Bombay High Court
Johnson And Johnson Private Limited vs The State Of Maharashtra Through ... on 11 January, 2023
Author: Gs Patel
Bench: G.S.Patel, S.G. Dige
JOHNSON & JOHNSON PVT LTD V STATE OF MAHARASHTRA & ORS
901-OSWPL-32004-2022-J.doc
Shephali
REPORTABLE
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
WRIT PETITION (L) NO. 32004 OF 2022
Johnson & Johnson Pvt Ltd,
having its registered office at:
LBS Marg, Mulund (W), Mumbai 400 080 ...Petitioner
~ versus ~
1. The State of Maharashtra,
through Minister of Food and Drug
Administration, Mantralaya,
Mumbai 400 032
2. Food and Drugs
Administration, M.S,
Through the Joint commissioner &
Licensing Authority, Greater Mumbai,
M.S., Survey No. 341, Bandra-Kurla
Complex, 2nd Floor, Bandra (East),
Mumbai 400 051. ...Respondents
A PPEARANCES
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11th January 2023
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JOHNSON & JOHNSON PVT LTD V STATE OF MAHARASHTRA & ORS
901-OSWPL-32004-2022-J.doc
for the petitioner Mr Ravi Kadam, Senior Advocate,
with Venkatesh Dhond,
Senior Advocate, Prasad
Shenoy, Gowree Gokhale, Sahil
Kanuga & Darren Punnen, i/b
Nishith Desai Associates.
for respondents- Mr Milind More, Addl. AGP.
state
CORAM : G.S.Patel &
S.G. Dige, JJ.
DATED : 11th January 2023
ORAL JUDGMENT (Per GS Patel J):-
1. There are Affidavits in Reply. There have been previous orders. As we note below, the Petition may indeed have been overtaken by subsequent events. We issue Rule and make it returnable forthwith having heard both sides at considerable length over some days. Petition is taken up for final disposal.
2. The Petitioner ("J&J") is a well known manufacturer of various types of drugs, pharmaceuticals, cosmetics and other preparations. One of these is a talcum powder for use for infants known as 'Johnsons Baby Powder'. This is described as a talcum- based cosmetic product. It has been in production for over half a century. The product is available both in India and overseas.
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3. The 1st Respondent is the State of Maharashtra through Ministry of Food and Drug Administration ("FDA"). The 2nd Respondent is the Food and Drug Administration through its Joint Commissioner and Licensing Authority.
4. The Petition was originally filed on 4th October 2022. At that time, it sought a Writ of Certiorari against two impugned orders dated 15th September 2022 and 20th September 2022. This prayer has now been amended to include a challenge to an appellate order of 19th October 2022 passed by the 1st Respondent's Minister. The amended prayer (a) at page 54-A reads thus.
"(a) Issue a writ of certiorari or a writ in the nature of certiorari or any other appropriate writ, order and direction under the provisions of Articles 226 of the Constitution of India, calling for the papers and proceedings pertaining to the Impugned Orders dated September 15, 2022, September 20, 2022 and Appeal Order dated October 19, 2022 and after ascertaining the legality thereof to quash and/or set aside the same."
5. Shortly stated, the cumulative effect of these orders, ending with the appellate order the Minister passed on 19th October 2022, is the complete stoppage of all production of Johnsons Baby Power.
6. As we shall presently see, there is also an order of this Court of a later date by which fresh testing was ordered to be done. That will have some consequence to the result of this Petition.
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7. There are two chronologies given to us with associated compilations. Mr Kadam for the Petitioner has taken us through his chronology. The one presented by Mr More is co-related to various documents on record.
8. These are the facts. On 20th December 2018, the officers of FDA collected samples of Johnsons Baby Powder from a retailer in Pune. J&J has been manufacturing this product under a license granted under the Drugs and Cosmetics Act 1940 ("the Act"; "the D&C Act") read with the old Drugs and Cosmetics Rules 1945 since about 9th March 1965. That license has been periodically renewed. The Pune sample was batch number B3R80804. Ut was collected by the FDA, Pune inspector from one Vedant Medical and General Stores.
9. It seems that for about a year thereafter nothing at all happened. On 13th December 2019, J&J applied for a retention or extension of its license.
10. The compilation presented by Mr More shows us that on 11th December 2019, a test report came from the FDA, Maharashtra.1 The important aspect about this report in Form 34 is its date, which is 17th January 2019. The batch number is mentioned. The manufacturing date is noted as October 2018. The noted expiry date is September 2020. The license code is also noted. At page 11 is the result of the test. One of the tests required under the standard or specification issued by the BIS is a test for what is called 'potential 1 FDA Compilation, p. 10.
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11. This particular batch returned a result, according to FDA testing of 9.02, that is to say, it was more alkaline then permissible. Event at this stage we note Mr Kadam's argument that alkalinity or acidity -- and, therefore, the pH test -- is one of quality not safety. Whether this has any bearing given the wording of the statute is a matter to which we will presently turn.
12. On 16th December 2019, the FDA wrote to Vedant Medical and General Stores saying that the sample was not of standard quality (we note the use of the word 'quality'), directing that retailer to stop sale or distribution of the product and to recall the stock of that product from the market. Then further information was called for.
