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2023 Supreme(AP) 613
ANDHRA PRADESH HIGH COURT AT AMARAVATI
K. Sreenivasa Reddy, J.
Radico Remedies & Ors. – Appellants
Versus
State of Andhra Pradesh & Ors. – Respondents
Criminal Petition No. 1156 of 2020
Decided On : 12-04-2023
Palla Balu Anil Kumar, Advocate
The concept of vicarious liability under Section 34 of the Drugs and Cosmetics Act, 1940, does not apply to a proprietary concern, as it is not a juristic person.
Headnote:
DRUGS AND COSMETICS ACT, 1940 - SECTION 34 - QUASHING OF PROCEEDINGS - VICARIOUS LIABILITY - PROPRIETARY CONCERN - NOT JURISTIC PERSON - NO VICARIOUS LIABILITY AGAINST SON FOR ACTS OF FATHER - ABUSE OF PROCESS OF COURT:
Fact of the Case:
Petitioners, a sole proprietary firm and its managing director, challenged a complaint filed against them under the Drugs and Cosmetics Act, 1940, alleging violations related to the manufacture and sale of a 'Not of Standard Quality' drug. The complaint was filed after the death of the father of the managing director, who was the sole proprietor of the firm at the time of the alleged violations.
Finding of the Court:
The court found that there was no material on record to show that the managing director was in charge of or responsible for the conduct of the business of the firm at the time the alleged violations occurred. The court also noted that the concept of vicarious liability under Section 34 of the Act would not apply to a proprietary concern, as it is not a juristic person.
Issues: 1. Whether the managing director could be held vicariously liable for the acts of his father, the sole proprietor of the firm, under Section 34 of the Drugs and Cosmetics Act, 1940? 2. Whether the continuation of the proceedings against the managing director would amount to an abuse of process of court?
Ratio Decidendi: 1. The court held that the concept of vicarious liability under Section 34 of the Drugs and Cosmetics Act, 1940, would not apply to a proprietary concern, as it is not a juristic person. Therefore, the managing director could not be held vicariously liable for the acts of his father, the sole proprietor of the firm. 2. The court found that the complaint against the managing director was filed after the death of his father, and there was no evidence to suggest that the managing director was involved in the alleged violations. Therefore, the continuation of the proceedings against the managing director would amount to an abuse of process of court.
Final Decision: The court allowed the petition and quashed the proceedings against the petitioners.
JUDGMENT
K. Sreenivasa Reddy, J. - This Criminal Petition, under Section 482 Cr.P.C., is filed to quash the proceedings in C.C. No.3246 of 2019 on the file of the I Additional Chief Metropolitan Magistrate, Vijayawada. Petitioners herein are arrayed as A.1 and A.2 in the said case.
2. 2nd respondent herein filed a complaint before the learned Magistrate against A.1 and A.2 under Section 32 for violation of Section 18 (a) (i) punishable under Section 27 (d) of the Drugs and Cosmetics Act, 1940 (for short, "the Act, 1940?) and further A.2 failed to produce,/ non-disclosure of, information under Section 18B and 22(1) (cca) of the Act, 1940 and thus punishable under Section 28A and 22 (3) of the Act, 1940. The allegations, in brief, of the complaint are as follows. 2nd respondent/complainant is empowered to launch prosecution under Section 32 of the Act, 1940. A.1 firm, represented by its Managing Director A.2, is involved in manufacture and sale of 'Not of Standard Quality' drug viz. Bisacodyl Tablets IP 5 mg, B.No.BLS-013, Mfg 4/2017 Exp 3/2019. On 21.03.2018, 2nd respondent lifted sample of subject drug manufactured by A.1 issuing Form-17, 17-A for analysis/testing from Government Medical Stores, New Government Hospital, Ring Road, Gunadala, Vijayawada under acknowledgement. On the same day, one sealed sample portion of the drug was sent to the Government Analyst, Drugs Control Laboratory, Vijayawada for analysis/ testing in Form-18 after duly following the procedure laid down in Section 23 of the Act, 1940. On 28.05.2018, 2nd respondent received analytical report of the Government Analyst dated 28.05.2018 declaring the subject drug as 'Not of Standard Quality' drug as the sample fails in disintegration as per IP-2014. 2nd respondent ascertained through various correspondence that the subject drug was supplied by to the Government Medical Stores, New Government Hospital, Ring Road, Gunadala, Vijayawada by M/s. District Ware House located at M/s. Central Medical Stores, APMSIDC, Government Fever Hospital Compound, Amaravathi Road, Guntur, who in turn received the same from A.1 firm. After sending notices to A1-manufacturer and after receiving permission to file the complaint, 2nd respondent filed the present complaint for violation of Section 18 (a) (i) punishable under Section 27 (d) of the Act, 1940 and further A.2 failed to produce,/ non-disclosure of, information under Section 18B and 22 (1) (cca) of the Act, 1940 and thus punishable under Section 28A and 22 (3) of the Act, 1940.
3. Learned counsel for the petitioners contended that A.1 is a sole proprietary firm and the subject transactions took place in the year 2016; that the agreement was entered in the month of April, 2016 between the Managing Director of Andhra Pradesh Medical Services Infrastructure Development Corporation (APMSIDC), on one hand, and father of petitioner No.2 Dr.K.S.Sawhney, who was the Sole Proprietor of the firm, for supply of certain drugs. He further submits that copy of Certificate of Registration goes to show that A.1 is a Proprietary Concern and father of 2nd petitioner happens to be Managing Partner of the said concern. He further submits that there was an agreement between APMSIDC and father of 2nd petitioner for supply of drugs, and after the death the said Dr.K.S.Sawhney on 18.05.2019, 2nd respondent resorted in filing the present complaint impleading 2nd petitioner as A.2, who happens to be son of deceased Managing Partner and took over management of the firm, and that the present complaint has been filed as a counter blast to the civil litigation initiated by A.1 firm for recovery of the valid legal dues from the Andhra Pradesh Medical Services Infrastructure Development Corporation (APMSIDC). He further submits that in view of the aforesaid reasons, continuation of the impugned proceedings is nothing but abuse of process of Court.
4. On the contrary, the learned Special Assistant Public Prosecutor contended that petitioner No.2/A.2 is son of
