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Judgment
Raju, J.—The above two writ appeals arise out of the order of the learned single Judge dated 6-4-1990 in W.P. No. 5398 of 1989 filed by
M/s. Antex India (P) Ltd. Bangalore 80 whereunder the learned Judge while quashing the impugned order dated 2-12-1989 issued by the State
Drug Controller, Tamil Nadu in his reference No. 7771/IW/ 1/89, further directed the said Authority to pass orders by exercising the powers for
cancellation of the licence issued to the appellant in W. A. No. 527 of 1990 (Alfred Berg & Company (I) Private Ltd. Madras-7) to manufacture
a drug under the brand name Cal-De-Ce'', in the light of the observations contained in the judgment, after affording a fair and reasonable
opportunity to the appellants in W.A. Nos. 526 and 527 of 1990. The appellant in W.A. No. 526 of 1990 is the third respondent in the writ
petition (M/s Wander Limited, Bombay-18) and the appellant in W. A. No. 527 of 1990 is the second respondent in the writ petition.
It is necessary to set out certain facts in detail which will go to show that the course adopted by us in the disposal of the writ appeals will be the
proper and appropriate one on their peculiar nature.
The appellant in W.A. No. 526 of 1990 hereinafter referred to as ""Wander"" and the writ petitioner hereinafter referred to as ''Antex'' entered
into an agreement dated 28-3-1986 under which the writ petitioner was authorised to manufacture a pharmaceutical product and affix the trade
mark ''Cal-De-Ce'' which is the trade mark that was being used by Wander subject to certain terms and conditions specified therein. The sum and
substance of this agreement is that Antex shall manufacture the product in accordance with the standards and specifications given by Wander and
supply to them the product at such price as shall mutually be agreed upon by them, that the patent used by Wander shall at all times remain
Wander''s exclusive and absolute right, that Wander reserves the right to revoke the authority to affix the said trade mark given to Antex at its
discretion without assigning any reason, and that nothing in the agreement shall be deemed to preclude Wander from arranging for the manufacture
or purchase of the said products by or from any other party. The other terms are not necessary for the purpose of the controversy between the
parties before us. Thereupon, Antex made an application to the Drug Controller, Karnataka State who, on 20-6- 1986, informed Antex that their
application can be considered only if Wander surrender the permission granted to them and authorise Antex to use the trade name. It was further
insisted that Wander will have to give an undertaking to the effect that they will not simultaneously manufacture the said product nor authorise
anyone else to use the trade name. The undertaking, as required of Wander, was given by them on 21 -6-1986. The Drug Controller, Karnataka
State thereupon granted the permission on 10-7-1986 to Antex to manufacture the additional product ""Cal-De-Ce"" tablets (registered trade mark
of M/s. Wander Ltd. Bombay) under the manufacturing loan licence in form No. 28A, after specifying the formula etc.
Since the relationship between Wander and Antex became strained for over so many reasons which are not necessary for our purpose at this
stage, Wander made arrangement with Alfred Berg & Company on 21-4-1987 for the manufacture and supply to them of the Pharmaceutical
product and affix the trade mark ""Cal-De-Ce"". Alfred Berg thereupon obtained a licence to manufacture the said product on 2-2-1987 from the
Drug Controller, Tamil Nadu and started manufacturing and supplying the product to Wander. Thereafter, Wander also terminated their
arrangement with Antex by their letter dated 30-11-1988 and by their letter dated 16-12-1988 informed the Drug Controller, Karnataka of the
same and requested him to lake necessary action. At this stage, Antex filed C.S. No. 1220 of 1988 on the original side of this Court, u/Ss. 105
and 106 of the Trade and Merchandise Marks Act, 1958 for a permanent injunction against Wander and Alfred Berg and Company from
manufacturing and selling ""Cal-De-Ce"" on a parallel licence. In Application Nos. 4941 and 4942 of 1988, interim injunction though was obtained
on 23-9-1988 at the instance of Wander an Application No. 5352 of 1988 was filed for vacating the ex parte interim order and the matter was
taken up for consideration along with several other similar applications and a learned single judge, by his order dated 2-3-1989, vacated the ex
parte interim orders and dismissed Application Nos. 4941 and 4942 of 1988. Antex filed O.S. A. Nos. 111 and 112 of 1989 against the order of
the learned single Judge and a Division Bench of this Court, before whom the above appeals and other similar appeals came up for disposal, by an
order dated 19-1-1990, allowed the appeals, set aside the orders of the learned single Judge dated 2-3-1989 and directed the grant of injunction
in such terms as have been prayed for in their respective applications. On further appeal filed by Wander and Alfred Berg & Co., before the
Supreme Court of India in Civil Appeal Nos. 1892 and 1893 of 1990 with I.A. Nos. 1 and 2 of 1990 against O.S.A. Nos. 111 and 112 of 1989,
the Supreme Court of India, by its order dated 26-4-1990, allowed the appeals and set aside the order of the Division Bench dated 19-1-1990 in
so far as it pertained to C.S. No. 1220 of 1988 and restored the orders of the learned single Judge dated 2-3-1989 referred to above. The
Supreme Court further observed that, ""Having regard to the nature of the controversy, it will be appropriate for the High Court to dispose of the
suit expeditiously and we request the High Court to dispose of the suit within six months from today.
