Karnataka High Court
Sri Mantena Surendranath vs The State Of Karnataka on 31 August, 2017
Author: Aravind Kumar
Bench: Aravind Kumar
1
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 31ST DAY OF AUGUST, 2017
BEFORE
THE HON'BLE MR.JUSTICE ARAVIND KUMAR
CRIMINAL PETITION NO.3716/2017
BETWEEN:
1. SRI. MANTENA SURENDRANATH
AGED 46 YEARS,
DIRECTOR INCHARGE OF
M/S. MEDPLUS (A UNIT OF
RITEMED PHARMS RETAIL PVT. LTD.)
NO.27, 80 FEET ROAD,
RADHAKRISHNA LAYOUT,
PADMANABHANAGAR,
BENGALURU - 560070
2. SRI.K.SUDHAKAR REDDY
AGED ABOUT 43 YEARS,
SIGNATORY OF M/S MEDPLUS,
(A UNIT OF REITMED PHARMS
RETAIL PVT. LTD.), NO.27,
80 FEET RAOD, RADHAKRISHNA
LAYOUT, PADMANABHANAGAR,
BENGALURU - 560070
...PETITIONERS
(BY SRI. AKKI MANJUNATH GOWDA, ADVOCATE)
AND:
THE STATE OF KARNATAKA
BY ASSISTANT DRUGS CONTROLLER-I,
BENGALURU CIRCLE-4,
BENGALURU - 560 001
...RESPONDENT
2
(BY SRI.S.RACHAIAH, HCGP)
THIS CRIMINAL PETITION IS FILED U/S 482 OF
CR.P.C. PRAYING TO QUASH THE ENTIRE PROCEEDINGS
IN C.C.NO.160/2017 WHICH IS PENDING BEFORE THE
SPECIAL COURT (ECONOMIC OFFENCES), BENGALURU,
REGISTERED BY RESPONDENT AGAINST THE
PETITIONERS.
THIS CRIMINAL PETITION COMING ON FOR
ADMISSION THIS DAY, THE COURT MADE THE
FOLLOWING:
ORDER
Sri. Akki Manjunath Gowda K, learned counsel appearing for petitioners submits that he would not press this petition insofar as second petitioner is concerned. His submission is placed on record.
2. Petitioner who has been arraigned as accused No.2 in C.C.No.160/2017 for the offences punishable under Section 18(a)(vi) and 27(d) of Drugs and Cosmetics Act, 1940 and Rules 65(11-A) and 65(3)(1)(g) of Rules made thereunder, is seeking for quashing of said proceedings.
3. Facts in brief which has led to filing of this petition are as under:
3
Respondent herein filed a complaint before the Special Court for Economic Offences, Bangalore under Section 200 Cr.P.C. alleging that petitioner and three others have committed offences punishable under Section 18(a)(vi), 27(d) of Drugs and Cosmetics Act, 1940 (for short 'the Act') and Rules 65(11-A) and 65(3)(1)(g) of Drugs and Cosmetics Rules (for short 'Rules'), which is punishable under Section 27(d) of the Act contending interalia that on 19.11.2015 Sri.Kempaiah Suresh, Assistant Drugs Controller-I, Bangalore Circle IV, Bangalore, had received a complaint along with copy of prescription of Dr.Suresh.H.S. alleging that accused No.1 on a prescription of a registered medical practioner had sold Schedule H Drug, "Levoday Tablets" instead of "Levopsy Tablets". It is further alleged that on 05.12.2015 Sri.Dattamurthy had given a statement before C.W.1 stating that his wife (C.W.3) had been for medical examination to Dr.Suresh H.S. (C.W.6) and he had prescribed Levopsy 500 Capsules along with other two medicines and accused No.1 had sold Levoday 500 mg 4 Tablets and same having been consumed continuously led to serious health problem and as such, he sought for suitable action being taken against accused persons.
It is also alleged in the complaint that on 29.02.2016, C.W.1 had proceeded to accused No.1- firm and C.W.3 had admitted having sold such tablet and as such after conducting the investigation and seeking permission from the jurisdictional Court, complaint in question came to be lodged.
4. It is the contention of Sri.Akki Manjunath Gowda, learned counsel appearing for petitioner that allegation made by respondent is against accused No.1 - company, the principal offender and there is no direct or indirect allegations by the respondent made against petitioner in the entire complaint. Hence, he seeks for quashing of proceedings initiated against petitioner/accused No.2. He would also submit that accused No.1 is a registered company carrying on the business of chemists & druggists under the trade name "Medplus" and ingredients of Section 34 of the Act is not 5 attracted and hence, continuation of proceedings against first petitioner be quashed.
5. Per contra, Sri.S.Rachaiah, learned HCGP appearing for respondent-State would support the initiation of prosecution against petitioner/accused Nio2 and contends that both petitioners being the Directors of accused No.1 - firm, they are responsible for day-to- day administration and affairs of firm and as such, they have been rightly prosecuted and have been arraigned as accused and as such, he prays for rejection of petition.
