Full Judgment Text
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* IN THE HIGH COURT OF DELHI AT NEW DELHI
th
Reserved on: 17 May, 2023
th
Pronounced on: 06 September, 2023
+ CRL.M.C. 4334/2011
M K HAMIED & ANR. ..... Petitioners
Through: Mr. Arvind Nigam and Mr. Maninder
Singh, Sr. Advocates with Mr. Waize
Ali Noor, Mr. Mansimran Singh & Ms.
Nidhi Jain, Advocates.
versus
STATE THR. SUNDEEP B J DRUG INSPECTOR..... Respondent
Through: Mr. Aman Usman, APP for the State.
Mr. Sundeep B.J., Assistant Drug
Controller.
CORAM:
HON’BLE MR. JUSTICE AMIT SHARMA
JUDGMENT
AMIT SHARMA, J.
1. The present petition under Section 482 of the Code of Criminal
Procedure, 1973 (hereinafter referred to as ‗CrPC‘) seeks quashing of CC no.
47/04 titled ‗State through Sh. Sundeep B.J Drugs Inpector vs. Mr. Mahender
Pal Singh & Ors.‘ and all other consequential proceedings emanating
therefrom, pending before the Court of the learned Metropolitan Magistrate,
Rohini, Delhi, including the order dated 06.12.2010 (hereinafter referred to as
‗impugned order‘) by which the learned Metropolitan Magistrate has taken
cognizance of offences under Sections 18(a)(i) and 27(d) of the Drugs and
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Signature Not Verified
Digitally Signed
By:RANJU BHALLA
Signing Date:06.09.2023
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Cosmetics Act, 1940 (hereinafter referred to as ‗the Act‘) and summoned the
accused persons including the petitioners herein.
1.1. It is noted that by separate judgments of the same date, this Court has
disposed of similar petitions filed on behalf of the petitioners herein, in
relation to separate complaints filed by the respondent with respect to
different batches of drugs. The facts and circumstances of the said petitions
are similar to the present petition and the same contentions have been raised
on behalf of the parties. Details of the said petitions are as under:
i. CRL.MC. 3424/2011 pertaining to CC No. 46/04 arising out of
complaint dated 06.12.2010.
ii. CRL.MC. 4332/2011 pertaining to CC No. 46/04 arising out of
complaint dated 06.12.2010.
iii. CRL.MC. 4335/2011 pertaining to CC No. 48/04 arising out of
complaint dated 06.12.2010.
iv. CRL.MC. 4336/2011 pertaining to CC No. 45/04 arising out of
complaint dated 06.12.2010.
Background
2. Petitioner no. 1 is the Joint Managing Director of M/s Cipla Ltd - a
leading pharmaceutical company and petitioner no. 2 is its Chairman and
Managing Director. The subject complaint dated 06.12.2010 was instituted at
the instance of Sh. Sundeep B.J., Drugs Inspector, Drugs Control Department,
Government of NCT of Delhi, seeking initiation of prosecution against the
accused persons named therein, including the petitioners, for commission of
offences under Sections 18(a)(i) and 27(d) of the Act. Briefly stated, the facts
of the case, are as under:
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Digitally Signed
By:RANJU BHALLA
Signing Date:06.09.2023
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i. As on November 2007, M/s Cipla Ltd. (accused no. 4) was a company
within the meaning of Section 34 of the Act. The drug namely,
‗Ibugesic‘ Ibuprofen Oral Suspension B.P. (hereinafter referred to as
‗the Drug‘), which is a drug within the meaning of Section 3(b) of the
Act was manufactured by M/s Mistair Health and Hygiene Pvt. Ltd.
(accused no. 8) on the basis of a loan license granted to M/s Cipla Ltd.
At the relevant point in time, petitioner no. 1 (accused no. 5) was the
Joint Managing Director and petitioner no. 2 (accused no. 6) was the
Chairman and Managing Director of M/s Cipla Ltd. and were in-charge
of the conduct of day to day business of the said company.
ii. It was stated that on 21.02.2009, a sample of the Drug from batch no.
CM 8484, Mfd. 09/08, Exp. 08/11, manufactured by M/s Cipla Ltd.
was taken by the complainant for test/analysis from the premises of M/s
Mahindra Medicos (accused no. 1, hereinafter referred to as ‗vendor‘)
as per the procedure laid down in Section 23 of the Act. Intimation on
Form-17 and one sealed portion of the sample was handed over to the
vendor.
iii. On the same day, i.e., 21.02.2009, a portion of the sampled drug was
forwarded to the government analyst, as per the procedure laid down in
Rule 57 of the Drugs and Cosmetics Rules, 1945 (hereinafter referred
to as ‗1945 Rules‘).
iv. Vide test report no. F.2/(24)/TR/DTL-123/09 dated 14.09.2009, the
government analyst declared the sample as „not of standard quality‟ as
it did not “conform to claim as per BP with respect to test for assay
(content of ibuprofen)” inasmuch as it was found to contain 59.98%
of Ibuprofen as against the claim of 100 mg/5 ml.
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Signature Not Verified
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By:RANJU BHALLA
Signing Date:06.09.2023
19:46:14
v. On further enquiry made on 01.10.2009, Sh. Mahender Pal Singh,
proprietor of the vendor informed the complainant that the said batch of
the Drug was supplied to his firm by M/s Sehgal Medical Agencies
(accused no. 2, hereinafter referred to as ‗distributor‘) vide invoice no.
S 1-24769 dated 13.02.2009.
vi. On 01.10.2009, a copy of the report of the government analyst was
supplied to the vendor.
vii. In terms of Section 23(4)(iii) and 25(2) of the Act, on 01.10.2009, the
complainant sent one portion of the sample alongwith the test report of
the government analyst to the distributor. The same was not challenged
and therefore, it is alleged that the same was conclusive evidence of the
facts stated therein as per the provisions of Section 25(4) of the Act.
viii. On 01.10.2009, Sh. Sachin Sehgal, Managing Partner of the distributor
firm revealed that the aforesaid batch of the Drug was supplied to them
by M/s Cipla Ltd. from its sales depot located at Mandoli Village,
Delhi.
ix. On 06.10.2009, enquiries were made with the Delhi depot of M/s Cipla
Ltd. and it was revealed that the Drug was supplied to them from the
Indore depot of the said company vide stock transfer invoice number
D/2075 dated 31.10.2008.
x. On 18.11.2009 and 19.11.2009, enquiries made with M/s Mistair
Health and Hygiene Pvt. Ltd. revealed that the Drug was manufactured
by them on the basis of loan license granted to M/s Cipla Ltd. for sale
and distribution. It was confirmed that the aforesaid batch of the Drug
was supplied to M/s Cipla Ltd. at their Pune depot on 20.09.2008 and
25.09.2008. The said position was also not disputed by Mr. Santosh S.
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Digitally Signed
By:RANJU BHALLA
Signing Date:06.09.2023
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Naik, who was the authorised person of M/s Cipla Ltd. at M/s Mistair
Health and Hygiene Pvt. Ltd.
xi. On 08.04.2010, the complainant wrote a letter to M/s Cipla Ltd.
requesting for details in relation to the management of the said
company and persons in-charge for the conduct of the business of the
firm during the period of manufacture of the Drug.
xii. Vide letter dated 23.06.2010, in response to the aforesaid letter dated
08.04.2010, M/s Cipla Ltd. informed the complainant that on the date
of the manufacture of the Drug, Mr. Talat Fakhri (accused no. 7) was
responsible for the conduct the day to day business of the company. A
copy of the Power of Attorney issued by petitioner no. 1 in favour of
Mr. Talat Fakhri was submitted alongwith the said letter.
xiii. On 06.12.2010, the learned Metropolitan Magistrate took cognizance
on the complaint for offences under Sections 18(i)(a) and 27(d) of the
Act and summoned all the accused persons named in the complaint,
including the present petitioner for 04.04.2011.
Submissions on behalf of the Petitioners
Non-compliance with Section 23 of the Act
3. Learned Senior Counsel appearing on behalf of the petitioners
submitted that the complaint dated 06.12.2010 and any proceedings instituted
in pursuance of the same stand vitiated on account of non-compliance with
the mandatory provisions of Section 23 of the Act which provides as under:
― 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 acquire a written acknowledgement therefor.
(2) Where the price tendered under sub-section (1) is refused, or
where the Inspector seizes the stock of any drug or cosmetic under clause
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By:RANJU BHALLA
Signing Date:06.09.2023
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( c ) of Section 22, he shall tender a receipt therefor in the prescribed
form.
(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 prescribed form to the person from whom he takes it and, in the
presence of such person unless he wilfully absents himself, 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 whereon 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 up in
containers of small volume, instead of dividing a sample as aforesaid, the
Inspector may, and if 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 them.