13. On the same day, 16th December 2019, the FDA wrote to J&J at its Mumbai office. It reported that this sample had been taken from its retailer in Pune. A copy of the original test report was enclosed along with sealed portion of the sample. The FDA required J&J to submit several documents. The FDA says that the 2 Technically, "a scale-specify the acidity or basicity of an aqueous solution."
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14. We are therefore concerned only with the specification for pH and nothing else. Throughout this matter there has been no occasion to look at any other parameter.
15. On 24th January 2020, J&J wrote to the Drug Inspector of the FDA disputing the accuracy of the report and saying that repeated tests had shown that the pH of Johnsons Baby Powder was consistently 6.83, well within the prescribed range. That letter also said that J&J's manufacturing unit at Mulund, Mumbai was inspected. A sample of the same batch was tested. A copy of the inspection book was annexed. J&J emphasised that the product met the applicable quality standards. It invoked its rights to adduce evidence under Section 25(3) of the D&C Act. J&J also sought that the batch be tested by the Central Drug Laboratory ("CDL"). There is a statutory reason why J&J made this request.
16. On 28th January 2020, the Drug Inspector of the FDA, Pune made an application under Section 23(4) of the D&C Act for sending the sample to the CDL in Kolkata. Even in this application, the FDA noted that the batch had an expiry date of September 2020.4 3 FDA Compilation, p. 50.
4 FDA Compilation, pp. 19-27.
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17. On 26th February 2020, the Court made an order directing the sample to be sent to the CDL in Kolkata.5
18. On 18th March 2020, CDL forwarded its test reports. 6 The covering letter noted that the sample had been found to be substandard. The test report gave a reason for declaring the sample as not of standard quality. It noted a pH of 8.42 as against the permissible range of 5.5 to 8 and said, therefore, that the sample did not conform to IS5339:2004 specification with respect to the pH test. A certified copy of this result came on 16th August 2021 to the Chief Judicial Magistrate. On 10th February 2021, the Joint Commissioner, Greater Mumbai, FDA wrote to the Joint Commissioner Food & Drug, Pune submitting the test report of the CDL.7
19. We come now to the date of 10th February 221. This is the date on which Joint Commissioner, Greater Mumbai of the FDA issued a show cause notice to J&J.8 This show cause notice reiterated that the sample in question -- collected on 18/20th December 2018, by now almost two years earlier -- did not comply with the IS5339:2004 specification for skin powder for infants, second revision, regarding the pH test. The show cause notice is specifically a direction to J&J to show cause why its manufacturing license for this product should not be cancelled.
5 FDA Compilation, pp. 30-32.
6 FDA Compilation, pp. 34-35.
7 FDA Compilation, pp. 36-37.
8 FDA Compilation, pp. 39-40.
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20. Although this is still at a relatively early point in the narrative, Mr Kadam submits even at this stage that on its own and for two possibly distinct (though connected) reasons, the action of the FDA not only shows an unacceptable non-application of mind or perhaps a mindless application of law, but is utterly unreasonable and disproportionate. Specifically, his submission is first, that given the delay and one that is without a cogent explanation, such an action could not have been initiated at all. Second, up to this point there was in question an alleged non-conformity with one aspect (the pH factor) from a single batch a sample of which was taken two-and-a- half years earlier. That batch in any case had already passed its expiry date. Putting all these factors together, Mr Kadam submits, J&J would have been within its rights to come to Court even at this stage to impugn the show cause notice because there was really nothing against which cause could any longer been shown for this one batch. As to the question of proportionality, a submission to which he returns later, Mr Kadam states that there is up to this point nothing to show that every batch of Johnson's Baby Power suffered from the same non-conformity. The show cause notice was not directed to asking J&J to show cause why the batch should not be destroyed, or unsold stock should not be recalled. It went to the furthest extent possible by demanding a complete stoppage of manufacturing of the product altogether -- based on a single sample taken two-and-a-half years earlier from a batch now past its expiry date.
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21. On 17th February 2021, J&J responded to the Joint Commissioner of the FDA and replied to the show cause notice. 9 In this reply, J&J maintained inter alia that internal and external test results proved conformity. It disputed the test results and their accuracy. It mentioned specifically that there was an inordinate delay even in testing the sample. It mentioned again, as it had done earlier, that the sample was taken only once it was outside J&J's chain of custody and was picked up from the open market. It reiterated that a second sample was taken from the Mulund manufacturing unit and was tested in the presence of the Assistant Commissioner and Drug Inspector and was found to be compliant. Importantly, the second sample was from the very same batch. What is interesting is the comment that J&J made at this stage because it said that pending the conclusive test report from the CDL no action could be taken. Mr Kadam is at some pains to point out that although FDA had the CDL report from 18th March 2020, even as late as the show cause notice on 10th February 2021 that CDL report had never been sent to J&J. J&J provided additional documentation and it then mentioned that another batch No. B3R90301 was picked up at Nashik and was also declared to be of non-standard quality for the same reason. Proceedings regarding to that batch were going on separately. J&J said no action should be taken pending the receipt of the CDL report and demanded a hearing of the matter.
22. We will pass over some internal correspondence between the Joint Commissioner Greater Mumbai, FDA to the Joint 9 FDA Compilation, pp. 41-43.