Matters did not stop there. In the meantime, Wander filed Civil Suit No. 3 of 1989 on the file of the District Court, Baroda against Antex and
M/s. Fleming (India) for a permanent injunction restraining them from manufacturing, selling, advertising or offering for sale any medicinal
pharmaceutical product under the Trade Mark ""Cal-De-Ce"" or any other mark identical or similar thereto and also for a permanent injunction
restraining them from acting on the basis of any manufacturing or other licence, permit or permission issued under the Drugs and Cosmetics Act,
1940 of any other applicable laws for using the Trade Mark ""Cal-De-Ce"" (Registered No. 113972) of the plaintiffs therein and for other incidental
reliefs. Ex-parte interim orders of injunction appear to have been granted on 1-4-1989 and after contest by defendants, the District Court, by its
order dated 21-6-1989, confirmed the interim injunction granted on 1-4-1989 till the final disposal of the suit. On appeal to the High Court by the
defendants before the District Court, Baroda, a learned single Judge of the Gujarat High Court at Ahmedabad, by an order dated 21-9-1989,
confirmed the order of the District Court, after declining the request of the appellant therein for adjournment. On further appeal by Antex from the
said order before the Supreme Court in Civil Appeal No. 3092 of 1990, by an order dated 26-4-1990, virtually made on consent, the Supreme
Court set aside the order of the learned single Judge of the Gujarat High Court and remitted the matter to the High Court for consideration afresh
of the appeal for admission after affording another opportunity to the appellant of being heard. The matter, we are told, stands at that stage.
In the meantime, when O. S. A. Nos. 104 to 112 of 1989 as well as W.P. No. 5398 of 1989 were pending on the file of this Court, in C.M.P.
Nos. 4630 to 4638 of 1989 interim order No. 2 was passed by a Division Bench on 6-10-1989 to the extent that the pendency of the
proceedings before this Court could not preclude the authority to pass any orders in any matters pending before such authorities, viz., Drug
Controller, Karnataka, Commissioner, Food & Drug Administration, Gujarat and Drug Controller, Tamil Nadu, and that it is well open to those
authorities to dispose of any of the petitions filed before them by any of the parties to these proceedings by passing suitable or appropriate orders
on its own merit after hearing the concerned parties. Pursuant to the said order, the State Drugs Controller, Tamil Nadu passed an order on 2-12-
1989 to the following effect :--
There is a dispute between the parties to the agreement/contract and parties to the contract/agreement have to settle themselves as per the
contractual obligation. In view of the above and the product in question has been permitted to be manufactured by a licensing authority under the
provisions of Drugs and Cosmetics Rules, it may not attract S. 17B of the Drugs and Cosmetics Act, 1940.
It is this order of the Drug Controller, Tamil Nadu that came to he challenged by Antex in W. P. No. 5398 of 1989, as per the amended prayer of
the writ petition, which has given rise to the writ appeals before us.
To make the narration of the facts behind the controversy before us complete, it is necessary to refer to two more events. One is that with
reference to the request of Wander to the Drug Controller, Karnataka requesting for cancellation of the licence in favour of Antex, he has passed
an order dated 23-10-1989 on almost the same lines as that of the Drug Controller, Tamil Nadu, referred to above in respect of licence in favour
of Alfred Berg & Company. The other is the filing of C.S. No. 972 of 1989 before the original side of this Court by Antex against Wander and
Alfred Berg (P) Ltd., praying, among other things, for a permanent injunction restraining the defendants from manufacturing any pharmaceutical
product with the name ""CAL-DE-CE"", for declaration that the agreement dated 28-3-1986 between Wander and Antex and the agreement dated
21-4-1987 between Wander and Alfred Berg (P) Ltd., to be null and void and for other incidental reliefs. Applications Nos. 5668 to 5670 of
1989 were filed for injunction. By an order dated 26-3-1990, a learned single Judge of this Court on the original side rejected the plea of Antex
for injunction and dismissed all the three applications.
