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2023 DIGILAW 539 (JK)

Ujjwal Srivastav v. State Of J. &K.

2023-09-20

RAJNESH OSWAL

body2023
JUDGMENT : 1. The petitioner, through the medium of present petition, has prayed for the following reliefs: I By a writ of certiorari A. The permission for launching prosecution granted vide order No. DFO/D-T/1278/193-95 dated 11.04.2014 by respondent no. 2 may be quashed. B. The order of the Learned Chief Judicial Magistrate, Budgam, taking cognizance of the complaint titled State through Drug Inspector v. M/S Tulbross Formulations and others, dated 22.07.2014 in complaint No. 27/ may also be quashed. C. The complaint may be accordingly quashed in the interests of justice. II. By a writ of mandamus, The Amending Act 19 of 1972, whereby the Drugs and Cosmetics Act, 1940 was extended to the State of Jammu & Kashmir be declared ultra vires as violative of Article 370. 2. At the very outset, learned counsel for the petitioner submitted that the petitioner shall not press the challenge thrown to the Amending Act of 1972, whereby the Drugs and Cosmetics Act was extended to the then State of Jammu and Kashmir. 3. It is stated that the petitioner is the Managing Director of M/S R. B. Remedies Private Limited. The Court of Chief Judicial Magistrate, Budgam (for short ‘the trial court’), has taken the cognizance of the complaint under Section 18(a) and 18(b) of Drugs and Cosmetics Act, 1940, and issued the process against the petitioner as well as other accused vide order dated 22nd July, 2014. It is also stated that during the investigation, the matter was referred to respondent No.4 by the complainant and simultaneously a show cause notice was issued to the petitioner. Pursuant to the investigation conducted by respondent No.4, the product was not found to be sub-standard as alleged in the complaint. Respondent No.4 vide communication dated 16th May, 2014, sent the appraisal report to the complainant i.e. respondent No.3 but despite the findings which dispelled the allegations levelled in the complaint, the permission for prosecution was granted by respondent No.2. 4. The petitioner has impugned the complaint on the ground that in the complaint the petitioner has neither been implicated by name nor any role has been attributed to him in managing the affairs of the company or being responsible in any manner for the conduct of its business. 4. The petitioner has impugned the complaint on the ground that in the complaint the petitioner has neither been implicated by name nor any role has been attributed to him in managing the affairs of the company or being responsible in any manner for the conduct of its business. In the complaint, respondent No.3 has accused not only the Managing Director, business partners but also the technical staff of the petitioner company without demonstrating as to how the Managing Director of the company was in-charge of and responsible for the conduct of business of the company which is essential pre-requisite for initiating any process against the petitioner. It is also urged that once M/S Tulbross Formulations, Uttarakhand has been exonerated by respondent No.4 under the same set of circumstances, no complaint could have been filed even against the petitioner. 5. Respondents have filed their response. Respondents No.1 to 3 in their reply have raised a preliminary objection regarding maintainability of the writ petition. It is further stated that a sample of Repzole capsule was lifted by the Drug Inspector from Lone Medical Agency at Magam and the Drug Analyst vide report dated 29th June, 2013, declared the said drug as not of standard quality. It is further stated that the constitution of the company was not disclosed, therefore, mentioning the name of the petitioner in the complaint was not possible and the complaint was filed in the name of Managing Director. It is also stated that if the petitioner was aggrieved of the test report, he should have challenged the same within the time prescribed under the Act and having not done so, the petitioner is estopped from maintaining the instant writ petition. It is also averred that the petitioner has himself replied the communications to the answering respondents and, as such, the petitioner is responsible and no other person from M/S R. B Remedies can be made responsible or implicated. 6. Respondent No.4 in his reply has stated that the writ petition is not maintainable once efficacious remedy was available under the Code of Criminal Procedure. 7. Mr. Salih Pirzada, learned counsel for the petitioner, restricted his arguments only to the extent that the petitioner being the Managing Director of the company could not have been summoned without complying the provisions of Section 34 of the Drugs and Cosmetics Act, 1940. 8. Learned counsel for the respondent Nos. 7. Mr. Salih Pirzada, learned counsel for the petitioner, restricted his arguments only to the extent that the petitioner being the Managing Director of the company could not have been summoned without complying the provisions of Section 34 of the Drugs and Cosmetics Act, 1940. 8. Learned counsel for the respondent Nos. 1-3 vehemently argued that the writ petition is not maintainable and that the constitution of the company was not disclosed, as a result of which the accused No.2 was arrayed in the manner as mentioned in the title of the complaint. 9. Heard and perused the record. 10. In order to appreciate the controversy, it is apt to extract Section 34 of the Drugs and Cosmetics Act, 1940, which is 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— (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. 11. 