Judgment

A. C. GUPTA, J. :- This is an appeal by special leave from a judgment of the Karnataka High Court by which the High Court set aside the acquittal of the three appellants before us ordered by the Judicial Magistrate, Ist Class, (4th Court), Bangalore and convicted them of various offences under the Drugs and Cosmetics Act, 1940 (hereinafter referred to as the Act). The first appellant M/s. Rajasthan Pharmaceutical Laboratory is a firm of which the second appellant is a partner and the third appellant is the Manager. The first appellant holds a licence under the Act for repacking of drugs mentioned in the list which forms part of the licence. For purposes of the Act the first appellant is a manufacturer of the said drugs in view of the definition of the term manufacture occurring in S. 3 (f) of the Art which is as follows :-

"manufacture in relation to any drug or cosmetic includes any process or part of a process for making, altering, ornamenting, finishing, packing, labelling breaking up or otherwise treating or adopting any drug or cosmetic with a view to its sale and distribution but does not include the compounding or dispensing of any drug, or the packing of any drug or cosmetic in the ordinary course of retail business; and to manufacture shall be construed accordingly."

On February 27, 1970 on a search of the business premises of the first appellant, a Drugs Inspector seized 42 items of drugs from a room, 33 of which were not in the approved list of drugs appended to the licence issued to the first appellant. The third appellant who is the Manager of the firm and was present during the search failed to disclose the source from which these drugs had been acquired. To a notice issued under Section 18A of the Act calling upon the first appellant to disclose the source of acquisition of the drugs seized, the reply, signed by the third appellant on behalf of the firm, was a denial of the fact that the drugs were found in their possession and that they were seized. Samples were taken from the seized drugs which were sent to the Government Analyst and from his report it was found that one of the drugs, Sodium Bromide I.P. Batch No. 1 was substandard. On the aforesaid facts the Drugs Inspector filed a complaint in the court of the Judicial Magistrate, First Class (4th Court), Bangalore alleging that the appellants before us were guilty of having committed offences under Ss. 18 (c), 18 (a) (i) and 18A punishable respectively under Sections 27 (a) (ii), 27 (b) and 28 of the Act. Another partner of the firm also figured as an accused in the complaint but as he was absconding the trial could not proceed against him. As already stated the Magistrate acquitted the appellants.

2. On the facts on record the High Court found :

(a) 33 out of the 42 items of drugs seized from the business premises of the first appellant do not figure in the approved list of drugs which forms part of the licence issued to the first appellant. These 33 items had been kept in the premises for sale without the requisite licence. This constitutes an offence under Section 18 (c) of the Act for which all the appellants are punishable under Section 27 (a) (ii).

(b) Of the samples of the drugs seized and sent to the Government Analyst, one sample of Sodium Bromide I.P. Batch No. 1 was found to be sub-standard. An offence under Section 18 (a) (i) has therefore been committed for which the appellants are punishable under Sec. 27 (b).

(c) The appellants failed to disclose the source of acquisition of the aforesaid 33 items of drugs which were not in the approved list. This constitutes an offence under Section 18A which makes the appellants punishable under Section 28 of the Act.

3. For these offences the High Court sentenced each of the three appellants to pay a fine of Rs. 2,000 on each of the counts, in default appellants Nos. 2 and 3 were to undergo simple imprisonment for three months for each non-payment of fine". For the same offences the High Court further sen