Bombay High Court
A.V. Mody & Others vs S.R. Salunke & Another on 3 September, 1999
Equivalent citations: 2000(5)BOMCR872
Author: S.S. Parkar
Bench: S.S. Parkar
ORDER S.S. Parkar, J.
1. Petitioners who are the Directors of M/s. Uni-Sankyo Ltd., a registered company have filed this petition for quashing the complaint in Criminal Case No. 47 of 1992 filed by the respondent State in the Court of JMFC, Khed, Dist. Ratnagiri and the process issued therein under the provisions of the Drugs and Cosmetics Act, 1940.
2. The registered company by name Uni-Sankyo Ltd. was engaged in the business of manufacture and sale of pharmaceutical products. On 16th March, 1991 the Drug Inspector B.R. Masal visited the premises of M/s Tirupati Medical Stores and had drawn the sample of Sporlac Tablets S.No. L.P. 011016 mfg. date June 90 expiry date May 92 manufactured by M/s Uni-Sankyo Ltd. The said company is having its address at Plot No. B 4, M.I.D.C., Lote Parshuram, Tal. Khed, Dist. Ratnagiri which is original accused No. 8. The said sample was drawn for test and analysis as per the procedure laid down in section 28 of the Act and issued intimation in form No. 17. One part of the seated sample was given to the firm M/s. Tirupati Medical Stores against the Credit Memo and the price was subsequently paid on 26th March, 1991 against receipt No. 2426. On 18th March, 1991 the part of the sealed sample was sent along with the specimen seal to the Government analyst, Drug Control Laboratory, Maharashtra State, Bandra (East), Bombay 400051. The Government analyst gave his report bearing No. M-1826/91 dated 22nd July, 1991 in Form No. 13 reporting that the drug in question was not of standard quality as defined in the Act and rules thereunder. As per the report the content of Lactobacillus Sporogen in the sample was less than the labelled amount (35%) as each tablet contained 21 million organisions of Lactobacillus spares which is 35% of the labelled amount. The copy of the said report was sent to the Medical Store on 9-8-1991 asking them to disclose the name of the firm from whom they bought the drugs in question. The medical store revealed that they had purchased the drug in question from M/s Padmashree Medical Distributors, Pune. Thereafter the copy of the report was sent to the said Distributors. On further enquiries it was revealed that the drug in question was purchased from the Company Uni-Sankyo Ltd. who are the manufacturers. Therefore, copy of the report was sent to the company vide letter dated 13th August, 1991. Thereafter by letter dated 13th February, 1992 the said company was called upon to challenge the report under section 25(3) of the Act. Para 16 of the complaint mentions that though the opportunity was given to challenge the report under section 25(3) of the Act, the company did not avail of that opportunity. This does not appear to be correct. The company had by their letter dated 3rd September, 1991 addressed to the Joint Commissioner, Konkan Division, mentioned that the drug in question was not properly analysed and requested the Joint Commissioner to send the sample to the Government Analytical Laboratory, Bandra for analysis. Accordingly the Joint Commissioner had sent the sample for analysis to Analytical Laboratory at Bandra vide their forwarding letter No. 2124/91/3-A dated 3rd September, 1991. This was mentioned in the company's letter dated 13th September, 1991 addressed to the Joint Commissioner a copy whereof is annexed as Exhibit 'C' to the petition. Pursuant to that, Government analyst had carried out the analysis and by his report dated 23rd March, 1992 opined that the contents of Lactobacillus Sporogens in the sample was within permissible limits. A copy of this report was forwarded to the company by the office of the Government Analyst along with the forwarding letter dated 16-7-1992. Mr. Desai has produced the xerox copies of the said forwarding letter and the report of the Government Analyst in Form No. 13. However, the complaint was filed in the Court by the Drug Inspector on 28-4-1992 i.e. subsequent to the report of the Government Analyst dated 23rd March, 1992 but the complaint is based on the earlier report dated 22nd July, 1991.
