Himachal Pradesh High Court
Decided On: July 4 vs State Of Himachal Pradesh And Others on 4 July, 2024
Author: Sandeep Sharma
Bench: Sandeep Sharma
2024:HHC:4799
IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA.
CrMMO No. 738 of 2021
Decided on: July 4, 2024
.
________________________________________________________
Anil Mediratta and others ...........Petitioners
Versus
State of Himachal Pradesh and others ....Respondents
________________________________________________________
Coram:
Hon'ble Mr. Justice Sandeep Sharma, Judge.
Whether approved for reporting? 1yes.
________________________________________________________
For the Petitioners : Mr. Anand Sharma, Senior Advocate
with Mr. Karan Sharma, Advocate.
For the Respondents : Mr. Rajan Kahol, Mr. Vishal Panwar
and Mr. B.C. Verma, Additional
r Advocates General with Mr. Ravi
Chauhan, Deputy Advocate General,
for respondent No.1.
None for respondents Nos. 2 to 6.
Mr. Sunny Rawat, Advocate, for
respondent No.7.
________________________________________________________
Sandeep Sharma, Judge (oral):
By way of instant petition filed under S.482 CrPC, prayer has
been made on behalf of the petitioners herein for quashing of
complaint No. HFW-HMR(PROS) DRUGS/10-09, registered as
Complaint No. 58-1 of 2010 titled as State of Himachal Pradesh
(through Drugs Inspector H.Q. Hamirpur) v. Anil Chand and others
(Annexure P-2) as well as consequent proceedings pending in the
court of learned Judicial Magistrate First Class, Nadaun, Hamirpur.
2. For having bird's eye view of the matter, facts relevant for
adjudication of the case at hand are that on 8.1.2009 Drug Inspector,
Whether the reporters of the local papers may be allowed to see the judgment?
Headquarters, Hamirpur alongwith Shri Jagdish Chand, Peon, visited
premises of co-accused /respondent No. 2 Anil Chand Pharmacist, in-
.
cahge of M/s Shri Shri Medical Store, Opposite Bus Stand Nadaun,
District Hamirpur, Himachal Pradesh. Drug Inspector concerned after
having noticed that said Anil Chand was conducting business of
stocking and exhibiting for sale of allopathic drugs over the counter via
his retail drugs licence No. HMR/2006/389 and HMR/2006/390 valid
upto 29.3.2011, picked up three samples of drug namely
Chlorpheniramine Maleate Tablets (C.P. Sys-4) B. No. LGT-8106,
expiry date 08/2011, manufactured by M/s Legen Healthcare, Plot
No.20, Sector 05, Parwanoo, District Solan, Himachal Pradesh. As per
procedure, aforesaid drug was sent for chemical examination to C.T.L.
Kandaghat. However, vide report dated 31.10.2009 (annexed with the
complaint) sample of aforesaid Chlorpheniramine Maleate was "not of
standard quality as defined in the Drugs and Cosmetics Act, 1940 and
Rules there under" for the reason that "the sample of Chlorpheniramine
Maleate tablets contained less content of Chlorpheniramine Maleate i.e.
37.25 % against the prescribed limit i.e. 95% to 105% as per
I.P."(available page 96 of paper book).
3. After receipt of aforesaid 'adverse' analysis report, (AnnexureP-
J), Drug Inspector concerned, vide letter dated 9.11.2009, sent a
communication to Anil Chand, Pharmacist respondent No.2, (Annexure
P-J1) In Charge M/s Shri Shri Medical Store to disclose the information
as required under S.18-A of the Act, who in turn, vide his reply,
(Annexure PJ2) disclosed that the said drug was purchased by him
from M/s Aar Kay Surgicals Tibhra Road, Sujanpur, Village and Post
Office Sujanpur, District Hamirpur, vide invoice No. AKV=-908 dated
.
23.12.2008 (Annexure PJ3 of complaint). Drug Inspector concerned,
issued letter dated 2.12.2009 to M/s Aar Kay Surgicals, Sujanpur
alongwith enclosing therewith copy of adverse analysis report and
purchase invoice, asking it to disclose the information as required under
S.18-A of the Act, who in turn vide letter dated 9.12.2009, (Annexure
PK2 of complaint) disclosed that the drug in question was purchased by
it from M/s Generica India Limited, 718, 719, Main Burari Road, Burari,
Delhi vide invoice No. GIO-2530, dated 21.10.2008 (Annexure PK4 of
complaint). Said firm also informed vide letter 9.12.2009 that drug was
received by it from authorized signatory of the said firm, namely Mr.
