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Kailashdevi & Another v/s Union of India, Rep. by The Drug Inspector, Office of the Deputy Drugs controller (India) Central Drugs Standard Control Organization, Chennai

    Crl.O.P. No. 1942 of 2020 & Crl.M.P. Nos. 1193 & 1194 of 2020
    Decided On, 08 July 2022
    At, High Court of Judicature at Madras
    By, THE HONOURABLE MR. JUSTICE G.K. ILANTHIRAIYAN
    For the Petitioners: K.P. Anantha Krishna, Advocate. For the Respondent: Dr. D. Simon, Central Government Standing Counsel.


Judgment Text
(Prayer: Criminal Original Petition filed under Section 482 of Code of Criminal Procedure, to call for the records relating to the C.C.No.6712 of 2016 pending on the file of the learned X Metropolitan Magistrate Court, Egmore and quash the same.)

1. This petition has been filed to quash the proceedings in C.C.No.6712 of 2016 on the file of the learned X Metropolitan Magistrate Court, Egmore, thereby taken cognizance for the offences punishable under Section 27(d) of the Drugs and Cosmetics Act, 1940 (herein after referred to as “the Act”) as against the petitioners.

2. The respondent lodged complaint under Section 32 of the Act for the contravention of Section 18(a)(i) of the Act and punishable under Section 27(d) of the Act. The allegations made in the complaint is that on 22.04.2015, the respondent inspected M/s. ICF Hospital and had drawn the sample of Roxithromycin tablets IP 150 mg (Roxitec-150), Batch No.RDTB481, Manufacturing Date: April 2014, Expiry Date: March 2016 Quantity: 400 (10X10X4) tablets manufactured by the first accused firm, in which the accused 2 to 3 are the Directors and the fifth accused is the authorized agent of the first accused company.

3. The respondent followed the procedure prescribed under Section 23 of the Act and divided the sample into four portions and sealed them and sent to the Government Analyst, Central Drugs Testing Laboratory, Chennai, on 22.04.2015. The government analyst sent report dated 28.12.2015 which declared that that sample is not of standard quality as defined under the Act, since the subject drugs does not conform to the Indian Pharmacopeia standards with respect to the test for disintegration. On receipt of the said test report, the respondent had issued show cause notice dated 31.12.2015 to the said hospital.

4. In response to the said notice, the hospital authority by the reply dated 04.01.2016 had informed that the said drugs were purchased from M/s.United Biotech (P) Limited, New Delhi, vide bill dated 23.04.2014. Therefore, the respondent had issued notice to the said company to disclose the name and address of the person from whom the drug was acquired, as per the Act. By the reply dated 28.01.2016, the authorized signature of M/s.United Biotech (P) Limited, New Delhi had informed that they received the subject drugs on two occasions from the first accused company, who is the manufacturer of the subject drugs.

5. Therefore, the respondent issued show cause notice dated 01.02.2016 to the first accused company. By the reply dated 01.03.2016, the first accused company informed that they do no accept Form-13 certificate of analysis and requested to exonerate from the findings of the government analyst. Further by the letter dated 09.03.2016, the authorized signatory of the first accused company stated that they do not agree with the findings and intend to adduce evidence in controversion of the report of the government analyst.

6. Thereafter, on the application filed by the respondent in M.P.No.1335 of 2016, the learned X Metropolitan Magistrate, Egmore, Chennai, directed for reanalysis by the Director, Central Drugs Laboratory, Kolkata, as contemplated under Section 25(4) of the Act. The report dated 18.04.2016 from the Director, Central Drugs Laboratory, Kolkata, revealed that the subject Drug has been found substandard on the test and also enclosed the test report in Form-2. Hence, the complaint.

7. The learned counsel appearing for the petitioners submitted that there are totally five accused in which, the petitioners are arrayed as A3 & A4. Both are Directors of the first accused company and they are not active Directors of first accused company's day to day affairs. There are not incharge or responsible for the conduct of the business of the first accused company. The petitioners are mere the directors of the first accused company and it is not sufficient to make the directors to be punished on vicarious liability. The impugned complaint has no material to attract the offence as against the petitioners.

7.1. He further submitted that the manufacturing date of the subject drugs is April, 2014 and the expiry date is March, 2016. The samples of the said drugs were drawn by the respondent on 22.04.2015. Under Form-18, the first government analyst report dated 22.04.2015 and it declared that the sample is not of standard quality as defined under the Act. Thereafter the other sample was sent to the Central Drugs Laboratory, Kolkata on 11.03.2016. However, after expiry of the subject drug, the same was analyzed and by the report dated 18.04.2016, declared that the subject drug has been found substandard on test. Therefore, after expiry of the drug, the test was conducted and found to be substandard. Now the impugned complaint has been taken cognizance only on the report submitted by the Central Drugs Laboratory, Kolkata on the expired drug. Therefore, prejudice caused to the petitioner and the impugned complaint cannot be sustained as against them. Therefore, he prayed for quashment of the present proceedings.

8. Per contra, Dr.D.Simon, learned Central Government Standing Counsel filed counter and submitted that the petitioners are arrayed as A3 & A4 and their specific role in the first accused company are categorically mentioned in the complaint. The first accused is the company and A2 to A4 are the Directors and the fifth accused is the authorized representative of the first accused company. All are taking active part in the business of manufacturing of drugs of the first accused company. Therefore, all the directors are held vicarious liability for the offences committed by the first accused.

