Telangana High Court

Smt. Kalva Padmaja vs The State Of Telangana, on 28 January, 2022

Bench: G.Radha Rani

        THE HON'BLE Dr. JUSTICE G. RADHA RANI

            CRIMINAL PETITION No.12389 of 2016
ORDER:

This petition is filed by the petitioner-A10 under 482 Cr.P.C. to

quash the proceedings against her in S.C. No.2 of 2015 on the file of

I-Additional District Judge, Sanga Reddy, Medak District for the

offences under Sections 18(a)(i) read with 17-B for stocking and

selling the Spurious/NSQ (Not of Standard Quality) drug, for

violating Section 18A for not disclosing the name of manufacturer and

source of supply of said batch of drug punishable under Section 28,

for violation of Section 18B, for not submitting the documents,

records and registers of the said drug punishable under Section 28A,

for violating Section 18(a)(vi) read with Rule 65(5)(3) for not

submitting the purchase details punishable under Section 27(d) and

for violating Section 22(1)(cca) for not submitting the purchase bills,

records and registers for the said drug punishable u/s 22(3) of the

Drugs and Cosmetics Act, 1940.

2. The respondent No.2-The Drug Inspector filed a complaint

before the Judicial Magistrate of First class, Siddipet, Medak District

stating that he visited the premises of M/s. Mani Sai Sree Medical

Agencies, situated at D.No 8-2-101/13, Shivaji Nagar, Siddipet on 12-

12-2013 and on suspicion, taken drug of quantity 20x10 tablets of

ZIFI-200 (Cefixime Tablets IP 200 mg), B.No CKM3083,

Manufacturing date 08/2013, Expiry date 01.2015, manufactured by

FDC Limited, at Village: Khol-Bhood, Tehsil: Nalagarh, Baddi-173 Dr.GRR,J

2015, Dist. Solan (HP) for the purpose of test or analysis under

intimation in Form-17, divided the sampled drug into 4 portions and

sealed them. On 13-12-2013, the sampled drug was submitted for

analysis to the Government Analyst, Drug Control Laboratory,

Hyderabad. On 16-12-2013, the Government Analyst gave a report

that the drug was "not of standard quality" as the said tablets did not

comply for Cefixime as per IP HPLC Method. The Drug Inspector

issued a notice to M/s. Mani Sai Sree Medical Agencies, Siddipet for

disclosing the purchase and distribution details of the said drug and

they replied that they purchased the same from M/s. Swathi Medical

Corporation, Jawahar Nagar, Hyderabad. The Drug Inspector

inspected M/s. Swathi Medical Corporation, Jawahar Nagar,

Hyderabad and they reported that they purchased the said batch of

drug from M/s. Shiva Medical Agencies, D.No.8-2-101/4, Shivaji

Nagar, Siddipet, Medak District. On 19-12-2013, the Drug Inspector

issued a notice to M/s Shiva Medical Agencies, Siddipet for

disclosing the license particulars, purchase and distribution

particulars, conveyance particulars and mode of payment for the

supplied drug. K. Sridhar, Managing Partner and competent person in

his letter dated 19-12-2013 stated that he sold the drug only to

M/s. Swathi Medical Corporation, Hyderabad.

3. It was mentioned in the charge sheet that on 8-1-2014, Kalva

Sridhar, Managing Partner cum competent person of M/s. Shiva

Medical Agencies, Siddipet in his reply dated 8-1-2014 failed to

disclose the name and address of the manufacturer and supplier from Dr.GRR,J

whom he acquired the said batch of drug. He failed to submit the

conveyance details for supply of the said drug and also failed to

produce the payment details for supply of said drug and claimed as

Managing Partner of M/s. Shiva Medical Agencies, Siddipet and

responsible for day to day activities of the firm vide affidavit.

4. Basing on the same, the Drug Inspector filed the complaint

showing Kalva Sridhar as A1 and the petitioner as A10. The same was

taken cognizance by the learned Magistrate, numbered as P.R.C No.

10 of 2014 and committed to the Court of Sessions. The said case was

transferred to I-Additional District Judge, Sanga Reddy, Medak

District and numbered as SC No.2 of 2015.

5. Heard the learned Counsel for the Petitioner and the learned

Public Prosecutor.

6. The learned counsel for the petitioner submitted that the

petitioner was only a partner of A1 firm and he was not responsible

for the day to day affairs of the firm, the complainant had not

specifically alleged in the complaint the role played by the petitioner

and how he was responsible for the day to day affairs of the firm to

attribute any sort of liability on him. Merely because a person was a

partner of a firm, it would not make such person liable for the offence

committed by the firm. Liability would lie only on such people as per

Section 34 of Drugs and Cosmetics Act, 1940 at the time of

commission of offence were incharge of the conduct of the business

of the firm. A1 in his letter dated 8-1-2014 stated that he was the

Managing Partner and competent person and filed affidavit to that Dr.GRR,J

effect. The affidavits of A2 and other partners also would disclose that

they were not responsible for the conduct of business of the firm and

relied upon the judgment of the Hon'ble Apex Court in SMS

Pharmaceuticals Ltd v. Neeta Bhalla and Another1 and of this

Court in Crl.P No. 6772 of 2008 dated 1-4-2011.

