Jharkhand High Court
Roshan Lal Goyal vs The State Of Jharkhand on 28 April, 2022
Author: Sanjay Kumar Dwivedi
Bench: Sanjay Kumar Dwivedi
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IN THE HIGH COURT OF JHARKHAND, RANCHI
Cr.M.P. No. 2580 of 2016
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1.Roshan Lal Goyal, son of Shri Balraj Kumar Goyal, Director of M/s Maiden Pharmaceuticals Limited, resident of BJ-3, West Shalimar Bagh, PO and PS Shalimar Bagh, District New Delhi (New Delhi)
2.Mr. Naresh Kumar Goyal, son of Shri Balraj Kumar Goyal, Director of M/s Maiden Pharmaceuticals Limited, resident of 326, Kohat Enclave Pitam Pura, PO and PS Pitam Pura, District Delhi (New Delhi)
3.Mr. Vinay Kumar Goyal, son of Shri Balraj Kumar Goyal, Director of M/s Maiden Pharmaceuticals Limited, resident of BJ-3, West Shalimar Bagh, PO and PS Shalimar Bagh, District New Delhi (New Delhi)
4.Mr. Vinod Kumar Goyal @ Vinod Gopal, son of Shri Balraj Kumar Goyal, Director of M/s Maiden Pharmaceuticals Limited, resident of BJ-3, West Shalimar Bagh, PO and PS Shalimar Bagh, District New Delhi (New Delhi)
5.Mr. Mahender Kumar Sharma, son of Shri Bijendra Nath Sharma, Director of M/s Maiden Pharmaceuticals Limited, resident of 17/502, East End Apartment, Mayur Vihar, Phase-I, PO and PS Mayur Vihar, District Delhi (New Delhi ..... Petitioners
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1.The State of Jharkhand
2.Drug Inspector, Singhbhum East/Singhbhum West/ Seraikella- Kharsawan, PO and PS Seraikella -Kharsawan, District Seraikella - Kharsawan, Department of Health, Government of Jharkhand ...... Opposite Parties
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CORAM: HON'BLE MR. JUSTICE SANJAY KUMAR DWIVEDI
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For the Petitioners :- Mr. Rohan Mazumdar, Advocate For the State :- Mr. Ashok Kumar, AAG-IV
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4/28.04.2022 This petition has been filed for quashing the entire criminal proceeding as well as the order dated 13.12.2013 passed by the learned Chief Judicial Magistrate at Chaibasa in connection with Complaint Case being C/7-86 of 2013 whereby learned court has been pleased to find a prima facie case under sections 27(D), 18(a)(i) of the Drugs and Cosmetics Act, 1940 against the petitioners and accordingly took cognizance of the said offence and issued summons to the petitioners to face trial, pending in the court learned Chief Judicial Magistrate, at Chaibasa.
The complaint has been filed by the Drug Inspector alleging therein that on 28.02.2014 in presence of Child Development and Project Officer, Khuntipani, Store of M/s Aushadhi Bhandar, ICDS Project, Khuntipani, West Singhbhum was inspected and sample of Paracetamol 2 syrup I.P, B.No.ML12-017 was collected for its examination. The sample was sent to Govt. Analyst, State Medicine Test Laboratory, Namkum, Ranchi, where the chemical examination of the said sample was done and the report dated 22.3.2013 was received and the sample was found not of standard quality as the oral liquid was not homogenous, which duly informed to the CDPO, Khuntipani, Singhbhum West and she was requested to make available the sale register of the said medicine and she was further requested to stop the sale/distribution/use of the said medicine. On 10.05.2013, the representative of the medicine manufacturer company had received a part of the sealed sample. M/s HLL Life Care Limited, Bekar Bandh, Gupteshwar Complex, Dhanbad on 31.03.2013 had provided the required document to the complainant. The manufacturing and distribution of the sub-standard medicine is hazardous and cognizable offence and therefore the present case has been lodged against the accused persons.
Mr. Mazumdar, the learned counsel for the petitioners submits that lodging of the complaint, the learned CJM, Chaibasa has taken cognizance under sections 27(D), 18(a)(i) of the Drugs and Cosmetics Act, 1940 against the petitioners. He further submits that the petitioners are the Directors of M/s Maiden Pharmaceuticals Limited. He submits that there is no averments on the allegation in the complaint against the petitioners who are the Directors of the said company/firm. He submits that in view of section 34 of the Drugs and Cosmetics Act, 1940 (hereinafter referred to be as the Act.), the persons who are Incharge and looking after the day to day affairs of the company is only required to be prosecuted. He submits that there is no averments in this regard. In the complaint there is no averments that the petitioners are looking after the day to day affairs of the company. To buttress this argument he relied in the case of State of Haryana v. Brij Lal Mittal and Others, (1998) 5 SCC 343 and relied on paragraph no. 8 of the said judgment which is 3 quoted hereinbelow:
"8. Nonetheless, we find that the impugned judgment of the High Court has got to be upheld for an altogether different reason. Admittedly, the three respondents were being prosecuted as directors of the manufacturers with the aid of Section 34(1) of the Act which reads as under:
"34. Offences by companies.--(1) Where an offence under this Act has been committed by a company, every person who at the time the offence was committed, was in charge of, and was responsible to the company for the conduct of the business of the company, as well as the company shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly:
Provided that nothing contained in this sub-section shall render any such person liable to any punishment provided in this Act if he proves that the offence was committed without his knowledge or that he exercised all due diligence to prevent the commission of such offence."
