Procedure to be followed by complainant when company is not made accused in criminal case

 It was submitted by Mr. Lawande, learned Additional Public Prosecutor appearing on behalf of the State, that in the present case, there is a legal snag due to which the accused No. 1 could not be proceeded against. He submitted that the accused No. 1 could not be independently served and the accused No. 5 had refused to accept the summons on behalf of the accused No. 1 and, therefore, there was no other alternative for the State than dropping the accused No. 1. There is absolutely no force at all in the above submission of the learned Additional Public Prosecutor. There is prescribed procedure under the Cr.P.C., if an accused person cannot be served with the summons. Where summons cannot be served, a warrant is to be issued and when the warrant also cannot be executed, a proclamation is required to be issued under Section 82 of Cr.P.C.. Thereafter, the case has to be proceeded under Section 299of the Cr.P.C., against the absconding accused. In the present case, instead of proceeding against the accused No. 1 under Section 299 of Cr.P.C., the State opted to drop the accused No. 1. This cannot be termed as legal snag or legal bar to proceed against the accused No. 1. Besides the above, as per the judgment of the Apex Court in the case of "Aneeta Hada" (supra), if the matter cannot be proceeded against the Company, then, sanction of the Court of Law or other authority has to be obtained for proceeding with the trial against the other accused. In the present case, even such a sanction was not obtained.

IN THE HIGH COURT OF BOMBAY AT GOA

Criminal Appeal No. 17 of 2011

Decided On: 21.01.2014

Appellants: State of Goa
Vs.
Respondent: Shivani Laboratories

Hon'ble Judges/Coram:U.V. Bakre, J.

Citation; 2014 ALLMR(CRI) 2911

1. Heard Mr. Lawande, learned Additional Public Prosecutor appearing on behalf of the State and Mr. Usgaonkar, learned counsel appearing on behalf of the respondent No. 5.

2. This is a State appeal against acquittal of respondent No. 5 above-named, vide judgment and order dated 19/04/2010, passed in Criminal Case No. 192/N/96/F/III.

3. For convenience, the parties shall hereinafter be referred to as arrayed before the Magistrate.

4. The State, through the Drugs Inspector namely Ms. Jyoti Sardessai, had lodged the complaint before the Judicial Magistrate First Class, at Margao against five accused persons for contravention of the provision of Section 18(a)(i) punishable under Section 27(c) of the Drugs and Cosmetics Act, 1940 ('the Act', for short), which came to be registered as Criminal case No. 192/N/96/III.

5. The case of the complainant, in short, is as follows:

The accused No. 1 is a Partnership Firm having manufacturing premises at Shirali, Uttar Kannada and is engaged in drug manufacturing activity at their factory and holds drug manufacturing licence No. KTK/28/265/94 for manufacturing of drugs for sale under the provisions of the Drugs and Cosmetics Rules, 1945 ('the Rules', for short). On 28/06/1995, the complainant visited the premises of M/s. Anil Enterprises situated at Margao and found large number of drugs for sale which included 'Framycetin Sulphate Cream' under the brand name 'Fratouch' manufactured by M/s. Shivani Laboratories (accused No. 1). The complainant drew samples of three batches for test analysis in the presence of the owner of the said shop and intimation was given to him. One sealed portion of each of the three batches was also given to the said owner. The credit note was issued by the owner for an amount of ` 185.75/-towards the costs of the drugs. The said samples were sent for analysis at Bombay and the Government analyst declared that the said samples were not of standard quality vide his reports dated 08/12/1995, 13/12/1995 and 15/12/1995, with the reason that the sample does not conform to the standards for Framycetin Sulphate as the contents of Neomycin 'C' in the samples was more than the standard limits. During the inquiry, it was reported by M/s. Anil Enterprises that the drugs were supplied to them by M/s. Shivani Pharmatech, Bangalore which in turn disclosed that the said drugs were purchased from M/s. Shivani Laboratories, Shirali (accused No. 1), who is the manufacturer. The accused nos. 1 to 5, therefore, contravened Section 18(a)(i) of the Act by manufacturing for sale and selling a drug which was not of standard quality and, therefore, committed an offence punishable under Section 27(c) of the Act. Written sanction from the Director of Food and Drugs Administration, Panaji to launch the prosecution against the accused persons has been duly obtained.

6. The accused No. 1 could never be served with the process. The accused nos. 2, 3 and 4, upon appearance before the learned Magistrate, filed an application dated 16/03/1998 for recalling process and dropping the proceedings as against them. It was alleged in the application that the complaint did not disclose that the accused nos. 2 to 4 were responsible for day to day activity in the manufacturing process of the accused No. 1. It was also stated that the sanctioning authority had concluded that there is one person authorised by Firm for looking after the day to day affairs who has been joined as the accused No. 5. The complainant objected to the said application. The learned Magistrate passed the order dated 29/06/1998 thereby rejecting the application. The accused nos. 2 to 4 then approached the learned Sessions Court at Margao and in Criminal Revision Application No. 93/1999, by judgment and order dated 17/01/2003, the process issued against the accused nos. 2 to 4 in Criminal Case No. 192/N/1996, came to be quashed and set aside and the learned Magistrate was directed to proceed with the matter only as against the accused nos. 1 and 5. The learned Assistant Sessions Judge found that the complaint did not disclose that any person was in-charge of the day to day affairs and responsible for the conduct of the business of accused No. 1 and hence held that that accused nos. 2, 3 and 4 cannot be prosecuted for contravention of the provisions of the Act. The said order dated 17/01/2003 has not been challenged.

7. Subsequently, on 29/11/2004, charge was framed as against the accused nos. 1 and 5 for having contravened the provisions of Section 18(a)(i)punishable under Section 27(c) of the Act by manufacturing for sale or distribution, the drug 'Framycetin Sulphate Cream' which was not of standard quality and was spurious under Section 17B(d) of the Act. The charge was explained to the accused No. 5 who pleaded not guilty.