Hem Raj Thakur.
4. In the aforesaid background, Drug Inspector sent a notice to M/s
Generica India Limited on 17.12.2009 (Annexure PL of complaint) with
a copy of Adverse Analysis Report and related copies of purchase
invoices, asking it to disclose the information as required under S.18-A
of the Act. M/s Generica India Limited vide letter dated 23.12.2009
(Annexure PM of complaint) disclosed that the said drug was purchasd
by it from M/s Legen Healthcare, Plot No. 20, Sector 05, Parwanoo,
District Solan, Himachal Pradesh vide invoice No. 4, dated 7.10.2008.
(Annexure PM1 of complaint). (page 136, 139 of paper book).
5. On the basis of information shared by M/s Legen Healthcare,
which had allegedly manufactured the drug in question, Drug Inspector
issued letter dated 1.2.2010 (Annexure PN of complaint) enclosing
therewith sealed sample portion and it was asked to disclose the
information as required under S.18-A of the Act. Said company issued
.
letter dated 10.2.2010 stating that it was not satisfied with report of CTL
Kandaghat and requested to send the second sample for re-testing to
Central Drug Laboratory. Though aforesaid prayer made by M/s Legen
Healthcare was not acceded to but Drug Inspector having found breach
of provisions of the Act, filed a complaint in the competent court of law
(Annexure P-2, page 58) inter alia impleading petitioners herein, as
6.
r to
accused Nos. 5 to 7, who happen to be Directors of M/s Generica India
Limited.
Taking cognizance of averments contained in the complaint and
documents annexed therewith, learned trial Court issued process
against the accused named in the complaint, including the petitioners,
however, fact remains that the complaint is still pending adjudication.
7. Initially, one of the partners of M/s Legen Healthcare, namely
Ashish Mittal (Accused No. 11) had approached this court by way of
CrMMO No. 111 of 2013, titled Ashish Mittal v. Shri Anil Chand and
others for quashing of proceedings. On account of pendency of
aforesaid petition, proceedings in the complaint filed by Drug Inspector
could not proceed further. On account of judgment dated 16.9.2013
passed by Co-ordinate Bench of this Court in CrMMO No. 111 of 2013,
Ashish Mittal, partner, M/s Legen Healthcare was discharged and
complaint qua aforesaid accused was quashed (Page 231)(Annexure
P-3).
8. Though after passing of judgment dated 16.9.2013, stay granted
by this court in proceedings sought to be quashed, stood vacated, but
.
yet proceedings in the complaint were not taken forth. It is only in the
year 2021, notices were issued to other respondents including
petitioners but the fact remains that till date, charge has not been
framed.
9. Respondent State has filed reply to the present petition, pursuant
to notices issued in the instant proceedings, wherein facts as have
10.
r to
been noticed herein above, have not been disputed, rather stand
admitted.
Precisely, the grouse of the petitioner, as has been highlighted in
the present petition and further canvassed by Mr. Anand Sharma,
learned senior counsel duly assisted by Mr. Karan Sharma, Advocate,
appearing for the petitioners is that court concerned, while issuing
process against the petitioners, failed to take note of the fact that the
complaint filed by Drug Inspector concerned under relevant provisions
of Act/Rules is not maintainable against petitioners, who happen to be
Directors of M/s Generica India Limited, for the reason that aforesaid
company was merely a stockiest/trader, at no point of time, had any
hand in manufacturing of drug in question, rather, action could be taken
against M/s Legen Healthcare, which otherwise is admitted to have
manufactured the drug in question. While making this court peruse
Section 19(3) of the Act, Mr. Sharma, learned senior counsel appearing
for the petitioners, vehemently argued that a person, not being the
manufacturer of a drug or cosmetic or his agent for the distribution
thereof, shall not be liable for contravention of S.18 (a)(i) if he proves
that he acquired the drug or cosmetic from a duly licensed
.
manufacturer, distributor or dealer thereof; 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
that the drug or cosmetic, while in his possession was properly stored
and remained in the same state as when he acquired it.
11. While referring to S.34 of the Act, Mr. Sharma, learned senior
counsel further argued 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. First Proviso to 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.
