1 IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA Cr. Appeal No. 385 of 2001 Reserved on: May 2, 2008 Decided on: May 8 , 2008 ____________________________________________________________ State of H.P. ……..Appellant. Versus Dr.C.L.Malhotra and others. ……..Respondents. Coram Hon’ble Mr. Justice Surinder Singh, J. Whether approved for reporting1? yes For the appellant : Mr.Ram Murti Bisht, Deputy Advocate General. For respondent 1 : Mr. B.K.Malhotra, Advocate. For respondents 2 and 3 Mr.N.K.Sood, Advocate For respondents 4 to 8 Mr Anand Sharma, Advocate.] For respondents 9 to 11 Mr Romesh Verma, Advocate ______________________________________________________________ SURINDER SINGH, J. State has challenged the judgment of acquittal passed by learned Special Judge, Shimla, in S.Trial No.14-S/7 of 97/96 dated 1.9.1999 whereby the respondents were acquitted of the offences punishable under sections 120-B, 420 IPC, Section 13(2) of the Prevention of Corruption Act and Section 22 of the H.P. Prevention of Corrupt Practices Act, 1983 in short the Act. Admitted facts of the case are: a) during the year 1989, Government of Himachal Pradesh had decided to purchase a large number of “Allopathic Drug- Kits” for Whether reporters of the Local papers are allowed to see the judgment? .yes 2 its Units in the State. Consequently tenders were invited by the Controller of Stores, Himachal Pradesh, Shimla; b) number of suppliers / manufactures of medicines submitted their tenders; c) tenders submitted by “M/S Rennice Drug House” Solan and “M/S Panacea Drugs and Pharmaceutical Private Limited” Jasoor, District Kangra, were accepted and they were awarded the contract to supply the said kits at the rates mentioned in the formal letters and documents of rate contract; d) respondents Ranjan Banga and Suresh Sood were the alleged partners of “M/S Rennice Drug House” Solan; e) the allopathic drug-kits were purchased through the Director of Health Services. Dr. C. L. Malhotra, was the Director Health Services at that time; f) one of the conditions of the rate contract was that before the dispatch of consignments of kits, a team of experts would inspect the kits on behalf of the Government. Accordingly, a team consisting of respondents, named Dr. Om Parkash and S. N. Sharma, was constituted to carry out the inspection. Dr.C.L.Malhotra, respondent, in his capacity as the Director (Health) approached the Government through the Secretary (Health) for according administrative sanction for the purchase of allopathic drug-kits worth Rs. 76,83,673/- from the aforesaid two firms in whose favour contracts were awarded. g) on his request, the Government accorded sanction vide letter dated 16.12.1989. Thereafter, Dr. C. L. Malhotra, placed two orders dated 28.12.1989 and 19.3.1990 each for supply of 246 kits, with “M/S Rennice Drug House”, Solan. These drug-kits were to be supplied 3 to the Chief Medical Officer, Nahan, who was to further distribute them among his various Health Centers; h) each kit was to contain 29 medicines and other medical items like bandages, cotton wool etc. of different kinds. The aforesaid medicines and medical items were manufactured and supplied to “M/S Rennice Drugs House”, Solan, by the firms “M/S Hindustan Trust Pvt. Ltd.”, “M/S Krishan Chand and Sons” and “M/S Aroma Surgical Rohtak”. i) respondents Umesh Sanghi, R.S.Arora, Vinod Kumar and Pritam Ahuja were the Managing Director(s) of “M/S Hindustan Trust Pvt. Ltd.” New Delhi, “M/S Indus Pharma, Pvt.Ltd”. New Delhi, “M/S Krishan Chand and Sons”, Delhi; j) respondents Pritam Ahuja, Sanjay Ahuja, Ram Parkash and proclaimed offender Tilak Raj were the partners of “M/S Aroma Surgical”, Rohtak; k) “M/S Rennice Drug House”, Solan, prepared the kits at its premises; l) members of the inspection team namely respondents Dr. Om Parkash and S. N. Sharma, visited and inspected the premises of “M/S Rennice Drug House”, Solan, on 22.2.1990 and submitted a report of the inspection to the Director Health Services on the same day. Thereafter, 246 kits were supplied by “M/S Rennice Drug House”, Solan to the Chief Medical Officer, Nahan vide invoice dated 22.2.1990. Prosecution case It is alleged that the consignment was not accompanied by any certificate of analysis, though it was one of the conditions of the rate contract. Dr. C. L. Malhotra, as Director Health Services, in spite of the 4 aforesaid condition, released the payment of 246 kits to “M/S Rennice Drug House”, Solan, whereas only 90% of the payment was to be released on receipt of the consignment and rest of 10% payment was required to be released after getting random samples analyzed from the Government Analyst. It is also alleged that some kits were also supplied to C.M.O.Shimla by “M/S Rennice Drug House”, Solan; Dr. Daler Singh, Drugs Inspector, Shimla, took random samples of medicines and