Jammu & Kashmir High Court
Rajesh Kumar And Anr. vs Drug Inspector Kishtwar on 22 September, 2017
Author: Sanjay Kumar Gupta
Bench: Sanjay Kumar Gupta
HIGH COURT OF JAMMU AND KASHMIR
AT JAMMU
Case: 561-A Cr.P.C. No.333/2015 & MP No.01/2015
Date of Decision:22.09.2017
Rajesh Kumar and anr. Vs. Drug Inspector Kishtwar
Coram:
Hon'ble Mr. Justice Sanjay Kumar Gupta
Appearing counsel:
For the petitioner(s) : Mr. Varut Kumar Gupta, Advocate.
For the respondent(s) : None.
i. Whether approved for reporting in Press/Media : Yes/No/Optional ii. Whether to be reported in Digest/Journal : Yes/No
1. Through the medium of instant petition under Section 561-A Cr.P.C., petitioners seek quashing of all proceedings in File No.48/A Complaint of 2013 titled Drugs Inspector Kishtwar Vs. Proprietor/competent person Maheep Singh Bijral & anr. under Section 18(a)(i) read with Section 27(d) and Section 18-A & 18-B of Drugs and Cosmetics Act, 1940 pending before the Court of learned Chief Judicial Magistrate, Kishtwar.
2. It is submitted in the petition that the petitioners are filing the present petition jointly inasmuch as the facts leading to the filing of the petition available to petitioners are same and identical, and the legal & factual grounds on which petition has been filed are also same and identical as also the relief prayed for in the present petition is identical.
3. In the petition, it is submitted that the petitioners are partners in a partnership concern namely M/s R. H. Laboratories having its registered 561-A Cr.P.C. No.333/2015 Page 1 of 10 office and place of business/manufacturing unit situated at Opp. Gondpur, Industrial Estate Area, Paonta Sahib, Himachal Pradesh. The partnership firm M/s R. H. Laboratories has acquired one manufacturing licence being Licence Nos.MNB/05/180 & MB/05/181 (Form Nos.25 & 28) for manufacturing, sale and distribution of drugs under Drugs and Cosmetics Act, 1940 from the State Drug Licensing Authority Himachal Pradesh. The said licence was duly renewed from time to time and the Firm had provided the list of Technical Staff/persons under whose supervision and directions, various drugs are being manufactured.
4. It is pleaded that the respondent/complainant has filed a criminal complaint under Section 18(a)(i) read with Section 27(d) of Drugs and Cosmetics Act, 1940 against the petitioners alleging to be Managing Directors of M/s R. H. Laboratories and also against one Mahdeep Singh Bijral (M/s Winner Pharmaceuticals) arrayed him as accused No.1 in the said complaint.
5. In the petition, it is stated that on 24.04.2013, respondent/complainant lifted the sample of drug "Curecef 1000" from the premises of District Hospital Kishtwar for test analysis and the details of drugs in question are as under:-
Drug in question : Curecef 1000
Batch No. : RHI-11/06
Date of Mfg. : 11/2011
Exp. Dt. : 10/2013
Manufactured by : M/s R. H. Laboratories
6. That one sample portion of drug in question was sent to Govt. Analyst, Kishtwar for test and analysis vide Form No.18 and the Government Analyst Kishtwar vide its Report dated 30.07.2013 has declared the drug in question Not of Standard Quality due to the reason that the sample fails in the test for particular matter. The respondent asked District Hospital Kishtwar authorities to disclose the source of purchase of drug in question 561-A Cr.P.C. No.333/2015 Page 2 of 10 and in reply District Hospital Kishtwar disclosed the name of Controller Stores, Provincial Medical Stores, Jammu as the source of purchase and supply, who in turn, disclosed the name of M/s Winner Pharmaceuticals as the source of purchase of drug and supply. Further, M/s Winner Pharmaceuticals gave the name of M/s R. H. Laboratories as the manufacturer of the drug under subject.
7. It is submitted that as stated in the complaint that the respondent has issued letter to Managing Director M/s R. H. Laboratories, but neither the partnership firm nor its partners have received any such letter from the respondent. That respondent has filed criminal complaint against the petitioners before the Court below and petitioners have caused their appearance before the Court and furnished bail bonds. The respondent has alleged wrong penal sections in the impugned complaint as the offence alleged to have been committed pertains to not of standard quality and the same is punishable under Section 27(d) of the Act and not under Section 27(a).