(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 as follows—
( i ) one portion or container he shall forthwith send to the
Government Analyst for test or analysis;
( ii ) the second he shall produce to the Court before which
proceedings, if any, are instituted in respect of the drug or cosmetic]; and
( iii ) the third, where taken, he shall send to the person, if any,
whose name, address and other particulars have been disclosed under
Section 18-A.
(5) Where an Inspector takes any action under clause ( c ) 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, if
it is ascertained that the drug or cosmeticdoes not so contravene,
forthwith revoke the order passed under the said clause or, as the case
may be, take such action as may be necessary for the return of the stock
seized;
( b ) if he seizes the stock of the drug or cosmetic, he shall as
soon as may be, inform a Judicial Magistrate and take his orders as to the
custody thereof;
( c ) without prejudice to the institution of any prosecution, if the
alleged contravention be such that the defect may be remedied by the
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Signature Not Verified
Digitally Signed
By:RANJU BHALLA
Signing Date:06.09.2023
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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.‖
3.1. It was submitted that as per the complaint, it is an admitted position
that the respondent had sent a sealed portion of the sample as per Section
23(4)(iii) and the original report of the government analyst in terms of Section
25(2) of the Act to the distributor. It was submitted that in the same paragraph
of the complaint, it has been stated that as per Section 25(3) of the Act, the
distributor was given an opportunity to challenge the report. Since the report
was not challenged, it attained finality and is conclusive evidence of the facts
stated therein.
3.2. It was submitted that the respondent also does not dispute the fact that
the prosecution against the petitioners and M/s Mistair Health and Hygiene
Pvt. Ltd. is based on the fact that the aforesaid report is conclusive evidence
on account of the same not being challenged by the distributor. It was further
submitted that it is also an admitted position that Sections 23(4)(iii) and 25(3)
were not complied with inasmuch as the sample of the Drug or an opportunity
to challenge the report of the government analyst were not provided to the
petitioners or to M/s Mistair Health and Hygiene Pvt. Ltd.
3.3. Attention of this Court was drawn to a judgment of the Hon‘ble
Supreme Court in Amery Pharmaceuticals and Ors. v. State of Rajasthan,
(2001) 4 SCC 382 , wherein the term ‗conclusive‘ as employed in Section
25(3) of the Act was interpreted and it was held as under:
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Digitally Signed
By:RANJU BHALLA
Signing Date:06.09.2023
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― 24. The extent of the implication of the words ―such evidence shall
be conclusive‖ as employed in Section 25(3) of the Act has to be
understood now. Section 4 of the Evidence Act says that when one fact is
declared by the said Act to be conclusive proof of another ―the court
shall, on proof of one fact, regard the other as proved, and shall not allow
evidence to be given for the purpose of disproving it‖. The expression
―conclusive evidence‖ employed in Section 25(3) of the Act cannot have
a different implication as the legislative intention cannot be different.
Such an import as for the word ―conclusive‖ in the interpretation of
statutory provisions has now come to stay. If so, what would happen if
the manufacturer is disabled from challenging the facts contained in the
document which would visit him with drastic consequences when he is
arraigned in a trial? Any legal provision which snarls at an indicted
person without affording any remedy to him to disprove an item of
evidence which could nail him down cannot be approved as consistent
with the philosophy enshrined in Article 21 of the Constitution. The first
effort which courts should embark upon in such a situation is to use the
power of interpretation to dilute it to make the provision amenable to
Article 21.‖
3.4. It was further contended that the procedure prescribed under Section 23
of the Act has to be mandatorily followed by the Drugs Inspector while taking
samples of the subject drug or medicine. If the sample is taken from a retailer
or a person whose name has been disclosed under Section 18A of the Act, the
Inspector shall divide the same into four portions, seal and mark them and
allow the person from whom the sample was taken to add his own seal or
mark. It was submitted that as per Section 23(4)(iii) of the Act, the third
portion of the sample is required to be provided to the person whose name,
address, etc., have been disclosed pursuant to the exercise conducted under
Section 18A of the Act. It was submitted that a perusal of Section 18A makes
it abundantly clear that the purpose of the said provision is to disclose the
name of the manufacturer of the subject drug and extend a fair opportunity to
the said manufacturer for exercising his rights provided for in the Act. The
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By:RANJU BHALLA
Signing Date:06.09.2023
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provision of Section 18A is applicable on every person who is not a
manufacturer or its agent for distribution.
3.5. It was submitted that it is thus, incumbent upon the Inspector to seek
disclosure under Section 18A of the Act from every person/entity in the
supply chain till such Inspector reaches the person who discloses the name of
the manufacturer and by way of invoices, substantiates that he had purchased
the subject drug from the manufacturer itself or its agent for distribution.
Upon such disclosure, the Inspector has to then provide a portion of the
sample and the report in terms of Sections 23(4)(iii) and 25(2) of the Act
respectively. Section 18A of the Act provides as under:
― 18-A. 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, if so required, disclose to the Inspector the
name, address and other particulars of the person from whom he
acquired the drug or cosmetic.‖
3.6. As far as the facts of the present case are concerned, learned Senior
Counsel submitted that it is not in dispute that the respondent had interpreted
Section 18A of the Act to mean that since the vendor had disclosed the name
of the distributor, the statutory rights under Section 23(4)(iii) and 25(2)
accrued only in favour of the distributor and not the manufacturer of the Drug
or the petitioners herein.
3.7. It was submitted that in terms of the settled legal position, one portion
of the sample was to be sent to the manufacturer. As per the complaint, both -
M/s Cipla Ltd. and M/s Mistair Health and Hygiene Pvt. Ltd. are responsible
for the manufacture of the Drug, however, it is an admitted case that neither
of them were supplied with a portion of the sample or a copy of the report of
the government analyst which is a clear infraction of the mandatory
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Signature Not Verified
Digitally Signed
By:RANJU BHALLA
Signing Date:06.09.2023
19:46:14
safeguards incorporated in the Act. Learned Senior Counsel submitted that
such violations completely vitiate the complaint and any proceedings
emanating therefrom. In support of the said contention, learned Senior
Counsel placed reliance on the decision of the Hon‘ble Supreme Court in
Laborate Pharmaceuticals India Limited and Ors. v. State of Tamil
Nadu, (2018) 15 SCC 93 , and in particular, on the following paragraphs
thereof:
―6. A reading of the provisions of Sections 23(4) and 25 of the Act
would indicate that in the present case the sample having been taken
from the premises of the retailer had to be divided into four portions; one
portion is required to be given to the retailer; one portion is required to
be sent to the Government Analyst and one to the court and the last one
to the manufacturer whose name, particulars, etc. is disclosed under
Section 18-A of the Act. In the present case, admittedly, one part of the
sample that was required to be sent to the appellant (manufacturer) under
Section 23(4)(iii) of the Act was not sent. Instead, what was sent on 22-
3-2012 was only the report of the Government Analyst. When the part of
the sample was not sent to the manufacturer, the manufacturer could not
have got the same analysed even if he wanted to do so and, therefore, it
was not in a position to contest the findings of the Government Analyst.
In the present case, the sample was sent to the appellant manufacturer on
10-8-2012 and on 13-9-2012 the appellant had indicated its desire to
have another part of the sample sent to the Central Laboratory for
reanalysis. This was refused on the ground that the aforesaid request was
made much after the stipulated period of 28 days provided for in Section
25(3) of the Act.
7. The cognizance of the offence(s) alleged in the present case was
taken on 4-3-2015 though it appears that the complaint itself was filed on
28-11-2012. According to the appellant the cough syrup had lost shelf
life in the month of November 2012 itself. Even otherwise, it is
reasonably certain that on the date when cognizance was taken, the shelf
life of the drug in question had expired. The Magistrate, therefore, could
not have sent the sample for reanalysis by the Central Laboratory.
8. All the aforesaid facts would go to show that the valuable right of
the appellant to have the sample analysed in the Central Laboratory has
been denied by a series of defaults committed by the prosecution; firstly,
in not sending to the appellant manufacturer part of the sample as
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Digitally Signed
By:RANJU BHALLA
Signing Date:06.09.2023
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required under Section 23(4)(iii) of the Act; and secondly, on the part of
the Court in taking cognizance of the complaint on 4-3-2015 though the
same was filed on 28-11-2012. The delay on both counts is not
attributable to the appellants and, therefore, the consequences thereof
cannot work adversely to the interest of the appellants. As the valuable
right of the accused for reanalysis vested under the Act appears to have
been violated and having regard to the possible shelf life of the drug we
are of the view that as on date the prosecution, if allowed to continue,
would be a lame prosecution.
