Himachal Pradesh High Court
Date Of Decision: 2.9.2024 vs State Of Himachal Pradesh on 2 September, 2024
Author: Sandeep Sharma
Bench: Sandeep Sharma
2024:HHC:7948
IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA
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CrMMO No. 92 of 2024
Date of Decision: 2.9.2024
_____________________________________________________________________
Mr. Murgaiah Ravichandran and Anr.
.........Petitioners
Versus
State of Himachal Pradesh
.......Respondent
Coram
Hon'ble Mr. Justice Sandeep Sharma, Judge.
Whether approved for reporting?
For the Petitioners: M/s C.N. Singh, Devender Sharma and Mr.
r Anshul Gandhi, Advocates.
For the Respondent: Mr. Rajan Kahol, Mr. Vishal Panwar and Mr.
B.C. Verma, Additional Advocates General
with Mr. Ravi Chauhan, Deputy Advocate
General.
___________________________________________________________________________
Sandeep Sharma, J. (Oral)
By way of present petition filed under Section 482 CrPC, prayer
has been made by the petitioners-accused for quashing of complaint No.
182/3 of 2022 titled State of Himachal Pradesh v. Mr. M. Ravichandran and
Ors. as well as order dated 12.8.2022, passed by the learned Chief Judicial
Magistrate Bilaspur, District Bilaspur, Himachal Pradesh, thereby issuing
process against the petitioners on the afore complaint initiated at the
behest of the Drug Inspector, Bilaspur.
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2. Precisely, facts of the case as emerge from the record are that
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on 6.8.2021, Drug Inspector, visited the premises of the Petitioner-
Company namely Tidal Laboratories Private Ltd, Pase-II Industrial Area,
Gowalthai, District Bilaspur, Himachal Pradesh and drew samples of Enzox
Plus tab Batch No. ENZP-02105-02; M/D 05/2021; E/D 04/2024 and
Octoxid Capsules Batch No. OTXC0-02102; M/D 06/21; E/D 11/22. On
8.10.2021, the Government Analyst declared the afore drugs “not of
standard quality”. On 25.10.2021, show cause notice came to be issued by
the Drug Inspector for EnxozPlus (FDC) along with the copy of Form 13.
3. On 21.10.2021, a show cause notice was issued to the
petitioner for another drug Octoxid (FXC) capsules. On 1.11.2021, both the
show cause notices were replied to and intention to adduce evidence was
also notified to the Drug Inspector. On 20.2.2022, the intention to retest
the drugs was notified for both the drugs and as such, on 2.3.2022, Drug
Inspector filed an application before the learned Chief Judicial Magistrate
for retesting and sending the drugs in question to Central Drug Laboratory.
After receipt of report furnished by the Central Drug Laboratory, complaint
sought to be quashed in the instant proceedings came to be lodged in the
competent court of law, which taking note of the contents of complaint
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(Annexure P-1), issued process against the petitioners vide order dated
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12.1.2022 (Annexure P-2).
4. In the foresaid background, petitioners, who are the Directors
of the company, as detailed herein above, have approached this Court in
the instant proceedings for quashing of complaint as well as order dated
12.8.2022 passed by the Court below, thereby issuing process.