6. This Court under identical circumstances had considered the similar plea in Crl.P.No.5392/2017 and by order dated 07.08.2017 had accepted the plea put forward by accused persons therein. After analyzing Section 34 of the Act, it came to be held as under:
"6. A bare reading of sub-section (1) of Section 34 of the Act would indicate that expression "every person who, at the time of offence was committed" is used not without any significance and same would indicate that criminal liability of a Director must be 6 determined on the date the offence alleged to have been committed. In other words, complaint should specify or disclose or indicate that accused persons were responsible for day to day management and affairs of the company and on account of their participation in the said act, it has resulted in an act punishable under the Act and as such, criminal liability is to be fastened on them. Provision contained in Section 34 of the Act clearly stipulates that when the company is an accused and then, persons incharge as well as company would be deemed to be liable for the offence under the Act for such offence. Statutory intendment is clear and unambiguous. Proviso to sub-section (1) would be a complete answer to this proposition namely, it would indicate that nothing contained in sub-section (1) would render any such person liable to any punishment provided under the Act, proves that offence is committed without his knowledge or that he had exercised his due diligence to prevent commission of such offence. To put it differently, if complaint averments does not disclose that persons who have been arraigned as accused were not at the helm of affairs at the time of alleged commission of offence or accused persons were in no way responsible for the day to day administration of the business or allegations made in the complaint does not disclose that persons so accused were directly responsible for the criminal act, in such circumstances, prosecution cannot be heard to contend that merely because the person is a Director of the company would be vicariously liable for 7 all the acts done by any other person who has committed the offence. This proposition is fortified by the view expressed by Hon'ble Apex Court in the case of ANEETA HADA vs M/S.GODFATHER TRAVELS & TOURS PVT. LTD. reported in AIR 2012 SC 2795 vide paragraph 25 & 32 and in the case of HARSHENDRA KUMAR D vs REBATILATA KOLEY ETC. reported in AIR 2011 SC 1090 vide paragraph 15."
7. Petitioner herein would be similarly placed as that of first petitioner therein and it would be benefit to note that allegations made in the complaint and particularly allegations made against first petitioner, who has been arraigned as accused No.2, reads as under:
"20. That on 23/11/2016, CW1 issued Notices U/s 18-A, 18B of the Act and rules thereunder to A2, to submit the purchase details and sales bills for the drugs sold under their sale bills bearing No.20151602347035915 dated 25.09.2015 which was sold to CW3 on a prescription of Registered Medical Practitioner.
21. That on 29/11/2016 CW1 sought permission from Drugs Controller to launch prosecution against the Accused A1, A2, A3, and A4 for contravening the provisions of Drugs and Cosmetics Act, 1940 and Rules thereunder.8
a) That on 24/01/2017 the Drugs Controller granted permission to launch prosecution against the Accused A1, A2, A3, and A4 in violation of Section 18(a)(vi) read with Rule 65(11-A) and 65(3)(1)(g) which is punishable under Section 27(d) respectively.
22. From the investigation it is established that,
b) A1Med Plus (Unit of Ritemed Pharma Retail Pvt Ltd.) No-27, 80 Feet Road, Radhakrishna Layout, Revenue Layout, Padmanabhanagar, Bangalore-70 have sold the drug Levoday 500mg Tablets by substitution of (Schedule H Drug) instead of Levopsy 500 mg on a prescription of RMP in the presence of Registered Pharmacist in violation of Section 18(a)(vi) read with Rule 65(11-A) and 65(3)(1)(g) which is punishable under Section 27(d) respectively.
c) A2 Sri. Mantena Surendranath, Director Incharge of A1 Hence any offence committed by the firm is on his behalf. On 29/03/2014, A1 has sold Levoday 500mg Tablets by substitution (Schedule H Drug) instead of Levopsy 500 on a prescription of RMP in the presence of Registered medical practitioner in violation of Section 18(a)(vi) read with Rule 65(11-A) 65(3)(1)(g) which is punishable under Section 27(d) respectively."
8. A bare reading of these allegations made in the complaint cannot be construed that petitioner as 9 Director of accused No.1 - firm, was either in-charge of day-to-day affairs of firm or he had dispensed with the drug prohibited under the Act and on account of his participation and supervision it has been sold. Merely because petitioner is a Director of accused No.1 - firm/company ipso facto does not make his act a criminal liability or to fix the vicarious liability on him and as such, this Court is of the considered view that proceedings initiated against petitioner cannot be sustained or continuation of same would be an abuse of process of law.
9. Thus, taking into consideration the above referred order passed on 07.08.2017 and the fact that Section 34 of the Act would disclose that criminal liability can be fastened on a Director of a company, where company is arraigned as accused only in the event of such Director being responsible for the day-to- day administration and affairs of the said company, it cannot be gainsaid by prosecution that petitioners herein would be liable to be prosecuted. In fact, 10 complaint itself should specify and indicate the acts of such Directors in carrying on the business or activity of the company/firm and which had resulted in their participation in the criminal act, which would ultimately be liable to be punished under the Act on account of their vicarious liability. In the absence of such allegation in the complaint and the complaint in question itself disclosing that accused No.4 was in- charge and was the qualified person to sell the Schedule Drug, continuation of proceedings against the first petitioner, who is only a director of the firm, particularly when he was not in-charge of day-to-day affairs of the firm and had not participated in the act of selling Schedule Drug, this Court is of the considered view that continuation of proceedings against petitioner would be an exercise in futility and it would not sub-serve the ends of justice. On the other hand, continuation of proceedings against petitioner would be an abuse of process of law.
Hence, I proceed to pass the following: 11
ORDER
(i) Criminal petition is hereby allowed.
(ii) Proceedings in C.C.No.160/2017 pending on the file of Special Court for Economic Offences, Banglaore, insofar as first petitioner is concerned, is hereby quashed.
(iii) Petitioner is acquitted of charges of violation of offences under Section 18(a)(vi) of Drugs and Cosmetics Act, 1940 and Rule 65(11-A) and 65(3)(1)(g) of Rules made thereunder.
SD/-
JUDGE DR