8. Being aggrieved and dissatisfied with the initiation of impugned proceedings pending before the Court of CJM Kishtwar in complaint titled Drugs Inspector Kishtwar Vs. Proprietor/competent person Maheep Singh Bijral & anr., petitioners challenge the same, inter alia, on the ground that the proceedings initiated against the petitioners by way of filing of impugned complaint are against the provisions of Drugs and Cosmetics Act, 1940, hence require to be quashed. That the impugned complaint is liable to be set aside against the petitioners on the ground that it involves settled position of law 'that in absence of Partnership Firm being arrayed as accused in complaint, the complaint against partners does not lie'. That the respondent has not arrayed the partnership firm (M/s R. H. Laboratories) as an accused in the impugned complaint nor there any allegation against the firm. That on the plain reading of Section 34 of the 561-A Cr.P.C. No.333/2015 Page 3 of 10 Drugs and Cosmetics Act, 1940, if a person who commits an offence under the Act is a Company, the Company as well as every person in charge of and responsible to the Company for the conduct of business of the Company at time of commission of offence is deemed to be guilty of the offence. That the impugned complaint is liable to be set aside on the ground that the respondent has failed to establish extent of liability against the petitioners/partners in terms of Section 34 of Drugs and Cosmetics Act, 1940. That the mandate of Section 34 of the Drugs and Cosmetics Act, 1940 provides that the liability arises on account of conduct, act or omission on the part of a person and not merely on account of holding an office or a position in a company/firm. That the respondent must disclose the necessary facts/averments which makes a person liable and there must be clear, unambiguous and specific allegations against the persons who are impleaded as accused that they were in charge and responsible to the company/firm in the conduct of its manufacturing activities and sale thereof and day-to-day business of the company/firm when the offence was committed. That no Drug Inspector has been appointed in terms of Section 21 of the Act for the post of Drugs Inspector Kishtwar and no notification has been issued in the official Gazette issued by Govt. of J&K indicating the area of exercise at the time when the sampling and investigation has been conducted by respondent. The impugned complaint is liable to be set aside on the ground that the petitioners were denied statutory right of adducing evidence against the report of Government Analyst under Section 25(3) of the Act.
9. Heard learned counsel for the petitioners and considered the law on the subject. There is no representation on behalf of respondent-State.
10. I have considered the rival contentions and also gone through the law on the subject. Learned counsel for petitioners has relied upon 2011 (1) SCC (Cr.) 195 case titled State of NCT of Delhi v. Rajiv Khurana.
561-A Cr.P.C. No.333/2015 Page 4 of 1011. From the perusal complaint it is evident that respondent state through Drug Inspector has filed complaint u/s 18A read with section 27-D of Drugs and Cosmetic Act against petitioners both partners of M/s R. H. Laboratories at Opp. Gondpur Industrial Estate Area, Paonta Sahib, HP and proprietor M/S Winner Pharmaceuticals through proprietor Maheet Singh before CJM Kishtwar on the ground that sample of CURECEF 1000 injection batch no. RHI-11/06 lifted from District Hospital Kishtwar was found not of standard quality.
12. One of the ground taken is that as Section 34 of the Drugs and Cosmetics Act, 1940, if a person who commits an offence under the Act is a Company, the Company as well as every person in charge of and responsible to the Company for the conduct of business of the Company at time of commission of offence is deemed to be guilty of the offence and in present case there is no such averments.
13. Section 34 in the Drugs and Cosmetics Act, 1940 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--561-A Cr.P.C. No.333/2015 Page 5 of 10
(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."
14. Bare perusal of this Section 34 makes it clear that if the offence is committed by the company, in addition to the company, the other categories of persons enumerated therein can also be prosecuted, if it is shown that such person was in charge of and was responsible to the company for the conduct of the business of the company. Therefore, to prosecute the other categories of persons as enumerated under Section 34 of the Act, the condition precedent is that such person must have been in charge of, and was responsible to the Company for the conduct of the business of the Company. For that purpose, there should be specific averments made in the complaint. I have carefully fully gone through each and every contents of complaint. On the basis of the facts of the case on hand, it is found that there were no averments to show that these two petitioners were in charge and were responsible to the company for the conduct of the business of the company. Thus, there is no compliance of the requirement of Section 34(1) of the Act. In the absence of any such averments as required by Section 34(1) of the Act, the prosecution cannot be launched.
15. In 2011 (1) SCC (Cr) 195 case titled State of NCT of Delhi v. Rajiv Khurana, wherein it is held as under:-
"12. In Municipal Corporation of Delhi v. Ram Kishan Rohtagi & Others (1983) 1 SCC 1, the Food Inspector, Municipal Corporation filed a complaint before the Metropolitan Magistrate against the respondents alleging commission of offence under Sections 5/7, Prevention of Food Adulteration Act as the sample of food article (Morton toffees) manufactured by the Company (respondent 5) had been found by the Public Analyst to be not of the prescribed standard. The Inspector alleged in the complaint that the accused- respondents were Manager (respondent 1) and Directors (respondent 2 to 4) of the 561-A Cr.P.C. No.333/2015 Page 6 of 10 Company (respondent 5) "and as such they were incharge of and responsible for the conduct of business of accused 2 (the Company) at the time of sampling". Pursuant to the complaint the proceedings against the respondents were commenced. But the High Court quashed the proceedings against all the respondents under Section 482, Cr.P.C. on the ground that the complaint did not disclose any offence.
