1 IN THE HIGH COURT OF JUDICATURE AT MADRAS (CONTEMPT JURISDICTION) MONDAY, THE 6TH DAY OF JUNE, 2011 THE HON'BLE MR.JUSTICE P.JYOTHIMANI CONTEMPT PETITION NO.1563 OF 2010 AND SUBAPPLICATION NO.510 OF 2010 ********* Vasantha Meena Enterprises rep. by its Proprietrix, N.M.Sathammai W/o.V.Meenakshi Sundaram 16-D, 3rd Floor, Postal Audit Colony Chinmaya Nagar, Chennai – 92. .. Petitioner Vs. 1. Baskaran The Director of Drugs Control DMS Complex, Chennai – 6. 2. Vijayalakshmi The Assistant Director of Drugs Control Zone-III, DMS Compound Chennai – 6. 3. Bharani Kumar The Deputy Superintendent of Police, CBCID SIDCO Electronic Complex Block-3, 1st Floor, Industries Estate Guindy, Chennai – 32. .. Respondents Contempt Petition praying that this Court be pleased to punish the respondents herein for their wilful act of committing contempt of Court in disobeying the order of https://hcservices.ecourts.gov.in/hcservices/ 2 this Hon'ble Court dated 18/08/2010 and made in W.P.No.11239 of 2010. Sub Application praying that this Court be pleased to stay of the operation of the order of the cancellation of the Drugs Licence (yet to be serviced on the petitioner) issued to the petitioner. The above Contempt Petition came up on 09/02/2011 before this Court for hearing in the presence of Mr.N.Jothi, Advocate for Mr.M.C.Govindan, Advocate for the petitioner in Contempt Petition and Sub Application; and of Mr.P.Wilson, Additional Advocate General assisted by Mr.G.Sankaran, Special Government Pleader; and Mr.K.Balasubramanian, Special Government Pleader for the respondents in Contempt Petition and Sub Application; and upon reading the petition and affidavit of N.M.Sathammai, filed herein; and the Counter Affidavit of M.Bhaskaran, P.V.Vijayalakshmi, S.Baranikumar, filed herein; and having stood over for consideration; the Court made the following order:- The contempt complained of is in respect of the order dated 18.8.2010 passed in W.P.No.11239 of 2010. 2.1. The said writ petition (W.P.No.11239 of 2010), which has been filed by Vasantha Meena Enterprises, which is a proprietary concern represented by its Proprietrix, was taken for disposal along with another writ petition in https://hcservices.ecourts.gov.in/hcservices/ 3 W.P.No.11240 of 2010 filed by Meena Health Care (P) Limited, which is a company registered under the Companies Act, represented by its Managing Director, V.Meenakshisundaram, who is the husband of N.M.Sathammai. The said writ petitions were filed challenging the orders of the second respondent, viz., the Assistant Director of Drugs Control, Zone-III, directing to appear for an enquiry and for a direction against the second respondent to grant sufficient time to answer the show cause notice dated 20.3.2010. 2.2. According to the petitioner, her family, including her husband, who is the Manager of the petitioner/proprietary concern, has been doing the business in medicine and drugs after obtaining permission, licence, etc. in the name of Vasantha Enterprises, Vasanthameena Enterprises and Meena Health Care Private Limited. The licence has been granted by the authorities under the Drugs and Cosmetics Act, 1940 (for brevity, "the Act") and the Drugs and Cosmetics Rules, 1945 (for brevity, "the Rules") framed thereunder. 2.3. It is stated that based on a complaint given by the Drugs Inspector, Perambur Range against her husband, he surrendered before the police authorities on 23.3.2010 and was taken into custody as a detenu under Act 14 of 1982. https://hcservices.ecourts.gov.in/hcservices/ 4 It is based on the complaint lodged by the Drugs Inspector, Perambur Range against the petitioner's husband, it is stated that the petitioner's business premises was also sealed by the third respondent herein, who was the fourth respondent in the writ petition. It was against the same, the petitioner has filed W.P.No.7986 of 2010. 2.4. In the meantime, the second respondent/licensing authority, through the Drugs Inspector (G.Ammukutty) has issued a show cause notice and the said show cause notice is stated to have been attempted to be served on the premises which has been sealed by the third respondent and in spite of the authorization given by the husband of the petitioner to her advocate, Mr.S.Sudalaikani to obtain the copy of the show cause notice, the second respondent has not issued the same and therefore, the petitioner's husband has filed W.P.No.9162 of 2010 and when the writ petition was moved for admission, an officer from the first respondent's office appeared and on a direction from this Court, the copy of the show cause notice was handed over to the counsel and there was a direction in the writ petition to reply to the show cause notice by 21.5.2010. 