Second proviso to S.34 provides that 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, but it shall be incumbent
upon complainant to prove that persons as detailed in said provision of
.
law, were responsible for day-to-day activities of that company, on the
date, offence was occurred,
12. While making this court peruse the complaint, Mr. Sharma,
learned senior counsel attempted to carve out a case that there is not a
single word suggestive of the fact that petitioners being Directors of
company concerned were responsible for day-to-day activities of
company, rather for that purpose authorized person, Mr. Hem Raj
Thakur, accused No.4 was appointed. Mr. Sharma, further submitted
that as per information given by M/s Aar Kay Surgicals, Sujanpur, to
whom drug was sold by M/s Generica India Limited had specifically
apprised Drug Inspector concerned that the drug was purchased from
authorized representative Mr. Hem Raj Thakur vide invoice No. GIO
2530 dated 21.10.2008. If it is so, there was no occasion, if any, for the
Drug Inspector concerned to implead petitioners herein as accused.
13. Mr. Sharma, learned senior counsel further submitted that since
company i.e. M/s Generica India Limited has not been arrayed as an
accused, complaint having been filed by Drug Inspector concerned
otherwise is bound to fail, in terms of specific provisions contained
under S. 34, which mandate for impleadment of company as an
accused, if there is violation of any provisions contained under the Act.
In support of aforesaid submissions Mr. Sharma, learned senior
counsel invited attention of this court to various judgments which shall
be referred to in the later part of order.
14. Lastly, Mr.Sharma, learned senior counsel argued that since on
account of non-compliance of various provisions as detailed herein
.
above, prosecution case is bound to fail, no fruitful purpose would be
served in case, complaint as well as consequent proceedings against
the petitioners herein are allowed to sustain, rather, continuation of
same, if permitted would cause great prejudice to the petitioners who
would be unnecessarily subjected to ordeal of protracted trial, which
otherwise is bound to fail.
15.
To the contrary, Mr. Rajan Kahol, learned Additional Advocate
General, while supporting the registration of complaint by Drug
Inspector against the petitioners, vehemently argued that petitioners
being Directors of M/s Generica India Limited, are liable and
responsible for conduct of business of the company. He submitted that
respondent No.5 Mr. Hem Raj Thakur, was merely an authorized
representative of the company and petitioners, being Directors of the
Company, are liable to be punished for the commission of offence
punishable under S.27 of the Act. While referring to S. 19(3) of the Act,
Mr. Rajan Kahol, learned Additional Advocate General argued that
once, there is no denial to the fact that drug in question was stocked by
the company concerned and same was not found to be of standard
quality, petitioners being Directors of company have been rightly
booked for deliberate contravention of the provisions contained under
S.18 of the Act. Lastly, Mr. Kahol, learned Additional Advocate General
submitted that petition under S. 482 CrPC is not maintainable,
especially when complaint sought to be quashed is already fixed for
consideration on charge. He further submitted that there is
overwhelming evidence on record suggestive of the fact that petitioners
.
have contravened various provisions contained under the Act and as
such, it would be too premature at this stage to conclude that no case,
much less case under S. 18(a)(i) punishable under S.27(d) of the Act, is
made out against petitioners.
16. I have heard learned counsel for the parties and perused
material available on record.
17.
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.
18. A three-Judge Bench of the Hon'ble Apex Court in case titled
State of Karnataka v. L. Muniswamy and others, 1977 (2) SCC 699,
held that High Court while exercising power under Section 482 Cr.PC is
entitled to quash the proceedings, 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.
19. Subsequently, in case titled State of Haryana and others v.
Bhajan Lal and others, 1992 Supp (1) SCC 335, the Hon'ble Apex
Court while elaborately discussing the scope and competence of High
Court to quash criminal proceedings under Section 482 Cr.PC laid
down certain principles governing the jurisdiction of High Court to
exercise its power. After passing of aforesaid judgment, issue with
.
regard to exercise of power under Section 482 Cr.PC, again came to be
considered by the Hon'ble Apex Court in case bearing Criminal Appeal
No.577 of 2017 (arising out of SLP (CrL.) No. 287 of 2017) titled Vineet
Kumar and Ors. v. State of U.P. and Anr., wherein it has been held that
saving of the High Court's inherent powers, both in civil and criminal
matters, is designed to achieve a salutary public purpose i.e. court
20.
r to
proceedings ought not to be permitted to degenerate into a weapon of
harassment or persecution.
