1. Introduction

The Drugs and Cosmetics Act, 1940 (hereinafter "the Act") stands as a cornerstone of pharmaceutical regulation in India, designed to ensure the safety, efficacy, and quality of drugs and cosmetics sold or distributed in the country. Central to its enforcement mechanism is Section 27, which prescribes penalties for various offences related to the manufacture, sale, and distribution of drugs in contravention of the Act's provisions. This article undertakes a comprehensive analysis of Section 27, examining its scope, the nature of offences it covers, judicial interpretations of its key elements, and its interplay with other significant provisions of the Act. The analysis draws upon landmark judgments and statutory provisions to provide a scholarly understanding of this critical penal section.

The overarching objective of the Act, as highlighted in cases like Bayer Corporation & Ors. v. Uoi & Ors. (Delhi High Court, 2009), is public health, ensuring standard practices and protecting the populace from adulterated, spurious, or substandard drugs. Section 27 serves as a deterrent by imposing stringent punishments for non-compliance, thereby reinforcing the regulatory framework.

2. Scope and Ambit of Section 27

Section 27 of the Act is a penal provision that outlines punishments for individuals or entities who, either themselves or by any other person on their behalf, engage in prohibited activities concerning drugs.

2.1. Prohibited Acts and Categories of Drugs

The section penalizes the acts of manufacturing for sale, selling, stocking or exhibiting for sale, or distributing certain categories of drugs. As articulated in Mohd. Shabir v. State Of Maharashtra . (Supreme Court Of India, 1979), these acts are central to invoking liability under Section 27. The categories of drugs that fall within its purview typically include:

• Drugs deemed to be misbranded under clauses (a), (b), (c), (d), (f), or (g) of Section 17 of the Act. The issue of misbranding and its penal consequences under Section 27(d) was noted in Swarup Enterprise v. Union of India (Tripura High Court, 2013).
• Drugs deemed to be adulterated under Section 17B of the Act (previously Section 17A for certain contexts). The case of State Of Haryana v. Brij Lal Mittal And Others (1998 SCC 5 343, Supreme Court Of India, 1998) involved allegations of distributing misbranded and adulterated drugs under Sections 17 and 17-A.
• Spurious drugs.
• Drugs manufactured, sold, stocked, exhibited for sale, or distributed without a valid license as required under clause (c) of Section 18 of the Act. This linkage is evident in numerous cases, including Rajasthan Pharmaceutical Laboratory, Bangalore And Two Others v. State Of Karnataka . (Supreme Court Of India, 1981).

The Act, through Chapter IV which includes Section 18 (prohibitions) and Section 27 (penalties), aims to control the quality and distribution of drugs (Ishwar Singh Bindra And Others v. State Of U.P . (Supreme Court Of India, 1968)).

2.2. Penalties Prescribed

Section 27 stipulates significant penalties, reflecting the gravity of offences concerning drug standards and safety. For instance, as detailed in Mohd. Shabir v. State Of Maharashtra . (Supreme Court Of India, 1979) and Rajasthan Pharmaceutical Laboratory, Bangalore And Two Others v. State Of Karnataka . (Supreme Court Of India, 1981), offences such as manufacturing for sale, selling, stocking, or distributing drugs without a valid license as required under Section 18(c), or dealing with certain misbranded or adulterated drugs, can attract imprisonment for a term which shall not be less than one year but which may extend to ten years, and also a fine.

A proviso often allows the court, for special reasons to be recorded in writing, to impose a sentence of imprisonment of less than one year. Different sub-clauses of Section 27, such as 27(a)(i), 27(a)(ii), 27(b)(ii), and 27(d), address varied contraventions with corresponding penal structures. For example, Section 27(b)(ii) is frequently invoked for contraventions of Section 18(c) (NAROTTAM CHAND v. STATE OF HP (Himachal Pradesh High Court, 2024); Dr. S. Selvam Petitioner v. State (2011 SCC ONLINE MAD 743, Madras High Court, 2011); Anil Kumar v. State Of Punjab . (2017 SCC 5 53, Supreme Court Of India, 2017)).

3. Judicial Interpretation of Key Elements

The application of Section 27 has been subject to considerable judicial scrutiny, leading to important interpretations of its constituent elements.

3.1. The "Stocking for Sale" Conundrum and "Possession Simpliciter"

A significant line of judicial precedent revolves around the interpretation of "stocking for sale." The Supreme Court in Mohd. Shabir v. State Of Maharashtra . (Supreme Court Of India, 1979) (both Ref 7 and 21) famously held that mere "possession simpliciter" of drugs, without evidence to show that such possession was for the purpose of sale or distribution, would not automatically fall within the mischief of Section 27. The prosecution must establish that the stocking was indeed "for sale." This principle was reiterated in Samar Kumar Swain v. Subodha Kumar Nayak (Orissa High Court, 2009) concerning Section 27(d).