2.5. In the meantime, certain interim common orders were passed on 30.4.2010 in W.P.No.7986 of 2010 along with another writ petition filed by her husband in W.P.No.7985 https://hcservices.ecourts.gov.in/hcservices/ 5 of 2010 in respect of locking of the premises, taking of inventory and filing of report, with a specific direction to keep the premises open in the presence of the representatives of the petitioners for taking inventory/list of articles available in the premises. A further direction was given permitting the petitioners to operate the bank accounts and they were directed to file accounts for the amounts taken from the accounts by 6.5.2010, posting the case on 6.5.2010. 2.6. It is stated that inventory is being carried out and in the meantime, the second respondent has issued a proceeding dated 21.5.2010 directing the petitioner to offer further explanation in person on 25.5.2010 at 3 P.M. in the office of the Assistant Director of Drugs Control, Zone-III, Chennai – 6, as a final chance, ignoring the interim reply sent by the petitioner and her husband on 19.5.2010 stating that unless the show cause notice has been completely replied, any truncated reply cannot be a ground to proceed with the enquiry, which will amount to violation of the principles of natural justice and they also sought the report of inspection made by G.Ammukutty, Drugs Inspector, Ashok Nagar Range, Zone-III, Chennai-6. 2.7. It was in those circumstances, the said writ petition in W.P.No.11239 of 2010 was filed by the https://hcservices.ecourts.gov.in/hcservices/ 6 petitioner challenging the proceedings of the second respondent dated 21.5.2010 directing to appear on 25.5.2010 and also for a direction to give sufficient time to answer the show cause notice dated 20.3.2010 after completion of the inventory by the third respondent herein. 2.8. Both the writ petitions were disposed of by this Court by a common order dated 18.8.2010. While passing the order, this Court has set aside the communication of the second respondent dated 21.5.2010 and directed the second respondent to furnish the copies of the documents relied upon in the show cause notice within two weeks from the date of receipt of that order and thereafter, the petitioners were directed to give a final reply to the show cause notice within four weeks from the date of furnishing of documents and removal of seal from the premises of the petitioners, leaving it open to the second respondent to pass final orders on merits and in accordance with law. It is apposite to extract the following paragraphs of the order dated 18.8.2010: "8. These writ petitions are posted before me along with W.P.Nos.7985 and 7986 of 2010. The respondents have filed counter affidavit and raised various contentions. Since the writ petitions are being disposed of not on merits, it is not necessary to traverse into the grounds raised in the writ petitions as well as in the counter affidavits. https://hcservices.ecourts.gov.in/hcservices/ 7 9. The learned counsel for the petitioners submitted that the business premises of the petitioners are sealed by the Police on 16.3.2010; the show cause notice was served to the counsel for the petitioners in the open Court on 28.4.2010 when a complaint was made while hearing the writ petitions; petitioners gave preliminary objections and required documents to furnish effective reply after getting access to the records and computer as the business premises including their offices are sealed. The learned counsel also submitted that the notice dated 21.5.2010 was posted on 22.5.2010 and the same were served on the petitioners/representative of the petitioners on 23.5.2010 and only one day time was given to submit objections that too without furnishing copies of the documents as sought for by the petitioner by their interim reply dated 19.5.2010 and therefore the petitioners rushed to this Court and filed these writ petitions and challenged the communication dated 21.5.2010. The learned counsel further submitted that the licences granted to the petitioners are for five years and the said licences are expiring only in the year 2011. The Inspection report dated 10.3.2010 said to have been submitted by one G.Ammukutty, Drugs Inspector, Ashok Nagar Range, Zone-III, Chennai – 6, though was sought for, was not furnished, which is the basis for issuing show cause notice and denial of the said document is in violation of the principles of natural justice. https://hcservices.ecourts.gov.in/hcservices/ 8 10. The learned Advocate General in answer to the said submissions submitted that the seal put up by the Police in the premises of the petitioners will be removed in terms of the order to be passed in W.P.7985 and 7986 of 2010 today and therefore there may not be any impediment to the petitioners to get access to the records and computers to prepare detailed explanation and copy of the Inspection report dated 10.3.2010, relied on in the show cause notice will also be furnished to the petitioners. The learned Advocate General further submitted that reasonable time may be given to the petitioners to submit detailed explanation to the show cause notice. The said submissions made by the learned Advocate General are recorded. 