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2022 DIGILAW 58 (JK)

Pharose Remedies Ltd. v. Union of India

2022-02-22

SANJAY DHAR

body2022
JUDGMENT : 1. The petitioners have challenged the complaint filed by respondent No.1 against them before the Court of learned Chief Judicial Magistrate (CJM), Jammu under Section 18(a)(i) read with Section 27(d) of the Drugs and Cosmetics Act, 1940 (for short, the Act of 1940) and the proceedings emanating therefrom. 2. It appears that respondent No. 1-Drugs Inspector filed a complaint for offences under Section 18(a)(i) read with Section 27(d) of the Act of 1940 against the petitioners and proforma respondents No.2 to 4 before the court of learned CJM, Jammu and on the basis of the said complaint, the learned Magistrate has, vide order dated 05.09.2014 after observing that prima facie commission of offences under Section 18(a)(i) read with Section 27(d) of the Act of 1940 are made out against the accused including the petitioners herein, issued process against them. 3. In the complaint, it has been alleged that on 22.04.2013, the complainant visited the Provincial Medical Store, Shalimar, Near MLA Hostel, Directorate of Health Services, Jammu and collected three samples of suspected drugs from the said sales premises in Form-17. One of the samples pertained to Paracetamol Tab. 500 mg with Batch No. PCM-2014, date of manufacture 12/2012 and date of expiry 11/2014. The sample was sent to the Government Analyst, Regional Drugs Testing Laboratory (RDTL), Chandigarh, and vide test report dated 15.05.2013, the sample was declared to be of standard quality. 4. An order came to be passed by Srinagar Bench of this Court in PIL No. 67 of 2014 titled Dr. Nisar-ul-Hassan and anr. v. State of J&K and ors. on 10.09.2013 whereby a direction was issued for sending all the samples of drugs collected by the complainant to both the laboratories i.e. Central Drugs Laboratory (CDL), Kolkatta and RDTL, Chandigarh as the Court was of the view that quite a high numbers of samples sent to CDL Kolkatta were found to be misbranded in comparison to the samples sent to the RDTL, Chandigarh. In pursuance to the aforesaid directions, the sample of drug in question was sent to the CDL, Kolkatta for re-analysis. Vide test report dated 10.01.2014 of CDL Kolkatta, the sample in question was declared as not of standard quality for the reason that the sample did not conform to IP with respect to the test of dissolution. 5. In pursuance to the aforesaid directions, the sample of drug in question was sent to the CDL, Kolkatta for re-analysis. Vide test report dated 10.01.2014 of CDL Kolkatta, the sample in question was declared as not of standard quality for the reason that the sample did not conform to IP with respect to the test of dissolution. 5. After the receipt of the aforesaid test report from the CDL Kolkatta, the complainant vide communication dated 20.01.2013 addressed to the Medical Officer, Provincial Medical Store, Shalimar, sought a reply as to the source of the purchase. In response thereto, the Medical Officer, Provincial Medical Store, Shalimar communicated vide his letter dated 25.01.2014 that the drug in question has been purchased from the accused company. Accordingly, a notice dated 11.02.2013 was addressed to the accused company and a reply thereto was furnished by the accused company vide its communication dated 09.03.2014. Upon receipt of the reply from the accused company, the prosecution was launched against the accused persons including the petitioners herein. 6. As per the complaint, petitioner No. 2 happens to be the Chairman-cum-Director of the accused company, petitioner No.3 happens to be Managing Director of the accused company and both of them are responsible for the conduct and day-to-day affairs of the accused company. It has been further averred in the complaint that the proforma respondent No. 2 is running the financial, production, sale distribution, manufacturing affairs of the company and, as such, he is liable to be punished under the Act of 1940. The proforma respondent No. 3 is stated to be the Manufacturing Chemist, whereas proforma respondent No. 4 is stated to be Analyst Quality Control of the accused company and that all of these accused persons with common intention and with active participation have manufactured the drug in question which has been declared as not of standard quality. Petitioner No. 1, the company has also been impleaded as an accused in the complaint. 7. Petitioner No. 1, the company has also been impleaded as an accused in the complaint. 7. The petitioners have challenged the complaint and the proceedings emanating therefrom inter alia on the grounds that as per the report of the Government Analyst of RDTL, Chandigarh, the sample of drug in question was found to be of standard quality and even during the joint investigation it was found that the drug in question was meeting all the parameters as per IP 2000, as such, no offence is made out against the petitioners; that petitioner No. 2 and 3 were not responsible for the conduct of business of the company pertaining to its manufacturing activity as the company, in terms of section 33 of the Act of 1940 had nominated respondent No. 2 as the person responsible for the conduct of business of the company pertaining to manufacturing activity; that the complaint is not maintainable because the person from whom the sample was taken by the complainant for its testing has not been made a party to the complaint and that the statutory requirements of Act of 1940 have not been followed by the complainant in the instant case and, as such, the complaint and the proceedings emanating therefrom are liable to be quashed. 8. I have heard learned counsel for the parties and perused the material placed on record including the trial court record. 