Summary – At a time when drug regulators are intensifying enforcement against the sector across India, this article examines the regulatory framework within which drug regulators are required to act in the wake of the Bombay High Court’s recent order in Cadila Pharmaceuticals’ writ petition challenging the Maharashtra FDA’s directions restraining sale and distribution of its ACILOC products.
Introduction
In recent months, enforcement actions by state drug regulators in India’s pharmaceutical sector have intensified, raising questions about the balance between public health imperatives and procedural fairness. In early July 2026, the Food and Drugs Administration, State of Maharashtra (“FDA”) inspected the warehouses of Cadila Pharmaceuticals Limited (“Cadila”) in Pune, Nagpur and Bhiwandi, raising concerns over “ACILOC 150”, “ACILOC 150+”, “ACILOC 300”, and “ACILOC 300+”. While Aciloc 150 and 300 contained ranitidine, the “+” variants contained famotidine.[1] Viewing the branding as potentially confusing for doctors, pharmacists, and patients, the FDA directed Cadila to refrain from disposing of, distributing, or selling the stock.[2]
Aggrieved, Cadila filed a writ petition before the Bombay High Court (“HC”), challenging the FDA’s directions as arbitrary and issued without a hearing.
Order of the Bombay High Court
By its Order dated August 11, 2026, the HC disposed of Cadila’s writ petition, following the FDA’s undertaking to recall its directions and provide Cadila with an opportunity to respond to its allegations. Considering it had not issued a show cause notice to any of the three locations inspected under Rule 85 of the Drugs Rules, 1945 (“Rules”), the FDA agreed to issue such notices to the said establishments within seven working days and grant Cadila the opportunity to file its written responses within 21 days.
Significantly, the HC held that the injunctions clamped upon Cadila’s establishments by the FDA would stand vacated, more so because the duration for which the direction had been clamped exceeded the periods permissible in law. One order (dated July 9, 2026) had been imposed for 20 days and the remaining notices imposed directions that could not lawfully extend beyond a maximum period of 21 days.[3] In other words, the FDA’s own orders had overstayed their permissible statutory duration, independently vitiating them.
The HC also directed the Assistant Commissioner, FDA, to issue fresh notices regarding the alleged violation of the Drugs and Cosmetics Act, 1940 (“Act”) within seven days. Cadila would then have 21 days to tender its responses to each such notice, following which the issuing authority (the FDA) would provide Cadila a notice and issue intimation of a hearing to be held on a particular date and time. Following such hearings, conducted in accordance with the law, reasoned orders would be passed and emailed to Cadila within 24 hours. The HC also preserved Cadila’s liberty to avail of any remedy permissible in law against such orders, if aggrieved.
Understanding the Regulatory Framework
Chapter III (Manufacture, Sale, and Distribution of Drugs and Cosmetics) of the Act classifies substandard drugs as misbranded, adulterated, and spurious. Section 18 of the Act prohibits their manufacture and sale.[4]
The Cadila matter arose from the FDA’s concerns that the look-alike/sound-alike branding of ranitidine-based “ACILOC” products and famotidine-based “ACILOC+” variants could mislead doctors, pharmacists, and patients regarding the active ingredient being dispensed or consumed, as it appeared to be in the realm of misbranding.
The Power of Inspectors and the FDA: What the Act and Rules Actually Permit
Section 22 empowers the Inspector appointed under the Act to inspect, take samples, seize, and where an offence under Chapter III has been or is being committed, pass an order in writing to restrain the disposal of drugs and cosmetics for a period not exceeding 20 days.
This 20-day cap is not a discretionary administrative convenience, but the statutory limit on how long an Inspector may restrain the disposal of drug stock, merely on the reasonable belief that an offence has been committed. The Rules require that the Inspector issue restraint orders in the prescribed Form 15.[5] They also prohibit any person in possession of a drug for which such an order has been made from selling or otherwise disposing of the stock. For seizure of stock (rather than mere disposal restraint), the Inspector must tender a receipt in the prescribed Form 16.[6]
Once a seizure or restraint order under Section 22(1)(c) has been issued, Section 23(5) of the Act obligates the Inspector to use all despatch in ascertaining whether the drug contravenes Section 18; revoke the order if ascertained that it does not; inform a Judicial Magistrate as soon as possible if stock is seized and take the Magistrate’s orders regarding the custody of the stock; and revoke the order if satisfied that the defect has been remedied by the possessor.