3. The said complaint was filed against 11 accused, including the company as accused No. 8 and three directors of the company who have challenged the said complaint in this Court. On the basis of the said complaint the process was issued which is also challenged in this petition.
4. Mr. Desai, learned Counsel appearing on behalf of the petitioners submitted that the petitioners who are the Directors could not have been prosecuted as the requirement of section 34 of the Drugs and Cosmetics Act is not fulfilled. According to him under section 34 of the Act in case of offences by the companies only those persons who are in-charge of and are responsible for the conduct of the business of the company can be prosecuted along with the company. He placed reliance on the recent decision of the Supreme Court in the case of State of Haryana v. Brij Lal Mittal, in which the Supreme Court has held that when there is no allegation to indicate even prima facie that the Directors were in charge of the company and also responsible to the company for the conduct of its business, the prosecution against them was liable to be quashed. It was further observed in para 8 of the judgment that simply because a person is Director of the company it does not necessarily mean that it fulfils the requirement of section 34 of the Act so as to make him liable.
5. In the instant case what is averred in para 2 of the complaint is that accused Nos. 1 to 4 are the Directors of the accused No. 8 Company. It is further averred in para 20 that as per the provisions of section 34 of the Act accused Nos. 1 to 11 were responsible for manufacture, for sale, for distribution and for sale of the drug in question which was not of standard quality and hence committed offence under section 18(a)(i) of the Act. The said averments in the complaint, in my view, do not make out the prima facie case against the petitioners accused who were the Directors of the company and, therefore, the petitioners are not liable for being prosecuted under section 34 for the alleged offence committed by the company.
6. Mr. Desai next contended that even otherwise the complaint is liable to be quashed in view of the subsequent report of the Government Analyst dated 23rd March, 1992 according to which the drug in question was not below the standard quality as it was found that the content of Lactobacillus sporogens in the sample was within permissible limits. Both the earlier report as well as the subsequent report was given by the Government Analyst on the basis of the same sample sent to the Government Laboratory by the office of the complainant. Only the different methods seem to have been adopted for analysis. In view of the report Mr. Desai is right in contending that the complaint itself is not maintainable and the criminal case filed in the trial Court is liable to be quashed.
7. Though the petition has been filed as far back as in the year 1992 and apart from the State of Maharashtra, the Drug Inspector himself has been made party to this petition as respondent No. 1 and was served long ago, however, till this date no reply affidavit is filed contesting or controverting the averments made in the petition nor the learned A.P.P. appearing in the matter has been able to assail the arguments advanced on behalf of the petitioners on either of the two grounds, that the petitioners Directors could not be prosecuted by virtue of section 34 of the Act and that the subsequent report of the Government Analyst regarding the same sample showed the sample to be of standard quality.
8. Mr. Desai submits that in view of the fact that the subsequent report of the Government Analyst showed that the drug in question was not of substandard quality the prosecution is liable to be quashed against the company and consequently against all the accused though they have not challenged the prosecution. He relies on the decision of the Division Bench of this Court in the case of Esso. Standard Inc. v. Udharam Bhagwandas Japanwalla, reported in 1973 Mh.L.J. 1022 : 75 B.L.R. 417. In that case the company had challenged the prosecution filed against the company and its Directors in this Court by filing writ petition, under its inherent powers. When the Division Bench of this Court found that the company had not committed offence of cheating it was held that the entire proceedings against the applicant as well as other accused pending in the Court of the Presidency Magistrate was liable to be quashed and all the accused were discharged. In view of the fact that the drug in question was not found to be of substandard quality in the instant case and there is no reason for me to doubt the xerox copy of the report produced about which reference is made in the petition itself that the drug was found to be of standard quality, the entire complaint is liable to be quashed in terms of prayer Clauses (a) and (b) of the petition and discharge all the accused including those who are not party to this petition.
9. In the result the petition is allowed. Rule is made absolute in terms of prayer Clauses (a) and (b) of the petition.
10. Petition allowed.