9. Consequently and for the reasons alluded we are of the view that
the present would be a fit case to interdict the criminal trial against the
appellant-accused. We order accordingly. Therefore, CC No. 263 of
2015 pending on the file of the XVth Metropolitan Magistrate, George
Town, Chennai is hereby quashed. The appeal is allowed and the order of
the High Court is set aside.‖
Non-compliance with Section 25 of the Act
4. Learned Senior Counsel appearing on behalf of the petitioners
contended that the fact that Section 25 of the Act was not complied with by
the respondent also vitiates the proceedings arising out of the complaint dated
06.12.2010. Section 25 of the Act provides as under:
― 25. Reports of Government Analysts .—(1) The Government
Analyst to whom a sample of any drug or cosmetic has been submitted for
test or analysis under sub-section (4) of Section 23, shall deliver to the
Inspector submitting it a signed report in triplicate in the prescribed form.
(2) The Inspector on receipt thereof shall deliver one copy of the
report to the person from whom the sample was taken and another copy to
the person, if any, whose name, address and other particulars have been
disclosed under Section 18-A, and shall retain the third copy for use in
any prosecution in respect of the sample.
(3) Any document purporting to be a report signed by a Government
Analyst under this Chapter shall be evidence of the facts stated therein,
and such evidence shall be conclusive unless the person from whom the
sample was taken or the person whose name, address and other particulars
have been disclosed under Section 18-A has, within twenty-eight days of
the receipt of a copy of the report, notified in writing the Inspector or the
Court before which any proceedings in respect of the sample are pending
that he intends to adduce evidence in controversion of the report.
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Digitally Signed
By:RANJU BHALLA
Signing Date:06.09.2023
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(4) Unless the sample has already been tested or analysed in the
Central Drugs Laboratory, where a person has under sub-section (3)
notified his intention of adducing evidence in controversion of a
Government Analyst‘s report, the Court may, of its own motion or in its
discretion at the request either of the complainant or the accused, cause
the sample of the drug or cosmetic produced before the Magistrate under
sub-section (4) of Section 23 to be sent for test or analysis to the said
Laboratory, which shall make the test or analysis and report in writing
signed by, or under the authority of, the Director of the Central Drugs
Laboratory the result thereof, and such report shall be conclusive
evidence of the facts stated therein.
(5) The cost of a test or analysis made by the Central Drugs
Laboratory under sub-section (4) shall be paid by the complainant or
accused as the Court shall direct.‖
4.1. It was submitted that it is an admitted case that the report of the
government analyst was never sent to M/s Cipla Ltd. or to M/s Mistair Health
and Hygiene Pvt. Ltd. in terms of Section 25(2) of the Act. It was submitted
that supplying the report to the distributor is not sifficient complianc eof
Section 25(2) of the Act. Since M/s Cipla Ltd. has been sought to be
proceeded against as the manufacturer of the Drug, the Inspector has failed to
comply with the aforesaid provision.
Non-compliance with the guidelines under the Drugs and Cosmetics
(Amendment) Act, 2008
5. Learned Senior Counsel submitted that guideline number 7 of the
Guidelines For Taking Action On Samples Of Drugs Declared Spurious Or
Not Of Standard Quality Formulated Under The Drugs And Cosmetics
(Amendment) Act, 2008 (‗2008 Guidelines‘) mandate that the State Drug
Control Departments must constitute screening committees to examine the
investigation report of the cases where prosecution is sought to be launched. It
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Signing Date:06.09.2023
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is further mandated that the said prosecution is to be launched only after
considering the recommendations of the screening committee.
5.1. Learned Senior Counsel submitted that a bare perusal of the complaint
dated 06.12.2010 does not disclose that the matter was ever placed by the
screening committee as mandated by the 2008 Guidelines. Attention of this
Court was drawn to a judgment of the Hon‘ble High of Madras in CRL.OP.
Nos. 4419, 4420 and 4595 of 2017 and CRL.M.P. Nos. 3300, 3302, 3303,
3469 and 3470 of 2017 , titled ‘Y.K. Hamied and Ors. v. State’ , whereby the
Court quashed a criminal complaint under the Act on the ground that requisite
sanction was not sought by the Drugs Inspector from the screening committee
before prosecution was initiated. While quashing the complaint, the Hon‘ble
High Court of Madras held as under:
―16.There is no record to show that the show cause notice and the replies
thereto were placed before the Screening Committee. There is no such
reference in the sanction order also. The learned Magistrate had also not
examined whether, the mandatory procedure had been adhered to the
respondent / complainant. There is also no record to show that the replies
to the show cause notice were examined in their proper perspective.
Since there is a violation of these mandatory requirements, it is only just
that cognizance which had been taken by the learned Magistrate of the
complaint filed by the respondent is quashed.‖
Section 34 of the Act
6. Learned Senior Counsel submitted that merely because petitioner no. 1
is the Joint Managing Director and petitioner no. 2 is the Chairman and
Managing Director of M/s Cipla Ltd. does not mean that they can
automatically be prosecuted by virtue of Section 34 of the Act. Section 34 of
the Act provides 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
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Signing Date:06.09.2023
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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.
Explanation .—For the purposes of this section—
( a ) ―company‖ means a body corporate, and includes a firm or
other association of individuals; and
( b ) ―director‖ in relation to a firm means a partner in the firm.‖
6.1. It was submitted that Mr. Talat Fakhri, in favour of whom a Power of
Attorney was executed by petitioner no. 1 was the person responsible for the
conduct of the day to day affairs of M/s Cipla Ltd. Learned Senior Counsel
submitted that it is also an admitted position that the Drug in question was
manufactured by M/s Mistair Health and Hygiene Pvt. Ltd. on the basis of a
loan license.
6.2. In support of the aforesaid contentions, reliance was placed on the
following judgments:
i. Cheminova India Limited v. State of Punjab, 2021 SCC OnLine SC
573.
ii. State of H.P. v. Shri Nand Kishore and Ors., 2011 (2) Drugs Case (DC)
308.
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Signing Date:06.09.2023
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iii. M/s Hwizal Laboratory Pvt. Ltd. & Ors. v. State of Rajasthan, 2009 (1)
Drugs Case (DC) 265.
iv. Umesh Sharma, Managing Director, M/s. Aristo Pharmaceuticals Ltd.,
v. S.G.Bhakta, Drugs Inspector and Ors., (2003) Drugs Case 1.
v. Sanjay G. Revankar v. State by Drugs Inspector, Uttar Kannada
District, Karwar, (34) 2002 Drugs Case 163.
vi. State of Haryana v. Brij Lal Mittal & Ors., (1998) 5 SCC 343.
vii. Adarsh Marwah & Ors. v. Nehar Ranjan Bhattacharya & Anr.,
Judgement of the High Court of Delhi dated 15.03.1990 in Crl. Misc.
(M) 1867 of 1989.
viii. Municipal Corporation of Delhi v. Ram Kishan Rohtagi & Ors., (1983)
1 SCC 1.
ix. State of Karnataka & Ors. v. Pratap Chand & Ors., (1981) 2 SCC 335.
x. Ashoke Mal Bafna v. Upper India Steel Mfg. & Engg. Co. Ltd., (2018)
14 SCC 202.
xi. Castrol (India) Ltd. v. State of Karnataka, (2018) 17 SCC 275.
xii. Pooja Ravinder Devidasani v. State of Maharashtra, (2014) 16 SCC 1.
xiii. G.N. Verma v. State of Jharkhand & Anr., (2014) 4 SCC 282.
Rules 69A and 79 of the Drugs and Cosmetics Rules, 1945
6.3. Attention of this Court was drawn to Rule 69-A of the 1945 Rules
which stipulates that before grant of a loan license, the licensing authority is
required to satisfy itself that the manufacturing unit has adequate equipment,
staff, capacity for manufacture and facilities for testing to undertake the
manufacture on behalf of the applicant for a loan license. Attention of this
Court was further drawn to Rule 79 which states that before a loan license is
granted, the licensing authority shall cause the proposed manufacturing
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establishment to be inspected by one or more inspectors with or without an
expert in the field. Learned Senior Counsel submitted that the provisions
concerning a loan license contained in the 1945 Rules would require approval
of the Office of the Drugs Inspector for manufacture of the drug in question
by M/s Mistair Health and Hygiene Pvt. Ltd. with approved scientific and
supervisory staff.
Section 202 of the CrPC
7. Learned Senior Counsel submitted that in the present case, both the
petitioners reside outside the territorial jurisdiction of the Court of the learned
Metropolitan Magistrate before whom the trial in the present case is pending.