8. On 10/01/2005, the accused No. 5 filed an application praying therein to delete the substance of accusation explained to him and his plea and to proceed with the case in terms of the procedure applicable to warrant cases filed otherwise than on police report. By order dated 07/02/2005, the said application was granted by the Magistrate. The charge framed and explained to the accused and the plea of the accused No. 5 was deleted and it was ordered that the matter shall proceed for evidence of the prosecution as provided under Section 244 of Cr.P.C.

9. Thereafter, the complainant Ms. Jyoti Sardessai examined herself as PW1 and produced various documents before the learned Magistrate. The complainant further examined one Surekha Borkar, a panch witness to the attachment panchanama dated 17/10/1996, as PW2, one Shri Shivram Raikar, a retired Bank Manager as PW3, one Nazir Ahmad, Drugs Inspector, Uttar Kannada, as PW4 and Mr. V.L. Hambar, Drugs Inspector, Headquarters, Bangalore as PW5.

10. There is no dispute that after all the evidence of the prosecution under Section 244 of Cr.P.C. was recorded, the Magistrate, by order dated 09/12/2009, dropped the proceedings as against the accused No. 1. Thereafter, the learned Magistrate, instead of proceeding under Section 246 of Cr.P.C. and without framing charge against the accused No. 5, proceeded to examine the accused No. 5 under Section 313 of Cr.P.C..

11. The case of the accused No. 5 was of denial. The accused No. 5 did not examine any witness in his defence.

12. Upon consideration of the entire evidence on record, by judgment and order dated 19/04/2010, the learned Magistrate acquitted the accused No. 5, by giving him benefit of doubt. It has been held that there is no document from accused No. 1, on record, to show that the accused No. 5 was authorized to take care of the production and distribution of the drugs of accused No. 1. The learned Magistrate held that the evidence on record creates doubt on the story of the prosecution as to whether accused No. 5 was responsible for the day to day affairs of accused No. 1. The said judgment and order dated 26/04/2014 is impugned in the present appeal.

13. Learned Additional Public Prosecutor submitted that in spite of oral and documentary evidence on record, the Magistrate held that there is doubt as to whether the accused No. 1 manufactured the said medicine. He contended that the above finding is perverse. According to him, the letter dated 15/03/1996 read with the other evidence on record proves beyond doubt that the said drug was manufactured by the accused No. 1. On the other hand, it was contended by the learned Counsel appearing on behalf of the accused No. 5 that the answers given by PW1, PW3, PW4 and PW5 in their cross-examination showed that the prosecution could not prove beyond doubt that the said drug was manufactured by accused No. 1. There is no dispute that samples of the drug 'Framycetin Sulphate Cream' under the brand name 'Fratouch' in three different batch numbers: 428, 501 and 503 were duly collected by PW1, by following the prescribed procedure, from the premises of M/s. Anil Enterprises. The evidence on record reveals that all the batches match and they belong to M/s. Anil Enterprises. It was reported by M/s. Anil Enterprises that the drugs were supplied to them by M/s. Shivani Pharmatech, Bangalore which in turn disclosed that the said drugs were purchased from M/s. Shivani Laboratories, Shirali (accused No. 1), who is the manufacturer. With regard to the above, ample documentary evidence has been produced on record. At one stage, the trial Magistrate has observed that it is clear from the letter dated 15/03/1996 (Exhibit 52) that the accused No. 1 is the manufacturer of the drugs. But at the other stage, it has been observed by the Magistrate that there is doubt on the story of prosecution as to whether the accused No. 1 manufactured the said medicine. The unshaken testimony of PW3, Mr. Shivam Raikar, one of the partners of M/s. Anil Enterprises read with the documents produced on record by the prosecution, in my view, duly proves that the said drugs were manufactured by the accused No. 1-firm. The accused No. 1, by letter dated 15/03/1996 which is produced by PW1 as Exhibit 52, objected to the tests reports dated 08/12/1995, 15/12/1995 and 13/12/1995 and alleged that they are not correct, but did not allege that the said drugs were not manufactured by it. Thus, the accused No. 1 admitted that the said drugs were manufactured by it. Therefore, there is no substance in the submission of the learned Counsel appearing on behalf of the accused No. 5 that there is no cogent evidence to prove that the said drugs were manufactured by the accused No. 1. The evidence on record sufficiently proves that the said drugs were manufactured by the accused No. 1.

14. It was further contended by the learned Counsel appearing on behalf of the accused No. 5 that the prosecution could not prove beyond reasonable doubt that the subject drug was sub-standard and spurious. It was pointed out by learned Counsel that as per the reports of Government Analyst, the said samples did not conform to the standards for 'Framycetin Sulphate' as the content of Neomycin 'C' was more than the standard limits (Not more than 3.0 per cent). Learned Counsel submitted that there is no evidence or any document to prove that the content of Neocim 'C' should not be more than 3%. These reports of Government Analyst did not say that the samples did not contain 'Framycetin' or that the samples are considered spurious under Section17(B)(d) of the Act. He submitted that reports were objected to by the accused No. 5 in terms of Section 25(3) of the Act. He pointed out that the author of these reports was not examined. According to the learned Counsel for the accused No. 5, tests conducted for the result were not proper and the method for Neomycin 'C' determination in Framycetin gauge dressing BP' 93 was not the permissible procedure. For all the above reasons, according to the learned Counsel for the accused No. 5, the reports dated 08/12/1995, 13/12/1995 and 15/12/1995, of the Drugs Control Laboratory, Maharashtra, were not admissible and could not be termed as conclusive. The learned Counsel for the accused No. 5 submitted that the complaint was filed on 31/10/1996 when the reports of Central Drugs Laboratory were not received. He therefore contended that as on the date of the complaint there was no material to launch prosecution. I am unable to agree with the submission of the learned Counsel for the accused No. 5 that there was no material for filing the complaint. The report of the Public Analyst was there which stated that the drugs did not conform to the standards of Framycetin Sulphate. On account of the objection raised by accused No. 1 under Section 25(3) of the Act, vide letter dated 15/03/1996 (Exhibit 52), the samples deposited in the trial court were sent to Central Drugs Laboratory. The reports of Analyst from Central Drugs Laboratory, which are dated 02/12/1996, say that the samples are not of standard quality as they did not contain Framycetin but contained Neomycin 'C' in the quantity more than the limit of 3% and that the same are considered spurious under Section 17B(d) of the Act. It was then contended by the learned Counsel for the accused No. 5 that in terms of Section 17B(d) of the Act a drug shall be deemed to be spurious if it has been substituted wholly or in part by another drug or substance. According to him, Neomycin 'C' is not a foreign material but Framycetin Sulphate contains the same. He submitted that the drug 'Fratouch' was not substituted by any other drug and therefore Section 17B(d) of the Act was not applicable. Be that as it may, as rightly submitted by the learned Additional Public Prosecutor, in terms of Section 25(4) of the Act, the result of the Director of the Central Drugs Laboratory is conclusive evidence of the facts stated therein.

