Research › Search › Judgment

Andhra High Court · body

2023 DIGILAW 687 (AP)

Radico Remedies v. State of Andhra Pradesh

2023-04-12

K.SREENIVASA REDDY

body2023
JUDGMENT K. Sreenivasa Reddy, J. - This Criminal Petition, under Section 482 Cr.P.C., is filed to quash the proceedings in C.C. No.3246 of 2019 on the file of the I Additional Chief Metropolitan Magistrate, Vijayawada. Petitioners herein are arrayed as A.1 and A.2 in the said case. 2. 2nd respondent herein filed a complaint before the learned Magistrate against A.1 and A.2 under Section 32 for violation of Section 18 (a) (i) punishable under Section 27 (d) of the Drugs and Cosmetics Act, 1940 (for short, "the Act, 1940?) and further A.2 failed to produce,/ non-disclosure of, information under Section 18B and 22(1) (cca) of the Act, 1940 and thus punishable under Section 28A and 22 (3) of the Act, 1940. The allegations, in brief, of the complaint are as follows. 2nd respondent/complainant is empowered to launch prosecution under Section 32 of the Act, 1940. A.1 firm, represented by its Managing Director A.2, is involved in manufacture and sale of 'Not of Standard Quality' drug viz. Bisacodyl Tablets IP 5 mg, B.No.BLS-013, Mfg 4/2017 Exp 3/2019. On 21.03.2018, 2nd respondent lifted sample of subject drug manufactured by A.1 issuing Form-17, 17-A for analysis/testing from Government Medical Stores, New Government Hospital, Ring Road, Gunadala, Vijayawada under acknowledgement. On the same day, one sealed sample portion of the drug was sent to the Government Analyst, Drugs Control Laboratory, Vijayawada for analysis/ testing in Form-18 after duly following the procedure laid down in Section 23 of the Act, 1940. On 28.05.2018, 2nd respondent received analytical report of the Government Analyst dated 28.05.2018 declaring the subject drug as 'Not of Standard Quality' drug as the sample fails in disintegration as per IP-2014. 2nd respondent ascertained through various correspondence that the subject drug was supplied by to the Government Medical Stores, New Government Hospital, Ring Road, Gunadala, Vijayawada by M/s. District Ware House located at M/s. Central Medical Stores, APMSIDC, Government Fever Hospital Compound, Amaravathi Road, Guntur, who in turn received the same from A.1 firm. After sending notices to A1-manufacturer and after receiving permission to file the complaint, 2nd respondent filed the present complaint for violation of Section 18 (a) (i) punishable under Section 27 (d) of the Act, 1940 and further A.2 failed to produce,/ non-disclosure of, information under Section 18B and 22 (1) (cca) of the Act, 1940 and thus punishable under Section 28A and 22 (3) of the Act, 1940. 3. 3. Learned counsel for the petitioners contended that A.1 is a sole proprietary firm and the subject transactions took place in the year 2016; that the agreement was entered in the month of April, 2016 between the Managing Director of Andhra Pradesh Medical Services Infrastructure Development Corporation (APMSIDC), on one hand, and father of petitioner No.2 Dr.K.S.Sawhney, who was the Sole Proprietor of the firm, for supply of certain drugs. He further submits that copy of Certificate of Registration goes to show that A.1 is a Proprietary Concern and father of 2nd petitioner happens to be Managing Partner of the said concern. He further submits that there was an agreement between APMSIDC and father of 2nd petitioner for supply of drugs, and after the death the said Dr.K.S.Sawhney on 18.05.2019, 2nd respondent resorted in filing the present complaint impleading 2nd petitioner as A.2, who happens to be son of deceased Managing Partner and took over management of the firm, and that the present complaint has been filed as a counter blast to the civil litigation initiated by A.1 firm for recovery of the valid legal dues from the Andhra Pradesh Medical Services Infrastructure Development Corporation (APMSIDC). He further submits that in view of the aforesaid reasons, continuation of the impugned proceedings is nothing but abuse of process of Court. 4. On the contrary, the learned Special Assistant Public Prosecutor contended that petitioner No.2/A.2 is son of Managing Partner of A.1 firm and he took over management of the firm from his father and is answerable to the acts of his father. He further submits that the complaint shows that son of the Managing Partner is shown as one of the accused, and the contentions raised are all disputed questions of fact, and truth or otherwise of the accusations against the petitioners has to be decided during the course of trial. 5. Heard. Perused the record. 6. 2nd respondent/complainant is a Drug Inspector appointed under Section 21 of the Act, 1940 and the Rules made thereunder. A.1 is a proprietary concern represented by its Proprietor K.S.Sawhney and petitioner No.2 is shown as A.2. It is alleged that A.1 and A.2 are involved in manufacture and sale of 'Not of Standard Quality' drug i.e. Bisacodyl Tablets IP 5 mg, B.No.BLS-013, Mfg 4/2017 Exp 3/2019. A.1 is a proprietary concern represented by its Proprietor K.S.Sawhney and petitioner No.2 is shown as A.2. It is alleged that A.1 and A.2 are involved in manufacture and sale of 'Not of Standard Quality' drug i.e. Bisacodyl Tablets IP 5 mg, B.No.BLS-013, Mfg 4/2017 Exp 3/2019. On 21.03.2018, 2nd respondent lifted sample of subject drug manufactured by A.1 issuing Form-17, 17-A for analysis/testing from Government Medical Stores, New Government Hospital, Ring Road, Gunadala, Vijayawada and on the same day, one sealed sample portion of the drug was sent to the Government Analyst, Drugs Control Laboratory, Vijayawada for analysis/ testing after duly following the procedure laid down under the Act, 1940. On 28.05.2018, 2nd respondent received analytical report of the Government Analyst dated 28.05.2018 wherein it is stated that the subject drug as 'Not of Standard Quality' drug as the sample fails in disintegration as per IP-2014. On enquiries, 2nd respondent got confirmed that the source of supply and distribution of the subject drug was from A.1 firm. After sending notice and issuing reminders, there was no response from A.1. On receiving permission to file complaint, 2nd respondent resorted in filing the present complaint against A.1 and A.2. 