Should statutory regulators be made to pay monetary compensation for enforcement actions taken in good faith? Examine with reference to recent judicial developments.

On 5 October 2026, in State of Maharashtra & Ors. v. M/s Gurunanak Dairy & Sweets, the Supreme Court set aside a Bombay High Court order. That order had told the Maharashtra FDA to pay ₹5 lakh to a Pune sweets shop. The FDA had suspended the shop's licence after a food-poisoning complaint [1]. The case asks whether enforcement done in good faith should carry a money penalty.

Arguments for compensation

• Lost livelihood: a suspension stops a small business's income at once, and sales lost during the shutdown cannot be recovered. This touches the right to trade under Art. 19(1)(g).
• Pressure to follow procedure: the FSS Act, 2006 sets out steps in order. First comes an improvement notice under Section 32 giving at least 14 days to comply. Suspension comes next, and cancellation only after a show-cause notice [2]. If officers skip these steps, the trader pays for their mistake.
• Accountability: Nilabati Behera (1993) treated public-law compensation as strict liability, where sovereign immunity does not apply [3].

Arguments against compensation

• Law allows urgent action: the Act lets an officer suspend a licence "forthwith" in the interest of public health, with reasons recorded in writing [2]. Here, inspectors found real labelling and staff-hygiene lapses [1].
• Chilling effect: if inspectors can be made to pay, they may hold back in high-risk sectors such as dairy and sweets.
• Remedy already exists: the Act provides an appeal to the Commissioner of Food Safety [2]. Writ damages should not bypass it.
• Doctrine does not fit: Nilabati Behera was about a custodial death under Art. 21 [3]. Limits on a trade licence for public health are reasonable restrictions under Art. 19(6).
• Weak capacity, not bad faith: the CAG (2017) found that 65 of 72 State food labs lacked NABL accreditation. It also found licences issued on incomplete documents in more than half the cases checked, and an acute shortage of staff [4]. Compensation would punish these system-wide gaps, not bad intent.

Recent judicial trend

• The High Court had ordered compensation, and the Supreme Court set that order aside [1]. Its full reasoning is not yet reported. The reversal still points towards courts being more cautious about awarding money against regulators acting on public-health grounds.

Way forward

• A standard written-reasons checklist for every immediate suspension.
• Fixed time limits for the Commissioner to decide urgent appeals.
• Fill vacant posts and get State labs NABL-accredited, as the CAG recommended [4].
• Compensation only for mala fide or clearly arbitrary action.

Overall, enforcement done in good faith should not carry a price tag, but it must stay open to scrutiny. Recorded reasons, quick appeals and stronger regulator capacity protect livelihoods without weakening the State's Art. 47 duty to improve public health and its SDG-3 commitment.