IN THE HIGH COURT OF KARNATAKA CIRCUIT BENCH AT GULBARGA DATED THIS THE 19FF1 DAY OF NOVEMBER, 2011 BEFORE THE HON’BLE MR. JUSTICE ARAVIND KUMAR CRIMINAL PETITION NO.15263/2011 ciw CRIMINAL PETITION NOS.15243/2011, 15093/2011, 15092/2011 & 15094/2011 CRIMINAL PETITION No.15263/2011: BETWEEN: Ritesh S/o Yogendrapal Sharma, Age: 42 Years, 0cc: Business, R/o # 88/1 Civil Lines, Jhansi, Uttar Pradesh. PETITIONER (BY SRI PRAKASH YELL ADVOCATE) AND: The State of Karnataka Through the Drugs Inspector. Gulbarga Circle,’ Gulbarga. Office of the Drugs Inspector, C/o Asst. Drugs Controller. Govt. of Karnataka Guibarga Circle, Gulbarga. RESPONDENT (BY SMT. ANURADHA.M.DESAI, ADDL.SPP) This Criminal Petition is filed under Section 482 of Cr.P.C praying to call for the relevant records and allow the petition by quashing the impugned order dated 28.01.2009 passed by the Learned 1s Addi. Civil Judge Jr.Dn) and JMFC, Gulbarga thereby taking cognizance and issuing of process and further quash the entire criminal proceedings arising out of C.C.No. 179/2009. against the petitioner for the offence punishable under Sections 18(a)(1) and 27(d) of the Drugs and Cosmetics Act 1940, in the interest ofjustice and equity. CRIMINAL PETITION No.15243/2011: BETWEEN: Uprnanyu Sb Ramakrishna Trivedi, Age: 48 Years, 0cc: Business, R/o # E4. 125, Area Colony, Bhopal, Madhya Pradesh. . . PETITIONER (BY SRI PRAKASH YELl, ADVOCATE) AND: The State of Karnataka Through the Drugs Inspector, Gulbarga Circle, Gulbarga, — Office of the Drugs Inspector, C/o Asst. Drugs Controller, Govt. of Karnataka Gulbarga Circle, Gulbarga. RESPONDENT (BY SMT. ANURADHA.M.DESAI, ADDL.SPP) This Criminal Petition is filed under Section 482 of Cr.P.C praying to call for the relevant records and allow the petition by quashing the impugned order dated 28.0 1.2009 passed by the Learned 1st Addl. Civil Judge (Jr.Dn) and JMFC, Gulbarga thereby taking cognizance and issuing of process and further quash the entire criminal proceedings arising out of C.C.No. 179/2009, against the petitioner for the offence punishable under Sections 18(a)(1) and 27(d) of the Drugs and Cosmetics Act, 1940, in the interest ofjustice and equity. CRIMINAL PETITION No. 15092/2011: BETWEEN: Shri Himanshu Jhavar. Director M/s.Bright Drug Industries Ltd., 45-A, Sector ‘F’, Sanwar Road, Indore-4520 15, Madhya Pradesh. .. . .PETITIONER (BY SRI VEERESH B.PATIL, ADVOCATE) -4- AND: The State of Karnataka Through the Drugs Inspector, Gulbarga Circle. Gulbarga, Office of the Drugs Inspector. C/o Asst. Drugs Controller, Govt. of Karnataka Gulbarga Circle, Gulbarga. RESPONDENT (BY SMT. ANURADHA.M.DESAI, ADDL.SPP) This Criminal Petition is filed under Section 482 of Cr.P.C praying to quash or set aside the order taking cognizance dated 28.0 1.2009 passed by the Learned 1st Addl. Civil Judge (Jr.Dn) and JMFC, Gulbarga whereby the learned court below summoned the petitioner to face trial in C.C.No. 179/2009 titled as “State at the instance of Drugs Inspector, Gulbarga Circle Vs M/s Bright Drugs Industries and others” and also the proceedings arising out of C.C.No. 179/2009 under sections 18(a)(i) of the Drugs and Cosmetics Act 1940, punishable under section 27(d) of the Drugs & Cosmetics Act, 1940 in the interest ofjustice and equity. CRIMINAL PETITION NO.15093/2011: BETWEEN: Shri P.G.Mishra, Ex Director M/s Bright Drug Industries Ltd., 45-A. Sector F’, Sanwar Road, Indore-4520 15. Madhya Pradesh. . . . PETITIONER (BY SRI VEERESH B.PATIL. ADVOCATE) AND: The State of Karnataka Through the Drugs Inspector, Gulbarga Circle, Gulbarga, Office of the Drugs Inspector, C/o Asst. Drugs Controller, Govt. of Karnataka Gulbarga Circle, Gulbarga. RESPONDENT (BY SMT. ANURADHA.M.DESAI, ADDL.SPP) This Criminal Petition is filed under Section 482 of Cr.P.C praying to quash and set aside the order dated 28.0 1.2009 passed by the Learned 1st Addl. Civil Judge (Jr.Dn) and JMFC, Gulbarga whereby the learned court below summoned the petitioner to face trial in complaint case No. 179/2009 titled as “State at the instance of Drugs Inspector. Gulbarga Circle Vs M/s. Bright Drugs Industries and others” be quashed and set aside the proceedings arising out of complaint case no. C.C.No. 179/2009 under sections 18(a)(i) of the Drugs and Cosmetics Act 1940, punishable under section 27(d) of the Drugs & Cosmetics Act, 1940 in the interest ofjustice and equity. -6- CRIMINAL PETITION NO.15094/2011: BETWEEN: Shri Dharmesh Goval. Director M/s Bright Drug Industries Ltd., 45-A, Sector IF’. Sanwar Road, Indore-4520 15, Madhya Pradesh. . . . . PETITIONER (BY SRI VEERESH B.PATIL, ADVOCATE) AND: The State of Karnataka Through the Drugs Inspector, Gulbarga Circle, Gulbarga, Office of the Drugs Inspector, C/o Assistant Drugs Controller, Govt. of Karnataka Gulbarga Circle, Gulbarga. RESPONDENT (BY SMT. ANURADHA.M.DESAI, ADDL.SPP) This Criminal Petition is filed under Section 482 of Cr.P.C praying to quash and set aside the order taking cognizance dated 28.0 1.2009 passed by the Learned 1st Addi. Civil Judge (Jr.Dn) and JMFC, Gulbarga whereby the learned court below summoned the petitioner to face trial in complaint case No. 179/2009 titled as “State at the instance of Drugs Inspector, Gulbarga Circle V/s -7- M/s Bright Drugs Industries and others” be quashed and set aside the proceedings arising out of complaint case no. C.C.No. 179/2009 under sections 18(a)(i) of the Drugs and Cosmetics Act 1940, punishable under section 27(d) of the Drugs & Cosmetics Act, 1940 in the interest ofjustice and equity. These petitions coming on for orders this day, the court made the following: ORDER These petitions are disposed of by a common order since the respondent/complaint has filed complaint under section 200 Cr.P.C, 1973 against the respondents before the jurisdictional court to take cognizance of offence alleged against the respondents and on such complaint being filed, trial court having taken cognizance and issuing summons to the petitioners, they are before this court urging common and identical grounds in all these petitions. 2. Respondent herein i.e., Drug Inspector lodged a complaint under section 200 Cr.P.C against nine accused persons out of whom five i.e., A-2 to A-6 are the -8- present petitioners, alleging that accused persons have committed offence punishable under Sections 18 (a) (i) and 27 (d) of Drugs and Cosmetics Act, 1940 and to take cognizance of same. 3. Gist of the complaint is: A-i, M/s Bright Drug Industry Limited is manufacturing drugs after obtaining necessary license in this regard and Assistant Drugs Controller and Drug Inspector visited the first accused industry and took legal samples of the drugs manufactured by A-i company and on testing, it was found that drugs which were manufactured by A-i were of sub-standard quality and after obtaining the test report and same was forwarded to A-i factory calling upon it to furnish the details of persons in-charge of the Industry for day to day affairs and responsible for the Manufacturing of Drugs and no reply was received. Thereafter complaint was lodged against the company. its directors, 4’ -9- manufacturing chemists and analytical chemists alleging accused persons have committed offence punishable under section 18(a) (1) and 27(d) of the Drugs and Cosmetics Act 1940 (hereinafter referred to as Act’ for the sake of brevity). 4. On such complaint being filed before the jurisdictional Magistrate, cognizance was taken summons was ordered to be issued to the accused persons. Petitioners who are arraigned as A-2 to A—6 are the directors of A-i company have questioned the order of the Magistrate court taking cognizance and issuing summons to them by raising following grounds: (i) Petitioners are only directors of the A-i industry and they are not incharge of the day to day affairs or control of the company. (ii) The averments made in the complaint regarding petitioners is bald and vague statement and there is no specific allegation - made in the complaint against their role and participation in the day to day administration and affairs of A-i industry. (iii) Except making a vague statement in the complaint that petitioners are directors of the company there are no specific averments made in the complaint pointing out the specific act of each of the directors and how they are responsible for the working of day to day affairs of A-i industry. (iv) The license issued to A-i industry itself clearly specifies the names of the persons who are incharge and as such prosecuting of petitioners for any for alleged violation of the provisions of the Drugs and Cosmetics Act. 1940 if any cannot be proceeded against them and if there is any offence committed as alleged complaint it has to proceed to prosecute those persons who are responsible -11- for it and not the petitioners who are only directors of A- 1 industry and not incharge of day to day affairs of the A-I industry. (v) Section 34 of the Act would fix the liability and responsibility on those persons who are responsible for the manufacturing and testing of drugs and admittedly the petitioners herein are not the persons who are responsible for the manufacturing and testing the drugs that are manufactured by A-i industry. 5. In support of their submission they would rely upon the following judgments. (i) 2011 (1) SCC (Crimes) 195 — State of NCT of Delhi Vs Rajiv Khurana (ii) Cr1. A.836/2010 - Pepsico India Holdings (P) Ltd., Vs Food Inspector and anr (iii) 1981(2) SC 454 — Drugs Inspector. Palace Road, Bangalore Vs Dr.B.K.Krishnaiah and anr 12- (iv) AIR 1998 SC 2327 State of Harvana Vs Brij Lal Mittal (v) ILR 2002 Karnataka 475 - Sanjay G.Revankar Vs State by Drug Inspector. Uttar Kannada District, Karwar (vi) Order dated 12.04.2011 passed in CrLP.7128 C/w 7129/2010 by Co-ordinate Bench of this Court. (vii) Order dated 02.06.2011 passed in Crl.P.7262/2010 and 7427/2010 by Co ordinate Bench of this Court. 