The Hon'ble Apex Court in Prashant Bharti v. State (NCT of
Delhi), (2013) 9 SCC 293, relying upon its earlier judgment titled as
Rajiv Thapar and Ors v. Madan Lal Kapoor, (2013) 3 SCC 330,
reiterated that High Court has inherent powers under Section 482
Cr.PC., to quash the proceedings 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. In the aforesaid judgment, the Hon'ble Apex
Court concluded that while exercising its inherent jurisdiction under
Section 482 of the Cr.PC, Court exercising such power must 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 overrule the veracity of the allegations contained in the
accusations levelled by the prosecution/complainant. Besides above,
the Hon'ble Apex Court further held that 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 of the Cr.P.C. to
quash such criminal proceedings, for that would prevent abuse of
process of the court, and secure the ends of justice. In the aforesaid
judgment titled as 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 would naturally 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, it would 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. 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; the material produced is such, as would
.
rule out and displace the assertions contained in the charges
levelled against the accused; and the material produced is such,
as would clearly reject and overrule the veracity of the
allegations contained in the accusations levelled by 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 any
evidence. 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 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 of the Cr.P.C. to quash
such criminal proceedings, for that would prevent 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
power vested 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 sterling and 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 and overrule 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?
30.4 Step four, whether proceeding with the trial would
.
result in an 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."
21.
It is quite apparent from the bare perusal of aforesaid judgments
passed by the Hon'ble Apex Court from time to time that where a
criminal proceeding is manifestly attended with mala fide and/or where
the proceeding is maliciously instituted with an ulterior motive for
wreaking vengeance on the accused and with a view to spite him/her
due to private and personal grudge, High Court while exercising power
under Section 482 Cr.PC can proceed to quash the proceedings.
22. Recently, the Hon'ble Apex Court in case tilted Anand Kumar
Mohatta and Anr. v. State (Government of NCT of Delhi) Department
of Home and Anr, AIR 2019 SC 210, has held that abuse of process
caused by FIR stands aggravated if the FIR has taken the form of a
charge sheet after investigation and as such, the abuse of law or
miscarriage of justice can be rectified by the court while exercising
power under Section 482 Cr.PC. The relevant paras of the judgment
are as under:
16. Even otherwise it must be remembered that the provision
invoked by the accused before the High Court is Section 482 Cr.
P.C and that this Court is hearing an appeal from an order under
Section 482 of Cr.P.C. Section 482 of Cr.P.C reads as follows: -
"482. Saving of inherent power of the High Court.- Nothing
.
in this Code shall be deemed to limit or affect the inherent
powers of the High Court to make such orders as may be
necessary to give effect to any order under this Code, or
to prevent abuse of the process of any Court or otherwise
to secure the ends of justice."
17. There is nothing in the words of this Section which restricts
the exercise of the power of the Court to prevent the abuse of
process of court or miscarriage of justice only to the stage of the
FIR. It is settled principle of law that the High court can exercise
jurisdiction under Section 482 of Cr.P.C even when the
discharge application is pending with the trial court ( G. Sagar
Suri and Anr. V. State of U.P. and Others, (2000) 2 SCC 636
(para 7), Umesh Kumar v. State of Andhra Pradesh and Anr.
(2013) 10 SCC 591 (para 20). Indeed, it would be a travesty to
hold that proceedings initiated against a person can be interfered
with at the stage of FIR but not if it has advanced, and the
allegations have materialized into a charge sheet. On the
contrary it could be said that the abuse of process caused by FIR
stands aggravated if the FIR has taken the form of a charge
sheet after investigation. The power is undoubtedly conferred to
prevent abuse of process of power of any court."
23. Recently, the Hon'ble Apex Court in case titled Pramod
Suryabhan Pawar v. The State of Maharashtra and Anr, (2019) 9
SCC 608, has elaborated the scope of exercise of power under Section
482 Cr.PC, the relevant para whereof reads as under:-
"7. Section 482 is an overriding section which saves the inherent
powers of the court to advance the cause of justice. Under Section
482 the inherent jurisdiction of the court can be exercised (i) to
give effect to an order under the CrPC; (ii) to prevent the abuse of
the process of the court; and (iii) to otherwise secure the ends of
justice. The powers of the court under Section 482 are wide and
the court is vested with a significant amount of discretion to decide
whether or not to exercise them. The court should be guarded in
.
the use of its extraordinary jurisdiction to quash an FIR or criminal
proceeding as it denies the prosecution the opportunity to
establish its case through investigation and evidence. These
principles have been consistently followed and re-iterated by this
Court. In Inder Mohan Goswami v State of Uttaranchal5, this Court
observed.
