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Narendrakumar Mangilal Dani And Others v. State Of Maharashtra And Another
Factual and Procedural Background
Three petitions were filed by the same petitioners (the accused) seeking quashing of complaints lodged against them under the Drugs and Cosmetics Act, 1940. The petitions were heard together because they involved common questions of law and were disposed of by a common judgment.
The principal petitioner is Prem Pharmaceuticals, a manufacturer licensed to produce 0.9% Sodium Chloride and 5% Dextrose Injection I.P., used as intravenous fluids. Samples of these injections were collected by Drug Inspectors from hospitals (St. George Hospital, Civil Hospital Alibaug, and various hospitals in Maharashtra) and sent for chemical analysis. The Chemical Analyser reported that the samples contained suspended matter visible to the unaided eye and declared them not of standard quality. Prosecutions were consequently initiated against the manufacturing company and ten partners (including four lady partners) under section 18(a)(i) read with sections 16, 34 and 27(d) of the Drugs and Cosmetics Act, 1940.
The petitions for quashing were brought under Article 227 of the Constitution and section 482 of the Code of Criminal Procedure.
Legal Issues Presented
- Whether the presence of visible suspended matter in samples of Sodium Chloride and Dextrose injections, collected from hospitals after manufacture and storage, establishes that the drug is "not of standard quality" and supports prosecution under the Drugs and Cosmetics Act, 1940.
- Whether all partners of the manufacturing company (petitioner Nos. 1–10) can be prosecuted under section 34 of the Act merely because they are partners, in the absence of any averment that they were in charge of and responsible for the conduct of the company's business.
Arguments of the Parties
Petitioners' Arguments
- The visible suspended particles do not necessarily indicate the drug was sub-standard because such particles may develop during storage if the drug is not kept in a cool place; there was no allegation that the particles were foreign material.
- All partners of the company cannot be prosecuted under section 34 of the Act unless it is shown that they were in charge of and responsible for the conduct of the business of the company.
- The petitioners asserted compliance with Rule 76 of the Drugs and Cosmetics Rules, 1945: the company had an approved qualified manufacturing chemist and a separate qualified chemist for the laboratory, both approved by licensing authorities.
Prosecution / State's Position (as reflected in the opinion)
- The samples collected from hospitals were analyzed and declared not of standard quality because they contained suspended matter visible to the unaided eye; prosecutions were filed on that basis under section 18(a)(i) read with sections 16, 34 and 27(d) of the Act.
- There is no statement in the complaint alleging that the particles were foreign material or that the ingredients were out of prescribed proportion; however, the Chemical Analyser's report of suspended matter formed the basis for prosecution.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Prem Pharmaceuticals v. State of M.P., 1989 Cri LJ 2028 | Held that absent analysis of the particles found in the medicine, it cannot be concluded they were extraneous; cited section 19(2)(b) indicating a drug is not below standard merely because some extraneous substance has unavoidably become intermixed, absent allegation of awareness. | The court found this ratio squarely applicable to the present case and agreed with the view that the mere presence of particles, without proof they were extraneous, does not establish contravention of the Act. |
| Impha Labs, Indore v. State of M.P., 1991 Drugs Cases 386 | Applied the same view as in Prem Pharmaceuticals regarding particles developing during storage and the necessity of proof that particles were extraneous to hold a drug sub-standard. | The court noted that the same legal position had been followed by the Madhya Pradesh High Court in that case. |
| Vetcha Venkata Raju v. State of A.P., Cri. Revision Petition No. 327 of 1991 (decided 24-12-1992) | The Andhra Pradesh High Court followed the view that visible particles alone, without proof of extraneous matter or improper ingredients, do not establish a drug as sub-standard. | The court observed that the Andhra Pradesh High Court had followed a similar approach and cited it as corroborative authority. |
| State of Haryana v. Brij Lal Mittal, 1998 Drugs Cases 11 (Supreme Court) | Principle that partners cannot be prosecuted merely by naming them as partners; liability under section 34 requires that the individuals be shown to be in charge of and responsible for the conduct of the business of the company. | The court relied on this Supreme Court authority to hold that petitioners Nos. 1–10 (partners) could not be prosecuted where the complaint lacked averment that they were in charge and responsible for the company's business; accordingly, the cases against them were quashable. |
Court's Reasoning and Analysis
The court proceeded by analyzing statutory/regulatory standards and the factual record as alleged in the complaints and the petition.
