Andhra Pradesh High Court - Amravati
M/S. Inox Air Products Limited vs The State Of A.P., on 12 January, 2024
THE HON'BLE SRI JUSTICE TARLADA RAJASEKHAR RAO
CRIMINAL PETITION No. 4148 OF 2018
ORDER:
The present Criminal Petition is filed to call for the record
pertaining to C.C. No.71 of 2018 on the file of the First Additional
Judicial Magistrate of First Class, Kadapa and to quash the same
against the petitioners-accused Nos.5 and 6.
2. The Drug Inspector, Kadapa filed a complaint under
Section 32 of the Drugs and Cosmetics Act, 1940 (for short the
Act, 1940) and Rules of 1945 for the contravention of the Section
18 (c) punishable under Section 27(b)(ii) against Accused No.1 to
4 and contravention of the Section 18(a)(vi) r/w condition of the
license in Form 25 point No.03 r/w Rule 65(5)(1)(b) of the Act
1940.
3. The Accused No.5 and 6 filed the present Criminal Petition.
4. The Drug Inspector filed the above complaint against
petitioners/Accused No.5 and 6 herein on the ground that they
sold the drug Nitrous Oxide I.P. to the unlicenced A3 firm,
thereby they contravene Section 18(a)(vi) r/w condition of the
license under Form 26 point No.03 r/w Rule 65(5)(1)(b) of the Act
1940 punishable under Section 27 (d) of Act,1940.
5. Heard Sri S. Niranjan Reddy, learned Senior Counsel
appearing on behalf of Sri N. Naveen Kumar, learned counsel for
the petitioners and Sri S. Dushyanth Reddy, learned Additional
Public Prosecutor appearing for the respondent.
6. Apart from the oral argument, a written submission on
behalf of the petitioners was filed. Through the written
submission, it is contended by the learned Senior Counsel that a
sole allegation is made in the complaint against the
petitioners/accused that they have sold Nitrous Oxide I.P. to
Accused No.3 firm, who does not possess license for purchase.
Accused No.3 firm has licence to manufacture for sale or for
distribution of Nitrous Oxide IP, which has been submitted by
Accused No.3 to the Drug Inspector vide its reply dated
10.05.2017. There is no such allegation in the complaint to the
effect that the drugs supplied by the Petitioner Company to
Accused No.3 were not for further manufacturing, thus, not
covered under Form-25. Accused No.3 admittedly holds licence
under Form No.25 for Manufacturing Nitrous Oxide IP. The
Accused No.3 being a manufacturer, purchased Nitrous Oxide IP
from the Petitioner Company and can further breakdown the
same into Nitrogen or Oxygen for further supply in cylinders
based on altering, ornamenting, finishing, packing, labeling,
breaking up or otherwise or adopting any drug are referred to
definition of manufacture under Section 3 of the Act and denied
the allegation made against the Accused No.3 that they did not
have any drug licence to distribute the drugs as per the Form-
20B, which is required to purchase and sale of drugs, on the
ground that the said allegation is contrary to the facts on record
and it is evident from Form-25 licence in favour of Accused 3,
that it is not only authorized to manufacture, but the same also
authorizes the sale by way of wholesale dealing and storage for
sale by the licensee of the drugs manufactured under the licence.
7. And he would refer Form-25 issued to 3rd accused in the
Complaint, which, Form-25 Clause 2 alludes that "The licence"
authorizes the sale by way of wholesale dealing and storage for
sale by the licensee of the drugs manufactured under the licence,
subject to the conditions applicable to licence for sale.
8. And also contends that no vicarious liability against the
petitioner No.2 who is arrayed as Accused No.6 on the ground
that there is no material to show that the petitioner No.2 was
incharge and responsible to the company for the conduct of the
business of the company at the time of the alleged offence was
committed and the entire complaint is silent whether during the
time of alleged violations, Petitioner No.2 was involved in the day
to day transactions of petitioner company or not.
9. Learned Senior Counsel referred Section 3(f) of the Act,
1940 and he would contend that the definition includes breaking
up or otherwise and the Nitrous Oxide can break into Nitrogen or
Oxygen for supply in Cylinders based on demand.
10. On the aforesaid grounds, learned Senior Counsel would
pray to quash the proceedings and relied on the judgment of
High Court of Andhra Pradesh at Hyderabad titled as J. Krishna
Murthy and others v. State of Andhra Pradesh and another1 for
the proposition that wholesaler to bona fide believing that licence
was subsisting and supplying drugs to retailer, cannot be said to
have committed offences alleged against him as there is no mens
rea on the part of the wholesaler.
