Himachal Pradesh High Court
Date Of Decision: 2.9.2024 vs State Of Himachal Pradesh on 2 September, 2024
Author: Sandeep Sharma
Bench: Sandeep Sharma
2024:HHC:7948
IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA
.
CrMMO No. 92 of 2024
Date of Decision: 2.9.2024
_____________________________________________________________________
Mr. Murgaiah Ravichandran and Anr.
.........Petitioners
Versus
State of Himachal Pradesh
.......Respondent
Coram
Hon'ble Mr. Justice Sandeep Sharma, Judge.
Whether approved for reporting?
For the Petitioners: M/s C.N. Singh, Devender Sharma and Mr.
r Anshul Gandhi, Advocates.
For the Respondent: Mr. Rajan Kahol, Mr. Vishal Panwar and Mr.
B.C. Verma, Additional Advocates General
with Mr. Ravi Chauhan, Deputy Advocate
General.
___________________________________________________________________________
Sandeep Sharma, J. (Oral)
By way of present petition filed under Section 482 CrPC, prayer has been made by the petitioners-accused for quashing of complaint No. 182/3 of 2022 titled State of Himachal Pradesh v. Mr. M. Ravichandran and Ors. as well as order dated 12.8.2022, passed by the learned Chief Judicial Magistrate Bilaspur, District Bilaspur, Himachal Pradesh, thereby issuing process against the petitioners on the afore complaint initiated at the behest of the Drug Inspector, Bilaspur.
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2. Precisely, facts of the case as emerge from the record are that .
on 6.8.2021, Drug Inspector, visited the premises of the Petitioner-
Company namely Tidal Laboratories Private Ltd, Pase-II Industrial Area, Gowalthai, District Bilaspur, Himachal Pradesh and drew samples of Enzox Plus tab Batch No. ENZP-02105-02; M/D 05/2021; E/D 04/2024 and Octoxid Capsules Batch No. OTXC0-02102; M/D 06/21; E/D 11/22. On 8.10.2021, the Government Analyst declared the afore drugs "not of standard quality". On 25.10.2021, show cause notice came to be issued by the Drug Inspector for EnxozPlus (FDC) along with the copy of Form 13.
3. On 21.10.2021, a show cause notice was issued to the petitioner for another drug Octoxid (FXC) capsules. On 1.11.2021, both the show cause notices were replied to and intention to adduce evidence was also notified to the Drug Inspector. On 20.2.2022, the intention to retest the drugs was notified for both the drugs and as such, on 2.3.2022, Drug Inspector filed an application before the learned Chief Judicial Magistrate for retesting and sending the drugs in question to Central Drug Laboratory.
After receipt of report furnished by the Central Drug Laboratory, complaint sought to be quashed in the instant proceedings came to be lodged in the competent court of law, which taking note of the contents of complaint ::: Downloaded on - 05/09/2024 20:29:58 :::CIS 3 2024:HHC:7948 (Annexure P-1), issued process against the petitioners vide order dated .
12.1.2022 (Annexure P-2).
4. In the foresaid background, petitioners, who are the Directors of the company, as detailed herein above, have approached this Court in the instant proceedings for quashing of complaint as well as order dated 12.8.2022 passed by the Court below, thereby issuing process.
5. Precisely, the grouse of the petitioners, as has been highlighted in the petition and further canvassed by Mr. C.N. Singh, learned counsel for the petitioners is that court below before issuing process failed to consider the material adduced on record by the complainant because bare perusal of same clearly reveals that no allegation ever came to be leveled against the petitioners that they were otherwise responsible for day to day working of the company. While making this Court peruse the contents of the complaint, learned counsel for the petitioner, vehemently argued that once company, which allegedly made the violation of various provisions contained in Drugs and Cosmetics Act, is not made party and as such, complaint against the petitioners being Directors of the Company is otherwise not sustainable in the eye of law. To substantiate his aforesaid statement, Mr. Singh invited attention of this court of judgment passed by the Hon'ble Apex Court in Ashish Mittal v. Shri Anil Chand and Ors., ::: Downloaded on - 05/09/2024 20:29:58 :::CIS 4 2024:HHC:7948 2013 SCC OnLine HP 3847, wherein it came to be specifically ruled that .
