Dr. Krishnagopal Agrawal vs State of Maharashtra, Mr. N.P. Bhandarkar

A.V. Potdar, J.—Rule. Rule made returnable forthwith. By consent of the parties, heard finally at the stage of admission.

By the present criminal application filed u/s 482 of Code of Criminal Procedure, the applicant, who was arrayed as accused No. 3, prays to quash and set aside R.C.C. No. 208 of 1996 pending on the file of learned Judicial Magistrate, First Class Kallam, District Osmanabad, to the extent of the present applicant. The complaint is filed by the Drugs Inspector, Food and Drugs Administration, Osmanabad on behalf of the State for the offences punishable under Sections 18(a)(i) and 19(a)(vi) r.w. Sections 16, 18-B, 28-A, 27(d) of the Drugs and Cosmetics Act 1940 r.w. Section 34 of I.P.C.

I have heard learned Counsel for the applicant and learned APP for the State. I have also perused the grounds on which quashing is claimed by the present applicant. I have also perused affidavit in reply filed by the State.

It is contended by the learned Counsel appearing for the applicant that the Drugs Inspector Shri. N.P. Bhandarkar, attached to the Office of Food and Drugs Administration at Osmanabad on 10.7.1995 had visited the shop of Chemist by name M/s. Sanjay Bandhu Chemist at village Shiradhon, Tq. Kallam and drawn samples of drugs viz. Framyoetin skin cream, septaneomyoin cream, manufactured in India by M/s. Dujohn Laboratory Limited having its factory at Indore. The Drugs Inspector further contended that he sent one portion of the sample for analysis to the Drugs Control authority at Bombay as per the procedure and Rules provided under the provisions of Drugs and Cosmetics Act, 1940. It is further averred in the said complaint that Government analyst, Drug control lab. Bombay vide its analytical report dated 18.3.1996 reported that the said sample is not of standard quality drug for the reason given in the said report. It is alleged that the present applicant is one of the Director of the said company hence, he was arrayed as one of the accused in the said complaint. In the affidavit in reply, it is alleged that the said information was collected by the Drugs Inspector concerned from the Manager of the said company.

It is contended across the bar that the applicant was not director of M/s. Dujohn Laboratory Limited on the date when the samples were collected by the Drugs Inspector from the concerned shop. Neither he was director when the complaint was lodged before learned J.M.F.C. at Kallam on 28.6.1996 and the process was issued.

Relying on the documents tendered along with present application, learned Counsel for the applicant would urge that the documents on record i.e. Report submitted to the Registrar of Companies by M/s. Dujohn Laboratory Limited indicate that the present applicant was appointed as Director of the said company on 6.8.1992 and ceases to be the Director of w.e.f. 1.3.1994. No doubt, this report was submitted to the Registrar of Companies clearly indicates that since 1.3.1994 as the applicant was ceases to be the director of the said company, he must not be held responsible for the activities and business of the said company. Learned Counsel for the applicant further placed reliance on the agreement of settlement entered into between the Directors of the said M/s. Dujohn Laboratory Limited dated 19.8.1993. Clause 5 of the said agreement, according to the learned Counsel for the applicant, discloses that the applicant ceases to be the Director of the said Company from the date on which Director interse entered into an agreement of settlement. However, the said document is a private document executed by the parties interse and will not take effect of public document, hence the same cannot be relied upon. Learned Counsel for the applicant further urged that in the present case the procedure laid down under the company law and the Rules laid down thereunder is not followed. Every company Registered under the provisions of Companies Act, required to publish annual report of the company. The applicant has also produced copy of the annual report of M/s. Dujohn Laboratory Limited for the year 1993-1994 and this report is published/made available to the public at large on 20.8.1994. In the said report, names of existing directors of the company were disclosed. My attention is drawn to the list in which the names of Directors/Board of Directors of the company are mentioned, in which name of present applicant does not appear. According to learned Counsel annual report, which is made available to the public at large and also submitted to the Registrar of Company coupled with the annual report later on submitted about directors existing as well as past clearly indicate that from 1.3.1994 onwards the present applicant ceases to be Director of company, hence, he is not liable for any prosecution in the complaint in which he has arrayed as an accused.

Para 15 of the complaint reads as follows:

That the accused Nos. 2 to 8 are the Directors of Accused No. 1 i.e. Dujohn Lab Ltd. Indore and they are responsible for contravention of Section 18(a)(i) and 18(a)(vi) r.w. Section 16 and 34 and also Section 18B r/w Section 34 of the said Act.

For clarity, it is necessary to quote these sections, which read as follows:

Section 16. Standards of quality-(1) For the purposes of this Chapter, the expression "standard quality" means -

(a) in relation to a drug, that the drug complies with the standard set out in, and

(b) In relation to a cosmetic, that the cosmetic complies with such standard as may be prescribed.

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;

(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 distributing any drug or cosmetic which has been imported or manufactured in contravention of any of the provisions of this Act or any rule made thereunder;

18-B Maintenance of records and furnishing of information;-Every person holding a license under Clause (c) of Section 18 shall keep and maintain such records, registers and other documents as may be prescribed and shall furnish to any officer or authority exercising any power or discharging any function under this Act such information as is required by such officer or authority for carrying out the purposes of this Act.

Offences by companies;-(1) Where an offence under this Act has been committed by a company, every person who at the time of 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 present the commission of such offence.

In the light of the above quoted relevant sections from Drugs and Cosmetic Act, 1940, more particularly Section 34 of the Act, speaks for offence by the Company and who are responsible if the offence is committed by the company. On plain reading of Section 34, it clearly indicate that every person who at the time of 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 (emphasis supplied).

Thus, from bare perusal of above quoted Sections from Drugs and Cosmetics Act, 1940, more particularly Section 34 of the said Act, the mandate of law required that the persons who are responsible for the offence committed under the provisions of this Act must be in charge and/or was responsible of the company for the conduct of business of the company are main and basic requirements. The documents on record clearly indicate that from 1.3.1994 onwards the present applicant ceases to be the Director of the said company. Nothing is on record to show that after applicant ceases to be Director of the company in any way he is connected with the business of the company or manufacturing of the product of the company as the complaint is silent on this aspect. On the contrary, on bare perusal of the averments in para 1 and 5 of the complaint indicate that the applicant is arrayed as an accused in the said offence in the capacity of the director of the company. Perusal of the averments in the affidavit in reply indicate that this information is collected by the Drug Inspector from the Manager of the Company. Admittedly, it is not averred in the complaint that information is received from the Manager of the company. Whatever it may be, the annual report of the company is a public document so also annual report submitted by the company with the Registrar of the company is also a public document. Bare perusal of the averments in the affidavit in reply filed by the State have not commented on these documents at all. It is not the case that these documents are false, forged or fabricated documents prepared by the applicant just to get advantage of discharge from the prosecution. In absence of any comments about validity or genuineness of the public document on which the reliance is placed by the applicant, the genuineness of these documents are requires to be accepted as these documents are public documents and available to the public at large.

It is tried to urge across the bar that this defence to be put up by the applicant at the time of trial. The fact remains that if on bare perusal of the public document made available that the applicant who is arrayed as an accused in the capacity as Director of the company, at the material time was not the director of the company, cannot be held responsible for the offence allegedly committed by the company, if any, by virtue of provisions of Section 34 of the Drugs and Cosmetic Act, 1940. It that be so, further prosecution against the applicant would be an abuse of process of law. In view of this legal position, application succeeds.

In the result, application is allowed in terms of prayer clause "B" and stands disposed of. Rule made absolute accordingly. No costs.