Crl. P. No.5893 of 2004

22nd December, 2004

Petitioner Counsel: E. V. BHAGIRATHA RAO

Cases Cited:
State of Karnataka Vs. Pratap Chand, AIR 1981 SC 872 [Para PARA5]
G. L. Gupta Vs. D. N. Mehta, AIR 1971 SC 28 [Para PARA9]
State of Haryana Vs. Bhajanlal, (1992)1 SCC (Supp) 335 : AIR 1992 SC 604 [Para PARA12]

JUDGMENT

-This petition is filed to quash the proceedings in C.C. No.514 of 2004 on the file of the Additional Judicial Magistrate of I Class, Kurnool initiated against the petitioners by the Drugs Inspector for contravening the provisions of the Drugs and Cosmetics Act, 1940.

2. The petitioners who are A-2 and A-3 in CC No.514 of 2004 on the file of the Additional Judicial Magistrate of I Class, Kurnool, were charged for the contravention of Section 18 (a)(i) read with Section 16 punishable under Section 27(d) of Drugs and Cosmetics Act. 1940 and Rules thereunder.

3. The petitioners are the partners representing A-1 firm in the name and style of M/s. Corewell Pharma, situated at No.9, Nagi Reddy Garden, Guindy, Chennai. It is stated that A-1 firm deals with manufacture of drugs including Propranolol tablets, I.P.

4. The facts of the case in brief are that on 18-3-2003 the Drugs Inspector (L.W.1 - T. Bose Babu) inspected Central Drug Stores of APHM & HIDC, Kurnool and as per the procedure prescribed under the Act, in the presence of the Pharmacist (L.W.2) lifted 4 drugs for the purpose of Test/Analysis including Propranolol tablet IP 40 mg. Batch No.T-170 manufactured by A-1 firm. The Food Inspector (L.W. 1) prepared Form-17 inspection report. On the same day he sent the sample along with one sealed portion of the drug-Propranolol tablet I.P. 40 mg. to the Government Analyst for the purpose of analysis. The case of prosecution is that as per public analyst report, the drug is not of standard quality since it failed I.P. specification. Therefore, the Drug Inspector filed a complaint against A-1 to A-3 for contravention of provisions of Drugs and Cosmetics Act, 1940.

5. Sri E. V. Bhagiradha Rao learned counsel for the petitioners (A-2 and A-3) contends that since in the absence of any allegations to indicate that the petitioners were in charge of the company (A-1) and are also responsible for conducting business of the company, the petitioners cannot be prosecuted for the alleged contravention of provisions of the Drugs and Cosmetics Act, 1940. Relying on the provisions of Section 34(1) of the Drugs and Cosmetics Act, 1940, it is contended by the learned counsel that the Manager of A-1 firm who is in charge of the same and responsible for the day-to-day administration, can alone be prosecuted but not against the present petitioners (A-2 and A-3) who are merely partners of A-1 firm and therefore, launching of prosecution against the petitioners amounts to abuse of process of law. In support of his contention, he relied on a decision of the Apex Court reported in State of Karnataka Vs. Pratap Chand, AIR 1981 SC 872 wherein it the was held thus (para 5) "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 Vs. D. N. Mehta, (1971) 3 SCR 748 : (AIR 1971 SC 28); it was observed as follows:

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

6. On the contrary, the learned Addl. Public Prosecutor submits that the attempts made by the learned counsel for the petitioners that there is no specific allegation in the charge-sheet indicating that the petitioners who are the partners of the A-1 firm are Incharge of the company and they are also responsible for conducting of the business of the company, cannot be considered at this stage of the proceedings.

7. I have perused the copy of the complaint and the relevant material available on record. Now it is relevant to go through the provisions of Section 34(1) of the Drugs and Cosmetics Act, which read as under:

"Section 34(1) Where an offence under this Act has been committed by a company, every person who at the time the offence was committed, was incharge 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."

8. On a perusal of the above provisions, it is apparent that every person who at the time of the offence, was incharge of, and was responsible to the company for the conduct of the business of the company, is alone liable to be punished.

9. In the above cited decision, while considering the provisions of Section 34(1) of the Drugs and Cosmetics Act and also while interpreting the expression "a person incharge and responsible for the conduct of the affairs of a company", and while concurring with the view taken earlier by the Apex Court in a decision reported in G. L. Gupta Vs. D. N. Mehta AIR 1971 SC 28 : it was categorically held by the Apex Court that where the Partnership firm was charged for the offences under Section 18(a)(ii) and (c) of the Drugs and Cosmetics Act, the partner of the firm who was in overall control of the day to day business of the firm, would alone be liable to be convicted.

10. Now, it has to be examined as to whether the petitioners will come under the purview of the principles as laid down by the Apex Court in the decisions cited supra. I have perused the copy of the complaint. Except the status of the petitioners and the procedure as to the taking of sample, nothing is mentioned as to the primary ingredient as to whether the petitioners herein are in overall control of the day-to-day business of the firm. No other material is also adduced to show prima facie to that effect.

11. In short the partner of a firm is liable to be convicted for an offence committed by the firm if he was incharge 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.

12. In the above facts and circumstances of the case and in view of the provisions under Section 34(1) of the Drugs and Cosmetics Act and in the light of the principles laid down by the Apex Court in the decisions cited supra, the uncontroverted allegations made in the complaint and the evidence collected in support of the same do not make out a case against the petitioners herein who are A-2 and A-3 in CC No.514 of 2004 on the file of the Additional Judicial Magistrate of I Class, Kurnool. It fits in with category 3 of broad categories indicated in a decision reported in State of Haryana Vs. Bhajanlal (1992)1 SCC (Supp) 335. In view of the same, continuance of proceedings would be an abuse of process of Court as such, the same is liable to be quashed in so far as the present petitioners (A2 and A3) are alone concerned.

13. Accordingly, this Criminal petition is allowed and the proceedings against the petitioners (A2 and A3 in C.C. No.514 of 2004) is quashed.

Petition allowed.