11. The issue is not more res-integra that the company can be prosecuted alone without prosecuting any person who was in charge of and was responsible to the company for the conduct of its business but in that case the accused company cannot be sentenced to imprisonment but with fine [See “Standard Chartered Bank v. Directorate of Enforcement, (2006) 4 SCC 278”] but vice-a-versa is not permissible. As per the mandate of Section 34 (supra), in addition to the Company who has committed an offence, every person who, at the time when the offence was committed, was in charge of and was responsible to the company for the conduct of the business of the company shall be deemed to be guilty of the offence. In order to prosecute the person who is in charge of and responsible to the company for the conduct of its business, there must be averments in the complaint specifying the actions/omissions of the said person having nexus with the commission of the offence by the company and then only the said person can be prosecuted along with the company. In this context, it would be appropriate to take note of the judgment of the Hon’ble Supreme Court in the case of “State of Haryana v. Brij Lal Mittal, AIR 1998 SC 2327 wherein it has been 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 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. 12. In the present case, the complainant i.e. the respondent No.3 has arrayed accused No.2 in the complaint in the following manner: “Proprietor/competent person:-M/S R. B. Remedies Pvt. Ltd. Ahmedabad-380015 (Constitution of the firm not disclosed)” 13. It would also be advantageous to take note of para (8) of the complaint which is reproduced as under: “8. 12. In the present case, the complainant i.e. the respondent No.3 has arrayed accused No.2 in the complaint in the following manner: “Proprietor/competent person:-M/S R. B. Remedies Pvt. Ltd. Ahmedabad-380015 (Constitution of the firm not disclosed)” 13. It would also be advantageous to take note of para (8) of the complaint which is reproduced as under: “8. That further investigation revealed that M/S B. R. Remedies Pvt. Ltd., Ahmedabad-380015, had purchased the Drug in question from the Manufacturer M/S Tulbros Formulations, Plot No.91, Sector-IIDC, IIE, Pant Nagar SIDCUL, U.S. Nagar (Uttarakhand), vide invoice no.121190 dt.26-02-2013 (Annexure-6). 14. In whole of the complaint, there is no allegation against any person who was in charge of or was responsible for the conduct of business of the company, as such, it is evident that none of the officer/Director/Manager of the company M/S R. B. Remedies Pvt. Ltd. Ahmedabad has been arrayed as an accused by name. The petitioner was prompted to approach this Court through the medium of present petition only because of improper arraying of the accused No.2 in the complaint. The perusal of the preliminary statement of the complainant/ respondent No.3 reveals that the has specifically mentioned that M/S R. B. Remedies had purchased the drug from M/S Tulbros Formulations and subsequently supplied the same to other accused. The tone and tenor of the complaint not only demonstrates but establishes that it was the company M/S B. R. Remedies Pvt. Ltd. Ahmedabad, who had committed the offence along with other accused. The respondent No.3 has arrayed accused No.2 in an improper manner because of the reason that constitution of the firm was not disclosed, as is evident from the title of the complaint. In almost identical situation, the Hon’ble Supreme Court in U.P. Pollution Control Board v. Modi Distillery, (1987) 3 SCC 684 , Apex Court has held as under: 4. The question that arises in the appeal is whether the Chairman, Vice-Chairman, Managing Director and members of the Board of Directors are liable to be proceeded against under Section 47 of the Act in the absence of a prosecution of the Company owning the said industrial unit. Section 47 in so far as material reads as follows: “47. The question that arises in the appeal is whether the Chairman, Vice-Chairman, Managing Director and members of the Board of Directors are liable to be proceeded against under Section 47 of the Act in the absence of a prosecution of the Company owning the said industrial unit. Section 47 in so far as material reads as follows: “47. 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.” 5. On a plain reading of sub-section (1) of Section 47 of the Act, where an offence has been committed by a company, every person who at the time of the commission of the offence was ‘in charge of and 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. Proviso to sub-section (1) however engrafts an exception in the case of any such person if he were to prove that the offence was committed without his knowledge or that he exercised all due diligence to prevent the commission of such offence. Proviso to sub-section (1) however engrafts an exception in the case of any such person if he were to prove that the offence was committed without his knowledge or that he exercised all due diligence to prevent the commission of such offence. It would be noticed that sub-section (1) of Section 47 is much wider than sub-section (4) of Section 17 of the Prevention of Food Adulteration Act, 1954 which fell for consideration in I.K. Nangia case [ (1980) 1 SCC 258 : 1980 SCC (Cri) 220] . Furthermore, proviso to sub-section (1) shifts the burden on the delinquent officer or servant of the company responsible for the commission of the offence. The burden is on him to prove that he did not know of the offence or connived in it or that he had exercised all due diligence to prevent the commission of such offence. The non-obstante clause in sub-section (2) expressly provides that notwithstanding anything contained in sub-section (1), where an offence under the 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. 