However, a perusal of the summoning order dated 06.12.2010 reflects that no
enquiry prior to issue of process in terms of Section 202 has been conducted
by the learned Metropolitan Magistrate. Section 202 of the CrPC provides as
under:
― 202. Postponement of issue of process .—(1) Any Magistrate, on
receipt of a complaint of an offence of which he is authorised to take
cognizance or which has been made over to him under Section 192, may,
if he thinks fit, and shall, in a case where the accused is residing at a
place beyond the area in which he exercises his jurisdiction, postpone the
issue of process against the accused, and either inquire into the case
himself or direct an investigation to be made by a police officer or by
such other person as he thinks fit, for the purpose of deciding whether or
not there is sufficient ground for proceeding:
Provided that no such direction for investigation shall be made,—
( a ) where it appears to the Magistrate that the offence
complained of is triable exclusively by the Court of Session; or
( b ) where the complaint has not been made by a Court, unless
the complainant and the witnesses present (if any) have been examined
on oath under Section 200.
(2) In an inquiry under sub-section (1), the Magistrate may, if he
thinks fit, take evidence of witnesses on oath:
Provided that if it appears to the Magistrate that the offence
complained of is triable exclusively by the Court of Session, he shall call
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upon the complainant to produce all his witnesses and examine them on
oath.
(3) If an investigation under sub-section (1) is made by a person not
being a police officer, he shall have for that investigation all the powers
conferred by this Code on an officer in charge of a police station except
the power to arrest without warrant.‖
7.1. Learned Senior Counsel placed reliance on the following judgments:
i. In Re: Expeditious Trial of Cases Under Section 138 of the Negotiab;le
Instruments Act, 1881, 2021 SCC OnLine SC 325.
ii. Abhijit Pawar v. Hemant Madhukar Nimbalkar & Anr., (2017) 3 SCC
528.
iii. Mohammad U.L. Rehman v. Khazir Mohammad Tunda & Ors., (2015)
12 SCC 420.
No prima facie case against the Petitioners
8. Learned Senior Counsel submitted that although proviso ‗a‘ to Section
200 of the CrPC provides for an exemption from recording pre-summoning
evidence in a case where a private complaint is filed by a public servant in
discharge of his official duties; it is settled legal position that it is incumbent
upon the Magistrate to apply his mind to see whether on the basis of the
allegations made in the complaint and the evidence placed on record, a prima
facie case for taking cognisance and summoning the proposed accused is
made out or not.
8.1. Learned Senior Counsel submitted that just because a complaint is filed
on behalf of a department of the Government, it does not constitute an
automatic exemption of the applicability of the mandatory provision of
Section 200 of the CrPC. It was submitted that a perusal of the impugned
order reflects that the learned Metropolitan Magistrate did not examine the
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complainant before taking cognisance and has treated the present case to be
considered as one where there is an automatic exemption from compliance of
Section 200 of the CrPC.
8.2. Learned Senior Counsel drew the attention of this Court to a judgment
of the Hon‘ble Supreme Court in Dayle De’souza v. Government of India
through Deputy Chief Labour Commissioner and Anr., 2021 SCC
OnLine SC 1012 and in particular, the following paragraphs thereof:
― 38. Equally, it is the court‘s duty not to issue summons in a
mechanical and routine manner. If done so, the entire purpose of laying
down a detailed procedure under Chapter XV of the 1973 Code gets
frustrated. Under the proviso (a) to Section 200 of the 1973 Code, there
may lie an exemption from recording pre-summoning evidence when a
private complaint is filed by a public servant in discharge of his official
duties; however, it is the duty of the Magistrate to apply his mind to see
whether on the basis of the allegations made and the evidence, a prima
facie case for taking cognizance and summoning the accused is made out
or not. This Court explained the reasoning behind this exemption
in National Small Industries Corporation Limited v. State (NCT of
Delhi) :
―12. The object of Section 200 of the Code requiring the complainant
and the witnesses to be examined, is to find out whether there are
sufficient grounds for proceeding against the accused and to prevent
issue of process on complaints which are false or vexatious or intended
to harass the persons arrayed as accused. (See Nirmaljit Singh
Hoon v. State of W.B. ) Where the complainant is a public servant or
court, clause (a) of the proviso to Section 200 of the Code raises an
implied statutory presumption that the complaint has been made
responsibly and bona fide and not falsely or vexatiously. On account of
such implied presumption, where the complainant is a public servant, the
statute exempts examination of the complainant and the witnesses,
before issuing process.‖
39. The issue of process resulting in summons is a judicial process
that carries with it a sanctity and a promise of legal propriety.‖
8.3. It was submitted that the rationale behind Section 200 of the CrPC is
that before criminal law is set in motion against any person, the satisfaction of
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a criminal court in relation to the existence of a prima facie case is
mandatory. It follows that it is only upon discharge of the unequivocal
obligation upon the court of carefully examining the contents of the complaint
and the material placed on record in its support, a Judge, after duly recording
reasons for his satisfaction, can dispense with the examination of the
complainant and witnesses before issuance of summons.
8.4. Learned Senior Counsel further submitted that nothing contained in the
impugned order shows that the learned Metropolitan Magistrate has applied
his mind to the facts of the case to determine whether a prima facie case is
made out against the proposed accused or not.
Submissions on behalf of the State
Responsibility of M/s Cipla Ltd. and the Petitioners
9. Learned APP for the State submitted that M/s Cipla Ltd. is a
‗manufacturer‘ in terms of Section 3(b) of the Act. Attention of this Court was
drawn to a letter dated 20.02.2009 addressed by M/s Cipla Ltd. to the Drugs
Inspector admitting that batch No. CM 7451 of the Drug was manufactured at
their Kolhapur plant. Learned APP of the State drew the attention of this
Court to a letter dated 23.06.2010 addressed by M/s Cipla Ltd. stating that a
Power of Attorney was executed by petitioner no. 1 in favour of Mr. Talat
Fakhri making him responsible for conduct of the day to day business of M/s
Cipla Ltd. It was submitted that Section 34 of the Act provides that in case of
an offence committed by a company, every person responsible for the conduct
of the business of the company at the time of the commission of the offence
shall be liable to be proceeded against and punished accordingly. It was
submitted that the import of Section 34 of the Act includes Directors of the
company as well, which in this case are the petitioners. Therefore, it was
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submitted that the Magistrate was required to only formulate a prima facie
view in relation to the commission of the offence and has not erred in
summoning the petitioners.
Compliance with Section 23 of the Act
10. Learned APP for the State submitted that the procedure prescribed in
Section 23 of the Act was duly followed.
10.1. Four samples of the Drug were collected from the vendor:
i. The first portion of the sample was handed over to the person/chemist
from whom the sample was collected under his acknowledgment.
ii. Second portion of the sample was sent to the government analyst for
testing.
iii. The third portion of the sample, as per Section 23(4)(iii) of the Act was
handed over to the person/firm whose name was disclosed under
Section 18A, i.e., the distributor.
iv. The fourth portion of the sample is to be produced before the Court
before which the proceedings have been instituted in respect of the
drugs, in case the report of the government analyst is challenged under
Section 25(3) of the Act. In the present case, the said fourth portion of
the sample is in the possession of the Investigating Officer as case
property as the report was never challenged.
10.2. Learned APP for the State submitted that as far as Section 23(4)(iii) of
the Act is concerned, the same was complied with the moment a portion of
the sample to provided to the distributor from which the vendor had bought
the drug. To substantiate this argument, learned APP for the State drew the
attention of this Court to the following paragraph of Amery Pharmaceuticals
( supra ) :
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― 16. Thus, in a case where the drug or medicine has passed from the
manufacturer to a wholesaler (a distributor) and then to a retailer, the
obligation of the Inspector (who takes the sample from a retailer) as for
giving portions of the sample would end up by giving it to the retailer
and also to the distributor (from whom the retailer bought the drug).‖
10.3. Reliance was further placed on a judgment of the Hon‘ble High Court
of Punjab and Haryana rendered in CRM-M-23426 of 2022 titled ‘Varun
Kapoor and Ors. v. State through Drugs Inspector, Amritsar’ , wherein
the Hon‘ble High Court, after referring to Amery Pharmaceuticals ( supra )
and Laborate Pharmaceuticals ( supra ) has clearly distinguished the
entitlement of a manufacturer in reference to obtaining a portion of the
sampled drug and has held as under:
―9. As observed by Hon‘ble Supreme Court, in Amery Pharmaceuticals
Vs. State of Rajasthan (supra), as per Section 25(2) of the Act, Inspector
shall deliver one copy of the report to the person from whom the sample
was taken, another copy of the report to person whose name and address
have been disclosed to the Inspector, whereas third copy shall be retained
by the Inspector for use in any prosecution in respect of the sample.
xxx
11. It is contended by learned counsel for the petitioners that the
petitioner- manufacturer has been disabled from controverting the
finding of the government analyst in this case because he was not
provided the portion of the sample, which was taken by the Drug
Inspector on 30.01.2018. Contention of learned counsel is that the
petitioner could challenge the report by notifying his intention to the trial
Court or the Drug Inspector to adduce evidence in controversion of the
report only in case a portion of the sample was sent to him. It is further
urged that name of the petitioner – manufacturer was duly mentioned in
Form 17, despite which compliance of Section 23(4)(iii) of the Act was
not made.