5. Precisely, the grouse of the petitioners, as has been highlighted
in the petition and further canvassed by Mr. C.N. Singh, learned counsel
for the petitioners is that court below before issuing process failed to
consider the material adduced on record by the complainant because bare
perusal of same clearly reveals that no allegation ever came to be leveled
against the petitioners that they were otherwise responsible for day to day
working of the company. While making this Court peruse the contents of
the complaint, learned counsel for the petitioner, vehemently argued that
once company, which allegedly made the violation of various provisions
contained in Drugs and Cosmetics Act, is not made party and as such,
complaint against the petitioners being Directors of the Company is
otherwise not sustainable in the eye of law. To substantiate his aforesaid
statement, Mr. Singh invited attention of this court of judgment passed by
the Hon’ble Apex Court in Ashish Mittal v. Shri Anil Chand and Ors.,
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2013 SCC OnLine HP 3847, wherein it came to be specifically ruled that
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without company being made the accused, the Directors cannot be made
party to the criminal proceedings. Mr. C.N. Singh, further argued that for
initiation of criminal proceedings against a company, impleadment of
company is a sine qua non, as such, complaint having been filed by the
Drug Inspector in the case at hand deserves to be quashed. He further
submitted that since no specific allegation ever came to be made in the
complaint that petitioners herein being Directors of the company were
involved in the day to day affairs of the company, there was otherwise no
occasion, if any, for the court below to issue process against them. While
referring to judgment passed by the Hon’ble Apex Court in Ashok Kumar
Tyagi v. State of Himachal Pradesh and Ors., MANU/HP/0283/2015,
learned counsel for the petitioners argued that mere bald statement against
directors, is not sufficient, rather specific averments with regard to role and
responsibility in day-to-day affairs is required to be pleaded in the
complaint. Lastly, learned counsel for the petitioner argued that since
Drug Inspector proceeded to implead the petitioners without necessary
inquiry, complaint otherwise having been filed by him deserves outright
rejection. He stated that both the petitioners though are the Directors of
the company, but they live in the State of Tamil Nadu and have no role to
play as the company’s manufacturing site is at Bilaspur. He further
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submitted that as per instructions issued by the Central Government under
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Section 33P, under direction No.X. 11014/04/2009-DFQC dated
26.11.2010, Government Analyst as well as Central Drug Laboratory are
under obligation to seek protocol of test and method of analysis from the
manufacturer, however in the instant case, aforesaid procedure was never
followed and as such, report, if any, given by the Central Drug laboratory,
thereby declaring drugs in question to be “not of standard quality”, is of no
consequence. Mr. Singh also placed reliance upon judgment dated
4.7.2024 passed by this Court in CrMMO No. 738 of 2021, titled Anil
Mediratta and Ors. v. State of Himachal Pradesh and Ors., wherein this
Court having taken note of the various judgments passed by the Hon’ble
Apex Court proceeded to hold that no complainant under the Act is
maintainable against its Directors without company being impleaded as
party respondent.
6. To the contrary, Mr. B.C. Verma, learned Additional Advocate
General, while supporting the registration of the complaint by the Drug
Inspector against the petitioners vehemently argued that petitioners being
directors of the company are liable and responsible for the conduct and
business of the company. While referring to Section 19, Sub-clause 3 of
the Act, learned Additional Advocate General argued that once there is no
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denial of the fact that drugs in question were manufactured by the
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company concerned and same were found to be “not of standard quality”,
petitioners being directors of the company have been rightly booked for
deliberate contravention of provisions contained under Section 18 of the
Act. Lastly, Mr. Verma, submitted that petitioner under Section 482 Cr.PC
is not maintainable, especially when complaint sought to be quashed has
been already fixed for consideration of charges. He further submitted that
there is overwhelming available on record suggestive of the fact that
petitioners have contravened the various provisions contained under the
Act and as such, it would be too premature at this stage to conclude that
no case much less under Section 18 (a) (i) punishable under Section 27(d)
of the Act, is made out against the petitioners.
7. I have heard the learned counsel for the parties and gone
through the record of the case.
8. Before ascertaining the genuineness and correctness of the
submissions and counter submissions having been made by the learned
counsel for the parties vis-à-vis prayer made in the instant petition, this
Court deems it necessary to discuss/elaborate the scope and competence of
this Court to quash the criminal proceedings while exercising power under
Section 482 of Cr.PC.
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9. Hon’ble Apex Court in judgment titled State of Haryana and
.
others vs. Bhajan Lal and others, 1992 Supp (1) SCC 335 has laid
down several principles, which govern the exercise of jurisdiction of High
Court under Section 482 Cr.P.C. Before pronouncement of aforesaid
judgment rendered by the Hon’ble Apex Court, a three-Judge Bench of
Hon’ble Court in State of Karnataka vs. L. Muniswamy and others,
1977 (2) SCC 699, held that the High Court is entitled to quash a
proceeding, if it comes to the conclusion that allowing the proceeding to
continue would be an abuse of the process of the Court or that the ends of
justice require that the proceeding ought to be quashed. Relevant para is
being reproduced herein below:-
“7….In the exercise of this wholesome power, the High Court is
entitled to quash a proceeding if it comes to the conclusion that
allowing the proceeding to continue would be an abuse of the processof the Court or that the ends of justice require that the proceeding
ought to be quashed. The saving of the High Court’s inherent powers,both in civil and criminal matters, is designed to achieve a salutary
public purpose which is that a court proceeding ought not to bepermitted to degenerate into a weapon of harassment or persecution.