It is thus seen that the vicarious liability of a person for being prosecuted for an offence 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."
He further submits that the company is not made an accused and in absence of the company being made an accused in the complaint, the vicarious liability cannot be fastened against the petitioners who are the Directors of the company. To buttress his argument, he relied in the case of Sunil Bharti Mittal v. Central Bureau of Investigation, (2015) 4 SCC 609, paragraph nos. 42, 43, 44 and 48 of the said judgment are quoted hereinbelow:
"42. No doubt, a corporate entity is an artificial person which acts through its officers, Directors, Managing Director, Chairman, etc. If such a company commits an 4 offence involving mens rea, it would normally be the intent and action of that individual who would act on behalf of the company. It would be more so, when the criminal act is that of conspiracy. However, at the same time, it is the cardinal principle of criminal jurisprudence that there is no vicarious liability unless the statute specifically provides so.
43. Thus, an individual who has perpetrated the commission of an offence on behalf of a company can be made an accused, along with the company, if there is sufficient evidence of his active role coupled with criminal intent. Second situation in which he can be implicated is in those cases where the statutory regime itself attracts the doctrine of vicarious liability, by specifically incorporating such a provision.
44. When the company is the offender, vicarious liability of the Directors cannot be imputed automatically, in the absence of any statutory provision to this effect. One such example is Section 141 of the Negotiable Instruments Act, 1881. In Aneeta Hada, the Court noted that if a group of persons that guide the business of the company have the criminal intent, that would be imputed to the body corporate and it is in this backdrop, Section 141 of the Negotiable Instruments Act has to be understood. Such a position is, therefore, because of statutory intendment making it a deeming fiction. Here also, the principle of "alter ego", was applied only in one direction, namely, where a group of persons that guide the business had criminal intent, that is to be imputed to the body corporate and not the vice versa. Otherwise, there has to be a specific act attributed to the Director or any other person allegedly in control and management of the company, to the effect that such a person was responsible for the acts committed by or on behalf of the company.
48. Sine qua non for taking cognizance of the offence is the application of mind by the Magistrate and his satisfaction that the allegations, if proved, would constitute an offence. It is, therefore, imperative that on a complaint or on a police report, the Magistrate is bound to consider the question as to whether the same discloses commission of an offence and is required to form such an opinion in this respect. When he does so and decides to issue process, he shall be said to have taken cognizance. At the stage of taking cognizance, the only consideration before the court remains to consider judiciously whether the material on which the prosecution proposes to prosecute the accused brings out a prima facie case or not."
On the same point he further relied in the case of Shiv Kumar Jatia v. State of NCT of Delhi, (2019) 17 SCC 193 and relied on paragraph nos.21 and 22 of the said judgment which are quoted hereinbelow: 5
"21. By applying the ratio laid down by this Court in Sunil Bharti Mittal3 it is clear that an individual either as a Director or a Managing Director or Chairman of the company can be made an accused, along with the company, only if there is sufficient material to prove his active role coupled with the criminal intent. Further the criminal intent alleged must have direct nexus with the accused. Further in Maksud Saiyed v. State of Gujarat this Court has examined the vicarious liability of Directors for the charges levelled against the Company. In the aforesaid judgment this Court has held that, the Penal Code does not contain any provision for attaching vicarious liability on the part of the Managing Director or the Directors of the Company, when the accused is a company. It is held that vicarious liability of the Managing Director and Director would arise provided any provision exists in that behalf in the statute. It is further held that statutes indisputably must provide fixing such vicarious liability. It is also held that, even for the said purpose, it is obligatory on the part of the complainant to make requisite allegations which would attract the provisions constituting vicarious liability.