11. In the light of the said submissions made by the learned counsel for the petitioners as well as learned Advocate General, these writ petitions are disposed of by setting aside the communication dated 21.5.2010 and the second respondent is directed to furnish copy of the documents relied on in the show cause notice, within a period of two weeks from the date of receipt of copy of this order and on receipt of the same, the petitioners are directed to give final reply to the show cause notices dated 20.3.2010 within a period of four weeks from the date of furnishing of the said documents and removal of seals from the petitioners' business premises and on receipt of the same, it is open to the second https://hcservices.ecourts.gov.in/hcservices/ 9 respondent to pass orders on merits strictly in accordance with law, in the action initiated through the show cause notice dated 20.3.2010. This order shall not be construed as approving the show cause notices, on merits." 2.9. It is the case of the petitioner that in spite of the said order having been passed on 18.8.2010, the seal of the premises has not been removed and the premises has not been handed over to the petitioner. However, the third respondent is making verifications and segregation of drugs at intermittent days in a casual manner. According to the petitioner, the direction given in the writ petition means to remove the seal once for all, since the petitioner has to get accessibility to the computers wherein the details are stored. During the time when the seal is removed by the third respondent along with the Drugs Inspector (Ammukutty), it is stated that the petitioner is not allowed to have access to the computers, ledgers, etc. and is thereby deprived of an opportunity to give detailed explanation as per the order of this Court. 2.10. It is stated that even on the date of filing of the contempt petition accessibility has not been given to the computer system and the petitioner learnt that an order of cancellation has been passed, which will be contrary to https://hcservices.ecourts.gov.in/hcservices/ 10 the order passed by this Court dated 18.8.2010. It is stated that by not granting proper opportunity by giving access to the computers and other records and thereby preventing the petitioner from replying to the show cause notice, and by opening the seals on intermittent days without proper opportunity to the petitioner and taking advantage of the period fixed by this Court for taking inventory, the second respondent has chosen to take steps to cancel the licence as if the petitioner has not given its reply as per the direction of this Court. It is in these circumstances the present contempt petition is filed to punish the respondents for the wilful act of contempt committed by them in respect of the order dated 18.8.2010 passed in W.P.No.11239 of 2010. 3.1. In the counter affidavit filed by the second respondent, it is stated that the second respondent has scrupulously followed the order of this Court dated 18.8.2010 and therefore, the contempt petition is liable to be dismissed. 3.2. It is stated that the second respondent by exercising the power under Rule 66(1) of the Rules has already passed an order of cancellation of licence on 21.10.2010 and the contempt petition is filed only to circumvent the said order without challenging the same and https://hcservices.ecourts.gov.in/hcservices/ 11 the intention is to arm-twist the authorities for initiating genuine legal and statutory action to enforce, maintain and safeguard the public health and safety as per the provisions of the Act. 3.3. It is stated that credible information was received to the effect that during the month of March, 2010, certain expired drugs like "Renerve" have been re- circulated by altering the date of expiry, date of manufacturing, batch number, etc. by certain persons and that a team of Drug Inspectors of Drugs Control Department, Chennai was constituted to find out the illegal activities and on preliminary investigation, it was revealed that a gang of unscrupulous persons are involved in these illegal activities with the aid of licensed dealers in Chennai like Meena Health Care Private Limited, Vasantha Meena Enterprises, and others, and on 10.3.2010, it was found by the Drugs Inspector, Ashok Nagar Range that the petitioner has purchased and sold Renerve capsules, which is a spurious drug as per Section 17B(e) of the Act, and hence, a show cause notice was issued for cancellation of licence in Forms 20B and 21B. https://hcservices.ecourts.gov.in/hcservices/ 12 3.4. It was challenging the said show cause notice, writ petition in W.P.No.11239 of 2010 was filed. It is stated that there was an interim order passed by this Court on 18.8.2010, as follows: "The second respondent is directed to furnish the copies of the documents relied on in the show cause notice within 2 weeks from the date of receipt of the copy of this order. On receipt of the same the petitioner are directed to give final reply to the show cause notices dated 20.3.2010 within a period of four weeks from the date of furnishing of the said documents and removal of seals from the petitioners' business premises. On receipt of the same, it is open to the second respondent to pass orders on merits strictly in accordance with law in the action initiated through the show cause notice dated 20.3.2010." 