Lal Chand Patni vs State of Haryana

K.S. Kumaran, J.

The State of Haryana through the District Drugs Inspector, Hissar filed a complaint before the Chief Judicial Magistrate, Hissar on 28.3.1995 (Annexure P1) against the petitioners 1 to 3 herein and six others under the Drugs and Cosmetics Act, 1940 (hereinafter referred to as the Act). The relevant allegations in the complaint are as follows :

On 21.6.1994, the District Drugs Inspector, Hissar (hereinafter referred to as the complainant) accompanied by Dr. P.S. Dhawan, Medical Officer, Civil Hospital, Hissar and a Peon inspected the firmM/s Kishan Medical Agencies, Hissar (9th accused), and its proprietorShri Kishan (8th accused) was present. During the inspection of the firm, the complainant found stock of sixteen bottles of Dextrose Injection IP 5%, which the complainant purchased for test and analysis. After complying with all the formalities, the complainant took the samples, sent the samples for chemical analysis and received test reports declaring that the samples sent were not of standard quality and contained funguslike suspended matter. The complainant handed over notices along with the copies of the test reports to the 8th accused mentioned above. The 8th accused disclosed that he had purchased these drugs from the first accusedfirm of which the accused 2 to 4 are partners. The complainant sent notices accompanied by copies of the test reports to the first accusedfirm directing them to take the samples. The second accusedLal Chand Patni came to the office of the complainant and collected the samples and the test reports under due acknowledgement, but submitted a reply on behalf of the firm challenging the test reports. The complainant also received the letters from the first accusedfirm signed by the third accused showing the firm''s intention to controvert the test reports.

On a letter by the complainant to the first accusedfirm calling for information as to the constitution of the firm, names of manufacturing and analytical chemist, the first accusedfirm sent a reply disclosing that accused 2 to 4 are the partners of the firm, that accused 5 and 6 are approved manufacturing chemists, while the 7th accused is the analytical chemist of the firm. It is clear that accused 5 to 7 were actually involved in the manufacturing and the testing of the drugs in question. 8th accused Shri Kishan is the proprietor and the competent person of the 9th accused M/s. Kishan Medical Agencies, Hissar.

According to the complainant, accused 8 and 9 contravened the provisions of (1) Section 18(a)(i) read with Sections 16 and 17A of the Act punishable under Section 27(a) of the Act; (2) Rule 65(6) punishable under Section 27(d) of the Act; and (3) Section 18B of the Act punishable under Section 28A of the Act.

The complainant has alleged that accused 1 to 7 contravened the provisions of (1) Section 18(a)(i) of the Act read with Sections 16 and 17A of the Act punishable under Section 27(a) of the Act; and (2) Rule 74 of the rules framed under the Act punishable under Section 27(d) of the Act.

The learned Chief Judicial Magistrate passed the summoning order dated 28.3.1995 (Annexure P2) observing that a perusal of the complaint and the documents shows that a prima facie case is made out against the accused.

Therefore, accused 2 to 4 namely, (1) Lal Chand Patni, Chairman of the 1st accusedfirm M/s. Inven Pharmaceuticals Pvt. Ltd.; (2) Hemant Chhazed, a Director of the said firm; and (3) Dalip Kumar Jain, another Director of the firm have filed this petition under Section 482 Cr.P.C. for quashing the abovesaid complaint and summoning order (annexures P1 and P2 respectively) pending before the Chief Judicial Magistrate, Hissar, alleging mainly as follows :

No definite allegations have been made in the complaint (annexure P1) against the petitioners. Section 34 of the Act provides that where the offence is committed by a company, every person who was incharge of and was responsible to the company for the conduct of its business at the time when the offence was committed, and the company as such shall be deemed to be guilty. There is no allegation in the complaint that the petitioners were in any manner responsible for and incharge of the manufacturing process of the company and thus, the ingredients of section 34 have not been made out. Therefore, the complaint is not maintainable. The petitioners are not responsible for the alleged offence. The services of qualified and approved manufacturing and analytical chemists were deployed in the manufacture of the drugs. The petitioners 2 and 3 were also not incharge at the time of the commission of the offence. The company has already informed the complainant that K.P. Gupta and B.M. Qureshi (accused 5 and 6) are approved manufacturing chemists and as such the petitioners cannot be held responsible for any offence. The summoning order is nonspeaking order and the continuation of the proceedings is an abuse of process of the Court.

On notice, the respondentsState of Haryana filed reply through the District Drugs Inspector, Hissar mainly alleging as follows :

The case is pending before the trial Court at the stage of precharge evidence. No evidence has been recorded as yet. The extent of the liability of the accusedpetitioners has to be established by evidence during trial. The petitioners manufactured and sold adulterated drugs. Lal Chand Patni, Chairman has full control over the daytoday activities of manufacturing the drugs. In response to the notice sent by the complainant to the manufacturing firm, he visited the office of the complainant and received the test reports and samples by giving receipts. The second petitioner Hemant Chhazed has in response to the notice sent by the complainant, demanded the copies of test reports and samples and has also challenged the test reports. The third petitioner Dalip Kumar Jain is the Technical Director of the manufacturing firm responsible for the conduct of the business of the firm.

Even getting the adulterated drugs manufactured through qualified and approved manufacturing and analytical chemists and selling them is an offence as provided for under Section 18 of the Act. The summoning order is a speaking order, and at that stage it was only to be seen if prima facie the offences are made out against the accused or not. Summoning orders are interim orders and cannot be challenged.