6. On a combined reading of the provisions contained in sub-sections (1) and (2), we have no doubt whatever that the Chairman, Vice-Chairman, Managing Director and members of the Board of Directors of Modi Industries Limited, the company owning the industrial unit Modi Distillery could be prosecuted as having been in charge of and responsible to the company, for the business of the industrial unit Modi Distillery owned by it and could be deemed to be guilty of the offence with which they are charged. The learned Single Judge has failed to bear in mind that this situation has been brought about by the industrial unit viz. Modi Distillery of Modi Industries Limited because in spite of more than one notice being issued by the Board, the unit of Modi Distillery deliberately failed to furnish the information called for regarding the particulars and names of the Managing Director, Directors and other persons responsible for the conduct of the Company. Modi Distillery of Modi Industries Limited because in spite of more than one notice being issued by the Board, the unit of Modi Distillery deliberately failed to furnish the information called for regarding the particulars and names of the Managing Director, Directors and other persons responsible for the conduct of the Company. Having wilfully failed to furnish the requisite information to the Board, it is now not open to the Chairman, Vice-Chairman, Managing Director and other members of the Board of Directors to seek the court's assistance to derive advantage from the lapse committed by their own industrial unit. The learned Single Judge has focussed his attention only on the technical flaw in the complaint and has failed to comprehend that the flaw had occurred due to the recalcitrant attitude of Modi Distillery and furthermore the infirmity is one which could be easily removed by having the matter remitted to the Chief Judicial Magistrate with a direction to call upon the appellant to make the formal amendments to the averments contained in para 2 of the complaint so as to make the controlling company of the industrial unit figure as the concerned accused in the complaint. All that has to be done is the making of a formal application for amendment by the appellant for leave to amend by substituting the name of Modi Industries Limited, the company owning the industrial unit, in place of Modi Distillery. Although as a pure proposition of law in the abstract the learned Single Judge's view that there can be no vicarious liability of the Chairman, Vice-Chairman, Managing Director and members of the Board of Directors under sub-section (1) or (2) of Section 47 of the Act unless there was a prosecution against Modi Industries Limited, the company owning the industrial unit, can be termed as correct, the objection raised by the petitioners before the High Court ought to have been viewed not in isolation but in the conspectus of facts and events and not in vacuum. We have already pointed out that the technical flaw in the complaint is attributable to the failure of the industrial unit to furnish the requisite information called for by the Board. Furthermore, the legal infirmity is of such a nature which could be easily cured. We have already pointed out that the technical flaw in the complaint is attributable to the failure of the industrial unit to furnish the requisite information called for by the Board. Furthermore, the legal infirmity is of such a nature which could be easily cured. Another circumstance which brings out the narrow perspective of the learned Single Judge is his failure to appreciate the fact that the averment in para 2 has to be construed in the light of the averments contained in paras 17, 18 and 19 which are to the effect that the Chairman, Vice-Chairman, Managing Director and members of the Board of Directors were also liable for the alleged offence committed by the Company. (emphasis added) 15. This judgment was followed by the Hon’ble Supreme Court in “Aneeta Hadia in Aneeta Hada v. Godfather Travels & Tours (P) Ltd., (2012) 5 SCC 661 ”. 16. It appears that the learned Magistrate has issued the process in a mechanical manner and without ascertaining as to whether the accused No. 2 has been arrayed in a proper manner. In Pepsi Foods Ltd. v. Special Judicial Magistrate reported in (1998) 5 SCC 749 , 760, it has been held as under: “28. Summoning of an accused in a criminal case is a serious matter. Criminal law cannot be set into motion as a matter of course. It is not that the complainant has to bring only two witnesses to support his allegations in the complaint to have the criminal law set into motion. The order of the Magistrate summoning the accused must reflect that he has applied his mind to the facts of the case and the law applicable thereto. He has to examine the nature of allegations made in the complaint and the evidence both oral and documentary in support thereof and would that be sufficient for the complainant to succeed in bringing charge home to the accused. It is not that the Magistrate is a silent spectator at the time of recording of preliminary evidence before summoning of the accused. The Magistrate has to carefully scrutinise the evidence brought on record and may even himself put questions to the complainant and his witnesses to elicit answers to find out the truthfulness of the allegations or otherwise and then examine if any offence is prima fade committed by all or any of the accused.” 17. The Magistrate has to carefully scrutinise the evidence brought on record and may even himself put questions to the complainant and his witnesses to elicit answers to find out the truthfulness of the allegations or otherwise and then examine if any offence is prima fade committed by all or any of the accused.” 17. The defect in the complaint is curable in nature as only the accused-company has to be arrayed in a proper manner. The company M/S R. B. Remedies Pvt. Ltd, was required to be arrayed as accused no.2 but not in the manner the respondent no.2 has been arrayed in the complaint. Had the learned Magistrate gone through the complaint carefully, he would have noticed the defect in the title of the complaint. In view of above, this Court is of the view that the order of issuance of process dated 22.07.2014 to the extent of issuance of process against the accused No.2, is not sustainable in the eyes of law. As such, this Court deems it proper to quash order dated 22.07.2014 to the extent of issuance of process against the accused No.2. 18. Taking into consideration judgment of the Hon’ble Supreme Court in UP Pollution Control Board vs. Modi Distillery ( AIR 1988 SC 1128 ), the respondent No.3 is directed to lay an appropriate motion for amending the particulars of accused No.2 in the complaint before the trial court and the learned trial court, after permitting the respondent No.3 to make appropriate corrections in the particulars of accused No.2 shall pass appropriate order afresh in accordance with law. 19. The petition is disposed of. 20. A copy of this order be sent to the learned trial court for information and compliance.