1. Mr. Bal Krishan Bansal 2. Mr. Mukesh Bansal 3. Mr. Lajpat Rai Bansal v. The State of Jharkhand & Anr
Case Details
1 IN THE HIGH COURT OF JHARKHAND AT RANCHI Cr.M.P. No. 2116 of 2016 1. Mr. Bal Krishan Bansal 2. Mr. Mukesh Bansal 3. Mr. Lajpat Rai Bansal 4. Mr. Anshul Bansal 5. Mr. Puneet Bansal 6. Mr. Manish Bansal 7. Mrs. Monika Bansal 8. Mr. Amit Kumar Bansal 9. Mrs. Madhu Bansal 10. Mrs. Shiana Bansal …….Petitioners Versus The State of Jharkhand & Anr. With Cr.M.P. No. 2706 of 2016 …… Opp. Parties Mr. Puran Chand Joshi …….Petitioner The State of Jharkhand & Anr. Versus …….. …… Opp. Parties
Legal Reasoning
“ 8. Nonetheless, we find that the impugned judgment of the High Court has got to be upheld for an altogether different reason. Admittedly, the three respondents were being prosecuted as directors of the manufacturers with the aid of Section 34(1) of the Act 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.” It is thus seen that the vicarious liability of a person for being prosecuted for an offence committed under the Act by a company arises if at the material time he was in charge of and was also responsible to the company for the conduct of its business. Simply because a person is a director of the company it does not necessarily mean that he fulfils both the above requirements so as to make him liable. Conversely, without being a director a person can be in charge of and responsible to the company for the conduct of its business. From the complaint in question we, however, find that except a bald statement that the respondents were directors of the manufacturers, there is no other allegation to indicate, even prima facie, that they were in charge of the company and 4 also responsible to the company for the conduct of its business.” 6. With regard to not making company as one of the accused, he relied in the case of relied in the case of “Sunil Bharti Mittal Vs. Central Bureau of Investigation”(2015) 4 SCC 609. He refers to para 42, 43, 44 and 48 of the said judgment which are quoted hereinbelow:- “42. No doubt, a corporate entity is an artificial person which acts through its officers, Directors, Managing Director, Chairman, etc. If such a company commits an 4 offence involving mens rea, it would normally be the intent and action of that individual who would act on behalf of the company. It would be more so, when the criminal act is that of conspiracy. However, at the same time, it is the cardinal principle of criminal jurisprudence that there is no vicarious liability unless the statute specifically provides so. 43. Thus, an individual who has perpetrated the commission of an offence on behalf of a company can be made an accused, along with the company, if there is sufficient evidence of his active role coupled with criminal intent. Second situation in which he can be implicated is in those cases where the statutory regime itself attracts the doctrine of vicarious liability, by specifically incorporating such a provision. 44. When the company is the offender, vicarious liability of the Directors cannot be imputed automatically, in the absence of any statutory provision to this effect. One such example is Section 141 of the Negotiable Instruments Act, 1881. In Aneeta Hada, the Court noted that if a group of persons that guide the business of the company have the criminal intent, that would be imputed to the body corporate and it is in this backdrop, Section 141 of the Negotiable Instruments Act has to be understood. Such a position is, therefore, because of statutory intendment making it a deeming fiction. Here also, the principle of “alter ego”, was applied only in one direction, namely, where a group of persons that guide the business had criminal intent, that is to be imputed to the body corporate and not the vice versa. Otherwise, there has to be a specific act attributed to the Director or any other person allegedly in control and management of the company, to the effect that such a person was responsible for the acts committed by or on behalf of the company. 48. Sine qua non for taking cognizance of the offence is the application of mind by the Magistrate and his satisfaction that the allegations, if proved, would constitute an offence. It is, therefore, imperative that on a complaint or on a police report, the Magistrate is bound to consider the question as to whether the same discloses commission of an offence and is required to form such an opinion in this respect. When he does so and decides to issue process, he shall be said to have taken cognizance. At the stage of taking cognizance, the only consideration before the court remains to consider judiciously whether the material on which the prosecution proposes to prosecute the accused brings out a prima facie case or not.” 7. He further submits that in view of Section 23 (4) (iii) of the said Act it was not complied in view of the that Section sample was to be sent to the manufacturer after seizing the same as the name and particular of the manufacturers are available on the label of the subject drug, which was not done in the present case. He submits that the valuable right of the petitioners has been taken for non compliance of Sub-Section 3 of Section 25 of the said Act. 5 8. He submits that this Court considering the above two judgments and other judgments interfered in quashing application in the case of “Roshan Lal Goyal & Ors. Vs. The State of Jharkhand & Anr. (Cr.M.P. No. 2580 of 2016) by order dated 28.04.2022. 