CRL.M.C. 3535/2016

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** ## **THE HONOURABLE MR. JUSTICE K.HARIPAL** **TUESDAY, THE 18[TH] DAY OF JANUARY 2022 / 28TH POUSHA, 1943** ## **CRL.MC NO. 3535 OF 2016** **CC 1465/2015 OF JUDICIAL MAGISTRATE OF FIRST CLASS - I, OTTAPPALAM PETITIONERS/ACCUSED 1 TO 4 & 6 TO 9:** - **1 M/S.LINCOLN PHARMACEUTICLAS LTD TRIMUL ESTATE, KHATRAJ-382721, TALUKA KALOL, DISTRICT GANDHINAGR, GUJARAT, INDIA, RERESENTED BY RAJANIKANT GULABDAS PATEL, JOINT MANAGING DIRECTOR, M/S LINCOLN PHARMACEUTICALS LTD.** - **2 MAHENDRABHAI GULABDAS PATEL AGED ABOUT 61 YEARS, 37 SARATHI-111 NEAR SURDHARA CIRCLE, DRIVE IN ROAD, THALTEJ, AHMEDABAD-380054, GUJARAT, INDIA.** - **3 RAJANIKANT GULABDAS PATEL AGED ABOUT 59 YEARS, 42, SARVODAY NAGAR SOCIETY PARTII, BHUYANGDEV, SOLA ROAD, AHMEDABAD-380061, GUJARAT, INDIA.** - **4 HASMUKHBHAI ISWARLAL PATEL AGED 57 YEARS, DAMODARKUNJ14, PRAGATLAXMI SOCIETY RANIP, AHMEDABAD-382480, GUJARAT, INDIA.** - **5 MIHIR VITHALDAS PATEL AGED ABOUT 55 YEARS, 10, SADHANA SOCIETY, SARDAR PATEL STADIUM, NAVARANGPURA, AHMEDABAD-380014, GUJARAT, INDIA.** - **6 ISHWARLAL AMBALAL PATEL AGED ABOUT 81 YEARS, 12, JIVANDEEP SOCIETY, NARANPURA, AHMEDABAD-380061,GUJARAT INDIA** - **7 KISHOR MEGHJI SHAH** - **AGED ABOUT 71 YEARS, BOX 49025, NAIROBI-49025, KENYA.** - **8 PIRABHAI RAMABHAI SUTHAR AGED ABOUT 69 YEARS, AT AND POST RAH-385013, TALUKA THARAD, DISTRICT BANASKANTHA, GUNARAT, INDIA.** **BY ADV SRI.MILLU DANDAPANI** Crl.M.C.3535/16 2 ## **RESPONDENTS/COMPLAINANT & STATE:** **1 THE DRUGS INSPECTOR OFFICE OF THE DRUG INSPECTOR, PALAKKAD. 2 STATE OF KERALA REP. BY THE PUBLIC PROSECUTOR, HIGH COURT OF KERALA, ERNAKULAM.** ## **OTHER PRESENT:** **SR.PP - SMT. PUSHPALATHA M.K.** **THIS CRIMINAL MISC. CASE HAVING COME UP FOR FINAL HEARING ON 29.11.2021, THE COURT ON 18.01.2022 PASSED THE FOLLOWING:** Crl.M.C.3535/16 3 ## **O R D E R** This is a Criminal M.C. filed under Section 482 of the Code of Criminal Procedure seeking to quash Annexure-A complaint and further proceedings in C.C. 1465 of 2015 on the file of the Judicial First Class Magistrate, Ottapalam. Petitioners are the accused in the said Calendar Case. The case was registered on Annexure-A complaint preferred by the Drugs Inspector, Palakkad. The facts of the case are thus: On 11.06.2012, the then Drugs Inspector visited the premises of the Employees State Insurance Dispensary, Kulappully, Shornur, Palakkad and drew statutory samples of medicine Adil-90 (Diltiazem Sustained Release Tablets) Batch No.T-IC22 with manufacturing date 12/2011, expiry date 11/2014 manufactured by the 1[st] accused firm. The samples were taken for analysis following the provisions under Section 23 of the Drugs and Cosmetics Act, 1940, hereinafter referred to as the Act, and the items were seized adopting the procedural formalities. The first sample was sent to the Government Analyst Drugs Testing Laboratory, Thiruvananthapuram as provided under Section 23(4)(i) of the Act by registered post. After testing, the Government Analyst declared that the drug does not conform to standard quality for the reason that it failed in the test for dissolution. Crl.M.C.3535/16 4 The test report was received and the matter was informed to the Superintendent, ESI Dispensary, Shornur. Thereafter the second sample was sent to the Central Drugs Laboratory, Calcutta. After testing, they also reported that the sample does not conform to IP with respect to 'test for dissolution'. Thereafter the details of the manufacturer of the drug were collected and it came out that the accused are the manufactures and thus the complaint was filed and that was how the case was taken on file and the accused persons were summoned. The 1[st] petitioner is the company which admittedly manufactured the medicine. Petitioners 2 and 3 are the Managing Director and Joint Managing Director respectively of the company. One of the directors, the 5[th] accused has passed away; others are the directors of the company. They have