3.5. It is stated that as per the said direction copies of the documents were sent to the petitioner on 3.9.2010 by speed post and according to the second respondent, the delivery has been effected on 6.9.2010. It is stated that the sealed premises was opened by the third respondent on 18.9.2010 in the presence of the Drugs Inspector concerned and the petitioner and therefore, the petitioner had sufficient opportunity to give plausible explanation. It is stated that the computer with software and hard disk is not required for furnishing the carbon https://hcservices.ecourts.gov.in/hcservices/ 13 copies of the sales bills and that for having purchased and sold spurious drugs and for not having raised sales bills, no explanation was offered by the petitioner within the period of four weeks from the date of removal of seal. 3.6. It is stated that the Drugs Inspector has also approved the sales of few drugs on 7.10.2010 under nine sales bills pertaining to Meena Healthcare Private Limited, which is the sister concern of the petitioner, however in respect of the petitioner concern there was no request made for approval of sale of drugs. It is stated that the petitioner has neither replied within the stipulated time nor such communication has been received and therefore, the second respondent has passed the cancellation order and he has acted as per the provisions of the Act and the Rules. 4.1. In the counter affidavit filed by the third respondent, it is stated that, pursuant to the order of this Court dated 18.8.2010, the third respondent has received the keys of the sealed premises on 17.9.2010 and he has sent intimation to the petitioner on the said date requesting her or her representative to be present in the said premises on 18.9.2010. On 18.9.2010, the third respondent along with the Drugs Inspector (Ammu Kutty) proceeded to Chinmaya Nagar and opened the sealed premises of all the three premises Vasantha Meena Enterprises, Meena https://hcservices.ecourts.gov.in/hcservices/ 14 Health Care Private Limited and Vasantha Enterprises at 1130 Hrs, 1615 Hrs and 1630 Hrs respectively in the presence of the petitioner and her representatives. It is stated that the premises did not have electricity supply due to non payment of electricity bills and the supply was restored in the afternoon after clearing the arrears bills by the petitioner. Cleaning work was done at Vasantha Meena Enterprises and due to the shortage of company staff, the work could not be continued at the premises and at the request of the petitioner, the premises were locked at 1645 Hrs, 1650 Hrs and 1730 Hrs respectively and it is stated that the petitioner assured to make arrangement for manpower to continue the work on 20.9.2010. 4.2. It is stated that, on 20.9.2010, the process of segregation was continued and the valid, expiry and short expiry medicines were segregated in the presence of the petitioner, her representatives and the Drugs Inspector. It is stated that in deference to the order of this Court, on 7.10.2010, the petitioner was permitted to sell the valid medicines worth about ` 2,400/-, after obtaining clearance from the Drugs Inspector. It was stated that access was provided to the petitioner to further produce purchase bills, but the petitioner and her representatives did not produce any purchase bills before the Drug Authorities for the sale of the segregated valid medicines. https://hcservices.ecourts.gov.in/hcservices/ 15 4.3. It is stated that, on 22.10.2010, a fax message was received from the Director of Drug Control by the ADGP, CBCID, Chennai for cancellation of licence of Meenakshisundaram and therefore, the said Meenakshisundaram has instructed the representatives of the petitioner not to sell any medicines. It is stated that the process of segregation was completed at the said premises in the presence of the petitioner, Drugs Control authorities and police. 5. Similar is the case of the first respondent in the counter affidavit filed by him. 6.1. Mr.N.Jothi, learned counsel appearing for the petitioner would submit that when this Court has passed an order on 18.8.2010 by setting aside the order dated 21.5.2010 directing the respondents to furnish the documents relied on in the show cause notice, permitting the petitioner to give reply within four weeks from the furnishing of documents and removal of seal from the petitioner's premises and thereafter enabling the second respondent to pass orders, it means that, on opening the premises, proper access must be given to the petitioner for the purpose of enabling the petitioner to submit her explanation to the show cause notice and for the purpose of https://hcservices.ecourts.gov.in/hcservices/ 16 giving proper explanation, it is necessary for the petitioner to have access to the internet and that has not been given. 