[Cites 4, Cited by 0]
Rajasthan High Court - Jodhpur
Jhanwer Medical Agencies vs The Commissioner (2026:Rj-Jd:16682) on 9 April, 2026
Author: Kuldeep Mathur
Bench: Kuldeep Mathur
[2026:RJ-JD:16682]
HIGH COURT OF JUDICATURE FOR RAJASTHAN AT
JODHPUR
S.B. Civil Writ Petition No. 7707/2026
Jhanwer Medical Agencies, Through Proprietor Jugal Kishore
Jhanwar S/o Shri Poonam Chand, Aged About 58 Years, Resident
Of 22, First Floor, Amarnath Building, Jalori Bari, Jodhpur.
----Petitioner
Versus
1. The Commissioner, Food Safety And Drug, Controller
(Drug Wing), Commissionerate, 3Rd Floor, Swasthya
Bhawan, Tilak Marg, C-Scheme, Jaipur.
2. Drug Licencing Authority And Assistant Drug Controller,
District Food Safety And Drug Controller, Jodhpur
Swasthya Bhawan, Jhalamand Choraha, Old Pali Road,
Jodhpur.
3. Manish Gupta - Assistant Drug Controller, District Food
Safety And Drug Controller, Jodhpur Swasthya Bhawan,
Jhalamand Choraha, Old Pali Road, Jodhpur.
----Respondents
For Petitioner(s) : Mr. C.S. Kotwani
For Respondent(s) : Mr. Narendra Singh Rajpurohit
HON'BLE MR. JUSTICE KULDEEP MATHUR
Order
09/04/2026
1. By way of filing the present writ petition, the petitioner has
prayed for the following reliefs:
"It is, therefore, most respectfully and humble prayed
that the instant writ petition may kindly be ordered to be
allowed and further prayed as follows:-
(i) The the impugned order dated 25.03.2026
(Annexure-25) cancelling the drug licence of humble petitioner
firm impugned show cause as well as notice dated 17.03.2026
(Annexure-23) may kindly be ordered to be quashed and set
aside; and
(ii) The respondents may kindly be directed to. permit the
humble petitioner to undertake his business under the drug
licence granted to it; and
(iii) any other order of direction, which this Hon'ble Court
deems fit and proper in the facts and circumstances of the
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present case may kindly be passed in favour of the humble
petitioner."
2. This is the second round of litigation alleging that the order
dated 13.03.2026 (Annex-22) passed by this Court in S.B. CWP
No. 4432/2025 (Jhanwar Medical Agencies vs. The Commissioner,
Food Safety) has not been complied with in its true letter and
spirit. According to the petitioner-firm, the respondents, without
providing a reasonable opportunity of defence, and after issuing a
show cause notice dated 17.03.2026 (Annex-23), proceeded to
terminate the drug licence vide the impugned order dated
25.03.2026 (Annex-25) without waiting for the petitioner's reply.
3. Briefly stated, the facts of the case are that the petitioner-firm
was holding a valid licence issued under the provisions of the
Drugs Control Act to carry on business as a retailer as well as a
wholesaler. An FIR No. 265/2023 dated 26.09.2023 (Annex-2)
came to be registered against the petitioner-firm at Police Station
Basni, alleging, inter alia, irregularities in maintaining drug stock
and its supply under the Rajasthan Government Health Scheme
(RGHS). Pursuant to the FIR, the Drugs Licensing Officer-cum-
Assistant Drugs Controller, Jodhpur issued a show cause notice
dated 19.03.2024 (Annex-5) alleging violation of Sections 18(a)
(vi) and 18-B of the Drugs Control Act and Rules 65(3), 65(4),
65(5), 65(6), and 65(9) of the Drugs and Cosmetics Rules.
4. The petitioner-firm submitted a detailed reply to the said show
cause notice on 02.05.2024 (Annex-9). However, being
dissatisfied with the reply, the Drugs Licensing Officer-cum-
Assistant Drugs Controller, Jodhpur, vide order dated 13.06.2024
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(Annex-14), suspended the licence of the petitioner-firm.
