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2023 DIGILAW 1110 (JHR)

Ashok Monga, Managing Director of Rhydburg Pharmaceutical Limited v. State of Jharkhand

2023-09-04

ANIL KUMAR CHOUDHARY

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JUDGMENT : ANIL KUMAR CHOUDHARY, J. 1. Heard the parties. 2. This criminal miscellaneous petition has been filed invoking the jurisdiction of this Court under Section 482 Cr.P.C. with a prayer to (a) quash the entire criminal proceeding arising out of Drug and Cosmetic Case No. 235 of 2013 (CIII-235 of 2013) including the order dated 28.06.2013 whereby and where under the learned Additional Chief Judicial Magistrate has taken cognizance for the offence punishable under Section 27(b) and 27(d) of the Drugs and Cosmetic Act, 1940 and ordered for issuance of summons inter-alia against the petitioner for appearance in connection with the said case and other prayers but at the outset, the learned counsel for the petitioner confines his prayer to prayer no. (a) mentioned in Para-34 of the petition and do not press the other prayers. 3. The brief facts of the case is that, the Drug Inspector, Ranchi instituted a prosecution report inter-alia against the petitioner and co-accused persons alleging therein that in Reproductive and Child Health Centre, Namkum, Ranchi, the Government supply of Vitamin A Syrup I.P. in 100 ml was invited through tender and the company; of which the petitioner is the Managing Director succeeded in the said tender but instead of such medicine, concentrated Vitamin-A solution IP ’85 (Revit-A) 100 ml bottles, total 80,000 was to be supplied immediately and rest 80,000 was to be supplied in the month of May, 2013 and when the said medicine was sent for sample examination, the sample was found ‘not of standard quality’ because, each container contained only 60% of the 1ml dose and it was further found in such examination that some mandatory information required to be published on the label of the bottles as per Rule 104 and 124 of the Drugs and Cosmetics Rules was omitted to be mentioned or was not properly mentioned and on the basis of the same, the learned Additional Chief Judicial Magistrate took cognizance of the offences as already indicated above. It is submitted by the learned counsel for the petitioner, relying upon the judgment of Hon’ble Supreme Court of India, in the case of State of Haryana vs. Brij Lal Mittal and Others, (1998) 5 SCC 343 , Para-8 of which reads as under: “8. Nonetheless, we find that the impugned judgment of the High Court has got to be upheld for an altogether different reason. 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.” That it has been categorically mentioned in the internal page no. 5 of the complaint itself that the petitioner being the Managing Director of the Rhydburg Pharmaceuticals Limited authorized the Assistant Manager of the said M/s Rhydburg Pharmaceuticals Limited namely Sri Sunit Pun by way of a power of attorney and the said Sunit Pun who has been arrayed as accused no. 5 of the complaint itself that the petitioner being the Managing Director of the Rhydburg Pharmaceuticals Limited authorized the Assistant Manager of the said M/s Rhydburg Pharmaceuticals Limited namely Sri Sunit Pun by way of a power of attorney and the said Sunit Pun who has been arrayed as accused no. 2 in the complaint is the person in-charge of and responsible to the company for the conduct of its business in respect of the tender floated by the Health Department, Government of Jharkhand vide E-tender Reference SRCH/Nam/30/2012 and there is absolutely no allegation against the petitioner that he was in-charge of and was responsible to the company for the conduct of its business so far as and in respect of the said tender and the petitioner has been implicated in this case merely because, he is the Managing Director of the company. In this respect, the learned counsel for the petitioner relied upon the Judgment passed by the Co-ordinate Bench of this Court in the case of Roshan Lal Goyal and Others vs. State of Jharkhand and Another, (2022) 3 JLJR 60 , Para-10 of which reads as under: “10. 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 In-charge 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 vs. Brij Lal Mittal and Others and Shiv Kumar Jatia vs. State of NCT of Delhi (supra). The judgment relied by Mr. Ashok 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. The judgment relied by Mr. Ashok 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 vs. 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 vs. 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 vs. 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.” 4. It is then submitted by the learned counsel for the petitioner, relying upon the Judgment passed by another Co-ordinate Bench of this Court dated 09.01.2020, in Cr. M.P. No. 1112 of 2019, that the order of which cognizance has been taken by the learned Additional Chief Judicial Magistrate is a cryptic one and the learned Additional Chief Judicial Magistrate has just filled the word cognizance in a printed proforma. Hence, it is submitted that as cognizance has been taken and summon has been issued by a composite order and the order does not suggest as to what are the materials that has come in the case so as to summon the petitioner to face the trial, hence on this score also the order dated 28.06.2013 whereby and where under the learned Additional Chief Judicial Magistrate has taken cognizance for the offence punishable under Section 27(b) and 27(d) of the Drugs and Cosmetic Act, 1940 and ordered for issuance of summons inter-alia against the petitioner for appearance in connection with the said case is liable to be quashed and set aside. 