approached this Court under Section 482 of the Cr.P.C. for quashing the proceedings predominantly for two reasons, firstly, that there is absolutely no averment in the complaint that the petitioners, especially petitioners 4 to 8, have played any role in the management and day-to-day business of the company. According to them, there are no averments that all the petitioners are dealing with the day-to-day administration and management of the company and therefore Section 34 of the Act is not applicable and it is a clear abuse of the process of law that a complaint has been filed against the petitioners without Crl.M.C.3535/16 5 making positive averments with regard to the roles played by them in the manufacture and business deals of the company. Secondly, it is stated that the said Adil-90 is not a drug as provided under Section 3(b)(i) of the Act. On the other hand, the standards for dissolution applied by the Central Drugs Laboratory as prescribed in Indian Pharmacopoeia (IP) are inapplicable to a drug in question; as it is not an Indian Pharmacopoeia drug, but a patent/proprietary drug as defined under Section 3(h)(ii) of the Act. So, according to the petitioner, the drug in question being a patent/proprietary drug has to achieve the standards prescribed for the patent/proprietary drug under Rule 124B and not the standards prescribed for Indian Pharmacopoeia drug under Rule 124(1) of the Drugs and Cosmetics Rules, 1945, hereinafter referred to as the Rules. In this connection, the petitioners have also relied on Annexure-C certificate dt. 07.04.2016 issued by the Commissioner, Food and Drugs Control Administration, Gandhinagar, Gujarat State. 2. I heard the learned counsel for the petitioners and also the learned Senior Public Prosecutor. 3. The learned counsel for the petitioners has reiterated the above two arguments. According to him, there is no positive averment that the petitioners have any role in the day-to-day affairs of the company. In this Crl.M.C.3535/16 6 connection, he has relied on the decision of the Karnataka High Court in Criminal Petition 3027 of 2014 dated 14.11.2014, **State of Haryana v. Brij Lal Mittal and others [(1998) 5 SCC 343]** , order of a learned Single Judge of this Court in Criminal M.C. 1183 of 2012 dt.20.02.2014, **Mukesh Bhagubhai Patel and others v. State of Kerala and another [2014 (2) KHC 514]** and **State of Karnataka v. Pratap Chand and others [AIR 1981 SC 872]** . 4. Relying on the decision in **M/s. Aphali Pharmaceuticals Ltd.** **v. State of Maharashtra and others [AIR 1989 SC 2227]** the learned counsel said that the patent or proprietary medicine has the same meaning in sub-clause (h) of Section 3 of the Act and it has to be distinguished from a drug as defined in Section 3(b)(i) of the Act. 5. According to the learned Senior Public Prosecutor, it is a drug as defined under Section 3(b)(i) of the Act and the complaint was laid following Section 23 of the Act. The second sample was also tested at the instance of the petitioners and the complaint was filed thereafter and now the petitioners cannot be heard to say that it is not a drug. 6. After hearing counsel on both sides, I am of the view that both the contentions raised by the learned counsel for the petitioners are formidable. Section 34 of the Act provides that where an offence under the Crl.M.C.3535/16 7 Act has been committed by a company, every person, who, at the time of commission of the offence, 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. Before choosing to prosecute any person vicariously, prima facie the complaint must contain allegations that such persons were in charge and responsible for the conduct of business of the company at the relevant time. Absence of this basic averment would be sufficient to halt the prosecution against those persons. Here, Annexure-A is the complaint preferred by the Drugs Inspector, Palakkad. It is stated that the 1[st] accused is the company and 2[nd] and 3[rd] accused are the Managing Directors