Drug licence cancellation requires a show-cause opportunity and reasoned consideration of its scope.

The petitioner, a distributor of pharmaceutical products, challenged the Licensing Authority’s order cancelling its drug licences after an allegation that it had dealt in “Zavicefta 2.5 gms Injection,” stated to be a spurious drug.

The petitioner contended that the licences had been cancelled without an opportunity to show cause and that cancellation of the entire licences was disproportionate.

Rule 66(2) provided an appeal to the State Government against an order suspending or cancelling a licence.

Whether the Licensing Authority could cancel the petitioner’s licences without first giving it an opportunity to show cause, as required by Rule 66(1) of the Drugs and Cosmetics Rules, 1945.

Whether the Authority had to consider whether cancellation should apply to the entire licences or only to particular substances.

Rule 66(1) of the Drugs and Cosmetics Rules, 1945 authorises the Licensing Authority, after giving the licensee an opportunity to show cause and recording reasons in writing, to cancel or suspend a licence wholly or in respect of some of the substances covered by it.

Rule 66(2) permits an appeal to the State Government within three months of the order.

The Court also exercised its jurisdiction under Articles 226 and 227 of the Constitution.

Although an appeal was available under Rule 66(2), the Court found that the impugned order had cancelled the petitioner’s entire licences without a prior opportunity to show cause.

The Authority had also failed to consider whether cancellation should extend to the whole licences or only to some substances. The Court therefore found the order unsustainable and treated it as a show-cause notice, allowing the petitioner to respond and requiring the authorities to proceed lawfully thereafter.

Pending the authorities’ decision, the order was stayed and the petitioner was permitted to continue its business, except in relation to the purchase and sale of “Zavicefta 2.5 gms Injection.” The authorities remained free to conduct further inspections in accordance with law.