15. In the case of "Smt. Somawanti and others Vs. The State of Punjab and others", (MANU/SC/0034/1962 : AIR 1963 SC 151), relied upon by the learned Counsel for the complainant, the meaning of the expression 'Conclusive proof' and 'Conclusive evidence' has been explained by the Apex Court. It is observed thus:

Since evidence means and includes all statements which the Court permits or requires to be made, when the law says that a particular kind of evidence would be conclusive as to existence of a particular fact, it implies that the fact can be proved either by that evidence or by some other evidence which the Court permits or requires to be advanced. Where such other evidence is adduced it would be open to the Court to consider whether, upon that evidence, the fact exists or not. Where, on the other hand, evidence which is made conclusive is adduced, the Court has no option but to hold that the fact exists. Statutes may use the expression 'conclusive proof' where the object is to make a fact non-justifiable. But the legislature may use some other expression such as 'conclusive evidence' for achieving the same result. There is thus no difference between the effect of the expression 'conclusive evidence' from that of 'conclusive proof', the aim of both being to give finality to the establishment of the existence of a fact from the proof of other.

16. Learned Additional Public Prosecutor relied upon "Amery Pharmaceuticals Vs. State of Rajasthan", (MANU/SC/0174/2001 : AIR 2001 SC 1303), wherein the Apex Court has held that once the sample is tested at the Central Drugs Laboratory and a report as envisaged in Section 25(4) of the Act is produced in Court, the conclusiveness mentioned in that Section would become incontrovertible. In the case of "Plethico Pharmaceuticals & ors. Vs. State of Maharashtra" [MANU/MH/0157/2002 : 2003 Vol. 104(3) Bom. L.R. 41], also relied upon by the learned Additional Public Prosecutor, a learned Single Judge of this Court has held that sub-section (4) of Section 25 of the Act is quite clear that the report signed by, or under the authority of Director of the Central Drugs Laboratory shall be conclusive evidence of the facts stated therein and would have an edge over the report of the Public Analyst of the State.

17. In the light of the above, the Court need not look into the reports of the Drugs Control Laboratory, Maharashtra. The reports of the Central Drugs Laboratory are conclusive.

18. Another objection taken by the learned Counsel for the accused No. 5 was that the prosecution did not produce any Notification published in the Official Gazette as required under the Act to show that either Dr. M.K. Majumdar, who issued the test reports is Director, Central Drugs Laboratory or was appointed as Government Analyst as required under Section 20(2) of the Act. It was contended that therefore the reports cannot become conclusive. In terms of Section 25(4) of the Act, as rightly argued by the learned Additional Public Prosecutor, the reports are conclusive evidence of the facts stated therein. The reports clearly mention that Dr. M.K. Majumdar, who has signed these reports, is the Director, Central Drugs Laboratory. The learned Additional Public Prosecutor alleged that the Court can take judicial notice of the fact of compliance with the requirement of publication in Official Gazette and produced for perusal of this Court the Notification regarding Dr. Majumdar. He relied upon various judgments, on the point of taking judicial notice. In the case of "Ramlagan Singh Vs. State of Bihar", (MANU/BH/0083/1960 : AIR 1960 Patna 243), the Patna High Court has held that under Section 57(7)of the Evidence Act, judicial notice has to be taken of the office occupied by a particular individual if the fact of his appointment is notified in the Official Gazette. Such notice can be taken if the Gazette is produced for inspection of the Court at the time of arguments in the original, appellate or revisional Court, just as the law can be perused at any stage under Sub-section (1) of Section 57. There is no reason not to agree with the above observation of the Patna High Court. Therefore there is no force in the objection of learned Counsel for the accused No. 5, with regard to non-production of the Official Gazette.

19. Therefore, the prosecution can be said to have proved beyond reasonable doubt that there was contravention of the provisions of Section 18(a)(1) of the Act, which is punishable under Section 27(c) of the Act.

20. In spite of all said and done, as above, still the complainant cannot succeed in this Appeal on account of serious technical lapses.

21. First and the foremost question that arises for determination is whether accused No. 5, independently without the Firm namely M/s. Shivani Laboratories being an accused in the case, could have been prosecuted for the offence under the Act. Section 34 of the Act provides as follows:

34. Offences by companies.-

(1) Where an offence under this Act has been committed by a company, every person who at the time the offence was committed, was in charge of, and was responsible to the company for the conduct of the business of the company, as well as the company shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly:

Provided that nothing contained in this sub-section shall render any such person liable to any punishment provided in this Act if he proves that the offence was committed without his knowledge or that he exercised all due diligence to prevent the commission of such offence.

(2) Notwithstanding anything contained in sub-section (1), where an offence under this Act has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to any neglect on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly.