9. Learned counsels for the State submit that the learned court has rightly taken cognizance. 10. It is an admitted position that drugs in question was seized from the premises of the Balaji Medical Store. The petitioners are the directors of the M/s Theon Pharmaceuticals Ltd. In the complaint petition how the petitioners are looking to day to day affairs of the said company, is not disclosed. 11. In view of that section 34 of the Drugs and Cosmetics Act is attracted and the case of the petitioner is covered in the light of judgment in the case of State of Haryana Vs. Sunil Bharti Mittal (supra). 12. Further, it is an admitted position that Section 23 (4) (iii) of the said Act compliance is not made. Further the right of the petitioner was taken in view of non compliance of the sub section 3 of section 25 of the said Act. 13. The case of the petitioner is covered in view of judgment of Hon’ble Supreme Court so far non compliance of statutory provision of sub- section 3 and 4 of Section 25 of the Drugs and Cosmetics Act, 1940. Reference may be made to the case of “Medicamen Biotech Limited and Another Vs. Rubina Bose, Drug Inspector, (2008) 7 SCC 196. Paragraph Nos. 13, 16 and 18 of the said judgment are quoted hereinbelow:-
Arguments
CORAM: HON'BLE MR. JUSTICE SANJAY KUMAR DWIVEDI --------- For the Petitioners: Mr. R.S. Mazumdar, Sr. Advocate, Advocate Mohini Gupta, Advocate Mr. Nishant Kr. Roy, Advocate For the State : Mr. Rajneesh Vardhan, A.P.P. (Cr.M.P. 2116/2016) Mr. V.S. Sahay, A.P.P. ( Cr.M.P. 2706/2016) ………… 06/Dated: 30/01/2024 In both the cases common complaint as well as cognizance order are under challenge accordingly, both the cases are heard together with the consent of the parties.. 2. Heard Mr. R.S. Mazumdar,, learned counsel for the petitioners and Mr. Rajneesh Vardhan and Mr. V.S. Sahay, learned counsels for the State in respective cases. 3. Both the petitions have been filed for quashing the entire criminal proceeding including order taking cognizance dated 28.10.2015 in connection 2 with Complaint Case No. 43/2015, pending in the Court of learned Chief Judicial Magistrate, Chaibasa. 4. The case has been instituted on the basis of a prosecution report lodged by the opposite party no. 2 alleging therein that on 30.08.14 the complainant had inspected M/s Om Sri Jai Balaji Medical, Chalbasa and had seized sample of Amplus for inspection and thereafter nearly after 5 days, the sample was sent on 04.09.2014 for testing to Government Analyst, Drug testing Laboratory, Ranchi and the same was received by the Government Analyst on 08.09.2014. The said drug was analyzed by the Government Analyst, and reported to be not of standard quality vide his report No GA 736 dt. 21.01.15 in Form 13 mentioning two reasons i.e. Description and Uniformity in weight. Thereafter the same was communicated to the medical shop i.e. retailer and details of purchase and distribution of the said medicine was sought from the concerned medical shop with further direction to stop its sale. It was informed that the said medicines have been purchased from M/s Life Medical Agency, Chakradharpur whereafter M/s Life Medical Agency, Chakradharpur was also informed with a direction to stop sale / purchase of the said medicines and further details of purchase were sought. M/s Life Medical Agency, Chakradharpur informed about its purchase from M/s Jagsonpal Pharmaceuticals Ltd., Ranchi and accordingly the said pharma was also informed with a direction to stop sale / purchase of the said medicines and further details of purchase were sought. M/s Jagsonpal Pharmaceuticals Ltd., Ranchi informed about its purchase from M/s Jagsonpal Pharmaceuticals Ltd., Delhi and accordingly the said pharma was also informed with a direction to stop sale/purchase of the said medicines and further details of purchase were sought. M/s Jagsonpal Pharmaceuticals Ltd., Ranchi informed about its purchase from M/s Theon Pharmaceuticals Ltd., Solan, Himachal Pradesh. 3 Accordingly by letter dt. 23.04.15, M/s Theon Pharmaceauticals Ltd., Solan, Himachal Pradesh was informed about the drug being not of standard quality. It is alleged in the impugned complaint that the medicine Amplus drug manufactured by M/s Theon Pharmaceuticals Ltd is substandard, and impugned complaint has been filed U/s 18(a)(i) and 27(d) of the Drugs and Cosmetic Act, 1940 and prayer has been made to take cognizance and proceed accordingly. 