without company being made the accused, the Directors cannot be made party to the criminal proceedings. Mr. C.N. Singh, further argued that for initiation of criminal proceedings against a company, impleadment of company is a sine qua non, as such, complaint having been filed by the Drug Inspector in the case at hand deserves to be quashed. He further submitted that since no specific allegation ever came to be made in the complaint that petitioners herein being Directors of the company were involved in the day to day affairs of the company, there was otherwise no occasion, if any, for the court below to issue process against them. While referring to judgment passed by the Hon'ble Apex Court in Ashok Kumar Tyagi v. State of Himachal Pradesh and Ors., MANU/HP/0283/2015, learned counsel for the petitioners argued that mere bald statement against directors, is not sufficient, rather specific averments with regard to role and responsibility in day-to-day affairs is required to be pleaded in the complaint. Lastly, learned counsel for the petitioner argued that since Drug Inspector proceeded to implead the petitioners without necessary inquiry, complaint otherwise having been filed by him deserves outright rejection. He stated that both the petitioners though are the Directors of the company, but they live in the State of Tamil Nadu and have no role to play as the company's manufacturing site is at Bilaspur. He further ::: Downloaded on - 05/09/2024 20:29:58 :::CIS 5 2024:HHC:7948 submitted that as per instructions issued by the Central Government under .
Section 33P, under direction No.X. 11014/04/2009-DFQC dated 26.11.2010, Government Analyst as well as Central Drug Laboratory are under obligation to seek protocol of test and method of analysis from the manufacturer, however in the instant case, aforesaid procedure was never followed and as such, report, if any, given by the Central Drug laboratory, thereby declaring drugs in question to be "not of standard quality", is of no consequence. Mr. Singh also placed reliance upon judgment dated 4.7.2024 passed by this Court in CrMMO No. 738 of 2021, titled Anil Mediratta and Ors. v. State of Himachal Pradesh and Ors., wherein this Court having taken note of the various judgments passed by the Hon'ble Apex Court proceeded to hold that no complainant under the Act is maintainable against its Directors without company being impleaded as party respondent.
6. To the contrary, Mr. B.C. Verma, learned Additional Advocate General, while supporting the registration of the complaint by the Drug Inspector against the petitioners vehemently argued that petitioners being directors of the company are liable and responsible for the conduct and business of the company. While referring to Section 19, Sub-clause 3 of the Act, learned Additional Advocate General argued that once there is no ::: Downloaded on - 05/09/2024 20:29:58 :::CIS 6 2024:HHC:7948 denial of the fact that drugs in question were manufactured by the .
company concerned and same were found to be "not of standard quality", petitioners being directors of the company have been rightly booked for deliberate contravention of provisions contained under Section 18 of the Act. Lastly, Mr. Verma, submitted that petitioner under Section 482 Cr.PC is not maintainable, especially when complaint sought to be quashed has been already fixed for consideration of charges. He further submitted that there is overwhelming available on record suggestive of the fact that petitioners have contravened the various provisions contained under the Act and as such, it would be too premature at this stage to conclude that no case much less under Section 18 (a) (i) punishable under Section 27(d) of the Act, is made out against the petitioners.
7. I have heard the learned counsel for the parties and gone through the record of the case.
8. Before ascertaining the genuineness and correctness of the submissions and counter submissions having been made by the learned counsel for the parties vis-à-vis prayer made in the instant petition, this Court deems it necessary to discuss/elaborate the scope and competence of this Court to quash the criminal proceedings while exercising power under Section 482 of Cr.PC.
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9. Hon'ble Apex Court in judgment titled State of Haryana and .
others vs. Bhajan Lal and others, 1992 Supp (1) SCC 335 has laid down several principles, which govern the exercise of jurisdiction of High Court under Section 482 Cr.P.C. Before pronouncement of aforesaid judgment rendered by the Hon'ble Apex Court, a three-Judge Bench of Hon'ble Court in State of Karnataka vs. L. Muniswamy and others, 1977 (2) SCC 699, held that the High Court is entitled to quash a proceeding, if it comes to the conclusion that allowing the proceeding to continue would be an abuse of the process of the Court or that the ends of justice require that the proceeding ought to be quashed. Relevant para is being reproduced herein below:-
"7....In the exercise of this wholesome power, the High Court is entitled to quash a proceeding if it comes to the conclusion that allowing the proceeding to continue would be an abuse of the process of the Court or that the ends of justice require that the proceeding ought to be quashed. The saving of the High Court's inherent powers, both in civil and criminal matters, is designed to achieve a salutary public purpose which is that a court proceeding ought not to be permitted to degenerate into a weapon of harassment or persecution. In a criminal case, the veiled object behind a lame prosecution, the very nature of the material on which the structure of the prosecution rests and the like would justify the High Court in quashing the proceeding in the interest of justice. The ends of justice are higher than the ends of mere law though justice has got to be administered according to laws made by the legislature. The compelling necessity ::: Downloaded on - 05/09/2024 20:29:58 :::CIS 8 2024:HHC:7948 for making these observations is that without a proper realisation of .
the object and purpose of the provision which seeks to save the 58 inherent powers of the High Court to do justice, between the State and its subjects, it would be impossible to appreciate the width and contours of that salient jurisdiction."
