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2000 Supreme(Bom) 714
IN THE HIGH COURT OF BOMBAY
(AURANGABAD BENCH)
B.B. Vagyani, J.
Pannalal Sunderlal Choksi others .... Petitioners.
Versus
State of Maharashtra another.... Respondents.
Criminal Writ Petition No. 361 Criminal Appeal No. 2397 of 1998, decided on 14-9-2000.
Advocates appeared :
Shirish Gupte, Sr.C. with B.R. Warma, in Cri.W.P. No. 361/1998, for petitioners.
V.D. Sapkal, A.P.P., in Cri.W.P. No. 361/1998, for State-respondent in Cri.Appl. No. 2397/1998, for petitioners.
S.K. Tambe, A.P.P., in Cri.Appl. No. 2397/1998, for State-respondent.
Headnote:Section 34 and Prevention of food Adulteration Act, 1954, Section 17-Offence committed by companies -Person charged should effectively exercise all control of day-to-day business of the company or the firm Legal requirement is overall control over the day-to-day business of the company or the firm-Petitioners charged merely because they were Directors of the company which committed offence-Order issuing summons quashed.-Petitioners Directors of two different companies carne to be charged for committing offences under Drugs and Cosmetics Act and Prevention of Food Adulteration Act. Judicial Magistrate, First Class issued Summons against the petitioner, which order was challenged by the petitioner by invoking jurisdiction of the High Court under Section 482 of Criminal Procedure Code and Article 227 of the Constitution of India.
Held, that Section 34 of the Drugs and Cosmetics Act, 1940, and Section 17 of the Prevention of Food Adulteration Act, 1954 are practically identical. Both these sections speak about the offences committed by the companies. If these two sections are carefully read, there is no manner of doubt that the vicarious liability of a person for being prosecuted for an offence committed under the Drugs and Cosmetics Act, 1940, and Prevention of Food Adulteration Act, 1954, by a company arises if, at the relevant time, he was in charge of and was also responsible to the company for the conduct of its business. The phraseology used in Section 34 of the Drugs and Cosmetics Act, 1940, and Section 17 of the Prevention of Food Adulteration Act, 1954, has a special significance. A commission of offence by company under Drugs and Cosmetics Act, 1940, and under Prevention of Food Adulteration Act, 1954, requires different treatment by virtue of Section 34 of the Act of 1940 and Section 17 of the Act of 1954. The phraseology used in Section 34 of the Act of 1940, and Section 17 of the Act, 1954, conveys actual participation in day-to-day affairs of the company. A person in charge of and responsible to the company for the conduct of the business of the company means the person who effectively exercises all control of the day to-day business of the company or firm. What is legally required is overall control over the day-to-day business of the company and the firm. If this element is present then only the directors of the company are responsible. Except bald statement made in the complaints filed by the Drug Inspector and Food Inspector, there was no whisper in the complaints that the petitioners were in charge of and were also responsible to the companies for the conduct of the business of the companies. Drug inspector and the Food Inspector had drawn a presumption with regard to involvement of the Directors of the company without any averments with regard to control of day-to-day business of the companies. No prima facie case was made out against the petitioners. Under the circumstance, it was not proper to subject the petitioners to the agony of criminal trial. Order of issue of summons quashed.
Section 34 and Prevention of Food Adulteration Act, 1954, Section 17-0nus of proving that a particular director was in charge of and also responsible to the conduct of the business of the company, at the time of contravention of the provisions of Drugs and Cosmetics Act, 1940, and Prevention of Food Adulteration Act, 1954, is on the prosecution-If it is shown that a particular director has overall control over the day-to-day business of the company and he participates in the day-to-day affairs of the company then, in that event, there will be transformation of onus of proof from prosecution to the accused.
2. Heard learned Advocate Shri V.D. Hon for the petitioners and learned A.P.P. Shri S.K. Tambe for the respondent State in Criminal Application No. 2397/1998.
3. The law points involved in Criminal Writ Petition No. 361/1998 and Criminal Application No. 2397/1998 are identical and, therefore, both the petitions are disposed of by common order.
4. The facts giving rise to the Criminal Writ Petition No. 361/1998 are as under :
The petitioners Nos. 1 to 3 are the Directors of M/s. Gufic Pharma Pvt. Ltd. (hereinafter referred to as 'the said company'). The said company is registered under the Companies Act, 1956. The office of the said company is situated at Nehru Road, Vile Parle (East), Mumbai 400 007. The registered office of the said company is in the State of Gujarat.
5. The said company carries on business of manufacturing pharmaceuticals, using bottles, containers, tubes, wrapping material, insulating material and other blow moulded form from extruded articles. The said company also manufactures crude drugs, herbs and raw materials like basic drugs, chemicals and pharmaceutical preparations. The said company is also engaged in the manufacture of various health care products.
6. Shri S.B. Patil, Drug Inspector, attached to the Food and Drugs, Administration, Government of Maharashtra, at the relevant time, was posted at Dhule. The complainant i.e. Shri S.B. Patil, Drug Inspector visited the premises of M/s. Unique Agencies, 5th lane, near Sonya Maruti Mandir, Dhule. He collected the sample of Plucinolone Acetonide Cream B.P. Luci Skin cream manufactured by M/s. Gufic Pharma Pvt. Ltd., Bharoch, Gujarat (hereinafter referred to as 'the said drug' for the sake of brevity). The sample was sent to Government Analyst, Drug Control Laboratories, M.S., Bombay for test and analysis. The Government Analyst opined that the said Drug is not of standard quality as defined in the Drugs and Cosmetics Act, 1940, and the Rules framed thereunder. (Hereinafter referred to as the said Act, 1940, and the said Rules).
7. During enquiry, it is transpired that M/s. Gufic Pharma Ltd., Bharoch, had manufactured and distributed the said drug. The complainant on 15-2-1995 then visited the premises of M/s. Gufic Pharma Pvt. Ltd., and made enquiries with Shri S.C. Jain, Production Manager and Authorised Signatory of M/s. Gufic Pharma Pvt. Ltd., Bharoch, regarding manufacture and distribution of the said drug and he was further asked to furnish information regarding the said firm. Shri S.C. Jain; Production Manager and Authorized Signatory of M/s. Gufic Pharma Pvt. Ltd., disclosed that the accused No. 5 i.e. the company is holding drug manufacturing licence and the company had distributed the said drug manufactured in the factory. Shri S.C. Jain supplied certified xerox copies of necessary documents. After having found that the original accused No. 5 i.e. M/s. Gufic Pharma Pvt. Ltd., manufactured for sale and distributed the said drug, which is not of standard quality, the Drug Inspector filed complaint bearing R.C.C. No. 82/1995 in the Court of Chief Judicial Magistrate, Dhule, against the present petitioners Nos. 1 to 3, Shri S.C. Jain, Production Manager, and the company i.e. M/s. Gufic Pharma Pvt. Ltd., for having contravened the provisions of section 18(a)(1) of the said Act, 1940, punishable under section 27-D read with section 34 of the said Act, 1940 and the said rules. Learned Chief Judicial Magistrate took cognizance of the case and issued summons to each of the petitioners along with others calling upon them to appear before the Court. The petitioners, on being aggrieved by the order of issuance of summons, approached this Court under section 482 of Criminal Procedure Code seeking to invoke inherent jurisdiction
