Page No.2 of 26
manufacturing is dry blending operation; (ii) extant documents were
submitted in respect of Manufacturing Process Flow Chart, Quality Control
Plan, RM, PM, Blending and FG (Enclosure # 4); and, (iii) details of
Precertification of raw materials (Enclosure # 6).
6. It is submitted that CMD-1 took six months time from April 09 to
October 18, 2007 for scrutinizing the documents. Further, the petitioner
was asked to furnish additional information with respect to the
organization, manufacturing and testing facilities. The petitioner complied
with all such requests including information about providing of documents
of KERRY Ingredient‟s Recipe Detailed Report in respect of Base Powder
and documentary evidence for quantitative addition to Choline and other
formalities as asked by the respondent from time to time. On
April 04, 2008, the respondent sent a letter to the petitioner, informing the
grant of respondent/BIS Certification Marks Licence for Infant Milk
Substitute as per IS No.14433:2007. The number assigned to this licence is
CM/L-4011329 and was valid up to April 03, 2009. As per the licence, the
petitioner and its authorized India representative were granted the licence to
use the Standard Mark for its Infant Milk Substitute which was
manufactured in accordance with/conforms to the related Indian
Standard(s) IS: 14433:2007 Infant Milk Substitute - Type II - Infant
Formula - Specification as from time to time amended or revised.
7. It is submitted that on April 06, 2009, the petitioner notified the
respondent about the change in name. On May 04, 2009, the respondent
wrote to the petitioner intimating them of their renewed Certification Marks
Licence from April 04, 2009 to April 03, 2011. From 31st August, 2010 to
WP(C) Nos.3752/2012 & 3751/2012 Page No.3 of 26
2nd September, 2010, Mr. Biman Chattopadhyay, Scientist-F and Head
(Laboratory), Respondent/BIS conducted a first Surveillance Inspection at
the petitioner‟s factory situated at Amata Nakorn Industrial Estate, Phase 4,
700/428, Moo 7, Don Huaroh, Muang Choburi, Thailand 20000. On April
07, 2011, the respondent intimated the petitioner upon renewal of the
instant Certification Marks Licence CM/L - 4011429 as per IS 14433:2007
had been renewed from April 04, 2011 to April 03, 2013.
8. It is also submitted that from April 03 to April 05, 2012, Ms. Sashi
Rekha, Scientist E, CMD-II, respondent/BIS did the second surveillance
inspection at the petitioner‟s factory of the above said premises in Thailand.
During the inspection, the I.O. raised the issues verbally and requested
certain documents/undertaking, inter-alia, that the respondent was unaware
of the fact that base powder used in the manufacture of infant formula was
spray dried at KERRY Speciality Ingredients, Malaysia. On April 05,
2012, the I.O. generated a Discrepancy/Variation Report during the
inspection, stating that the test methods being used for testing phosphorous,
iodine, copper, manganese, zinc, sodium, potassium, chloride, selenium,
vitamin E and staphylococcus aureus are different from those specified in
IS 14433:2007. The petitioner vide letter dated April 05, 2012 intimated to
the respondent that the HACCP flow chart provided to the I.O. during
preliminary inspection on January 23-25, 2008 was erroneously submitted
to their office (as manufacturing process flow chart) and enclosed a correct
Flow diagram reflecting the actual manufacturing process in detail as
requested by the I.O. Further, it was reiterated that the base powder is
manufactured by KERRY ingredients and that the base powder is accepted
only after the verification of Certificate of Analysis supplied by Kerry
WP(C) Nos.3752/2012 & 3751/2012 Page No.4 of 26
Ingredients. On April 12, 2012, the petitioner wrote to the respondent
requesting for using the services of respondent‟s recognized Microchem
Lab for testing of quality parameters.
9. It is submitted that the respondent served a notice dated 14th May,
2012 via e-mail directing the petitioner to stop marking immediately. The
reason provided was that the actual manufacturing process in the factory as
seen during second surveillance inspection between April 3-5, 2012 was
different from the process verified during the preliminary inspection during
January 23-25, 2008. Further, not only was no prior evaluation/approval
taken for the revised manufacturing process from the respondent, but also
no intimation was given either. This tantamount to violation of
Clause 5(7)(b)(iv) of Regulations. It is also alleged that during second
surveillance inspection between April 3-5, 2012, milk powder and base
powder are separately indicated in the process flow but there is no mention
of milk powder in the list of raw materials. It was also mentioned that the
Test Certificate of Milk Powder was not provided during the second
surveillance inspection.