10. Subsequently, Hon'ble Apex Court in Bhajan Lal (supra), has elaborately considered the scope and ambit of Section 482 Cr.P.C.
Subsequently, Hon'ble Apex Court in Vineet Kumar and Ors. v. State of U.P. and Anr., while considering the scope of interference under Sections 397 Cr.PC and 482 Cr.PC, by the High Courts, has held that High Court is entitled to quash a proceeding, if it comes to the conclusion that allowing the proceeding to continue would be an abuse of the process of the Court or that the ends of justice require that the proceedings ought to quashed. The Hon'ble Apex Court has further held that the saving of the High Court's inherent powers, both in civil and criminal matters, is designed to achieve a salutary public purpose i.e. a court proceeding ought not to be permitted to degenerate into a weapon of harassment or persecution. In the aforesaid case, the Hon'ble Apex Court taking note of seven categories, where power can be exercised under Section 482 Cr.PC, as enumerated in Bhajan Lal (supra), i.e. where a criminal proceeding is manifestly attended with malafides and/or where the proceeding is maliciously instituted with an ::: Downloaded on - 05/09/2024 20:29:58 :::CIS 9 2024:HHC:7948 ulterior motive for wreaking vengeance on the accused and with a view to .
spite him due to private and personal grudge, quashed the proceedings.
11. Hon'ble Apex Court in Prashant Bharti v. State (NCT of Delhi), (2013) 9 SCC 293, while drawing strength from its earlier judgment titled as Rajiv Thapar and Ors v. Madan Lal Kapoor, (2013) 3 SCC 330, has reiterated that High Court has inherent power under Section 482 Cr.PC., to quash the initiation of the prosecution against an accused, at the stage of issuing process, or at the stage of committal, or even at the stage of framing of charge, but such power must always be used with caution, care and circumspection. While invoking its inherent jurisdiction under Section 482 of the Cr.P.C., the High Court has to be fully satisfied that the material produced by the accused is such, that would lead to the conclusion, that his/their defence is based on sound, reasonable, and indubitable facts and the material adduced on record itself overrules the veracity of the allegations contained in the accusations levelled by the prosecution/complainant. The material relied upon by the accused should be such, as would persuade a reasonable person to dismiss and condemn the actual basis of the accusations as false. In such a situation, the judicial conscience of the High Court would persuade it to exercise its power under Section 482 Cr.P.C. to quash such criminal proceedings, for that would ::: Downloaded on - 05/09/2024 20:29:58 :::CIS 10 2024:HHC:7948 prevent abuse of process of the court, and secure the ends of justice. In the .
aforesaid judgment titled Prashant Bharti v. State (NCT of Delhi), (2013) 9 SCC 293, the Hon'ble Apex Court has held as under:-
"22. The proposition of law, pertaining to quashing of criminal proceedings, initiated against an accused by a High Court under Section 482 of the Code of Criminal Procedure (hereinafter referred to as "the Cr.P.C.") has been dealt with by this Court in Rajiv Thapar & Ors. vs. Madan Lal Kapoor wherein this Court inter alia held as under: (2013) 3 SCC 330, paras 29-30)
29. The issue being examined in the instant case is the jurisdiction of the High Court under Section 482 of the Cr.P.C., if it chooses to quash the initiation of the prosecution against an accused, at the stage of issuing process, or at the stage of committal, or even at the stage of framing of charges. These are all stages before the commencement of the actual trial. The same parameters would naturally be available for later stages as well. The power vested in the High Court under Section 482 of the Cr.P.C., at the stages referred to hereinabove, would have far reaching consequences, inasmuch as, it would negate the prosecution's/complainant's case without allowing the prosecution/complainant to lead evidence. Such a determination must always be rendered with caution, care and circumspection. To invoke its inherent jurisdiction under Section 482 of the Cr.P.C. the High Court has to be fully satisfied, that the material produced by the accused is such, that would lead to the conclusion, that his/their defence is based on sound, reasonable, and indubitable facts; the material produced is such, as would rule out and displace the assertions contained in the charges levelled against the accused; and the material produced is such, as would clearly reject and overrule ::: Downloaded on - 05/09/2024 20:29:58 :::CIS 11 2024:HHC:7948 the veracity of the allegations contained in the accusations levelled by .
the prosecution/complainant. It should be sufficient to rule out, reject and discard the accusations levelled by the prosecution/complainant, without the necessity of recording any evidence. For this the material relied upon by the defence should not have been refuted, or alternatively, cannot be justifiably refuted, being material of sterling and impeccable quality. The material relied upon by the accused should be such, as would persuade a reasonable person to dismiss and condemn the actual basis of the accusations as false. In such a situation, the judicial conscience of the High Court would persuade it to exercise its power under Section 482 of the Cr.P.C. to quash such criminal proceedings, for that would prevent abuse of process of the court, and secure the ends of justice.