"23. This Court in a number of cases has laid down the scope
and ambit of courts' powers under Section 482 CrPC. Every High
Court has inherent powers to act ex debito justitiae to do real
and substantial justice, for the administration of which alone it
exists, or to prevent abuse of the process of the court. Inherent
power under Section 482 CrPC can be exercised:
(i) to give effect to an order under the Code;
(ii) to prevent abuse of the process of the court, and
(iii) to otherwise secure the ends of justice.
24. Inherent powers under Section 482 CrPC though wide have
to be exercised sparingly, carefully and with great caution and
only when exercise is justified 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."
8. Given the varied nature of cases that come before the High
Courts, any strict test as to when the court's extraordinary powers
can be exercised is likely to tie the court's hands in the face of
future injustices. This Court in State of Haryana v Bhajan Lal6
conducted a detailed study of the situations where the court may
exercise its extraordinary jurisdiction and laid down a list of
illustrative examples of where quashing may be appropriate. It is
not necessary to discuss all the examples, but a few bear
relevance to the present case. The court in Bhajan Lal noted that
quashing may be appropriate where, (2007) 12 SCC 1 1992 Supp
.
(1) SCC 335
"102. (1) Where the allegations made in the first information
report or the complaint, even if they are taken at their face value
and accepted in their entirety do not prima facie constitute any
offence or make out a case against the accused.
(2) Where the allegations in the first information report and other
materials, if any, accompanying the FIR do not disclose a
cognizable offence, justifying an investigation by police officers
under Section 156(1) of the Code except under an order of a
Magistrate within the purview of Section 155(2).
..........
(7) Where a criminal proceeding is manifestly attended with mala
fide and/or where the proceeding is maliciously instituted with an
ulterior motive for wreaking vengeance on the accused and with
a view to spite him due to private and personal grudge."
In deciding whether to exercise its jurisdiction under Section 482,
the Court does not adjudicate upon the veracity of the facts
alleged or enter into an appreciation of competing evidence
presented. The limited question is whether on the face of the
FIR, the allegations constitute a cognizable offence. As this
Court noted in Dhruvaram Murlidhar Sonar v State of
Maharashtra, 2018 SCC OnLine SC3100 ("Dhruvaram Sonar") :
"13. It is clear that for quashing proceedings, meticulous
analysis of factum of taking cognizance of an offence by
the Magistrate is not called for. Appreciation of evidence
is also not permissible in exercise of inherent powers. If
the allegations set out in the complaint do not constitute
the offence of which cognizance has been taken, it is
open to the High Court to quash the same in exercise of
its inherent powers."
24. Aforesaid law, clearly stipulates that court can exercise power
under S.482 of the Code of Criminal Procedure, to quash criminal
proceedings, in cases, where the allegations made in the first
information report or the complaint, even if they are taken at their face
.
value and accepted in their entirety do not prima facie constitute any
offence or make out a case against the accused.
25. Now being guided by the aforesaid proposition of law laid down
by the Hon'ble Apex Court, this Court would make an endeavor to
examine and consider the prayer made in the instant petition vis-à-vis
factual matrix of the case.
26.
Admittedly in the case at hand, drug in question i.e.
Chlorpheniramine Maleate was not manufactured by M/s Generica
India Limited, rather the same was manufactured by M/s Legen
Healthcare. Petitioners herein have been arrayed as accused on
account of their being Directors of M/sGenerica India Limited, which is
admittedly a stockiest/trader of the drug in question. Sample of drug
was drawn from pharmacy namely M/s Shri Shri Medical Store, whose
in-charge was respondent No.2 Anil Chand. Above named Anil Chand
disclosed to Drug Inspector concerned that the drug in question was
purchased from M/s Aar Kay Surgicals, Sujanpur vide invoice dated
23.12.2008. M/s Aar Kay Surgicals, Sujanpur further informed the Drug
Inspector concerned that the drug was purchased by it from M/s
Generica India Limited vide invoice dated 21.10.2008 from Mr. Hem Raj
Thakur, authorized representative M/s Generica India Limited.