10. After receipt of e-mail dated 14th May, 2012 and the letter dated 16th
May, 2012 issued by the respondent regarding stoppage of marking, the
petitioner vide letter dated 18th May, 2012 sent the information to the
respondent and in para-2 of the said letter, it was mentioned by the
petitioner that they have not made any changes in the manufacturing
process of their products verified during the preliminary inspection carried
out in 2008. They also sent the copy of the Manufacturing Process Flow
Diagram provided at the time of recording of their application and during
WP(C) Nos.3752/2012 & 3751/2012 Page No.5 of 26
preliminary inspection. It was also mentioned in the letter that during the
last surveillance inspection from 3rd April, 2012 to 5th April, 2012, certain
documents were provided to the officer and also clarified that the
manufacturing process was the same as that in 2008. Along with the letter,
the petitioner sent manufacturing process flow and other manufacturing
details of raw material and process etc. As per the petitioner, no reply was
received from the respondent.
11. The petitioner again on 8th June, 2012 sent another letter, clarifying
their stand. It was also informed to the respondent by the said letter that by
means of the direction to stop marking and dispatching the goods, the
petitioner has suffered financial loss and damages of Rs.34 lac as on 9th
June, 2012 and shall suffer further loss of Rs.1.15 crore as on 7th August,
2012 due to obsolescence of raw materials, and there is no violation of
Section 5(7)(b)(iv) of the Bureau of Indian Standards (Certification)
Regulations, 1988 (hereinafter referred to as the „Regulations‟).
12. The respondent has filed the counter-affidavit of Mr. Sanjay Gupta
who was employed as Scientist-E with the respondent. The Annexure-14 is
also filed by the respondent after obtaining the liberty of the Court.
13. Respondent's Case
(a) The respondent in its counter-affidavit has submitted that it was
clearly stated in the „check list‟ that "Manufacturing status is clearly
stated." The respondent thereafter decided to grant certification mark
licence to the petitioner, a communicated to the petitioner vide letter
dated 4th April, 2008 wherein it was clearly stated in para 10, as under:
WP(C) Nos.3752/2012 & 3751/2012 Page No.6 of 26
"This licence is being granted for your factory situated at
Amata Nakoran Industrial Estate, Phase 4, 700/428, Moo 7,
Don Huroh, Muang Chonbury - Thailand 20000 and the rights
and privileges under the licence shall not be exercised by any
other factory/company/factory location etc. This licence is
not transferable. In the event of shifting of the manufacturing
and testing equipment from the licenced premises to some
other place, use of the Standard Mark shall be stopped till
the new premises are inspected and found to be satisfactory
by us in respect of manufacturing and testing facilities
available there and the address of new premises is endorsed
in the licence."
(b) The respondent thereafter carried out first surveillance inspection
of the petitioner‟s factory premises from 31st August, 2010 to 2nd
September, 2010 through Shri Biman Chattopadhyay, Scientist „F‟ posted
at its Kolkata office, wherein it was stated that the „production control‟ was
„satisfactory‟.
(c) Thereafter, second surveillance inspection of the petitioner‟s factory
premises at Amata Nakorn Industrial Estate, Phase 4, 700/428, Moo 7, Don
Huaroh, Muang, Chonbury, Thailand 20000 was carried out by Ms.
Shashirekha, Scientist „E‟ (Director) of the respondent posted at its
Central Marks Department II, New Delhi from 3rd April, 2012 to 5th April,
2012. During the course of inspection it was seen that certain raw
materials like flavor, DHA/ARA indicated in the HACCP flow chart were
not permissible as per the relevant Indian standard. The petitioner
submitted a declaration dated 5th April, 2012 (pg. 75 of the paper book) to
the effect that these were not added to producrts manufactured under the
WP(C) Nos.3752/2012 & 3751/2012 Page No.7 of 26
BIS licnece in question, but there was no independent method of verifying
the same.
(d) Serious discrepancy observed by the inspection officer during the
course of surveillance inspection was that the base power and spray dried
milk power were not being manufactured within the factory premises of
the petitioner. These were procured from third party, and only the blending
was carried out in the factory premises. Hence no manufacturing process
was in fact being carried out by the petitioner, which was sine qua non for
grant, renewal and continuation of the BIS certification marks licence in
question. The flow diagram submitted by the petitioner during the
preliminary inspection did not tally with the actual activities being carried
out in the factory premises of the petitioner.