xxx
13. A reading of the above-said provision to be read with Section 25 of
the Act already reproduced, would indicate that after taking the sample,
the Inspector is required to hand over one portion of sample in sealed
condition to the person from whom he takes it (retailer in this case);
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second portion is required to be sent to the government analyst for test/
analysis; another portion is required to be produced in the Court before
which proceedings are to be instituted in respect of the drug and the last
sample is required to be sent to the person, whose name, address and
other particulars have been disclosed under Section 18-A of the Act.
xxx
15. A bare perusal of the above-said provision would reveal that a
person, who is neither the manufacturer of the drug nor the agent for
distribution, is required to disclose to the Inspector, the name, address
and other particulars of the person from whom he acquired the drug or
the cosmetic. It is important to notice here itself that requirement of
Section 18A is to disclose the name, address and other particulars of the
person from whom the concerned person has acquired the drug. It is not
the requirement of law that the concerned person has to disclose the
name of the manufacturer. He is only to disclose the particulars of the
person from whom he acquired the drug or cosmetic.‖
Compliance with Section 25 of the Act
11. Learned APP for the State submitted that Section 25 of the Act has also
been complied with.
11.1. It was submitted that Section 25(2) of the Act provides that one copy of
the report shall be provided to the person from whom the sample was
collected and one to the person whose name has been disclosed under Section
18A of the Act. In the present case, the entity whose name was declared under
Section 18A is the distributor, to which the report of the government analyst
was admittedly supplied in original on 01.10.2009.
11.2. Learned APP for the State further submitted that as per the judgment of
the Hon‘ble Supreme Court in Amery Pharmaceuticals ( supra ) , the
manufacturer can also avail himself of the remedy provided for in Section
25(4) of the Act by requesting the Court to send a portion of the sample to be
tested at the Central Drugs Laboratory. Since M/s Cipla Ltd. never expressed
their interest to adduce evidence to dispute the report of the government
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analyst, they cannot at this stage plead that their right to challenge the report
was violated. It was further submitted that M/s Cipla Ltd. could also have
challenged the report by directly approaching the Court under Section 25(3)
of the Act, as the enquiry in relation to the sampled Drug was made at their
Delhi Depot by the concerned Drugs Inspector in the year 2009, which is well
before the expiry date of the batch of the Drug.
Loan Licence
12. Learned APP for the State submitted that the loan licence, on the basis
of which M/s Mistair Health and Hygiene Pvt. Ltd. was manufacturing the
drug, was granted to M/s Cipla Ltd. It was urged that Rule 69A of the 1945
Rules provides that a loan licence may be issued by the concerned Licensing
Authority to an applicant who intends to avail the manufacturing facilities
owned by a licensee in term of form 25 of the 1945 Rules.
12.1. It was submitted that in the present case, M/s Cipla Ltd. has used the
manufacturing facilities of M/s Mistair Health and Hygiene Pvt. Ltd. to
manufacture, sell and distribute the Drug. The loan license was granted to M/s
Cipla Ltd. after complying with the mandatory requirements of the 1945
Rules. As per the said rules, the loan licensee, i.e., M/s Cipla Ltd. is the actual
manufacturer of the Drug and its liability is at par with M/s Mistair Health
and Hygiene Pvt. Ltd.
12.2. Attention of this Court was drawn to a Technical Agreement entered
into between M/s Cipla Ltd. and M/s Mistair Health and Hygiene Pvt. Ltd.,
wherein it was agreed that a representative of M/s Cipla Ltd. would be
responsible for supervision and certification of the manufacture of the
products, periodic validation of manufacturing systems, equipment and
operations, periodic validation of the products, review of all documentation
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relating to the batches to be sent to the principal and any other duties as
assigned. As per the said agreement, M/s Cipla Ltd. was also responsible for
confirming the stability of the products and quality control.
Guidelines under the Drugs and Cosmetics (Amendment) Act, 2008
13. As far as the compliance with the 2008 Guidelines is concerned, it was
submitted that the said guidelines are only recommendatory in nature and are
not mandatory. Neither the Act nor the 1945 Rules mandate the constitution
of a Screening Committee as recommended in the 2008 Guidelines. It was
submitted that different States have formulated different mechanism to
facilitate a thorough examination of the case before prosecution is initiated
under the Act. In the State of Delhi, all cases are screened by the Legal Cell of
the Department before any prosecution is initiated, the said screening process
is regulated by internal departmental guidelines/procedure which may vary
from State to State.
Rejoinder on behalf of the Petitioners
14. Learned Senior Counsel appearing on behalf of the petitioners
submitted that the reliance placed by the State on paragraph 16 of Amery
Pharmaceuticals ( supra ) is misconceived. It was submitted that the said
paragraph cannot be read in isolation and the judgment has to be read as a
whole. It was the contention of the learned APP for the State that the said
paragraph states that if the Drug has passed on from the manufacturer to the
distributor and then to a retailer, then the obligation of the Inspector would be
completed by giving a portion of the sampled Drug to the retailer and the
distributor. It was submitted that the aforesaid paragraph 16 of Amery
Pharmaceuticals ( supra ) in fact records the submission of the respondent
department therein and is not the ratio laid down by the Hon‘ble Supreme
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Court. Learned Senior Counsel reiterated that reliance placed on paragraph
16 of the said judgment to contend that the mandatory requirement under
Section 23(4)(iii) has been satisfied is entirely misconceived and
unsustainable.
14.1. Learned Senior Counsel further submitted that Section 18A was
incorporated to enable the concerned department/investigating officer to reach
the actual manufacturer of a drug which is the subject matter of an
investigation. It was submitted that compliance with Section 18A is vital in
order to distinguish a genuine manufacturer from the manufacturer of a
counterfeit/spurious drug. Essentially, the procedure in Section 18A compels
the retailers and distributors to disclose the details of their purchase until such
time that the identity of the original manufacturer is revealed. Therefore, it is
submitted that it would be misconceived to say that the requirement of
Section 18A of the Act was satisfied when the name of the distributor was
disclosed by the vendor.
14.2. Learned Senior Counsel further submitted that if the interpretation
accorded by the State to paragraph 16 of Amery Pharmaceuticals ( supra ) is
accepted, it is likely to create an anomalous and dangerous situation,
especially in cases where counterfeit drugs are involved. For the sake of
argument, it was submitted that in an event where a counterfeit drug is
sampled during an investigation, and then declared as ‗not of standard
quality‘, the sample and the report of the government analyst in terms of
Sections 23(4)(iii) and 25(2) of the Act read with paragraph 16 of Amery
Pharmaceuticals ( supra ) will only be required to supplied to the retailer and
the distributor. If such a course of action is accepted as sufficient of
compliance of Section 18A of the Act, the investigating agency would
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proceed to initiate prosecution against the actual manufacturer without even
having to supply it with a portion of the sample and giving it an opportunity
to test it or challenge the report. In such a case, the actual manufacturer will
confronted with a situation where it will be prosecuted on the basis of an
inconvertible report in relation to a drug which was not actually manufactured
by it. Learned Senior Counsel submitted that such an interpretation would
defeat a legislative intent behind Sections 23(4)(iii), 25(2) and 18A of the Act.
14.3. Without prejudice to the aforesaid arguments, learned Senior Counsel
submitted that upon a bare reading of Amery Pharmaceuticals ( supra ) , a
clear position emerges which unequivocally recognises the right of a
manufacturer whose name has been disclosed under Section 18A of the Act
and also of a manufacturer which is impleaded at a subsequent stage under
Section 32A of the Act to be entitled to the safeguards incorporated in
Sections 23 and 25 of the Act. Attention of this Court was drawn to the
following paragraphs of Amery Pharmaceuticals ( supra ) .
― 26. In Vetcha Venkata Raju v. State of A.P. [1994 Drugs Cases 94
(AP)] a manufacturer was prosecuted in a situation similar to the present
case and he was convicted by the trial court which was confirmed by the
Sessions Court. He raised a contention before the High Court of Andhra
Pradesh that he was precluded from exercising a valuable right to get the
sample examined by the Central Drugs Laboratory as provided under
Section 25(4) of the Act because the portion of the sample or copy of the
report was not supplied to him. As against the said contention the Public
Prosecutor in that case pointed out that any other manufacturer also
would be under such a disability if he is prosecuted in exercise of the
powers under Section 32-A of the Act because there is no provision for
serving him with a copy of the report in such a situation. A Single Judge
of the Andhra Pradesh High Court, in the wake of the above contentions,
observed that if the manufacturer is prosecuted by impleading him as per
Section 32-A of the Act he cannot claim the right to be supplied with a
copy of the report of the Government Analyst, but if he is prosecuted in
consequence of the disclosure made under Section 18-A such
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manufacturer would be entitled to a portion of the sample as well as a
copy of the report of the Government Analyst. According to learned
Single Judge, failure to supply such things to the manufacturer who was
made an accused as per Section 18-A could cause prejudice to him. But
no such prejudice can be caused by ( sic to) a manufacturer impleaded
under Section 32-A of the Act, according to the learned Single Judge.