Aforesaid private limited company, while responding to notice issued by
Drug Inspector concerned, specifically disclosed that it is not the
manufacturer of drug in question, rather it has purchased the same
from M/s Legen Healthcare and thereafter, being stockiest and trader,
supplied the drug in question to whole seller M/s Aar Kay Surgicals,
.
Sujanpur.
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 its
authorized 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];]
(iv) any drug which by means of any statement design or
.
device 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
quantities of 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 or exhibiting 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 or
.
offer 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 for
punishment 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 to be 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:
"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
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 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."
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
39.
r to
committed without his knowledge or that he exercised all due diligence
to prevent the commission of such offence
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 the company
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 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.
41. A similar view was taken by Hon'ble Apex Court in Dayle
De'souza v. Govt. of India, 2021 SCC OnLine SC 1012, wherein it was
observed:-
"24. There is yet another difficulty for the prosecution in the present
case as the Company has not been made an accused or even
summoned to be tried for the offence. The position of law as
propounded in State of Madras v. C.V. Parekh (1970) 3 SCC 491,
reads:
"3. Learned Counsel for the appellant, however, sought
conviction of the two respondents on the basis of Section 10 of
the Essential Commodities Act under which, if the person
contravening an order made under Section 3 (which covers an
order under the Iron and Steel Control Order, 1956), is a
company, every person who, at the time the contravention 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
contravention and shall be liable to be proceeded against and
punished accordingly. It was urged that the two respondents
were in charge of, and were responsible to, the Company for
the conduct of the business of the Company and, consequently,
they must be held responsible for the sale and for thus
contravening the provisions of clause (5) of the Iron and Steel
.
Control Order. This argument cannot be accepted, because it
ignores the first condition for the applicability of Section 10 to
the effect that the person contravening the order must be a
company itself. In the present case, there is no finding either by
the Magistrate or by the High Court that the sale in
contravention of clause (5) of the Iron and Steel Control Order
was made by the Company. In fact, the Company was not
charged with the offence at all. The liability of the persons in
charge of the Company only arises when the contravention is
by the Company itself. Since, in this case, there is no evidence
and no finding that the Company contravened clause (5) of the
Iron and Steel Control Order, the two respondents could not be
held responsible. The actual contravention was by Kamdar and
Vallabhdas Thacker and any contravention by them would not
fasten responsibility on the respondents. The acquittal of the
respondents is, therefore, fully justified. The appeal fails and is
dismissed."
25. However, this proposition was later deviated from in Sheoratan
Agarwal v. State of Madhya Pradesh (1984) 4 SCC 352. This case
pertained to the pari materia provision under Section 10 of the
Essential Commodities Act, 1955. The court held that anyone among
the company itself; every person in charge of and responsible to the
company for the conduct of the business; or any director, manager,
secretary or other officers of the company with whose consent or
connivance or because of whose neglect offence had been committed,
could be prosecuted alone. However, the person in charge or an officer
of the company could be held guilty in that capacity only after it has
been established that there has been a contravention by the company
as well. However, this will not mean that the person in charge or an
officer of the company must be arraigned simultaneously along with
the company if he is to be found guilty and punished.
26. Relying upon the reasoning in Sheoratan Agarwal (supra) and limiting the
interpretation of C.V. Parekh (supra), this Court in Anil Hada v. Indian Acrylic
Ltd. (2000) 1 SCC 1 had held that:
"13. If the offence was committed by a company it can be punished
only if the company is prosecuted. But instead of prosecuting the
company if a payee opts to prosecute only the persons falling within
the second or third category, the payee can succeed in the case only if
he succeeds in showing that the offence was actually committed by the
company. In such a prosecution the accused can show that the
company has not committed the offence, though such a company is
not made an accused, and hence the prosecuted accused is not liable
to be punished. The provisions do not contain a condition that
prosecution of the company is sine qua non for prosecution of the
other persons who fall within the second and the third categories
mentioned above. No doubt a finding that the offence was committed
by the company is sine qua non for convicting those other persons. But
if a company is not prosecuted due to any legal snag or otherwise, the
other prosecuted persons cannot, on that score alone, escape from the
penal liability created through the legal fiction envisaged in Section 141
.
of the Act."