I have heard the counsel for both the sides and perused the records.

The main contention of the learned counsel for the petitioners is that where a company is alleged to have committed the offence, the person who was incharge of and was responsible to the company for the conduct of the business of the company at the time when the offence was committed, shall be deemed to be guilty of the offence as per Section 34 of the Act, whereas there is no allegation in the complaint Annexure P1 that the petitioners were accordingly incharge of and were responsible to the company for the conduct of its business and, therefore, simply because the first petitioner happens to be the Chairman and the petitioners 2 and 3 happen to be the Directors of the Company, they cannot be made liable for the offences alleged to have been committed by the company. In support of this contention, the learned counsel for the petitioners relied upon the decision of this Court in Mrs. Kavita Mittal v. Drugs Inspector, 1993(3) RCR 497 . That was also a case arising under the Drugs and Cosmetics Act and this Court, after considering the provisions of Section 34, held as follows :

"To make any partner liable for an offence committed by the company, it has to be shown that such person was in charge of and was responsible to the company for the conduct of the business of the company at the time of commission of the offence. Since in the complaint, no allegations have been made against any of the present petitioners, the prosecution is bad in law."

So holding this Court quashed the complaint and the consequential proceedings with regard to these petitioners who had approached this Court.

Learned counsel for the petitioners also relied upon the other decisions in Ramesh Vangal, Managing Director v. State of Punjab, 1994(3) RCR 550 ; Sham Sundar v. State of Haryana, 1989(2) RCR 494 (SC) and Gharda Chemicals Limited v. State of Punjab, 1997(2) RCR 99 , which are also to the same effect. The last of the cases arose under the Insecticides Act, 1968 which also contains a provision (in Section 33) similar to the provisions contained in Section 34 of the Drugs and Cosmetics Act. The first of the cases arose under the Prevention of Food Adulteration Act, wherein also the provisions of Section 17(1) are more or less similar to the provisions under Section 34 of the Drugs and Cosmetics Act. The second of the cases arose under the Essential Commodities Act wherein Section 10 contains a similar provision. Relying upon these decisions, the learned counsel for the petitioners contends that inasmuch as there is no allegation in the complaint against the petitioners that they were incharge and were responsible to the company for the conduct of its business, the complaint and the consequential proceedings are liable to be quashed.

As against this, the learned counsel for the respondent contends that on a notice issued to the company, the first petitioner who is the Chairman of the Company, came to the office of the complainant and received the testreports and the samples after giving proper receipts. He further contends that the second petitioner has also, in response to the notice issued, asked for the copies of the testreports and samples and has also challenged the test reports. So far as the third petitioner is concerned, the learned counsel for the respondent contends that he is the Technical Director of the manufacturing firm. Therefore, according to the respondent, the petitioners are involved in the manufacturing of the adulterated drug. Learned counsel for the respondentcomplainant also contends that the extent and liability of the petitioners has to be determined only after letting in evidence at trial, whereas the case is now at the stage of precharge evidence and therefore also, the complaint and the consequential proceedings cannot be quashed at this stage.

I have gone through the complaintannexure P1 and as rightly contended by the learned counsel for the petitioner there is no specific allegation in the complaint that these petitioners were in any way incharge or responsible to the company for the conduct of the business. Under Section 34 of the Act, when an offence has been committed by the company, only such person who was incharge and was responsible to the company for the conduct of the business of the company (apart from the company), shall be liable to be proceeded against and punished. Therefore, without an allegation in the complaint that any of these three petitioners were accordingly incharge or responsible to the company for the conduct of the business, these petitioners cannot be proceeded against at all for the commission of the alleged offence. This is also clear from the decisions cited by the petitioners referred to supra. The petitioners have specifically stated in para4 of this petition that no definite allegations have been made in the complaint against them. They have denied their responsibility in the grounds I, II, III and X also. The reply to the respondents is that the petitioners are Directors of the firm, and that it can be proved in the trial Court that they were involved in the manufacturing of the adulterated drug. It has also been stated in the reply that the First petitioner being the Chairman, has full control over the day to day activities of the manufacturing, that he in response to the notice, came to the office of the District Drugs Inspector and received the test reports and samples. So far as the second petitioner is concerned, it has been alleged that he asked for copies of test reports and challenged the same. So far as third petitioner is concerned, it has been stated that he is the Technical Director. According to the respondents, the extent of the liability of these petitioners can be proved at the trial.

But in view of the provisions contained in Section 34 and in view of the decisions cited above and relied upon by the petitioners, these contentions put forward by the respondent are no answers to the contentions of the petitioners that there is no allegation in the complaint that these petitioners were incharge or responsible to the company for the conduct of the business, and that in the absence of such allegation, the complaint is not maintainable against them. Further in para 19 of the complaint it has been specifically alleged that "It is clear that accused Nos. 5, 6 and 7 were actually involved in the manufacturing and testing of the drugs in question. Accused 5 and 6 are the approved Manufacturing Chemists while accused 7 is the approved Analytical Chemist. In these circumstances, I am of the view that the complaint against the petitioners is not maintainable and, therefore, the complaint and the summoning order have to be quashed.

Accordingly, this petition is allowed quashing the complaint and the summoning order impugned in this petition in so far as they relate to the present petitioners.