-
Regulatory and factual assessment:
The Pharmacopoeia of India (Indian Pharmacopoeia, Vol. I, 3rd Ed., 1985) prescribes storage for Sodium Chloride and Dextrose injections: "Store in single-dose containers in a cool place. On keeping; there may be separation of small solid particles." It also mandates labelling that the injection "should not be used if it contains visible solid particles."
Applying these prescriptions, the court observed that the development of visible solid particles is a recognized phenomenon during storage where temperature variations occur, and therefore such particles may be particulate matter of the medicine itself rather than extraneous contamination.
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On the evidentiary sufficiency:
The complaint and analysis relied on samples taken from hospitals several months after manufacture (manufacture August 1986; samples taken November 1986). No samples were taken from the manufacturer, and the prosecution did not allege that the particles were foreign material or that the ingredients were not in the prescribed proportion.
Given the absence of analysis identifying the suspended matter as extraneous and the Pharmacopoeia's express recognition that particles may develop in storage, the court concluded that the presence of visible particles per se did not establish contravention of the Drugs and Cosmetics Act.
-
Reliance on precedent:
The court relied on earlier decisions (notably Prem Pharmaceuticals v. State of M.P.) where the Madhya Pradesh High Court held that, in the absence of analysis showing particles to be extraneous, prosecution could not be sustained. The court found that precedent directly applied and followed similar decisions from other High Courts.
-
On liability of partners:
The complaint merely named petitioner Nos. 1–10 as partners and alleged responsibility under section 34 of the Act without averring they were in charge of or responsible for the conduct of the company's business. Citing the Supreme Court's decision in State of Haryana v. Brij Lal Mittal, the court held that partners cannot be prosecuted under section 34 unless it is shown they were in charge and responsible; accordingly, the cases against the partners were liable to be quashed.
-
Conclusion of analysis:
Because the only ground given by the Government Analyst for declaring the samples sub-standard was presence of suspended matter (which could be a natural consequence of storage and was not alleged to be foreign), and because the partners were not averred to be in charge, the court found no prima facie case to sustain prosecution of the petitioners.
Holding and Implications
Holding: The petitions were allowed and the rule was made absolute in terms of the prayer clause (a) in all the petitions. In the court's words: "Petitions allowed."
Implications:
- Direct effect on the parties: The prosecutions based on the samples containing visible suspended matter were quashed as against the petitioners (the manufacturing company and, on the additional ground, the partners named as petitioners Nos. 1–10), because the presence of suspended particles alone—without proof they were extraneous or that ingredients were not as represented—did not establish a contravention of the Drugs and Cosmetics Act. The partners could not be held liable under section 34 in the absence of an averment that they were in charge of and responsible for the business.
- Precedential posture: The court's decision rests on and follows existing High Court and Supreme Court authorities cited in the opinion; the judgment applies those precedents to the facts before the court. The opinion does not purport to establish a new principle beyond the application of those precedents to the present facts.
Order: Petitions allowed.
1. These three petitions are filed by the same petitioners-accused for quashing the complaints filed against them under the provisions of the Drugs and Cosmetics Act, 1940 and since they involve, common question of law, the same are being disposed of by this common judgment.
2. The petitioner-company i.e Prem Pharmaceuticals situated at Osan Baug, P.O Palda, Indore (MP) is a manufacturer of drugs. The petitioner-company holds valid drug licence to manufacture for sale and distribution different transfusion fluids and is permitted to manufacture 0.9% Sodium Chloride and 5% Dextrose Injection I.P The said injections are used as intravenous injections to the persons who are Unable to take food and water orally or otherwise are unable to digest food having undergone surgery or otherwise.