other medical items from four of those kits, supplied to C.M.O.Shimla. In all he took twenty nine samples from each of the consignments supplied to C.M.O. Shimla and sent the samples to the Government Analyst Punjab (Chandigarh), who at the relevant time, was notified as Government Analyst for the State of Himachal Pradesh. The Government Analyst, opined that out of 29 samples, 16 samples did not conform to the prescribed standards. The samples which did not conform to the prescribed quality are as follows: 1.Burnicide ointment Batch No. 012148 Manufactured by Hindustan Pvt. Ltd. 2.Electrox R Batch No.388 Manufactured by Hindustan Pvt. Ltd. 3.Tablet Asprin Batch No.1888 Manufactured by Hindustan Pvt. Ltd. 4.Multilon Antiseptic Liquid Batch No.012144 Manufactured by Hindustan Pvt. Ltd. 5.Compound Benzoin Tinct Batch No.006419. Manufactured by Hindustan Pvt. Ltd. 6.Gention Violet Lotion NF Batch No.012143 Manufactured by Hindustan Pvt. Ltd. 7.Rolled bandage Batch No.5858 Manufactured by M/S Krishan Chand and sons 8.Absorbent Gauze Batch No.5857 Manufactured by Krishan Chand and sons 9.Rolled bandage Batch No.5906 Manufactured by Krishan Chand and sons 10.Eagle Gauze Plain Batch No.5907 Manufactured by Krishan Chand and Sons. 5 11. Albusole Eye Drops Batch No. A166 Manufactured by Indus Pharma Pvt. Ltd. 12. Albusole 20 Batch No. A-166 Manufactured by Indus Pharma Pvt. Ltd. New Delhi 13. Promethazine Epix Batch No.006433 Manufactured by M/S Hindustan Trust Delhi 14.Oxphenonium Bromide Tablets Batch No.2019 Manufactured by M/S Hindustan Trust Delhi 15.Mebendozole Batch No.1955 Manufactured by M/S Hindustan Trust Delhi 16.Tablet Asprine Batch No.2032 Manufactured by M/S Hindustan Trust Delhi Results of the analyzed samples were informed to Dr. C. L.Malhotra, Director Health Services by the Drug Inspector, but he took no steps to get the substandard medicines/medical items replaced nor got recovered their value from “M/S Rennice Drugs House” and in turn he released the entire payment of the medicines/medical items. Second consignment of the kits, ordered to be supplied, vide order dated 19.3.1990, was also inspected by the Inspecting Team on 21.7.1990 and further the Inspecting Team submitted a detailed report to the Director Health Services on 23.7.1990. Thereafter, “M/S Rennice Drug House”, Solan, consigned the said kits to the Chief Medical Officer, Nahan. On 31.7.1990 Dr. C. L.Malhotra had released cent percent payment of the bill, despite the fact that it also did not contain certificate of the Government Analyst, as per the condition of the rate contract. Further, Deputy Superintendent of Police, Anti Corruption Zone, Nahan, started a secret inquiry in the month of June, 1990 and visited the Central Store of Chief Medical Officer, Nahan on 14.6.1990 and seized two of the allopathic drug-kits, supplied by “M/S Rennice Drugs House”. One of kit was kept with the store keeper (PW) Sham Lal Sharma, whereas the other kit was sent for analysis to the Government Analyst. On 18.6.1990, after informing the C.M.O. in writing, he physically counted the contents of each and every container of 29 items, forming part of an allopathic 6 drug-kit, which was produced by Store keeper (PW) Sham Lal aforesaid. The verification revealed that there were 1202 tablets of asprine against the claimed quantity of 1250 tablets, 1188 tablets of Aluminium Hydroxide against the claim of 1250 tablets and 1215 tablets of Phthalysu Phathiazone against the claim of 1250 tablets. On 30.11.1991 the said Dy. S. P. drew the sample of 22 items out of 29 samples, contained in the kit, which he had allegedly seized on 14.6.1990 and carried with him for getting its contents analyzed from the Drug laboratory/Government Analyst. The Government Analyst opined through separate reports, that six items were of substandard and five were misbranded. It is also alleged that the total value of the substandard, misbranded and short supplied medicines/medical items, supplied on 24.2.1990 and 23.7.1990 was Rs. 85,211-94 paise and that due to negligence of Dr. C .L. Malhotra and S. N. Sharma, they have intentionally caused the loss to the State Exchequer to the tune of Rs.85,211-94 paise and hatched a conspiracy to help the suppliers and manufactures of the drugs to make unlawful and wrongful gains out of this deal and obtained monetary benefits for themselves. On the above allegations, a case was registered vide F.I.R. No. 7 of 1991 by the Deputy Superintendent of Police (Vigilance), Anti Corruption Zone, Nahan. During the investigation, Investigating Agency took into possession various documents and recorded statements of witnesses and thereafter sought sanction from the Government to prosecute the Government officials. On completion of the investigation, a challan was presented against the respondents in the court of learned Special Judge. 