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23. It was not until 8th July 202211 that the FDA issued a letter to J&J appointing time for a personal hearing. That hearing took place on 24th August 2022.12
24. On 15th September 2022 came the first impugned order. 13 Effectively, this entirely cancelled or revoked J&J's license to manufacture Johnson's Baby Powder. On 20th September 2022, the FDA wrote to J&J to halt production and sale of the product. This is the second impugned order.14
25. The immediately following documentation is not necessary except to note that J&J ultimately took the matter in appeal to the Minister of the State of Maharashtra, the Food and Drugs Department. That resulted in an appellate order in Appeal No. 245 of 2022 delivered on 19th October 2022 upholding the action of the FDA in cancelling J&J manufacturing license for Johnson's Baby Powder and directing it to stop production and sale of the product. This is now impugned in the amended Petition.
10 FDA Compilation, pp. 44-49.
11 FDA Compilation, pp. 51-52.
12 Roznama at FDA Compilation, pp. 53-55.
13 FDA Compilation, pp. 56-56.
14 FDA Compilation, p. 60.
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26. The important aspect in this is that the CDL report which J&J had been asking for from the time of show cause notice did not come to the hands of J&J until after J&J filed this Petition on 4th October 2022 (even before the appellate order). On the Petition, on 26th October 2022, a vacation Bench of this Court directed that a copy of the CDL report is given to the J&J, which received it on 27th October 2022.
27. To complete the narrative after the Petition was filed: A Division Bench of this Court permitted an amendment to challenge the appellate order, and this amendment was carried out on 21st October 2022. By this time there was an Affidavit in Reply. After some hearing, the Court issued some directions and requested the AGP then appearing to take instructions. At a hearing on 14th November 2022, the Government submitted that a sample taken in Delhi was also found to be not of standard quality. J&J argued that that batch was also prior to the time that J&J applied for a retention of its license and which had been granted. Equally, there were test reports of other batches that showed compliance and showed the batches to be of standard quality. The Court then asked for a list of laboratories where fresh samples of the product could be sent. On 16th November 2022, there came to be passed an order which we will set out in its entirety. It reads thus:
". On the last date, we have heard Mr Kadam, the learned Senior Counsel for the Petitioner and the learned AGP.
2. It was expressed that the samples be sent for testing in the lab.Page 11 of 33
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3. Today the learned AGP placed on record the information of the laboratories in the State of Maharashtra.
4. Considering the above we pass the following order.
ORDER
(i) The Respondent No.2 shall collect four samples from the factory of the Petitioner at Mulund, Mumbai.
(ii) The samples shall be collected and sealed in the presence of the representative of the Petitioner by the Respondent No.2 and or his Officer
(iii) The samples shall be sent to the following Laboratories:-
(a) Central Drugs Testing Laboratory, West Zone, 4th Floor Zonal FDA Bhawan, GMSD Campus, Bellasis Road, Mumbai Central, Mumbai, Maharashtra-400 008.
(b) Food and Drugs Administration Laboratory, Survey No. 341, Bandra-Kurla Complex, Bandra (E) - 400 051.
(c) M/s Intertek India Pvt Ltd, F-Wing, Tex Centre, 3rd Floor, Chandivali Farm Road, 301/302 off Saki Vihar Road, Andheri (W), Mumbai.
(iv) The samples shall be collected within three days from today by the Respondent No.2 with the intimation to the Petitioner and thereafter sent to the aforesaid laboratories within three days for carrying out the necessary test and the report shall be submitted by the Laboratory preferably within a week from the date of the receipt of samples.
(v) The reports shall be submitted as per the standard norms applicable.
(vi) Place the matter on 30 November 2022. Page 12 of 33 11th January 2023 ::: Uploaded on - 06/02/2023 ::: Downloaded on - 28/05/2023 23:39:47 :::
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(vii) The Petitioner may manufacture he Johnson baby power at its own risk.
(viii) In the impugned order the Petitioner is already refrained from selling, distributing the said Johnson bay powder to the distributors and consumers.
(ix) The learned Senior Counsel for the Petitioner assures to abide by the said condition."
28. By early December 202, the test reports came to this Court under seal. There is an order of 2nd December 2022 which notes that these reports were unsealed in Court. The Court saw them. The order notes that the reports received were from the Central Drugs Testing Laboratory or CDTL, Mumbai, the FDA Laboratory in Bandra and one Intertek India Private Limited, a private enterprise. The reports were returned to the AGP so that he could give copies of the reports to the Counsel for the Petitioners.
29. The matter was taken up again on 16th December 2022. The Court continued the ad-interim order that was granted on 16th December 2022 as quoted above, namely, that J&J could continue manufacturing the product but could not sell or distribute it until further orders of the Court. This is the ad-interim order that continues to this date.
30. Before we look at the reports, we note that the BIS specification IS5339 had a third revision in 2021. IS5339:2021 came into operation in late 2021 or some time in March 2022. This has a separate specification for skin powder for infants. It notes in particular that this is a specification for skin powder for infants.
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31. We come to the reports. The CDTL reports are of batch Nos. B3R10040, B3R20042, B3R10056. For the first of these, the pH is noted as being 7.8. For the second it is 7.89. For the third it is 6.32, more or less what J&J has been claiming since 2019. The FDA reports are in respect of B3R10056, B3R10040 and B3R20042. For the first the pH is shown as 7.20, also within the range. For the second the result is shown as 8.52, above the maximum. For the third it is shown as low as 5.98, well within the range. There appears to be another FDA report for batch No. B3R10053 which returns a result of 7.19. Thus, three of the four FDA reports also show compliance.
