M/S Digital Vision & Others v. Union of India and others.

Judgment

#1. The instant revision application has been preferred under Section 482 of the Criminal Procedure 1973 with a prayer for quashment of the proceedings in connection with Complaint Case No. 12 of 2023 under Section 18 (a) (i)/16 (1) (a)/34/27 (d) of Drugs and Cosmetics Act, 1940 (in short Act 1940) against the petitioners. 2

#2. One Mr. Deepak Kumar Shetty, Drugs Inspector had filed a complaint alleging offence under Section 32 (1) (a) of the Act 1940 before the court of learned Chief Judicial Magistrate at Port Blair, Andaman & Nicobar Islands, alleging, inter alia, that said Deepak Kumar Shetty was directed by DDC(I), CDSCO, East Zone Kolkata to collect the drug samples in accordance with the provisions of the Act 1940 in the month of march 2021 vide order No. EZ/6-13 Sampling/2021/1171-1174 dated 19.03.2021. Accordingly, said inspector visited the premises of M/S Central Medical Store, directorate of Health Services, Port Blair-744101 and the sample of drug namely Olanzpine Tablets IP 10 mg (OZOPINE-20), Batch No. DGTA1226, Mfg. Date 12/20, Expiry date 11/22 and manufacture India by the petitioners, vide drug sample No. LS/DKS/EZ/2021-03/011. The sample was transmitted to Central Drugs Laboratory, Kolkata for test/analysis and test report was filed with observation ‘not of standard quality’ for the reasons that ‘the sample does not conform to IP with respect to test for dissolution’. Said sample was considered as not of standard quality under Section 16 (1) (A) of the Act 1940. Respondent issued a notice under Section 18 A read with Section 22 of the Act 3 1940, to the petitioners to show cause and also order stoppage of the drug in question.

#3. In the show cause, petitioners submitted that the produce kept in higher temperature variation for prolonged period may bring some structural changes formulations though manufacturing and verification of the drug have been done correctly according to test reports. That apart petitioners also disclosed the name of the opposite parties Nos. 2, 3 and 4 being Approved Manufacturing Chemist, Production Manager and Approved Analytical Chemist, Quality Control Manager who were solely liable for manufacturing and testing of the drug within the meaning of the Section 34 of the Act, 1940.

#4. It has been further alleged that the proceedings against the petitioners without having any ingredient of liability, absolutely and abuse of process of law.

#5. On receipt of the complaint submitted by the drug inspector Deepak Kumar Shetty, respondent No. 1 herein, learned Chief Judicial Magistrate, Port Blair, Andaman & Nicobar Islands took cognizance and issue summons to the accused persons on

01.03.2023. On receipt of the summons the petitioners filed this 4 application with a prayer for quashing the proceedings in connection with Complaint Case No. 12 of 2023.

#6. Mr. Deep Chaim Kabir, learned Senior counsel appearing on behalf the petitioners has drawn my attend to different provisions of the sections of the Act as well as rules thereof and submitted that entire proceeding of this case is based on the allegation of manufacture of drugs ‘not of standard quality’ in terms of Section 16 as well as standards in terms of second schedule. Mr. Kabir has referred standard quality in terms of Section 16 involving identity and purity and strength. According to Mr. Kabir, dissolution is not one of the standards prescribed show no defect in the medicines in question. In support of his contention Mr. Kabir relied on drug testing laboratory report.

#7. Mr. Kabir has further contended that the sine qua non for issuance of licence under Act 1940 is that there must be a nominated person having technical knowledge who will be liable under Section 34 of the Act, and that competent person shall be in-charge of manufacturing the quality control and testing of medicines, leaving no scope for general vicarious liability of the company or firm or its partners. 5

#8. Mr. Kabir has submitted that opposite party Nos. 2, 3 and 4 are all competent technical persons having responsibility of manufacturing of medicine by the firm within a meaning of Section 34 of the Act. It has been further contended that petitioner No. 2, managing partner has given all responsibility to Anuj Kumar Singh, Ashok Kumar and Sudhir Kumar as responsible person under the statute before obtaining drug license by the Drugs Control Authorities of Himachal Pradesh.

#9. It is further highlighted that medicines were manufactured in December 2020 and purchased by the dealer in February, 2021 and tested thereafter. It is submitted that from the test report no defect in manufacturing was found with regard to identity, content and purity.

#10. Alternatively, Mr. Kabir has submitted that the medicines transported to Andaman where medicines were stored and such process may have cause the damage to the medicines with regard to ‘dissolution’ of the same.

