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IN THE HIGH COURT OF ORISSA
L. Rath, J.
SMT. AHALYA NAYAK AND OTHERS - APPELLANT
Versus
STATE OF ORISSA - RESPONDENT
Criminal Miscellaneous Case No. 236 of 1985
Decided On : 19-08-1988
DRUGS AND COSMETICS ACT, 1940 - SECTIONS 18A, 13(A)(VI), 28, 27(B), 34 - ORISSA COOPERATIVE SOCIETIES ACT, 1962 - SECTIONS 9, 28(3-B)(I), (2), 32 - CRIMINAL PROCEDURE CODE, 1973 - SECTION 482 - LIABILITY OF MEMBERS OF COMMITTEE OF MANAGEMENT OF COOPERATIVE SOCIETY FOR OFFENCES UNDER THE DRUGS AND COSMETICS ACT - INTERPRETATION OF SECTIONS 34 OF THE DRUGS AND COSMETICS ACT AND 28(3-B)(2) OF THE ORISSA COOPERATIVE SOCIETIES ACT - SCOPE OF INHERENT POWERS OF HIGH COURT UNDER SECTION 482 OF THE CODE OF CRIMINAL PROCEDURE.
Fact of the Case:
Petitioners, members of the general body, board of directors, and secretary of a cooperative medical store, challenged the criminal prosecution initiated against them for offenses under the Drugs and Cosmetics Act, 1940. They argued that the prosecution report did not allege any criminal liability or conduct on their part and that, as per Rule 37 of the Orissa Cooperative Societies Rules, 1965, only the secretary could be sued or prosecuted on behalf of the society.
Finding of the Court:
The court held that the secretary, being the executive officer of the society, was responsible for executing the decisions and directions of the committee of management and, therefore, the committee was in direct control of the day-to-day management of the society. The court also held that the members of the committee of management could not escape their liability and had to face prosecution along with the secretary.
Issues: 1. Whether the members of the committee of management of a cooperative society are liable for prosecution for offenses committed by the society under the Drugs and Cosmetics Act, 1940? 2. Whether the prosecution against the petitioners was maintainable in light of Rule 37 of the Orissa Cooperative Societies Rules, 1965?
Ratio Decidendi: 1. The court interpreted Section 34 of the Drugs and Cosmetics Act, 1940, and Section 28(3-b)(2) of the Orissa Cooperative Societies Act, 1962, to hold that the members of the committee of management of a cooperative society are liable for prosecution for offenses committed by the society. 2. The court held that Rule 37 of the Orissa Cooperative Societies Rules, 1965, does not bar the prosecution of the members of the committee of management along with the secretary for offenses committed by the society.
Final Decision: The court partly allowed the revision petition, quashing the cognizance taken against the petitioners who were members of the general body of the society, but upholding the cognizance taken against the petitioners who were members of the committee of management.
JUDGMENT :
L. Rath, J. - In this petition u/s 482, Code of Criminal Procedure the Petitioners who are members of the general body members of the board of directors and Secretary of M/s. Maa Charchika Cooperative Medical Stores Ltd. seek quashing of criminal' prosecution initiated against them on the complaints filed by the Drugs Inspector, Orissa for having committed offences under Sections 18A and 13 (a) (vi) of the Drugs and Cosmetics Act, 1940 (hereinafter referred to as "the . Act") in which charges were framed under Sections 28 and 27 (b) of the Act. The Petitioners agitated against the order in revision before the Additional Sessions Judge, Bhubaneswar but the same having been,rejected, have invoked the inherent powers of this Court for quashing of the prosecution.
2. The short sketch of facts leading to the prosecution as emerge out of the prosecution report submitted by the Drugs Inspector are that on 18-2-1961 he along with the Assistant Drugs Controller (Intelligence) visited the premises of M/s. Maa Charchika Co-operative Medical Stores Ltd. at Unit IV Bhubaneswar where the. Secretary of the said firm Petitioner No. 17, was found to be in charge of the premises but could not produce for inspection the purchase and sale records of certain drugs in respect of which an order in form No. 15 was issued to him directing riot to dispose of the said drugs and to produce the relevant documents within twenty days. A letter was also issued to the firm to produce the other documents which were not produced during the aforesaid visit. A further visit was made on 3-3-1981 along with police when Petitioner No. 17 was asked to produce the purchase arid sale records, but he informed that a reply had been sent to' the office of the complainant intimating that the firm did not possess any records or registers to produce. The stock of drugs was therefore seized in presence of witnesses. The firm was again asked in form No. 16 on 3-3-1981 to produce the records but it expressed its inability in its letter dated 11-4-1981. Besides the firm was also found stocking for sale certain date expired drugs mixed with regular stock and was also found to be stocking tetanus antitoxin without cold storage facility. For such violations of law the prosecution report was submitted.
3. Mr. Basu, learned Counsel for the Petitioners, has urged that even taking the prosecution report as a whole no offence is made out against the Petitioners. It is his contention that the entire report does not allege any criminal liability or conduct of either the members of the general body or the members of the board of directors of the cooperative society and hence there being no mens rea in them, prosecution against them could not ensue. It is further, contended that since, Rule 37 of the Orissa Cooperative' Societies Rules, 1965 provides that the Secretary is the person to sue or to be sued on behalf of the society ~ prosecution against the society can only be made in the name of the Secretary and not anybody else.
4. Admittedly the Medical Store is a cooperative society of which, as explained by Mr. Basu, Petitioner No. 1 is the President Petitioner No. 2 is the Vice-President Petitioner No. 3 is the Treasurer and Petitioners 4,5 and 7 are the Directors of the Committee 'of Management; whereas other Petitioners except Petitioner No. 17 are the members of the general body and Petitioner No. 17 is the secretary of the Society.
5. The Act makes provision u/s 34 as to the, persons liable for prosecution when an offence is committed by a company and in the explanation thereto "company" has been explained to mean, a body corporate and includes a firm or other associates of individuals and thus undoubtedly a cooperative society would be included in the term 'Company' since Section 9 of the Orissa Cooperative Societies Act, 1962 specifically provides a society to be a body corporate having perpetual succession and a common seal. As provided in Section 34 of the Act when an 'offe
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