32. The real problem with the FDA testing is that despite these tests being done on 18th November 2022, demonstrably and as shown in the reports themselves, the specification applied was IS5339:2004 and not the latest specification.
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33. Then there are the Intertek's reports. For batch No. B3R10056, applying the correct specification, the pH noted is 7.59 but this is with a comment that the pH reading was not stable even after five minutes. For batch No.B3R20042 the pH reading was 6.37 with the same comment. For batch No. B3R10040 the pH was noted as 9.19. For batch No. B3R10053, the pH was noted as 7.58.
34. The result of this is that FDA applied wrong specification, but even on its own testing three of the four batches were found to be compliant. The same is true for Intertek.
35. We turn now to a brief over view of the statute. The D&C is, as its Statement of Objects and Reasons states, a consumer protection legislation. It is mainly concerned with standards and quality of drugs manufacturing countries and the control of import, manufacture, sale and distribution of drugs and cosmetics. A portion of the SOR of the 2008 Amendment Act is worth reproducing:
"Statement of Objects and Reasons.--The Drugs and Cosmetics Act, 1940 is a consumer protection legislation, which is mainly concerned with the standards and quality of drugs manufactured in this country and control of the import, manufacture, sale and distribution of drugs and cosmetics.
2. There have been widespread reports regarding the easy movement and harmful consequences of adulterated and spurious drugs in the country and wide ranging national concern has been expressed on these reports. The issue of adulterated or spurious drugs has serious dimensions because it involves medicinal use and Page 15 of 33 11th January 2023 ::: Uploaded on - 06/02/2023 ::: Downloaded on - 28/05/2023 23:39:47 ::: JOHNSON & JOHNSON PVT LTD V STATE OF MAHARASHTRA & ORS 901-OSWPL-32004-2022-J.doc can lead to serious and even fatal injury. There is also loss of revenue to the Government due to the manufacture and sale of adulterated or spurious drugs.
3. Drugs and Cosmetics Act, 1940 was amended in 1982 so as to impose more stringent penalties on the anti- social elements indulging in the manufacture or sale of adulterated or spurious drugs or drugs not of standard quality which are likely to cause death or grievous hurt to the user. However, the penalties existing in the said Act are not found effective. One of the reasons for the existing penalties not being effective is that manufacture and sale of adulterated and spurious drugs is primary clandestine activity which is showing increasing involvement of organised crime in recent years. Besides, offenders often obtain bail as the offences are non-cognizable and bailable under the existing provisions of the Act. The offenders remain on bail due to delay in disposal of cases for manufacture and sale of adulterated and spurious drugs. Many cases for violation are detected and investigated by the police who needs to be conferred upon the power to prosecute such cases promptly."
36. We have noted this because this statement sets the stage for what follows and for the structure of the Act. The D&C Act, as amended has five chapters. Under Chapter II the Technical Advisory Board, the CDL and the Drugs Consultative Committee are established. Chapter III regulates the import of drugs and cosmetics while Chapter IV deals with manufacture, sale and distribution of drugs and cosmetics. Chapter IV-A has provisions relating to Ayurveda, Siddha and Unani drugs, with which we are not concerned. Miscellaneous matters are covered in Chapter V. For our purposes, and since we are not dealing with imports, Chapter IV Page 16 of 33 11th January 2023 ::: Uploaded on - 06/02/2023 ::: Downloaded on - 28/05/2023 23:39:47 ::: JOHNSON & JOHNSON PVT LTD V STATE OF MAHARASHTRA & ORS 901-OSWPL-32004-2022-J.doc is relevant. Further we are dealing with cosmetics, not drugs. A cosmetic is defined in Section 3(aaa) thus:
"cosmetic" means any article intended to be rubbed, poured, sprinkled or sprayed on, or introduced into, or otherwise applied to, the human body or any part thereof for cleansing, beautifying, promoting attractiveness, or altering the appearance, and includes any article intended or use as a component of cosmetic."
37. Section 16 sets out the statutory meaning of the expression 'standard quality'. The amended Section 16 reads thus.
"16. Standards of quality (1) For the purposes of this Chapter, the expression "standard quality" means--
(a) in relation to a drug, that the drug complies with the standard set out in the Second Schedule; and
(b) in relation to a cosmetic, that the cosmetic complies with such standard as may be prescribed. (2) The Central Government, after consultation with the Board and after giving by notification in the Official Gazette not less than three months' notice of its intention so to do, may by a like notification add to or otherwise amend the Second Schedule for the purposes of this Chapter, and thereupon the Second Schedule shall be deemed to be amended accordingly."
38. The present case is precisely that is Johnson's Baby Powder does not comply with the prescribed standards. This is a direct invocation of Section 16.
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39. Section 18 is an enabling provision by which the State Government may by notification prohibit the manufacture and sale of certain drugs and cosmetics. Section 18(a)(ii) says that the Government by notification may prohibit any person from manufacturing, selling or distributing or selling, stocking, exhibiting or offering for sale or distributing any cosmetic which is not of the standard quality or is misbranded, adulterated or spurious. There are also similar powers to halt manufacture and sale subject to conditions of a license. Government analysts are covered by Section
20. The appointment of the inspectors is the subject of Section 21, and the powers of Inspectors are set out in Section 22. These powers of inspection include not only taking samples but also search of premises or vehicles, examination of records, requiring production of records and the exercise of all ancillary powers. Inspectors must abide the procedure set out in Section 23.
