Drug Distributor Can Resume Business Except Allegedly Spurious Zavicefta For Now, Karnataka HC Quashes Suspension Passed Before Reply Deadline

In brief

The question

Whether the licensing authority could suspend the petitioner’s licences before the period allowed in the show-cause notice to respond had expired.

The court held

The Court partly allowed the petition and quashed the suspension order dated 23 September 2026.

It also directed

It permitted the petitioner to reply to the show-cause notice by 29 October 2026, directed the authority to provide a hearing and proceed in accordance with law, and allowed the petitioner to continue its business under the licences pending the authority’s consideration, except for dealing with Zavicefta injection.

All contentions on the merits were left open.

01Facts

The petitioner, a pharmaceutical distributor holding wholesale and retail drug licences, challenged the suspension of those licences after receiving a show-cause notice alleging that it had dealt with allegedly spurious “Zavicefta injection”.

p. 3 · ¶ 2

The petitioner contended that, although the notice allowed seven days to respond, the licences were suspended on 23 September 2026, only two days after the notice dated 21 September 2026.

p. 5 · ¶ 5

The judgment’s opening description refers to an impugned order dated 19 September 2026, while its reasoning identifies the order quashed as dated 23 September 2026.

p. 2 · ¶ 1 · p. 3 · ¶ 1 · p. 6 · ¶ 7

02Issues

i.Whether the licensing authority could suspend the petitioner’s licences before the period allowed in the show-cause notice to respond had expired.

p. 5 · ¶ 5

ii.Whether, in considering action under Rule 66(1), the authority was required to consider suspension or cancellation of a licence in whole or only in part.

p. 6 · ¶ 6

03Law Applied

Rule 66(1) of the Drugs and Cosmetics Rules, 1945 authorises the Licensing Authority, by a reasoned written order and after giving the licensee an opportunity to show cause, to cancel a licence or suspend it for such period as considered appropriate, either wholly or in respect of some substances covered by it.

p. 4 · ¶ 3–4 · p. 5 · ¶ 3 · p. 6 · ¶ 6

Rule 66(2) provides for an appeal to the State Government against an order of suspension or cancellation within three months.

p. 5 · ¶ 3

The Court’s reasoning rests on the requirement of a meaningful opportunity to show cause before an order under Rule 66(1), and on the authority’s power to tailor suspension to particular substances rather than necessarily suspending the entire licence.

p. 5 · ¶ 4 · p. 6 · ¶ 6

04Reasoning

The notice allowed the petitioner seven days to respond, but the authority suspended the licences on 23 September 2026, before that response period had expired.

p. 5 · ¶ 5

The Court held that this premature suspension was ex facie unsustainable because Rule 66(1) requires an opportunity to show cause before suspension or cancellation.

p. 5 · ¶ 4–5 · p. 6 · ¶ 7

The Court also directed the authority to take account of Rule 66(1)’s provision for action limited to some substances, and permitted the petitioner to continue its licensed business in the interim except in relation to the allegedly spurious Zavicefta injection.

p. 6 · ¶ 6 · p. 7 · ¶ 9