27. However, subsequent decisions of this Court have emphasised that the
provision imposes vicarious liability by way of deeming fiction which
presupposes and requires the commission of the offence by the company
itself as it is a separate juristic entity. Therefore, unless the company as a
principal accused has committed the offence, the persons mentioned in sub-
section (1) would not be liable and cannot be prosecuted. Section 141(1) of
the Negotiable Instruments Act, extends vicarious criminal liability to the
officers of a company by deeming fiction, which arises only when the offence
is committed by the company itself and not otherwise. Overruling Sheoratan
Agarwal and Anil Hada, in Aneeta Hada v. Godfather Travels and Tours
Private Limited (2012)5 SCC 661, a 3-judge bench of this court expounding on
the vicarious liability under Section 141 of the Negotiable Instruments Act, has
held:
"51. We have already opined that the decision in Sheoratan Agarwal
runs counter to the ratio laid down in C.V. Parekh which is by a larger
Bench and hence, is a binding precedent. On the aforesaid
ratiocination, the decision in Anil Hada has to be treated as not laying
down the correct law as far as it states that the Director or any other
officer can be prosecuted without impleadment of the company.
Needless to emphasise, the matter would stand on a different footing
where there is some legal impediment and the doctrine of lex non cogit
ad impossibilia gets attracted.
xxxxxxxx
59. In view of our aforesaid analysis, we arrive at the irresistible conclusion
that for maintaining the prosecution under Section 141 of the Act, arraigning of
a company as an accused is imperative. The other categories of offenders can
only be brought in the drag-net 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 which is a three-judge Bench decision. Thus,
the view expressed in Sheoratan Agarwal does not correctly lay down the law
and, accordingly, is hereby overruled. The decision in Anil Hada is overruled
with the qualifier as stated in para 51. The decision in Modi Distillery 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.
43. Reliance is also placed upon judgment rendered by Hon'ble
Apex Court in Lalankumar Singh v. State of Maharashtra, 2022
(Supp.) Shim. LC 260, wherein, Hon'ble Apex Court held as under:
"14. It could thus be seen that this Court had held that simply
because a person is a director of the company, it does not necessarily
mean that he fulfils the twin requirements of Section 34(1) of the said
Act so as to make him liable. It has been held that a person cannot be
made liable unless, at the material time, he was incharge of and was
also responsible to the company for the conduct of its business.
15. In the case of S.M.S. Pharmaceuticals Ltd. vs. Neeta
Bhalla and another, this Court was considering the question as to
whether it was sufficient to make the person liable for being a director
.
of a company under Section 141 of the negotiable Instruments Act,
1881. This Court considered the definition of the word "director" as
defined in Section 2(13) of the Companies Act, 1956. This Court
observed thus:
"8. ....... There is nothing which suggests that simply by being
a director in a company, one is supposed to discharge
particular functions on behalf of a company. It happens that a
person may be a director in a company but he may not know
anything about the daytoday functioning of the company. As a
director he may be attending meetings of the Board of Directors
of the company where usually they decide policy matters and
guide the course of business of a company. It may be that a
Board of Directors may appoint subcommittees consisting of
one or two directors out of the Board of the company who may
be made responsible for the daytoday functions of the
company. These are 4 (2005) 8 SCC 89 matters which form
part of resolutions of the Board of Directors of a company.
Nothing is oral. What emerges from this is that the role of a
director in a company is a question of fact depending on the
peculiar facts in each case. There is no universal rule that a
director of a company is in charge of its everyday affairs. We
have discussed about the position of a director in a company in
order to illustrate the point that there is no magic as such in a
particular word, be it director, manager or secretary. It all
depends upon the respective roles assigned to the officers in a
company. ....."
16. It was held that merely because a person is a director of a
company, it is not necessary that he is aware about the daytoday
functioning of the company. This Court held that there is no universal
rule that a director of a company is in charge of its everyday affairs. It
was, therefore, necessary, to aver as to how the director of the
company was in charge of daytoday affairs of the company or
responsible to the affairs of the company. This Court, however,
clarified that the position of a managing director or a joint managing
director in a company may be different. This Court further held that
these persons, as the designation of their office suggests, are in
charge of a company and are responsible for the conduct of the
business of the company. To escape liability, they will have to prove
that when the offence was committed, they had no knowledge of the
offence or that they exercised all due diligence to prevent the
commission of the offence.
17. In the case of Pooja Ravinder Devidasani vs. State of
.