5. Mr. R.S. Mazumdar, learned senior counsel for the petitioners submits that the petitioners are the directors of M/s Theon Pharmaceuticals Ltd. He submits that vicarious liability cannot be fastened upon the petitioners as they were not looking day to day affairs of the said company. He submits that even company has not been made accused in the complaint case and the learned court has not taken cognizance against the company and to buttress this argument, he refers to Section 34 of the Drugs and Cosmetics Act. He submits that in view of that the case of the petitioner is covered in the light of judgment of the Hon’ble Supreme Court in the case of “State of Haryana Vs. Brij Lal Mittal and Others” (1998) 5 SCC 343. He refers to para 8 of the said judgment which is quoted hereinbelow:-
Decision
“13. As would be evident, the matter would turn on an examination of the legal provisions. Section 23 of the Act provides the procedure for taking of samples and subsection (4) thereof, as already mentioned above, provides that the sample shall be divided into four portions and be kept/disposed of in the manner laid therein including one sample to be produced before the Magistrate. Section 25 is reproduced below: “25. Reports of Government Analysts.—(1) The Government Analyst to whom a sample of any drug or cosmetic has been submitted for test or analysis under sub-section (4) of Section 23, shall deliver to the Inspector submitting it a signed report in triplicate in the prescribed form. (2) The Inspector on receipt thereof shall deliver one copy of the report to the person from whom the sample was taken and another copy to the person, if 6 any, whose name, address and other particulars have been disclosed under Section 18-A, and shall retain the third copy for use in any prosecution in respect of the sample. (3) Any document purporting to be a report signed by a Government Analyst under this Chapter shall be evidence of the facts stated therein, and such evidence shall be conclusive unless the person from whom the sample was taken or the person whose name, address and other particulars have been disclosed under Section 18-A has, within twenty-eight days of the receipt of a copy of the report, notified in writing the Inspector or the court before which any proceedings in respect of the sample are pending that he intends to adduce evidence in controversion of the report. (4) Unless the sample has already been tested or analysed in the Central Drugs Laboratory, where a person has under sub-section (3) notified his intention of adducing evidence in controversion of a Government Analyst's report, the court may, of its own motion or in its discretion at the request either of the complainant or the accused, cause the sample of the drug or cosmetic produced before the Magistrate under sub-section (4) of Section 23 to be sent for test or analysis to the said laboratory, which shall make the test or analysis and report in writing signed by, or under the authority of, the Director of the Central Drugs Laboratory the result thereof, and such report shall be conclusive evidence of the facts stated therein. (5) The cost of a test or analysis made by the Central Drugs Laboratory under sub-section (4) shall be paid by the complainant or accused as the court shall direct. A reading of the aforesaid provisions would reveal that they lay certain obligations as well as provide safeguards for a person from whom a drug has been seized for analysis or testing as Section 25(3) specifies that unless such a person controverts the correctness of the report submitted by the Government Analyst within 28 days in writing that he intends to adduce evidence to controvert the report of the analyst, it would be deemed to be conclusive evidence of the quality of the drug whereas sub-section (4) of Section 25 obliges the Magistrate on the request of the complainant or the accused or on his own motion to send the fourth sample which has been disputed for fresh testing to the Director of the Central Drugs Laboratory. 16. It is, therefore, evident that the appellant had not once but on at least two occasions and within 28 days of the receipt of the show-cause notice clarified that it intended to adduce evidence to show that the test report of the Government Analyst was not correct. The judgments cited by the learned counsel for the respondent, therefore, do not apply to the facts of the case as they were given in the context where the dealer/manufacturer had not expressed its desire to challenge the veracity of the report of the Drugs Analyst. 