Date Of Decision: 18.10.2024 vs State Of H.P. & Others

Cr.MMO No.1261 of 2023 Date of Decision: 18.10.2024 _______________________________________________________ Kusum Lata Guleria .......Petitioner

Versus

State of H.P. & others ... Respondents _______________________________________________________ Coram:

Hon'ble Mr. Justice Sandeep Sharma, Judge. Whether approved for reporting? 1 Yes.

For the Petitioner: Mr. Vikrant Thakur, Mr. Vishal Singh Thakur and Mr. Shubham Singh Guleria, Advocates.

For the Respondents: Mr. Rajan Kahol, Mr. Vishal Panwar and Mr. B.C.Verma, Additional Advocate Generals, with Mr. Ravi Chauhan, Deputy Advocate General, for respondent/State.

_______________________________________________________ Sandeep Sharma, Judge(oral):

Through, instant petition filed under Section 482 of the

Code of Criminal Procedure, petitioner herein, besides making prayer

to set aside the summoning order dated 13.09.2017, issued by

learned Chief Judicial Magistrate, Kangra at Dharamshala, in case

No.59 of 2017, has also prayed for quashing of criminal proceedings

on the ground that neither company, which has allegedly committed

offence punishable under Sections 3(d), 4(b) and 4(c) of the Drugs

and Magic Remedies Act, 1954 (for short 'Act') has been arrayed as

an accused nor Court concerned, while issuing process, has bothered

1 Whether the reporters of the local papers may be allowed to see the judgment?

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to apply its mind to the allegations contained in the complaint as well

as material adduced alongwith the same.

2. Precisely, the facts of the case as emerge from the

record are that on 29.08.2017, a complaint came to be filed before

the learned Chief Judicial Magistrate, Dharamshala, District Kangra,

Himachal Pradesh against the Directors of the Company registered

under the name and style of Kangra Herb Private Limited for their

having allegedly violated sections 3(d), 4(b) and 4(c) of the Drugs

and Magic Remedies Act, 1954 punishable under Section 7(a) and 9

of the Act (Annexure P-4), alleging therein that on 15.03.2017,

complainant received a complaint from the Director of Ayurveda

against T.V. Commercial of M/s Kangra Herbs Private Limited

received from Advertising Standards Council of India vide letter dated

08.03.2017. Vide aforesaid complaint authority, as named

hereinabove, alleged that company wrongly claimed in the

advertisement given on the "total T.V" that drugs manufactured by it

successfully cure incurable disease like Liver Cirrhosis and

Parkinson as given under Schedule 'J' of Drugs and Cosmetic Rules

1945 read with Rule 106 of the Drug and Cosmetic Rules and also

3(d), 3(d)(i), 4(b), 4(c) and 7(a) of Drugs & Magic Remedies Act,

1954. After receipt of aforesaid complaint, matter was investigated by

the Drug Inspector of the area concerned, who gave adequate

opportunity to the company/firm to produce relevant record pertaining 3

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to the allegations contained in the complaint. Drug Inspector after

having investigated the matter in detail found that firm comprising of

five Directors as per MOA have contravened sections 3(d), 4(b) and

4(c) of the Act, punishable under Section 7(a) of the said Act and

accordingly, presented the complaint in the Court of learned Chief

Judicial Magistrate, Kangra at Dharamshala, Himachal Pradesh

against five Directors of the company, but without impleading

company/firm as an accused. Court, as detailed hereinabove, having

taken note of allegations contained in the complaint, proceeded to

issue process against the Directors of the company including the

present petitioner by way of order dated 13.09.2017.

3. During the pendency of the complaint before the

competent court of law, petitioner herein filed an application under

Sections 258, 203 and 245(2) of the Code of Criminal Procedure

(Annexure P-8), praying therein to drop the criminal proceedings

against her on the ground that no offence, if any, ever came to be

committed by her under Sections 3(d), 4(b) and 4(c) of the Act.

Precisely, petitioner claimed before the Court below that as per

notification issued on 21st December 2018 vide G.S.R. 1230(E) Rule

170, prohibition came to be imposed qua the advertisement of

Ayurvedic, Sidha or Unani Drugs, whereas prior to issuance of

aforesaid notification, there was no prohibition, if any, for issuing

advertisement of Ayurvedic, Siddha and Unani Drugs. 4

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4. Learned Chief Judicial Magistrate, Kangra at

Dharamshala though found force in the afore submission made on

behalf of the petitioner, but yet refused to allow the application on the

ground that criminal proceedings cannot be dropped while exercising

power under section 258 Cr.P.C in summons case, rather in such like

situation, appropriate remedy, if any, to the petitioner is to file revision

petition under Section 397 Cr.P.C or petition under Section 482

Cr.P.C in the competent Court of law. In the aforesaid background,

petitioner has approached this Court in the instant proceedings,

praying therein to quash and set aside summoning order as well as

complaint.