7. A perusal of the record goes to show that the date on which the offence had been detected is on 28.05.2018, on which date 2nd respondent received the report from the Government Analyst, Drugs Control Laboratory, Vijayawada. The present complaint was filed into the Court on 03.06.2019, on which date father of petitioner No.2/A.2, who happened to be Sole Proprietor of A.1 concern, was no more. 8. Section 34 of the Act, 1940 is analogous to Section 141 of the Negotiable Instruments Act, 1881. The said provision reads thus: '34. The present complaint was filed into the Court on 03.06.2019, on which date father of petitioner No.2/A.2, who happened to be Sole Proprietor of A.1 concern, was no more. 8. Section 34 of the Act, 1940 is analogous to Section 141 of the Negotiable Instruments Act, 1881. The said provision reads thus: '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.' Going by the aforesaid provision, there is no material on record to show that 2nd petitioner was in-charge of, and responsible to, the company for the conduct of the business of the company at the time the offence was committed. The entire complaint is silent as to whether during the time of detection of the violations/ offences alleged, petitioner No.2/A.2 was involved in day to day transactions of A.1 concern or not and whether he was in-charge of, and responsible to, A.1 concern for the conduct of the business of the company. The entire complaint is silent as to whether during the time of detection of the violations/ offences alleged, petitioner No.2/A.2 was involved in day to day transactions of A.1 concern or not and whether he was in-charge of, and responsible to, A.1 concern for the conduct of the business of the company. It is evident that the agreement was entered in the month of April, 2016 between the Managing Director of Andhra Pradesh Medical Services Infrastructure Development Corporation (APMSIDC), on one hand, and father of petitioner No.2 Dr.K.S.Sawhney, who was the Sole Proprietor of the firm, for supply of certain drugs. 2nd respondent came to conclusion that the subject drug is of sub standard quality on 28.05.2018. The acts committed by father of 2nd petitioner/A.2 representing A.1 concern, cannot be fastened on petitioner No.2/A.2, simply he happens to be his son. It is evident that when once the proprietary concern is not -- a juristic person, the concept of vicarious liability under Section 34 of the Act, 1940 would not attract as against the proprietary concern. 9. Learned counsel for the petitioners relied on a decision in Manisha Koushik Bhowmik v. Carol Patroleum Private Limited & another, 2016 ACD 338 wherein it is held thus: (paragraphs 9, 12, 13 and 15) '9. It is settled position in law that while issuing process, the Magistrate is supposed to act cautiously and diligently. The process cannot be issued in a criminal case merely on asking of the complainant. Person who approaches the court of law to take cognizance of the complaint and to issue process he has to make out a prima facie, case for issuance of process. Prima facie, case pre supposes the case of the nature that the averments made in the complaint together with the evidence, if any, relied in support of complaint, if proved the accused will be liable for the offence for which the complainant has filed complaint and call for issuance of process. Although the detail inquiry is not expected at the stage of issuance of process but the limited inquiry to satisfy itself that a prima facie case is made out or not for issuance of process as contemplated u/s 204 of Cr. P.C., certainly falls in domain of learned Magistrate and expected to be made before passing order of issuance of process. P.C., certainly falls in domain of learned Magistrate and expected to be made before passing order of issuance of process. While issuing the process, the Magistrate is expected to look into the allegations made in the complaint together with the documents, if any, relied as evidence and then to consider as to whether any prima facie case for commission of alleged offence has been made out or not. 12. It is settled position in law that the concept of vicarious liability introduced in Negotiable Instruments Act is attracted only against the Directors, Partners or other persons in charge and control of the business of the company, or otherwise responsible for its affairs. Section 141 of Negotiable Instruments Act, not covers within its ambit, the proprietory concern. The proprietory concern is not a juristic person so as to attract the concept of vicarious liability. The concept of vicarious liability is attracted only in the case of juristic person, such as the company registered under the provisions of the Companies Act, 1956 or the partnership firm registered under