Subsequently, by a detailed order dated 23.09.2024 (Annex-20),
the licence was cancelled upon recording findings of violation of
the aforesaid statutory provisions and the appeal preferred against
the said order was dismissed by the Appellate Authority vide order
dated 03.01.2025 (Annex-21).
5. The validity and correctness of the order dated 23.09.2024
(Annex-20) cancelling the licence, as well as the appellate order
dated 03.01.2025 (Annex-21), were challenged before this Court
by way of S.B. CWP No. 4432/2025.
6. This Court observed that although Rule 66(1) of the Drugs and
Cosmetics Rules provides for both suspension and cancellation
upon issuance of a show cause notice, the Licensing Authority
exercises two distinct powers having different consequences.
Therefore, if the authority, upon consideration of the reply to the
show cause notice dated 19.03.2024 (Annex-5), had initially
chosen suspension, then upon forming a subsequent opinion
warranting cancellation, it ought to have issued a fresh show
cause notice indicating the reasons and seeking the petitioner's
explanation as to why the penalty of cancellation should not be
imposed.
7. Accordingly, this Court, while allowing S.B. CWP No.
4432/2025, set aside the order dated 23.09.2024 (Annex-20)
passed by the Drugs Licensing Officer-cum-Assistant Drugs
Controller, Jodhpur, as well as the order dated 03.01.2025 (Annex-
21) passed by the Appellate Authority. Liberty, however, was
granted to the Licensing Authority to initiate fresh proceedings in
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accordance with law by issuing a fresh show cause notice and by
adhering to the principles of natural justice.
8. The relevant portion of the judgement dated 13.03.2026
(Annex-22) passed by this Court in S.B. CWP No.4432/2025 is
reproduced below for ready reference:-
"20. Having heard learned counsel for the parties and upon perusing
Rule 66(1) of the Rules of 1945, this Court finds that the said provision
confers upon the Licensing Authority the power either to cancel a license
issued under the relevant Drug laws or to suspend it, after giving the licensee
an opportunity to show cause. In other words, the power to cancel or suspend
a license may be exercised by the competent authority as a measure of
penalty. The term "suspension", by its very nature, is temporary, as the
license issued to a drug dealer revives upon completion of the suspension
period. In contrast, the term "cancellation" completely extinguishes the right
of a drug dealer to carry on trade in accordance with the Drug laws, thereby
permanently depriving the licensee of such right. Consequently, cancellation of
a license carries far more serious civil consequences and directly affects the
right of the licensee to carry on business.
21. In the present case, it is not in dispute that the petitioner-firm was
served with a show cause notice dated 19.03.2024 by respondent No.3 in
exercise of the powers conferred under Rule 66(1) of the Rules of 1945. Upon
receiving the explanation/reply submitted by the petitioner in response to the
said notice, respondent No.3, by a detailed and reasoned order dated
13.06.2024, suspended the license of the petitioner-firm for a specified
period.
22. In other words, despite possessing the power to cancel the license,
respondent No.3, after considering the explanation submitted by the
petitioner, chose only to suspend the license. This indicates that at that stage
the authority had not formed an opinion to cancel or terminate the petitioner's
drug license.
23. In the opinion of this Court, although Rule 66(1) of the Rules of 1945
provides for both suspension and cancellation upon issuance of a show cause
notice to a drug licensee, the Licensing Authority in fact exercises two distinct
powers having different consequences, even though they appear together in a
single provision. The exercise of such powers under Rule 66(1) necessarily
depends upon the gravity of the violation of the provisions of the Act and the
Rules.
24. This Court in Mangilal v. District Excise Officer, Ajmer, reported in
AIR 1971 Raj 46, while considering an analogous provision under the
Rajasthan Excise Act, observed that the suspension of a licensee stands on a
different footing than that from the suspension of a government servant. In
the case of a government servant, if he is ultimately found innocent after
inquiry, he may be compensated for the loss suffered during the period of
suspension. However, a licensee engaged in a particular trade cannot
ordinarily be compensated for the loss suffered due to suspension of his
license.