11. Demurer the contentions, learned Additional Public
Prosecutor Sri S. Dushyanth Reddy would contend that Accused
No.5 and 6 who are petitioners 1 and 2 herein respectively sold
the drug Nitrous Oxide IP to the unlicenced A3-Firm thereby the
Petitioners/Accused No.5 & 6 contravened Section 18(a)(vi) r/w
condition of the Licence under Form-26 Point No.03 r/w Rule
65(5)(1)(b) of the Act punishable under Section 27(d) of the Act,
1940 and the Accused No.3 did not have any drug licence to
distribute the drugs as per the Form-20B under point No.3 "No
sale of any drug" shall be made to a person not holding the
requisite licence to sell and further contends that under Rule
65(5)(1)(b) of the Rules, the supply of the drug shall be made duly
mentioning of licence number to whom it was sold and also
contend that the Accused No.6 who is petitioner No.2 herein, who
1 2007 (1) ALD (Criminal) 948 AP
is General Manager responsible for day to day activities but not
submitted any supported documents that he is not the
responsible person and as per the licence copies submitted by
the firm. As such he argues that the petitioners who arrayed as
Accused No.5 and 6 clearly contravened the Sections 18(a)(vi)
r/w condition of the licence in Form 26 point No.03 r/w
65(5)(1)(b) of the Act, which is punishable under Section 27(d) of
the Act, 1940.
12. On the afore said contentions raised by learned Senior
Counsel on behalf of the petitioner and learned Additional Public
Prosecutor, now the point for consideration is, whether the
petitioners/ A5 and A6 have contravened the provisions of Section
18(a)(vi) r/w condition of the licence in Form 26 point No.03 r/w
65(5)(1)(b) of the Act.
13. It is the plank contention of the Drug Inspector that the
petitioners/A5 has sold the Nitrous Oxide IP to the Accused No.3
unlicenced Firm, who is not having licence for the purchase of
Nitrous Oxide, therefore, Accused No.5 contravened the
provisions of the Act, 1940 and therefore liable for punishment
under Section 27(d) of the Act, 1940.
14. It is expedient and appropriate to quote the relevant
provisions, which are reproduced hereunder:
"18. Prohibition of manufacturer 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--
(vi) any drug or cosmetic in contravention of any of the
provisions of this Chapter or any rule made there under
15. Under the aforesaid Section, no person shall manufacture
or distribute or sell or stock or exhibit any drug or cosmetic in
contravention of the provisions of the Act.
16. Sub-rule (5)(1) of Rule 65 postulates that conditions of
licence sub-rule (5)(1) denotes that subject to the other
provisions of these rules the supply of a drug by wholesale shall
be made against a cash or credit memo wherein the name and
address of the licencee and his licence number under the Act,
1940, in which the following particulars shall be entered:
(a) The date of sale
(b) Name and address of the Licensee etc.,
(c) The name of the drug, the quantity and the batch number
(d) The name of the manufacturer
(e) The signature of the competent person under whose
supervision the sale was effected
17. Point No.3 of Form-20B postulates that [licence to sell,
stock or exhibit or offer for sale, or distribute] by wholesale,
drugs other than those specified in [schedules C, C(1) and X].
As per the point No.3,
(i) No drug shall be sold unless such drug is purchased
under a cash or credit memo from a duly licensed dealer or
a duly licensed manufacturer.
(ii) No sale of any drug shall be made to a person not
holding the requisite licence to sell, stock or exhibit for sale
or distribute the drug.
18. As seen from the Form-20B and Rule 65(5)(1)(B) of the
Rules made under the Act, 1940 and Section 18(6) distribution of
any drug in contravention of the aforesaid rules, the Drug
Inspector can made a complaint to punish the persons who
contravened the provisions under Section 32 of the Act, which is
punishable under Section 27 of the Act.
19. As seen from the record, the Accused No.3 has not
furnished any licence for the purchase of Nitrous Oxide IP
wherein, the petitioners/accused was granted licence under
Form-25 vide L.Dis No.3238/A1/2015, dated July, 2015 for the
manufacturing of Nitrous Oxide IP. It is not the case of the
petitioners/accused No.5 and 6 that the petitioners have
produced the licence and therefore they have supplied Nitrous
Oxide to the Accused Nos.3 and 4. The licence was granted to
the A3 for manufacturing Nitrous Oxide IP. Therefore, they
cannot purchase the same Nitrous Oxide from the
petitioner/accused No.5. Accused No.3 was granted licence to
manufacture of Nitrous Oxide and the same purchased from the
Petitioner/Accused No.5 Firm. Therefore, the petitioner/accused
No.5 has contravened the provision as well as Rules and the
Form-20, wherein the licence was granted to the A3-firm.
20. Sub-rule (5) of Rule 65 envisages that the name and
address of the licensee and Licence number under the Act, 1940
shall be entered to whom it was sold and his sale licence
number. As per the Form-20B at point No.3, no sale of any drug
shall be made to a person not holding the requisite licence to sell.
The 3rd accused in the complaint was not granted the licence for
purchase of the Drug [Nitrous Oxide] and he was given licence for
manufacturing of Nitrous Oxide. Therefore, the
Petitioner/Accused No.5 cannot sell the drug [Nitrous Oxide] to
the Accused No.3 in the complaint. The definition of
manufacturer under definition of Section 3(f) of the Act, 1940 is
no relevance to the present case. Therefore, the petitioner No.1
accused No.5 cannot rely on the Section 3(f) of the Act, 1940. As
the Accused No.3 was given licence under Form-25B for the
manufacture of Nitrous Oxide and Oxygen, therefore he cannot
purchase the Nitrous Oxide from the petitioner Accused No.5.