30. Based on the factors canvassed in the foregoing paragraphs, we would delineate the following steps to determine the veracity of a prayer for quashing, raised by an accused by invoking the power vested in the High Court under Section 482 of the Cr.P.C.:-
30.1 Step one, whether the material relied upon by the accused is sound, reasonable, and indubitable, i.e., the material is of sterling and impeccable quality?
30.2 Step two, whether the material relied upon by the accused, would rule out the assertions contained in the charges levelled against the accused, i.e., the material is sufficient to reject and overrule the factual assertions contained in the complaint, i.e., the material is such, as would persuade a reasonable person to dismiss and condemn the factual basis of the accusations as false. 30.3 Step three, whether the material relied upon by the accused, has not been refuted by the prosecution/complainant; and/or the material is such, that it cannot be justifiably refuted by the prosecution/complainant?::: Downloaded on - 05/09/2024 20:29:58 :::CIS
12 2024:HHC:7948 30.4 Step four, whether proceeding with the trial would result in an .
abuse of process of the court, and would not serve the ends of justice?
30.5 If the answer to all the steps is in the affirmative, judicial conscience of the High Court should persuade it to quash such criminal - proceedings, in exercise of power vested in it under Section 482 of the Cr.P.C. Such exercise of power, besides doing justice to the accused, would save precious court time, which would otherwise be wasted in holding such a trial (as well as, proceedings arising therefrom) specially when, it is clear that the same would not conclude in the conviction of the accused."
12. Hon'ble Apex Court in Asmathunnisa v. State of A.P. (2011) 11 SCC 259, has held as under:
"12. This Court, in a number of cases, has laid down the scope and ambit of the High Court's power under section 482 of the Code of Criminal Procedure. Inherent power under section 482 Cr.P.C. though wide have to be exercised sparingly, carefully and with great caution and only when such exercise is justified 9 by the tests specifically laid down in this section itself. Authority of the court exists for the advancement of justice. If any abuse of the process leading to injustice is brought to the notice of the court, then the Court would be justified in preventing injustice by invoking inherent powers in absence of specific provisions in the Statute.
13. The law has been crystallized more than half a century ago in the case of R.P. Kapur v. State of Punjab AIR 1960 SC 866 wherein this Court has summarized some categories of cases where inherent power can and should be exercised to quash the proceedings. This Court summarized the following three broad categories where the ::: Downloaded on - 05/09/2024 20:29:58 :::CIS 13 2024:HHC:7948 High Court would be justified in exercise of its powers under section .
482:
(i) where it manifestly appears that there is a legal bar against the institution or continuance of the proceedings;
(ii) where the allegations in the first information report or complaint taken at their face value and accepted in their entirety do not constitute the offence alleged;
(iii) where the allegations constitute an offence but there is no legal evidence adduced or the evidence adduced clearly or manifestly fails to prove the charge."
14.In Smt. Nagawwa v. Veeranna Shivalingappa Konjalgi and Others (1976) 3 SCC 736, according to the court, the process against the accused can be quashed or set aside :
"(1) where the allegations 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 is alleged against the accused; (2) where the allegations made in the complaint are patently absurd and inherently improbable so that no 10 prudent person can ever reach a conclusion that there is sufficient ground for proceeding against the accused;
(3) where the d iscretion exercised by the Magistrate in issuing process is capricious and arbitrary having been based either on no evidence or on materials which are wholly irrelevant or inadmissible; and (4) where the complaint suffers from fundamental legal defects, such as, want of sanction, or absence of a complaint by legally competent authority and the like".::: Downloaded on - 05/09/2024 20:29:58 :::CIS
14 2024:HHC:7948
15. This court in State of Karnataka v. L. Muniswamy & Others .
(1977) 2 SCC 699, observed that the wholesome power under section 482 Cr.P.C. entitles the High Court to quash a proceeding when it comes to the conclusion that allowing the proceedings to continue would be an abuse of the process of the court or that the ends of justice requires that the proceedings ought to be quashed. The High Courts have been invested with inherent powers, both in civil and criminal matters, to achieve a salutary public purpose. A Court proceeding ought not to be permitted to degenerate into a weapon of harassment or persecution. In this case, the court observed that ends of justice are higher than the ends of mere law though justice must be administered according to laws made by the Legislature. This case has been followed in a large number of subsequent cases of this court and other courts."