3. In the first case the sample of the aforesaid injection was collected from St. George Hospital, in the second case from Civil Hospital, Alibaug and in the third case the sample was collected from various hospitals in Maharashtra. The said samples were declared as not of standard quality as they contained suspended matter visible to an unaided eye. The samples were collected by the Drug Inspectors from various places and sent for analysis. As per the report of the Chemical Analyser the samples of the drug was declared to be not of standard quality as they contained suspended matter visible to an unaided eye. Therefore, the prosecutions were lodged against the petitioners who are the manufacturing company and its 10 partners, including four lady partners. The prosecutions were lodged under section 18(a)(i) read with sections 16, 34 and 27(d) of the Drugs and Cosmetics Act, 1940. These three petitions have been filed for quashing those cases under Article 227 of the Constitution of India and under section 482 of the Code of Criminal Procedure.
4. The learned counsel appearing for the petitioners raised two contentions. Firstly, he contended that the injection or drug in question cannot be said to be of sub-standard quality for visibility of suspended matter as the particles are likely to develop if the drug is not stored in cool place and there is no allegation that foreign material was found in the said drug. Secondly, it was contended that all the partners of the company cannot be prosecuted in view of section 34 of the Act unless they are shown to be incharge of and responsible to the company for the conduct of the business of the company.
5. The drugs which were seized from the different hospitals seem to have been manufactured in August 1986 and their expiry date was of August 1988. The samples were collected in the month of November, 1986 containing particles. It is not in dispute that the company is entitled by its licence to manufacture mixture of Sodium Chloride and Dextrose. Under Rule 76 of the Drugs and Cosmetics Rules, 1945 manufacturing company is bound to appoint a qualified manufacturing chemist approved by the licensing authorities under the Drugs and Cosmetics Act. In para 3 of the petition it is averred that the petitioner-company has been manufacturing all drugs by and under direct control of a qualified chemist engaged by the company in compliance with Rule 76 of the Drugs and Cosmetics Rules. It is further stated in para 4 of the petition that the petitioner-company had employed one Chand Sharma as a Chemist who used to manufacture all the drugs and was responsible to it for proper manufacture of it. It is further stated that a separate qualified Chemist was also appointed by the company for the laboratory of the petitioner-company and was assisted by qualified staff. It is not disputed on behalf of the State that both these Chemist as well as analytical Chemist are qualified and have been approved by the licencing authorities.
6. It is further pointed, out on behalf of the petitioners that the Pharmacopoeia of India under Ministry of Health and Family Welfare appoints Pharmacopoeia Committee which is called “Pharmacopoeia of India”, which has laid down standards which were published in Pharmacopoeia of India (The Indian Pharmacopoeia) Volume-I, Third Edition of 1985. So far as the drug or injection called “Sodium Chloride and Dextrose” is concerned it has laid down under the heading Storage as follows:—
“Storage: Store in single-dose containers in a cool place. On keeping; there may be separation of small solid particles.”
(emphasis supplied)
7. Secondly it has also laid down the rule about labelling under the heading Labelling as follows:—
“Labelling: The Label on the container states (1) the strength as the percentages w/v of Sodium Chloride and of Dextrose, C6HI206; (2) the approximate concentrations, in milli equivalents per litre, of the sodium ions and the chloride ions (when the preparation is intended for intravenous infusion); (3) that the injection should not be used if it contains visible solid particles.”
(emphasis supplied)
8. Thus, the two essential standards or the conditions laid down are that the injection should be stored in a cool place and secondly the injection should not be used if it contains visible solid particles. It, therefore, appears that according to the Pharmacopoeia of India the development of visible solid particles is a natural phenomenon during storage if there is variation in temperature, hence label is required to be put on such drugs with the instructions that the injection should not be used if it contains visible solid particles. If the drug in question contained visible solid particles the hospitals ought not to use those injections on the patients. It is not the case of the prosecution that the drug or injection in question contained any foreign material and the ingredients thereof were not in the prescribed standard proportion. No samples were taken from the manufacturers directly and as per the complaint which is the subject matter of Criminal Writ Petition No. 975/1989 the injections in question were purchased by the St. George Hospital in September, 1986 from the distributors, Delpha Drugs and Pharmaceuticals (India) and the samples in question were taken in the month of November, 1986 from St. George Hospital. The development of particles may be due to non-observance of the standard of storage in a cool place. As stated earlier, it is not the case of the prosecution that these particles were foreign material and not of Sodium Chloride or of Dextrose. In the above circumstances, it cannot be said that there was any contravention of the provisions of Drugs and Cosmetics Act by the petitioner-company.