In a criminal case, the veiled object behind a lame prosecution, the
very nature of the material on which the structure of the prosecution
rests and the like would justify the High Court in quashing the
proceeding in the interest of justice. The ends of justice are higher
than the ends of mere law though justice has got to be administered
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8 2024:HHC:7948for making these observations is that without a proper realisation of
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the object and purpose of the provision which seeks to save the 58
inherent powers of the High Court to do justice, between the State
and its subjects, it would be impossible to appreciate the width andcontours of that salient jurisdiction.”
10. Subsequently, Hon’ble Apex Court in Bhajan Lal (supra), has
elaborately considered the scope and ambit of Section 482 Cr.P.C.
Subsequently, Hon’ble Apex Court in Vineet Kumar and Ors. v. State of
U.P. and Anr., while considering the scope of interference under Sections
397 Cr.PC and 482 Cr.PC, by the High Courts, has held that High Court is
entitled to quash a proceeding, if it comes to the conclusion that allowing
the proceeding to continue would be an abuse of the process of the Court or
that the ends of justice require that the proceedings ought to quashed. The
Hon’ble Apex Court has further held that the saving of the High Court’s
inherent powers, both in civil and criminal matters, is designed to achieve a
salutary public purpose i.e. a court proceeding ought not to be permitted to
degenerate into a weapon of harassment or persecution. In the aforesaid
case, the Hon’ble Apex Court taking note of seven categories, where power
can be exercised under Section 482 Cr.PC, as enumerated in Bhajan Lal
(supra), i.e. where a criminal proceeding is manifestly attended with
malafides and/or where the proceeding is maliciously instituted with an
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ulterior motive for wreaking vengeance on the accused and with a view to
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spite him due to private and personal grudge, quashed the proceedings.
11. Hon’ble Apex Court in Prashant Bharti v. State (NCT of
Delhi), (2013) 9 SCC 293, while drawing strength from its earlier
judgment titled as Rajiv Thapar and Ors v. Madan Lal Kapoor, (2013) 3
SCC 330, has reiterated that High Court has inherent power under Section
482 Cr.PC., to quash the initiation of the prosecution against an accused,
at the stage of issuing process, or at the stage of committal, or even at the
stage of framing of charge, but such power must always be used with
caution, care and circumspection. While invoking its inherent jurisdiction
under Section 482 of the Cr.P.C., the High Court has to be fully satisfied
that the material produced by the accused is such, that would lead to the
conclusion, that his/their defence is based on sound, reasonable, and
indubitable facts and the material adduced on record itself overrules the
veracity of the allegations contained in the accusations levelled by the
prosecution/complainant. The material relied upon by the accused should
be such, as would persuade a reasonable person to dismiss and condemn
the actual basis of the accusations as false. In such a situation, the judicial
conscience of the High Court would persuade it to exercise its power under
Section 482 Cr.P.C. to quash such criminal proceedings, for that would
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prevent abuse of process of the court, and secure the ends of justice. In the
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aforesaid judgment titled Prashant Bharti v. State (NCT of Delhi), (2013)
9 SCC 293, the Hon’ble Apex Court has held as under:-
“22. The proposition of law, pertaining to quashing of criminal
proceedings, initiated against an accused by a High Court under
Section 482 of the Code of Criminal Procedure (hereinafter referred to
as “the Cr.P.C.”) has been dealt with by this Court in Rajiv Thapar &Ors. vs. Madan Lal Kapoor wherein this Court inter alia held as
under: (2013) 3 SCC 330, paras 29-30)
29. The issue being examined in the instant case is the jurisdiction of
the High Court under Section 482 of the Cr.P.C., if it chooses to
quash the initiation of the prosecution against an accused, at the
stage of issuing process, or at the stage of committal, or even at the
stage of framing of charges. These are all stages before the
commencement of the actual trial. The same parameters wouldnaturally be available for later stages as well. The power vested in the
High Court under Section 482 of the Cr.P.C., at the stages referred to
hereinabove, would have far reaching consequences, inasmuch as, itwould negate the prosecution’s/complainant’s case without allowing
the prosecution/complainant to lead evidence. Such a determination
must always be rendered with caution, care and circumspection. To
invoke its inherent jurisdiction under Section 482 of the Cr.P.C. theHigh Court has to be fully satisfied, that the material produced by
the accused is such, that would lead to the conclusion, that his/their
defence is based on sound, reasonable, and indubitable facts; the
material produced is such, as would rule out and displace the
assertions contained in the charges levelled against the accused; and
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11 2024:HHC:7948the veracity of the allegations contained in the accusations levelled by
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the prosecution/complainant. It should be sufficient to rule out,
reject and discard the accusations levelled by the
prosecution/complainant, without the necessity of recording anyevidence. For this the material relied upon by the defence should not
have been refuted, or alternatively, cannot be justifiably refuted,
being material of sterling and impeccable quality. The material relied
upon by the accused should be such, as would persuade areasonable person to dismiss and condemn the actual basis of the
accusations as false. In such a situation, the judicial conscience of
the High Court would persuade it to exercise its power under Section
482 of the Cr.P.C. to quash such criminal proceedings, for that wouldprevent abuse of process of the court, and secure the ends of justice.