The Cadila order illustrates that this 20-day ceiling (and, in the case of successive orders, the requirement that they not cumulatively exceed the permissible period) is a hard statutory limit, not a mere procedural formality. Such restraints are intended to be a short, precautionary measure pending verification, not a punitive or final determination. In the Cadila matter, the High Court, therefore, treated the FDA’s failure to adhere to this maximum permissible 20-day limit as sufficient to vitiate its action.
Where the FDA’s concern seeks a sustained prohibition on manufacture, sale, or distribution, the correct escalation path is through Rule 85. This Rule empowers the Central Licence Approving Authority (“CLAA”) and the State-level licensing authorities (“SLA”) to cancel a licence issued under Part VII of the Rules or suspend it for such period as they think fit (wholly or in respect of some of the drugs to which it relates). It also empowers both authorities to direct the licensee to stop manufacture, sale, or distribution of the drugs concerned. In addition, they may order the destruction of the drugs and stock in the presence of an Inspector, for non-compliance with the conditions of the licence or with any provision of the Act or the Rules. However, Rule 85(1) conditions the exercise of this power on the CLAA and the SLAs “after giving the licensee an opportunity to show cause why such an order should not be passed” and requires that the order be in writing, stating the reasons.[7] A licensee aggrieved by an order made under Rule 85 may, within 90 days of receipt of the order, appeal to the Central Government or the state government, as the case may be, which must give the licensee an opportunity to be heard before confirming, reversing, or modifying the order.[8] Similar safeguards apply to SLAs acting under Rule 66 (in respect of Part VI licences for the sale of drugs) and Rule 85-I (in respect of Part VII-A licences for Homoeopathic medicines), both of which likewise condition suspension, cancellation, or a direction to stop manufacture, sale, or distribution, on a prior opportunity to show cause and a reasoned written order, subject to an appeal.
Read together, Sections 22 and 23, and Rule 85 (or its Rule 66/85-I equivalents), describe two distinct and sequential regulatory tools, not a single undifferentiated power. Section 22 furnishes a short, provisional, investigation-stage power to freeze disposal of specific stock for up to 20 days while the FDA verifies whether an offence has in fact been committed. It is not designed, and was never intended, to operate as a de facto market-wide, indefinite ban on a drug pending the FDA’s own further deliberation. Rule 85 (along with its analogues) furnishes the more far-reaching, licence-level power to direct a stop to manufacture, sell, or distribute altogether, and even to order the destruction of stock, but only where the authority has first given the licensee a genuine opportunity to show cause and passed a reasoned order in writing. Measured against this template, the Court found that the FDA’s July 2026 action departed from the prescribed sequence in that the restraint exceeded the maximum period of a Section 22 order and that it was imposed without first affording Cadila a hearing that would have justified action of that scale. The Court order restored the correct sequence, i.e., fresh Rule 85 notices, 21 days to respond, a hearing, and a reasoned order, thereby offering a template for how such branding and labelling concerns should be handled in future cases.
Conclusion
Cadila’s case is not an isolated incident of regulatory enforcement. Recently, the FDA cancelled the licences of 10 ayurvedic medicine manufacturers and issued show cause notices to 135 others following state-wide inspections that revealed serious violations adversely impacting public health.[9] However, as is evident from the Bombay High Court’s intervention in Cadila’s case, regulatory zeal cannot operate in disregard of due process and principles of natural justice. The FDA’s actions for the proper enforcement of standard quality and adherence to the Act must remain judicious, fair, and proper to be sustainable and to meaningfully enhance public health and safety.
[1] Bombay HC pulls up Maharashtra FDA over Cadila drug ban, says powers must be used judiciously
[2] Ibid.
[3] Section 22, Drugs and Cosmetics Act, 1940.
[4] Section 18, Drugs and Cosmetics Act, 1940.
[5] Rules 54 and 145C, Drugs Rules, 1945.
[6] Rule 55, Drugs Rules 1945.
[7] Rules 85(1) and 85(2), Drugs Rules, 1945.
[8] Rule 85(3), Drugs Rules, 1945.
[9] Maharashtra FDA cracks down on Ayurvedic drug makers, cancels 10 licences
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