22. In the judgment of this Court in Sharad Kumar Sanghi v. Sangita Rane while examining the allegations made against the Managing Director of a Company, in which, company was not made a party, this Court has held that when the allegations made against the Managing Director are vague in nature, same can be the ground for quashing the proceedings under Section 482 CrPC. In the case on hand principally the allegations are made against the first accused company which runs Hotel Hyatt Regency. At the same time, the Managing Director of such company who is Accused 2 is a party by making vague allegations that he was attending all the meetings of the company and various decisions were being taken under his signatures. Applying the ratio laid down in the aforesaid cases, it is clear that principally the allegations are made only against the company and other staff members who are incharge of day-to-day affairs of the company. In the absence of specific allegations against the Managing Director of the company and having regard to nature of allegations made which are vague in nature, we are of the view that it is a fit case for quashing the proceedings, so far as the Managing Director is concerned."
He submits that under section 34 of the said Act the petitioners are not vicariously liable as the company is not made accused and in view of the above judgments, this petition is fit to be allowed.
Per contra, Mr. Ashok Kumar, the learned counsel appearing for the respondent State submits that in view of section 34 of said Act 6 whereunder the offence under this Act is committed by any person when the offence was committed and was the Incharge and responsible for the company for conduct of the day to day affairs of the company as well as the company shall be deemed to be liable and punished accordingly. He submits that in the identical situation, the Hon'ble Supreme Court in the case of Dinesh B.Patel and Others v. State of Gujarat and Another, (2010) 11 SCC 125 has not interfered. He relied on paragraph no.10 of the said judgment which is quoted hereinbelow:
"10. Under the peculiar circumstances of this case and realising the seriousness of the allegations, we would not take a technical view based on pleadings in the complaint. Mr Raichura contended that as per the settled law by this Court in complaints under Section 138 of the Negotiable Instruments Act, 1881 against a company and its directors also specific averment about the active role of directors in running the company has to be made, failing which the directors cannot be proceeded against. The same logic should apply even in the present case. We cannot agree. Firstly, the language of Section 34(2) of the Act substantially differs from the language of Section 141 of the Negotiable Instruments Act. Secondly, here we are dealing with an offence which has a direct impact on public health. We, therefore, would choose not to interfere with the order of the High Court. It will be open for the Directors to show to the trial court that they had nothing to do with the manufacturing process and, therefore, they should not be held liable under Section 34(2) of the Act."
Relying on this judgment, he submits that this case is also arising out of Drugs and Cosmetics Act, 1940 and section 34 of the said Act was considered by the Hon'ble Supreme Court and looking to this judgment, this petition is fit to be dismissed.
The Court has gone through the materials on record. On perusal of the complaint petition contained in Annexure-1, which has been minutely placed by the learned counsel for the petitioners and the Court has also read the same along with the learned counsel for the petitioners as well as the O.P.No.2 and finds that there is no averment in the entire complaint about the role played by these petitioners who are the Directors of M/s Maiden Pharmaceuticals Limited. For correct 7 appreciation, section 34 of the Cosmetics and Pharmaceuticals Act is quoted below:
'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.
On a plane reading of the said section, it appears that vicarious liability on a person is prescribed for an offence committed under the Act by a company arises if at material time he was Incharge and was also responsible for the day to day affairs of the company. In the entire complaint, there is no averment as to what are the role played by these petitioners who happened to be Directors of the said company. If the company is responsible, the law is well settled that the company is required to be made accused in the case and in the case in hand the company has not been made an accused and the case of the petitioners is covered in the light of the judgment of Hon'ble Supreme Court in the cases of 'State of Haryana v. Brij Lal Mittal and Others' and 'Shiv Kumar Jatia v. State of NCT of Delhi' (supra). The judgment relied by Mr. Ashok 8 Kumar, the learned counsel for the respondent State, the facts are distinguishable. In the case relied by the learned counsel for the respondent State, there are direct allegation against the petitioners of that case which has been considered at paragraph no.9 of the said judgment. Moreover, the allegation in that case was of growth of fungus in the medicines. In this case, the judgment relied by the learned counsel for the petitioners in the case of State of Haryana v. Brij Lal Mittal (supra) was also considered. The Hon'ble Supreme Court has distinguished the facts of 'Brij Lal Mittal' and 'Dinesh B.Patel and Others v. State of Gujarat and Another'(supra) and has considered in that case and there is no direct allegation in the complaint whereas in the case decided by the Hon'ble Supreme Court, there is direct allegations against the petitioners of that case. On this ground, the Hon'ble Supreme Court has not interfered in that case and the case of the petitioners is fully covered in the light of the judgment in the case of State of Haryana v. Brij Lal Mittal (supra), in the case in hand also there is no direct allegation against the petitioners who happened to be Directors of the company.
In view of the above facts and the reasons and analysis, the entire criminal proceeding as well as the order dated 13.12.2013 passed by the learned Chief Judicial Magistrate at Chaibasa in connection with Complaint Case being C/7-86 of 2013, pending in the court learned Chief Judicial Magistrate, at Chaibasa is hereby quashed.
Cr.M.P.No.2580 of 2016 stands allowed and disposed of.
( Sanjay Kumar Dwivedi, J.) SI/,