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Rajasthan High Court · body

2011 DIGILAW 1666 (RAJ)

Vaikuntha Pandurang Prabhu v. State of Rajasthan

2011-08-09

SANDEEP MEHTA

body2011
Hon'ble MEHTA, J.—The present petition u/S. 482 Cr.P.C. has been filed, challenging the order dated 9th July, 2003 passed by the learned Chief Judicial Magistrate, Jaipur in Criminal Complaint No. 1819/2003, whereby the learned Magistrate has taken cognizance against the petitioners for the offence under Sections 16(1)(a) and 18(a)(i) read with Section 17(i), 17(A)(i), 17(B)(d) and Section 27(a) and 27(d) of the Drugs and Cosmetics Act, 1940 (for short, "the Drugs Act"). 2. Assailing the order taking cognizance as well as the complaint filed against the petitioners, learned counsel for the petitioners has vehemently submitted that in this case the medicines had been called back by the manufacturer because of some defects being found in the same batch number at Maharashtra and admittedly, the medicines were lying in the godown of M/s. Agarwal Brothers after having been received back from M/s. Khunteta Medicals, Laxmangarh. It has been submitted that the medicines were not kept for sale, but had been kept in the godown in pursuance of the recall of the medicines at the directions of the manufacturer. It has also been submitted that there was no sale of medicines to the Drug Inspector for the purposes of giving sample for the proposed prosecution and the Inspection Report dated 25.9.1996 discloses this fact that the price for the medicines were neither tendered nor charged. It has also been submitted that as per the report of the Government Analyst (State Government Analyst) the manufacturing date of the medicines was June 1995 and the expiry date thereof was October, 2000. It has been submitted that the report of the Analyst was prepared on 23rd September, 1996. Thereafter, the Drug Inspector requested for prosecution sanction, which was granted on 15.12.1998 and thereafter a complaint came to be filed in the Court on 9.7.2003. It has been submitted that no intimation within the expiry period of the drug was given to any person who was entitled to challenge the report of the Government Analyst for the purpose of having the same analyzed by the Central Drugs Testing Laboratory and as such the right of the accused to challenge the report as per the mandatory provisions of Section 25(4) of the Drugs Act was defeated. 3. 3. Lastly, it has been submitted that a bare reading of the complaint discloses that the complainant sets out the names of the persons who were responsible for the day to day affairs of the Company/firm sought to be prosecuted, but no such allegations have been made against the petitioners are simply the employees of M/s. Boehringer Mannheim India Ltd and were not concerned with the day to day affairs of the company, as such, their prosecution is perse illegal. 4. Learned counsel for the petitioner has placed reliance on the judgments of the Hon'ble Apex Court in Medicamen Biotech Limited vs. Rubina Bose, Drug Inspector, reported in (2008) 7 SCC 196 , for the purposes of showing that once the complaint was filed just near to the time when the shelf life of the seized medicines was to expire, then also the prosecution could not be permitted as there would be violation of the right of the accused to have the second sample examined by the Central Drugs Testing Laboratory. Counsel for the petitioners has also submitted that the report of the Analyst could only be read against the accused when the procedure established u/S. 23 of the Drugs Act was followed i.e. the Inspector had to tender a fair price of the drug when he proposes to seize the same for the purposes of filing a complaint. As such, no prosecution could be launched when the sample of the drug had not been taken for the purposes of prosecution under Chapter IV of the Drugs Act. 5. It has also been submitted that by virtue of the judgment of the Hon'ble Apex Court rendered in the case of S.M.S. Pharmaceuticals Ltd. vs. Neeta Bhalla and another, reported in (2005) 8 SCC 89 , the prosecution of the petitioners was vitiated because there is no allegation in the complaint nor there is any material in support thereto that the petitioners were connected or concerned with the day to day affairs of the Company. 6. In reply, learned Public Prosecutor has opposed the petition and supported the impugned order taking cognizance against the petitioner. He contended that the petitioner can always take these objections before the learned trial Court at the appropriate stage of trial of the case. 7. I have given my thoughtful consideration to the rival submissions and perused the record of the case annexed with the petition. He contended that the petitioner can always take these objections before the learned trial Court at the appropriate stage of trial of the case. 7. I have given my thoughtful consideration to the rival submissions and perused the record of the case annexed with the petition. For the purpose of a better appreciation of the questions in issue, the three relevant provisions of the Act i.e. Sections 18, 23 and 25 are hereunder:- "Section 18: Prohibition of manufacture and sale of