However, the interpretation of "stocking" must be nuanced. In Swantraj And Others v. State Of Maharashtra . (1975 SCC 3 322, Supreme Court Of India, 1974), the Supreme Court held that temporary storage of drugs in an unlicensed godown, even if intended for sale elsewhere, constituted "stocking for sale" under Section 18(c) of the Act, thereby attracting penalties under Section 27(b). The Court emphasized that the Act requires licensing for every place where drugs are stocked for sale to ensure drug safety and potency.

The defense that possession was for administration rather than sale, particularly by medical practitioners, has also been tested. In Dr. S. Selvam Petitioner v. State (2011 SCC ONLINE MAD 743, Madras High Court, 2011), a cardiologist claimed possession of drugs for administration to patients, arguing it did not amount to sale or distribution. The court's decision in such cases often turns on the quantity of drugs and other circumstantial evidence indicating an intent to sell or distribute.

3.2. Requirement of License and Contravention of Section 18(c)

Section 18(c) of the Act prohibits the manufacture for sale, sale, stocking, exhibition for sale, or distribution of any drug except under, and in accordance with the conditions of, a license. Contravention of Section 18(c) is a primary trigger for penalties under Section 27. The judgment in Swantraj And Others v. State Of Maharashtra . (1975 SCC 3 322, Supreme Court Of India, 1974) underscored the imperative of obtaining separate licenses for each location where drugs are stocked for sale, as mandated by Rule 62, reinforcing the strict application of Section 18(c).

The case of NAROTTAM CHAND v. STATE OF HP (Himachal Pradesh High Court, 2024) also highlights that an offence under Section 18(c) is punishable under Section 27(b)(ii) of the Act. The failure to produce a valid license for stocking or selling drugs forms the basis of prosecution in many such instances.

3.3. Misbranded, Adulterated, and Spurious Drugs

Section 27 imposes penalties for dealing in drugs that are misbranded (as defined in Section 17), adulterated (Section 17B), or spurious. The legislative intent is to protect public health by ensuring that drugs in the market conform to prescribed standards of identity, quality, and purity. In State Of Haryana v. Brij Lal Mittal And Others (1998 SCC 5 343, Supreme Court Of India, 1998), the prosecution was initiated for alleged violations of Sections 17 and 17-A (related to misbranded and adulterated drugs). Similarly, Amery Pharmaceuticals And Another v. State Of Rajasthan . (Supreme Court Of India, 2001) notes that Section 27 renders a person liable for dealing in adulterated or spurious drugs. The Delhi High Court in Bayer Corporation & Ors. v. Uoi & Ors. (Delhi High Court, 2009) affirmed that Section 27 provides for punishment for these categories of drugs.

4. Procedural Aspects and Vicarious Liability in Section 27 Prosecutions

Prosecutions under Section 27 are governed by specific procedural requirements laid down in the Act. Furthermore, the Act contains provisions for imputing vicarious liability to individuals responsible for the conduct of a company's business.

4.1. Vicarious Liability of Directors/Partners (Section 34)

Section 34 of the Act deals with offences by companies, making persons in charge of and responsible for the conduct of the company's business at the time of the offence vicariously liable. However, mere directorship or partnership does not automatically entail liability. The Supreme Court in State Of Haryana v. Brij Lal Mittal And Others (1998 SCC 5 343, Supreme Court Of India, 1998), referencing Municipal Corpn. of Delhi v. Ram Kishan Rohtagi (1983) 1 SCC 1, emphasized that there must be clear averments and prima facie evidence to show that the directors were actively responsible for the company's business conduct.

Similarly, in State Of Karnataka v. Pratap Chand And Others (1981 SCC 2 335, Supreme Court Of India, 1981) (Ref 2 and 17), a partner was not held liable as evidence showed another partner was in overall control of the day-to-day business. The principle that the person "in-charge" must be in overall control of the day-to-day business was also discussed in Girdhari Lal Gupta v. D. H. Mehta And Another (1970 SCC CRI 1 496, Supreme Court Of India, 1971) while interpreting a similar provision. These principles are vital when the offence itself falls under provisions punishable by Section 27.

4.2. Sampling, Analysis, and Right to Re-test (Sections 23, 25)

Procedural safeguards concerning sampling (Section 23) and analysis (Section 25) are critical to ensuring a fair trial. Section 25(3) states that a Government Analyst's report is conclusive evidence unless contested within 28 days. If contested, Section 25(4) provides the accused a valuable right to have the sample re-analyzed by the Central Drugs Laboratory.