30. Based on the factors canvassed in the foregoing paragraphs, we
would delineate the following steps to determine the veracity of a
prayer for quashing, raised by an accused by invoking the powervested in the High Court under Section 482 of the Cr.P.C.:-
30.1 Step one, whether the material relied upon by the accused is
sound, reasonable, and indubitable, i.e., the material is of sterlingand impeccable quality?
30.2 Step two, whether the material relied upon by the accused,
would rule out the assertions contained in the charges levelled
against the accused, i.e., the material is sufficient to reject andoverrule the factual assertions contained in the complaint, i.e., the
material is such, as would persuade a reasonable person to dismiss
and condemn the factual basis of the accusations as false.
30.3 Step three, whether the material relied upon by the accused,
has not been refuted by the prosecution/complainant; and/or the
material is such, that it cannot be justifiably refuted by the
prosecution/complainant?
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30.4 Step four, whether proceeding with the trial would result in an
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abuse of process of the court, and would not serve the ends of
justice?
30.5 If the answer to all the steps is in the affirmative, judicial
conscience of the High Court should persuade it to quash such
criminal – proceedings, in exercise of power vested in it under Section
482 of the Cr.P.C. Such exercise of power, besides doing justice to
the accused, would save precious court time, which would otherwise
be wasted in holding such a trial (as well as, proceedings arising
therefrom) specially when, it is clear that the same would not
conclude in the conviction of the accused.”
12. Hon’ble Apex Court in Asmathunnisa v. State of A.P. (2011)
11 SCC 259, has held as under:
“12. This Court, in a number of cases, has laid down the scope and
ambit of the High Court’s power under section 482 of the Code of
Criminal Procedure. Inherent power under section 482 Cr.P.C.
though wide have to be exercised sparingly, carefully and with great
caution and only when such exercise is justified 9 by the tests
specifically laid down in this section itself. Authority of the court
exists for the advancement of justice. If any abuse of the process
leading to injustice is brought to the notice of the court, then the
Court would be justified in preventing injustice by invoking inherent
powers in absence of specific provisions in the Statute.
13. The law has been crystallized more than half a century ago in the
case of R.P. Kapur v. State of Punjab AIR 1960 SC 866 wherein this
Court has summarized some categories of cases where inherent
power can and should be exercised to quash the proceedings. This
Court summarized the following three broad categories where the
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High Court would be justified in exercise of its powers under section
.
482:
(i) where it manifestly appears that there is a legal bar against
the institution or continuance of the proceedings;
(ii) where the allegations in the first information report or
complaint taken at their face value and accepted in their
entirety do not constitute the offence alleged;
(iii) where the allegations constitute an offence but there is no
legal evidence adduced or the evidence adduced clearly or
manifestly fails to prove the charge.”
14.In Smt. Nagawwa v. Veeranna Shivalingappa Konjalgi and Others
(1976) 3 SCC 736, according to the court, the process against the
accused can be quashed or set aside :
“(1) where the allegations made in the complaint or the
statements of the witnesses recorded in support of the same
taken at their face value make out absolutely no case againstthe accused or the complaint does not disclose the essential
ingredients of an offence which is alleged against the accused;
(2) where the allegations made in the complaint are patentlyabsurd and inherently improbable so that no 10 prudent person
can ever reach a conclusion that there is sufficient ground forproceeding against the accused;
(3) where the d iscretion exercised by the Magistrate in issuing
process is capricious and arbitrary having been based either on
no evidence or on materials which are wholly irrelevant or
inadmissible; and
(4) where the complaint suffers from fundamental legal defects,
such as, want of sanction, or absence of a complaint by legally
competent authority and the like”.