13. Hon'ble Apex Court in Asmathunnisa (supra) has categorically held that where discretion exercised by the Magistrate in issuing process is capricious and arbitrary having been based either on no evidence or on materials which are wholly irrelevant or inadmissible; and where the complaint suffers from fundamental legal defects, such as, want of sanction, or absence of a complaint by legally competent authority and the like, High Court would be justified in exercise of its powers under S. 482 CrPC.
14. From the bare perusal of aforesaid exposition of law, it is quite apparent that while exercising its inherent power under Section 482 Cr.PC., ::: Downloaded on - 05/09/2024 20:29:58 :::CIS 15 2024:HHC:7948 High Court can proceed to quash the proceedings, if it comes to the .
conclusion that allowing the proceedings to continue would be an abuse of process of the law.
15. Now being guided by the aforesaid law laid down by the Hon'ble Apex Court from time to time, this court would make an endeavour to find out whether complaint No. 182/3 of 2022 as well as order dated 22 .8.2022 disclose offence, if any, punishable under the afore provisions of law and evidentiary material collected on record by the prosecution is sufficient to connect the accused with the alleged commission of offence or not?
16. Having heard learned counsel for the parties and perused the material available on record, this Court finds that drugs in question, in the case at hand, were manufactured by company namely "Tidal Laboratories Private Limited". It is also not in dispute that petitioners herein are the directors of the company, as detailed herein above, but bare perusal of complaint filed by the Drug Inspector nowhere suggests that petitioners being directors of the company concerned had any kind of control upon the day to day affairs of the company, admittedly, manufacturing unit of company is situate in the State of Himachal Pradesh.
17. If the complaint is read in its entirety, there is no allegation, if any, against the Directors, rather allegation of manufacturing drugs, which ::: Downloaded on - 05/09/2024 20:29:58 :::CIS 16 2024:HHC:7948 are "not of standard quality" is against the company, which is not made .
party in the instant proceedings.
18. Precisely the question which needs to be answered is whether complaint filed against the director under Section 18 of the Act is maintainable without company being impleaded as party respondent or not?
19. Recently, this court had an occasion to explore answer to the aforesaid question of law in Anil Mediratta case (supra), wherein having taken note of the various judgments passed by the Hon'ble Apex Court, this court held as under:
"27. It is not in dispute that as per mandate of S.18, requisite information was made available by M/s Generica India Limited. M/s Generica India Limited specifically informed Drug Inspector concerned that the company concerned has appointed Mr. Hem Raj Thakur as its authorized signatory, enabling him to perform the day-to-day business of company (resolution passed by the company in this regard is available at page 56 of paper book). Complaint sought to be quashed came to be instituted under S.18(a)(i) of the Act and Rules framed under the Act, punishable under S.27(d) of the Act.
28.At this stage, it would be apt to take note of Section 18a(i) of Act, 1940, which reads 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--
[(i) any drug which is not of a standard quality, or is misbranded, adulterated or spurious;
[(ii) any cosmetic which is not of a standard quality or is misbranded, adulterated or spurious;]] [(iii) any patent or proprietary medicine, unless there is displayed in the prescribed manner on the label or container thereof [the true formula or list of active ingredients contained in it together with the quantities thereof];] ::: Downloaded on - 05/09/2024 20:29:58 :::CIS 17 2024:HHC:7948
(iv) any drug which by means of any statement design or device .
accompanying it or by any other means, purports or claims [to prevent, cure or mitigate] any such disease or ailment, or to have any such other effect as may be prescribed;
[(v) any cosmetic containing any ingredient which may render it unsafe or harmful for use under the directions indicated or recommended;
(vi) any drug or cosmetic in contravention of any of the provisions of this Chapter or any rule made thereunder;]
(b) [sell or stock or exhibit or offer for sale,] or distribute any drug 9 [or cosmetic] which has been been imported or manufacutred in contravention of any of the provisions of this Act or any rule made thereunder;
(c) [manufacture for sale or for distribution, or sell, or stock or exhibit or offer for sale,] or distribute any drug [or cosmetic], except under, and in accordance with the conditions of, a licence issued for such purpose under this Chapter:
Provided that nothing in this section shall apply to the manufacture, subject to prescribed conditions, of small quantities of any drug for the purpose of examination, test or analysis :
Provided further that the [Central Government] may, after consultation with the Board, by notification in the Official Gazette, permit, subject to any conditions specified in the notifica tion, the [manufacture for sale or for distribution, sale, stocking or exhibiting or offering for sale] or distribution of any drug or class of drugs not being of standard quality.