18. In Unique Farmaid case [(1999) 8 SCC 190 : 1999 SCC (Cri) 1404] which was a case under the Insecticides Act which has provisions analogous to Section 25(4) of the Act, the Court found that the accused had indeed made a request to the Inspector for sending the sample for retesting within the prescribed time-limit and as this request had not been accepted an important right given to an accused had been rendered ineffective on which the proceedings could be quashed. This is what the Court had to say: (SCC p. 197, paras 12-13) “12. It cannot be gainsaid, therefore, that the respondents in these appeals have been deprived of their valuable right to have the sample tested from the Central Insecticides Laboratory under sub-section (4) of Section 24 of the Act. Under sub-section (3) of Section 24 report signed by the Insecticide Analyst shall be evidence of the facts stated therein and shall be conclusive evidence against the accused only if the accused do not, within 28 days of the receipt of the report, notify in writing to the Insecticides Inspector or the court before which proceedings are pending that they intend to adduce evidence to controvert the report. In the present cases the Insecticides Inspector was notified that the accused intended to adduce evidence to controvert the report. By the time the matter reached the court, the shelf life of the sample had already expired and no purpose would have been served informing the court of such an intention. The report of the Insecticide Analyst was, therefore, not conclusive. A valuable right had been conferred on the accused to have the sample tested from the Central Insecticides Laboratory and in the circumstances of the case the accused have been deprived of that right, thus, prejudicing them in their defence. 7 13. In these circumstances, the High Court was right in concluding that it will be an abuse of process of court if the prosecution is continued against the respondents, the accused persons. The High Court rightly quashed the criminal complaint. We uphold the order of the High Court and would dismiss the appeals.” We find that this judgment helps the case of the appellant rather than that of the respondent because in spite of two communications from the appellant that it intended to adduce evidence to controvert the facts given in the report of the Government Analyst, the fourth sample with the 6 Cr.M.P. No. 1382 of 2021 Magistrate had not been sent for reanalysis. The observations in Amery Pharmaceuticals case [(2001) 4 SCC 382 : 2001 SCC (Cri) 724] are also to the same effect. We find that the aforesaid interpretation supports the case of the appellants inasmuch they had been deprived of the right to have the fourth sample tested from the Central Drugs Laboratory. It is also clear that the complaint had been filed on 2-7-2002 which is about a month short of the expiry date of the drug and as such had the appellantaccused appeared before the Magistrate even on 2-7-2002 it would have been well-nigh impossible to get the sample tested before its expiry.” 14. The same view has been taken by the Hon’ble Supreme Court in the case of “Laborate Pharmaceuticals India Limited and Others Vs. State of Tamil Nadu (2018) 15 SCC 93 wherein para 8 the Hon’ble Supreme Court has held as under:- 8. All the aforesaid facts would go to show that the valuable right of the appellant to have the sample analysed in the Central Laboratory has been denied by a series of defaults committed by the prosecution; firstly, in not sending to the appellant manufacturer part of the sample as required under Section 23(4)(iii) of the Act; and secondly, on the part of the Court in taking cognizance of the complaint on 4-3- 2015 though the same was filed on 28-11-2012. The delay on both counts is not attributable to the appellants and, therefore, the consequences thereof cannot work adversely to the interest of the appellants. As the valuable right of the accused for reanalysis vested under the Act appears to have been violated and having regard to the possible shelf life of the drug we are of the view that as on date the prosecution, if allowed to continue, would be a lame prosecution.” 15. In view of above the query made with regard to non compliance of said sections, the learned counsels for the State are not in a position to reply the same. As such, the case of the petitioners are covered in view of above judgements. 16. Accordingly, the entire criminal proceeding including order taking cognizance dated 28.10.2015 in connection with Complaint Case No. 43/2015, pending in the Court of learned Chief Judicial Magistrate, Chaibasa, are quashed. 17. Both the petitions are allowed and disposed of. Pending I.A, if any, stands disposed of. Interim orders passed in respective cases are vacated. 8 18. This Court has not interfered with order taking cognizance and entire proceeding so far other accused persons are concerned. The learned court shall proceed in accordance with law. ( Sanjay Kumar Dwivedi, J.) Satyarthi/