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15. This court in State of Karnataka v. L. Muniswamy & Others
.
(1977) 2 SCC 699, observed that the wholesome power under section
482 Cr.P.C. entitles the High Court to quash a proceeding when it
comes to the conclusion that allowing the proceedings to continue
would be an abuse of the process of the court or that the ends of
justice requires that the proceedings ought to be quashed. The High
Courts have been invested with inherent powers, both in civil and
criminal matters, to achieve a salutary public purpose. A Court
proceeding ought not to be permitted to degenerate into a weapon of
harassment or persecution. In this case, the court observed that ends
of justice are higher than the ends of mere law though justice must
be administered according to laws made by the Legislature. This case
has been followed in a large number of subsequent cases of this
court and other courts.”
13. Hon’ble Apex Court in Asmathunnisa (supra) has categorically
held that where discretion exercised by the Magistrate in issuing process is
capricious and arbitrary having been based either on no evidence or on
materials which are wholly irrelevant or inadmissible; and where the
complaint suffers from fundamental legal defects, such as, want of
sanction, or absence of a complaint by legally competent authority and the
like, High Court would be justified in exercise of its powers under S. 482
CrPC.
14. From the bare perusal of aforesaid exposition of law, it is quite
apparent that while exercising its inherent power under Section 482 Cr.PC.,
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High Court can proceed to quash the proceedings, if it comes to the
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conclusion that allowing the proceedings to continue would be an abuse of
process of the law.
15. Now being guided by the aforesaid law laid down by the Hon’ble
Apex Court from time to time, this court would make an endeavour to find
out whether complaint No. 182/3 of 2022 as well as order dated 22 .8.2022
disclose offence, if any, punishable under the afore provisions of law and
evidentiary material collected on record by the prosecution is sufficient to
connect the accused with the alleged commission of offence or not?
16. Having heard learned counsel for the parties and perused the
material available on record, this Court finds that drugs in question, in the
case at hand, were manufactured by company namely “Tidal Laboratories
Private Limited”. It is also not in dispute that petitioners herein are the
directors of the company, as detailed herein above, but bare perusal of
complaint filed by the Drug Inspector nowhere suggests that petitioners
being directors of the company concerned had any kind of control upon the
day to day affairs of the company, admittedly, manufacturing unit of
company is situate in the State of Himachal Pradesh.
17. If the complaint is read in its entirety, there is no allegation, if
any, against the Directors, rather allegation of manufacturing drugs, which
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are “not of standard quality” is against the company, which is not made
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party in the instant proceedings.
18. Precisely the question which needs to be answered is whether
complaint filed against the director under Section 18 of the Act is
maintainable without company being impleaded as party respondent or not?
19. Recently, this court had an occasion to explore answer to the
aforesaid question of law in Anil Mediratta case (supra), wherein having
taken note of the various judgments passed by the Hon’ble Apex Court, this
court held as under:
“27. It is not in dispute that as per mandate of S.18, requisite
information was made available by M/s Generica India Limited. M/s
Generica India Limited specifically informed Drug Inspector concerned
that the company concerned has appointed Mr. Hem Raj Thakur as itsauthorized signatory, enabling him to perform the day-to-day business
of company (resolution passed by the company in this regard is available
at page 56 of paper book). Complaint sought to be quashed came to be
instituted under S.18(a)(i) of the Act and Rules framed under the Act,punishable under S.27(d) of the Act.
28.At this stage, it would be apt to take note of Section 18a(i) of Act,
1940, which reads as under:
“18. Prohibition of manufacture and sale of certain drugs and
cosmetics.–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,] or distribute–
[(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, adulterated 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];]
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(iv) any drug which by means of any statement design or device
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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 cosmetic containing any ingredient 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 9
[or cosmetic] which has been been imported or manufacutred in
contravention of any of the provisions of this Act or any rule made
thereunder;
(c) [manufacture 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 quantitiesof 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 notifica tion, the
[manufacture for sale or for distribution, sale, stocking orexhibiting or offering for sale] or distribution of any drug or class of
drugs not being of standard quality.