9. On behalf of the petitioners reliance is placed on the judgments of the Madhya Pradesh High Court and Andhra Pradesh High Court. The first judgment relied on is in the case of these very manufacturers, Prem Pharmaceuticals v. State of M.P reported in 1989 Cri LJ 2028. That was a case where these petitioners were prosecuted under the provisions of Drugs and Cosmetics Act in respect of the drug Sodium Chloride injection on the ground that it was of sub-standard quality and contained extraneous particles. It was held by the Indore Bench of Madhya Pradesh High Court that in the absence of analysis of the particles found in the medicine it cannot be said that they were of extraneous substance and not particulate matter of the contents of the medicine coming into existence during storage subsequent to its manufacture. It was further observed that in view of section 19(2)(b) of the Act, a drug cannot be said to be below standard quality only by reason of the fact that in the process of manufacture, preparation or conveyance some extraneous, substance has unavoidably become intermixed with it, in the absence of allegation of awareness of the intermixture. In these circumstances, the prosecution was quashed in exercise of inherent powers under section 482 of the Code.
10. In my view the ratio of the aforesaid judgment of the Madhya Pradesh High Court is squarely applicable to the present case where the manufacturing company is same and I am in full agreement with the view taken in the aforesaid decision of the Madhya Pradesh High Court. Similar view has been taken by the same Court in respect of another manufacturing company in the case of Impha Labs, Indore v. State of M.P reported in 1991 Drugs Cases 386. This view has also been followed by the Andhra Pradesh High Court in the case of Vetcha Venkata Raju v. State of A.P in Cri. Revision Petition No. 327 of 1991 decided on 24-12-1992.
11. In my view, from the precautions laid down by the pharmacopoeia of India to be taken in respect of Sodium Chloride and Dextrose injection as regards the standard of storage and the condition of labelling, it is quite clear that the development of particles in the said drug is a natural phenomenon and they may be particulate matter of the contents of the medicine coming into existence during the storage subsequent to its manufacture for which the manufacturers cannot be held responsible. It is not the case of the prosecution that the ingredients of the injection were not as prescribed or as represented on the label and the only reason assigned by the Government Analyst for the drug being sub-standard, as per the complaint, is that the sample contained suspended matter, which may be particulate of the medicine. It is therefore, that the Pharmacopoeia of India has issued direction that the label should be put on containers of such injection that they should not be used if they contain visible solid particles. For the aforesaid reason, in my opinion, no prima facie case is made out to prosecute the petitioners.
12. Apart from this, the second contention raised on behalf of the petitioners is that unless the partners i.e petitioner Nos. 1 to 10 are shown to be incharge of and also responsible to the company for the conduct of the business of the company they cannot be prosecuted. In the complaint it is only mentioned that petitioner Nos. 1 to 10 i.e Original Accused Nos. 1 to 10 are partners of the firm of Prem Pharmaceuticals i.e accused No. 11 and, therefore, are responsible for contravention of section 18(a)(i) as per section 34 of the Act. There is not even an averment in the complaint that they are incharge of the business of the company. On this additional ground also, the cases are liable to be quashed as against petitioner Nos. 1 to 10, the partners of the manufacturing company as held by the Supreme Court in the case of State of Haryana v. Brij Lal Mittal reported in 1998 Drugs Cases 11. In view of the above the petitioners are entitled to succeed.
13. In the result, the above petitions are allowed and rule is made absolute in terms of prayer clause (a) in all the petitions.
Petitions allowed.
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