Explanation.--For the purposes of this section-

(a) "company" means a body corporate, and includes a firm or other association of individuals; and

(b) "director" in relation to a firm means a partner in the firm.

22. In the present case, as proved beyond reasonable doubt, the alleged offence was committed by the Partnership Firm, M/s. Shivani Laboratories, which was originally arraigned as accused No. 1 in the case. As per the above provision under Section 34 of the Act, therefore, every person, who at the time the offence was committed, was in charge of, and was responsible to the firm for the conduct of its business as well as the firm had to be arraigned as accused persons in the case. However, indisputably, the said accused No. 1 could never be served and ultimately has been dropped from the proceedings, by the prosecution. In paragraph 4 of the impugned order it is mentioned that by an order dated 9/12/2009, proceedings against accused No. 1 came to be dropped. In the memo of appeal also the State has stated that by order dated 09/12/2009, the proceedings against the accused No. 1 came to be dropped.

23. There is no dispute that Section 141 of the Negotiable Instruments Act, 1881 is in pari materia with i.e. exactly similar to Section 34 of the Act. In the case of "Aneeta Hada Vs. Godfather Travels and Tours Pvt. Ltd." [MANU/SC/0335/2012 : (2012) 5 SCC 661], the authorised signatory of the company was made an accused but the company was not arraigned as an accused. The question before the three-Judge Bench of the Hon'ble Supreme Court was whether the complaint under Section 138 of the N.I. Act read with Section 141 thereof against the Director or Authorised Signatory of a cheque but without joining the Company as an accused, was maintainable. The Hon'ble three-Judge Bench of the Supreme Court, held that Section 141 of the N.I. Act stipulates mandatory requirement of impleading company as one of the accused and the prosecution against the Director or Authorised Signatory of the Cheque, without arraigning Company as an accused, is not maintainable. It has been held that for maintaining the prosecution under Section 141 of the N.I. Act, arraigning of a company as an accused is imperative and the other categories of offenders can only be brought in the drag-net on the touchstone of vicarious liability as the same has been stipulated in the provision itself. However, it is added that the only exception would be in a case applying principle of 'Lex non cogit ad impossibilia' i.e. if for some legal snag, Company cannot be proceeded against without obtaining sanction of a Court of Law or other authority, trial as against the other accused may be proceeded against, if the ingredients of Section 138 as also Section 141 are otherwise fulfilled. It is clarified that in such an event, it would not be a case where the Company had not been made an accused, but would be one where the Company cannot be proceeded against due to existence of a legal bar.

24. It was submitted by Mr. Lawande, learned Additional Public Prosecutor appearing on behalf of the State, that in the present case, there is a legal snag due to which the accused No. 1 could not be proceeded against. He submitted that the accused No. 1 could not be independently served and the accused No. 5 had refused to accept the summons on behalf of the accused No. 1 and, therefore, there was no other alternative for the State than dropping the accused No. 1. There is absolutely no force at all in the above submission of the learned Additional Public Prosecutor. There is prescribed procedure under the Cr.P.C., if an accused person cannot be served with the summons. Where summons cannot be served, a warrant is to be issued and when the warrant also cannot be executed, a proclamation is required to be issued under Section 82 of Cr.P.C.. Thereafter, the case has to be proceeded under Section 299of the Cr.P.C., against the absconding accused. In the present case, instead of proceeding against the accused No. 1 under Section 299 of Cr.P.C., the State opted to drop the accused No. 1. This cannot be termed as legal snag or legal bar to proceed against the accused No. 1. Besides the above, as per the judgment of the Apex Court in the case of "Aneeta Hada" (supra), if the matter cannot be proceeded against the Company, then, sanction of the Court of Law or other authority has to be obtained for proceeding with the trial against the other accused. In the present case, even such a sanction was not obtained.

25. It was then contended by the learned Additional Public Prosecutor that since the evidence on record now shows that the accused No. 1-firm, which was dropped earlier, has committed the offence, the Court can take cognizance against the accused No. 1, under Section 319 of Cr.P.C.. In this regard, the learned Counsel relied upon the judgment of the Apex Court in the case of "Municipal Corporation of Delhi Vs. Ram Kishan Rohatgi and others", [MANU/SC/0094/1982 : (1983) 1 SCC 1]. The Apex Court has observed that there are ample provisions in the Code of Criminal Procedure in which the Court can take cognizance against the persons, who have not been made accused and try them in the same manner along with the other accused. The Apex Court has quoted the provision of Section 319 of Cr.P.C. and has held that if the prosecution can at any stage produce evidence which satisfies the Court that the other accused or those who have not been arraigned as accused against whom proceedings have been quashed, have also committed offence, the Court can take cognizance against them and try them along with the other accused. However, the Apex Court has cautioned that this is really an extraordinary power, which is conferred on the Court and should be used very sparingly and only if compelling reasons exist for taking cognizance against the other accused against whom action has not been taken. First of all, as rightly submitted by the learned Counsel for the accused No. 5, the case before this Court cannot be termed as an exceptional case for taking cognizance against the accused No. 1-firm now, at the appellate stage, by using the extraordinary power under Section 319 of the Cr.P.C., since in the present case, the complainant itself had dropped the accused No. 1, before the trial Magistrate. Secondly, as pointed out by the learned Counsel for the accused No. 5, Section 319 of Cr.P.C. empowers the Court to take cognizance and add any person not being an accused before it and try him along with the other accused. Since the trial of the case against the accused No. 5 has ended, question of trying the accused No. 1-firm along with the accused No. 5 is not possible. I am in respectful agreement with the observation of learned Single Judge of Rajasthan High Court in the case of "Samarth Ram Vs. State of Rajasthan", [2002(2) Crimes 536], relied upon by the counsel for the accused No. 5, that if trial of case comes to an end, power under Section 319 Cr.P.C. to summon additional accused cannot be exercised as person to be added as accused has to be tried with the accused already before court and a separate trial is not envisaged.