29. Perusal of afore provision of law makes it clear that no person can manufacture for sale or for distribution, or sell, or stock or exhibit or offer for sale or distribute any drug or cosmetic, which is not of standard quality or is misbranded, adulterous or spurious. Violation, if any, of aforesaid provision of law, would render person concerned, liable for punishment under Section 27 of the Act, which provides for penalty.
30.Admittedly, in the case at hand, drug in question which was supplied to M/s Aar Kay Surgicals by M/s Generica India Limited, was found to be of sub-standard quality as per Adverse Analysis Report given by CTL, Kandaghat and as such, no illegally can be said to have been committed by Drug Inspector, while instituting complaint, for commission of offence punishable under S.18(a)(i) punishable under S.27(d) of the Act, against the accused named in the complaint, including petitioners being Directors of M/s Generica India Limited but the question which needs determination at this stage is, "whether case made out against the petitioners herein, being Directors of M/s Generica India Limited under S. 18(a)(i) of Act is sustainable on account of certain immunities granted under S.19(3) of the Act or not?. S.19(3) reads as under:::: Downloaded on - 05/09/2024 20:29:58 :::CIS
18 2024:HHC:7948 "19. Pleas.--(1)x x x x .
(2) x x x x (3) A person, not being the manufacturer of a drug or cosmetic or his agent for the distribution thereof, shall not be liable for a contravention of section 18 if he proves--
(a) that he acquired the drug or cosmetic from a duly licensed manufacturer, distributor or dealer thereof;
(b) that he did not know and could not, with reasonable diligence, have ascertained that the drug or cosmetic in any way contravened the provisions of that section; and
(c) that the drug or cosmetic, while in his possession, was properly stored and remained in the same state as when he acquired it."
31.Aforesaid provisions of S.19(3) categorically provide that a person, not being the manufacturer of a drug or cosmetic or his agent for the distribution thereof, shall not be liable for a contravention of S.18 if he proves (a) that he acquired the drug or cosmetic from a duly licensed manufacturer, distributor or dealer thereof; (b) that he did not know and could not, with reasonable diligence, have ascertained that the drug or cosmetic in any way contravened the provisions of that section; and (c) that the drug or cosmetic, while in his possession, was properly stored and remained in the same state as when he acquired it.
32. In the instant case, M/s Legen Healthcare, manufacturer of drug in question neither claimed before authority concerned, that drug in question was not supplied to M/s Generica India Limited or that the same was not properly stored by M/s Generica India Limited rather, M/s Legen Healthcare, while responding to notice issued by Drug Inspector concerned, admitted factum of its having manufactured the drug in question and its supply to M/s Generica India Limited under proper invoice. If the reply given by M/s Legen Healthcare to Drug Inspector concerned is perused, it specifically laid challenge to the report of CTL Kandaghat and requested to send second sample of drug in question to Central Drug Laboratory, for re-testing. Needless to say as per procedure, company concerned can apply for re-testing of sample, but with the permission of Magistrate concerned.
33. No doubt, on account of report of CTL Kandaghat, case if any, is made out under S.18(a)(i) punishable under S.27(d) of the Act, against the manufacturer, stockiest, and the trader but since stockiest/trader can claim immunity from action under S. 18 of the Act, subject to satisfaction of conditions contained under S.19(3), there appears to be merit in the contention of Mr.Sharma, learned senior counsel appearing for the petitioners, that, once there is an admission on the part of M/s Legen Healthcare, manufacturer of drug, that the same was sold to M/s Generica India Limited under proper invoice and it had no knowledge ::: Downloaded on - 05/09/2024 20:29:58 :::CIS 19 2024:HHC:7948 that the drug has contravened provisions of S.18 coupled with the fact .
that there is nothing on record to suggest that the drug was not properly stored, after its acquisition from manufacturer, case if any under S.18 would not succeed in the competent court of law.
34.It also emerges from the record that on the date of receipt of notice from Drug Inspector concerned, stock of the drug in question stood sold out, as is evident from communication dated 23.12.2009 (page 136 of paper book) (Annexure PM).
35.Apart from above, this court finds that Drug Inspector concerned, while initiating proceedings against various accused named in the complaint, failed to implead M/s Generica India Limited as an accused. If it is so, prosecution, if any, against petitioners being Directors of company is bound to fail, especially when nothing has been adduced on record to suggest that, on the date of drawing sample, petitioners being directors of company were responsible for day-to-day affairs of company.
36. At this stage, it would be apt to take note of S. 34 of the unamended Act, 1940, 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.