While so, W. P. No. 5398 of 1989, which was filed by Antex originally with a prayer for a writ of Mandamus directing the Drug Controller,
Tamil Nadu to cancel the manufacturing licence issued in favour of Alfred Berg & Co. on 2-4-1987 to manufacture the drug under the brand name
of CAL-DE-CE was taken up for consideration by the learned single Judge with an amended prayer for the issue of a writ of certiorari filed
Mandamus to call for and quash the proceedings of the Drug Controller dated 2-12-1989 and consequently cancel the manufacturing licence No.
290 dated 2-2-1987 issued to Alfred Berg & Company, as above.
Before the learned single Judge, at the time of hearing of the writ petition, Antex, the writ petitioner appears to have contended as hereunder:--
That Antex has already been granted licence by the Drug Controller, Karnataka, which would have validity throughout India, that the validity of the
said licence had not in any manner been affected even as on that date, that Alfred Berg and Company is manufacturing an identical product and is
selling the same under the trade name ""CAL-DE-CE"" and that the Drug Controller, Tamil Nadu had no authority to authorised Alfred Berg and
Company to manufacture the said drug. On the above premise, the writ petitioner appears to have contended that the manufacturing of the product
CAL-DE-CE"", be it under the authority of the Drug Controller, Tamil Nadu under the licence granted by him, amounts to manufacturing a
''spurious drug'' within the meaning of S. 17B of the Drugs and Cosmetics Act, 1940 and, therefore, the licence granted to manufacture and sell the
particular commodity in question should be ordered to be cancelled. The appellants before us appear to have contended that there is no violation
of S. 17B as pleaded by the writ petitioner and that the licence once granted can be cancelled only under and as per Rule 85 of the Drugs and
Cosmetics Rules, 1945. Further, the appellants appear to have contended that the remedy of the writ petitioner is only to sue for damages and this
plea did not find favour of acceptance with the learned Judge. The learned single Judge, purporting to draw inspiration from the decision of the
Supreme Court of India reported in Medimpex (India) Pvt. Ltd. v. Drug Controller-cum-Chief L.A. came to the conclusion that the licence
granted by the Drug Controller, Tamil Nadu to Alfred Berg & Company to manufacture an identical product as manufactured by the writ petitioner
has been obtained contrary to the provisions of the Act, meaning thereby the provisions of S. 17B(a) of the Act. Even at this stage, we may state
that the decision of the Supreme Court did not consider the scope of S. 17B of the Act and the passage extracted by the learned Judge is found to
occur in the portion of the judgment narrating the factual background of the case. When we pointed out this, Mr. U. N. R. Rao, learned counsel
for Antex, had to accept the position that it is not the ratio decided in the case with reference to the scope of S. 17B of the Act. The learned Judge
also came to the conclusion that Rule 85 will be attracted even to a case where there was a disqualification to obtain the licence on account of any
contravention of the Act even at the initial stage. Finally, the learned single Judge, while setting aside the order of the Drug Controller, Tamil Nadu
dated 2-12-1989, remitted the matter to the Drug Controller, Tamil Nadu with a direction to the said authority to pass orders by exercising the
powers under Rule 85 referred to above for cancellation of the licence issued to Alfred Berg & Company to manufacture and sell the product
under the brand name ""CAL-DE-CE"", after affording fair and reasonable opportunity to Wander and Alfred Berg & Company to state their
respective cases.
Before us, Mr. M. R. Narayana-swami, learned counsel appearing for the appellants in W. A. No. 526 of 1990, after taking us through the
relevant facts of the case and the various proceedings between the parties, both concluded and pending, submitted even at the threshold of his
submissions that though the matter had been remitted to the Drug Controller, Tamil Nadu with a direction to give fair and reasonable opportunity to
the appellants in W.A. Nos. 526 and 527 of 1990 to state their respective cases and exercise the powers under Rule 85 of the Rules in respect of
the licence, the findings rendered by the learned Judge on the scope of the provisions of S. 17B(a) and certain factual assumptions made left
virtually as discretion in him to consider the issues objectively, as is expected of him, and, therefore, they are constrained to file these appeals and
agitate the matter before the Division Bench instead of facing the authority to whom the matter stood remanded. Mr. R. Alagar, learned counsel
appearing for the appellant in W.A. No. 527 of 1990, while adopting the submission of the learned counsel for the appellant in W.A. No. 526 of
1990, attempted to make submissions on the merits of the case. Mr. U. N. R. Rao, learned counsel appearing for the writ petitioner-Antex also
sought to argue the matter on merits and invited us to render a decision on all the issues raised. The learned counsel further contended that there is
nothing wrong in the learned Judge declaring the scope of S. 17B(a) and expressing his views on the matter before him while remitting the matter
for the consideration of the Licensing Authority under the Act.
