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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
S.J. VAZIFDAR, M.S. SONAK, JJ.
Johnson & Johnson Limited
Vs.
The State of Maharashtra & Ors.
Writ Petition (Lodg) No. 1714 of 2013 alongwith Chamber Summons (Lodg) No. 240 of 2013
Decided on : 19th September, 2013
Further, the issue of loan licence was raised by respondent No. 2 only before the Appellate Authority. The contention is noted in the order of the Appellate Authority. However, the operative part of the appellate order does not indicate that it was passed on the basis or ground of the petitioner having failed to obtain a loan licence. Mr. Dada would be justified in contending that this contention is, therefore, not open to the respondents who must seek to sustain the impugned orders only on the basis of what is stated in the show-cause notice and in the impugned orders and not on any other ground. In other words, it is not open to the respondents to obtain orders on the ground that the petitioner had failed to obtain a loan licence. However, the Appellate Authority merely noted the argument. The operative part of the order and the reasoning do not deal with the issue. In any event, it does not deal with the issue satisfactorily.
It is of general importance as well. The issue as to whether the petitioner ought to have obtained the loan licence or not ought to be considered by the authorities in the first instance. On such an important aspect under the said Act Court is not inclined to quash the impugned orders simplicitor on the ground that the respondents failed to observe the principles of natural justice. It would be appropriate in such cases to not merely set aside the impugned orders, but to set them aside and remand them for fresh consideration after affording the petitioner an opportunity of being heard.
DRUGS AND COSMETICS ACT, 1940 - Section 18(c) - Cancellation of license of factory. - Where factory of petitioner has about 2000 employees and its records were properly maintained therefore taking into consideration doctrine of proportionality, cancellation of licence with respect of petitioners factory, improper. - There is another important aspect of the petitioner‘s case. The order cancelling the licence albeit only with respect to the Mulund factory, prima facie, appears to be harsh in the facts and circumstances of this case. Neither of the impugned orders considers the doctrine of proportionality. They do not consider any of the relevant aspects in this regard. We will indicate only a few.
Firstly, even assuming that the petitioner was bound to obtain a loan licence and that it had failed to do so, there is nothing to indicate any mala fides on its part. Mr. Kumbhakoni also fairly did not attribute any mala fides on the petitioner‘s part. He, however, raised a serious grievance regarding the petitioner‘s refusal to admit its mistake. The petitioner‘s licence has been in existence from the year 1965 i.e. for about fifty years. It‘s manufacturing unit which has been ordered to be closed down, albeit qua only the manufacture of the said powder has about. 2000 employees. The said 15 batches are the only batches in respect whereof the said treatment was done. The records in respect thereof were maintained. Samples were preserved. There are no allegations of tampering of the record by the petitioner. In fact, the impugned action is based only on the petitioner‘s record. The petitioner itself carried out the tests in respect thereof as part of an internal audit although there was no obligation for it do so three years later. There is nothing on record that indicates that the said 15 batches in fact contained any defects of any nature whatsoever, including any ethylene oxide residue. The tests carried out by and at the instance of the petitioner indicate that the powder did not contain any harmful residue. To establish it‘s bona fides, the petitioner has gone a step further. It has been ready and willing at all times for tests to be conducted not merely in respect of the samples of the said batches but also in respect of fresh batches of powder with the same treatment. It made the offer to the authorities as noted by us earlier. For some inexplicable reason, the authorities have not carried out the tests. As far as the petitioner is concerned, however, it is not merely a question of law that would arise on the issue of whether a loan licence was required or not. The authorities would also have to consider the bona fides of the petitioner especially taking into consideration all the relevant facts indicated above or even otherwise while considering the issue of proportionality.