Maharashtra and another this Court observed thus:
"17. ...... Every person connected with the Company will not
fall into the ambit of the provision. Time and again, it has been
asserted by this Court that only those persons who were in
charge of and responsible for the conduct of the business of the
Company at the time of commission of an offence will be liable
for criminal action. A Director, who was not in charge of and
was not responsible for the conduct of the business of the
Company at the relevant time, will not be liable for an offence
under Section 141 of the NI Act. In National Small Industries
Corpn. [National Small Industries Corpn. Ltd. v. Harmeet Singh
Paintal, (2010) 3 SCC 330 : (2010) 1 SCC (Civ) 677 : (2010) 2
SCC (Cri) 1113] this Court observed: (SCC p. 336, paras 1314)
5 (2014) 16 SCC 1
"13. Section 141 is a penal provision creating vicarious
liability, and which, as per settled law, must be strictly
construed. It is therefore, not sufficient to make a bald cursory
statement in a complaint that the Director (arrayed as an
accused) is in charge of and responsible to the company for the
conduct of the business of the company without anything more
as to the role of the Director. But the complaint should spell out
as to how and in what manner Respondent 1 was in charge of
or was responsible to the accused Company for the conduct of
its business. This is in consonance with strict interpretation of
penal statutes, especially, where such statutes create vicarious
liability.
14. A company may have a number of Directors and to
make any or all the Directors as accused in a complaint merely
on the basis of a statement that they are in charge of and
responsible for the conduct of the business of the company
without anything more is not a sufficient or adequate fulfilment
of the requirements under Section 141." (emphasis in original)
18. In Girdhari Lal Gupta v. D.H. Mehta [Girdhari Lal Gupta v.
D.H. Mehta, (1971) 3 SCC 189 : 1971 SCC (Cri) 279 :AIR 1971 SC
2162], this Court observed that a person "in charge of a business"
means that the person should be in overall control of the daytoday
business of the Company."
44. There is another aspect of the matter, that once there is no
dispute qua the fact, that M/s Generica India Limited had appointed Mr.
Hem Raj Thakur as its authorized signatory, as is evident from
Annexure P-1, (para 8 of complaint) and he was otherwise responsible
.
for day-to-day functions of the company, there was otherwise no
occasion, if any, for Drug Inspector concerned to implead petitioners,
being Directors of company as accused.
45. Once, Mr. Hem Raj Thakur being authorized signatory was
responsible for conduct of business of firm in question and invoice, vide
which drug was sold to M/s Aar Kay Surgicals Sujanpur, contained his
signatures, coupled with the fact that no material came to be adduced
on record qua the fact that petitioners, being Directors of M/s Generica
India Limited were looking after day-to-day affairs of the company, no
case, if any, under S.18(a)(i), punishable under S.27(d) of the Act could
be registered against petitioners being Directors of company
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 Private Limited,
(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.
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 incharge of 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 said firm. Therefore, in my opinion,
summoning of the petitioner for the alleged offence in his capacity as
a Partner is wrong and illegal.
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 an accused 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 the petitioner, 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."
47. In the aforesaid judgment, Coordinate Bench of this Court,
having taken note of the fact that the firm, of which petitioner in that
case was a partner, was not impleaded as an accused, coupled with
the fact that there was no allegation against the petitioner, being partner
or in charge or responsible for conduct of business of said firm, held
summoning of petitioner in that case bad in law.
.
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.
49. Having scanned the entire material adduced on record, vis-à-vis
prayer made in the instant petition, this court is persuaded to agree with
Mr. Anand Sharma, learned senior counsel, appearing for the
petitioners, that this court, while exercising power under S.482 CrPC
may proceed to quash the complaint against the petitioners, because
continuance thereof would be sheer abuse of process of law, since, for
the reasons stated herein above, case of prosecution is bound to fail
against the petitioners in all probabilities.
50. Otherwise also, in case prayer made on behalf of the petitioners
is not accepted they would be subjected to unnecessary ordeal of
facing protracted trial, which otherwise is bound to fail.
51. In view of detailed discussion made herein above and law taken
into consideration, present petition is allowed. Complaint No. HFW-
.
HMR(PROS) DRUGS/10-09, registered as Complaint No. 58-1 of 2010
titled as State of Himachal Pradesh (through Drugs Inspector H.Q.
Hamirpur) v. Anil Chand and others as well as consequent proceedings
pending in the court of learned Judicial Magistrate First Class, Nadaun,
Hamirpur (Annexure P-2) are quashed and set aside qua the
petitioners. The petitioners are discharged henceforth. All pending
r to
applications, stand disposed of.
(Sandeep Sharma)
Judge
July 4, 2024
(vikrant)