40. What is important is Section 25 and sub-section (4). We reproduce the whole of Section 25. We do so noting that J&J had repeatedly invoked its rights under this very Section.
"25. Reports of Government Analysts (1) The Government Analyst to whom a sample of any drug or cosmetic has been submitted for test or analysis under sub-section (4) of section 23, shall deliver to the Inspector submitting it a signed report in triplicate in the prescribed form.
(2) The Inspector on receipt thereof shall deliver one copy of the report to the person from whom the sample was taken and another copy to the person, if any, whose name, address and other particulars have been disclosed under Page 18 of 33 11th January 2023 ::: Uploaded on - 06/02/2023 ::: Downloaded on - 28/05/2023 23:39:47 ::: JOHNSON & JOHNSON PVT LTD V STATE OF MAHARASHTRA & ORS 901-OSWPL-32004-2022-J.doc section 18A, and shall retain the third copy for use in any prosecution in respect of the sample.
(3) Any document purporting to be a report signed by a Government Analyst under this Chapter shall be evidence of the facts stated therein, and such evidence shall be conclusive unless the person from whom the sample was taken or the person whose name, address and other particulars have been disclosed under section 18A has, within twenty-eight days of the receipt of a copy of the report, notified in writing the Inspector or the court before which any proceedings in respect of the sample are pending that he intends to adduce evidence in controversion of the report.
(4) Unless the sample has already been tested or analysed in the Central Drugs Laboratory, where a person has under sub-section (3) notified his intention of adducing evidence in controversion of a Government Analyst's report, the Court may, of its own motion or in its discretion at the request either of the complainant or the accused, cause the sample of the drug or cosmetic produced before the Magistrate under sub-section (4) of section 23 to be sent for test or analysis to the said Laboratory, which shall make the test or analysis and report in writing signed by, or under the authority of, the Director of the Central Drugs Laboratory the result thereof, and such report shall be conclusive evidence of the facts stated therein. (5) The cost of a test or analysis made by the Central Drugs Laboratory under sub-section (4) shall be paid by the complainant or accused as the Court shall direct."
41. In this context, it is worth noting paragraph 12 of the Affidavit filed by the State Government at page 908 which reads thus:
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I say that, it will not be proper to say that, the method of analysis use by Government Analyst is not proper and his report of analysis is also not proper as retained samples of Cosmetics in question were reanalyzed/retested before the Drug Inspector of the office of respondent number 2. They are claiming that it is found to be standard Quality. But as per the provisions of the said Act, only report of CDL Kolkata is conclusive evidence and which supersedes to Government Analyst, Food and Drugs Administration Laboratory Mumbai as per said ACT.
42. Now the Drug and Cosmetics Act originally had the Drugs and Cosmetics Rule 1945. In this, there were provisions for the grant and issue of licenses and Rule 143 of the 1945 Rules specifically contemplated the cancellation and suspension of licenses. The Rules have since been substituted. There are now in place applicable to cosmetics the Cosmetics Rules 2020. The Rules set out the powers of licencing authorities and the procedure for obtaining licenses. Chapter IV of the Cosmetics Rules deals with the manufacture of cosmetics for sale or distribution. Rule 23 regulates the manner of applying for a grant of license or loan license to Page 20 of 33 11th January 2023 ::: Uploaded on - 06/02/2023 ::: Downloaded on - 28/05/2023 23:39:47 ::: JOHNSON & JOHNSON PVT LTD V STATE OF MAHARASHTRA & ORS 901-OSWPL-32004-2022-J.doc manufacture such cosmetics. Conditions that may be imposed are set out in Rule 26. Importantly, Rule 30 says that a license issued shall remain valid in perpetuity subject to payment of a license or loan license retention fees as specified in the Third Schedule before completion of five years from the date of its issue unless the license is suspended or cancelled by the State licensing authority.
43. Immediately, this means that there does exist a power to cancel a license. How that power should be exercised and in what circumstance is a separate question. Rule 31 allows inspection for verification of compliance. We are next concerned with standards of cosmetics as set out in Rule 39. There is a reference to standards of quantity and safety. Rule 39(1) reads thus:
"39. Standards of cosmetics.-- (1) No cosmetic shall be imported or manufactured unless it complies with the specifications prescribed under the Ninth Schedule or any other standards of quality and safety, applicable to it, and other provisions under the rules. In case, the cosmetic is not included under the Ninth Schedule, it shall meet the requirements under these rules and specifications and standards applicable to it in the country of origin."
44. Chapter VII of the Rules deals with procedure of sampling for test and analysis, seizure and report. Reference is made to Sections 22, 23 and 26 of the Act. Rule 47 says that no person in possession of cosmetic in respect of which an order has been made under Section 22(1)(c) shall sell or otherwise dispose of any stock of such cosmetic. Rule 49 speaks of despatch of samples for test or analysis under an order of the Court. Then there are provisions for Page 21 of 33 11th January 2023 ::: Uploaded on - 06/02/2023 ::: Downloaded on - 28/05/2023 23:39:47 ::: JOHNSON & JOHNSON PVT LTD V STATE OF MAHARASHTRA & ORS 901-OSWPL-32004-2022-J.doc confiscation. Chapter VIII is concerned with approval for laboratories for conducting tests.