9. The first and foremost contention that has been urged by the learned Senior counsel appearing for the petitioners is that as per the report of RDTL Chandigarh as also in the joint investigation report, the sample of the drug in question has been found to be of standard quality, as such, no offence is made out against the petitioners. It is contended that because the report of the Government Analyst was in favour of the accused company, as such, there was no occasion for the company to adduce evidence in controversion of the report in terms of provisions contained in Section 25 of the Act of 1940. 10. It is contended that because the report of the Government Analyst was in favour of the accused company, as such, there was no occasion for the company to adduce evidence in controversion of the report in terms of provisions contained in Section 25 of the Act of 1940. 10. It is true that in the instant case as per the reports of the Government Analyst and the joint investigation, the subject sample of the drug was found to be of standard quality and it is also a fact that the petitioner-company had no occasion to adduce evidence in controversion of the report of CDL Kolkatta, but we have to bear in mind the provisions of Section 25(4) of the Act of 1940 which makes the report of the CDL Kolkatta conclusive evidence of the facts stated therein. Thus, the report of the CDL Kokatta does have an overriding effect upon the report of the RTDL Chandigarh and the joint investigation report. The mere fact that the sample of drug in question was sent to the CDL Kolkatta for test/analysis under the orders of this Court would not make any difference to the conclusive nature of the report. In fact, there is no bar to sending a sample of drug for test/analysis directly to CDL without first sending to the Government Analyst. This is clear from the bare language of the Section 25(4) of the Act. 11. In view of the foregoing discussion, it is clear that in the presence of report of CDL Kolkatta the reports of RTDL Chandigarh and joint investigation reports pale into insignificance. Thus, it cannot be stated that no offence is made out against the accused company. 12. It has been next contended by learned Senior Counsel appearing for the petitioners that in the absence of the retailer from where the sample was taken, the prosecution against the accused company cannot proceed. According to him, it is quite possible that the drug in question would have been adversely effected due to inadequate storage facility with the retailer and in the absence of the retailer as party to the proceedings, the complaint against the other accused cannot proceed. He has referred to the provisions contained in 19(3) of the Act of 1940 in this regard, which reads as under: “19(3). He has referred to the provisions contained in 19(3) of the Act of 1940 in this regard, which reads as under: “19(3). A person, not being the manufacturer of a drug or cosmetic or his agent for the distribution thereof, shall not be liable for a contravention of section 18 if he proves— (a) that he acquired the drug or cosmetic from a duly licensed manufacturer, distributor or dealer thereof; (b) that he did not know and could not, with reasonable diligence, have ascertained that the drug or cosmetic in any way contravened the provisions of that section; and (c) that the drug or cosmetic, while in his possession, was properly stored and remained in the same state as when he acquired it.” 13. A bare perusal of the afore-quoted provision reveals that a person other than a manufacturer or his agent is not liable for contravention of Section 18 of the Act in case he shows that he has acquired the drug from a licensed manufacturer, distributor or dealer, he did not know or could not with reasonable diligence ascertain that the drug contravened any provision of the Act and the drug while in his possession was properly stored. 14. In the instant case, as per the complainant, investigation was conducted whereafter the complaint was laid against the accused company which means that as per the complainant, the retailer during investigation was able to satisfy the aforementioned three requirements. It is not necessary that in each and every case retailer should be made an accused even if he is able to satisfy the aforementioned three requirements. The accused company may still be able to show that there has been lapse on the part of the retailer in providing adequate storage facility which resulted in failure of the sample during test/analysis, but that can be done by the manufacturer at the time of entering its defence during the trial of the case. But at this stage, the proceedings against the accused company cannot be quashed on this ground, as the same would be premature. 15. Lastly, it has been contended by the petitioners that the accused company has already nominated the incharge and responsible officer of the company and it has also nominated the competent Technical Staff responsible for manufacture of drugs. But at this stage, the proceedings against the accused company cannot be quashed on this ground, as the same would be premature. 15. Lastly, it has been contended by the petitioners that the accused company has already nominated the incharge and responsible officer of the company and it has also nominated the competent Technical Staff responsible for manufacture of drugs. On this basis, it is submitted that by making vague and bald allegations, petitioners No. 2 and 3, who were the Managing Director and the Director of the accused company, are also sought to be prosecuted. 