In view of the fact that we do not see any reason to interfere with the directions of the learned single Judge to remit the matter for fresh
consideration by the Licensing Authority to exercise his powers under R. 85 after affording a fair and reasonable opportunity to the appellants, we
have made it clear to all the counsel appearing that it may not be fair to deal with the matter on merits ourself and express our views on one issue
or the other and thereby limit the scope of exercise of powers and discretion of the Licensing Authority, conferred upon him under the statutory
rules. Further, having regard to the pendency of the various civil litigations between the parties on the original side of this Court and the District
Court, Baroda in Gujarat State, we feel justified in dissuading ourself from entering upon the merits of the issues sought to be raised, lest the
conclusions of ours on such issues are bound to have a definite impact on those pending litigations and impair a free trial and fair disposal of those
cases by the Civil Courts which could go into the issues in a comprehensive manner and in greater detail.
The learned single Judge obviously was influenced by the fact that the order of the first respondent passed in his Reference No, 7771/1W/1/89
was a cryptic order and that the same had been issued without affording a fair and reasonable opportunity to respondents 2 and 3 to state their
respective case. It was for this reason, in our opinion, that the learned single Judge deemed it necessary to remit the case to the first respondent
after setting aside his order and to direct him to pass appropriate orders on the application seeking cancellation of the licence issued to the second
respondent to manufacture the drug under the brand name CAL-DE-CE"". We say so in view of what is recorded in the concluding paragraph of
the judgment of the learned single Judge which reads thus:--
For the foregoing reasons, there will be an order in this writ petition quashing the impugned orders dated 2-12-1989 issued by the first respondent
in his Reference No.7771/1W/1/89 and directing the first respondent to pass orders by exercising powers for cancellation of the licence issued to
the second respondent to manufacture a drug under the brand name Cal-De-Ce in the light of the observations contained above, after affording a
fair and reasonable opportunity to the second and third respondents to state their respective case. Orders in this regard should be made on or
before 10th May, 1990. No costs.
Obviously, the learned single Judge wanted the matter to be decided afresh by the first respondent after giving a fair and reasonable
opportunity to respondents 2 and 3 to state their respective case. However, while doing so, an embargo was placed by the learned single Judge on
the first respondent, that he should pass orders ""by exercising powers for cancellation of the licence under S. 17B(a) of the Act""..... and ""in the light
of the observations contained above. ""In our opinion, this was not a proper course to adopt. Undoubtedly, the authority exercising the powers to
cancel a licence under the Act exercises quasi-judicial functions and once it is found that the order dated 2-12-1989, which was sought to be
quashed through the writ petition was cryptic and had been passed without affording any opportunity to respondents 2 and 3, the matter should
have been left to the first respondent to decide afresh by exercising his quasi-judicial powers and giving a fair and reasonable opportunity to the
concerned parties to represent their case. By insisting upon the quasi-judicial authority to pass orders by exercising powers under S. 17B(a) and in
the light of the observations made by the learned single Judge, the further observation that he should do so ""after affording a fair and reasonable
opportunity"" to the parties became almost meaningless. The opportunity of hearing, which is required to be given by the Drug Controller white
exercising his powers of cancellation of licence has to be real and not illusory. Of course, whatever be the decision of the quasi-judicial authority,
the aggrieved party would have a right to question it, but to render the opportunity of hearing by fettering the exercise of jurisdiction by the quasi-
judicial authority, where the said authority has not applied his mind to the facts of the case in the light of the statutory provision, to decide the case
in accordance with the findings of the learned single Judge, would render the grant of hearing only a meaningless formality. It is for this reason that
we have refrained from dealing with the submissions of the learned counsel for the party about the scope of S. 17B of the Act or Rule 85 of the
Rules framed thereunder regarding the alleged violation, as any expression of opinion by us, is likely to prejudice the case of either party and would
amount to influencing the exercise of power by the statutory authority, who must decide the matter before him according to his own judgment.
We, therefore, partly allowed these writ appeals and while upholding the order of remand, direct the Drug Controller, the statutory to decide
the application for cancellation of the licence issued to the second respondent in accordance with law, uninfluenced by the observations of the
learned single Judge or his findings on the scope of S. 17B of the Act or Rule 85 of the Rules framed thereunder, as also by the other observations
on facts. Of course, he shall also not be influenced by anything said by us in this judgment, on the merits of the controversy between the parties.
Considering the fact that the application for cancellation of the licence is pending before the first respondent for some time, we direct that he
shall dispose of the matter within four weeks from the date of receipt of a copy of this judgment, after notice to the parties and granting them an
opportunity of hearing and representing their case. To the above limited extent, both the writ appeals are allowed. In the circumstances, there will
be no order as to costs.
Appeals partly allowed.