25. It is also pertinent to note that the order of suspension dated
13.06.2024 issued against the petitioner by respondent No.3 clearly indicates
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that a detailed inquiry for cancellation of the license was contemplated. The
relevant portion of the suspension order dated 13.06.2024 reads as under:
"अतः मैं मनीश गुप्ता, अनुज्ञापन प्राधिकारी एवं सहायक औषधि नियंत्रक, जोधपुर,
औषधि एवं प्रसाधन सामग्री नियम 1945 के के नियम 66 (1) के तहत प्रदत्त भाक्तियों का
प्रयोग करते हुए उक्त फर्म मैसर्स झंवर मेडिकल एजेन्सी, 22. प्रथम तल, अमरनाथ बिल्डिं ग,
जालौरी बारी, जोधपुर को जारी थोक औषधि अनुज्ञापन संख्य DRUG/2022-23/76118 to
76123 प्रपत्र 20, 21, 20 बी, 21 बी, 20 एफ, 20 जी जारी दिनां क 02.05.2022 को
एतद द्वारा 60 दिवस के लिए दिनां क 20.06.2024 से 18.08.2024 तक के लिए निलम्बित
करता हूँ साथ ही लाईसेंसी को निर्देाित किया जाता है कि वह इस अवधि में नियमानुसार निरीक्षण
एवं उस पर जारी कारण बताओ नोटिस का जवाब व उससे सम्बन्धित रिकार्ड जहां भी उपलब्ध
हो विधिक प्रकियानुसार प्राप्त कर इस कार्यालय में प्रस्तुत कर रिकार्ड का सत्यापन मय स्वः
प्रमाणित प्रतिलिपियों के प्रस्तुत करते हुए करवायेंगे तथा उक्त समयावधि में जवाब प्रसूत्त नही ं
करने व रिकार्ड का सत्यापन नही ं कराने की द॥ मे उक्तां कित औषधि अनुज्ञापन पत्रों को निरस्त
करने की कार्यवाही अमल में लाई जावेगी। - यह आदे । लाईसेंसी के विरूद्ध भविश्य में की जा
सकने वाली किसी भी न्यायिक / विभागीय कार्यवाही पर कोई विपरीत प्रभाव डाले बिना जारी
की गई है ।"
26. In view of the above, this Court has no hesitation in concluding that if,
after conducting a detailed investigation or inquiry in the matter, the Licensing
Authority, i.e., respondent No.3, formed the opinion that the facts of the case
warranted cancellation of the petitioner-firm's license, it ought to have issued
a fresh show cause notice indicating the reasons for forming such an opinion
and seeking the petitioner's explanation as to why the extreme penalty of
cancellation should not be imposed. The requirement of issuance of show
cause notice before imposing penalty is not an empty formality but a
substantive safeguard intended to ensure fairness in administrative action.
27. The non-issuance of a fresh show cause notice and the consequent
denial of an opportunity of hearing to the petitioner-firm which is mandatory
under Rule 66(1) of the Rules of 1945 before taking such drastic action has
resulted in manifest injustice. Accordingly, the order dated 23.09.2024
cancelling the license stands vitiated for non-compliance with the principles of
natural justice.
28. For the reasons stated above, the order dated 23.09.2024 (Annex-9)
passed by respondent No.3 cancelling the license of the petitioner-firm, as
well as the order dated 03.01.2025 (Annex-10) passed by the Appellate
Authority, are hereby quashed and set aside.
29. However, it is made clear that this order shall not preclude respondent
No.3 from initiating fresh proceedings against the petitioner-firm in
accordance with law, by issuing a fresh show cause notice and by following
the principles of natural justice as mandated under Rule 66(1) of the Rules of
1945.
30. Consequently, the present civil writ petition is allowed."
9. Learned counsel for the petitioner submitted that despite the
earlier order cancelling the licence being set aside on the ground
of violation of principles of natural justice, the respondents have
again, in a predetermined manner, cancelled the licence vide order
dated 25.03.2026 (Annex-25).
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10. In support of this contention, it was submitted that pursuant
to the judgment dated 13.03.2026 (Annex-22), the Licensing
Authority issued a fresh show cause notice dated 17.03.2026
(Annex-23) alleging serious irregularities in the implementation of
the RGHS scheme, including discrepancies in purchase and sale
quantities, sale of medicines below marked price, fraudulent
billing, fabrication of records, and embezzlement of public funds.