29. Perusal of afore provision of law makes it clear that no person can
manufacture for sale or for distribution, or sell, or stock or exhibit oroffer for sale or distribute any drug or cosmetic, which is not of standard
quality or is misbranded, adulterous or spurious. Violation, if any, of
aforesaid provision of law, would render person concerned, liable forpunishment under Section 27 of the Act, which provides for penalty.
30.Admittedly, in the case at hand, drug in question which was supplied
to M/s Aar Kay Surgicals by M/s Generica India Limited, was found tobe of sub-standard quality as per Adverse Analysis Report given by CTL,
Kandaghat and as such, no illegally can be said to have been committed
by Drug Inspector, while instituting complaint, for commission of offence
punishable under S.18(a)(i) punishable under S.27(d) of the Act, against
the accused named in the complaint, including petitioners being
Directors of M/s Generica India Limited but the question which needs
determination at this stage is, “whether case made out against the
petitioners herein, being Directors of M/s Generica India Limited under
S. 18(a)(i) of Act is sustainable on account of certain immunities
granted under S.19(3) of the Act or not?. S.19(3) reads as under:
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“19. Pleas.–(1)x x x x
.
(2) x x x x
(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.”
31.Aforesaid provisions of S.19(3) categorically provide that 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 S.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.
32. In the instant case, M/s Legen Healthcare, manufacturer of drug in
question neither claimed before authority concerned, that drug in
question was not supplied to M/s Generica India Limited or that the
same was not properly stored by M/s Generica India Limited rather,
M/s Legen Healthcare, while responding to notice issued by Drug
Inspector concerned, admitted factum of its having manufactured the
drug in question and its supply to M/s Generica India Limited under
proper invoice. If the reply given by M/s Legen Healthcare to Drug
Inspector concerned is perused, it specifically laid challenge to the
report of CTL Kandaghat and requested to send second sample of drug
in question to Central Drug Laboratory, for re-testing. Needless to say
as per procedure, company concerned can apply for re-testing of sample,
but with the permission of Magistrate concerned.
33. No doubt, on account of report of CTL Kandaghat, case if any, is
made out under S.18(a)(i) punishable under S.27(d) of the Act, against
the manufacturer, stockiest, and the trader but since stockiest/trader
can claim immunity from action under S. 18 of the Act, subject to
satisfaction of conditions contained under S.19(3), there appears to be
merit in the contention of Mr.Sharma, learned senior counsel appearing
for the petitioners, that, once there is an admission on the part of M/s
Legen Healthcare, manufacturer of drug, that the same was sold to M/s
Generica India Limited under proper invoice and it had no knowledge
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that the drug has contravened provisions of S.18 coupled with the fact
.
that there is nothing on record to suggest that the drug was not properly
stored, after its acquisition from manufacturer, case if any under S.18
would not succeed in the competent court of law.
34.It also emerges from the record that on the date of receipt of notice
from Drug Inspector concerned, stock of the drug in question stood sold
out, as is evident from communication dated 23.12.2009 (page 136 of
paper book) (Annexure PM).
35.Apart from above, this court finds that Drug Inspector concerned,
while initiating proceedings against various accused named in the
complaint, failed to implead M/s Generica India Limited as an accused.
If it is so, prosecution, if any, against petitioners being Directors of
company is bound to fail, especially when nothing has been adduced on
record to suggest that, on the date of drawing sample, petitioners being
directors of company were responsible for day-to-day affairs of company.
36. At this stage, it would be apt to take note of S. 34 of the unamended
Act, 1940, 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 punishedaccordingly:
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 committedwithout 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 thepart 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.”
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37.Aforesaid provision of law deals with offence, if any, committed by
.
company. Aforesaid provision provides that 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.
38. Proviso to the aforesaid section provides 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
39.Till the time, company is arrayed as an accused, offence, if any,
committed by company, cannot be ascertained. For the offence, if any,
committed by a company, person responsible for conduct of business of
the company is to be dealt in accordance with law, but admittedly, for
doing so, such company is essentially required to be impleaded as
accused. However, in the instant case, M/s Generica India Limited has
not been arrayed as party till date. Since aforesaid company has not
been arrayed as accused, it is not understood how prosecution would
prove case against its Directors i.e. petitioners herein.