6. Per contra the learned Addi. SPP, Smt.Ariuradha M.Desai appearing for the state would support the order of the trial court in taking cognizance of the complaint filed by the respondent (complainant) and submits that on testing of the samples taken at A-i industry. notice came to be issued to A-i industry as required under section 18 and 23 of the Act calling upon it to furnish the details of the persons incharge of day to day affairs if any and on not furnishing the said - 13- information and on further enquiry/investigation complainant has noticed that its directors are incharge of day to day affairs of the company as evidenced from the Memorandum and Articles of Association of the company particularly paragraphs 154, 155 and as such it has been specifically averred and pleaded in the complaint as per paragraphs 6 to 10 and 30(2) to 30(9) about the role of each of the accused persons and as such she contends that petitioners herein being the directors of A-i industry and being responsible for conduct of its business are guilty of the offence alleged against them and as such the ingredients of section 34 of the Act is squarely applicable to the petitioners. In support of her submission she relies upon the judgment of the Honble Apex Court in the case of Dinesh B.Patel and others reported in (2010) 11 SCC 125. 7. She would also further contend that after the test analysis report was secured from the Analyst same - 14 - was forwarded to A- 1 industry to furnish the details of those persons who are responsible for day to day affairs so as to proceed against them and on its failure to furnish such information sought for, enquiries/investigation has been made and it was found that petitioners being the directors of the A-i industry are conducting the day to day affairs of the industry and they are responsible for the day to day affairs of the company and as such it has been specifically averred and pleaded in the complaint about the role of each of the accused persons in conducting the affairs of the company and as such she seeks for dismissal of these petitions. 8. She would further submit that judgment of the Honble Apex Court in Dinesh Patel case referred to supra was not brought to the notice of this court while disposing of criminal petitions 7128, 7129 of 2010 and 7262 and 7427 of 2010. She would also rely upon - 15 - judgment of the Hon’ble Apex Court reported in the case of Drugs Inspector. Palace Road Bangalore V/s Dr.B.K. Krzshnaiha and Others 1981(2) SCC 454 to contend that when the Magistrate finds that the allegations made in complaint make out a prima facie case of the offence alleged and petitioners being the directors and responsible for carrying on business taking of cognizance and issuance of summons by the Magistrate is therefore justified and not to be interfered by this court and as such she prays for rejection of petitions. 9. Having heard Sri.Sandeep Gupta, learned Advocate appearing on behalf of Sri.Veeresh.B.Patil, for petitioner Sri Prakash Yeli, learned advocate, Smt. Anuradha Desai, learned Addi. SPP appearing for the State and on perusal of the original records made available and produced by Addi. SPP. I am of the considered view that following points would arise for my consideration: - 16- (a) Whether the order of the learned magistrate taking cognizance and issuing summons to petitioners is sustainable in law? (b) Whether the proceedings against the petitioner in 15093/2011 can be proceeded since he had resigned from A-i industry as on the date of collecting of samples by the Assistant Drugs Controller/Drug Inspector from A-i industry. 10. In order to adjudicate and answer the points formulated herein above it would be necessary to divide the following order into Five parts namely History of the legislation, Relevant Provisions of Drugs and Cosmetics Act, Authorities on the issue, Facts and Answers to the points formulated. - 17 I. HISTORY OF LEGISLATION & PROVISIONS OF LAW. 11. The Central Legislative Assembly to give effect to the recommendations of drugs an enquiry committee constituted by it to regulate import of drugs into British India introduced a bill in 1937 which caine to be referred to select committee which opined that a more comprehensive measure for the uniform control, manufacture and distribution of drugs as well as import was desirable and as such the Central Government suggested to Provincial Governments to pass a resolution empowering the Central Legislature to pass an Act for regulating such matters relating to control of Drugs which falls within the Provincial sphere. On such resolution being passed by the Provinicial legislatures, the drugs bill was introduced in the Central Legislative Assembly. After having considered to what extent the provision can be made to secure the maintenance of - 18 - uniformity in standards and any other important matters in which uniformity is desirable, the Central Legislative Assembly passed the bill and assent of the then Governor General of India was given on 10th April 1940 and thus came on the Statute Book Drugs Act, 1940. Subsequently same came to be amended by adding the words and Cosmetics” and now it stands as Drugs and Cosmetics Act, 1940”. 