7 The learned Special Judge, finding a prima-facie case against the respondents, framed the charges under the aforesaid sections, to which they pleaded not guilty and claimed trial. To prove its case, the prosecution examined its witnesses. The respondents were also examined under section 313 Cr.P.C. The respondents denied the circumstances, which were found attendant upon them. At the end of the trial, the learned Special Judge, acquitted the respondents on the grounds : (a) that the evidence on record did not support the allegations of conspiracy and making money out of the said deal. (b) while drawing sample, the Deputy Superintendent of Police did not follow the procedure, as provided under section 23 of the Drugs and Cosmetics Act, 1940, which safeguards the interest of the person from whom the sample is taken and further the object of the provision is to ensure that the contents of the sample sent to the Government Analyst are not tampered with. (c) the reports Ex.PM/1 to Ex.PM2 did not mention, of any seal on the samples or the receipt of the facsimile of the seal and the reports, did not show that these pertains to the samples which were take by the Deputy Superintendent of Police on 31.11.1990. Further According to Jasbir Singh (PW14) on 14.6.1990 he visited the medical store under the control of Chief Medical Officer, Nahan and seized two kits vide memo Ex.PB and that one of those kits after being sealed was handed over to Roshan Lal, Store Keeper, for safe custody, whereas the other one was carried by him to his office. The witness has further stated that on 18.6.1990 he conducted physical verification of the contents of each and every jar/packets contained in the kit carried by him to his office and 8 found three items short therein. When the contents of the jar/packet had been counted on 18.6.1990, there could be no manner of doubt that the kit had been opened and the seal affixed on it had been removed. Therefore, it could not be said that the items which were seized by the Deputy Superintendent of Police were of substandard. (d) Inspection notes Ex.PA/5 and PA/6, which were sent by respondents Om Parkash and S.N.Sharma, were retained in the Directorate of Health Services. The prosecution has not examined any person to prove that no such report was received from the inspection team along with other reports. Therefore, there was no violation of any condition of the rate contract. (e) The Director Heath Services Dr. C. L. Malhotra wrote a letter (Ex.DA) to the controller of stores on 11.6.1990 with a copy to the Financial Commissioner-cum-Secretary Health and Family Welfare informing them that he had asked the Drug Inspector concerned to supply the copies of the report of analysis and that as and when the same were received, he would forward the same. Copy of the letter was also forwarded to the Superintendent of the concerned branch of the Directorate with a direction not to release the payment due to “M/S Rennice Drug House”, Solan. Therefore, it could not be said that the Director Health Services had not taken any action. In fact the payment was released by Mrs. Nirmal Sachdeva, the then Assistant Director Health, who was the “Drawing and Disbursing Officer” but she was not arrayed as an accused and no link or conspiracy has been established by the prosecution with Dr .C. L. Malhotra, who was allegedly shown to have been instrumental in releasing the payment. 9 (f) there was no requirement of taking sample by the Inspection team at the relevant time, therefore, they cannot be held guilty for its non-compliance. (g) it was also not proved that the medicines were of substandard, therefore, “M/S Rennice Drug House”, Solan was not obliged to replace the medicines. Heard. Mr Bisht, learned Deputy Advocate General, has vehemently argued that the learned trial court did not appreciate the evidence on record in its right perspective, therefore, the respondents were wrongly acquitted. The learned Deputy Advocate General has taken me through the evidence on record and ventilated that the findings arrived at by the learned Special Judge are incorrect and if the evidence is properly appreciated there are grounds to convert the acquittal into conviction. Contra, learned counsel appearing for the respondents have supported the impugned judgment of acquittal and argued that the evidence put forth by the prosecution is wholly discrepant and unreliable and it has miserably failed to prove the charges against the respondents. I have given my thoughtful consideration to the rival contentions of the parties and have carefully re-evaluated the evidence on record. As a matter of fact, the entire prosecution case hinges upon the circumstantial evidence and there is a beed rool of authorities holding that the circumstantial evidence in order to sustain conviction must satisfy three conditions: (i) the circumstances from which an inference of guilty is sought to be drawn, must be cogently and firmly established; 10 (ii) those circumstances, should be of a definite tendency unerringly pointing towards the guilt of the accused; (iii) the circumstances taken cumulatively should form a chain so complete that there is no escape from the conclusion that within all human probability the crime was committed by the accused and none else, and it should also be incapable of explanation on any other hypothesis than that of the guilty of the accused. Now I proceed to analyze the various circumstances put forth by the prosecution to prove the charges against the respondents within the ambit of the above legal principles:- Circumstances (i) The prosecution has alleged that as per rate contract, kits were required to be supplied within two months of the placing of the order by the Director Health Services, but the inspection team did not arrange to carry out the inspection within two months period limited for supply of kits and Doctor C.L.Malhotra, also did not insist for the timely supply of the kits. It is manifest from the record that the order for the second assignment was placed on 19.3.1990 vide letter Ext. PG/1 but it was dispatched on 23.7.91. The inspection of the items supplied could only be possible thereafter. But it is not understood as to how this circumstance goes to establish conspiracy interse the supplier and respondent Dr. C.L. Malhotra. In fact by late supply of the drug kits M/S Rennice Drugs House, Solan could not gain anything, rather their payment was delayed on account of late 11 supply of drugs kits. The value of the consignment was Rs.2, 92,779/- which was paid vide bank draft Ex.PJ/2 dated 31.7.1990 i.e. after the receipt of the consignment. Had M/S Rennice Drug House, supplied the drug kits promptly they would have been paid earlier than the date on which they actually received the aforesaid amount. Therefore, late supply of drug-kits did not point out to any conspiracy on the part of the respondents or any monetary gain to the respondents and above all, loss to the Government. (ii) The next circumstance put forth by the prosecution to prove its case is that the inspection team did not carry out the inspection nor it took any sample from any of the kits for test but just cleared the consignments for dispatch with the result, there has been less medicines in the kit than shown and some sub- standard medicines forming part of the kits were got supplied to the Government, as the samples sent by Dy. Superintendent of Police (PW14) for analysis did not conform to the prescribed standard. It is an admitted case of the parties that respondents Dr Om Parkash and S. N. Sharma, were nominated to carry out the inspection of consignment before its dispatch. Clause 4 of the rate contract Ex.PC/6 provides that each consignment will be inspected before dispatch by the consignee or his authorized representative. This document does not show anywhere that what would be the mode of inspection; whether inspecting team was required to take sample of medicines which were to be supplied to the Government. Whereas clause 7 of the rate contract provides that every batch of medicines must be accompanied with certificate of analysis which will be supplied along with the kits. Thus, it is clear that the inspecting 12 team was not required to draw the sample; in fact they were to ensure that each drug kit contained the requisite medicine and or medical items, as indicated in the tender document. It is not disputed that each of the officers of the inspecting team did not inspect the consignment but it is alleged that they were required to take samples which they did not do. But the prosecution has failed to show by leading a cogent evidence that the members of the inspecting team were required to take the samples. Thus, in the absence of this condition for not picking up the samples for analysis, no liability can be fastened under the law, upon them. Further, on 18.6.90 the Dy.S.P. (PW14) had visited the central store of CMO Nahan. He informed the CMO and counted the contents of the kits picked up by him at random. These proceedings were reflected by him in the memo Ext. PW3/A allegedly prepared by him on the spot. But I have failed to find out from the said memo who was the supplier of those kits. Sham Lal (PW2) and PW 14 aforesaid have stated that these were one of the kits which were seized by him on 14.6.90 supplied by M/S Rennice Drug House. Further according to PW14, Dy. S.P., on 30.11.1991 he drew the sample of drugs which were short in the kit and prepared memo Ex.PB/4 to this effect. He has not stated anything about resealing of the drugs found at the time of physical checking nor he has stated where he had kept these drugs w.e.f. 18.6.1990 to 30.11.1990. Thus, there was possibility