5. 5. It is further submitted by the learned counsel for the petitioner that the petitioner is responsible only towards the internal management of the accused no. 3-company of the complaint and is not involved in day to day functioning of the company and the business of the company is handled by a team of Managers specially qualified in this regard and such Managers are responsible for the conduct of the business of the company. It is then submitted by the learned counsel for the petitioner that the prosecution report do not make any specific allegation against the petitioner and there is no allegation in the record to suggest that the alleged offence was committed with the connivance or consent of the petitioner nor any neglect on the part of the petitioner has been attributed in the entire complaint. It is also submitted by the learned counsel for the petitioner that the petitioner has no role to play so far as the e-tender of the subsequent rate contract in question for the short comings in respect of which the persecution report has been lodged by the Drug Inspector, Ranchi. Hence, it is submitted that the entire criminal proceeding arising out of Drug and Cosmetic Case No. 235 of 2013 (CIII-235 of 2013) including the order dated 28.06.2013 whereby and where under the learned Additional Chief Judicial Magistrate has taken cognizance for the offence punishable under Section 27(b) and 27(d) of the Drugs and Cosmetic Act, 1940 and ordered for issuance of summons inter-alia against the petitioner for appearance in connection with the said case be quashed and set aside. 6. The learned Spl. P.P. submits that the Managing Director oversees and coordinates all corporate operations, personnel and activities in order to sustain and expand the business and the petitioner being the Managing Director is directly benefited by the illegal sale of the unlicensed sub-standard drug products. Hence, it is submitted that this criminal miscellaneous petition being without any merit be dismissed. 7. Having heard the submissions made at the Bar and after going through the materials in the record, it is pertinent to mention here that in the entire complaint, there is no allegation against the petitioner of being in any way responsible for the day to day affairs of the accused no. 7. Having heard the submissions made at the Bar and after going through the materials in the record, it is pertinent to mention here that in the entire complaint, there is no allegation against the petitioner of being in any way responsible for the day to day affairs of the accused no. 3-Rhydburg Pharmaceuticals Limited though in the counter-affidavit, some additional allegations have been made against the petitioner but certainly, the same cannot supplement the prosecution report which was originally filed before the learned court below. There is no allegation against the petitioner of any misbranding or absence of manufacturing license or supplying any sub-standard drugs. The only allegation is that the spoon which was supplied was of smaller size. 8. Under such circumstances, in view of the principle of law settled by the Hon’ble Supreme Court of India, in the case of State of Haryana vs. Brij Lal Mittal and Others (supra), as the complaint does not contain any allegation that at the material time, the petitioner was in-charge of and was also responsible to the company for the conduct of its business, so far as it relates to the e-tender floated by the Department of Health, State of Jharkhand, simply because the petitioner is the Managing Director of the company, it does not mean that he is liable for the conduct of the company for which this prosecution report has been lodged, more so because, when it is the admitted case of the Drugs Inspector, Ranchi in the complaint itself that the accused no. 2-Sunit Pun was the person in-charge and responsible to the company for the conduct of its business so far it relates to the said e-tender, being the authorized person and power of attorney holder for the same. 9. 2-Sunit Pun was the person in-charge and responsible to the company for the conduct of its business so far it relates to the said e-tender, being the authorized person and power of attorney holder for the same. 9. Under such circumstances, this Court is of considered view that continuation of this criminal proceeding qua the petitioner will amount to abuse of process of law and this is a fit case where the entire criminal proceeding arising out of Drug and Cosmetic Case No. 235 of 2013 (CIII-235 of 2013) including the order dated 28.06.2013 whereby and where under the learned Additional Chief Judicial Magistrate has taken cognizance for the offence punishable under Section 27(b) and 27(d) of the Drugs and Cosmetic Act, 1940 and ordered for issuance of summons inter-alia against the petitioner for appearance in connection with the said case be quashed and set aside qua the petitioner. 10. Accordingly, the entire criminal proceeding arising out of Drug and Cosmetic Case No. 235 of 2013 (CIII-235 of 2013) including the order dated 28.06.2013 whereby and where under the learned Additional Chief Judicial Magistrate has taken cognizance for the offence punishable under Section 27(b) and 27(d) of the Drugs and Cosmetic Act, 1940 and ordered for issuance of summons inter-alia against the petitioner for appearance in connection with the said case is quashed and set aside qua the petitioner. 11. In the result, this criminal miscellaneous petition is allowed.