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2023 Supreme(Jhk) 1537

IN THE HIGH COURT OF JHARKHAND AT RANCHI
SANJAY KUMAR DWIVEDI, J.
Krishna Nand Shastri @ K.N. Shastri – Petitioner
Versus
The State of Jharkhand – Respondent
Cr. M.P. No. 1525 of 2014
Decided On : 03-05-2023

Advocates:
Advocate Appeared:
For the Petitioner: Pandey Neeraj Rai
For the Respondent: Kumari Rashmi

Headnote:(A) Drugs and Cosmetics Act, 1940 - Sections 18(a), (c) and 27(b), (d); Criminal Procedure Code, 1973 - Section 202 - Quashing of criminal proceeding - Cognizance invalid due to failure to comply with mandatory provisions of Section 202 - Complainants failed to establish petitioners' responsibility for day-to-day operations - Vicarious liability not applicable - Cognizance taken based on insufficient allegations and without jurisdictional inquiry - No averments regarding petitioners' involvement in business of company (Paras 3, 7, 10).

(B) Criminal Procedure - Mandatory inquiry - Section 202 requires inquiry prior to issuing summons if accused resides outside jurisdiction - This requirement applies even to government complaints - Non-adherence invalidates cognizance (Paras 8, 9).

Facts of the case:
Petitioners challenged cognizance taken in a criminal complaint regarding the sale of a product without a proper drug license, claimed as a 'nutritional supplement' despite being a drug.

Findings of Court:
Cognizance quashed due to lack of specific allegations against petitioners regarding company affairs and non-compliance with Section 202 - No invocation of vicarious liability without established responsibilities.

Issues: Whether the petitioners were responsible for the company's conduct and if cognizance was valid given jurisdictional concerns.

Ratio Decidendi: A director must be demonstrated to be in charge of the business for vicarious liability; mandatory inquiry under Section 202 must be followed when accused reside outside jurisdiction.

Result: Entire criminal proceeding quashed; petition allowed.

Table of Content
1. details of the criminal proceedings against the petitioners. (Para 1 , 2 , 3)
2. arguments regarding the lack of allegations against the petitioners. (Para 4 , 5 , 6)
3. court's analysis of the legal requirements under section 202 cr.p.c. (Para 7 , 8 , 9)
4. conclusion quashing the criminal proceedings. (Para 10 , 11 , 12)

JUDGMENT :

SANJAY KUMAR DWIVEDI, J.

1. Heard Mr. Pandey Neeraj Rai, the learned counsel appearing on behalf of the petitioners and Ms. Kumari Rashmi, the learned counsel appearing on behalf of the respondent-State.

2. This petition has been filed for quashing of the entire criminal proceeding in connection with G.O.C.R. No. 61 of 2013, T.R. No. 879 of 2014 including order taking cognizance dated 15.07.2013 pending in the court of learned Chief Judicial Magistrate, Deoghar.

3. The complaint case has been lodged alleging therein, in nutshell, that On 02.03.2011 the then Inspector of Drugs inspected premises of M/s. Bajpai Medicals, Deoghar and the Inspector issued Form-16 on Ciproplus BWS, 100 mg manufactured by M/s. Intercorp Biotech, New Delhi and as per the composition mentioned on the label ciprofloxacin hydrochloride-100 mg is present in 1 gm of the product, which implies that the product is a drug but no drug manufacturing license No. is mentioned on the label and the product is sold as ‘nutritional supplement’. The said company was informed regarding the seizure and it was asked to produce the constitution details of the firm. The manufacturer requested for 15 days’ time. After receipt of the judgment of Hon’ble High Court, the Drug Inspector sought approval for prosecution from the Director in Chief (Drugs) to prosecute the manufacturer company under section 27(b) and (d) for violation of section 18(a) and (c) of the Drugs and Cosmetics Act, 1940 and in turn approval has been granted. The special leave petition preferred by the manufacturer before the Hon’ble Supreme Court was dismissed. Ciprofloxacin Hydrochloride is a potent antibacterial agent which is categorized under schedule-H of the Drugs and Cosmetics Rules, 1945. The manufacturer by claiming ciprofloxacin hydrochloride as a nutritional supplement has tried to misguide and hamper the instigation process. The manufacturer distributed and sold the drug without obtaining the drug manufacturing license which violates section 18(c) and is punishable under section 27(b). Hence this case.

4. The learned counsel for the petitioners submits that the complaint case was lodged on 12.7.2013 and on the same day the learned court has taken cognizance on 15.7.2023. He submits that however it appears that summons have been issued on same day. He submits that the petitioners are the Directors of the company in question. He submits that in the entire complaint there is no allegation that these petitioners are looking into the day to day affairs of the company and to buttress his argument he has relied in the case of State (NCT of Delhi) v. Rajeev Khurana , 2010 (11) SCC 469 , paragraph Nos.17 of the said judgment is quoted below:

    “17. The ratio of all these cases is that the complainant is required to state in the complaint how a Director who is sought to be made an accused, was in charge of the business of the company or responsible for the conduct of the company’s business. Every Director need not be and is not in charge of the business of the company. If that is the position with regard to a Director, it is needless to emphasise that in the case of non-Director officers, it is all the more necessary to state what were his duties and responsibilities in the conduct of business of the company and how and in what manner he is responsible or liable.”

5. The learned counsel for the petitioners submits that the petitioners were stationed at Delhi and it is also admitted in the complaint and the learned court without following the mandatory provision under section 202 Cr.P.C. has taken cognizance which is against the mandate of law.

6. On the other hand, Ms.

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