Consequently the conviction and sentence passed on the manufacturer in
that case were set aside by the High Court.
27. We are unable to understand the rationale in drawing a hiatus
between a manufacturer who is arraigned as an accused at the first
instance itself and another manufacturer who is arraigned in exercise of
the powers under Section 32-A of the Act, as regards his right to
challenge a document purporting to be the report of the Government
Analyst. The right to challenge the report must, as of right, be available
to both such manufacturers who are prosecuted for the offence.‖
14.4. As far as the reliance placed by the State on the judgment rendered by
the Hon‘ble High Court of Punjab and Haryana in Varun Kapoor ( supra ) is
concerned, learned Senior Counsel submitted that in the said case, despite the
receipt of the report from the Drugs Inspector, the manufacturer did not
challenge the same within the 28 days as per the mandate of Section 25(3) of
the Act. It was for that reason that the Court had concluded that the reliance
placed by the petitioners therein on Laborate Pharmaceuticals ( supra ) was
misplaced. Be that as it may, it was submitted that the Hon‘ble High Court of
Punjab and Haryana had also not considered the judgment of Amery
Pharmaceuticals ( supra ) in its entirety, and especially, paragraphs 26 and 27
thereof.
Analysis
15. Heard learned counsel for the parties and perused the record.
Compliance of Section 18A, 23 and 25 of the Act
16. A learned Division Bench of the Hon‘ble High Court of Himachal
Pradesh, in Kiran Dev Singh v. State, 1990 SCC OnLine HP 56 , while
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answering a reference in the context of similar circumstances, observed and
held as under:
― 2. The complaint says that a sample of Furalin suspension (Batch
No. Red) manufactured by Rose Chem, haying a license under the
provisions of Drugs and Cosmetics Act, 1940 (briefly the Act; was
found to be of non-standard quality in the report dated September 28,
1988, by the Government Analyst, Punjab. The sample said to have
been drawn from the supply of Furalin suspension, a drug for Diarrhoea,
made by Kiran Dev Singh to the Sub Centre Stores, Public Health,
Mandi, on the basis of an order which had been secured by M/s. Easter
Pharmaceuticals Laboratory, Parwanoo, from the Chief Medical Officer,
Mandi. The allegation in the complaint further is that the sample having
been found to be of a drug which was not of standard quality, the
Incharge of the Sub Centre Stores was intimated about the fact by the
Drug Inspector vide letter dated October 4, 1988. The Incharge was
required to disclose the name of the person from whom he had received
the drug. The Incharge disclosed the name of Easter Pharmaceuticals
Laboratory, Parwanoo through his letter of October 6, 1988 and
supplied the purchase invoice. In this purchase invoice no batch number
of the drug was found mentioned.
3. A copy of the report of analysis of the drug sample was furnished
to M/s Easter Pharmaceuticals Laboratory, Parwanoo. A part of the
sample, which had been collected by the Drug Inspector on January 21,
1988, at the Sub Centre Storesh, Mandi, was also supplied to M/s Easter
Pharmaceuticals Laboratory, Parwanoo. No such copy of the report of
the Analyst or part of the sample was, however supplied to Kiran Dev
Singh, who learnt about the case on receiving of the process from the
court of the. Chief Judicial Magistrate, Mandi.
xxx
7. The basic question which arises for determination is whether
there is an obligation upon the Drug Inspector, under the provisions
of the Act, to furnish a part of the sample and a copy of the report
of the Analyst to a manufacturer of the drug in question or not.
Some provisions of the Act merit a look in this connection.
xxx
14. The provisions noticed above make one thing amply clear. And,
it is that where the manufacturer of a drug, which is found to be lacking
in the requisite standard of quality, can be traced, he is ultimately to be
held responsible for the supply of such a drug and, thus liable for
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prosecution. Where, as in a case covered by Section 19, the plea of
warranty put forward by a person from whose possession the Inspector
takes the sample or by a person who supplies the drug to such a person,
is coming forward as an acceptable plea of defence, the ultimate liability
for breach of the provisions of Section 18 rests upon the manufacturer.
15. If the intendment of the Act is to get hold of the
manaufacturer of a drug, which is lacking in necessary standards of
quality, it is absolutely clear that such a manufacturer should have
effective opportunity for a defence to the effect that the drug
manufactured by him, out of which was drawn the sample, is not
lacking in the necessary standards of quality. If such a defence is
available to the manufacturer, it is obvious, that he should have
access to a part of the sample drawn from his product as well as to
the report describing it as lacking in standards of quality, within a
reasonable period to enable him to exercise the right of adducing
evidence in controversion of the report of the Analyst which
describes his product as lacking in necessary standards of quality.
xxx
19. True it is that a; literal reading of the provisions may lead to
the conclusion that the obligation cast upon the Inspector under
section 24(4) would stand discharged where he-forwards a part of
the sample to the person whose identity is disclosed finder section
18A and that in case the person whose identity is so disclosed is
different from the manufacturer, it would not be necessary for the
Inspector to forward a part of the sample (or a copy of the report as
envisaged by Section 25(3)) to the manufacturer yet, having regard
to the scheme of the Act discussed above, it would be incumbent
upon the Inspector to make a part of the sample, as also a copy of
the report of the analyst, available to the manufacturer.
20. A perusal of the judgment in Manager, Medical Pharmaceutical
Processors (supra), would show that the learned Chief Justice was of
opinion that a manufacturer cannot claim any right which is not given to
him under the aforesaid provisions of the Act. With utmost respect to
the learned Chief Justice, the view taken by him proceeds on a literal
reading of the provisions without having regard to the scheme of the Act
and the basic principle of law that person who is likely to be affected
adversely by initiation of cirminal proceedings against him for the
breach of the provisions of the Act must legitimately have an effective
opportunity for his defence within the four corners of the Act. The
prosecution of a manufacturer in respect of a drug, of whiz sample is
drawn by the Inspector, is likely to result in the penalties envisaged by
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the Act, in case it is found that the drug manufacturer by him was
lacking in the requisite standard of quality contemplated under the Act.
The object of the Act clearly being to get at the manu facturer of the
drug, which is found lacking in the necessary standards of quality,
for ensuring the availability of drug of standard quality to the
actual consumer, it is consistent with the concept of justice that such
a manufacturer whose drug is found by the Analyst to be lacking in
the necessary standards of quality, should know about it and have
an opportunity of getting the sample rechecked by analysis by the
Director, Central Drugs Laboratory and thus put forward his
defence, if any, effectively. This can only be ensured by reading the
provisions of the Act in a manner that would lead to the conclusion
that it is incumbent upon the Inspector to make available a copy of
the report of the Analyst and a part of the sample to the
manufacturer, where his identity becomes known before he is
actually proceeded against from the initial stages by being made a
party to the complaint filed by the Inspector.
21. There may be occasions where identity of the manufacturer
becomes known later, during the pendency of the trial. In that situation,
he can only be brought before the Court in exercise of power under
section 32A. In such a case, it may not be necessary that the report of
the Analyst or any part of the sample of the drug in question be made
available to him. The report would be read against him as well. Law in
this respect has been clearly laid down by the Supreme Court in V.N.