The Supreme Court in Medicamen Biotech Limited And Another v. Rubina Bose, Drug Inspector . (2008 SCC 7 196, Supreme Court Of India, 2008) quashed proceedings where the Drugs Inspector failed to facilitate retesting despite the appellant's request, thereby violating this statutory right. The Court relied on precedents like State of Haryana v. Brij Lal Mittal (1998) 5 SCC 343 and Amery Pharmaceuticals v. State of Rajasthan (2001) 4 SCC 382 to underscore the importance of these procedural rights. The findings in State Of Haryana v. Brij Lal Mittal also turned on the interpretation of Section 25, although the ultimate decision rested on the lack of a prima facie case under Section 34.

4.3. Disclosure of Manufacturer's Name (Section 18-A)

Section 18-A of the Act mandates that any person (not being the manufacturer or their agent for distribution), if required, must disclose to the Inspector the name, address, and particulars of the person from whom they acquired the drug or cosmetic. Failure to comply can lead to prosecution under Section 28 of the Act. This provision often features alongside charges related to Section 18(c) and punishable under Section 27. For instance, in State Of Karnataka v. Pratap Chand And Others (1981 SCC 2 335, Supreme Court Of India, 1981), the respondents faced charges under Section 18-A in addition to Sections 18(c) and 18(a)(ii). The case of Mohd. Shabir v. State Of Maharashtra . (1979 SCC 1 568, Supreme Court Of India, 1979) also involved a charge under Section 28 read with Section 18-A.

4.4. Jurisdiction of Courts

Section 32(2) of the Drugs and Cosmetics Act, 1940, specifies the courts competent to try offences under the Act. As affirmed in NAROTTAM CHAND v. STATE OF HP (Himachal Pradesh High Court, 2024), citing the Supreme Court's decision in Union of India v. Ashok Kumar Sharma 2021 (12) SCC 674, offences punishable under Chapter IV of the Act (which includes Sections 18 and 27) are to be tried by a Court of Session, and not by a court inferior to it, unless otherwise provided.

5. Section 27 of the Drugs and Cosmetics Act vis-à-vis Section 27 of the NDPS Act: An Illustrative Distinction

It is pertinent to briefly distinguish Section 27 of the Drugs and Cosmetics Act from Section 27 of the Narcotic Drugs and Psychotropic Substances Act, 1985 (NDPS Act), as both deal with offences related to drugs but in vastly different contexts. Section 27 of the Drugs and Cosmetics Act primarily addresses the quality, standards, licensing, and branding of drugs that are otherwise legitimate for medicinal use, aiming to prevent substandard, adulterated, misbranded, or spurious drugs from reaching the market.

In contrast, Section 27 of the NDPS Act penalizes the consumption of any narcotic drug or psychotropic substance, with varying penalties based on the substance involved and provisions concerning "small quantity" for personal consumption (Ahamad Usman Bhattiwala v. State Of Maharashtra . (Bombay High Court, 1992)). The NDPS Act, as a whole, targets illicit drug trafficking, possession, cultivation, and consumption of substances legally designated as narcotic or psychotropic, which are generally prohibited or strictly controlled due to their abuse potential (Ramji Duda Makwana v. The State Of Maharashtra . (Bombay High Court, 1993); Court On Its Own Motion v. Union Of India (Tripura High Court, 2021)).

The distinct nature of these statutes is evident in cases like Anil Kumar v. State Of Punjab . (2017 SCC 5 53, Supreme Court Of India, 2017), where the appellant was convicted under both Section 22 of the NDPS Act and Section 27(b)(ii) of the Drugs and Cosmetics Act for separate offences. This illustrates that the regulatory regimes and the "drugs" they govern are fundamentally different, with Section 27 of the Drugs and Cosmetics Act focusing on the integrity of the pharmaceutical supply chain for therapeutic goods.

6. Conclusion

Section 27 of the Drugs and Cosmetics Act, 1940, is a critical penal provision that underpins the regulatory framework for drugs in India. It imposes stringent penalties for a range of offences, from manufacturing and selling drugs without a license to dealing in misbranded, adulterated, or spurious drugs. Judicial interpretations have clarified key aspects, such as the distinction between "possession simpliciter" and "stocking for sale," the strict requirements for licensing, and the conditions for imputing vicarious liability.

The courts have consistently emphasized the public health objective of the Act while also ensuring that procedural safeguards, such as the right to re-analysis of samples, are upheld to ensure fair trial. The effective enforcement of Section 27, balanced with adherence to due process, is essential for maintaining the quality and safety of drugs available to the public and for fostering confidence in the pharmaceutical regulatory system. The distinction from penal provisions in other statutes like the NDPS Act further highlights its specific role in governing the legitimate pharmaceutical sector.