IN THE HIGH COURT OF JUDICATURE AT PATNA Cr.Misc. No.7378 of 2008 AJAY BHATIA, son of Late Prithvi Raj Bhatia, resident of 584L, Model Town, Panipat in the State of Haryana. …Petitioner Versus 1. THE STATE OF BIHAR 2. The Drug Inspector, Sitamarhi, Bihar …Opposite parties For the petitioner: Mr. Rana Pratap Singh, Sr. Advocate & : Mr. Sumant Singh, Advocate For the State : Mr.Amitesh Verma,APP ----------- 06. 06.07.2010 The petitioner challenges the order dated 21.07.2004 passed by the learned Chief Judicial Magistrate, Sitamarhi in C-II/03/04/Tr. 1102 of 2007, whereby the learned Magistrate on the strength of the prosecution report ((Annexure-1) has taken cognizance under section 27(a) of the Drugs and Cosmetics Act, 1940(hereinafter referred to as the „Act), and processes were directed to be issued against the petitioner. Background facts giving rise to the present case may be indicated. The Drug Inspector, Sitamarhi (Health Deptt), Govt. of Bihar lodged a prosecution report alleging therein that on 18.8.2000 he collected samples of the Drugs named CEFLX TZ Batch Nop.o/cp-05 mdft. Date Feb.01, Expiry date-Jan, 04 mfd. by Laborate Pharmaceuticals(India) E- 11, Industrial Aria, Panipat from a shop called M/s Rajan Medical Hall, Sonbarsa in the district of Sitamarhi. The same was sent for test to the Govt. Analyst, Central Indian Pharmacopoeia Laboratory Ghaziabad, U.P. On an analysis made by the Govt. Analyst, i.e., C.I.P.L. Ghaziabad, it was found that the sample so collected and forwarded to it was of substandard quality due to failure in disintegration time. The aforesaid complaint itself explains that on enquiry it was found that M/s R.K. Remedies, Sitamarhi - 2 - had purchased the aforesaid drugs which were retailed out to M/s Rajan Medical Hall, Sonbersa, Sitamarhi. Further investigation/enquiry reveals that M/s Laborate Pharmaceuticals India ltd. was the manufacturer of the medicines/drugs which were supplied to M/s Aryoday, 20-I.A.S.Colony, Shrikrishna Nagar. This is what the complainant alleged in paragraph nos.10,11, and 12 of the complaint: “10. That the firm lab orate Pharmaceutical India Ltd. Panipat and the firm Laborate Pharmaceutical India, Panipat are the same firm according to the address given on their Invoice on 21-32003 and the letter issued to Mr. B.L. Das, Drugs Inspector, Sitamarhi on 24-2-2002 already enclosed as Annexures in previous paragraphs or it might have changed the Constitution of the firm which may affect the name of the firm partially. 11. That on investigation the name of only one partner could be detected, therefore, other partners/authorized signatories/director/directors could not be made party (respondents) which may be included in supplementary petitiones. 12. That by manufacturing sub-standard drugs mentioned above, the firm Laborate Pharmaceutical India Ltd./Laborate Pharmaceutical India, E-11, Ind., Area, Panipat-132103 has committed an offence by violating sec. 18(a) which is punishable u/s 27(a).” While assailing the validity of the order taking cognizance of the offence, it has been contended that the vicarious liability cannot be fastened on the petitioner who has been described simply as a partner of the said firm in view of the allegations contained in paragraphs 10, 11 and 12 of the complaint. Learned counsel referring to section 34 of the Act, submitted that in view of the provisions contained therein, a specific case has to be made by the complainant which may prima facie satisfy the requirement of law. He refers to and relies upon a judgment rendered by Hon‟ble Supreme Court in the case of State of Haryana vs. Braj Lal Mittal and ors. reported in (1998) 5 SCC 343. It is further submitted that - 3 - provisions similar or akin to section 34 of the Act is provided in section 141 of the Negotiable Instrument Act. The Apex Court while interpreting the said provision has taken a similar view. He relies on (2005) 8 S.C.C. page 89 (S.M.S. Pharmaceuticals Ltd vs. Neeta Bhalla & Anr.) Learned APP, on the other hand, supported the impugned order. I heard the parties and perused the materials on record. Section 34 of the Drugs and Cosmetics Act,1940 reads thus: “34. Offence 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: Provided that nothing contained in this sub- section shall render any such person liable to any punishment provided in this Act if he proves that the offence was committed without his knowledge or that he exercised all due diligence to prevent the commission of such offence. (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 officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly. The Apex Court dealing with the import of section 34 of the Act held as under in para 8 of its judgment rendered in the case of State of Haryana Vs. Braj Lal Mittal & Ors. (1998) 5 S.C.C. 343). Para 8 of this report reads thus: - 4 - “8. Nonetheless, we find that the impugned judgment of the High Court has got to be upheld for an altogether different reason. Admittedly, the three respondents were being prosecuted as directors of the manufacturers with the aid of Section 34(1) of the Act which reads as under: “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: Provided that nothing contained in this sub-section shall render any such person liable to any punishment provided