Kamdar v. Municipal Corporation, Delhi [AIR 1973 SC 2246.]
and Bhagwan Dass Jagdish Chander v. Delhi Administration [AIR
1975 SC 1309.] , while dealing with an identical provision contained in
Section 20A of the Provision of Food Adulteration Act, 1954. In a case,
however, where the manufacturer is before the Court from the
inception of the proceedings, there seems no legitimate ground to
take the view that he should not be provided with a copy of the
report of the Analyst or a part of the sample to enable him to
defend himself by seeking the examination afresh of the sample by
the Director, Central Drugs Laboratory.
xxx
24. The dictum of the Supreme Court has been relied upon by a
learned single Judge of the Punjab and Haryana High Court
in Cyanamid India Limited v. The State of Haryana [1989 C.C.C. 60
(HC).] for his view that a manufacturer of insecticides can claim to be
furnished with a copy of the report of the Analyst even though there is
no specific provision entitling him to do so under the, Insecticides Act,
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1968. The learned Judge also sought support from the decision in the
case of Mr. H. Lange v. The State of Punjab [1986 (1) PLR 262.] . In
view of what we have stated above, it appears clear that the decision
in Manager Medical Parmaceatical Processors, Amritsar v. State of
H.P. (supra) does not lay down the correct law. The provi sions of the
Act, when read in the light of the scheme thereof, lead to the
unmistakable conclusion that it is incumbent upon the Drug
Inspector to make, a copy of the report of the Analyst as also a part
of the sample, available to the manufacturer where his identity
becomes known before he is actually proceeded against from the
initial stages by being made a party to the complaint filed by the
Inspector. This is the mandate of law lest the manu facturer is
deprived of an effective opportunity for a defence to the affect that
the drug manufactured by him, out of which the sample was drawn,
is not lacking in necessary standard of quality. The manufacturer
should have access to the report and a, part of the sample drawn,
from his product within a reasonable period to enable him to
exercise the right of adducing evidence in controversion of the
report of the analyst which describes his product as lacking in
necessary standards of quality. ‖
(emphasis supplied)
18. In the present case, the following dates will be relevant:
i. 21.02.2009 - Samples were taken as per the procedure prescribed in
Section 23 of the Act. One portion of the sample was given to the firm
from which the sample was collected, i.e., the vendor, under
acknowledgment on Form-17. One portion of the sample was sent to
the government analyst under Section 23(4)(i) of the Act.
ii. 14.09.2009 - The government analyst declared the sample as ‗not of
standard quality‘.
iii. 01.10.2009 - A copy of the report of the government analyst was sent to
the firm from which the sample was collected, i.e., the vendor, under
Section 25(2) of the Act.
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iv. 01.10.2009 - The vendor informed the complainant that the drug was
supplied to them by the distributor.
v. 01.10.2009 - One portion of the sample and a copy of the report was
sent to the entity whose name, as per the complaint, was disclosed by
the vendor under Section 18A of the Act, i.e., the distributor.
vi. 06.10.2009 - After relevant enquiries from the distributor, it was
revealed that the drug was supplied to them by M/s Cipla Ltd. from its
depot at Mandoli Village, Delhi and investigation was conducted at the
Delhi depot of M/s Cipla Ltd.
vii. 18.11.2009 to 19.11.2009 - Enquiries made with M/s Mistair Health
and Hygiene Pvt. Ltd. revealed that the Drug was manufactured by
them on loan license from M/s Cipla Ltd.
viii. 08.04.2010 - The complainant wrote a letter to M/s Cipla Ltd.
ix. 23.06.2010 - In response to the letter dated 08.04.2010, M/s Cipla Ltd.
informed the complainant that Mr. Talat Fakhri was responsible for the
conduct of day to day business of the company.
x. 06.12.2010 - The subject complained was filed.
xi. 06.12.2010 - The learned Metropolitan Magistrate took cognizance of
offences under Sections 18(a)(i) and 27(d) of the Act and summoned
the accused persons, including the petitioners.
19. The subject complaint has been filed for commission of offences under
Sections 18(a)(i) and 27(d) of the Act, which provide as under:
― 18. Prohibition of manufacture and sale of certain drugs and
cosmetics .—From such date as may be fixed by the State Government
by notification in the Official Gazette in this behalf, no person shall
himself or by any other person on his behalf—
(a) manufacture for sale or for distribution, or sell, or stock or
exhibit or offer for sale, or distribute—
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(i) any drug which is not of a standard quality, or is
misbranded, adulterated or spurious;
xxx
27. Penalty for manufacture, sale, etc., of drugs in contravention of
this Chapter.— Whoever, himself or by any other person on his behalf,
manufactures for sale or for distribution, or sells, or stocks or exhibits or
offers for sale or distributes,—
*
(d) any drug, other than a drug referred to in clause (a) or clause
(b) or clause (c), in contravention of any other provision of this Chapter
or any rule made thereunder, shall be punishable with imprisonment for
a term which shall not be less than one year but which may extend to
two years and with fine which shall not be less than twenty thousand
rupees..‖
A perusal of the aforesaid provisions demonstrates that it is the
responsibility of the manufacturer, primarily, to ensure that the drugs
manufactured by it are of standard quality and the manufacturer is liable for
manufacture, sale etc. of a drug which does not comply with the requisite
standards.
20. The case of the prosecution is that in view of Section 18A of the Act,
disclosure of the person/concern given by the vendor, from where the sample
is collected is sufficient compliance thereof and so the sample collected under
Section 23(4)(iii) and report under Section 25(2) of the Act was supplied to
the said person/concern, which in the present case is the distributor. Learned
APP, in support of the aforesaid stand of the prosecution placed reliance on
Amery Pharmaceuticals ( supra ) , and in particular, paragraph 16 thereof,
wherein it has been recorded that disclosure by a primary source from where
the sample is collected is sufficient compliance of Section 18A of the Act.
21. It is pertinent to note that in the present case, disclosure in terms of
Section 18A of the Act was made while filling out Form-17. On the said form,
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it has been categorically mentioned that the Drug was manufactured by “M/s
Cipla Ltd., MIDC, Shiroli, Kolhapur - 416122” . It is a matter of record that
the Drugs Inspector noted the name of the manufacturer which was published
on the label of the drug. In these circumstances, the Drugs Inspector had
knowledge about the identity of the manufacturer at the time of seizure of
sample from the retailer itself and therefore, the requirement of disclosure
under Section 18A of the Act was thus, satisfied. The facts in the present case
are similar to the facts in Kiran Dev Singh ( supra ) , wherein it has been held
as under:
― 22. It was also urged on behalf of the State that in the present
case, the identity of the manufacturer, that is, M/s Rose Chem was
not disclosed under section 18A at all. The identity of the
manufacturer was known from the label of the drug and is also
mentioned in the details filled in by the Drug Inspector in the
prescribed form XVII. If that be so, as it seems, the claim of the
manufacturer to be furnished with a copy of the report of the
Analyst and a part of the same would stand on firmer ground.
There is no doubt, in such a situation, of the source from which the
drug in question has emanated. The manufacturer is brought before
the court for trial on that account. For an effective defence, therefore,
the manufacturer would, in these circumstances, have a right to supplied
with a copy of the report of the Analyst and a part of the sample of the
drug in question. Apart from any thing else, such a claim would be well
founded on the principles of natural justice.‖
(emphasis supplied)
22. Similarly, as noted hereinbefore, under the Act, the manufacturer is
prosecuted is on account of the drug lacking requisite standard, being the
ultimate responsibility of the manufacturer. In this scenario, such a
manufacturer should have the requisite opportunity to demonstrate that the
drug manufactured by him, of which the sample was drawn, is not lacking in
standards of quality and therefore, access to a portion of the sample as well as
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the report within the time frame prescribed under the Act is a valuable right. It
may be further noted that this aspect can be further inferred from the Act
itself. In this regard, the following observations in Kiran Dev Singh ( supra )
are relevant:
― 16. There is intrinsic indication in the Act itself which leads to this
conclusion. The indication is contained in sub-section (3) of Section 23
read earlier, The first proviso to that sub-section says that where the
sample is taken from the premises wherein the drug is being
manufactured, it shall be necessary to divide the sample into three
portions only and the earlier part of this section says that the
Inspector shall divide the sample into four portions. This discloses
the legislative intent of a sample being necessarily made available to
a manufacturer of the drug in question in unmistakable terms. A
look at sub-section (4) of Section 23 reinforces this conclusion. It
provides that apart from the person from whom the sample is taken, one
portion is to be sent to the Government Analyst for analysis, the other
shall be produced before the court before which the proceedings, are
instituted in respect of the drug and the third is to be sent to the person,
if any, whose identity is disclosed under section 18A.
17. In case the sample is drawn from the store of the
manufacturer, he gets. a part thereof. Where it is drawn from a
place other than a manufacturer’s store, the fourth part of the
sample is meant for a person whose identity is disclosed under
section 18A.
18. Under section 18A, disclosure of identity is to be by a person
from whom the sample is drawn by the Inspector. If it is the
manufacturer of the drug or his-agent for distribution, there is no
necessity or requirement of such a disclosure. The disclosure is
contemplated in other cases alone. Such a provision, as contained in
Section 18A, also suggests that the identity of the manufacturer of
the drug is being aimed at by the legislature for the purpose of
ensuring compliance with the provisions of the Act in regard to the
standard of quality. ‖
(emphasis supplied)
It is pertinent to note that the aforesaid decision rendered by a learned
Division Bench of the Hon‘ble High Court of Himachal Pradesh in Kiran
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Dev Singh ( supra ) was duly taken note of by Hon‘ble Supreme Court in
Amery Pharmaceuticals ( supra ) and the ratio of Kiran Dev Singh ( supra )
was not set aside. In the present case, as noted hereinabove, disclosure under
Section 18A of the Act came into effect at the time when the samples were
seized. As a sequitur, the provisions of Section 23(4)(iii) and Section 25(2) of
the Act were required to be complied with. the Following the judgment in
Kiran Dev Singh ( supra ) , this Court is of the opinion that the provision of
Section 24(4)(iii) and Section 25(2) of the Act have not been complied with.