14. It is alleged by the respondent that the petitioner submitted a letter
dated 5th April, 2012 admitting that the flow diagram submitted during the
preliminary inspection was not correct, and the only explanation
forthcoming was that ".... The said flow diagram was erroneously
submitted....", and requested the respondent to ignore the same. The
petitioner submitted a fresh process flow diagram to the inspection officer
of the respondent. The petitioner further stated in the letter that -
"....base powder is manufactured by Kerry Ingredients
according to the recipe provided us ...."
15. It was, thus, apparent, as alleged by the respondent, that the
petitioner had outsourced the manufacturing process in respect of the
product for which the licence was granted, amounting to blatant
breach/violation of the terms and conditions of the licence.
WP(C) Nos.3752/2012 & 3751/2012 Page No.8 of 26
16. It is stated that the respondent on receipt of the surveillance
inspection report from its inspecting officer, processed the same, and took
the decision to stop mark the licence w.e.f. 11th May, 2012, as
communicated to the petitioner vide e-mail dated 14th May, 2012 and letter
dated 16th May, 2012 and submitted reply dated 18th May, 2012 admitting
that :
".....The base powder is manufactured at Kerry Ingredients
according to the recipe provided by Mead Johnson
Nutrition......"
17. In the counter-affidavit, it is alleged that the petitioner‟s
representatives met the officials of the respondent at their headquarters in
New Delhi once again on 29th May, 2012, when they were clearly explained
the specifications as per the relevant Indian Standard, and conditions which
are sine qua non for grant of BIS certification mark licence, which stood
clearly breached by the petitioner by outsourcing of the manufacturing
process of third parties outside the licensed factory premises. The
petitioner in the circumstances submitted an additional reply dated 8th June,
2012 once again alleging that no change whatsoever was made in the
manufacturing process from the time of recording of the application for
licence in the year 2007, which was patently false. The petitioner
however admitted that there was variation between the raw materials
verified during the inspection in April 2012 as compared to those
furnished by the petitioner during the inspection in January 2008, which
was sought to be explained by alleging that -
"It is respectfully submitted that alleged variation is solely due
to the varying levels of details in different formats sought by
the two IOs during the respective inspections."
WP(C) Nos.3752/2012 & 3751/2012 Page No.9 of 26
18. In the affidavit, it is mentioned that the petitioner alleged in the
additional reply that in the covering letter dated 17th July, 2007 to the
application for licence it was clearly represented that the base power was
manufactured by Kerry Speciality Ingredients, Malysia, which was
patently false. The petitioner also alleged that Kerry‟s Certificate of
Analysis of the base power was provided during the inspection in 2008 and
directly to the respondent‟s office on 20th March, 2008 which was also
wholly false and baseless. The respondent considered the two replies
received from the petitioner, and was in the process of taking further steps
for cancellation of the licence when the petitioner has filed the present
writ petition with a view to somehow or the other obtain stay of the stop
marking of the licence, and to continue using the BIS certification mark
on their product imported to India, even though they do not manufacture
the product, and nor have in effect any control over its manufacture, or for
that matter, to ensure that the product is manufactured strictly as per the
relevant Indian Standard specifications.
19. Mr. Sandeep Sethi, learned Senior counsel appearing on behalf of the
petitioner has argued that the notice issued by the respondent regarding the
stoppage of marking demonstrates arbitrariness and has been issued in
infringement of the basic legal rights of the petitioner. He submits that
despite of reply given by the petitioner vide letters dated 18th May, 2012
and 8th June, 2012 wherein it was specifically stated that the petitioner has
not made any change in the manufacturing process of its products verified
during the preliminary inspection carried out in 2008 and also the petitioner
WP(C) Nos.3752/2012 & 3751/2012 Page No.10 of 26
sent all the requisite documents in order to prove its stand in the said two
letters, no response was given by the respondent.
20. The learned Senior counsel further submits that even before sending
the letters dated 14/16th May, 2012 directing the petitioner to stop the
marking of the products, the petitioner wrote two letters dated 5th April,
2012 and 12th April, 2012 explaining the discrepancies/ variation report
during the inspection of Ms. Sashi Rekha, Scientist E, from 3rd April, 2012
to 5th April, 2012.
