1. Petitioner's drug license cancelled for alleged violations under Drugs and Cosmetics Act, 1940 and Rules, 1945. (Para 2 , 5 )
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2026 Supreme(Raj) 438
IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR
KULDEEP MATHUR, J.
Jhanwer Medical Agencies – Appellant
Versus
The Commissioner, Food Safety and Drug Controller (Drug Wing) Jaipur – Respondent
S.B. Civil Writ Petition No. 4432 of 2025
Decided On : 13-03-2026
Important Points
Cancellation of a drug license, involving permanent deprivation of livelihood, requires a fresh show cause notice if the previous administrative action based on an earlier notice was only a temporary suspension, ensuring adherence to the principles of natural justice.
Subject
Administrative Law - Licensing
Act Referred
Headnote
(A) Drugs and Cosmetics Act, 1940 - Sections 18(a)(vi) and 18-B - Drugs and Cosmetics Rules, 1945 - Rules 65(3), 65(4), 65(5), 65(6), 65(9), and 66(1) - Cancellation and suspension of drug license - Power to suspend or cancel license as a penalty requires giving the licensee an opportunity to show cause - Suspension is temporary in nature, whereas cancellation completely extinguishes the right to carry on trade, causing serious civil consequences and affecting the right to livelihood - Both powers, though contained in the same provision, are distinct and their exercise depends on the gravity of the violation (Paras 20 and 23).
(B) Principles of Natural Justice - Requirement of fresh show cause notice - If a licensing authority, after considering a show cause notice, chooses to only suspend a license, it indicates that at that stage the authority had not formed an opinion to cancel the license - For the subsequent imposition of the extreme penalty of cancellation, a fresh show cause notice indicating reasons for such an opinion must be issued - Failure to provide a fresh opportunity of hearing before cancellation results in manifest injustice and vitiates the order (Paras 26 and 27).
Facts of the case:
A drug license holder was issued a show cause notice for irregularities in maintaining stock and supply of drugs. After considering the petitioner's explanation, the licensing authority suspended the license for a limited period. Following the completion of the suspension period, the authority issued an order cancelling the license permanently without providing a fresh show cause notice specifically proposing the cancellation.
Findings of Court:
The order of cancellation is vitiated for non-compliance with the principles of natural justice. Since the initial notice led only to a temporary suspension, a fresh notice was mandatory before taking the more drastic step of permanent cancellation.
Issues: Whether a fresh show cause notice is required before cancelling a license if a previous show cause notice had only resulted in the suspension of the said license.
Ratio Decidendi: The court ruled that suspension and cancellation are distinct penalties with vastly different consequences. While a single provision may cover both, the transition from a temporary suspension to a permanent cancellation constitutes a severe penalty that cannot be imposed without a specific show cause notice addressing the grounds for cancellation, ensuring a substantive safeguard of fairness in administrative action (Paras 20, 26, and 27).
Result: Civil writ petition allowed; orders cancelling the license and the subsequent appellate order are quashed and set aside.
(B) Principles of Natural Justice - Requirement of fresh show cause notice - If a licensing authority, after considering a show cause notice, chooses to only suspend a license, it indicates that at that stage the authority had not formed an opinion to cancel the license - For the subsequent imposition of the extreme penalty of cancellation, a fresh show cause notice indicating reasons for such an opinion must be issued - Failure to provide a fresh opportunity of hearing before cancellation results in manifest injustice and vitiates the order (Paras 26 and 27).
Facts of the case:
A drug license holder was issued a show cause notice for irregularities in maintaining stock and supply of drugs. After considering the petitioner's explanation, the licensing authority suspended the license for a limited period. Following the completion of the suspension period, the authority issued an order cancelling the license permanently without providing a fresh show cause notice specifically proposing the cancellation.
Findings of Court:
The order of cancellation is vitiated for non-compliance with the principles of natural justice. Since the initial notice led only to a temporary suspension, a fresh notice was mandatory before taking the more drastic step of permanent cancellation.
Issues: Whether a fresh show cause notice is required before cancelling a license if a previous show cause notice had only resulted in the suspension of the said license.
Ratio Decidendi: The court ruled that suspension and cancellation are distinct penalties with vastly different consequences. While a single provision may cover both, the transition from a temporary suspension to a permanent cancellation constitutes a severe penalty that cannot be imposed without a specific show cause notice addressing the grounds for cancellation, ensuring a substantive safeguard of fairness in administrative action (Paras 20, 26, and 27).
Result: Civil writ petition allowed; orders cancelling the license and the subsequent appellate order are quashed and set aside.