It may further be noted that it is an admitted case that the samples which are
now with the Court in terms of Section 23(4)(ii) of the Act are beyond their
expiry date and the same cannot be sent for analysis during the course of trial,
even if the manufacturer is given such an opportunity.
23. In view of the aforesaid discussion, the contention on behalf of the
petitioners regarding non-compliance of the 2008 guidelines need not be
examined.
Section 34 of the Act
24. Without prejudice to the aforesaid findings, it is noted that in the
present complaint, the relevant averments in relation to the present petitioners
are as under:
―9.That as on Sept. 2008, Mr. M.K. Hameid (Accused No.5) Dr.
Y.K. Hameid (Accused no.6) and Mr. Talat Fakhri (Accused No.7)
were Joint Managing Director, Chairman & Managing Director and
the Attorney respectively of the company M/s Cipla Ltd. (Accused
No.4) and in that capacity, were the persons in charge of and
responsible for the conduct of day to day business of the said
company.
xxx
19. That M/s Cipla Ltd. (Accused No.4), in response to the
letter of the complainant dated 08.04.2010 informed vide letter
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dated 23.06.2010 that Mr. Talat Fakri (Accused No.7) was
responsible for the conduct of the day to day business of the
company as on the date of manufacture of ‗The Drug‘ and
submitted copy of Power of attorney issued by Mr. M. K. Hameid
(Accused No.5) in favour of Mr. Talat Fakri (Accused No.7). They
also submitted copy of Memorandum and Articles of Association of
M/s Cipla Ltd. (Accused No.4).‖
Section 34 of the Act provides for prosecution of a company and of the
person who, at the time when the alleged offence was committed was in
charge and responsible for the conduct of the day to day business of the said
company. In the present case, it is an admitted case, as stated in Para 19 of the
complaint, that the complainant was informed that Mr. Talat Fakhri was the
person responsible for conduct of the day to day affairs of the company on the
date of manufacturing of the drug. The Power of Attorney executed by
petitioner no. 1 in favour of Mr. Talat Fakhri was provided to the
complainant, which is also a relied upon document.
25. The Hon‘ble Supreme Court, in State of Haryana v. Brij Lal Mittal,
(1998) 5 SCC 343, held as under:
― 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
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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 committed 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 mean 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 .‖
(emphasis supplied)
In view of the Power of Attorney executed in favour of Mr. Talat
Fakhri, which has also been relied upon by the prosecution, this Court is of
the opinion that in order to establish the vicarious liability of the present
petitioners, apart from a bald assertion in the complaint, some more material
was required to be placed on record demonstrating that the petitioners played
an active role in the day to day business of M/s Cipla Ltd. at the relevant time.
26. In S.P. Mani and Mohan Dairy v. Dr. Snehalatha Elangovan, 2022
SCC OnLine SC 1238 , the Hon‘ble Supreme Court, while dealing with a
similar provision, i.e., Section 141 of the Negotiable Instruments Act., 1881,
held as under:
― 40. The principles discernible from the aforesaid decision of this Court
in the case of Ashutosh Ashok Parasrampuriya (supra) is that the High
Court should not interfere under Section 482 of the Code at the instance
of an accused unless it comes across some unimpeachable and
incontrovertible evidence to indicate that the Director/partner of a firm
could not have been concerned with the issuance of cheques. This Court
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clarified that in a given case despite the presence of basic averments,
the High Court may conclude that no case is made out against the
particular Director/partner provided the Director/partner is able to
adduce some unimpeachable and incontrovertible evidence beyond
suspicion and doubt.
xxx
47. Our final conclusions may be summarised as under:—
*
d.) If any Director wants the process to be quashed by filing a petition
under Section 482 of the Code on the ground that only a bald averment
is made in the complaint and that he/she is really not concerned with
the issuance of the cheque, he/she must in order to persuade the High
Court to quash the process either furnish some sterling incontrovertible
material or acceptable circumstances to substantiate his/her contention.
He/she must make out a case that making him/her stand the trial would
be an abuse of process of Court.‖
27. In the present case, it is an admitted case that a Power of Attorney has
been executed in favour of Mr. Talat Fakhri by petitioner no. 1, which is a
document relied upon by the prosecution. Therefore, there is an
unimpeachable document to demonstrate that the petitioners herein were not
in-charge of day to day business of M/s Cipla Ltd. at the relevant time and
therefore, cannot be held liable by virtue of Section 34 of the Act. As per the
case of the prosecution itself, in light of the aforesaid Power of Attorney
relied upon by the complainant, Mr. Talat Fakhri is the person who would be
liable in terms of Section 34 of the Act. It is pertinent to note that this aspect
was ignored by the learned Metropolitan Magistrate while issuing summons
to the present petitioners under Section 200 of CrPC. The learned
Metropolitan Magistrate ought to have considered the fact that Mr. Talat
Fakhri was the person who was in charge of the conduct of day to day
business of M/s Cipla Ltd. It was the duty of the learned Metropolitan
Magistrate to examine the said fact before issuing summons to the present
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petitioners. Even if the complainant, being a public servant, was exempted
from being examined, documents placed on record ought to have been
considered by the learned Metropolitan Magistrate. In view thereof, the
summoning order dated 06.12.2010 is not sustainable qua the present
petitioners.
Section 202 of the CrPC
28. Learned Senior Counsel for the petitioners contended that an enquiry
was mandatorily required to be conducted by the learned Metropolitan
Magistrate since the present petitioners reside outside the territorial
jurisdiction of the learned Metropolitan Magistrate. It is noted that Section
202(1) provides that the magistrate, shall, in a case where the accused is
residing at a place beyond the area in which he exercises his jurisdiction,
postpone the issue of process against the accused, and either inquire into the
case himself or direct an investigation to be made by a police officer or by
such other person as he thinks fit, for the purpose of deciding whether or not
there is sufficient ground for proceeding. It is further noted that the proviso to
the said provision itself provides as under:
―Provided that no such direction for investigation shall be made,—
( a ) where it appears to the Magistrate that the offence
complained of is triable exclusively by the Court of Session; or
( b ) where the complaint has not been made by a Court, unless
the complainant and the witnesses present (if any) have been examined
on oath under Section 200.‖
The present complaint would be covered under the aforesaid proviso (b)
as the complainant and witnesses were not examined on oath under Section
200 of the CrPC on account of the fact that the present complaint was made
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by a public servant and therefore, the present case is covered by proviso (a) to
Section 200 of the CrPC which provides as under:
―Provided that, when the complaint is made in writing, the Magistrate
need not examine the complainant and the witnesses—
(a) if a public servant acting or purporting to act in the discharge of his
official duties or a Court has made the complaint;...‖
In view of the above, the said contention advanced on behalf of the
petitioners is not sustainable.
Conclusion
29. The final conclusions of this Court may be summarised as under:
i. The identity of the manufacturer was known at the time the sample of
the Drug was seized, as recorded in Form-17 filled out by the Drugs
Inspector. Identity of the manufacturer was thus disclosed from the
retailer itself and the same will amount to a disclosure under Section
18A of the Act. As a sequitur, a portion of the sample and report of the
government analyst had to be sent to the manufacturer, as mandated in
Section 23(4)(iii) and Section 25(2) of the Act. Sending the sample and
the report to the distributor instead of the manufacturer in the present
case was not a compliance of Section 23(4)(iii) and Section 25(2) of the
Act.
ii. Without prejudice to the above, in view of the Power of Attorney
executed in favour of Mr. Talat Fakhri by petitioner no. 1, it is
concluded that the petitioners were not responsible for the conduct of
day to day business of M/s Cipla Ltd. and hence, cannot be prosecuted
or held vicariously liable by virtue of Section 34 of the Act.
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iii. In the facts of the case, non-compliance of Section 202 of the CrPC is
not made out.
30. In view of the aforesaid reasons, the present petition is allowed.
31. CC no. 47/04 titled ‗State through Sh. Sundeep B.J Drugs Inpector vs.
Mr. Mahender Pal Singh & Ors.‘ (arising out of the complaint dated
06.12.2010) and all other consequential proceedings emanating therefrom,
pending before the Court of the learned Metropolitan Magistrate, Rohini,
Delhi are quashed qua the present petitioners, i.e., Sh. M.K. Hameid and Dr.
Y.K. Hameid.
32. The petition is allowed and disposed of accordingly.
33. Pending applications, if any, also stand disposed of.
34. Judgment be uploaded on the website of this Court, forthwith.
AMIT SHARMA
JUDGE
SEPTEMBER 06,2023 / sn/nk
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