certain drugs- 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] a*[(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 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];] (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 cosmetics containing any ingredients 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 [or cosmetic] which has been imported or manufactured in contravention of any of the provisions of this Act or any rule made thereunder; (c) [manufacturer 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 notification, 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. Section 23: Procedure of Inspectors (1) Where an Inspector takes any sample of a drug [or cosmetic] under this Chapter, he shall tender the fair price thereof and may require a written acknowledgment therefor. (2) Where the price tendered under sub-section (1) is refused, or where the Inspector seizes the stock of any drugs [or cosmetic] under clause (c) of Section 22, he shall tender a receipt therefore in the prescribed form. (3) Where an Inspector takes a sample of a drug [or cosmetic] for the purpose of test or analysis, he shall intimate such purpose in writing in the prescribed form to the person from whom he takes it and, in the presence of such person unless he absents himself, shall divide the sample into four portions and effectively seal and suitably mark the same and permit such person to add his own seal and mark to all or any of the portions so sealed and marked: Provided that where the sample is taken from premises whereon the drug for cosmetic] is being manufactured, it shall be necessary to divide the sample into three portions only: Provided further that where the drug [or cosmetic] is made up in containers of small volume, instead of dividing a sample as aforesaid, the Inspector may, and if the drug [or cosmetic] be such that it is likely to deteriorate or be otherwise damaged by exposure shall, take three or four, as the case may be, or the said containers after suitably making the same and, where necessary, sealing them. (4) The Inspector shall restore one portion of a sample so divided or one container, as the case may be, to the person from whom he takes it, and shall retain the remainder and dispose of the same as follows:- (i) one portion or container he shall forthwith send to the Government Analyst for test or analysis; (ii) the second he shall produce to the Court before which proceedings, if any, are instituted in respect of the drug; and (iii) the third, where taken, he shall send to the person, if any, whose name, address and other particulars have been disclosed under Section 18A.] (5) Where an Inspector takes any action under clause (c) of Sec. 22,- (a) he shall use all despatch in ascertaining whether or not the drug [or cosmetic] contravenes any of the provisions of Section 18 and, if it is ascertained that the drug [or cosmetic] does not so contravene, forthwith revoke the order passed under the said clause or, as the case may be, 25. Reports of Government Analysts.- (1) The Government Analyst to whom a sample of any drug [or cosmetic] has been submitted for test or analysis under sub-section (4) of section 23, shall deliver to the Inspector submitting it a signed report in triplicate in the prescribed form. (2) The Inspector on receipt thereof shall deliver one copy of the report to the person from whom the sample was taken [and another copy to the person, if any, whose name, address and other particulars have been disclosed under Section 18A], and shall retain the third copy for use in any prosecution in respect of the sample. (3) Any document purporting to be a report signed by a Government Analyst under this Chapter shall be evidence of the facts stated therein, and such evidence shall be conclusive unless the person from whom the sample was taken or the person whose name, address and other particulars have been disclosed under Section 18A] has, within twenty-eight days of the receipt of a copy of the report, notified in writing the Inspector or the Court before which any proceedings in respect of the sample are pending that he intends to adduce evidence in controversion of the report. (4) Unless the sample has already been tested or analysed in the Central Drugs Laboratory, where a person has under sub-section (3) notified his intention of adducing evidence in controversion of a Government Analyst's report, the Court may, of its own motion or in its discretion at the request either of the complainant or the accused: cause the sample of the drug1[or cosmetic] produced before the Magistrate under sub-section (4) of Section 23 to be sent for test or analysis to the said Laboratory, which shall make the test or analysis and report in writing signed by or under the authority of, the Director of the Central Drugs Laboratory the result thereof, and such report shall be conclusive evidence of the facts stated therein. (5) The cost of a test or analysis mad by the Central Drugs Laboratory under sub-section (4) shall b paid by the complainant or accused as the Court shall direct." 