21. The respondent herein by breaching the fundamental doctrine of
natural justice, stopped the petitioner‟s business, as no opportunity of
hearing/representation was accorded to the petitioner by the respondent
before directing the petitioner to stop marking and dispatching their
products. He submits that there is no specific exclusion of opportunity of
hearing in the said provision. Thus, the fundamental rights of the petitioner
have been infringed by the respondent by stoppage of marking.
22. He also argued that unless the specific provision in the Act is
provided for non-grant of opportunity of hearing, the benefit of doctrine of
natural justice would apply in favour of the petitioner. Mr. Sethi has
referred the judgment of the Supreme Court passed in the case of Sahara
India (Firm), Lucknow vs. Commissioner of Income Tax, Central-I
and another, reported in (2008) 14 Supreme Court Cases 151, para-19 of
which reads as under:-
"19. Thus, it is trite that unless a statutory provision either
specifically or by necessary implication excludes the
application of principles of natural justice, because in that
event the Court would not ignore the legislative mandate, the
WP(C) Nos.3752/2012 & 3751/2012 Page No.11 of 26
requirement of giving reasonable opportunity of being heard
before an order is made, is generally read into the provisions
of a statute, particularly when the order has adverse civil
consequences for the party affected. The principle will hold
good irrespective of whether the power conferred on a
statutory body or tribunal is administrative or quasi-judicial."
23. Mr. Jos Chiramal, learned counsel appearing on behalf of the
respondent submits that the petitioner in its letter dated 2nd April, 2007
enclosing the application for licence had alleged that they were
manufacturers of the product, but now it has been revealed during the
second surveillance inspection conducted from 3rd April, 2012 to 5th April,
2012 conducted by the respondent at the factory premises of the petitioner
in Thailand that the petitioner has outsourced the entire manufacturing
process to third parties, and are only dry blending some of the raw materials
into the said manufactured product, which amounts to breach of the terms
and conditions of the licence issued in favour of the petitioner and in case,
any stay of the stop marking of the product is granted by this court, the
same is likely to affect the health and well-being of infants in India who
would be fed with the product, for which BIS Certification Mark licence is
mandatory. Mr. Chiramal submits that there is no ground in the writ
petition that the respondent‟s actions are motivated by any lack of bona fide
or for extraneous considerations.
24. It is not disputed by either of the parties that the scheme under which
the petitioner has obtained the licence is in respect of „foreign
manufacturers‟ of products to be imported to India, and its is mandatory
under the scheme, as also as per the specific provisions of BIS
WP(C) Nos.3752/2012 & 3751/2012 Page No.12 of 26
(Certification) Regulations, 1988 that the product must be manufactured
within the licensed premises.
25. Relevant provision of Section-15 of the Bureau of Indian Standards
Act, 1986 reads as under:
" the Bureau may, by order, grant, renew, suspend or cancel
a licence in such manner as may be determined by the
Regulations. Further, the grant or renewal of the licence
under the said Section, shall be subject to such conditions and
on payment of such fees as may be determined by the
regulations. As per Section 38 of the Act, the Executive
Committee of the Bureau is empowered, with the previous
approval of the Central Government, by notification in the
Official Gazette, to make regulations consistent with the Act
and the Rules, generally to carry out the purpose of the Act,
and particularly, inter alia, the manner of grant, renewal,
suspension or cancellation of licence under sub-section (1) of
Section 15, and the conditions subject to which a licence may
be granted or renewed and the fees payable therefor under
sub-section (2) of Section 15. It is provide in Rule 15 of the
BIS Rules, 1987 that the manner of grant, renewal, suspension
and cancellation of licence shall be as determined by the
Regulations."
26. The relevant provision of Section 5(7)(b)(iv) of the Regulations for
the purpose of deciding the present dispute is reproduced as under:-
"Section 5(7)(b)(iv)
(b) If, at any time, the Bureau has sufficient evidence that the
product carrying the Standard Mark may not be conforming
to the Indian Standard, the licensee shall be directed to Stop
Marking of such product. Such evidence is not limited to, but
may include one or more of the following situations :
(i) non conformance of products established after factory or
independent testing
WP(C) Nos.3752/2012 & 3751/2012 Page No.13 of 26
(ii) non-implementation of the provisions (s) of the Scheme
of Testing and Inspection
(iii) non-availability of testing personnel and no alternate
arrangements made
(iv) significant modification (s) in the manufacturing
process, plant, machinery etc without prior evaluation and
approval of the Bureau
(v) relocation of plant and machinery
(vi) prolonged closure of factory
(vii) marking non-conforming products
(viii) marking on products other than those included in the
licence.