45. Rule 72 has a saving provision and it reads thus:
"72. Savings.--
(1) Notwithstanding the non-applicability of the Drugs and Cosmetics Rules, 1945, the approvals or permissions or licenses or certificates issued under the provisions of the Act and the said rules in respect of cosmetics prior to commencement of these rules, shall be deemed to be valid for all purpose still its expiry or for a period of eighteen months from the date on these rules are notified, whichever is later, under the corresponding provisions of said rules; (2) Any things done or any action taken or purported to have been done or taken, including any rule, notification, inspection, order or notice made or issued or any appointment or declaration made or any operation undertaken or any direction given or any proceedings taken or any penalty, punishment, forfeiture or fine imposed under the Drugs and Cosmetics Rules, 1945 shall, be deemed to have been done or taken under the corresponding provisions of these rules and shall always remain valid for all purposes."
46. The Ninth Schedule to the Rules sets out the standards for cosmetics. Entry 2 in the Ninth Schedule directly references the BIS specification IS:5339 for skin powder for infants.
47. From any reasonable reading of this statutory regulatory framework, it seems to us self-evident that the entire purpose of the statute is to ensure the maintenance of certain standards or quality Page 22 of 33 11th January 2023 ::: Uploaded on - 06/02/2023 ::: Downloaded on - 28/05/2023 23:39:47 ::: JOHNSON & JOHNSON PVT LTD V STATE OF MAHARASHTRA & ORS 901-OSWPL-32004-2022-J.doc and safety. Both quality and safety are undoubtedly important considerations. Some cosmetics may be relatively more benign than others. It is not unknown, for instance, for some cosmetic products to pose a greater risk and to a cause more severe problems then others. Not all cosmetics have the same standards. There will be different standard of quantity and safety for each class. It would not be possible to compare, for instance, standards applicable to cosmetics used for the eyes with talcum powder or shampoo.
48. The question, however, is how these standards are to be maintained, and by this we mean standards of both quantity and safety. Is it always inevitable, as Mr More seems to suggest, that if there is a single deviation or non-compliance with a quality standard, then the only regulatory option is to cancel the manufacturing licence altogether? Is a more granular approach permissible having regard to the facts and circumstances of each case?
49. Before we address Mr Kadam's submission, we note Section 21 of the General Clauses Act, which reads thus.
"21. Power to issue, to include power to add to, amend, vary or rescind, notifications, orders, rules or bye-laws.
-- Where by any Central Act or Regulation, a power to issue notifications, orders, rules, or bye-laws is conferred, then that power includes a power, exercisable in the like manner and subject to the like sanction and conditions (if any), to add to, amend, vary or rescind any notifications, orders, rules or bye-laws so issued."Page 23 of 33
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50. A power to issue a license includes the power to vary, add to, cancel, or modify it. There are, as we have noted, sufficient powers in the Act and the Rules for search, seizure, and ordering destruction. It does not seem to us reasonable to accept the proposition that the moment a particular sample from a particular batch is found to deviate, vary or be of not standard quality, then the only possible consequence or response from the regulator is to shut down all manufacturing. This seems to us to be an extreme approach and certainly there is nothing on record from the State Government to show that the FDA has in fact consistently adopted such a stringent standards with other J&J products or with other manufacturers of cosmetics. We rather believe that this kind of approach would result in a considerable degree of commercial chaos and wastefulness. It is hard to imagine how any manufacturer of any cosmetic could properly function.
51. In fairness, Mr Kadam does not say, nor have we understood him to suggest, that a non-compliant product should be allowed into the market. That is not his case at all. His submission is that there are sufficient powers within the statute to take appropriately calibrated action against a particular non compliant batch. He is not even suggesting that the action should be restricted to a particular sample. He says that if a sample properly taken and tested is found to be non-compliant then certainly action against that batch may well be justified, and it makes no difference whether the deviation is in regard to quality or safety. Fairly, Mr Kadam has not sought to make a distinction between standards of quality and standards of safety. He accepts the proposition that it is difficult to make any Page 24 of 33 11th January 2023 ::: Uploaded on - 06/02/2023 ::: Downloaded on - 28/05/2023 23:39:47 ::: JOHNSON & JOHNSON PVT LTD V STATE OF MAHARASHTRA & ORS 901-OSWPL-32004-2022-J.doc such fine or nice distinction especially in the context of drugs and cosmetics.
52. Mr Kadam's argument really turns on an assessment of what he calls unfairness or unreasonableness in executive action. Factually, his construct has two or three different facets. The first, and perhaps the most telling, is this quite extraordinary delay from 2018 to 2022 with no explanation. We believe Mr Kadam is right. We are unable to understand why for a sample taken in mid- December 2018, no test result was obtained for over a year. Now the usual excuse of Covid will not do because all of this was before anyone had even imagined Covid. Then there is the delay from late 2019 and which runs all the way till 2022.
