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Gul Raj Bhatia, Director of M/s. Pfizer Products India Pvt. Limited, Mumbai & Others v/s The State of Tamil Nadu, Rep. by Deepa Joseph, Drugs Inspector, Chennai

    Criminal Original Petition Nos. 23375, 23524 of 2016 & Crl.M.P. Nos. 10923 & 11036 of 2016

    Decided On, 31 January 2022

    At, High Court of Judicature at Madras

    By, THE HONOURABLE MR. JUSTICE V. BHARATHIDASAN

    For the Petitioners: Satish Parasaran, Senior Counsel, R. Palaniandavan, Advocate. For the Respondent: C.E. Pratap, Government Advocate (Criminal Side).



Judgment Text

(Prayer in Crl.O.P.No.23375 of 2016: Petition filed under Section 482 of the Code of Criminal Procedure, 1973, praying to call for the entire records in C.C.No.2694 of 2016 pending on the file of the learned IV Metropolitan Magistrate, Saidapet, Chennai and to quash the same.

Crl.O.P.No.23524 of 2016: Petition filed under Section 482 of the Code of Criminal Procedure, 1973, praying to call for the entire records in C.C.No.2694 of 2016 pending on the file of the learned IV Metropolitan Magistrate, Saidapet, Chennai and to quash the same.)

Common Order

1. Criminal Original Petition No.23275 of 2016 has been filed by A2, A3, A4, A6, A7, A8, A10, A11 and A12, while Criminal Original Petition No.23524 of 2016 has been filed by A1, A5, A9 and A13 seeking to quash the criminal prosecution instituted in C.C.No.2694 of 2016 on the file of the learned IV Metropolitan Magistrate, Saidapet, Chennai for the offence under Sections 18(a)(i) r/w 17(c) of the Drugs and Cosmetics Act, 1940 which are punishable under Section 27(d) of the Drugs and Cosmetics Act,1940 (hereinafter will be called as “the Act”) pursuant to a complaint filed by the respondent-Drugs Inspector, Saidapet Range.

2. M/s.Pfizer Products India Private Limited at Jogeshwari (West), Mumbai, represented by one of the Directors, Gul Raj Bhatia, and two other licensed premises at Kalher in Mumbai and at Guindy in Chennai, have been arrayed as A1, A5 and A9 respectively. Gul Raj Bhatia (A2), Anil Bhavnani (A3) and Kumar Viswantha Setty are the Directors of A1, A5 and A9 and hence, they have been added as Accused. A13 is the Power of Attorney Holder of M/s.Pfizer Products India Private Limited. Since the petitioners in both original petitions have been arrayed as accused in one single complaint and the issues involved are identical, both the original petitions were heard together and are being disposed of by way of this common order.

3. The gist of the private complaint filed by the respondent-complainant before the trial court against the petitioners is as follows:-

(a) That on 28.04.2015 an inspection was conducted by the Drugs Inspector, Saidapet Range, along with the Drugs Inspectors of Adyar and Royapettah Range at the premises of M/s.Pfizer Products India Private Limited (in short, the accused company) situated at Guindy in Chennai (A9), in connection with a complaint in respect of a drug “Depo-Provera”, which is in a Pre-filled Syringe. During inspection, it was found by the Drugs Inspectors that the drug Depo-Provera which were stocked and kept for sale bore different expiry dates printed on the inner and outer packing which is misleading. Moreover, the pack of the subject drug had two components namely, a pre-filled syringe containing Medroxyprogesterone Acctate injectable suspension USP and a disposable needle.

(b) According to the respondent-complainant, the expiry dates printed on the pre-filled syringe was 04/2019 and on the disposable needle the expiry date was printed as 02/2019; whereas on the outer carton, the expiry date was printed as 01/2019 which had no relevance with the expiry dates of the individual components’ expiry dates available inside the pack.