8.1. He further submitted that insofar as the central drugs analysis report is concerned, though the report had dated 18.04.2016, the samples were analyzed before the expiry viz., in the month of March itself viz., 28.03.2016. That apart, all the grounds raised by the petitioners can be considered only during the trial by let in evidence, since all the documents produced by the petitioners has to be tested before the trial Court and prayed for dismissal of the quash petition.

9. Heard Mr.K.P.Anantha Krishna, learned counsel appearing for the petitioners and Dr.D.Simon, learned Central Government Standing Counsel appearing for the respondent.

10. There are totally five accused in which the petitioners are arrayed as A3 & A4, who are the directors of the first accused company. The respondent had drawn the sample drugs and the analysis report declared that the subject drug is not standard one. After issuance of show cause notice and on the request made by the first accused company's representative by its authorized signatory viz., the fifth accused herein, again the sample was sent to the Central Drugs Laboratory, Kolkata on 11.03.2016.

11. The subject drug was manufactured in the month of April, 2014 and it expiry date is March, 2016. Whereas the second analysis report dated 08.04.2016 declared that the subject drugs has been found substandard on the test. It was tested after the expiry of the subject drug viz., after March, 2016. Though, the learned Central Government Standing Counsel submitted that the test was conducted in the month of March, 2016, there is no evidence to prove that subject drug was tested in the month of March, 2016 itself.

12. In this regard, the learned counsel appearing for the petitioner relied upon the judgment of the Hon'ble Supreme Court of India reported in (2021) 11 SCC 339 in the case of Medipol Pharmaceutical India Pvt. Ltd., Vs. Post Graduate Institute of Medical Education and research and anr., which reads as follows :-

“13. Though the aforesaid judgments pertain to criminal prosecutions under the Drugs and Cosmetics Act, Prevention of Food Adulteration Act and Insecticides Act, yet, they lay down that a valuable right is granted to a person who is sought to be penalized under these Acts to have a sample tested by the Government Analyst that is found against such person, to be tested by a superior or appellate authority, namely, the Central Drugs Laboratory. These judgments lay down that if owing to delay which is predominantly attributable to the State or any of its entities, owing to which an Article which deteriorates with time is tested as not containing the requisite standard, any prosecution or penalty inflictable by virtue of such sample being tested, cannot then be sustained. We have seen that on the facts of this case, the sample drawn and analyzed by the Government Analyst was delayed for a considerable period resulting in the sample being drawn towards the end of its shelf life. Even insofar as the samples sent to the Central Drugs Laboratory, there was a considerable delay which resulted in the sample being sent and tested 8 months beyond the shelf life of the product in this case. It is thus clear that the valuable right granted by Section 25 of the Drugs and Cosmetics Act kicks in on the facts of this case, which would necessarily render any penalty based upon the said analysis of the sample as void.”

Thus, the sample drawn and analysed by the government analyst was delayed for a considerable period resulting in the sample being drawn towards the end of its shelf life. Hence it is clear that the valuable right granted under Section 25 of the Act kicks in on the facts of this case, which would necessarily render and penalty based upon the said analysis of the sample as void. Therefore, the statutory right of the petitioners for re-testing the drugs in question under Section 25 (3) & (4) of the Act has been violated by the respondent. Therefore the petitioners would not have deprived the valuable right as contemplated under Section 25 (3) & (4) of the Act as such, it is liable to be quashed.

13. Insofar as the vicarious liability of the directors are concerned, it is relevant to extract the provisions under Section 34 of the Act, 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 subsection (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.”

Accordingly, the directors of the company deemed to be committed the offence, if it is proved that, they are incharge of and responsible for the conduct of the business of the first accused company at the time of commitment of offence, and if it proved that the offence has been committed with the knowledge and consent of the directors or negligence, they are also liable for prosecution. However, there should be a specific averment to that effect in the complaint that all the directors are incharge of and responsible in the day to day affairs of the company and the offence has been committed with their knowledge and consent.

14. Whereas on perusal of the impugned complaint it is seen th

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at there is no specific averments and overtact as against the petitioners as if they are actively involved in the day to day affairs of the company and the offence had been committed only with their consent and knowledge. Therefore, there should be a specific averment in the complaint to satisfy the mandatory provision of the Act. Hence in the absence of any such specific averment to that effect in the complaint, the petitioners are being the directors of the first accused company cannot be made liable for the offence committed by the first accused company and they cannot be prosecuted for the offence committed by the first accused company. 15. Therefore, the impugned complaint is nothing but clear abuse of process of law and this Court has no hesitation to quash the proceedings as against the petitioners herein. Accordingly the proceedings in C.C.No.6712 of 2016 on the file of the learned X Metropolitan Magistrate Court, Egmore is hereby quashed as far as the petitioners alone. The trial Court is directed to proceed with the trial as against the other accused persons and complete the same within a period of three months from the date of receipt of a copy of this Order. 16. In the result, the Criminal Original petition stands allowed. Consequently, connected miscellaneous petitions are closed.
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