THE HON'BLE SRI JUSTICE S. RAVI KUMAR CRIMINAL PETITION No.4950 of 2014 Date:25.06.2014 Between:
Sri Subasi B. Lalwani, Director, M/s.Pharmaice Pharmaceuticals Ltd., Bignagar Mandal, Nalgonda District and another.
. Petitioners.
AND The States of Telengana and Andhra Pradesh, rep by its’ Public Prosecutor, High Court of Judicature at Hyderabad for the states of Telangana and A.P. and another.
. Respondents.
The Court made the following :
THE HON'BLE SRI JUSTICE S. RAVI KUMAR CRIMINAL PETITION No.4950 of 2014 ORDER:
This petition is filed to quash proceedings in C.C.No.185/2003 on the file of Judicial First Class Magistrate at Adilabad for offences punishable under provisions of Drugs & Cosmetics Act, 1940 (herein after referred to as ‘Act 1940’).
2. Brief facts leading to filing of this petition are as follows:-
Drug Inspector, Adilabad filed charge sheet against the petitioners herein and two others alleging that on 23-10-2000, during routine inspection, he picked up vitamin ‘B’ Complex Tablets of B.No.012K with the date of manufacturing 5/2000 with the date of expiry by 10/2001 for analysis in the presence of mediators and when the samples were sent for analysis, the analyst opined that they are not of standard quality and the tablet does not contain the assay for Vit.B1 and Vit.B6 as per the composition and therefore, the Drug Inspector filed charge sheet against the Company and its’ Directors. First petitioner is A2 and second petitioner is A3 in the complaint filed by the Drug Inspector, which is registered as C.C.No.185/2003.
3. Heard both sides.
4. The main objection of the petitioners is that as Directors of the Company, they are not involved in day to day activities of the company, therefore, they are not responsible for the conduct of the business and cannot be held responsible for the offence. According to petitioners, since the petitioners are no way concerned with the offence, continuing proceedings against them would amount to abuse of process of law, therefore, proceedings in C.C.No.185/2003 as against petitioners are to be quashed under Sections 482 Cr.P.C.
5. Advocate for petitioners submitted that the petitioners are only Directors of the Company and they are no way concerned with the conduct of the business or day to day activities of the company, therefore, they cannot be held responsible. On the other hand, learned Public Prosecutor submitted that the petitioners are also responsible for the activities of the company and in fact, they have given a declaration stating that they will be responsible for the affairs of the company, to which the company held liable for any offences contravening provisions of Act, 1940 and therefore, they cannot now contend that they are not responsible.
6. Now the point that would arise my consideration is whether the proceedings in C.C.No.185/2003 are liable to be quashed or not?
7. Point:-The main contention of the petitioners is that they are only Directors and they are not concerned with the conduct of the business of the company, therefore, the complaint against them has to be quashed. Advocate for petitioners argued that Managing Director of the Company is also shown as an accused and when he is representing the company, prosecuting the other Directors also would amount to abuse of process of law. He further submitted that when the offence is by the company, the Directors are not vicariously liable for the offences committed by company and to support his argument, he relied on a decision of Hon’ble Supreme Court in STATE OF
[1] HARYANA v. BRIJLAL MITTAL AND OTHERS in
which it is held as follows:-
“The vicarious liability of a person for being prosecuted for an offence committed under the Act by a company arises if at the material time he was in charge of and was also responsible to the company for the conduct of its business. Simply because a person is a director of the company it does not necessarily mean that he fulfils both the above requirements so as to make him liable. Conversely, without being a director a person can be in charge of and responsible to the company for the conduct of its business. In the present case except a bald statement in the complaint that the respondents were directors of the manufactures, there is no other allegation to indicate, even prima facie, that they were in charge of the company and also responsible to the company for the conduct of its business. Therefore, the complaint is liable to be quashed.”
8. In that case, the appellant therein was prosecuted only because he was Director of the Company. In such circumstances, Hon’ble Supreme Court held that there is no vicarious liability for the offences committed by company. In that case, there is no material even prima
facie to show that the appellant therein was responsible for the affairs of the company. But here in our case, the allegation in the charge sheet is that even the petitioners also gave reply with a request to analyze the control sample, which was lifted by the Drug Inspector. This shows that the petitioners are also looking after the affairs of the company and responsible for the company affairs. Further, as seen from the copy of the declaration produced by the learned Public Prosecutor, it is clear that the petitioners have given declaration stating that they are also responsible for the affairs of the company to which the company held liable for any offence punishable under the Act 1940. Section 34 of the Act 1940, deals with offences by companies. According to this section, when an offence under the provisions of Act 1940 has been committed, every person was incharge of, and was responsible to the company for conduct of the business along with the company shall be deemed to be guilty of the offence and according to the proviso to this section, the person against whom such accusation is made has to prove that the offence committed was without his knowledge. Therefore, it is for the petitioners to prove during trial that the company violated the provisions of the Act without their knowledge by producing appropriate evidence. From the averments of the complaint, it is clear that the petitioners have prima facie knowledge of the offence committed by the company, because they also
replied through letter dated 14-05-2001 requesting the Drug Inspector for analysis of control sample. Further declaration given by petitioners also prima facie show that they are also responsible.
So when there is prima facie material to show that the petitioners are also responsible for the company affairs, they cannot contend since the Managing Director is also shown as accused and prosecuted they are not liable for the punishment.
9. Learned Advocate for petitioners cited a ruling of this Court decided in M/s. Tropical Agro System (P) Ltd.,
[2]
Guntur and others v. State of A.P., and another for the proposition that Directors are not responsible and that decision is in respect of Insecticides Act and there was no material in that case showing the involvement of Chemist to show that the manufacturing process was conducted under his supervision. Under those circumstances, this Court held that such person cannot be prosecuted. But here in our case as already referred above, prima facie there is material to show that the petitioners have knowledge of the commission of offences by the company and according to Section 34 proviso, it is for them to prove that they have no knowledge, which is a defence available to them and on the basis of the defence, they cannot claim quash of proceedings. Further, from the submissions of the learned Public Prosecutor, the petitioners are not cooperating with the trial of the case though it is pending since more than 10 years. Considering all these aspects, I am of the view that there are absolutely no grounds to quash the proceedings and the petition is liable to be dismissed.
10. In the result, Criminal Petition is dismissed and the trial Court is directed to expedite the trial and dispose of the case, preferably within one year from the date of receipt of this order.
11. As a sequel, miscellaneous petitions, if any, pending in this Criminal Petition, shall stand dismissed.
JUSTICE S. RAVI KUMAR
Date:25.06.2014 mrb
[1] (1998) 5 Supreme Court Cases 343
[2] 1990 CRI. L. J. 2739