IN THE HIGH COURT OF JUDICATURE AT MADRAS
N. ANAND VENKATESH, J.
Crescent Therapeutics Limited (Presently known as Sanctus Global Formulations Ltd.) Through its Directors Factory at Khasra, Himachal Pradesh & Others – Appellants
Versus
Union of India, represented by Drugs Inspector, Office of the Deputy Drugs Controller (India), Chennai – Respondent
Crl.O.P No. 2547 of 2022 & Crl.M.P. No. 1167 of 2022
Decided On : 02-08-2023
Drugs and Cosmetics Act - Quashing of Proceedings - Section 18(a)(i) r/w Section 16 and Section 18-B - 27(d) and 28-A - The court discussed the provisions of the Drugs and Cosmetics Act, 1940, specifically focusing on Section 34 and its requirements for naming accused persons. The court referred to relevant judgments, including a recent judgment of the Hon’ble Apex Court, to interpret the scope of Section 34 and the necessity of specific averments against the accused persons. The court emphasized the importance of clear statements of fact to establish the responsibility of the accused persons in the conduct of the business of the company, as mandated under Section 34 of the Act. The judgment highlighted the significance of the approved technical staff named in the license and the lack of sufficient allegations against the accused persons, leading to the quashing of proceedings against the petitioners 2 to 4 (A2 to A4).
Fact of the Case:
The respondent filed a complaint against the accused persons for contravention of the Drugs and Cosmetics Act, 1940, alleging manufacturing of drugs of substandard quality. The petitioners challenged the proceedings, arguing that the complaint lacked specific allegations against them and did not fulfill the requirements under Section 34 of the Act.
Finding of the Court:
The court found that the complaint did not fulfill the mandate under Section 34 of the Act, as it did not clearly establish how the petitioners 2 to 4 (A2 to A4) were in charge and responsible for running the day-to-day affairs of the company. The court referred to relevant judgments, including a recent judgment of the Hon’ble Apex Court, and concluded that the continuation of the proceedings against the petitioners 2 to 4 (A2 to A4) would amount to an abuse of process of the court, leading to the quashing of the proceedings against them.
Issues: The main issue revolved around the fulfillment of the requirements under Section 34 of the Drugs and Cosmetics Act, 1940, and the sufficiency of allegations against the accused persons in the complaint.
Ratio Decidendi: The court's decision was based on the interpretation of Section 34 of the Act and the necessity of specific averments against the accused persons to establish their responsibility in the conduct of the business of the company. The court emphasized the importance of clear statements of fact and referred to relevant judgments to support its decision.
Final Decision: The Criminal Original Petition was partly allowed, and the proceedings against the petitioners 2 to 4 (A2 to A4) in C.C.No.343 of 2021 were quashed. The proceedings against A1 were directed to continue, with the court below instructed to complete the proceedings within three months from the date of receipt of the order.
JUDGMENT
(Prayer: Criminal Original Petition filed under Section 482 of the Code of Criminal Procedure, to call for the records of the proceedings in C.C.No.343 of 2021 on the file of the XV Metropolitan Magistrate''s Court, George Town, Chennai and to quash the same as illegal.)
This petition has been filed challenging the proceedings pending in C.C.No.343 of 2021, on the file of the XV Metropolitan Magistrate Court, George Town, Chennai.
2. The respondent has filed a complaint before the Court below against the accused persons (A1 to A4) for contravention of Section 18(a)(i) r/w Section 16 and Section 18-B of the Drugs and Cosmetics At, 1940 (hereinafter referred to as ''the Act'') punishable under Sections 27(d) and 28-A of the Act.
3. The sum and substance of the complaint given by the respondent is that the company is manufacturing drugs of substandard quality and hence, the company and its directors have contravened the provisions of the Act and consequently they are punishable for the said contravention.
4. Heard the learned counsel for the petitioners and the learned Standing counsel appearing on behalf of respondent.
5. Even though the quash petition has been filed by all the four accused persons, the learned counsel for the petitioners submitted that he is confining his arguments only insofar as the petitioners 2 to 4 (A2 to A4).
6. It was submitted that the complaint filed by the respondent completely lacks any specific allegations against A2 to A4, which is mandatory under Section 34 of the Act. It was further submitted that the license that was issued by the designated authority for manufacture and sale / distribution of drugs specifically gives the names of persons who are involved in the manufacturing and testing. To substantiate the same, Form 28 and Form 26 that were issued in favour of A1-Company was brought to the notice of this Court and it was further informed by virtue of the communication dated 26.06.2018, that the license was extended from 20.06.2018 to 19.06.2023. Such extension was made by taking into consideration the earlier license issued under Form 26 which specifically names the persons who are responsible for manufacturing and testing. The learned counsel submitted that the persons on whom the responsibility has been placed under the license are the persons who are incharge of manufacturing and testing of drugs and they are the ones who should be made as accused persons. It was further contended that if the Director is made as an accused, the requirement under Section 34 of the Act must be satisfied.
7. Per contra, Mr.M.Karthikeyan, learned Standing counsel appearing on behalf of the respondent submitted that sufficient averments were made in the complaint as against the accused persons. That apart, learned counsel by pointing out to paragraph 13 of the complaint submitted that the investigation team was not able to gather the particulars and the same has been specifically mentioned in the complaint. In view of the same, it was contended that the mandate under Section 34 of the Act has been fulfilled and that the accused persons must face the trial before the Court below.
8. The allegations made against the petitioners in the complaint is as follows:
“4. The complaint further submits that the 1st Accused is manufacturer of the drug Telmisartan Tablets IP 40 mg (Telmiral 40) Batch No.: 78TML18002, Manufacturing Date: NOV. 2018, Expiry Date: JUN. 2020 running under the name and style of M/s.Crescent Therapeutics Ltd., Khasra No.587/588, Beside Jharmajri, Village Kunjhal, Baddi, Tehsil Nalagarh, Distt. Solan – 173 205, Himachal Pradesh.
5. The complainant further submits that, 2nd accused Shri. Vijay Kumar Joshi Director of M/s.Crescent Therapeutics Ltd., (presently known as M/s.Sanctus Global Formulations Ltd.,), Khasra No.587/588, Beside Jharmajri, Village Kunjhal, Baddi, Tehsil Nalagarh, Distt. Solan – 173 205, Himachal Pradesh, 3rd Accused, Shri.Vinod Kumar Joshi Director of M/s.Cresce
The central legal point established in the judgment is the necessity of specific averments against accused persons to establish their responsibility in the conduct of the business of the company, as ....
Directors of a company cannot be held vicariously liable under Section 34 of the Drugs and Cosmetics Act without specific allegations detailing their involvement in the conduct of the company's busin....
The main legal point established in the judgment is that for making a director of a company liable for offences committed by the company under the Drugs & Cosmetics Act, 1940, there must be specific ....
The main legal point established in the judgment is that specific and clear averments regarding the role and responsibilities of the accused in the commission of the offence are necessary to establis....
Liability under Section 34 of the Drugs and Cosmetics Act requires specific allegations of being in charge and responsible for the conduct of the business, which were absent in this case.
Directors cannot be held liable for a company's criminal acts without specific allegations of their involvement; mere directorship is insufficient for establishing vicarious liability.
Vicarious liability under Section 34 of Drugs and Cosmetics Act requires specific complaint averments that director/MD in charge and responsible for company business conduct; mere designation insuffi....
Vicarious liability under the Drugs and Cosmetics Act, 1940 arises if the person was in charge and responsible for the day-to-day affairs of the company at the time of the offence, and the company mu....
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