The resumption of marking shall be permitted by the
Bureau after satisfying itself that the licensee has taken
necessary actions and sufficient evidence is available about
the conformity of the product to the relevant standard."
27. On bare perusal of the said provision as referred above, it is clear that
there is no requirement of notice and giving a hearing to the licensee before
directing the licensee to stop marking the product. This is due to the reason
that the moment the Bureau has sufficient evidence of breach, the licencee
shall be directed to stop the use of the Standard mark upon the products
which are not confirming the requirements mentioned in the provision
pending the satisfaction of the bureau for resumption of the marking or
otherwise.
28. Upon reading the regulation 5 in its entirety, it is clear that the said
regulation 5 prescribes different kinds of eventualities under which
different actions are required to be taken by Bureau and likewise the
requirement of hearing or prior notice wherever warranted has been
prescribed making the regulation code in itself.
WP(C) Nos.3752/2012 & 3751/2012 Page No.14 of 26
29. In cases relating to cancellation of licence under sub regulation 5 of
Regulation 5 which relates to taking away or forfeiture of the license which
is the right or privilege granted, the requirement of prior notice as well as
the hearing has been provided. The sub regulation (8) of regulation 5 has
further provided that the grounds of arriving at such decision of
cancellation shall be intimated to the licensee. Similarly, before rejecting
the application for license, similar right of hearing as well as reasoned
decision has been provided under sub regulation 4 of regulation 4 read with
sub regulation 8 of regulation 5.
Furthermore, there are separate kinds of cases where the licensee
does not pay renewal fees or inspection or test charges, in those type of
cases, upon 14 days prior notice giving one opportunity to cure the defect,
the direction to stop marking can be issued without any requirement of any
further hearing in the matter and leaving the resumption of marking open
upon the payment of the renewal fees.
There is however a third kind of eventuality where the bureau has
sufficient evidence that the product carrying the standard mark does not
confirm either of the requirements prescribed under sub regulation 7 (b)
and those situations are the underlying basis on which the license was
earlier granted and goes into the root of the matter, thus in such cases, an
emergent action is required with a direction to stop marking pending the
further decision on resumption on further satisfaction. Therefore, the said
eventuality is distinctly prescribed under sub regulation 7 (b) of regulation
5 where under no right of hearing or prior notice is prescribed as there is
already sufficient evidence of the violation of basic terms of the license and
WP(C) Nos.3752/2012 & 3751/2012 Page No.15 of 26
the post decisional hearing mechanism is prescribed in those cases so that
upon satisfaction of the conditions, the marking can be resumed.
30. It is further noteworthy that the wordings used in the regulation 5(7)
(b) is "directed to stop marking" as against the sub regulation 5 of
regulation (5) are the cases relating to cancellation of the license. In cases
falling under regulation 5 (7), upon prima facie satisfaction, only the
marking is stopped pending the further satisfaction of the bureau and the
license right is not taken away and on the other hand, in the cases relating
to cancellation, the right or privilege of the license itself is taken away
which is a decision on merits. Thus, the cases relating to sub regulation 5
and sub regulation 7 cannot be equated so far as the hearing requirement is
concerned. Similarly, where the bureau has evidence that such products are
being sold under the standard mark which are not in conformity with the
terms of the license, the bureau is empowered to take such immediate or
emergent action in interest of the health and the safety of the people as
warranted to stop the marking pending further satisfaction of resumption on
the post decisional hearing basis.
31. Thus, upon analyzing the scheme of the regulations, it is clear that
the eventuality prescribed under sub regulation 7 (b) is distinct from the
other kinds of the eventualities like cancellation, suspension or non
payment of the renewal fees. Further, it is kind of action which bureau can
take when it has sufficient evidence of non conformity of the terms of the
license on emergent basis in the interest of health and safety of the people
without taking away the right of the licensee of the license and accord the
post decisional hearing in the matter for further satisfaction. I think that
WP(C) Nos.3752/2012 & 3751/2012 Page No.16 of 26
such kind of the mechanism is sufficient compliance of the natural justice
requirement in such kind of cases.
