1981 (4) TMI 276 - SC - Indian Laws

Supreme Court overturns license cancellation, orders fair proceedings, cites lack of defense opportunity & undisclosed material.

The Supreme Court set aside the orders cancelling the appellants' licenses due to lack of proper opportunity to defend themselves and reliance on ... Natural justice - failure to provide material evidence to affected party - reliance on post-notice material without furnishing - appellate authority's duty to consider explanations - setting aside administrative order for procedural unfairnessNatural justice - failure to provide material evidence to affected party - reliance on post-notice material without furnishing - Cancellation of licences was vitiated by denial of proper opportunity and by reliance upon a laboratory report and other material which had not been furnished to the appellants. - HELD THAT: - The Court found that the appellants were not given a proper opportunity before their licences were cancelled. The appellate authority relied upon a Central Drugs Laboratory test report and other matters that were not mentioned in the initial show cause notice, and that report, when received, ought to have been furnished to the appellants so they could meet it. The appellate authority was influenced by the late material and failed to grant the appellants an opportunity to reply to it. The authority also failed to apply its mind to the explanation tendered by the appellants concerning deposition of the godown licence for renewal and there was nothing to indicate the explanation was false. For these procedural infirmities, the impugned cancellation and confirmation orders were set aside.Both the State Drug Controller's cancellation order dated 23-8-1980 and the Appellate Authority's order dated 30-10-1980 were set aside for want of compliance with principles of natural justice and improper reliance on material not furnished to the appellants.Appellate authority's duty to consider explanations - setting aside administrative order for procedural unfairness - Respondent directed to reconsider the question of licence cancellation afresh after affording the appellants proper opportunity and applying their mind to the explanations. - HELD THAT: - Having set aside the earlier orders for procedural unfairness, the Court directed that the respondents proceed afresh in the matter of cancellation of the appellants' licences. The fresh proceedings must afford the appellants proper opportunity to meet all material relied upon, including any laboratory reports received after the original show cause notice, and must follow the principles of natural justice. This direction contemplates a reconsideration on merits after compliance with fair procedure.Matter remitted to the respondents for fresh consideration of licence cancellation after giving the appellants proper opportunity and following the principles of natural justice.Final Conclusion: The Supreme Court set aside the cancellation and appellate orders for failure to afford the appellants proper opportunity and for reliance on material not furnished to them, and directed the respondents to reconsider the licence cancellation afresh in accordance with principles of natural justice. Appellate cancellation of the appellants' drug licences was quashed for denial of procedural fairness: the appellate authority relied on a Central Drugs Laboratory report-four samples 'not to be standard quality'-without having furnished that report to the appellants or giving them an opportunity to meet it. The authority also accepted a narrative that the appellants were dealing in 'sub-standard and spurious quality of medicines' and thereby 'playing with the life of the ailing community,' but failed to consider the appellants' explanation that the godown licence had been deposited with the Civil Surgeon for renewal and thus could not be produced. The appellate findings demonstrate non-application of mind to submissions and reliance on material not previously disclosed. Both the original cancellation and the appellate order are set aside; the respondent is directed to proceed afresh, affording proper opportunity and observing the principles of natural justice.