26. It is, therefore, that the trial could not have been proceeded only against the accused No. 5 when main Firm namely M/s. Shivani Laboratories was not an accused. On this ground alone, the appeal is liable to be rejected.

27. It was submitted by Mr. Usgaonkar, the learned counsel for the accused No. 5 that accused No. 5 was not a partner of the accused No. 1. He pointed out that in the complaint, there is nothing stated as to what is the relationship of the accused No. 5 with the accused No. 1. More particularly, there is no averment to the effect that the accused No. 5, at the time the offence was committed, was in charge of, and was responsible to the accused No. 1 (Partnership Firm) for the conduct of the business of the said Firm. According to the learned Counsel, the averments in the complaint should, essentially, make out a case that the accused No. 5 was in charge of and responsible for the conduct of business of the company and since the same was not there, the trial Magistrate had rightly acquitted the accused No. 5. In this regard, the relevant averments in the complaint are as follows:

(i) That accused No. 1 is a Partnership Firm, having manufacturing premises at Shirali 581 354, Uttar Kannada and is engaged in the drug manufacturing activity at its factory.

(ii) That the accused nos. 1, 2, 3, 4 and 5 have contravened Section 18(a)(i) of the Act by manufacturing for sale and selling a drug 'Framycetin Sulphate Cream'....

28. It is the contention of the learned Additional Public Prosecutor that since it is specifically stated in the complaint that the accused nos. 1, 2, 3, 4 and 5 are manufacturing for sale and selling the said drug 'Framycetin Sulphate Cream', there is required averment in the complaint. He further contended that after trial is completed, the question of going to the averments in the complaint does not arise and the documents produced on record by PW1 clearly reveal that the accused No. 5 was in charge of and managing the affairs of the firm. According to him, in terms of proviso to Section 34(1) of the Act, it was for the accused No. 5 to prove that the offence was committed without his knowledge. Learned Counsel also contended that the extent of the liability of the accused No. 5 has also been established by evidence during trial. He contended that in the matter of drugs where there are serious allegations, technical view based on pleadings should not be taken.

29. Learned Additional Public Prosecutor relied upon the following judgments:

(i) "Dinesh B. Patel and others Vs. State of Gujrat and another" [MANU/SC/0753/2010 : (2010) 11 SCC 125].

(ii) "Drugs Inspector, Palace Road, Bangalore Vs. Dr. B.K. Krishnaiah and another" [MANU/SC/0136/1981 : (1981) 2 SCC 454].

30. In the case of "Dinesh B. Patel and others" (supra), in paragraph 6 of the complaint, it was averred as under:

Looking to the testing report of the above medicine, Denilyte M. 506072, presence of fungus is noted, hence, it has been declared as uneven. Therefore, by manufacturing of this medicine for sale, Firm of M/s. Denis Chem Lab. Ltd., Chhatral, Tal. Kalol, District Gandhinagar and its directors have made breach of this Act, therefore, this is punitive offence at first sight.

In the case supra, the accused were specifically mentioned as directors of the company. The Supreme Court, in the case supra, observed that the vicarious liability of a person for being prosecuted for an offence committed under the Act by 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. It was further observed that simply because a person is a director of Company, it does not necessarily mean that he fulfills 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. It was further observed by the Apex Court that from the complaint in question, it was found that except the bald submission that the respondents were directors of the manufacturers, there was no other allegation to indicate even prima facie that they were in charge of the Company and also responsible to the Company. It was observed that in addition to stating that the accused were directors, a statement had been made in paragraph 6 of the complaint that by manufacturing of the medicines concerned for sale, the Company and its directors had committed the breach of the Act and, therefore, there was an allegation that the directors were privy to the manufacturing of medicine by the Company. The Apex Court observed that this was a case of the manufacture of drug for human consumption and after it was tested in laboratory, it was found to be defective and since there was growth of fungus, it was a very serious matter relating to public health. Under the peculiar circumstances of that case and realising the seriousness of the allegation, the Apex Court held that they would not take a technical view based on the pleadings in the complaints. Thus, in the case supra, it has not been held by the Apex Court that there is no need to make specific averment in the complaint that the person named as accused along with the company, at the time the offence was committed, was in charge of and was responsible to the Company for the conduct of the business of the Company. In the peculiar circumstances of that case and realising the seriousness of the allegation, the Apex Court refused to take a technical view based on the pleadings in the complaint. No doubt, the case before this court also pertains to contravention of the Drugs and Cosmetics Act. However, the peculiar circumstances in the case supra were that the drug was manufactured for human consumption and it was found to be defective since there was a growth of fungus, which was found to be a very serious matter relating to public health. The circumstances in the case before this Court are not the same. The drug here is not for human consumption, but is a cream for external use. This is not a case where growth of fungus is found in this cream, but this is a case where allegedly, the content of Neomycin "C" was found to be more than the standard limits. It is not the case of the prosecution that the matter is very serious relating to public health. Therefore, the judgment in the case of "Dinesh B. Patil" (supra), is not applicable to the facts and circumstances of the present case.

31. In the case of "Drugs Inspector, Palace Road, Bangalore" (supra), there was a Partnership Deed annexed to the complaint which showed that all the partners were responsible for carrying on the business. Therefore, the Apex Court held that the High Court committed an error in holding that there was no allegation that the respondents were responsible for the management and conduct of the business of the firm. The Apex Court held in the case (supra) that the extent of the liability would be established by evidence during trial. In the present case, no documents were annexed to the complaint. There was no averment in the complaint that the accused No. 5 was responsible for carrying out the business of the accused No. 1. In fact there was no averment as to what relation, the accused No. 5 had with the firm. In such circumstances, the question of establishing the extent of the liability of the accused No. 5, subsequently, by evidence, does not arise. The above case is not applicable to the present case.