8. From a perusal of the record annexed with the petition, following undisputed facts emerge from the complaint and the documents submitted along with the same: (1) "The inspection report dated 23rd September, 1996 of Rallis India Ltd. discloses that: (a) "the licensee was directed to withdraw already sold stock of COMSAT FORTE tablet from the market. M/s. Khunteta Medicals, Laxmangarh, Distt. Alwar (PIN 321604) has returned 100 strips of 10 tablets each COMSAT FORTE Batch No. 675 R vide memo No. 1313 dt. 8.9.96. This stock is found in the premises today." and (b) That the stock of above said drug has been returned by M/s. Khunteta Medicals, Laxmangarh. The sample of the drug is taken for the purpose of taking/analysis as per the provisions of the Drugs & Cosmetics Act, 1940 and the rules made thereunder. Sample No. Assigned JPR (1B)/AKJ/SEP/96/15 Name of drug- COMSAT FORTE (Trimethoprima & sulphamethexazole Tab IP) quantity takes 4 containers each containing 10x16's tab. Batch No. 675 R D/M Nov. 1995 D/E Oct 2000 Mfd by M/s. Bocheringer Monnheium India Ltd. Kolshat Road, Thane. The price for the same is not charged by the licence however a stock issued voucher..." Thus, the inspection report unequivocally shows that the sample was not taken under Chapter IV of the Drugs Act. Further more, no compliance of the provisions of Section 23(1) of the Drugs Act was made by the Drug Inspector because no price of the medicine was tendered. Further more, no compliance of the provisions of Section 23(1) of the Drugs Act was made by the Drug Inspector because no price of the medicine was tendered. (2) The report of the Government Analyst shows that the manufacturing date of the drug was November, 1995 and the expiry date there of was October, 2000. (3) The complaint has been filed on 9th July, 2003. (4) There is no averment in the complaint that any of the accused were intimated about the report of the Government Analyst for the purposes of knowing their intention for challenging the report of the Government Analyst. (6) Lastly, the complaint as regards the liability of the employees of the Company is absolutely silent so far as the petitioners are concerned, inasmuch as apart from the designation of the petitioners, no allegation has been made against them. 10. Thus, tested on the guidelines in the decisions of the Hon'ble Apex Court, referred to above, no other conclusion but for the quashing of the proceedings against the petitioners in this case can be arrived at. It is not in dispute that the sample of the medicine was taken from the godown of M/s. Rallis India Ltd after the same had been called back from M/s. Khunteta Medicals, Laxmangarh in pursuance of the directions issued by the manufacturer. Thus, the medicines were not stocked or stored for sale when the samples were taken. Secondly, no price of the medicine was tendered by the Drug Inspector because, admittedly, the Drug Inspector was also aware of the fact that the medicines were not being stored for sale. 10. The Allahabad High Court had the occasion to deal with the phrase "stock for sale" in the case of Dharam Deo Gupta vs. State, reported in AIR 1958 Allahabad 865 and it was held as under: "11. In revision before me the counsel for the applicant raised three contentions so far as the first charge was concerned. Firstly, he contended that the ampoules recovered from the premises of the applicant's firm were not stocked and exhibited for sale. Secondly, his contention was that if a presumption is to be drawn against him that these ampoules were stocked and exhibited for sale, merely from the fact that they were recovered from the premises of his firm, even then the prosecution has failed to establish that they were below standard quality. Secondly, his contention was that if a presumption is to be drawn against him that these ampoules were stocked and exhibited for sale, merely from the fact that they were recovered from the premises of his firm, even then the prosecution has failed to establish that they were below standard quality. Thirdly, it was contended by him that even if these ampoules are held to be of a sub-standard quality, the applicant cannot be convicted because he was not the manufacturer of this drug and he did not know nor could he have with reasonable diligence ascertained that the said ampoules in any way contravened the provisions of Section 18 and the said ampoules while in his possession remained in the same state as when he acquired them. 12. I have heard the learned Counsel for the applicant as well as the counsel for the State at length in this case. I have come to the conclusion that so far as the first, charge is concerned, it must fail, because every one of the three contentions advanced before me on behalf of the applicant is maintainable and fully borne out by the evidence and the circumstances of the case. 13. I will first take up the question whether these ampoules were stocked and exhibited for sale or not. I would at this stage quote the relevant words of Section 18 of the Drugs Act, 1940. Section 18, runs as follows: "From such date as may be fixed by the State Government by notification in the Official Gazette so this behalf, no person shall himself or by any other person on his behalf: (a) manufacture for sale, or sell, or stock or exhibit for sale, or distribute (i) any Drug