40. Reliance in this regard is placed upon a judgment rendered by
Hon’ble Apex Court in Aneeta Hada v. Godfather Travels & Tours (P)
Ltd., (2012) 5 SCC 661, wherein, a similar provision enacted in the
Negotiable Instruments Act was considered by the Hon’ble Supreme
Court and it was held that prosecution of the company is sine qua non
for prosecuting the officials of the company. It is not permissible to
prosecute the officials without prosecuting the company. It was
observed:-
“58. Applying the doctrine of strict construction, we are of the
considered opinion that the commission of an offence by thecompany is an express condition precedent to attract the vicarious
liability of others. Thus, the words “as well as the company”
appearing in the section make it absolutely unmistakably clear
that when the company can be prosecuted, then only the persons
mentioned in the other categories could be vicariously liable for the
offence subject to the averments in the petition and proof thereof.
One cannot be oblivious of the fact that the company is a juristic
person and it has its own respectability. If a finding is recorded
against it, it would create a concavity in its reputation. There can
be situations when the corporate reputation is affected when a
Director is indicted.
59. In view of our aforesaid analysis, we arrive at the irresistible
conclusion that for maintaining the prosecution under Section 141
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of the Act, arraigning of a company as an accused is imperative.
.
The other categories of offenders can only be brought in the
dragnet on the touchstone of vicarious liability as the same has
been stipulated in the provision itself. We say so on the basis of the
ratio laid down in C.V. Parekh [(1970) 3 SCC 491: 1971 SCC (Cri)
97] which is a three-judge Bench decision. Thus, the view
expressed in Sheoratan Agarwal [(1984) 4 SCC 352: 1984 SCC (Cri)
620] does not correctly lay down the law and, accordingly, is
hereby overruled. The decision in Anil Hada [(2000) 1 SCC 1: 2001
SCC (Cri) 174] is overruled with the qualifier as stated in para 51.
The decision in Modi Distillery [(1987) 3 SCC 684: 1987 SCC (Cri)
632] has to be treated to be restricted to its own facts as has been
explained by us hereinabove.”
42. From the aforesaid exposition of law laid down by Hon’ble Apex
Court, it is thus clear that, a company, being a juristic person, cannot
be imprisoned, but it can be subjected to a fine, which in itself is a
punishment. Every punishment has adverse consequences, and
therefore, prosecution of the company is mandatory. The exception
would possibly be when the company itself has ceased to exist or cannot
be prosecuted due to a statutory bar. However, such exceptions are of
no relevance in the present case. Thus, the present prosecution must
fail for this reason as well. Therefore, it is not permissible to prosecute
the petitioners without prosecuting the company. Since the company
has not been arrayed as an accused, therefore, it is not permissible to
prosecute the petitioners, being Directors of the Company, in view of
the binding precedents of the Hon’ble Supreme Court.
46.This court in similar circumstances, where company was not arrayed
as an accused, straightway proceeded to quash the proceedings, vide
order dated 16.9.2023 passed in CrMMO No. 111 of 2013, titled Ashish
Mittal v. State of Himachal Pradesh, relevant paras whereof read as
under:
“11. A similar proposition was dealt with by the Apex Court
in Aneeta Hada v. Godhfather Travels and Tours PrivateLimited, (2012) 5 SCC 661, while dealing with Section 141 of
the Negotiable Instruments Act quoted above, held that when a
person, which is a Company commits an offence, then certain
categories of persons incharge as well as the Company would be
deemed to be liable for the offences under Section 138 of the
Negotiable Instruments Act. Thus, the statutory intendment is
absolutely plain. The provision makes the functionaries and the
Companies/ firms liable and that is by deeming fiction, which
has its own significance.
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12. Also on the comparative reading of the above Sections
.
under the different statutes, it can safely be concluded that
every person connected with Company shall not fall within the
ambit of Section 34 of the Act, which has a marked similarity
with the similar provisions of Negotiable Instruments Act. The
conclusion is obvious that only those persons, who are inchargeof and responsible for the conduct of the business of the
Company at the time of commission of the offence are liable for
the criminal action. The explanation added to Section 34 ibid
shows that the Company means a body corporate and includes
a firm or other association of individuals and Directos in
relation to a firm means a Partner.