7. The learned Public Prosecutor opposed the petition.

8. Perused the record. The complaint itself would disclose that

A1 in his letter dated 8-1-2014 stated that he was the Managing

Partner cum competent person of M/s. Shiva Medical Agencies,

Siddipet and was responsible for the day to day activities of the firm

vide affidavit. The petitioner and other partners also filed a joint

affidavit stating that they were only sleeping partners and Kalva

Sridhar (A1) was looking after the day to day business of the said

firm.

9. Section 34 of the Drugs and Cosmetics Act, 1940 deals with

offences by companies. The same is extracted for perusal.

"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

(2005) 8 SCC 89 Dr.GRR,J

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."

10. This Court in Crl.P No. 6772 of 2008 while dealing with a

petition under Section 482 Cr.P.C. for quashing the proceedings under

the Drugs and Cosmetics Act had taken the support of the judgment of

the Hon'ble Apex Court in State of Karnataka v. Pratap Chand

and others [1981 SCC (Crl) 453] wherein it was held that:

"Under Section 34 of the Act, Partner of a firm not in overall control of the day to day business of the firm, was not liable u/s 34 for offences under the Act."

11. The Hon'ble Apex Court in SMS Pharmaceuticals Ltd.,

case (supra) while dealing with the offence under Section 138 and 141

of Negotiable Instruments Act, held in paras-10 to 12 that:

10. While analysing Section 141 of the Act, it will be seen that it operates in cases where an offence under Section 138 is committed by a company. The key words which occur in the Section are "every person". These are general words and take every person connected with a company within their sweep. Therefore, these words have been rightly qualified by use of the words:

"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 etc."

What is required is that the persons who are sought to be made criminally liable under Section 141 should be at the time the offence was committed, in charge of and responsible to the company for the conduct of the business of the company. Every person connected with the company shall not fall within the ambit of the provision. It is only those persons who were in charge of and responsible for conduct of business of the company at the time of commission of an offence, who will be liable for criminal action. It follows from this that if a director of a Company who was not in charge of and was not responsible for the conduct of the business of the company at the relevant Dr.GRR,J

time, will not be liable under the provision. The liability arises from being in charge of and responsible for conduct of business of the company at the relevant time when the offence was committed and not on the basis of merely holding a designation or office in a company. Conversely, a person not holding any office or designation in a Company may be liable if he satisfies the main requirement of being in charge of and responsible for conduct of business of a Company at the relevant time. Liability depends on the role one plays in the affairs of a Company and not on designation or status. If being a Director or Manager or Secretary was enough to cast criminal liability, the Section would have said so. Instead of "every person" the section would have said "every Director, Manager or Secretary in a Company is liable"....etc. The legislature is aware that it is a case of criminal liability which means serious consequences so far as the person sought to be made liable is concerned. Therefore, only persons who can be said to be connected with the commission of a crime at the relevant time have been subjected to action.

11. A reference to Sub-section (2) of Section 141 fortifies the above reasoning because Sub-section (2) envisages direct involvement of any Director, Manager, Secretary or other officer of a company in commission of an offence. This section operates when in a trial it is proved that the offence has been committed with the consent or connivance or is attributable to neglect on the part of any of the holders of these offices in a company. In such a case, such persons are to be held liable. Provision has been made for Directors, Managers, Secretaries and other officers of a company to cover them in cases of their proved involvement.

12. The conclusion is inevitable that the liability arises on account of conduct, act or omission on the part of a person and not merely on account of holding an office or a position in a company. Therefore, in order to bring a case within Section 141 of the Act the complaint must disclose the necessary facts which make a person liable."

12. In the very same judgment para - 15 deals with the similar

provisions of vicarious liability in other Acts and particularly of

Section 34 of Drugs and Cosmetics Act and held as follows

"15. Cases have arisen under other Acts where similar provisions are contained creating vicarious liability for officers of a company in cases where primary liability is that of a company. State of Karnataka v. Pratap Chand and Ors., [(1981 SCC (Cri) 453] was a case under the Drugs and Cosmetics Act, 1940. Section 34 contains a similar provision making every person in charge of and responsible to the company for conduct of its business liable for offence committed by a company. It was held that a person liable for criminal action under that provision should be a person in overall control of day-to-day affairs of the company or a firm This was a case of a partner in a firm and it was held that a partner who was not in such overall control of the firm could not be held liable."

Dr.GRR,J

13. Hence considering the above citations and as there were no

specific averments in the complaint that the petitioner was in any way

responsible for the conduct of the business of the firm or incharge of

the affairs of the firm and conversely an affidavit was filed by A1 that

he was responsible for the day to day activities of the firm as the

Managing Partner of the firm and the petitioner is only a sleeping

partner, it is considered fit to quash the proceedings in S.C. No. 2 of

2015 on the file of I-Additional District Judge, Sanga Reddy, Medak

District, against the petitioner herein.

14. In the result, the Criminal Petition is allowed quashing the

proceedings in S.C. No.2 of 2015 on the file of I-Additional District