Bombay HC Orders Maharashtra FDA To Pay ₹5 Lakh Over Sweet Shop Licence Suspension Despite 98% Compliance

The Bombay High Court has directed the Maharashtra Food and Drug Administration (FDA) to pay ₹5 lakh compensation to a Pune-based sweet shop after finding that its food licence continued to remain suspended despite a subsequent inspection recording 98% compliance.

The Court also quashed the suspension and allowed the shop to resume its retail business.

A Division Bench of Acting Chief Justice Ravindra V. Ghuge and Justice Gautam A. Ankhad passed the order in a petition filed by M/s Gurunanak Dairy & Sweets, which has been operating since 2006.

Food licence suspended after inspection

The FDA had inspected the shop on June 11-12, 2026, following a complaint of food poisoning. The inspection recorded deficiencies relating to sanitation, record-keeping, labelling and staff hygiene.

On June 12, the authorities suspended the shop's food licence and directed closure of the business. The shop subsequently appealed against the suspension and submitted a detailed compliance report on July 9, addressing the deficiencies recorded during the inspection.

The FDA carried out a fresh inspection on July 13. The auto-generated inspection report awarded the establishment 35 out of 36 marks, resulting in a 98% compliance score.

The report's only observation was that the petitioner was operating only as a retailer and therefore needed to modify its licence to remove the manufacturing category.

Despite the favourable re-inspection report, however, the suspension was not revoked.

Before the High Court, the State defended the continued suspension on the ground that the petitioner's appeal before the Commissioner, Food and Drug Administration, was pending.

The State informed the Court that the appeal had already been heard and was closed for judgment on August 11, 2026. It also stated that the petitioner's application seeking removal of the “general manufacturing” category from its food licence had not been dealt with because the appeal remained pending.

High Court’s strong observations

The High Court found this explanation unconvincing. The Bench pointed out that the authorities had themselves carried out the re-inspection while the appeal was pending.

The Court observed: "If pendency of the Appeal was not an impediment for the Respondent authorities in inspecting the premises of the Petitioner, we find no reason for the authorities to continue with the suspension of the retail food licence only because an Appeal was pending."

It further said that once the shop had achieved a 98% compliance score, the result should have led to immediate revocation of the suspension.

"If re-inspection was permissible notwithstanding the pendency of the Appeal, the Petitioner scoring 98% compliance marks, should have fetched an order of instant recalling of the suspension order" the Division bench remarked.

The Court described the authorities' reliance on the pending appeal as "a lame excuse that an Appeal is pending". The Bench also held that the removal of the deficiencies itself constituted a lawful basis for immediately revoking the suspension.

The petitioner told the Court that it was a small business earning approximately ₹25,000 per day and that it had lost business for around 35 days because of the continued suspension. The loss was stated to be approximately ₹9 lakh.

The High Court considered the petitioner's reliance on its earlier judgment in M/s Pind Punjab v. Union of India & Ors. to be well placed. In that case, the Court had dealt with a similar situation where deficiencies had been cured and a fresh inspection recorded full compliance.

FDA directed to pay ₹5 lakh

Taking into account the fresh inspection report covering cleanliness, hygiene, maintenance and sanitation, and the resulting 98% compliance score, the Court directed the Maharashtra FDA to compensate the petitioner with ₹5 lakh.

The Court accordingly:

• vacated the suspension order forthwith;

• permitted Gurunanak Dairy & Sweets to restart its retail dairy and sweets business;

• directed the FDA to deposit ₹5 lakh with the High Court within 30 days; and

• permitted the petitioner to withdraw the amount without any condition.

The pending appeal was disposed of as withdrawn at the petitioner's request.

The Court further directed that the petitioner's application seeking removal of the “general manufacturing” category from its FSSAI licence be dealt with within 72 hours and, if allowed, the modified licence be issued.

Case Title : M/s. Gurunanak Dairy & Sweets v. The Union of India & Ors

Date of Order: August 17, 2026

Bench: Acting Chief Justice Ravindra V. Ghuge and Justice Gautam A. Ankhad