32. Mr. Usgaonkar, learned Counsel for the accused No. 5 vehemently submitted that it is mandatory to make an averment in the complaint that the accused person/s were in charge of and responsible for the conduct of the business of the company. He pointed out that the accused nos. 2, 3 and 4 were discharged by the learned Assistant Sessions Judge, in Criminal Revision Application No. 93/99, only because the complaint did not disclose any person being in charge of and responsible for the day to day affairs and business of the firm. He submitted that the above order has not been challenged and therefore the said finding has attained finality and by using the same principle, the accused No. 5 is also entitled for acquittal. Mr. Usgaonkar relied upon various authorities to substantiate his contention that the averment in the complaint that the accused was in charge of and responsible for the conduct of the business of the firm was mandatory.

33. In the case of "Municipal Corporation of Delhi" (supra), clause No. 5 in the complaint stated that the accused No. 3 was the manager of the accused No. 2 and the accused nos. 4 to 7 were the directors of the accused No. 2 and as such, they were in charge of and responsible for the conduct of the business of accused No. 2 at the time of sampling. Thus, the complainant had merely presumed that the accused nos. 4 to 7 were in charge of and responsible for the conduct of business of the accused No. 2 because they were directors of the accused No. 2. The Delhi High Court, therefore, had quashed the proceedings against the directors as also against the manager. The Hon'ble Supreme Court agreed with the High Court that no case against the directors (the accused nos. 4 to 7) was made out ex-facie on the allegations made in the complaint and that the proceedings against them were rightly quashed. The Hon'ble Supreme Court, however, did not agree that the accused No. 3 namely respondent No. 1, who was manager of the Company, would fall in the same category as the directors. The order of the High Court insofar as the quashing the proceedings against the manager, respondent No. 1 is concerned, was set aside by the Supreme Court. Thus, it can be understood from the above that even if an averment is made in the complaint to the effect that the accused persons are directors of the Company and, therefore, they are in-charge of and responsible for the conduct of the business of the Company, that would not be a sufficient averment in terms of Section 34 of the Act. In the present case, there is not even an averment in the complaint to the effect that on account of the designation of the accused No. 1, in relation to the accused No. 1, the present accused No. 5 was in charge of and responsible for the conduct of the business of the said firm.

34. In the case of "State of Maharashtra Vs. R.A., Chandawarkar and others" [MANU/MH/0435/1999 : 1999 Cri. L.J. 4449], which case was regarding the offences under the Drugs and Cosmetics Act, by the Company, there was no averment that the accused persons were in charge of and responsible for the conduct of the business of the Company. The learned Single Judge of this Court held that according to Section 34 of the Act, unless and until the prosecution makes an averment and produces the evidence to the effect that the concerned director was in charge of and responsible to the conduct of the business, the prosecution cannot lie against such a director against whom no such evidence is produced. In the present case, there was no averment as to what was the relation of accused No. 5 with the firm and more particularly, there was no averment at all that he was in charge of and responsible to the conduct of the business of the firm. When there was no averment in the complaint at all, the question of proving the same in evidence did not arise.

35. In the case of "A.V. Mody and others Vs. S.R. Salunke and another" [MANU/MH/0602/2000 : 1999(3) Mh. L.J. 850], just like in the case before this Court, it was averred in paragraph 20 of the complaint that as per the provisions of Section 34 of the Act, the accused nos. 1 to 11 were responsible for manufacture for sale, for distribution and for sale of the drug in question which was not of standard quality and hence, had committed offence under Section 18(a)(i) of the Act. The learned Single Judge of this Court observed that the said averments in the complaint do not make out a prima facie case against the accused, who were the directors of the Company and, therefore, they were not liable for being prosecuted under Section 34 of the Act for the alleged offence committed by the Company. It has been held that only those persons, who are in charge of and are responsible for the conduct of the business of the Company, can be prosecuted along with the Company.

36. In the case of "S.M.S. Pharmaceuticals Vs. Neeta Bhalla and another" [MANU/SC/0622/2005 : 2005(8) SCC 89], the Hon'ble Apex Court has observed that the cases have arisen under other Acts where similar provisions are contained creating vicarious liability for the officers of Company in cases where primary liability is that of a Company. It is observed that Section 34 of the Drugs and Cosmetics Act, 1940 contains a similar provision making every person in charge of and responsible to the Company for the conduct of its business liable for the offence committed by a Company. The Apex Court has held as under:

18. To sum up, there is almost unanimous judicial opinion that necessary averments ought to be contained in a complaint before a person can be subjected to criminal process. A liability under Section 141 of the Act is sought to be fastened vicariously on a person connected with a company, the principal accused being the company itself. It is a departure from the rule in criminal law against vicarious liability. A clear case should be spelled out in the complaint against the person sought to be made liable. Section 141 of the Act contains the requirements for making a person liable under the said provision. That the respondent falls within the parameters of Section 141 has to be spelled out. A complaint has to be examined by the Magistrate in the first instance on the basis of averments contained therein. If the Magistrate is satisfied that there are averments which bring the case within Section 141, he would issue the process. We have seen that merely being described as a director in a company is not sufficient to satisfy the requirement of Section 141. Even a non-director can be liable under Section 141 of the Act. The averments in the complaint would also serve the purpose that the person sought to be made liable would know what is the case which is alleged against him. This will enable him to meet the case at the trial.

19. In view of the above discussion, our answers to the questions posed in the reference are as under:

(a) It is necessary to specifically aver in a complaint under Section 141 that at the time the offence was committed, the person accused was in charge of, and responsible for the conduct of business of the company. This averment is an essential requirement of Section 141 and has to be made in a complaint. Without this averment being made in a complaint, the requirements of Section 141 cannot be said to be satisfied.