#11. Before parting with Mr. Kabri has submitted that the petition of complaint lacks any detail regarding role of dealer and supplier in transportation, storage and supply of medicines. 6

#12. In support of his contentions Mr. Kabir has relied on the ratio of following cases:  Lalankumar Singh vs. State of Maharashtra, AIR 2022 SC 5151  Cheminova India vs. State of Punjab, AIR 2021 SC 3701  State of Haryana vs. Brij Lal Mittal, AIRT 1988 SC 2327  State of Karnataka vs. Pratap chand, AIR 1981 SC 872  Monaben Ketanbhai Shah vs. State of Gujarat, AIR 2004 SC 4274  Pepsi Foods Ltd. Vs special Magistrate, AIR 1988 SC 128  JM Laboratories and Ors. Vs. State of Andhra Pradesh, MANU/SC/0124/2025

#13. In opposition to that Mr. Tulsi Lall, learned counsel appearing on behalf of opposite party No. has refuted the arguments advanced on behalf of the petitioner contending, inter 7 alia, that learned Magistrate forwarded the complaint to the police for inquiry invoking Section 202 of the Cr.P.C and the instant revision application under Article 227 of the Constitution of India is one premature initiative. It is submitted that the learned Magistrate is yet to take a stock of the situation after going through the report called for.

#14. Alternatively, Mr. Lall has submitted that there is no dispute that after testing of the medicine it was found that the same was off standard quality on account of ‘dissolution’. Mr. Lall has further submitted that according to the provisions of the Act 1940 petitioner are liable to show that they had no role manufacturing process, in course of trial not at the threshold of the proceedings.

#15. Having heard the Ld. Counsel appearing on behalf of the parties as well as after going through the reported judgments cited thereon, in my humble opinion, this revision application revolves around the sole determining factor that is whether the petitioners can be arraigned for the alleged offence of producing substandard drugs even though when they were not directly involved in the manufacturing and testing of the drug. 8

#16. At the very outset, for brevity of discussion and just adjudication of the lis, it would be pertinent to first reproduce the specific provision of Section 34 of the Act 1940 which runs as follows:- “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.”

#17. Therefore, careful perusal of the provisions enshrined hereinabove would clearly suggest that the partner of a firm can also be made liable for an offence committed by the firm if he was in charge of and was responsible to the firm for the conduct, business of the firm or if it is proved that the offence was committed with the consent or connivance of, or was attributable 9 to any neglect on the part of the partner concerned. In the present case, the opposite parties no. 2,3 & 4 herein, the Deputy General Manager, approved Manufacturing Chemist cum Production Manager, approved Analytical Chemist cum Quality Control Manager respectively were indeed responsible manufacturing and testing of the drug in compliance with Section 34 of the Act of 1940.

#18. The available documents on record especially the affidavit dated 14.07.2018 would further suggest that the petitioners authorised the opposite party no. 2 herein for conduct of all businesses and day to day activity with effect from 12.07.2018. Moreover, opposite party no. 3 & 4 were also entrusted with the responsibility to verify the quality and standard of the product as per the mandates of the Act of 1940. All these endorsements have been ratified through annexed documents.

#19. Now, if I come to the genesis of the prosecution i.e. the complaint case lodged at the behest of the Drugs Inspector, Central Drugs Control Organisation, East Zone, the allegation was that all the accused along with the petitioners have violated the Section 18(a) (i) read with Section 16 (1) (a) of the Act 1940. Accordingly, prosecution was instituted under Section 32(1) (a) of 10 the Act 1940 and the same was placed before the Ld. CJM Port Blair who in tern issued summons to the accused including the petitioners after taking cognizance. However, the complaint does not categorically show what is the exact role of the petitioners in manufacturing of drugs which is said to be not of standard quality. The only allegation in the complaint is that the firm did not carry out the in-process hardness testing during batch processing for Olanzapaine 10mg. Such allegation in the complaint merely entangles the petitioners on the basis of them being the Directors of the said Company. But no averment as to how the complainant came to such conclusive finding.

#20. At this juncture, it would also be pertinent to mention that the Act 1940 envisages a statutory frame work of responsibility which is very clear. As per the provision of the Section 34 of the said Act the competent technical persons and authorised managers are the ones who bear the responsibility manufacturing, testing and day to day administration of the firm. A collective scrutiny of Rule 65, 71, 74, 76, 78 of the Drugs Rules 1945 would further clarify the aforesaid stance.

#21. It is trite law that criminal liability should only be fastened on those who, at the time of the commission of offence, were in charge 11 of or responsible to the firm, for the conduct of the business. The primary responsibility lies on the complainant to make necessary averments in the complaint so as to make the accused vicariously liable. The obligation of the petitioners to discharge their onus would only arise when the complainant through necessary averments prima facie establishes the offences against the petitioners. But the present case is of total absence of such requisite averments.

#22. The conglomeration of the aforesaid discussion clearly boils down to the only conclusion left before this Court which is to quash the entire proceeding in connection with Complaint Case No. 12 of 2023 under Sections 18 (a) (i)/16 (1) (a)/34/27 (d) of Drugs and Cosmetics Act, 1940 against the petitioners only.

#23. As a sequel, the instant revision application being no. CRR 33 of 2024 stands disposed of.

#24. Interim Order, if there be any, stands vacated.

#25. Connected applications, if there be, also stand disposed of accordingly.

#26. Parties to act on the server copy of this order duly downloaded from the official website of this Court. 12

#27. Urgent photostat certified copy of this judgment, if applied for, be supplied to the parties subject to compliance with all requisite formalities. (Bibhas Ranjan De, J)