6.2. He would also bring to the notice of this Court that even as per the counter of the third respondent, the petitioner's premises was opened at 1130 Hrs on 18.9.2010 and was closed at 1645 Hrs and segregation work was done in respect of the medicine on 20.9.2010 and therefore, it was only on these two days the seal was opened and it was not sufficient for the petitioner to give her explanation and that fact was known to the respondents and in spite of it, hurriedly, only for the purpose of counting the days given by this Court, they waited for passing an order of cancellation, which according to the learned counsel for the petitioner, is patently not only illegal, but also a gross disobedience of the order of this Court. 6.3. He would also submit that even the order passed by this Court on 18.8.2010 is a consent order, wherein the learned Advocate General has consented that access will be given to the records and computers, so as to enable the petitioner to give detailed explanation to the show cause notice and inasmuch as such access to the computers has not been given to the petitioner, it is disobedience of the order of this Court and the intention of the respondents is https://hcservices.ecourts.gov.in/hcservices/ 17 to cancel the licence somehow or other and therefore, they should be dealt with severely in accordance with law. 6.4. The order dated 18.8.2010 has to be read in the light of the concept of the principles of natural justice, since the show cause notice issued has to be given proper reply and that requires materials to be collected and inasmuch as such opportunity has not been given, there is a statutory violation and in this regard, he would rely upon the judgment in Uma Nath Pandey and others v. State of Uttar Pradesh and another, [2009] 12 SCC 40. 6.5. The passing of the order by the second respondent dated 21.10.2010, which, according to the petitioner, has not even been communicated to him, cancelling the licence without even giving opportunity to the petitioner to give reply to the show cause notice is liable to be set aside. He would also rely upon the judgment of the Allahabad High Court in Amit Kumar Verma v. State of U.P. and another, 2011 (1) Crimes 127 (All.). 7.1. Per contra, it is the submission of the learned Additional Advocate General that the documents have been served as per the direction of the Court and it was the duty of the petitioner to give proper explanation to the show cause notice. https://hcservices.ecourts.gov.in/hcservices/ 18 7.2. He would refer to the various provisions of the Rules referring to the powers of the authority in dealing with the licences and he would submit that the order cancelling the licence has been passed on 21.10.2010 in accordance with Rule 66(1) of the Rules, in view of the non-compliance of the order of this Court by the petitioner. He would submit that even otherwise there is no deliberate violation of the order of this Court. He would rely upon the decisions of the Supreme Court in Indian Airports Employees' Union v. Ranjan Chatterjee, [1999] 2 SCC 537, Jhareswar Prasad Paul v. Tarak Nath Ganguly, [2002] 5 SCC 352, Anil Ratan Sarkar v. Hirak Ghosh, [2002] 4 SCC 21. 7.3. It is his submission that the petitioner having not given explanation has only otherwise intended to have the order of cancellation set aside in the contempt petition, which cannot be permitted. 8. Admittedly, the second respondent/licensing authority, through the Drugs Inspector (G.Ammukutty), has issued a show cause notice to the petitioner on 20.3.2010 for cancellation of licence on the ground of sale of spurious drugs by the petitioner. Such notice was given under Rule 66(1) of the Rules, which enables the licensing https://hcservices.ecourts.gov.in/hcservices/ 19 authority, viz., the second respondent, after giving the licensee an opportunity, to show cause why such order should not be passed cancelling the licence. It is true that such proceedings for cancellation of licence are quasi judicial in nature. Rule 66 of the Rules is as follows: "Rule 66. Cancellation and suspension of licences.- (1) The Licensing Authority may, after giving the licensee an opportunity to show cause why such an order should not be passed by an order in writing stating the reasons therefor, cancel a licence issued under this Part or suspend it for such period as he thinks fit, either wholly or in respect of some of the substances to which it relates, if in his opinion, the licensee has failed to comply with