(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."::: Downloaded on - 05/09/2024 20:29:58 :::CIS
20 2024:HHC:7948
37.Aforesaid provision of law deals with offence, if any, committed by .
company. Aforesaid provision provides that 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.
38. Proviso to the aforesaid section provides 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
39.Till the time, company is arrayed as an accused, offence, if any, committed by company, cannot be ascertained. For the offence, if any, committed by a company, person responsible for conduct of business of the company is to be dealt in accordance with law, but admittedly, for doing so, such company is essentially required to be impleaded as accused. However, in the instant case, M/s Generica India Limited has not been arrayed as party till date. Since aforesaid company has not been arrayed as accused, it is not understood how prosecution would prove case against its Directors i.e. petitioners herein.
40. Reliance in this regard is placed upon a judgment rendered by Hon'ble Apex Court in Aneeta Hada v. Godfather Travels & Tours (P) Ltd., (2012) 5 SCC 661, wherein, a similar provision enacted in the Negotiable Instruments Act was considered by the Hon'ble Supreme Court and it was held that prosecution of the company is sine qua non for prosecuting the officials of the company. It is not permissible to prosecute the officials without prosecuting the company. It was observed:-
"58. Applying the doctrine of strict construction, we are of the considered opinion that the commission of an offence by the company is an express condition precedent to attract the vicarious liability of others. Thus, the words "as well as the company"
appearing in the section make it absolutely unmistakably clear that when the company can be prosecuted, then only the persons mentioned in the other categories could be vicariously liable for the offence subject to the averments in the petition and proof thereof. One cannot be oblivious of the fact that the company is a juristic person and it has its own respectability. If a finding is recorded against it, it would create a concavity in its reputation. There can be situations when the corporate reputation is affected when a Director is indicted.
59. In view of our aforesaid analysis, we arrive at the irresistible conclusion that for maintaining the prosecution under Section 141 ::: Downloaded on - 05/09/2024 20:29:58 :::CIS 21 2024:HHC:7948 of the Act, arraigning of a company as an accused is imperative.
.
The other categories of offenders can only be brought in the dragnet on the touchstone of vicarious liability as the same has been stipulated in the provision itself. We say so on the basis of the ratio laid down in C.V. Parekh [(1970) 3 SCC 491: 1971 SCC (Cri) 97] which is a three-judge Bench decision. Thus, the view expressed in Sheoratan Agarwal [(1984) 4 SCC 352: 1984 SCC (Cri) 620] does not correctly lay down the law and, accordingly, is hereby overruled. The decision in Anil Hada [(2000) 1 SCC 1: 2001 SCC (Cri) 174] is overruled with the qualifier as stated in para 51. The decision in Modi Distillery [(1987) 3 SCC 684: 1987 SCC (Cri) 632] has to be treated to be restricted to its own facts as has been explained by us hereinabove."
42. From the aforesaid exposition of law laid down by Hon'ble Apex Court, it is thus clear that, a company, being a juristic person, cannot be imprisoned, but it can be subjected to a fine, which in itself is a punishment. Every punishment has adverse consequences, and therefore, prosecution of the company is mandatory. The exception would possibly be when the company itself has ceased to exist or cannot be prosecuted due to a statutory bar. However, such exceptions are of no relevance in the present case. Thus, the present prosecution must fail for this reason as well. Therefore, it is not permissible to prosecute the petitioners without prosecuting the company. Since the company has not been arrayed as an accused, therefore, it is not permissible to prosecute the petitioners, being Directors of the Company, in view of the binding precedents of the Hon'ble Supreme Court.
46.This court in similar circumstances, where company was not arrayed as an accused, straightway proceeded to quash the proceedings, vide order dated 16.9.2023 passed in CrMMO No. 111 of 2013, titled Ashish Mittal v. State of Himachal Pradesh, relevant paras whereof read as under:
"11. A similar proposition was dealt with by the Apex Court in Aneeta Hada v. Godhfather Travels and Tours Private Limited, (2012) 5 SCC 661, while dealing with Section 141 of the Negotiable Instruments Act quoted above, held that when a person, which is a Company commits an offence, then certain categories of persons incharge as well as the Company would be deemed to be liable for the offences under Section 138 of the Negotiable Instruments Act. Thus, the statutory intendment is absolutely plain. The provision makes the functionaries and the Companies/ firms liable and that is by deeming fiction, which has its own significance.::: Downloaded on - 05/09/2024 20:29:58 :::CIS
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12. Also on the comparative reading of the above Sections .
under the different statutes, it can safely be concluded that every person connected with Company shall not fall within the ambit of Section 34 of the Act, which has a marked similarity with the similar provisions of Negotiable Instruments Act. The conclusion is obvious that only those persons, who are incharge of and responsible for the conduct of the business of the Company at the time of commission of the offence are liable for the criminal action. The explanation added to Section 34 ibid shows that the Company means a body corporate and includes a firm or other association of individuals and Directos in relation to a firm means a Partner.