(c) Further, according to the respondent-complainant, the pre-filled syringe and the needle were manufactured by two different companies. However, the label of the pre-filled syringe alone contained both manufacturing and expiry date and the needle did not bear manufacturing date. Since the expiry date mentioned on the outer carton of the said pack has got no relevance either to the needle or to the pre-filled syringe and the pack of the subject drug had three different sets of expiry dates printed on the label of the pre-filled syringe, on the label of the needle and on the outer carton, they were thus misleading and the same would create confusion to the public at the time of usage/consumption and thereby the drug “Depo-Provera”was a misbranded drug as per Section 17(c) of the Act and thus, it contravenes Section 18(a)(i) of the Act, which is punishable under Section 27(d) of the Act.

(d) It is the further case of the respondent-complainant that earlier a show cause notice was issued to A9 company in Chennai calling for explanation for having contravened Section 18(a)(i) r/w 17(c) of the Act, for which a reply was received from the accused company stating that they had received the stock from A5 company and therefore, another show cause notice was issued to A5 company at Kalher. Accordingly, A5 sent a reply stating that they had received the stock from A1 company in Jogeshwari (West), Mumbai. Therefore, another show cause notice was issued to A1 and not being satisfied with the explanation submitted by A1, after getting necessary sanction from the authority concerned, the present complaint has been filed against all the three licensees and its directors.

(e) A2, A3, A4, A6, A7, A8, A10, A11 and A12 are directors of the accused companies and A13 is the Power of Attorney Holder of the accused company. Hence, they have been arrayed as accused.4. Mr.Sathish Parasaran, the learned senior counsel appearing for the petitioner would submit that the subject drug called “Depo-Provera” is a contraceptive injunction which is marketed in a combi-pack containing a pre-filled syringe containing the subject drug and a disposable needle. The syringe containing the subject drug and the needle were manufactured by different entities in Belgium and they have been imported into India by A1. Both the pre-filled syringe and the needle have different expiry date printed on the respective label as per the mandate of law. As per the best practices followed internationally in respect of combi-packs, shorter expiry date is mentioned on the outer carton in order negate the potential risk of confusion in the mind of the consumer by mentioning two separate expiry dates on the outer carton pack, i.e., one for the needle and the other for the syringe, only to avoid the possible confusion among the chemists as well as the consumer and also to avoid the possibility of use of the drug beyond the expiry date thereby reducing the risk to the consumer, a single expiry date was printed on the outer packaging. This would no way mislead neither the consumer nor chemist.

5. The learned senior counsel would further submit that in the instant case the expiry date printed on the needle was 02/2019 and the expiry date on the pack was put as 01/2019, one month shorter than the expiry date, due to the “auto expiry adjust method” setting in SAP system and therefore, the expiry date on the outer packaging of combi-pack has been mentioned as 01/2019 and it is an internationally accepted practice, which is being followed by th petitioner, in order to avoid the risk of use of the drug beyond the expiry date. Further, according to the learned senior counsel, this practice has also got the approval of the Drugs Controller General (India) vide proceedings in File No.Import/Misc/134/2015-D dated 15.9.2015. Therefore, such practice is not violative of Section 17(c) of the Act and as such it cannot be said to be misbranding.

6. The learned senior counsel would further submit that admittedly, the inspection was conducted at the premises of A9 and merely because, the show cause notices were issued to A1 and A5, they cannot be made as accused. That apart, the other accused are only the Directors of the Company and therefore, they cannot be made vicariously liable for the offence said to have been committed by the company in the absence of any specific allegation that those Directors were in-charge and responsible for the day-to-day affairs of the conduct of business of the company at the time of commencement of the offence. Thus, according to the learned senior counsel, absolutely no averment in the complaint that the accused directors were in-charge and responsible for the day to day affairs of the conduct of the company and therefore, they cannot be made vicariously liable for the offences said to have been committed by the company. So far as A13 is concerned, she is an employee and not the Director and he was only a Power of Attorney Holder of the company and as such she also cannot be made vicariously liable for the offence said to have been committed by the company.