Legal Category Hierarchy
- administrative law
- drugs and cosmetics regulation
- practice and procedure
Advocates Appeared:
For the Appellants : C.S. Kotwani, Chinmay Shekhar Kotwani, Manoj Choudhary
For the Respondent: Narendra Singh Rajpurohit
For the Appellants : C.S. Kotwani, Chinmay Shekhar Kotwani, Manoj Choudhary
For the Respondent: Narendra Singh Rajpurohit
Table of Contents
2. Petitioner argued cancellation without fresh show cause notice violated natural justice; respondent argued suspension order facilitated inquiry, no fresh notice required. (Para 6 , 7 , 8 , 9 , 10 , 11 , 12 , 13 , 14 , 15 , 16 , 17 )
3. Suspension is temporary; cancellation permanently extinguishes right to carry on trade, requiring fresh show cause notice. (Para 20 , 22 , 23 , 26 )
4. License cancellation under Rule 66(1) of Drugs and Cosmetics Rules, 1945 requires a fresh show cause notice if authority initially imposes only suspension. (Para 26 , 27 )
5. Quashed cancellation order and appellate order; allowed fresh proceedings with show cause notice and natural justice. (Para 28 , 29 , 30 )
6. Does cancellation of a drug license under Rule 66(1) of the Drugs and Cosmetics Rules, 1945 require a fresh show cause notice if suspension was initially imposed?
Yes. If the licensing authority initially imposes only suspension, a fresh show cause notice is required before cancellation because suspension is temporary while cancellation permanently extinguishes the licensee's right. (Para 20 , 22 , 23 , 26 , 27 )
7. Is the requirement of a show cause notice before imposing penalty under Rule 66(1) a substantive safeguard or an empty formality?
It is a substantive safeguard intended to ensure fairness in administrative action. Non-issuance of a fresh show cause notice before cancellation vitiates the order for non-compliance with principles of natural justice. (Para 26 , 27 )
ORDER :
1. By way of filing the present writ petition under Article 226 of the Constitution of India, the petitioner has prayed for the following reliefs:
“It is, therefore, prayed that the second stay petition moved by the petitioner may kindly be allowed and during pendency of the writ petition, impugned orders dated 23.09.2024 (Annexure-9), dated 03.01.2025 (Annexure-10) and notice dated 19.03.2024 (Annexure-2) may kindly be ordered to be stayed till final disposal of the writ petition and it is further prayed that the respondents may kindly be ordered to be directed to permit the humble petitioner firm to restart his business with immediate effect.
Any other appropriate interim order or direction, which this Hon'ble Court may deem just and proper in the facts and circumstances of the case, may kindly be also passed in favour of the petitioner.”
2. Briefly stated, the relevant facts of the case are that the petitioner - firm was issued a license under the Drug Control Act to conduct business as a retailer as well as a wholesaler, as per the provisions of the Drugs and Cosmetics Act, 1940 (hereinafter referred to as “the Act of 1940”). It is alleged that the petitioner committed irregularities in maintaining stock and in the supply of drugs under the Rajasthan Government Health Scheme (RGHS), thereby causing fiscal loss to the Government. An FIR No. 265/2023 dated 20.09.2023 was registered against the petitioner at Police Station Basni for offences under Sections 420, 406, 467, 468, 471, 474 and 120B of the Indian Penal Code. During the course of investigation, the police arrested the petitioner and seized stock records, bills, computers, and other relevant materials from the premises of the petitioner’s firm. Thereafter, the respondent No.3 — the Drugs Licensing Officer–cum–Assistant Drugs Controller, Jodhpur served the petitioner with a show cause notice dated 19.03.2024 alleging violation of Sections 18(a)(vi) and 18-B of the Act of 1940 and Rules 65(3), 65(4), 65(5), 65(6), and 65(9) of the Drugs and Cosmetics Rules, 1945 (hereinafter referred to as “the Rules of 1945”). By the said notice, the petitioner was directed to submit his explanation within seven days.
3. At the time when the show cause notice dated 19.03.2024 was issued, the petitioner was in judicial custody. Therefore, he requested respondent No.3 to grant him additional time to submit his explanation, as he did not have access to the records and documents necessary for preparing a proper reply. The petitioner was subsequently enlarged on bail by this Court on 19.03.2024. Thereafter, respondent No.2, vide communication dated 23.04.2024, directed the petitioner to positively submit his explanation to the show cause notice dated 19.03.2024 within a period of seven days. Upon receipt of the said communication, the petitioner submitted a detailed reply to the show cause notice through his advocate on 02.05.2024.
4. Being dissatisfied with the explanation furnished by the petitioner regarding the alleged irregularities, respondent No.3, by order dated 13.06.2024, in exercise of the powers conferred under Rule 66(1) of the Rules of 1945, suspended the license issued to the petitioner for the sale, stocking, exhibition, offering for sale, or distribution of retail drugs (other than those specified in Schedule C, C(1), and X of the Rules of 1945) for a period of sixty days, i.e., from 20.06.2024 to 18.08.2024.
4.1 Aggrieved by the order dated 13.06.2024 passed by respondent No.3 suspending the license, the petitioner filed Appeal No.27/2024 before the Appellate Authority–cum–Joint Secretary to the Government, Department of Medical Health. The Appellate Authority, after considering the material placed before it, vide order dated 26.07.2024, rejected the appeal filed by the petitioner-firm. However, the period of suspension of the license was modified to operate from 19.08.2024 to 18.09.2024 (both days inclusive).
5. After completion of the suspension period imposed upon the