(b) The answer to question posed in sub-para (b) has to be in the negative. Merely being a director of a company is not sufficient to make the person liable under Section 141 of the Act. A director in a company cannot be deemed to be in charge of and responsible to the company for the conduct of its business. The requirement of Section 141 is that the person sought to be made liable should be in charge of and responsible for the conduct of the business of the company at the relevant time. This has to be averred as a fact as there is no deemed liability of a director in such cases.

(c) The answer to Question (c) has to be in the affirmative. The question notes that the managing director or joint managing director would be admittedly in charge of the company and responsible to the company for the conduct of its business. When that is so, holders of such positions in a company become liable under Section141 of the Act. By virtue of the office they hold as managing director or joint managing director, these persons are in charge of and responsible for the conduct of business of the company. Therefore, they get covered under Section 141. So far as the signatory of a cheque which is dishonoured is concerned, he is clearly responsible for the incriminating act and will be covered under sub-section (2) of Section 141.

37. In view of the above, it is clear beyond doubt that it was mandatory to make averment in the complaint to the effect that the accused No. 5 was in charge of and responsible to the accused No. 1 for the conduct of its business. The extent of the responsibility/control, etc., if found necessary, could have been brought in oral evidence and proved. In the absence of said mandatory averment in the complaint, the question of proceeding against the accused No. 5, did not at all arise.

38. Learned Additional Public Prosecutor then contended that after the trial was completed, and there was evidence record to establish that the accused No. 5 was in charge of and responsible for the conduct of the business of the firm at the relevant time, the question of going back to the averments in the complaint did not arise. In my considered view, the above submission has no legal sanctity. If the averments in the complaint are not to be seen, then the accused, in no case, would be in a position to get discharge on the ground that there are no required averments in the complaint since in all such cases the prosecution would claim that the accused should wait till completion of trial and the said requirement would be established during trial. Primarily, the complainant had to make necessary averments in the complaint and establish the same during trial. If such averments were made in the complaint and initial burden to prove the same was discharged by the prosecution, then the obligation of the accused No. 5 to prove that at the time the offence was committed he was not in-charge of and was not responsible to the firm for the conduct of the business of the firm or that the offence was committed without his knowledge or that he had exercised all due diligence to prevent the commission of such offence, would have arisen.

39. In the case of "Monaben Ketanbhai Shaha and another Vs. State of Gujrat and others" [MANU/SC/0596/2004 : AIR 2004 SC 4274], the Apex Court set aside the judgment of the High Court and restored the order of the Magistrate discharging the appellants. It has been held as under:

6. From the above, it is evident that in the complaint there are no averments against the appellants except stating in the title that they are partners of the firm. Learned counsel for the respondents/complainant contended that a copy of the partnership deed was also filed which would show that the appellants were active in the business. No such document was filed with the complaint or made part thereof. The filing of the partnership deed later is of no consequence for determining the point in issue. Section 141 does not make all partners liable for the offence. The Criminal liability has been fastened on those who, at the time of the commission of the offence, was in-charge of and was responsible to the firm for the conduct of the business of the firm. These may be sleeping partners who are not required to take any part in the business of the firm; they may be ladies and others who may not know anything about the business of the firm. The primary responsibility is on the complainant to make necessary averments in the complaint so as to make the accused vicariously liable. For fastening the criminal liability, there is no presumption that every partner knows about the transaction. The obligation of the appellants to prove that at the time the offence was committed they were not in-charge of and were not responsible to the firm for the conduct of the business of the firm, would arise only when first the complainant makes necessary averments in the complaint and establishes that fact. The present case is of total absence of requisite averments in the complaint.

40. From the above judgment of the Apex Court, it is clear that the primary responsibility is on the complainant to make necessary averments in the complaint so as to make the accused vicariously liable. The filing of the partnership deed later on is of no consequence for determining the point in issue. Therefore, the contention of the learned Additional Public Prosecutor that once the evidence is recorded and it is proved through documents that the accused No. 5 was in charge of and responsible to the conduct of the business of the firm, Court cannot go back to the contents of the complaint, has no merit at all.