7. The learned senior counsel would lastly submit that there is no allegation on the standard and quality of the subject drug. Merely because the outer carton pack contained an expiry date shorter than one month of the actual date of expiry cannot be termed as misleading and as such no prima facie case is made out against the petitioners. The learned Magistrate without considering the available materials in a proper perspective mechanically taken cognizance of offences and issued process and therefore, the criminal prosecution against the petitioners is liable to be quashed.

8. Per contra, the learned Government Advocate appearing for the respondent would submit that the disputed drug call “Depo-Provera”is marketed by the accused company in a combi-pack which contained two components namely, (i) pre-filled syringe containing Medroxyprogesterone Acctate injectable suspension USP and (ii) a disposable needle. Both the syringe and needle have different expiry dates printed on the label, however, on the outer carton of combi-pack, a different date has been mentioned. Thus the subject drug contained three different expiry dates printed, which are misleading and would create confusion in the mind of the general public at the time of usage or consumption of the subject drugs. That apart, the needle of the pre-filled syringe does not bear the manufacturing date on its label which was also not in inconformity with the provisions of Section 17 of the Act. Therefore, the subject drug is a misbranded drug under Section 17(c) of the Act and it contravenes Section 18(a)(i) of the Act. After issuing proper show cause notice and obtaining necessary approval from the competent authority, the respondent filed a complaint and the learned Magistrate has taken cognizance of offences having found prima facie case against the petitioners and issued process. No infirmity or irregularity could be found in the order of the learned Magistrate taking cognizance of offences and the original petitions are liable only to be dismissed. The respondent-complainant also filed a detailed counter affidavit opposing the quash petitions.

9. I have considered the rival submissions meticulously and perused the records carefully.

10. Before considering the rival submissions, it would be useful to refer to the relevant provisions in the Drugs and Cosmetics Act, 1940.

(i) Section 17 of the Act deals with misbranded drugs which reads as follows:-

“17. Misbranded drugs. -For the purposes of this Chapter, a drug shall be deemed to be misbranded,—- (a) if it is so coloured, coated, powdered or polished that damage is concealed or if it is made to appear of better or greater therapeutic value than it really is; or (b) if it is not labelled in the prescribed manner; or (c) if its label or container or anything accompanying the drug bears any statement, design or device which makes any false claim for the drug or which is false or misleading in any particular.”

(ii) Section 18 of the Act prohibits manufacture and sale of certain drugs and cosmetics. Sub-clause (i) of Clause (a) of Section 18 of the Act deals with the drugs which is not of a standard quality, or is misbranded, adulterated or spurious which reads as follows:-

“18. Prohibition of manufacture and sale of certain drugs and cosmetics.-From such 2 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;

... ... ... ... ... ... ... ... ...

... ... ... ... ... ... ... ... ...”

(iii) Section 27 of the Act is the penal provision which sets out penalty for manufacture, sale, etc., of drugs in contravention of the Chapter and it reads as follows:-

“27. Penalty for manufacture, sale, etc., of drugs in contravention of this Chapter.—Whoever, himself or by any other person on his behalf, manufactures for sale or for distribution, or sells, or stocks or exhibits or offers for sale or distributes,—

... ... ... ... ... ... ... ... ...

... ... ... ... ... ... ... ... ...

(d) any drug, other than a drug referred to in clause (a) or clause (b) or clause (c), in contravention of any other provision of this Chapter or any rule made thereunder, shall be punishable with imprisonment for a term which shall not be less than one year but which may extend to two years 5 [and with fine which shall not be less than twenty thousand rupees]: Provided that the Court may, for any adequate and special reasons to be recorded in the judgment, impose a sentence of imprisonment for a term of less than one year.””

11. Rule 96 of the Drugs and Cosmetics Rules, 1945 (hereinafter will be referred to as “the rule”) deals about the manner of labelling. Rule 109-A of the Rules deals with labelling of medical devices and sub clause (p) of Rule 109-A deals with providing label on the imported devices.