32. The principles of natural justice have twin ingredients. Firstly, the
person likely to be adversely effected by the action of the authorities should
be given notice to show cause or granted reasonable opportunity of being
heard in consonance with the maxim audi alteram partem. Secondly, the
order so passed by the authorities should give reasons for arriving at any
conclusion showing proper application of mind. Violation of either of these
principles normally would render an order particularly quasi-judicial in
nature invalid. Violation of principles of natural justice is violation of basic
rule of law and would invite judicial chasticism. However, this rule is not
without exceptions. Of course, the exception to such a rule are rare. Where
the legislative scheme of provisions of a statute suggest that intent of the
legislature is to take emergent action, in that event and subject to
fulfillment of ingredients of the provisions, an order could be passed
without affording pre-decisional hearing and an expeditious post-decisional
hearing may amount to substantial compliance with the basic rule of law.
33. In Union of India v. Tulsiram Patel, 1985 SCR Supl. (2) 131 , the
Supreme Court observed :
"The audi alteram partem rule can be excluded where the right to
prior notice and an opportunity to be heard before an order is passed
would obstruct the taking of prompt action; or where the nature of
the action to be taken, its object and purpose and scheme of the
relevant statutory provisions warrant its exclusion; or importing it
would have the effect of paralysing the administrative process or
where the need for promptitude or the urgency of taking action so
WP(C) Nos.3752/2012 & 3751/2012 Page No.17 of 26
demands. If legislation and the necessities of a situation can exclude
the principles of natural justice including audi alteram partem rules;
fortiori so can a provision of the Constitution, for a Constitutional
provision has a far greater and all-pervading sanctity than a statutory
provision."
34. 18. It will be useful to refer to the decision of Olga Tellis v. Bombay
Municipal Corporation, 1985 SCR Supl. (2) 51, wherein a question arose
in the context of section 314 of the Bombay Municipal Corporation Act as
to whether the Court should direct remand to the Municipal Commissioner
to afford an opportunity to the petitioners to show why the encroachments
committed by them on pavements or foot-paths should not be removed. The
Supreme Court observed that remand was not necessary because the
opportunity which was denied by the Commissioner was granted by the
Court in an ample measure, both sides having made their contentions
elaborately on facts as well as on law. Thus the question whether post-
decisional hearing is a sufficient compliance with the principles of natural
justice and fair play will have to be determined in the context of the facts of
the case. The court while affirming that section 314 of the Act excludes the
natural justice observed thus:
"Section 314 is so designed as to exclude the principles of natural
justice by way of exception and not as a general rule. There are
situations which demand the exclusion of the rules of natural
justice by reason of diverse factors like time, place, the
apprehended danger and so on. The ordinary rule which regulates
all procedure is that persons who are likely to be affected by the
proposed action must be afforded an opportunity of being heard as to
why that action should not be taken. The hearing may be given
individually or collectively, depending upon the facts of each
situation. A departure from this fundamental rule of natural justice
may be presumed to have been intended by the Legislature only in
WP(C) Nos.3752/2012 & 3751/2012 Page No.18 of 26
circumstances which warrant it. Such circumstances must be known
to exist, when so required, the burden being upon those who affirm
their existence." (Emphasis Supplied)
35. This legal position is reiterated by the Supreme Court in the case of
Carborundum Universal Limited v. C.B.D.T., 1989 Supp. (2) S.C.C.
462. The Supreme Court held that exclusion of principles of natural justice
can be made expressly or impliedly by statutory provisions. It was also held
that personal hearing cannot always be insisted upon. In a judgment of the
Supreme Court in State of U.P. v. Pradhan Sangh Kshetra Samiti, 1995
SCC Supl. (2) 305, the question arose whether action of de-limitation of
Panchayat areas and Gram Sabhas, without giving an opportunity of
hearing in view of the urgency, was valid. The Supreme Court observed
that in a matter which is urgent even post-decisional hearing is sufficient
compliance of the principles of natural justice, namely, audi alteram
partem. Accordingly, the authorities were directed to grant post-decisional
hearing to the petitioners in that case.
36. Applying the present principles of law enunciated by Supreme Court
as well as other courts to the present case, it can safely said that the kind of
eventuality prescribed under the sub regulation (7) (b) of regulation 5 is
distinct from the others where upon prima facie satisfaction in cases where
the bureau has a sufficient evidence that the product carrying the standard
mark is not confirming the conditions prescribed under the said regulation
which are also the basis of the license granted, the bureau can direct to stop
marking pending further satisfaction. In the said regulation itself, it is
provided that the resumption of the marking shall be permitted by the
bureau after the satisfying itself that the licensee has taken necessary
WP(C) Nos.3752/2012 & 3751/2012 Page No.19 of 26
actions and sufficient evidence of the conformity is available. All this
would mean that it is kind of emergent measure in interest of health and
safety which the bureau is empowered to take without cancelling the
license directing the licensee "to stop marking" pending the further
satisfaction. The said further satisfaction can be in the form of
representation or by according the post decisional hearing. I think the same
is sufficient compliance of the principles of the natural justice as no license
or privilege has been taken away and thus, the resumption of the marking is
possible once the representation is made before bureau with sufficient
evidence showing the steps towards the compliance.
