Right to reanalysis of sample under the Drugs and Cosmetics Act, 1940

Isha Sawant | Government Law College | 22nd August 2020

Medipol Pharmaceutical India Pvt. Ltd. v. Post Graduate Institute of Medical Education & Research

Facts:

The respondent- Post Graduate Institute of Medical Education and Research (PGI), issued a notice inviting quotations (NIQ) on 06-07-2015 for Clotrimazole Cream 1% 15-gram tubes, for the first and second year the quantity of 3400 tubes each.  The appellant- Medipol Pharmaceutical Pvt. Ltd, submitted its quotation on 09-07-2015 specifying that the cream has a shelf life of two years. After negotiations supply order was issued on 04-11-2015 with the condition that when the order is received no more than 1/6^th of the shelf life should have expired. After supplying the first installment of 1700 on 18-01-2016 tubes no complaint was received however, after the second installment was supplied on 08-04-2016, complaints were made. The respondent drew samples on 29-11-2017 which were sent to the Government Analyst for testing under section 25(1) of the Drugs and Cosmetics Act (DCA), 1940. The first report dated 27-03-2018 stated the sample was received on 26-12-2017 i.e. a few days before the shelf life of the cream expired, in which it was found that the sample was 61.96% w/w as against an acceptable standard of 95-100%. Two show cause notices were issued by the State Drugs Controller and Drug Inspector respectively to the appellant asking why its license should not be cancelled under Rule 84(2) of Drugs and Cosmetic Rules, 1945. The appellant replied to the notices but a third notice issued on 29-09-2018 questioned as to blacklisting the company. The appellant in its reply dated 21-01-2019 requested the authorities not to take any action until a final report of the appellate lab is received. However, before the appellate report was received, the appellant was blacklisted for a period of two years without giving any reasons for the same. The appellate lab test report of the Central Drug Laboratory, Kolkata, dated 19-08-2019 tested a sample dated 11-02-2019 long after the expiry date of the cream in April 2018, which yielded a result of 92.01%, which was way more than the 61.69% of the first test report. A post-decisional hearing was given to the appellant based on the appellate report, in which a seven-member committee upheld the blacklisting order based on the first test report result of 61.69%. The appellant approached the Punjab and Haryana High Court who dismissed the impugned order passed in the post-decisional hearing, however, after examining the appellate report and finding the result to be 3% lower than the required standard, the court stated there was no ground for interfering with impugned order of blacklisting. The appellant has approached the Supreme Court against this order of the High Court.

Issues:

• Whether the First test report by the Government Analyst is correct.
• Whether the blacklisting order was given after a fair trial.
• If the right of the appellant under section 25(3) of the Drugs and Cosmetics Act, 1940 is violated.

Legal Provisions:

• Drugs and Cosmetics Act, 1945, sections 24 and 25

Observations of the Court:

   The court observed that the Drug Inspector collected the sample on 29-11-2017 which was a long time after the supplies were made to the respondent and complaints received on 08-04-2016, the same were received by the Government Analyst after a delay of one month, and through no fault of the appellant the sample was received by the Central Drugs Laboratory on 11-02-2019 long after the expiry date of the drug which was April 2018, even than this sample yielded a result of 92.01% which is only 3% less than the required minimum standard, more importantly it shows that the Government analyst’s report was completely wrong. It was also stated that there was no reason for the post-decisional hearing by a 7-member committee to blacklist the company based on the first laboratory test report and ignore the appellate test report, the decision dated 18-09-2019 was held to be unreasonable as it was only based on the first test report.

   The High Court was criticized for considering the appellate report individually and not striking down the impugned decision for relying only on the first test report and ignoring the appellate report. The High Court should have appreciated that variation between the appellate test report and first report was 30%, despite the appellate report being based on sample taken long past the drug’s shelf life. The court mentioned the provisions of section 25 of the Drugs and Cosmetics Act, 1940 and the apex court’s judgements based on similar provisions. The court referred to the case of Medicamen Biotech Ltd vs. Rubina Bose, Drug Inspector (2008), where it was said that the provisions of sec-25 of  DCA laid down obligations as well as safeguards for the person from  whom drugs have been seized for analysis or testing and as per sec-25(3) if such a person contests the correctness of the report submitted by the government analyst within 28 days in writing that he intends to cite evidence to counter the analyst’s report, the counter report would be deemed as the conclusive evidence of the quality of the drug. In Laborate Pharmaceuticals India Ltd vs. State of Tamil Nadu, the court criticized the prosecution for denying the appellant the valuable right for reanalysis vested under sec-25 of the DCA. In Municipal Corporation of Delhi vs. Ghisa Ram (1967), the court held that if an accused chooses not to exercise his right under sec-13(2) of the Prevention of Food Adulteration Act, 1954 (similar to right under sec-25 of the DCA)the case against him cannot be decided on the basis of the Public Analyst report in case where the denial of the right is due to conduct of the prosecution so that the case is seriously prejudiced against the accused it would be improper to uphold his conviction on the basis of the Public Analyst report even though it is evidence in case of facts, similar observation was made by the court in State of Haryana vs. United Farmaid (P) Ltd (1999). 

   The above-mentioned judgements shed light on the valuable right granted to an individual for reanalysis by a superior authority namely Central Drug Laboratory, who is sought to be punished under the DCA on the basis of Government analyst report. They stated that due to delay of State of any of its entities owing to which an article deteriorates with time and when tested is not up to requisite standards, any prosecution or penalty inflicted by virtue of such report cannot be sustained. In the present case it is evident that there was a delay in the sample being drawn and analyzed by the Govt. analyst as well as by the Central Drugs Laboratory to the extent the sample was taken either towards the end or beyond its shelf life of the drug. It was thus made clear that the valuable right granted under sec-25 of the DCA on the basis of the facts of this case, necessarily renders as void any penalty imposed based up on the said analysis of the sample. On the punishment of blacklisting the court relied on the principles in regard to blacklisting laid down by the court in Erusian Equipment and Chemicals Ltd vs. State of West Bengal (1975) where it was stated that since Blacklisting tarnishes one’s reputation and prevents them from the advantage of entering into a lawful relationship with the Government for purpose of gains. Fair play and equality require that the person should be given an opportunity to represent their case before being blacklisted; similar position was taken by the court in Patel Engineering Ltd vs. Union of India (2012) and Kulja Industries Ltd vs. Chief General Manager, Western Telecom Project BSNL (2014).                                                                                                                                      

   The court held the post-decisional hearing to be insincere as it only relied on the Government Analyst’s report which was proven incorrect by the appellate report which the committee ignored. 

Judgement of the court:

The Blacklist order dated 21-02-2019 confirmed by an order dated 18-09-2019 was set aside, similarly the decision of the Punjab and Haryana High Court was also set aside. The appeal was allowed in the aforesaid terms.