12. Chapter II of the Act deals with Constitution of Drugs Technical Advisory Board, Central Drugs Laboratory and Drugs Consultative Committee. Chapter III relates to import of Drugs and Cosmetics, power of Central Government to make rules, punishment for offences relating thereto, power of confiscation and jurisdiction of the court to try the offence punishable thereunder. Chapter IV is the one which relates to facts and circumstances on hand namely it relates to manufacture, sale and distribution - 19- of drugs and cosmetics. Section 1 8A mandates every person not being the manufacturer of drug or cosmetic to disclose to the Inspector the name, address and other particulars of the person from whom he acquired the drug or cosmetic. As per section 21 Central Government or State Government is empowered to appoint such persons as it thinks fit as “Inspectors” by prescribing their qualifications whose duties are circumscribed by section 22 of the Act. The procedure required to be adopted by inspectors while taking sample of drugs under this chapter is regulated by Section 23. Chapter V relates to Miscellaneous provisions and Section 34 explains as to who are to be proceeded with when offence has been committed by a company. II. “PROVISIONS OF DRUGS & COSMETICS ACT” Some of the provisions which are relevant for the purposes of considering rival contentions urged in these -20- petitions are extracted herein below. Section 18(A). 18(B) and 21 reads as under: Section 1 8A. Disclosure of the name of the manufacturer, etc. — Every person, not being the manufacturer of a drug or cosmetic or his agent for the distribution thereof shall, f so required. disclose to the Inspector the name. address and other particulars of the person from whom he acquired the drug or cosmetic. Section 18B. - Maintenance of records and furnishing of information - Every person holding a licence under clause (c) of section 18 shall keep and maintain such records, registers and other documents as may be prescribed and shall furnish to any officer or authority exercising any power or discharging any function under this Act such information as is required by such officer or authorityJr carrying out the purposes of this Act. Section 21:- Inspectors -(1) The Central Government or a State Government may by notification in the Official Gazette, appoint such persons as it thinks fit. having the prescribed qualifications, to be Inspectors for such areas as may be assigned to them by the Central Government of the State Government. as the case may be. (2) The powers which may be exercised by an Inspector and the duties which may be performed by him, the drugs or [classes of - 21 - drugs or cosmetics or classes of cosmetics] in relation to which and the conditions, limitations or restrictions subject to which, such powers and duties may be exercised or performed shall be such as may be prescribed. (3) No person who has any financial interest [in the import, manufacture or sale of drugs or cosmetics] shall be appointed to be an Inspector under this section. (4) Every Inspector shall be deemed to be a public servant within the meaning of section 21 of the Indian Penal Code (45 of 1860), and shall he qfficially subordinate to such authority [having the prescrthed qualifications,] as the Government appointing him may specify in this behaUl Section 23. Procedure of Inspectors:- (1) Where an Inspector takes any sample of a drug (or cosmetic) under this Chapter. he shall tender the fair price thereof and may require a written acknowledgement therefor. (2) Where the price tendered under sub sec•on (1) is refused or where the Inspector seizes the stock of any drug (or cosmetic) under clause (c) of section 22, he shall tender a receipt therefore in the prescrthedforim (3) Where an Inspector takes a sample of a drug (or cosmetic) for the purpose of test or analysis, he shall intimate such purpose in writing in the prescribedform to the personfrom whom he takes it and, in the presence of such person unless he wiifully absents himseJ shall - divide the sample into four portions and