37. This distinction which exists between the cancellation, suspension of
the license on one hand and non payment of the renewal fee on the other
and different requirements of hearings and notice under the regulation 5 of
the BIS regulation has been also noticed by the learned single judge of this
court in the case of S.K.N. Associates Pvt. Ltd. vs Union Of India (Uoi)
And Anr. ( Hon‟ble BD Ahmed J) decided on 5th September, 2007
wherein the learned single judge came to the conclusion that the said
scheme must be adhered to and no additional requirement of hearing can be
imported as in the case of non payment of renewal, the license right is not
lost. The learned single judge observed thus:
"A plain reading of the provisions of Section 15(1) indicates that the
Bureau may, by order, grant, renew, suspend or cancel a license in
such manner as may be determined by regulations. The regulations
have prescribed that before the Bureau cancels any license, it shall
give the licensee not less than 14 days notice of its intention to cancel
the license [See: Regulation 5(5)(c) of the bids Certification
Regulations, 1988]. It is further provided under Regulation 5 (5) (d)
WP(C) Nos.3752/2012 & 3751/2012 Page No.20 of 26
that on receipt of such notice, the licensee may submit an explanation
on his behalf to the Bureau within seven days thereof. If an
explanation is submitted, the Bureau may consider the explanation
and give a hearing to the licensee within 14 days from the date of
receipt of such explanation or before the expiry of the notice
whichever is longer. Regulation 5 (5) (e) provides that if no
explanation is submitted, the Bureau may, on the expiry of the period
of notice, cancel the license. Under Regulation 5 (8), it is provided
that the decision of the Bureau under Regulation 4 (4) or Regulation
5 (5) together with the grounds for arriving at such decision shall be
communicated, in writing by registered post, to the applicant or the
licensee, as the case may be. It is, therefore, clear that as per the
manner determined by the Regulations, a license can be cancelled
only after a notice is given and if an explanation is submitted by the
noticee after hearing is given to him. The decision is also required to
be a reasoned decision in writing and is required to be communicated
to the licensee by registered post. But, there is no such procedure or
requirement for renewal or non-renewal.
17. If one looks at Section 15 of the said Act one finds that it has
reference to (a) grant of a license; (b) renewal of a license; (c)
suspension of a license; and (d) cancellation of a license. All these
fall in distinct and different categories. Renewal of a license is
not the same as a grant and it is definitely distinct from
suspension or cancellation. The three Division Bench decisions of
this Court in Gayco Pvt. Ltd (supra), Kaushalya Devi (supra)
and Falcon Air Cargo (supra) make it very clear that a non-
renewal does not amount to a cancellation. The primary reason
for this cancellation is that a license does not have a vested right
in renewal. Whereas in the case of a cancellation a right vested in
the license is taken away. It is for this reason that renewal and
cancellation have been treated differently. While the right to
hearing incumbent before a vested right is taken away by a
cancellation of a license, no such right enures in favor of a
licensee while his license is being considered for
renewal." (Emphasis Supplied)
WP(C) Nos.3752/2012 & 3751/2012 Page No.21 of 26
38. On reading the observations of the learned single judge in S.K.N.
Associates(Supra), it is clear that the learned single judge distinguished the
cases where the license right is taken away and in those cases where it is
not. Thus, the distinction is made in cases where there is forfeiture of
license where the hearing and the complete mechanism is essential and in
those where such forfeiture or right is not taken away as in those case no
such right of hearing can be enure to the licensee. I find that there is no
reason why such distinction should also not be extended and applied to the
cases where there is a mere "direction to stop marking" leaving the licensee
to the post decisional hearing or further satisfaction. The said further
satisfaction by way of the post decisional hearing can resume the marking
upon the satisfaction of the bureau with the evidence as prescribed in the
regulation. Thus, the distinct eventuality under sub regulation 7 (b) has to
be treated difference and it can safely satisfy the rules of the natural justice
if the post decisional hearing for the resumption is accorded to the licensee
in order to All satisfy the bureau.
