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IN THE HIGH COURT OF JUDICATURE AT MADRAS
G. JAYACHANDRAN, J.
Singana Obul Reddy, Director of Apollo Pharmacies Limited – Petitioner
Versus
The State of Tamil – Respondent
Crl. O.P. No. 15913 of 2024, Crl. M.P. Nos. 9706, 9708 of 2024
Decided On : 09-07-2024
Liability - Criminal Prosecution - Drugs and Cosmetics Act - Sections 34, 65, 25-A - The court interpreted vicarious liability under Section 34, emphasizing the responsibility of directors for company offenses, leading to the dismissal of the quash petition.
Fact of the Case:
The petitioner, a director of a pharmacy, faced prosecution for violations of the Drugs and Cosmetics Act following an inspection that revealed serious regulatory breaches, including selling drugs without proper supervision and documentation.
Finding of the Court:
The court found that the petitioner was responsible for the company's operations and had failed to respond adequately to a show cause notice regarding the violations, thus affirming the prosecution's basis under the Drugs and Cosmetics Act.
Issues: Whether the petitioner can be held vicariously liable under Section 34 of the Drugs and Cosmetics Act for the alleged violations committed by the pharmacy.
Ratio Decidendi: The court held that under Section 34, a director can be held liable if they are responsible for the company's conduct, and the failure to respond to regulatory inquiries indicates complicity in the violations.
Result: The Criminal Original Petition is dismissed.
ORDER :
Prayer: Criminal Original Petition is filed under Section 482 of Criminal Procedure Code, pleased to call for the records pertaining to the impugned complaint instituted by the respondent in C.C. No. 104 of 2023, pending on the file of the learned Judicial Magistrate-1, Tirupattur and quash the same insofar as the petitioner is concerned.
1. This Criminal Original Petition is filed to quash the criminal prosecution initiated by the Drug Inspector against this petitioner and two others for contravening Section 65 of Drugs and Cosmetics Act and rules made thereunder which is punishable under Section 25-A of the Drugs and Cosmetics Act.
2. The sum and substance of the complaint is that on a surprise check conducted along with NIB, CID, Vellore in the premises of M/s. Apollo Pharmacy, a unit of Apollo Pharmacies Limited, Vaniyambadi, the following defects were found:
2. The prescription register was not properly maintained.
3. Tramazac 2 ml ampoule was sold in retail without a cash or credit memo.
4. Tramazac 2 ml ampoule was sold without prescription of a Registered Medical Practitioner.”
3. On perusal of the records, the inspection team found that drugs were sold without supervision of the registered pharmacist. The prescription register was not properly maintained and without prescription of registered medical practitioner, drugs were sold. Pursuant to this inspection, show cause notice was issued to the petitioner's company and the pharmacy, which was subjected to inspection. This petitioner who is the Director of the company, has not responded to the show cause notice and the remainder which followed. Earlier he approached this Court to quash the complaint and the same was dismissed on the ground that the plea raised to quash the complaint are all factual in nature and therefore, same has to be decided only in the course of the trial. Second quash petition is now filed on the question of law and the counsel appearing for the petitioner submits that the dismissal of the first quash petition shall not be an impediment for the accused to file the second quash petition on a different set of facts pertaining to question of law. In this quash petition, it is contended that under Section 34 of the Drugs and Cosmetics Act, this petitioner cannot be held vicariously liable, since there is no averment in the complaint how this petitioner as a Director is responsible for the day to day affairs of the company. In support of the submissions, the learned counsel also relies upon the judgment of the Hon'ble Supreme Court in Lalankumar Singh Vs. State of Maharashtra, 2022 SCC Online SC 1383.
4. The learned Government Advocate (Crl. Side) appearing for the State submits that the surprise check conducted on 28.12.2021 in the business premises of the M/s. Apollo Pharmacy, Vaniyambadi resulted in grave violation of the Drugs and Cosmetics Act, which has led to filing of the complaint by the Drug Inspector and the same has been taken cognizance by the Judicial Magistrate, Tirupattur in C.C. No. 104 of 2023. The complaint specifically states that this petitioner was issued show cause memo dated 19.05.2022 and the remainder dated 07.06.2022 calling upon him to explain about the contravention of the act by one of his licensee, but the petitioner failed to reply. The response of the company through its DGM was not satisfactory and therefore, after obtaining sanction for prosecution, the complaint been filed against the Director of M/s.Apollo Pharmacies Pvt. Ltd. the petitioner herein and the person incharge of the unit.
5. The contention of the learned counsel appearing for the petitioner is that on behalf of the petitioner and the company reply been given to the show cause notice through DGM and it is stated by the company that the franchise given to the 3rd accused had been revoked for violation of Drugs and Cosmetics Act by the retailer
Unexplained inordinate delay can be fatal to a prosecution case, and individuals involved in the day-to-day affairs of a company can be held liable for contraventions under the Drugs and Cosmetics Ac....
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....
Mere presence at a drug shop does not establish liability for drug sales without pharmacist supervision; the burden of proof lies with the complainant to provide evidence of wrongdoing.
Vicarious liability under the Drugs and Cosmetics Act requires clear allegations of a director's responsibility for the company's conduct; mere directorship is insufficient.
A prima facie case may arise from additional documents, supporting liability despite insufficient initial allegations.
The court established that former directors cannot be held vicariously liable for offences committed after their tenure, and highlighted multiple procedural lapses that rendered the prosecution unsus....
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.
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 ....
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