11. It was further submitted that although the show cause notice
granted seven days' time for reply, the respondents acted in
undue haste. Despite the earlier cancellation order having been
set aside, no formal order restoring the licence was passed, and
the status of the petitioner's licence continued to reflect as
"cancelled" on the Government portal. The Licensing Authority was
aware of this anomaly and had addressed communications dated
18.03.2026 (Annex-27) and 24.03.2026 (Annex-28) to the
Commissioner, FSDC, Rajasthan, seeking correction of the status.
12. It was contended that the petitioner submitted a detailed reply
on 24.03.2026 through speed post; however, without considering
the same, the Licensing Authority proceeded to cancel the licence
on 25.03.2026 (Annex-25). It was argued that this action was
neither fair nor transparent and deprived the petitioner of a
meaningful opportunity of defence. On these grounds, learned
counsel prayed for setting aside the impugned order dated
25.03.2026 (Annex-25).
13. Per contra, learned AAG submitted that while this Court had
set aside the earlier orders, it had granted liberty to initiate fresh
proceedings. Accordingly, a fresh show cause notice was issued,
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and upon failure of the petitioner to respond within the stipulated
time, the impugned order was rightly passed.
14. It was further submitted that since the earlier cancellation
order had already been set aside by this Court, no separate formal
order of withdrawal was required. On these submissions, learned
AAG prayed for dismissal of the writ petition.
15. Heard.
16. Upon hearing learned counsel for the parties and perusing the
material on record, this Court finds that the earlier orders dated
23.09.2024 (Annex-20) and 03.01.2025 (Annex-21) were set
aside on account of violation of principles of natural justice and
the judgment dated 13.03.2026 (Annex-22) has attained finality.
17. It is settled principle that compliance with rules of natural
justice, particularly the doctrine of audi alteram partem, is not a
mere procedural ritual but a substantive safeguard to ensure
fairness, transparency and reasonableness in decision making any
action taken in derogation thereof stands vitiated.
18. In such circumstances, once the earlier cancellation stood
quashed, it was incumbent upon the Licensing Authority to restore
the petitioner to the position existing prior thereto and thereafter
proceed strictly in accordance with law by affording a fair, effective
and meaningful opportunity of hearing, rather than merely
completing a procedural formality.
19. This Court finds that prior to issuing the fresh show cause
notice dated 17.03.2026 (Annex-23), no formal order restoring
the licence was passed, nor was the status of the petitioner's
license corrected on the Government portal, despite repeated
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communications. It is further evident that the petitioner's reply,
which reportedly reached on 25.03.2026, was not duly considered,
and the impugned order came to be passed without awaiting the
same.
20. In this backdrop, it is apposite to observe that Rule 66(1) of
the Drugs and Cosmetics Rules, 1945 expressly incorporates the
requirement of affording an opportunity of hearing prior to the
suspension or cancellation of a license. The provision obligates the
Licensing Authority to grant the licensee a reasonable and
effective opportunity to show cause and to meaningfully respond
to the allegations forming the basis of the proposed action. Thus,
adherence to the principles of natural justice is not merely implicit
but stands statutorily embedded in the scheme of Rule 66(1), and
any departure therefrom would render the action legally
unsustainable.
21. The aforesaid sequence of events clearly demonstrate that the
petitioner was effectively deprived of an opportunity to rebut the
allegation levelled against it, thereby vitiating the decision making
process. Prima facie, the conduct of the Licensing Authority
indicates a predetermined approach with statutory requirement of
hearing being reduced to an empty formality. This is evident from
the fact that even the communications seeking correction of
license status were not awaited.
22. Consequently, the show cause notice dated 17.03.2026
(Annex-23) and the impugned order dated 25.03.2026 (Annex-25)
are quashed and set aside. The Licensing Authority is directed to
issue a fresh show cause notice, if so advised, and to provide a
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fair and meaningful opportunity of hearing before taking any
decision.
23. The writ petition is accordingly allowed.
24. The stay petition and all pending applications stand disposed
of.
(KULDEEP MATHUR),J
240-himanshu/-
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