in this Act if he proves that the offence was committed without his knowledge or that he exercised all due diligence to prevent the commission of such offence. It is thus seen that the vicarious liability of a person for being prosecuted for an offence committee under the Act by a company arises if at the material time he was in charge of and was also responsible to the company for the conduct of its business. Simply because a person is a director of the company it does not necessarily men that he fulfils both the above requirements so as to make him liable. Conversely, without being a director a person can be in charge of and responsible to the company for the conduct of its business. From the complaint in question we, however, find that except a bald statement that the respondents were directors of the manufacturers, there is no other allegation to indicate, even prima facie, that they were in charge of the company and also responsible to the company for the conduct of its business.” While dealing with vicarious liability of a functionary of the Firm/Company similar provisions existing in section 141 of the N.I. Act the Apex Court in the case of S.M.S. Pharmaceuticals Ltd. Vs. Neeta Bhalla and Anr. reported in (2005) 8 S.C.C. page 89, concluded as under in paragraphs 15 and 18 of the said report. “15. Cases have arisen under other Acts where similar provisions are contained creating vicarious liability for officers of a company in cases where primary liability is that of a company. State of Karnataka vs. Pratap Chand was a case under the Drugs and Cosmetics Act, 1940. Section 34 contains a similar provision making every person in charge of and responsible to the company for the - 5 - conduct of its business liable for offence committed by a company. It was held that a person liable for criminal action under that provision should be a person in overall control of the day-to-day affairs of the company or a firm. This was a case of a partner in a firm and it was held that a partner who was not in such overall control of the firm could not be held liable. In Municipal Corpn. of Delhi v. Ram Kishan Rohtagi the case was under the Prevention of Food Adulteration Act. It was first noticed that under Section 482 of the Criminal Procedure Code in a complaint, the order of a Magistrate issuing process against the accused can be quashed or set aside in a case where the allegation made in the complaint or the statements of the witnesses recorded in support of the same taken at their face value make out absolutely no case against the accused or the complaint does not disclose the essential ingredients of an offence which are arrived at against the accused. This emphasises the need for proper averments in a complaint before a person can be tried for the offence alleged in the complaint. 18. To sum up, there is almost unanimous judicial opinion that necessary averments ought to be contained in a complaint before a person can be subjected to criminal process. A liability under Section 141 of the Act is sought to be fastened vicariously on a person connected with a company, the principal accused being the company itself. It is a departure from the rule in the criminal law against vicarious liability. A clear case should be spelled out in the complaint against the person sought to be made liable. Section 141 of the Act contains the requirements for making a person liable under the said provision. That the respondent falls within the parameters of Section 141 has to be spelled out. A complaint has to be examined by the Magistrate in the first instance on the basis of averments contained therein. If the Magistrate is satisfied that there are averments which bring the case within Section 141, he would issue the process. We have seen that merely being described as a director in a company is not sufficient to satisfy the requirement of Section 141. Even a non- director can be liable under Section 141 of the Act. The averments in the complaint would also serve the purpose that the person sought to be made liable would know what is the case which is alleged against him. This will enable him to meet the case at the trial.” In the light of the provision of law contained in section 34 of the Act as explained by the Apex Court, this Court is satisfied that the - 6 - necessary averment(s)/allegation(s) made in the complaint do not make out a case against the petitioner. It can well be seen from these averments that it is not the complainant‟s case that this petitioner being the Director of the firm/company was In-charge of and was responsible to the conduct of the business of the company in question. The vicarious liability, therefore, on the strength of these allegation cannot be fastened on the petitioner. There may be a possible situation that the company has several partners or Directors, some of them are dormant and not responsible to the conduct of the business of the company. To fasten the guilt vicariously, the complainant must satisfy the requirement of law which in the present case is lacking. Consequently, the order taking cognizance dated 21.07.2004, passed by the Chief Judicial Magistrate, Sitamarhi in Complaint Case No.C-II/03/04/Tr.1102 of 2007 in so far as it relates to the petitioner is hereby quashed and set aside. hr ( Kishore K. Mandal )