13. In the instant case, the petitioner is alleged to be a
Partner of “M/s. Legen Healthcare”. The said firm has not been
impleaded as an accused and also there is no allegation in the
complaint that the petitioner in the capacity as a Partner was
incharge of and responsible for the conduct-business of the saidfirm. Therefore, in my opinion, summoning of the petitioner for
the alleged offence in his capacity as a Partner is wrong andillegal.
14. Thus, the logical conclusion is that the summoning of
the petitioner as a Partner of the said firm as an accused is
unsustainable, hence, quashed and set aside., but, however, it
shall open to the Drug Inspector to implead the Company as anaccused by moving an appropriate application before the
learned trial Court and in case there is any evidence during the
trial that a particular person is incharge of or responsible for
the conduct of the business or the Company including thepetitioner, he can also be impleaded as an accused. The record
of learned trial Court be returned forthwith and shall reach
before it on or before 21.10.2013.”
48. Similar is present case. In the instant case, though petitioners being
Directors of company have been arrayed as accused, but the company
namely, M/s Generica India Limited has not been arrayed as accused,
as such, prosecution of the petitioners alone, is bound to fail. Most
importantly, protection under S.19(3) of Act is also available to
petitioners being stockiest/traders, for the reason that sale of drug in
question by manufacture to M/s Generica India Limited has not been
denied by M/s Legen Healthcare, the admitted manufacturer of drug. It
clearly emerges from the complaint that M/s Generica India Limited
being duly licenced stockiest, purchased drug from duly licenced
manufacturer and sold the same thereafter to M/s Aar Kay Surgicals,
vide proper invoice dated 23.12.2008.”
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20. In the aforesaid judgment, this Court while placing reliance
.
upon the various judgments passed by the Hon’ble Apex Court has
categorically held that till the time, company is not arrayed as an accused,
offence, if any, committed by the directors of the company, cannot be
ascertained. For the offence, if any, committed by company, person
responsible for conduct of business of the company is to be dealt in
accordance with law, but admittedly, for doing so, such company is
essentially required to be impleaded as accused. Since, in the instant case,
M/s Tidal Laboratories Private Ltd., which allegedly manufactured the
drugs in question, which subsequently were found to be of “not of standard
quality” has not been arrayed as party, it is not understood how
prosecution would prove case against its Directors i.e. petitioners herein,
especially, when it is nowhere averred in the complaint that petitioners
being Directors of the company were incharge of its day to day affairs of the
company.
21. To bring Director of the company in the ambit of Section 18, it
is necessary to aver as to how the Director of the Company is incharge and
responsible for day to day affairs of the company. No doubt, to escape
liability, directors, will have to prove that when the offence was committed,
they had no knowledge of the offence or that they exercised all due
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diligence to prevent the commission of the offence, however, in the case at
.
hand, there is no allegation, if any, against the Directors in the complaint,
if it is so, there is/was otherwise no occasion for them to prove that when
offence was committed, they had no knowledge of the offence.
22. Evidence collected on record by the prosecution is not
sufficient to connect the petitioners with the offence alleged to have been
committed by them. Basic ingredients of afore sections are missing, as a
result thereof, trial, if any, pursuant to FIR sought to be quashed is likely to
fail in all probabilities.
23. Having scanned the entire evidence, this Court has no
hesitation to conclude that, no case much less under the aforesaid
provisions of law can be said to have been made against the petitioners.
Since for the discussion made herein above, case of the prosecution is likely
to fail in any eventuality, this Court finds the case at hand to be fit for
exercising power under Section 482 CrPC to quash complaint as well as
consequent proceedings. If prayer made in the instant petition is not
accepted, petitioner would be unnecessarily subjected to ordeal of the
protracted trial, which is otherwise bound to culminate in acquittal of the
accused.
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24. Consequently, in view of the aforesaid discussion as well as
.
law laid down by the Hon’ble Apex Court (supra), present petition is allowed
and Complaint Case No. 182/3 of 2022, titled State of Himachal Pradesh v.
Mr. M. Ravichandran and Ors., filed by the petitioners alongwith
consequential proceedings arising therefrom i.e. order dated 12.8.2022
(Annexure P-2) passed by the learned Chief Judicial Magistrate, Bilaspur,
District Bilaspur, Himachal Pradesh, is quashed and set aside. Accused are
acquitted of the charges framed against them. The petition stands disposed
of in the aforesaid terms, alongwith all pending applications.
September 2, 2024 (Sandeep Sharma),
(manjit) Judge
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