21. In the instant case, the petitioners / accused have sold the
Nitrous Oxide in contravention of the Rules and, therefore, in
view of the provisions of Section 18(a)(vi) read with Section 27 of
the Act is liable to be prosecuted. The Rule 65 as well as sub-
clauses of the said Rule impose the duty on the licensee alone to
maintain records and registers in the prescribed forms and for
any contravention thereof or breach of Rule is liable for
prosecution. Neither Section 18 nor Rule 65 carves out any
exception in this regard. In absence thereof, a person who
contravenes the provisions of the Act and Rules, is not
possible to be excluded from the Criminal liability under the
provisions of the Act.
22. When the intent of the legislature is clear any
interpretation in my view would contravenes the provisions of the
Act and Rules. The contention of the learned counsel for the
petitioner if accepted in this regard, would frustrate the scheme
of Sections 18 and 27 and rule 65 and sub-rule made there
under therefore, the same is rejected.
23. The rules made under the Act need to be understood within
the frame work in this scheme of the substantive provisions of
the Act and it cannot be construed in isolation in order to draw
meaning different by the scheme of the provisions of the Act. The
provisions of Section 18 and Rule 65 in no uncertain times
imposes liability on a person whoever he may be sells a drug in
contravention of any of the provisions of the Act, 1940 or Rules
contemplated under Section 27 (d) is liable to be punished
accordingly, if the offence against him is proved by the
prosecution for such contravention.
24. Admittedly, petitioners/accused have sold the nitrous oxide
to Accused 3 & 4 without producing the license. Accused No.3
firm was given permission for manufacturing of nitrous oxide.
25. On repetition, as discussed supra, the 3rd accused has
given licence to manufacture the Nitrous Oxide and Oxygen and
the petitioner/A5 firm is also given licence to manufacture
Nitrous Oxide.
26. In the instant case, the petitioners/accused have sold the
drug in contravention of the Act and Rules and, therefore, in view
of the provisions under Section 18(a)(vi) r/w Section 27 of the
Act, 1940 is liable to be prosecuted.
27. Learned Senior Counsel relied on the order in J. Krishna
Murthy and others v. State of Andhra Pradesh and another
referred supra (1), wherein, the said case, the authorities has
granted licence and it was expired as it was not renewed. On
bona fide believing that licence was subsisting, supplying the
drugs to the retailer. In the present case, there is no such
licence to purchase the drug, where the licence was granted
infavour of the 3rd accused in the complaint, to manufacture the
Nitrous Oxide. And the petitioner/accused have sold the drug
without obtaining any licence, particularly from accused No.3
Firm. Therefore, the said decision is not applicable to the
present facts of the case.
28. The contention of learned Senior Counsel for the
petitioners/accused is accepted in this regard would frustrate the
scheme of the Act and Rules made there under. Therefore, the
same is rejected.
29. The 2nd contention raised by the learned Senior Counsel is
that no vicarious liability can be fixed against the petitioner No.2
who is arrayed as Accused No.6 in the complaint on the ground
that he was not involved in day to day transactions of the
petitioner's company. And the complaint should contain all the
requisite averments to bring a case within the purview of Section
34 so as to make a person liable under the said Section.
30. As seen from Section 34 of the Act, 1940, where an offence
under the Act has been committed by a Company, every person
who at time of the offence was committed was incharge and was
responsible of the Company for the conduct of the business shall
be deemed to be guilty of the offence and shall be liable to be
proceeded against and punished accordingly. And the proviso
alludes that the arrayed accused should prove that the offence
was committed without his knowledge or that he exercises or due
diligence to prevent the commission of such offence.
31. As per the aforesaid Section, the person who at the time of
offence was incharge of the Company or not is the question of the
fact which has to be decided during the course of trial by leading
evidence. Hence, at this stage, this Court cannot come to
conclusion that the Accused No.6 who is the Petitioner No.2
herein is not incharge of the company, whether he was
responsible for sale of drug has to be decided during the course
of trial.
32. Therefore, for the aforesaid discussion, the Criminal
Petition is liable to be rejected and accordingly it is dismissed.
However, the Court below shall proceed in accordance with law
without taking into consideration any of the observations made
in the Criminal Petition, as the observations are made only for
the purpose of disposal of the present Criminal Petition.
33. Accordingly, the Criminal Petition is dismissed.
As a sequel, interlocutory applications, if any pending in
this Criminal Petition shall stand closed.
________________________________________
JUSTICE TARLADA RAJASEKHAR RAO
Date: 12.01.2024
HARIN
THE HON'BLE SRI JUSTICE TARLADA RAJASEKHARA RAO
Crl.P No. 4148 OF 2018
Date: 12-01-2024
Harin