the provisions of Partnership Act, 1932 or association of persons which ordinarily would mean a body of persons which is not incorporated under any statute. The proprietory concern stands absolutely on different footing. A person may carry on a business in the name of the business concern being proprietor of such proprietory concern. In such case the proprietor of proprietory concern alone can be held responsible for the conduct of business carried in the name of such proprietory concern. Therefore, Section 141 of the Negotiable Instruments Act have no applicability in a case involving the offence committed by a proprietory concern. In this context it is useful to refer Section 141 of Negotiable Instruments Act, which reads as under: 'S.141. Offences by companies. Therefore, Section 141 of the Negotiable Instruments Act have no applicability in a case involving the offence committed by a proprietory concern. In this context it is useful to refer Section 141 of Negotiable Instruments Act, which reads as under: 'S.141. Offences by companies. -(1) If the person committing an offence under section 138 is 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 person liable to punishment if he proves that the offence was committed without his knowledge, or that he had exercised all due diligence to prevent the commission of such offence: Provided further that where a person is nominated as a Director of a company by virtue of his holding any office or employment in the Central Government or State Government or a financial corporation owned or controlled by the Central Government or the State Government, as the case may be, he shall not be liable for prosecution under this Chapter.] (2) Notwithstanding anything contained in sub-section (1), where any 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 any 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.' 13. The plain reading of above quoted provision itself spell out that the provision of Section 141 of Negotiable Instruments Act is applicable only if person committing an offence u/s 138 of Negotiable Instruments Act, is a company, or the partnership firm or association of individuals. It has no applicability to cases relating to dishonour of cheques issued by proprietor of proprietory concern. 15. It has no applicability to cases relating to dishonour of cheques issued by proprietor of proprietory concern. 15. Thus in view of the undisputed position that the process was issued against the applicant/original accused No. 2, as a Manager of the proprietory concern, by taking recourse to Section 141 of Negotiable Instruments Act and accused No. 1 being a proprietory concern, the concept of vicarious liability cannot be attracted in the matter as against the applicant/original accused No. 2 on the face of the complaint filed by the complainant. The order passed by the learned Magistrate to the extent of process issued u/s 138 of Negotiable Instruments Act, against the applicant/accused No. 2 is not sustainable in law. Since the continuation of such proceeding against the applicant would amount to gross abuse of process of law, the order deserves to be quashed in exercise of powers u/s 482 of Cr. P.C.' The said principle has been reiterated by the three Judge Bench of the Hon?ble Apex Court in S.M.S. Pharmaceuticals Limited v. Neeta Bhalla and another (2005) 8 SCC 89 wherein it is held that the complaint should contain all the requisite averments to bring a case within the purview of Section 141 of the Negotiable Instruments Act, 1881, so as to make a person liable under the said Section. 10. In the case on hand, since A.1 concern is the Sole Proprietary concern and father of petitioner No.2/A.2, was conducting the business of A.1 concern in the capacity of Sole Proprietor. During his tenure, he entered into an agreement with APMSIDC for supply of the aforesaid drug. Thereafter, 2nd respondent/ complainant lifted a sample of the said drug from medical stores and basing on the report given by the Government Analyst, Drugs Control Laboratory, Vijayawada, he came to conclusion that the drug which has been supplied is not of standard quality drug. Ignoring the fact that father of petitioner No.2/A.3 was in-charge of, and responsible to, the day to day conduct of the business of A.1, being its Sole Proprietor, at the time of detection of the violation/offence, 2nd respondent has gone to the extent of arraying the petitioner No.2 as one of the accused for the acts of his father. Ignoring the fact that father of petitioner No.2/A.3 was in-charge of, and responsible to, the day to day conduct of the business of A.1, being its Sole Proprietor, at the time of detection of the violation/offence, 2nd respondent has gone to the extent of arraying the petitioner No.2 as one of the accused for the acts of his father. It is pertinent to mention here that case against father of petitioner No.2 gets abated since, admittedly, he died on 18.05.2019, and his son cannot be made vicariously liable for the acts committed by his father. Therefore, this Court, after perusing the entire material on record and keeping in view of the aforesaid decisions, feels that continuation of the impugned proceedings is nothing but abuse of process of Court. 11. For the foregoing reasons, the Criminal Petition is allowed. The proceedings in C.C. No.3246 of 2019 on the file of the I Additional Chief Metropolitan Magistrate, Vijayawada are quashed. Miscellaneous petitions pending, if any, in the Criminal Petition shall stand closed.