12. The petitioners have admittedly imported both pre-filled syringe and the needle from Belgium and the same are being marketed in India in a combi-pack, containing a pre-filled syringe with Medroxyprogesterone Acctate injectable suspension USP, which is said to be a progestational steriodal hormone (contraceptive / birth control) and a disposable hypodermic needle. It is also an admitted fact that both the syringe and the needle have been notified as drug by the Drug Controller by notification dated 17.03.1989.

13. The allegation is that the subject drugs have different set of expiry dates one printed on the label of the pre-filled syringe and on the label of the needle and the other on the outer carton of the combi-pack. So far as the pre-filled syringe is concerned, manufacturing date was printed on the label as 05/2014 and the expiry date was 04/2019, however, on label of the needle, manufacturing date was not printed and the expiry date alone was printed as 02/2019. Whereas on the outer carton of the combi-pack, the manufacturing date was printed as 05/2014 and the expiry date was printed as 01/2019 which have got no relevance with the expiry dates printed on the pre-filled syringe as well as the needle. The expiry dates printed on the same were different which is misleading and the same would create confusion to the public, therefore, according to the respondent-complainant, the drug is misbranded.

14. However, the case of the petitioners is that the expiry date mentioned on the outer carton of the combi-pack was one month shorter than the expiry dates printed on both the pre-filled syringe and the needle and the company has printed a single date of expiry, on the outer packing only in order to avoid the possibility of use of the drug beyond the expiry date thereby reducing the risk to the consumer. It was contended by the petitioners that the expiry date was mentioned as per the practice followed internationally by the drug companies in respect of combi-packs and as per auto expiry adjust method in SAP system, however, no materials placed before this court regarding the international practice in respect of printing of expiry date on the combi-pack.

15. It is not in dispute that there is no concept of combi-pack in the Drugs and Cosmetics Act, 1940. Section 17(c) of the Act deals with misbranding. As per sub-section (c) of Section 17 of the Act, if the label or container or anything accompany the drug bears any statement, design or device which makes any false claim for the drug or which is false or misleading in any manner, the drug shall be deemed to be a misbranded one. That apart, Rule 96 sets out the manner of labelling which states that the particulars shall be printed on the label of the innermost container of any drug and on every other covering in which the container is packed. Sub-clause (vii) of sub-rule 7 of Rule 96, stipulates that the drug specified in Schedule P and their preparations including combinations with other drugs shall bear on their labels the date of manufacture and the date of expiry of potency. Rule 109-A deals with the labelling of medical devices including imported devices.

16. Admittedly, in the instant case, the pre-filled syringe and the needle and the outer carton of the combi-pack bear three different dates which are not in accordance with the rules mentioned above. As there is no provision in the Act dealing with combi-pack, the manufacturer or distributor should necessarily comply with the provisions in respect of labelling contemplated in the Act as well as the rules.

17. So far as the contention of the petitioners that the printing of expiry date on the outer cover of the combi-pack was in accordance with the international standard and auto expiry adjust method, if at all, any such acceptable practice is in prevalence, it is for the petitioner to satisfy the trial court with acceptable materials during trial. At this stage, the expiry date mentioned on the outer carton has no relevance either to the pre-filled syringe or needle kept inside the combi-pack and as such, obviously, it was not in accordance with relevant provisions of the Act and Rules. Therefore, this court is of the considered view that a prima facie case is made out for taking cognizance and there are sufficient grounds available for proceeding against the accused.

18. The next limb of the submission is in respect of implicating the directors as accused for the offence said to have been committed by the accused company. Section 34 of the Act deals with the offence committed by companies which reads 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 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.”