13. In the instant case, the petitioner is alleged to be a Partner of "M/s. Legen Healthcare". The said firm has not been impleaded as an accused and also there is no allegation in the complaint that the petitioner in the capacity as a Partner was incharge of and responsible for the conduct-business of the said firm. Therefore, in my opinion, summoning of the petitioner for the alleged offence in his capacity as a Partner is wrong and illegal.
14. Thus, the logical conclusion is that the summoning of the petitioner as a Partner of the said firm as an accused is unsustainable, hence, quashed and set aside., but, however, it shall open to the Drug Inspector to implead the Company as an accused by moving an appropriate application before the learned trial Court and in case there is any evidence during the trial that a particular person is incharge of or responsible for the conduct of the business or the Company including the petitioner, he can also be impleaded as an accused. The record of learned trial Court be returned forthwith and shall reach before it on or before 21.10.2013."
48. Similar is present case. In the instant case, though petitioners being Directors of company have been arrayed as accused, but the company namely, M/s Generica India Limited has not been arrayed as accused, as such, prosecution of the petitioners alone, is bound to fail. Most importantly, protection under S.19(3) of Act is also available to petitioners being stockiest/traders, for the reason that sale of drug in question by manufacture to M/s Generica India Limited has not been denied by M/s Legen Healthcare, the admitted manufacturer of drug. It clearly emerges from the complaint that M/s Generica India Limited being duly licenced stockiest, purchased drug from duly licenced manufacturer and sold the same thereafter to M/s Aar Kay Surgicals, vide proper invoice dated 23.12.2008."
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20. In the aforesaid judgment, this Court while placing reliance .
upon the various judgments passed by the Hon'ble Apex Court has categorically held that till the time, company is not arrayed as an accused, offence, if any, committed by the directors of the company, cannot be ascertained. For the offence, if any, committed by company, person responsible for conduct of business of the company is to be dealt in accordance with law, but admittedly, for doing so, such company is essentially required to be impleaded as accused. Since, in the instant case, M/s Tidal Laboratories Private Ltd., which allegedly manufactured the drugs in question, which subsequently were found to be of "not of standard quality" has not been arrayed as party, it is not understood how prosecution would prove case against its Directors i.e. petitioners herein, especially, when it is nowhere averred in the complaint that petitioners being Directors of the company were incharge of its day to day affairs of the company.
21. To bring Director of the company in the ambit of Section 18, it is necessary to aver as to how the Director of the Company is incharge and responsible for day to day affairs of the company. No doubt, to escape liability, directors, will have to prove that when the offence was committed, they had no knowledge of the offence or that they exercised all due ::: Downloaded on - 05/09/2024 20:29:58 :::CIS 24 2024:HHC:7948 diligence to prevent the commission of the offence, however, in the case at .
hand, there is no allegation, if any, against the Directors in the complaint, if it is so, there is/was otherwise no occasion for them to prove that when offence was committed, they had no knowledge of the offence.
22. Evidence collected on record by the prosecution is not sufficient to connect the petitioners with the offence alleged to have been committed by them. Basic ingredients of afore sections are missing, as a result thereof, trial, if any, pursuant to FIR sought to be quashed is likely to fail in all probabilities.
23. Having scanned the entire evidence, this Court has no hesitation to conclude that, no case much less under the aforesaid provisions of law can be said to have been made against the petitioners.
Since for the discussion made herein above, case of the prosecution is likely to fail in any eventuality, this Court finds the case at hand to be fit for exercising power under Section 482 CrPC to quash complaint as well as consequent proceedings. If prayer made in the instant petition is not accepted, petitioner would be unnecessarily subjected to ordeal of the protracted trial, which is otherwise bound to culminate in acquittal of the accused.
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24. Consequently, in view of the aforesaid discussion as well as .
law laid down by the Hon'ble Apex Court (supra), present petition is allowed and Complaint Case No. 182/3 of 2022, titled State of Himachal Pradesh v.
Mr. M. Ravichandran and Ors., filed by the petitioners alongwith consequential proceedings arising therefrom i.e. order dated 12.8.2022 (Annexure P-2) passed by the learned Chief Judicial Magistrate, Bilaspur, District Bilaspur, Himachal Pradesh, is quashed and set aside. Accused are acquitted of the charges framed against them. The petition stands disposed of in the aforesaid terms, alongwith all pending applications.
September 2, 2024 (Sandeep Sharma),
(manjit) Judge
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