39. On facts, it is noticed that the respondents have carried out the
inspection at the premises of the petitioner in the month of April 2012 when
the discrepancy to the manufacturing process, existence of the plant and
machinery as well as the ingredient of the product were noticed. The
petitioner itself supplied some evidence or documents at that point of time
which were indicative of such discrepancy or inconsistency with the
requirements of the license or the regulation. Consequently, the direction to
stop marking was issued in the month of the 16th May, 2012. Thereafter, the
WP(C) Nos.3752/2012 & 3751/2012 Page No.22 of 26
petitioner visited the office of the respondent through representative and
also issued some letters with the documents controverting or refuting such
non compliance and praying for the resumption of the marking.. The
petitioner nowhere in the letters either demanded pre decisional hearing
either after inspection once it was witnessed at the time of inspection that
there exists the discrepancy and nor after the letter dated 16th May 2012 and
only prayed for reinstatement of the marking. Though it is altogether
different matter that I have found that the requirement of post decisional
hearing is sufficient compliance of the natural justice. All this means that
the petitioner grievance can be redressed once the post decisional hearing
for further satisfaction is accorded to the petitioner.
40. Mr. Sethi, learned Senior counsel has taken pains to explain that
there is no change in the manufacturing process and other requirements are
also satisfied as they were existing prior to the direction of stopping of the
marking (verified during the preliminary inspection carried out in 2008).
An affidavit to this respect has also been filed by the petitioner‟s
representative. Per contra, Mr. Chiramal strongly refutes such contention
and urges that the petitioner has changed the corporate name as well as the
manufacturing unit and is importing the material from Malaysia. It is stated
the ingredient requirement of Kerry base powder is not complied with
which means that the product is not suitable for the children and thus the
petitioner is still noncompliant licensee.
41. It is a well settled principle of law that the writ court is not fact
finding court and the enquiry of the court under article 226 of the
constitution has to only confined to testing the reasonableness, fairness of
WP(C) Nos.3752/2012 & 3751/2012 Page No.23 of 26
the decision making process and to see that the quasi judicial or
administrative actions do not overstep their legitimate bounds.
42. Applying the said principle of law to the present case, I find that the
rival contentions raised by the parties is a factual enquiry which has to be
decided by the expert body which the Bureau of Indian Standard at the time
of post decisional hearing. The court while exercising the jurisdiction under
article 226 cannot indulge into this fact finding enquiry by supplementing
its own opinion at this stage. This is more so when the matter is still
pending for further satisfaction for the purposes of resumption. Thus, it
would be wise if the parties are relegated to the fact finding authority which
is the Bureau/ respondent which shall decide whether the petitioner with the
existing evidence has fulfilled the requirements of the regulation 5 (7) (b)
or not.
43. Under these circumstances, I am of the view that it was not
obligatory on the part of the respondent to issue advance notice and give a
hearing before passing direction to stop marking of product as the said
directions are not the final order for cancellation of licence, and under the
said direction, an opportunity is available to the petitioner under the
regulation to satisfy the respondent by the licensee/ petitioner to take
necessary actions about conformity. Hence, the submission of the
petitioner that the direction to stop marking could not have been issued
without notice and hearing, is without any substance and post decisional
hearing is granted to the petitioner to make its representations before the
authority.
WP(C) Nos.3752/2012 & 3751/2012 Page No.24 of 26
44. Resultantly, both the petitions are disposed of, with the following
directions:-
(a) That the Director General of the respondent shall
examine all the requisite documents produced by
the petitioner and take his decision after hearing
the petitioner or its authorized representative and
consider the stand taking in the petition. The
respondent is directed to pass a reasoned order
upon clear finding of the facts as to whether the
petitioner satisfies the requirements of the sub
regulation 7 (b) or not.
(b) The respondent while deciding the issue shall also
take into consideration the further evidence
submitted by the petitioner which shall acts as the
steps of the petitioner towards the compliance of
the of Regulation 5(7)(b) of the Act before passing
the order.
(c) That the petitioner shall appear before him on 13 th
July, 2012 at 11.00 a.m. for directions.
45. No further orders are required to be passed in the matters. Both
petitions along with interim applications are disposed of.
46. No costs.
WP(C) Nos.3752/2012 & 3751/2012 Page No.25 of 26
47. Copies of this order be given dasti to the learned counsels for both
the parties.
MANMOHAN SINGH, J.
JULY 02, 2012
WP(C) Nos.3752/2012 & 3751/2012 Page No.26 of 26