19. By virtue of the above provision, directors of a company or partners of a firm who were actually in-charge and responsible for the conduct of the business of the company at the time of commencement of the offences. are also vicariously liable for the offence committed by the company. It is settled law that, to that effect, there must be a specific averment in the complaint that the directors were actually in-charge and responsible for the day to day affairs of the company, in the absence of any such averment, no director could be made vicariously liable for the offence committed by the company. The directors of the company cannot be prosecuted for the offence committed by the company merely because of their official position in the company unless they were in-charge and responsible for the day to day affairs of the conduct of the company. Apart from that, the complaint should also indicate that the offence has been committed by the company with the consent or connivance of or any negligence is attributable on the part of the directors of the company for launching the prosecution against the directors. Therefore, there must be some averments in the complaint to show that the directors were in charge and responsible for the conduct of the business of the company and the offence has been committed by the company with the consent or connivance of the directors of the company and if at all any negligence, it is attributable on the part of the directors.

20. The Honourable Supreme Court in the matter of S.M.S. Pharmaceuticals Ltd Vs. Neeta Bhatla reported in (2005) 8 SCC 89, while considering Section 141 of the The Negotiable Instruments Act, 1881, which is almost pari materia to Section 34 of the Drugs and Cosmetics Act, 1940, has held as follows:-

“19.(a) It is necessary to specifically aver in a complaint under Section 141 that at the time the offence was committed, the person accused was in charge of, and responsible for the conduct of business of the company. This averment is an essential requirement of Section 141 and has to be made in a complaint. Without this averment being made in a complaint, the requirements of Section 141 cannot be said to be satisfied.

(b) The answer to the question posed in sub-para (b) has to be in the negative. Merely being a director of a company is not sufficient to make the person liable under Section 141 of the Act. A director in a company cannot be deemed to be in charge of and responsible to the company for the conduct of its business. The requirement of Section 141 is that the person sought to be made liable should be in charge of and responsible for the conduct of the business of the company at the relevant time. This has to be averred as a fact as there is no deemed liability of a director in such cases.

(c) The answer to Question (c) has to be in the affirmative. The question notes that the managing director or joint managing director would be admittedly in charge of the company and responsible to the company for the conduct of its business. When that is so, holders of such positions in a company become liable under Section 141 of the Act. By virtue of the office they hold as managing director or joint managing director, these persons are in charge of and responsible for the conduct of business of the company. Therefore, they get covered under Section 141. So far as the signatory of a cheque which is dishonoured is concerned, he is clearly responsible for the incriminating act and will be covered under sub-section (2) of Section 141.”

21. While dealing with Section 34 of the Drugs and Cosmetics Act, 1940, the Honourable Supreme Court in State of Karnataka v. Pratap Chand, 1981 (2) SCC 335 has held that merely because the directors have right to participate in the business of the firm, they cannot be made liable. The relevant portion of the judgment reads as follows:-

“7. It is seen that the partner of a firm is also liable to be convicted for an offence committed by the firm if he was in charge of, and was responsible to, the firm for the conduct of the business of the firm or if it is proved that the offence was committed with the consent or connivance of, or was attributable to any neglect on the part of the partner concerned. In the present case the second respondent was sought to be made liable on the ground that he along with the first respondent was in charge of the conduct of the business of the firm. Section 23-C of the Foreign Exchange Regulation Act, 1947 which was identically the same as Section 34 of the Drugs and Cosmetics Act came up for interpretation in G.L. Gupta v.D.H. Mehta [(1971) 3 SCC 189, 190 : 1971 SCC (Cri) 279, 280 : (1971) 3 SCR 748] where it was observed as follows: [SCC p. 190: SCC (Cri) p. 280, para 6]

“What then does the expression ‘a person in-charge and responsible for the conduct of the affair of a company’means? It will be noticed that the word ‘company’includes a firm or other association, and the same test must apply to a director in-charge and a partner of a firm in-charge of a business. It seems to us that in the context a person ‘in-charge’must mean that the person should be in overall control of the day to day business of the company or firm. This inference follows from the wording of Section 23-C(2). It mentions director, who may be a party to the policy being followed by a company and yet not be in-charge of the business of the company. Further it mentions manager, who usually is in charge of the business but not in overall charge. Similarly the other officers may be in charge of only some part of business.”

