- Bookmark
- Share
- CaseIQ
R.K. Khandelwal v. State
Factual and Procedural Background
Messrs P. Cool & Co. Ltd., Lucknow, supplied Olive Oil to G.B Pant Hospital, Naini Tal. The Inspector of Drugs, Bareilly Region, took a sample of this Olive Oil on 27-2-1960, which was found to be substandard by the Government Analyst. Subsequently, a complaint was filed against the applicants, R.K Khandelwal and G.C Khandelwal, alleging an offence under Sec. 27 read with Sec. 18 of the Drugs Act, 1940. The Magistrate initially discharged the applicants due to lack of evidence proving their responsibility as partners or directors of the company. However, this discharge order was set aside in revision by the Additional Sessions Judge, who directed further inquiry. The applicants then filed this revision against that order.
Legal Issues Presented
- Whether the applicants, as alleged partners or directors of the company, can be convicted under Sec. 27 of the Drugs Act solely on that basis.
- Whether there was sufficient evidence to frame a charge against the applicants or to justify further inquiry.
Arguments of the Parties
The opinion does not contain a detailed account of the parties' legal arguments.
Table of Precedents Cited
No precedents were cited in the provided opinion.
Court's Reasoning and Analysis
The court analyzed the scope of liability under Sections 27 and 34 of the Drugs Act, 1940. Section 27 holds liable not only the actual seller of a substandard drug but also the principal on whose behalf it was sold. Section 34 extends liability to companies and persons in charge of and responsible to the company for its conduct, including directors, managers, or officers, but only if the offence was committed with their consent, connivance, or due to neglect.
The court emphasized that mere status as a partner or director does not automatically impose criminal liability. There must be evidence showing that the accused were responsible for the conduct of the business or that the offence occurred with their consent, connivance, or neglect. In this case, no judicial evidence was presented to prove that the applicants were responsible for the company’s business or that they consented to or were negligent regarding the offence. The applicants’ own statements, if admissible, only indicated their partnership but not responsibility or culpability.
Therefore, the court held that the Magistrate was correct in discharging the applicants and that the Additional Sessions Judge erred in setting aside that order and directing further inquiry without sufficient evidence.
Holding and Implications
The revision is allowed and the order dated 21-5-1963 of the Additional Sessions Judge directing further inquiry is set aside. The applicants are deemed to have been discharged of the offence under the Drugs Act.
Holding: The applicants cannot be held criminally liable under Sec. 27 of the Drugs Act merely by virtue of being partners or directors without proof of consent, connivance, neglect, or responsibility for the company’s conduct.
Implications: This decision clarifies that criminal liability under the Drugs Act for company officials requires proof beyond mere association with the company. The ruling directly affects the parties by affirming the discharge of the applicants. No new precedent was established beyond the interpretation of statutory provisions as applied to the facts.
Mathur, J.:— This is an application in revision by R.K Khandelwal and G.C Khandelwal against the order of the Additional Sessions Judge of Kumaon, Naini Tal, setting aside the order of discharge and directing further inquiry.
2. Messrs P. Cool & Co. Ltd., Lucknow, had supplied Olive Oil to G.B Pant Hospital, Naini Tal. The Inspector of Drugs, Bareilly Region, Bareilly, took a sample of this Olive Oil on 27-2-1960. One of the samples was sent to the Government Analyst for analysis and report who found that the drug (Olive Oil) was substandard. On receipt of the report the Inspector of Drugs filed a complaint against the applicants alleging that they had committed an offence punishable under Sec. 227 read with Sec. 18 of the Drugs Act, 1940 (to be referred hereinafter as the Act). The complainant led evidence as to the supply of they live Oil by Messrs P. Cool & Co. Ltd., Lucknow, the taking of the sample and also the report of the Government Analyst. No at tempt was made to prove who the partners or Directors of the Firm were and to what extent the applicants were responsible to the Company. The applicants, however, made a statement as if they were the partners of this Company. The Magistrate discharged the applicants of the offence, but this order was set aside in revision and the Additional Sessions Judge directed further inquiry.
3. The case having been started on the complaint of the Inspector of Drugs, and not on a police report, the evidence which could be taken into consideration while framing a charge or discharging the accused persons of the offence was the evidence actually adduced in the case, and not evidence which may be available but had not been adduced. In other words, there existed no judicial evidence on record to infer that the applicants were the partners or Directors of Messrs P. Cool Co. Ltd., Lucknow. In view of the statement of the accused persons, it shall, however, be desirable to proceed with the assumption that they are partners of the above concern. “Director” as contemplated by Sec. 34 of the Act includes a partner. The point for consideration, therefore, is whether the applicants can be convicted of the offence under Sec. 27 of the Act simply because they are Directors of the Company.
4. Under Sec. 27 of the Act not only the person actually selling a drug in contravention of the provisions of the Act or the rules made thereunder is guilty, but also the person on whose behalf the sub-standard drug had been sold. Where the offence is committed by a Company Sec. 34 comes into operation and as provided in sub-sec. (1) not only the Company but also every person in charge of, and responsible to the Company for the conduct of the business of the Company shall be deemed to be guilty of the offence. Similarly, under sub-sec. (2) of Sec. 34, director, manager, secretary or other officer of the Company can also be deemed to be guilty if it is proved that the offence was committed with his consent or connivance or is attributable to any neglect on his part.
5. A reading of Secs. 27 and 34 of the Act shall make it clear that the following category of persons can be convicted of the offence under Sec. 27:—
(a) the actual seller;
(b) the principal on whose behalf the sub-standard drug was sold;
(c) in the case of a Company, the Company itself; and also.
(i) every person in charge of, and responsible to the Company for the conduct of the business of the Company; and
(ii) director, manager, secretary or other officer of the Company if the offence is committed with his consent or connivance or is attributable to any neglect on his part.
6. The burden to prove the charge lies upon the prosecution unless under some provision of the law it is for the accused person to satisfy the Court that the offence was not committed with his consent or connivance, nor could it be attributed to any neglect on his part.
7. In Companies there can be directors who are not incharge of, and responsible to the Company for the conduct of the business of the Company. There can be directors who merely lay down the policy and are not concerned with the day to day working of the Company. Consequently, the mere fact that the accused person is a partner or director of the Company, shall not make him criminally liable for the offences committed by the Company unless the other ingredients are established which make him criminally liable. To put it differently, no director or partner of a Company can be convicted of the offence under Sec. 27 of the Act unless it is proved that the sub standard drug was sold with his consent or connivance or was attributable to any neglect on his part, or it is proved that he was a person in charge of, and responsible to the Company for the conduct of the business of the Company.
8. In the instant case no such evidence exists. The admission of the applicants, if admissible in evidence, will merely show that they were partners of the firm and not that they were in charge of, and responsible to the Company for the conduct of its business, or that the offence was the result of their negligence or was committed with their consent or connivance. For want of evidence no charge could be framed against the applicants and they deserved to be discharged of the offence as was done by the Magistrate. The order of the Sessions Judge directing further inquiry is thus against the law and deserves to be set aside. The Drugs Inspector would have been well advised to make the complaint after collecting the necessary evidence.
9. Whether he can make another complaint after making a proper investigation is not in issue in the present revision and no opinion need be expressed on this point.
10. The revision is hereby allowed and the order 21-5-1963 of the Additional Sessions Judge directing further inquiry is set aside. The applicants shall be deemed to have been discharged of the offence.
11. Revision allowed.
Alert