41. Be that as it may, let us see if there is evidence on record to prove beyond reasonable doubt that the accused No. 5 was, at the relevant time, in charge of and responsible for the conduct of the business of the firm. The accused No. 5 has not been described in the complaint by his designation. He was admittedly not a partner of the accused No. 1-firm. The complainant (PW1) did not record the statement of the accused No. 5 or of any partners of the accused No. 1. When accused No. 1-firm was sought to be served through the accused No. 5, he had filed a Memo dated 25/06/2008 (Exhibit 92) before the Magistrate alleging that he is in the employment of the accused No. 1 since long but is not the representative of the accused No. 1 and he had never been in charge of the affairs of the accused No. 1. PW1, the complainant, in her cross-examination, could not deny the suggestion that the accused No. 5 was not in charge of day to day affairs of the accused No. 1 at the time of manufacturing the batch of drug, which is concerned in the present complaint. Her answer was that she cannot say anything. PW1 deposed that during the investigation carried out by the Drugs Inspector (Headquarters), Bangalore, it was revealed that the partners namely the accused nos. 2 to 4 do not take actual part in the day to day affairs of the Firm and that they had authorised Shri Sanjay Revankar to take care of production, sales and distribution. She has produced the copies of the letters dated 04/07/1995, allegedly, of Shri Narayan Kolle, partner of the Firm as also a letter dated 04/07/1995, allegedly, of the accused No. 5 himself, which have been marked as exhibit 54 colly. As per the letter dated 04/07/1995 (Exhibit 133-C) stated to have been written by Narayan Kolle, on behalf of Shivani Laboratories to Mr. V.L. Hambar, the Drugs Inspector, Bangalore, Smt. Shantabai Gajanan Kolle, Shri Raghuveer Gajanan Kolle, Kumari Vaishnavi J. Kolle, Master Aniruddha R. Kolle and Mr. Narayan G. Kolle (all partners of Shivani Laboratories) did not actively take part in the day to day affairs of the Firm and that Mr. Sanjay Revankar had been authorised by the said persons to take care of the day to day affairs of the Firm concerning production, sale and distribution. Again, as per the letter dated 04/07/1995 (Exhibit 134-C), stated to have been written by the accused No. 5-Sanjay Revankar to Mr. V.L. Hambar, Drugs Inspector, Bangalore, the accused No. 5 has stated that he was a power of attorney to sign the documents and correspondence and that he manages the day to day affairs of Shivani Laboratories, Shirali concerning production, sale and distribution. It was submitted by the learned Additional Public Prosecutor that there is on record a letter dated 15/03/1996 from Shivani Laboratories stating that the reports analysing the samples seized, are not correct and requesting to adduce additional evidence in contravention of the said report. He submitted that this letter has been signed by the accused No. 5, Mr. Sanjay Revankar. Mr. Lawande, therefore, contended that there is more than sufficient evidence on record to establish that the accused No. 5 was in charge of and responsible for the day to day affairs of the accused No. 1. Therefore, he submitted that the prosecution as against the accused No. 5 is maintainable. However, as has been rightly contended by the learned Counsel for the accused No. 5, though the said letter dated 04/07/1995, allegedly, written by one of the partners namely Narayan Kolle, has been marked as an exhibit, however, the contents of the same have not been proved since the maker of the same has not been examined and the signature on the same has not been proved to be of the said alleged maker. Same is the case with the letter dated 04/07/1995, allegedly written and signed by accused No. 5. The complainant (PW1) had visited the premises on 28/06/1995. According to PW5, Mr. V.L. Hambar, he visited the premises on 04/07/1995 and the accused No. 5 handed over the said documents to him. Thus, the said letters are not of the date prior to the investigation, so as not to doubt their genuineness. The question arises as to why the accused No. 5 would hand over such letters to PW5. A suggestion has been put to PW5 that the letter at Exhibit 134-C has not been signed by accused No. 5 and that the same was not handed over to PW5 by accused No. 5. PW5 did not identify the signature of accused No. 5 on that letter nor did he state that he was acquainted with the signature of accused No. 5. There is nothing on record to show as to in what context and as for what reason, Mr. Narayan Kolle had to write such letter to Mr. V.L. Hambar. Same is the case with further letter dated 04/07/1995 allegedly written by the accused No. 5 since the signature on the same has not been proved to be of the accused No. 5. PW5, Mr. V.L. Hambar, the Assistant Drugs Controller, has stated that except the letter Exhibit 134-C, he has no evidence to show that accused No. 5 was managing the day to day affairs of accused No. 1. He did not see any power of attorney showing that the accused No. 5 was the attorney of accused No. 1 or of its partners. In his statement under Section 313 of Cr.P.C., the accused No. 5 has denied that he was the authorized person to look after the day to day affairs of the firm. The Partnership Deed at Exhibit 54-colly says that Shri Narayan Kolle, Smt. Shantabai Kolle and Raghuveer Kolle were the working partners and they were supposed to take active part and engage themselves in conducting the affairs of the business of the firm. The said two letters at Exhibits 133-C and 134-C are, therefore, not beyond suspicion. Thus, even during trial, it was not convincingly proved that the accused No. 5 was in charge of and responsible for the conduct of the business of the accused No. 1-firm. The trial Magistrate has held that the evidence brought on record creates doubt on the story of the prosecution as to whether accused No. 5 was responsible for the day to day affairs of accused No. 1.

42. In the case of "Chandrappa and others Vs. State of Karnataka", [MANU/SC/7108/2007 : (2007) 4 SCC 415, amongst others, two important principles regarding the power of the appellate Court while dealing with an appeal against an order of acquittal are stated, which are as under:

(i) An appellate Court, however, must bear in mind that in case of acquittal, there is double presumption in favour of the accused. Firstly, the presumption of innocence is available to him under the fundamental principle of criminal jurisdiction that every person shall be presumed to be innocent unless he is proved guilty by a competent court of law. Secondly, the accused having secured his acquittal, the presumption of his innocence is further reinforced, reaffirmed and strengthened by the trial court.

(ii) If two reasonable conclusions are possible on the basis of the evidence on record, the appellate court should not disturb the finding of acquittal recorded by the trial court.

43. In the circumstances above, even if this Court is of the view that from the evidence on record it is possible to hold that the accused No. 5 was in charge of and responsible for the conduct of the business of the accused No. 1-firm, then also, this Court, in appeal against acquittal, cannot interfere with the possible view taken by the Magistrate to the effect that the evidence on record creates doubt on the story of the prosecution as to whether accused No. 5 was responsible for the day to day affairs of the accused No. 1-firm.

44. It should be kept in mind that by order dated 17/01/2003 passed in Criminal Revision Application No. 93/1999, the learned Sessions Judge has quashed and set aside the process issued against the accused nos. 2 to 4. The reason given for the same is that no case was made out in the complaint as against them in terms of requirement of Section 34 of the Act, since there was no allegation in the complaint that they were in charge of and responsible for the day to day affairs of the accused No. 1. The said order has not been challenged by the State, which means that the fact that there is a necessity to make an averment in the complaint that the accused persons are in charge of and responsible for the day to day affairs of the Company and there is no error if the process is quashed for lack of such allegation, is acceptable to the prosecution. Admittedly, in the complaint, there is also no such allegation as against the accused No. 5 also.

45. By order dated 07/02/2005, the charge framed and explained to the accused and the plea of the accused No. 5 was deleted the Magistrate and it was ordered that the matter shall proceed for evidence of the prosecution as provided under Section 244 of Cr.P.C. But the Magistrate did not proceed as per the above order passed by itself. There was no charge framed as against the accused No. 5 and thus the accused No. 5 did not get opportunity to further cross-examine the prosecution witnesses, after charge.

46. In the result, there is no merit in the appeal and hence the same is dismissed. Bail bonds of the accused No. 5 and his surety are cancelled. Proceedings closed.

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