which is not of standard quality; (ii) any misbranded drug..." It would be seen from the words of Sub-clause (a) that a person can be convicted under the provisions of this section only if the stocking or exhibiting of goods is for the purpose of sale. The commas placed in this sub-clause leave no room for doubt that the intention of the Legislature was to penalise the stocking or exhibiting of goods below standard quality only if they were meant for sale. In other words the mere stocking of goods or exhibiting of goods of sub-standard quality is not an offence under Section 18 of the Drugs Act. In other words the mere stocking of goods or exhibiting of goods of sub-standard quality is not an offence under Section 18 of the Drugs Act. I am fortified in this view by a decision of a Single, Judge of our High Court in Kasim Bhai vs. State MANU/UP/0228/1956 : AIR 1956 All 703 (A). The learned judge was dealing with Sub-rules (2) and (9) of Rules 65 of the Drugs Rules, but his observations are applicable to the stocking under Section 18 of the Drugs Act also. The learned Judge after discussing the said sub-rules observed: "It will appear from the above provisions that what is prohibited by them is the supply or sale of particular kinds of medicines except under the direction and personal supervision of a qualified person. There is nothing in these sub-rules which lays down that such medicines will not be stocked unless a qualified person is engaged in the shop. The charge against the applicant is not for the supply or sale of the medicines specified in Schedule H, but for stocking such medicines." I am in agreement with the view expressed above and mere stocking unless it is for the purpose of sale does not amount to an offence within the Meaning of Section 18 of the Drugs Act, 1940. 14. It is true that this circumstance that the ampoules were stocked in a side room near the shop would lend itself to the inference that they were meant for sale, if there had not been clear indications that this inference cannot be drawn in this case. In the case cited above the learned Judge held that if a particular medicine is kept in the shop, there will be a presumption that it is there for the purpose of sale unless that presumption is rebutted. In my opinion the undisputed facts and circumstances of this case not only rebut the presumption, but make it impossible for this presumption to be raised all. 15. I would first take up the question whether these ampoules were stocked for sale or not, There is nothing on the record to indicate that they were exhibited for sale. The long history of the case given by me in the beginning leaves no room for doubt that these ampoules were stocked because the agreement to sell these ampoules existed. I would first take up the question whether these ampoules were stocked for sale or not, There is nothing on the record to indicate that they were exhibited for sale. The long history of the case given by me in the beginning leaves no room for doubt that these ampoules were stocked because the agreement to sell these ampoules existed. They were the first installment to fulfil the terms of the contract and the appellant's firm was awaiting the directions of the Government of India. They were seized on 22.3.1955 and upto that time the applicant was not even aware that these ampoules would be rejected by the Government of India. Under the terms of the contract itself, the applicant's firm had to stock these ampoules and if he did so in order to fulfil the contract into which he had entered, it cannot be inferred that he had stocked these ampoules for the purposes of sale. There is a clear distinction between a sale and an agreement to sell. Sub-secs. (3) and (4) of Section 4 of the Indian Sale of Goods Act (Act 3 of 1930) clearly brings out this distinction. These sub-sections run as follows: "4(1)... (2).... (3) Where under a contract of sale the property in the goods is transferred from the seller to the buyer, the contract is called a sale, but where the transfer of the property in the goods is to take place at a future time or subject to some condition thereafter to be fulfilled, the contract is called an agreement to sell. (4) An agreement to sell becomes a sale when the time elapses or the conditions are fulfilled subject to which the property in the goods is to be transferred." It is, therefore, clear that these ampoules were stocked because the applicant's firm had contracted to provide these ampoules and they were not stocked for the purpose of sale. 16. The next question to be determined is whether the stocking of these ampoules for the purpose of meeting the contract by itself would amount to stocking for sale or not. In my opinion it cannot be described as a stocking for sale. The terms of the contract were quite clear. 