of its tampering and there is no link evidence worth the name that on 14.6.90 the said officer had sealed the kits and that before breaking the seal, it was compared with the sample of seal if any taken earlier. Therefore, in the above circumstances, it cannot be said that it was the same kit which was supplied by “M/S Rennice Drugs House”, Solan, the contents whereof were counted on 18.6.90 and then reopened 13 on 30.11.1990 for taking the sample. Further, marginal witnesses PW2 Sham Lal and Hari Ram (PW11) did not say about taking of the sample as alleged. Thus, the prosecution has failed to connect the samples, having been taken from the kit supplied by M/S Rennice Drug House, Solan, were substandard. This apart while taking sample, Dy.S.P.(PW14) has also not complied with the prescribed procedure, for taking the sample as per section 23 of the Drugs and Cosmetics act, 1940. In the event when this procedure has not been followed, the report of analysis also loses its significance and cannot be treated as conclusive evidence. Therefore, the prosecution could not prove this circumstance beyond any reasonable doubt. (iiii) The next circumstance put forth by the prosecution is that it was one of the conditions of the rate contract that the kits were to be accompanied by “certificates of analysis”, but the kits that were supplied to the Chief Medical Officer, Nahan, under the orders of Doctor C. L. Malhotra had no such certificates accompanying them and in spite of that Doctor C. L. Malhotra released the payment of the kits, which was a hefty amount of Rs.5, 55,558/- As a matter of fact, inspection notes Ex.PA-5 and PA-6 submitted by respondents Doctor Om Parkash and S. N. Sharma were received in the office of Directorate of Health Services, which were taken into possession by the Investigating Officer on 4.12.1992 vide Memo Ex.PA. from the Directorate itself. Para 4 of inspection notes also shows that reports were retained in the Directorate. In para 6 of the Inspection note it is mentioned that C.M.Os were already requested to get the contents of the drugs analyzed from the Drug Inspectors. According to PW2 he had sent two bills, received from “M/S Rennice Drugs House” with the 14 consignment to the Director Health Services, for payment and its payment was made to the said firm, which means that the requisite certificates of analysis were received and that was the reason for releasing their payment. Thus, this circumstance also fails to establish anything in favour of the prosecution. (iv) The next circumstance put forth by the prosecution is that when 16 out of 29 items were found substandard and the fact was brought into the notice of Director Health Services by the Chief Medical Officer, Shimla, he did not inform the Controller of Stores or to the Government to blacklist “M/S Rennice Drugs House”, Solan nor he took any steps to recover the price of the adulterated drugs from the said firm but in turn he released the entire amount of the consignments in hot haste. To prove it, the prosecution has examined Daler Singh (PW15) who was Licensing-cum-Controlling Authority of Drugs of the State of Himachal Pradesh at that time. According to him, he had taken the samples of certain items from the kits from Central-Store, Shimla and some of the items did not conform to the prescribed standard, as per reports of the Government Analyst. He placed on record reports Ex.PN-1 to PN-3. According to him, he telephonically informed C. M. O. Nahan to stop further use of such items. Though he denied any personal grudge against Dr. C. L. Malhotra and respondent S.N.Sharma but in the cross- examination he has admitted that he had filed a petition before the Administrative Tribunal alleging bias, against Dr C. 15 L. Malhotra and lodging of a FIR regarding the assault against Mr. Sharma. It appears that he was in logger head with Dr.C.L.malhotra and S.N.Sharma thus he had a motive to depose against them. On close examination of his testimony, I find that his contention is absolutely incorrect in view of the letter dated 11.6.90 (EXT.DA) sent by the Director of Health Services Dr, Malhotra to the Controller of Stores with its copy to the Financial Commissioner-cum-Secretary, Health & F.W. to the Government of Himachal Pradesh, whereby he had informed the Controller of Stores, that he had asked the Drugs Inspector, who had taken the samples of the medicines to supply him the copies of the analysis reports. On its receipt, it would be forwarded to the Controller. He also informed the Chief Medical Officers / Medical Superintendents telegraphically to stop the use of the medicines. He sent a copy of this letter to the concerned branch of the Directorate with a direction not to release the payment of M/S Rennice Drugs House, Solan and “M/S Panacea, Pharmaceuticals & Drugs” (sic) Distt. Kangra. Thus, it is