and the persons responsible for the conduct of the business of the first accused. Such a vague allegation alone is there to rope in the petitioners and to proceed against them under Section 18 read with Section 27 of the Act. In the decision reported in **G.L.Gupta v. D.H.Mehta and another [AIR 1971 SC 2162]** , the Hon'ble Supreme Court has held as follow: “What then does the expression "a person in-charge 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 Crl.M.C.3535/16 8 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 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 in-charge of the business of the company. Further it mentions manager, who usually is in charge of the business but not in over-all-charge. Similarly the other officers may be in charge of only some part of business.” Here, it is only stated that accused Nos.2 and 3 Managing Director and Joint Managing Director are in charge of the day to day affairs of the company. Regarding other accused persons, there is no allegation that they have any role in the management and running of the affairs of the company. It is interesting to note that one of the accused persons, that is 7[th] petitioner as the 8[th] accused, whose address is shown in Nairobi, in Kenia, which can be inferred from the complaint itself. That means, there is absolutely no averment in the complaint that accused Nos.4 to 10 had any role in the running of the company. Regarding accused Nos. 2 and 3 also it is only stated in a very vague manner that they are the persons responsible for the conduct of business of the 1[st] accused firm, which is Crl.M.C.3535/16 9 not sufficient to attract criminal liability. Therefore that argument is really susceptible. 7. The second argument also is liable to be upheld. Here, Annexure-C(2) certificate issued by the Commissioner, Food and Drugs Control Administration, Gandhinagar, Gujarat states that Diltiazem Sustained Release tablets, Adil-90 each uncoated sustained release tablet contains Diltiazem hydrochloride I.P. 90 mg, excipients QS. It is also certified that it is a patent and proprietary product as per the provisions of the Drugs and Cosmetics Act, 1940 and Rules thereunder. In other words, it is not a drug as provided under Section 3(b)(i) of the Act. 8. From Annexure-C(2) it is clear that the tests prescribed in the Indian Pharmacopoeia in respect of drugs are inapplicable to a patent or proprietary drug defined under Section 3(h) of the Act. In that case, what is applicable is the standards prescribed for a patent or proprietary drug under Rule 124B of the Rules and not under the standards prescribed for Indian Pharmacopoeia drug under Rule 124(1) of the Rules. Rule 124B says that the standards for patent or proprietary medicines shall be those laid down in Schedule V and such medicines shall also comply with the standards laid down in the Second Schedule to the Act. The subject matter of the complaint is a tablet. Schedule V stipulates the requirements for the Crl.M.C.3535/16 10 dosage forms of patent or proprietary medicines. It does not seem that any test was conducted as required under Schedule V of Rule 124B of the Rules. In the circumstances, the prosecution cannot sustain and the petitioners are entitled to be exonerated. In the result, the entire proceedings in C.C.1465/2015 of the Judicial First Class Magistrate's Court, Ottappalam are quashed and the petitioners shall stand exonerated. The Crl.M.C. is allowed as above. Sd/- **K.HARIPAL JUDGE** okb/16.1.22 //True copy// P.S. to Judge Crl.M.C.3535/16 11 ## **APPENDIX OF CRL.MC 3535/2016** |PETITIONER EXHIBITS|| |---|---| |ANNEXURE-A|TRUE COPY OF THE COMPLAINT IN C.C.| ||NO.1465/2015 ON THE FILES OF THE JUDICIAL| ||FIRST CLASS MAGISTRATE COURT, OTTAPALAM.| |ANNEXURE-B|TRUE COPY OF THE REPORT DATED 7-3-2014 ISSUED| ||BY THE CENTRAL DRUGS LABORATORY.| |ANNEXURE-C|TRUE COPY OF THE CERTIFICATE DATED 7-4-2016| ||ISSUED BY THE OFFICE OF COMMISSIONER, FOOD| ||AND DRUG CONTROL ADMINISTRATION, GUJARAT| ||STATE.|