DRUGS AND COSMETICS ACT, 1940 - Section 18(c) - Cancellation of license of factory. - Since there are 2000 workers in factory of petitioner and no complaints received so far against petitioner hence cancellation of license of petitioner’s factory, improper. - That procedure has not been applied thereafter. In any event, the petitioner states that it will not be applied hereafter. The statement is accepted. Secondly, the product continues to be manufactured at other units. Revoking the licence to manufacture the powder at the Mulund unit would not serve any purpose whatsoever except by way of a penalty. The question of the quantum of penalty is yet to be determined after the matter is decided afresh upon remand. There are 2000 workers at the Mulund unit. A major part of the activities at the Mulund unit pertain to the manufacture of the said powder. As on date, no complaints have been received. The absence of mala fides already indicated above is another factor in this, regard.
DRUGS AND COSMETICS RULES, 1945 - Rules 142(c), 143(2), 138-A, 139(5) Form 32- A. - See Drugs and Cosmetics Act, 1940, Section 18(c), 18(3), 143(1) and 3-F.
S.J. VAZIFDAR, J. :- Rule. Rule is made returnable forthwith and heard finally.
2. The petitioner has challenged an order dated 30th March, 2013, passed by respondent No.2 - Joint Commissioner and Licensing Authority - Food and Drug Administration, cancelling the petitioner's licence with effect from 24th June, 2013, and an order of the Hon'ble Minister dated 20th June, 2013, dismissing the petitioner's appeal against the same. The result of the impugned orders is the cancellation of the -petitioner's licence in relation to Johnson & Johnson baby powder, a cosmetic powder with respect to it's manufacturing facility situated at Mulund, Mumbai.
3. The petitioner is a part of the Johnson & Johhson group of companies which has been in existence for more than 127 years. The petitioner's predecessor in title started its operations in India in 1947. In 1948, it started manufacturing the powder under the brand name and mark "Johnsons' Baby Powder" (hereinafter referred to as "the powder"). The powder has been manufactured at the Mulund plant for over fifty years pursuant to and in accordance with the licences issued from time to time. The said licence bearing No.C/6 was issued to the petitioner initially in March, 1965. The last renewal was on 13th March, 2013 which was after the issuance of the show cause notice which we will shortly refer to and only 17 days' before the impugned order dated 30th March, 2013 passed by respondent No.2.
Prior to the impugned orders, the petitioner manufactured about 2000 batches of powder per month at the Mulund plant. There about 2000 employees at the plant.
4. The facts leading to the impugned order are as follows :
Fifteen batches of powder manufactured by the petitioner in the year 2007 required pH correction/re-processing as it was outside the mandatory specification range. If the pH factor is too low, the product becomes too acidic and if it is too high, it becomes alkaline. In either case, the product is said to be harmful to human skin and particularly to the skin of infants which is more delicate. The 15 batches of powder were bottled in 1,61,848 bottles. Before the same were despatched, even according to the respondents, the petitioner itself detected the high pH level and decided to re-process the entire produce to bring down the pH level within the permissible limits. Accordingly, all the bottles were emptied, the powder was collected in a processor and the same was treated by additional quantity of sodium sesquisistrate. The pH level was, accordingly, corrected. The petitioner itself formed the opinion that it was possible that handling during the procedure may have increased the bio-burden (microbial contamination) outside the specified range. To ensure customer safety, it decided to treat the said 15 batches of powder with ethylene oxide. The process is referred to by the parties as ETO treatment. As the petitioner did not have an in-house ETO treatment facility, it decided to carry out the same at the licenced facility of a third party Microtrol Sterilisation Services Pvt. Ltd. The petitioner contends that the ETO treatment is not a part of the regular manufacturing process. It further contends that the Microtrol facility is licenced by the FDA for drug products. In the year 2007, Microtrol also used its facility for ETO treatment of other items such as spices, cosmetics and Ayurvedic drugs for which it was not required to have any FDA licence.
5. Microtrol, accordingly, treated the 15 batches of powder with ETO treatment. The powder was then brought back to the petitioner's Mulund facility. According to the petitioner, it thereafter took all further steps required before selling the product, including testing each batch as per the mandatory monogram of skin powder for infants under Schedule S of the Act and the Rules, including Rule 142(c). Entries in that regard were made in the batch record sheet. It was only thereafter that the product was released for sale in compliance with t
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