effectively seal and suitably mark the same and permit such person to add his own seal and mark to all or any of the portions so sealed and marked: Provided that where the sample is taken from premises wehreon the drug (or cosmetic) is being manufactured, it shall be necessary to divide the sample into three portions only: Provided further that where the drug (or cosmetic) is made in containers of small volume, instead of dividing a sample as aforesaid. the Inspector may, and f the drug (or cosmetic) be such that it is likely to deteriorate or be otherwise damaged by exposure shall, take three or four, as the case may be, of the said containers after suitably marking the same and, where necessary, sealing theni (4) The Inspector shall restore one portion of a sample so divided or one container, as the case may be, to the person from whom he takes it. and shall retain the remainder and dispose of the same asfoUows: (i) one portion or container he shall forthwith send to the Government Analystfor test or analysis: (iD the second he shall produce to the Court before which proceedings, f any, are instituted in respect of the drug (or cosmetic): and (iii) the third, where taken, he shall send to the person, f any, whose name, address and other particulars have been disclosed under section 18A.) - 23 - (5) Where an Inspector takes any action under clause (ci of section 22. (a) he shall use all despatch in ascertaining whether or not the drug (or cosmetic) contravenes any of the provisions of section 18 and, f it is forthwith revoke the order passed under the said clause or, as the case may be, take such action as may he necessaryfor the return of the stock seized; (b) f he seizes the stock of the drug (or cosmetic), he shall as soon as may be, irform (a Judicial Magistrate) and take his orders as to the custody thereof) (c) without prejudice to the institution of any prosecution, f the alleged contravention be such that the defect may be remedied by the possessor of the drug (or cosmetic). he shall, on being satisfied that the defect has been so remedied, forthwith revoke his order under the said clause. (6) Where an Inspector seizes any record, register. document or any other material object under clause (cc) of sub-section (1) of section 22, he shall, as soon as may be, inform (a Judicial Magistrate) and take his orders as to the custody thereof) (34) Offences by companies:- (1) Where an offence under this Act has been committed by a company, every person who at the time the offence was committed, was in charge of and was responsible to the company for the conduct of the business of the company, as well as the company shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly: - 24 Provided that nothing contained in this sub-section shall render any such person liable to any punishment provided in this Act f he proves that the offence was committed without his knowledge or that he exercised all due diiiqence to prevent the commission of such oftènce. (2) Notwithstanding anything contained in sub section (1), where an offence under this Act has been committed by a company and it is proved that the offence has been committed with the consent or connivance of or is attributable to any neglect on the part of any director. manager, secretary or other officer of the company, such director, manager. secretary or other ofjicer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly. AUTHORITIESICITATIONS: - (1) 1981(2) SCC 454 - Drugs Inspector, Palace Road, Bangalore Vs Dr.B.K.Krishnaiah and Another “4. This order of the Magistrate was challenged before the High Court, The High Court considered Section 34(1) of the Act and held that the complainant “has not complained against accused 2 and 4, the petitioners in this case making out that they were, in any manner. in charge of and responsible to the firm, namely - 25 - accused 1 for the conduct of the business of the firm, namely, accused 1. 6. The only question for consideration for the High Court in this case was whether the accused or any of them were liable. In paragraph 17 of the complaint, petition the complainant quoted the provisions of the Act. In addition, he cited the names of witnesses. submitted a list of documents including a copy of the iartnership deed at Item 13 of the list of documents. The learned Magistrate perused the partnership deed and prima facie found that the respondents as well as the deceased accused were liable for the offence and proceeded for trial. The learned High Court committed an error in holding that there was no allegation that the respondents were not (sic) responsible for the management and conduct of the firm. The extent of their liability would be established by evidence during trial. In our opinion the judgment of the learned High Court is erroneous