53. While Mr Kadam says that the delay per se makes the action arbitrary and unreasonable, and that this is a settled position in law, we discern another incongruity. For a moment, if we view this in reverse, beginning with the stock production protected by this Court's order (manufacture but no sale), and juxtapose this with the sampling done in 2018, then the question that presents itself to us (and, we dare say, to Mr More) is what is to be done for the production that went without hindrance from 2018 all the way to 2022? To this, nobody from the FDA has any answer at all. There is no solution to be found in this statute. There is no solution in logic because the products manufactured, distributed and put to market in that time have not only been disbursed but have probably gone well past their expiry dates.
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54. Mr Kadam also submits that once the Petitioner received an extension of its license or retention of its license, tests carried out prior to that date would not be a consequence: KV Acharya & Anr v State of Maharashtra & Ors.15 We do not need to examine this aspect of the matter any further.
55. Mr Kadam submits that whether one views this from the perspective of Wednesbury unreasonableness as enunciated in Associatedd Provincial Picture Houses Limited v Wednesbury Corporation16 or from the doctrine of proportionality, the result must be the same. Both doctrines have their roots in a concept of unreasonableness. This is squarely a facet of Article 14, even leaving aside any considerations under Article 19. Unreasonableness speaks to arbitrariness and is therefore a direct link to Article 14 of the Constitution.
56. In its origins, the doctrine of Wednesbury unreasonableness essential said that no Court possessed of a discretionary equitable jurisdiction, particularly one that enjoyed the power to issue a high prerogative remedy, would ever contemplate permitting in judicial review and executive or administrative action that was found to be so unreasonable that no prudent or reasonable person would ever have taken it. In Council of Civil Service Unions v Minister for the Civil Service,17 Diplock LJ for the House of Lords described the assailed decision inviting judicial action as:
By 'irrationality' I mean what can by now be succinctly 15 2000 SCC OnLine Bom 12: (2000) 3 MhLJ 90. 16 [1948] 1 KB 223.
17 [1983] UKHL 6 : [1984] 3 All ER 935 : [1984] 3 WLR 1174.Page 26 of 33
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57. This doctrine has long been adopted in India in our own jurisprudence and it is safe to say that it became the standard in various branches of the law.
58. Even as Wednesbury unreasonableness continued to inform decisions of Courts with the power of judicial review, not only here but in many other jurisdictions, there came into ascendance a parallel doctrine of proportionality. This is not necessarily linked to the award of punishment. It is a facet of reasonableness. Its tests are slightly different from those of Wednesbury unreasonableness. The doctrine tells us that in any executive or administrative action, the act or thing done or ordered to be done cannot be so disproportionate to the cause for that order. To put it more colloquially, an administrator or an executive cannot use our hammer to kill an ant.18 There is a great deal of law cited in this regard. The Council of Civil Service Unions or CCSU standard was accepted in Union of India & Anr v G Ganayutham.19 The two doctrines received an elucidation in Om Kumar & Ors v Union of India,20 particularly on the question of primary judicial review 18 See: R v Goldstein, [1983] 1 WLR 151 : [1983] 1 All ER 434 : per Diplock LJ: "This would indeed be using a sledge-hammer to crack a nut." 19 (1997) 7 SCC 463.
20 (2001) 2 SCC 386.
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59. The scope of the proportionality principle came to be examined in Coimbatore District Central Cooperative Bank v Coimbatore District Central Cooperative Bank Employees Association & Anr.22 The Supreme Court said:
17. So far as the doctrine of proportionality is concerned, there is no gainsaying that the said doctrine has not only arrived in our legal system but has come to stay. With the rapid growth of administrative law and the need and necessity to control possible abuse of discretionary powers by various administrative authorities, certain principles have been evolved by courts. If an action taken by any authority is contrary to law, improper, irrational or otherwise unreasonable, a court of law can interfere with such action by exercising power of judicial review.
One of such modes of exercising power, known to law is the "doctrine of proportionality".
18. "Proportionality" is a principle where the court is concerned with the process, method or manner in which the decision-maker has ordered his priorities, reached a conclusion or arrived at a decision. The very essence of decision-making consists in the attribution of relative importance to the factors and considerations in the case. The doctrine of proportionality thus steps in focus true nature of exercise--the elaboration of a rule of permissible priorities.
...
21. The doctrine has its genesis in the field of administrative 21 See also: Kerala State Beverages (M&M) Corporation Ltd v PP Suresh & Ors, (2019) 9 SCC 710.
22 (2007) 4 SCC 669.
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(Emphasis added)
60. As the Supreme Court itself noted, the proportionality principle is a test of whether the decision-maker has achieved the correct balance: Chairman, All India Railway Recruitment Board & Anr v K Shyam Kumar & Ors.23
61. Some learning seems to suggest that the doctrine of proportionality now has greater prevalence than Wednesbury unreasonableness.24 But we have not seen a judgment which says that only one can be applied and not the other; All India Recruitment Board points to the contrary. Indeed, the proportionality principle's origins have been traced to the Wednesbury unreasonableness doctrine: Maharashtra Land Development Corporation & Ors v State of Maharashtra & Ors.25 It is not out of place to mention that in CCSU, while discussing irrationality, Wednesbury unreasonableness, illegality, and procedural impropriety, Diplock LJ foresaw the emergence and growth of a doctrine of proportionality. 23 (2010) 6 SCC 614.