16. A perusal of the record of the trial court suggests that the aforesaid contention of the learned Senior Counsel appears to be full of substance. The complainant has placed on record of the trial court, a copy of Board Resolution dated 18.09.2012 of the accused company whereby petitioner No. 2 Managing Director has been authorized to nominate any person responsible for the conduct of the business of the company. Pursuant to the aforesaid Resolution, petitioner No. 2 has executed Nomination Letter dated 19.09.2012, according to which, Mr. Ram Chander Rai (proforma respondent No. 2) has been nominated as the person incharge of the establishment responsible for the conduct of business, liable for any contravention of the Act. Apart from this, in the certificate of renewal of licence issued in favour of the accused company, names of proforma respondents No. 3 and 4 are shown to be as approved Technical Staff for the manufacture of drugs. Copies of all these documents are on record of the trial court and the same have been annexed to the complaint. 17. In the fact of aforesaid record, it can safely be stated that proforma respondent No. 2 was responsible for the conduct of business of the company and proforma respondents No. 3 and 4 were responsible for manufacture of the drugs. Mere bald allegations in the compliant against the Managing Director and Director of the company, i.e. petitioners No. 2 and 3 would not make out a case for proceeding against them. 18. I am supported in my aforesaid view by the ratio laid down by the Supreme Court in the case of M/s Cheminova India limited and anr. v. State of Punjab and ors., (2021) 8 SCC 818 . 18. I am supported in my aforesaid view by the ratio laid down by the Supreme Court in the case of M/s Cheminova India limited and anr. v. State of Punjab and ors., (2021) 8 SCC 818 . Paragraph 9 of the judgment is relevant to the context and the same is reproduced as under: 09. Section 33 of the Act deals with ‘offences by companies’. A reading of Section 33(1) of the Act, makes it clear that whenever 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, or 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 shall be liable to be proceeded against and punished accordingly. In the case on hand, it is not in dispute that on behalf of the 1st Appellant–Company, 2nd Appellant–Managing Director has furnished an undertaking dated 22.01.2013, indicating that Shri Madhukar R. Gite, Manager of the Company, has been nominated in the resolution passed by the Company on 28.12.2012 to be in charge of and responsible to the said Company, to maintain the quality of the pesticides manufactured by the said Company and he was authorized to exercise all such powers and to take all such steps, as may be necessary or expedient to prevent the commission of any offence under the Act. Filing of such undertaking with the respondent is not disputed. Even, at Para 5.10 in the counter affidavit filed before this Court, it is pleaded by the Respondents that by appointing persons responsible for affairs of the Company, quality control, etc., 2nd Appellant–Managing Director cannot escape his liability from offences committed by 1st Appellant–Company. In view of the specific provision in the Act dealing with the offences by companies, which fixes the responsibility and the responsible person of the Company for conduct of its business, by making bald and vague allegations, 2nd Appellant–Managing Director cannot be prosecuted on vague allegation that he being the Managing Director of the 1st Appellant–Company, is overall responsible person for the conduct of the business of the Company and of quality control, etc. In the instant case, the Company has passed a resolution, fixing responsibility of one of the Managers namely Mr. In the instant case, the Company has passed a resolution, fixing responsibility of one of the Managers namely Mr. Madhukar R. Gite by way of a resolution and the same was furnished to the respondents by the 2nd Appellant in shape of an undertaking on 22.01.2013. When furnishing of such undertaking fixing the responsibility of the quality control of the products is not in dispute, there is no reason or justification for prosecuting the 2nd Appellant–Managing Director, on the vague and spacious plea that he was the Managing Director of the Company at the relevant time. A reading of Section 33 of the Act also makes it clear that only responsible person of the Company, as well as the Company alone shall be deemed to be guilty of the offence and shall be liable to be proceeded against. Though, the Managing Director is overall incharge of the affairs of the company, whether such officer is to be prosecuted or not, depends on the facts and circumstances of each case and the relevant provisions of law. Having regard to specific provision under Section 33 of the Act, and the undertaking filed in the present case, respondent cannot prosecute the 2nd Appellant herein. Thus, we find force in the contention of Mr. Sidharth Luthra, learned Senior Counsel, that allowing the prosecution against 2nd Appellant–Managing Director is nothing but, abuse of the process of law. At the same time, we do not find any ground at this stage to quash the proceedings against the 1st Appellant–Company.” 19. The ratio laid down in the aforesaid judgment squarely applies to the facts of the instant case. Thus, merely on the basis of bald allegations made in the complaint against the petitioners No. 2 and 3, does not make them responsible for the conduct of the business of accused company when there is material on record to show that the accused company had nominated respondents No. 2, 3 and 4 for the said purpose. Thus, allowing the prosecution to go on against petitioners No. 2 and 3 would amount to nothing but abuse of process of law. 20. Accordingly, the petition to the aforesaid extent is allowed and the impugned complaint as well as the proceedings initiated thereon to the extent of petitioners No. 2 and 3 is quashed.