JUDGMENT

VIPUL M. PANCHOLI, J.

1. Leave granted.

2. This Appeal challenges the judgment and order dated 29.07.2024 in Cr. MMO No. 167 of 2018 passed by the High Court of Himachal Pradesh at Shimla. The Appellants sought the quashing of Complaint No. 36/3 of 2017 (subsequently renumbered as Complaint No. 9 of 19.12.2017). The Appellants are being prosecuted for contravening Section 18(a)(vi) read with Rule 74 and 22(l)(cca) and 18-B, punishable under Section 27(d) and 28-A of the Drugs and Cosmetics Act, 1940 (hereinafter referred to as 'the Act') and the Rules framed thereunder.

3. Factual Matrix:

(i) The Appellant No. 1, M/s SBS Biotech, is a partnership firm engaged in the manufacturing of pharmaceutical preparations at Mauza Rampur Jattan, Nahan Road, Kala Amb, District Sirmaur, H.P.. The firm operates under valid drug licenses issued in Form-25 and Form-28 of the Drugs and Cosmetics Rules, 1945 ('the Rules'), and is mandated to adhere to Schedule-M of the Rules. Appellant No. 2, Shri Sanjeev Kumar Santoshi, is the Production Head, and Appellant No. 3, Mr. Avinash Banga, was arrayed as the alleged managing partner at the relevant time.

(ii) The chronology of events commenced with an inspection of the firm's premises conducted by the Drug Inspector on 22.07.2014. During this inspection, carried out in the presence of officials of the firm, including the Production Head, it was alleged by the Respondent that the firm had not maintained the requisite records as stipulated by Schedule-M and Schedule-U of the Rules. Specifically concerning the drug Pseudoephedrine B. No. 503413, inadequate details regarding the entry of the drug received from Neha Pharma Pvt. Ltd. were noted, and the firm failed to produce consumption records.

(iii) A Spot Inspection Report was prepared on 22.07.2014. Through this report, the firm was directed under Section 22(d) of the Act not to dispose of the stock of the said drug until the investigation was completed. Further, directions were issued, commanding the firm, pursuant to Section 22(1)(cca) and 18-B of the Act, to produce the complete record of purchase, sale/distribution, and consumption of the said drug within a period of seven days. The Appellants subsequently contended that serving directions via the spot inspection report, rather than a separate notice, was irregular.

(iv) A re-inspection of the manufacturing premises was conducted on 05.08.2014. It was observed that the firm had neither submitted a reply nor produced the complete record as directed. During this re-inspection, it was alleged that huge discrepancies were found in the record of manufacturing, testing, and distribution. Allegations were made that the record was tampered with at certain places, including misleading entries and corrections made with fluid. The firm allegedly failed to explain these discrepancies satisfactorily.

(v) Consequent to these findings, the Drug Inspector seized the drug and corresponding documents in Form-16 on 05.08.2014 for alleged contravention of Sections 18(a)(vi) and 18-B of the Act. The seized items included 24.990 Kg of Pseudoephedrine Hydrochloride I.P. in a blue coloured PVC drum, along with numerous documents, including invoices, a register (pages 1 to 29 of the Pseudoephedrine register), and Batch Production Records (BPRs) for various batches of Eudocet tablets. On the same day (05.08.2014), a separate letter (Annexure R-1/PE) was issued to the firm, requiring them again to submit information, records, and documents under various Sections, including 22(l)(cca), 18-B, and 22(3), within 15 days. The Respondent asserted that the Appellants never responded to this notice.

(vi) On 06.08.2014, the Respondent moved an application before the learned Chief Judicial Magistrate, Nahan, for custody orders in terms of Section 23(5)(b) and (6) of the Act. The learned Judicial Magistrate, Nahan, granted the custody orders. The Appellants, however, consistently asserted that while the seized drug (the PVC drum) was pr