24 Jitendra Kumar & Ors v State of Haryana & Anr, (2008) 2 SCC 161; 25 (2011) 15 SCC 616.
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62. Mr Kadam also points next to the subsequent events and the results of the Court-mandated testing results. There were altogether 11 or 12 results. Of these two have been found to be non-compliant. All the others are well within range. Is it, Mr Kadam asks, either reasonable or proportionate on such a result to say that the entire manufacturing line of the product should be shut down conceivably in perpetuity and manufacture of all batches should also cease? Or would it not be more reasonable, proportionate and appropriate, he suggest, to take such action as the law permits against non- conforming batches?
63. We have made it abundantly clear to both sides that we are confining ourselves to the present action. We do not constrain or restrict the powers of the FDA in any manner whatsoever. They are at liberty to take a sample every single day, if they so wish. Mr Kadam readily agrees. Our concern, having set out not only standards of reasonableness and proportionality but also the public purpose, welfare and consumer protection that is at the heart of the D&C Act is about such delays. Those we find unacceptable. We find them contrary to the statutory intent and purpose. We find them to be unreasonable and for that reason arbitrary. A watchdog like the FDA is necessary. But a watchdog must do its job, which is to guard and to save from harm. That purpose is not achieved by delaying the testing of samples that are drawn and protracting proceedings for weeks, months and, in this case, years.
64. We understand that a testing process may take a few days. But consider the pH test in this case. We find this it astonishing that Mr Page 30 of 33 11th January 2023 ::: Uploaded on - 06/02/2023 ::: Downloaded on - 28/05/2023 23:39:47 ::: JOHNSON & JOHNSON PVT LTD V STATE OF MAHARASHTRA & ORS 901-OSWPL-32004-2022-J.doc More says that this takes two weeks. It cannot. There is a talcum powder. There is purified water. One has to be stirred well into the other and then a test has to be carried out. Even if this has to be done in sterile laboratory conditions, it cannot take more than a few minutes. Much of the rest of the time would go in maintaining records to ensure the integrity of process rather than the test itself. A pH test cannot conceivably take a week let alone months or a year. That is unreasonable. It is unreasonable not only from the point of view of the manufacturer such as J&J -- or not even principally from the point of view of such a manufacturer -- but it is unreasonable from the perspective of the consumer. If there is a sub- standard product being manufactured and brought to market, every one of us as consumers or potential consumers have the statutory right to be protected by the FDA and to be saved from potential harm. It is therefore, for the FDA to act with the utmost despatch and to exercise its powers. As we have noted, there are sufficient powers under the statutes to order an immediate suspension of sale of a batch, seizure of a batch, perhaps even temporarily suspending a license and so on.
65. It is also not necessary for FDA to always to adopt a one-size- fits-all approach. A manufacturer which is a repeated offender may receive a very different treatment and more stringent or harsh one from a manufacturer whose product has the occasional lapse. And by occasional we mean one separated by long periods of time. Indeed, it is the experience of many of us in this very Court while taking up IPR matters for example that there is in this country a thriving cottage industry making spurious cosmetics products. There are of course the corporates who come to Court and Page 31 of 33 11th January 2023 ::: Uploaded on - 06/02/2023 ::: Downloaded on - 28/05/2023 23:39:47 ::: JOHNSON & JOHNSON PVT LTD V STATE OF MAHARASHTRA & ORS 901-OSWPL-32004-2022-J.doc complain of their IPR rights being violated. But more importantly the Court's concern has always been of the consumers of these products especially cosmetics and especially that are used around the eyes and skin, etc. For manufacturers of spurious products, therefore, the FDA can take the most stringent action possible and must do so. It must act in the shortest possible time. To take a straightforward example. If a manufacturer complains that somebody else is putting to market a spurious product then there is no question of a long process of testing or analysis etc. The other side of this analysis is that a failure by the FDA to act with the necessary despatch must be held to be contrary to the statutory objective and purpose. This particular action was needlessly delayed by nearly two years. It is too late now to fall back on a single batch sample of 2018, not tested till 2019 and not acted upon till 2022 to justify the extreme action of stopping all production and all sale of all batches of J&J baby powder.
66. We do not believe that the impugned orders can be sustained. For the reasons that we are set out above, the Petition succeeds. Rule is made absolute in terms of prayer clause (a).
67. We have noted earlier that J&J had agreed under an order of the Court of 16th November 2022 that it would manufacture but not sell further J&J products. That order will now stand vacated.
68. We also note that in the Court-mandated testing all three laboratories tested the same four batches. The Intertek non- compliant report was in respect of a batch where CDTL found no Page 32 of 33 11th January 2023 ::: Uploaded on - 06/02/2023 ::: Downloaded on - 28/05/2023 23:39:47 ::: JOHNSON & JOHNSON PVT LTD V STATE OF MAHARASHTRA & ORS 901-OSWPL-32004-2022-J.doc variance. But FDA, though applying the wrong specification, also found that particular batch B3R10040 to be non-compliant. On instructions, Mr Shenoy states that this batch has an expiry date of January 2023. He agrees on instructions that whatever is in possession of J&J will not be put to market. We further require J&J through its official distributors to endeavour to recall any unsold stock of this particular batch. It will at its own cost take it to destruction and in any case ensure that it does not reach the market.
69. The Petition is disposed of in these terms with no order as to costs.
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