8. The evidence in the present case shows that it was Respondent 1 and not Respondent 2 who was in overall control of the day to day business of the firm. The second respondent is not liable to be convicted merely because he had the right to participate in the business of the firm under the terms of the partnership deed.”

22. Recently, in the matter of Dayle De’souza v. Government of India through Deputy Chief Labour Commissioner reported in 2021 SCC OnLine SC 1012, while dealing with an pari materia provision as contained in the Minimum Wages Act, 1948, the Honourable Supreme Court after considering its various judgments on the issue has held that there should be a specific averment in the complaint to satisfy the mandate of the provision of the Act which reads as under:-

“23. In the factualcontext present before us it is crystal clear that the complaint does not satisfy the mandate of sub-section (1) to Section 22C of the Act as there are no assertions or averments that the appellant before this Court was in-charge of and responsible to the company M/s. Writer Safeguard Pvt. Ltd. in the manner as interpreted by this Court in the cases mentioned above. The proviso to sub-section (1) in the present case would not apply. It is an exception that would be applicable and come into operation only when the conditions of sub-section (1) to Section 22C are satisfied. Notably, in the absence of any specific averment, the prosecution in the present case does not and cannot rely on Section 22C(2) of the Act.””

23. Keeping the above principles in mind, if we peruse the complaint, absolutely no averment to show that the pet

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itioners in Crl.O.P.No.23375 of 2016, who are the directors of the company were in-charge and responsible for the conduct of the business of the company at the time of the commencement of the offences and the offence has been committed by the company with the connivance of the accused directors. In the absence of any such averment in the complaint, the directors of the accused companies cannot be made vicariously liable for the offence said to have been committed by the company. 24. So far as A13 is concerned, she was not the director of the company and she was only a power of attorney holder of A9 company and it is stated that A13 was only a carrying and forwarding agent of the company and she was never in-charge and responsible for the day to day affairs of the company. Therefore, A13 also cannot be made vicariously liable for the offence said to have been committed by the company. 25. Besides, A2 to A4 have been repeatedly implicated in the complaint as A6 to A8 and A10 to A12 and A1 and A5 were implicated based on the replies given by them for the show cause notice. Admittedly, inspection was conducted on 28.04.2015 at A9 company at Guindy in Chennai, however, based on the replies given by A5 and A1, they were impleaded as accused and the directors of the companies have been repeatedly shown as accused. As already stated supra, A2 to A4, A6 to A8 and A10 to A12 are one and the same persons. In the considered opinion of this court, it is a procedural error and not permissible in law. Admittedly, the offences were said to have been committed by A9 and therefore, A9 alone is liable to be prosecuted for the offences, merely because communications were responded from different address by the company, the other to branches cannot be arrayed as accused and they cannot be prosecuted for the alleged offences. 26. In view of the foregoing discussions, this court is of the view that criminal prosecution could be allowed to be continued only as against A9 and prosecution as against the others accused are liable to be quashed. In the result, (i) Crl.O.P.No.23524 of 2016: (a) This Criminal Original Petition is allowed in part and the criminal case in C.C.No.2694 of 2016 pending on the file of the learned IV Metropolitan Magistrate, Saidapet, Chennai, is quashed insofar as A1, A5 and A13 are concerned; and (b) insofar as A9 is concerned, the criminal original petition stands dismissed and the learned IV Metropolitan Magistrate, Saidapet, Chennai, shall proceed with the case in C.C.No.2694 of 2016 in accordance with law and complete the trial as expeditiously as possible. (ii) Crl.O.P.No.23375 of 2016: This Criminal Original Petition is allowed in its entirety and the criminal case in C.C.No.2694 of 2016 pending on the file of the learned IV Metropolitan Magistrate, Saidapet, Chennai, is quashed insofar as A2 to A4, A6 to A8 and A10 to A12 are concerned. (iii) Consequently, connected MPs stand closed.
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