13. In State of Haryana v. Brij Lal Mittal & Others (1998) 5 SCC 343, it was held 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 incharge 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 incharge 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 incharge of the company and also responsible to the company for the conduct of its business
14. K.P.G. Nair v. Jindal Menthol India Ltd. (2001) 10 SCC 218 was a case of this court under the Negotiable Instruments Act, 1881 and it was found that the allegations in the complaint did not either in express words or with reference to the allegations contained therein make out a case that at the time of commission of the offence the appellant was in charge of and was responsible to the company for the conduct of its business. It was held that the requirements of Section 141 of the Negotiable Instruments Act, 1881 were not met and the complaint against the accused was quashed. The same view has been taken in Katta Sujatha (Smt.) v. Fertilizers & Chemicals Travancore Ltd. & Another (2002) 7 SCC 655.
15. The respondent placed reliance on the case of S.M.S. Pharmaceuticals Ltd. (supra), wherein this Court has held as under:
"19. In view of the above discussion, our answers to the questions posed in the reference are as under:
(a) It is necessary to specifically aver in a complaint under Section 141 that at the time the offence was 561-A Cr.P.C. No.333/2015 Page 7 of 10 committed, the person accused was in charge of, and responsible for the conduct of business of the company.
This averment is an essential requirement of Section 141 and has to be made in a complaint. Without this averment being made in a complaint, the requirements of Section 141 cannot be said to be satisfied.
(b) The answer to the question posed in sub- para (b) has to be in the negative. Merely being a director of a company is not sufficient to make the person liable under Section 141 of the Act. A director in a company cannot be deemed to be in charge of and responsible to the company for the conduct of its business. The requirement of Section 141 is that the person sought to be made liable should be in charge of and responsible for the conduct of the business of the company at the relevant time. This has to be averred as a fact as there is no deemed liability of a director in such cases.
(c) The answer to Question (c) has to be in the affirmative. The question notes that the managing director or joint managing director would be admittedly in charge of the company and responsible to the company for the conduct of its business. When that is so, holders of such positions in a company become liable under Section 141of the Act. By virtue of the office they hold as managing director or joint managing director, these persons are in charge of and responsible for the conduct of business of the company. Therefore, they get covered under Section 141. So far as the signatory of a cheque which is dishonoured is concerned, he is clearly responsible for the incriminating act and will be covered under sub- section (2) of Section 141."
16. In Sabitha Ramamurthy and Another v. R.B.S. Channabasavaradhya (2006) 10 SCC 581 this court held there was absence of requisite averments in the complaint not containing any statement that the appellants were in charge of the business of the company at the material time. The statement of witness also did not specifically allege that the appellants were in charge of the business of the company. This Court held that requirement of section 141 of the Negotiable Instruments Act was not complied with and the complaint was liable to be quashed.
17. In K.K. Ahuja v. V.K. Vora and Another (2009) 10 SCC 48, this court observed that the averment in a complaint that an 561-A Cr.P.C. No.333/2015 Page 8 of 10 accused is a director and that he is in charge of and is responsible to the company for the conduct of the business of the company, duly affirmed in the sworn statement, may be sufficient for the purpose of issuing summons to him. But if the accused is not one of the persons who falls under the category of 'persons who are responsible to the company for the conduct of the business of the company', then merely by stating that 'he was in charge of the business of the company' or by stating that 'he was in charge of the day to day management of the company' or by stating that he was in charge of, and was responsible to the company for the conduct of the business of the company', he cannot be made vicariously liable under Section 141(1) of the Act.
18. The ratio of all these cases is that the complainant is required to state in the complaint how a Director who is sought to be made an accused, was in charge of the business of the company or responsible for the conduct of company's business. Every Director need not be and is not in charge of the business of the company. If that is the position with regard to a Director, it is needless to emphasise that in the case of non-Director officers, there is all the more necessary to state what were his duties and responsibilities in the conduct of business of the company and how and in what manner he is responsible or liable.
19---
20. The court further observed that the trauma, harassment and hardship of the criminal proceedings in such cases may be more serious than the ultimate punishment, it is not proper to subject all and sundry to be impleaded as accused in a complaint against a company, even when the requirements of section 138 read with section 141 of the Act are not fulfilled.
21. The legal position which emerges from a series of judgments is clear and consistent that it is imperative to specifically aver in the complaint that the accused was in charge of and was responsible for the conduct of business of the company. Unless clear averments are specifically incorporated in the complaint, the respondent cannot be compelled to face the rigmarole of a criminal trial."
16. In above law cited, it has been held by Hon'ble Apex Court that compliance of section 34 of Act is mandatory.
561-A Cr.P.C. No.333/2015 Page 9 of 1017. In view of what has been discussed above and law on the point, this petition is accepted and all proceedings in File No.48/A Complaint of 2013 titled Drugs Inspector Kishtwar Vs. Proprietor/competent person Maheep Singh Bijral & anr. under Section 18(a)(i) read with Section 27(d) of Drugs and Cosmetics Act, 1940 pending before the Court of learned Chief Judicial Magistrate, Kishtwar, are quashed. Copy of this order be sent to Court below.
(Sanjay Kumar Gupta) Judge Jammu, 22.09.2017 Narinder 561-A Cr.P.C. No.333/2015 Page 10 of 10