By TIOL News Service

CHENNAI, FEB 17, 2015: THE Petitioner's consignment of Progesterone said to be manufactured by M/s Zhejiang purchased from a foreign trader was held up as the manufacturer, M/s Zhejiang lodged a complaint before the Drugs Controller General of India and hence, the certificates referred to by the petitioner importer were sent to Zhejiang to verify the authenticity of the same.

During the course of examination, the Assistant Drugs Controller, vide opinion dated 26.5.2009 stated that 'Zhejiang' is claimed as the manufacturer of the consignment as per the documents submitted by the petitioner while filing the Bill of Entry, however, the said Zhejiang has clarified to the respondents that the goods of the bill were neither produced nor supplied by them to the said foreign supplier and that the certificate of analysis, batch release certificate were not theirs and hence, the said documents were forged and fake. Thus, the material imported is not from a registered source as required under the Act and Rules. For this reason, the material was not permitted for release and it was detained. Thereafter, the petitioner requested for re-export of the consignment. However, by the impugned proceedings, the second respondent informed the petitioner that the permission for re-export of the consignment sought for by him, was denied. Challenging the same, the petitioner has come forward with the present writ petition.

The Petitioner submitted inter alia that the impugned decision of the second respondent in rejecting the claim of the petitioner for re-export the consignment in two lines without giving sufficient reasons for such rejection, is arbitrary and such a non-speaking decision cannot stand and is liable to be set aside.

The respondents contended that the authorities have rightly detained the permission to re-export and further prosecution has already been launched against the petitioner and it is pending before the XV Metropolitan Magistrate and therefore, considering all the circumstances, the authorities have rejected the plea of the petitioner for re-exporting the spurious drugs and intimated the same by impugned communication, which cannot be interfered. Rule 41(1) of the Drugs and Cosmetics Rules, 1945 applies only for re-export of substandard drugs declared by the Director of testing lab only and not for spurious drugs and it is required for the purpose of marking it as material object during the trial of the prosecution.

After hearing both sides, the High Court allowed the re-export with conditions by holding that:

From a perusal of the communication, (rejecting the re-export) it is not known on what grounds, the second respondent has taken the decision to deny the permission sought for by the petitioner for re-exporting the consignment. No reasons have been assigned in the impugned communication to enable the petitioner to workout his further remedy if any or atleast to know for his satisfaction as to why the decision has gone against him. However, strangely, the respondents have given reasons in the counter affidavit, by enclosing the proceedings of the Deputy Drugs Controller (India), CDSCO, South Zone, wherein, it is stated that the department had already obtained permission to prosecute the importer for having imported material without adequate registration and import licence and since, the contraventions attract the provisions of Drugs & Cosmetics Act and Rules and as per Section 14 of the Act, the imported drugs is subject to confiscation and Rule 41(1) applies for re-export of substandard drugs declared by Director of testing lab only and not for spurious drugs. The circumstances pointed out in the counter-affidavit cannot be held to be substitute for the reasons which the second respondent must be held to have arrived at a decision, cannot be countenanced. The second respondent who passed the impugned order cannot be permitted to support his order relying on or on the basis of the statements made in the counter affidavit. Therefore, whenever an order is passed by a statutory authority, the same must be supported either on the reasons stated therein or on the grounds available therefor in the record.

It is well settled law that the face of an order passed by a quasi-judicial authority or even an administrative authority affecting the rights of parties, must speak and it must not be like the inscrutable face of a sphinx. Recording of reasons operates as a valid restraint on any possible arbitrary exercise of judicial and quasi-judicial or even administrative power and it re-assures that discretion has been exercised by the decision maker on relevant grounds and by disregarding extraneous considerations. The authority shall adduce reasons which will be regarded as fair and legitimate by a reasonable man and will discard irrelevant or extraneous considerations. Therefore, the statutory authority, which is a decision maker, by exercising statutory power given under the Act, must assign the reasons while making the decisions and communicate the same to the aggrieved party.

A perusal of Rule 41(1), it is clear that the re-export of the material can be made based on the declaration of the Director of testing Lab that the said drugs are not of substandard. In the present case, the Deputy Drugs Controller was of the view that the material itself is 'spurious drugs' since it has been imported by the petitioner without adequate registration and import licence and the documents furnished by the petitioner are forged and fake. For the risk of repetition, this Court reiterates that this Court cannot venture upon the issues, viz., whether the petitioner has imported the consignment based on the forged and fake documents from unregistered source contrary to the provisions of the Act and whether the detained material is a 'spurious', etc., since these are the allegations levelled against the petitioner, are the disputed questions of fact and are subject matter of the prosecution already launched against the petitioner. Therefore, it is not appropriate for the Deputy Drugs Controller to pre-determine that the drugs are 'spurious' now itself in order to reject the claim of the petitioner for re-exporting of the consignment.

(See 2015-TIOL-396-HC-MAD-CUS)