16. The next question to be determined is whether the stocking of these ampoules for the purpose of meeting the contract by itself would amount to stocking for sale or not. In my opinion it cannot be described as a stocking for sale. The terms of the contract were quite clear. I have mentioned the important and relevant condition earlier by which the ampoules were to be tested and if they were found sub-standard, the Government was entitled to cancel the contract. On 22.3.1955 the Government had not cancelled the contract and the applicant could do nothing else except to keep the ampoules and stock them in his premises. Again where there is a condition precedent that a sample would be tested, the stocking of goods of sub-standard quality cannot come within the purview of Section 18 of the Drags Act. The very basis of this provision is to protect unwary customers from buying inferior goods which are passed as goods of standard quality. A customer cannot test the quality of the goods supplied to him and he goes by the description given to the goods by the dealer. But where a sample is to be tested first, the dealer cannot cheat the customer. If he supplies sub-standard goods, he takes the risk of losing the contract and suffering loss on that account. Even in this contract the penalty which the applicant had to pay was that the contract would be cancelled. I am therefore of the opinion that in these circumstances even if the applicant had been the manufacturer of these ampoules, he could not have been prosecuted under Section 18 of the Drugs Act, for he had not stocked them for sale but to meet a provisional contract. 17. Where goods are to be produced according to certain specifications, there is a likelihood that occasionally they may not be of that standard. The penalty the contractors pay for such a mistake is that they suffer a loss, but if they fail to produce the goods of a standard quality, this failure by itself does not constitute any offence. It is only when there is a possibility of some wrongful gain accruing to a person from such a failure, that a doubt can arise that it was not a genuine failure, but was due to something else. It is only when there is a possibility of some wrongful gain accruing to a person from such a failure, that a doubt can arise that it was not a genuine failure, but was due to something else. Where a sample was to be tested before die `agreement to sale' became a `sale' there was no possibility of securing any wrongful gain. That the failure of the applicant was not considered an offence by the Medical Stores Depot, Karnal, is proved from the fact that they wrote to the firm of the applicant requesting him to tender the second instalment at an early date. If a consignment is not of an acceptable quality, the contract cannot be enforced, but on this ground alone it cannot be held that an offence under Section 18(a)(i) has been committed. To prove an offence under Section 18 of the Drugs Act the prosecution must prove that the goods were stocked or exhibited for sale and not merely that they were stocked. This can be proved by direct evidence or by circumstantial evidence. It is true that in some cases the act of stocking alone might be sufficient to prove that they were stocked for sale, but there can be other cases where a reasonable explanation can be offered for stocking. On the facts of this case the evidence leads only to one conclusion namely that the stocking was done to meet the contract and not for the purposes of sale. 11. Thus, in my considered view, the medicine in question was undisputedly not stocked for sale and there is total non-compliance of the provisions of Section 23 of the Drugs Act in relation to the prosecution. The complainant and its documents clearly disclose that the drug Inspector was himself aware of the fact that the drugs were lying in the godown as they had been called back from the vendor on the instructions of the manufacturer as being defective. This is the very reason that the Inspector did not even attempt to tender the price of the medicine while taking sample. The tender of the price of the medicine of which the sample is sought to be taken is a mandatory requirement under Section 23(1) of the Act. This is the very reason that the Inspector did not even attempt to tender the price of the medicine while taking sample. The tender of the price of the medicine of which the sample is sought to be taken is a mandatory requirement under Section 23(1) of the Act. It is also an admitted fact that the complaint has been filed after the expiry date of the self life of the medicines and as such, looking to the dictum of their Lordships of the Supreme Court in Medicamen Brotech, referred to Supra, the prosecution against the petitioners cannot continue. 12. Lastly, there is no allegation or averment in the complaint nor there is any document on record which could show that the petitioners were responsible for the day to day affairs of the Company. Tested in the light of the dictum of their Lordships in the case of S.M.S. Pharma and Pepsico Holdings vs. Food Inspector, reported in (2011) 2 SCC 176, the petitioners not being responsible for the day to day affairs of the Company, cannot be prosecuted. 13. The upshort of the above discussion is that the petition must succeed. Consequently, this petition succeeds and is hereby allowed. The order dated 9.7.2003 impugned in this petition taking cognizance against the petitioners and the proceedings pending against them in pursuance of the complaint, are quashed and set aside. 14. The stay application also stands disposed of.