5. Precisely, the grouse of the petitioner as has been

highlighted in the petition and further canvassed by Mr. Vikrant

Thakur, learned counsel for the petitioner, is that though bare perusal

of the complaint filed by the Drug Inspector, nowhere suggests that

petitioner herein had specific role with regard to issuance of

advertisement, if any, qua Ayurvedic medicines manufactured by firm

namely, Kangra Herbs Private Limited, but even otherwise no criminal

prosecution could have been launched against her being one of the

Director of the company without arraying the company as an accused.

He further submitted that as per the own reply filed by the respondent

to the application filed by the petitioner under Section 258 Cr.P.C,

praying therein to drop the criminal proceedings, clearly reveals that 5

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advertisement of drug in question was not banned upto 31st

December, 2018, rather ban to advertise drug in question came to be

imposed on 21st December, 2018, whereas offence, if any, alleged to

have been committed by the petitioner pertains to 25.09.2016, if it is

so, complaint, if any, filed against the petitioner ought to have been

rejected at its threshold. Lastly, learned counsel for the petitioner

submitted that petitioner herein was a sleeping partner and at no point

of time, played any active role in manufacturing as well as

advertisement of the drug in question. He further submitted that after

October, 2019, petitioner ceased to be Director as she resigned from

the directorship and after that she otherwise could not have been held

liable for the act, if any, of the company. He further stated that since

there is no whisper, if any, with regard to role played by the petitioner

in advertising the drug in question, she could not have been

prosecuted merely on account of her being partner of the company,

which had allegedly issued advertisement, especially when company

never came to be arraigned as an accused. To substantiate his

aforesaid submission, he specifically invited attention this Court to

judgment dated 4th July 2024 passed by this Court in Cr.MMO No.738

of 2021, titled Anil Mediratta and others versus State of Himachal

Pradesh and others, wherein this Court having taken note of number

of judgments passed by Hon'ble Apex Court, held that Director of the

Company cannot be prosecuted without there being impleadment of 6

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the company as an accused, especially when offence alleged to have

been committed is attributed to the company.

6. To the Contrary, Mr. Rajan Kahol, learned Additional

Advocate General, supported the impugned action of filing the

complaint against the petitioner being Director of the Company as well

as issuance of process. He submitted that material collected on

record by the complainant, clearly reveals that petitioner was

responsible for day to day functioning and conduct of the business

alongwith other directors and as such, she rightly came to be booked

under relevant provisions of law. He further submitted that process in

the case at hand was issued in the year, 2017 and thereafter,

petitioner not only subjected herself to the jurisdiction of the

competent court of law, but also kept on contesting the case on merit

and as such, she is otherwise estopped at this stage to lay challenge

to summoning order that too on the ground that no prosecution could

have been launched against her without arraying the company as an

accused. While referring to Sections 3 and 4 of the Act, learned

Additional Advocate General states that afore provision of law clearly

bars issuance of advertisement of Ayurvedic drug and as such,

petitioner has been rightly booked under aforesaid provision of law for

her having allegedly given misleading advertisement on "total T.V" on

25.9.2016. He also submitted that it is also not in dispute that at the

time of issuance of advertisement, petitioner was Director of the 7

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Company. Lastly, learned Additional Advocate General submitted that

petition under Section 482 Cr.P.C is not maintainable, especially

when complaint, sought to be quashed, is already fixed for

consideration on charge. He further submitted that there is

overwhelming evidence adduced on record suggestive of the fact

petitioner has contravened various provisions contained under the Act

and as such, it would be too premature at this stage to conclude that

no case muchless under sections 3(d), 4(b) and 4(c) of the Act is

made out against the petitioner.

7. I have heard learned counsel for the parties and perused

material available on record.

8. Before ascertaining the genuineness and correctness of

the submissions and counter submissions having been made by the

learned counsel for the parties vis-à-vis prayer made in the instant

petition, this Court deems it necessary to discuss/elaborate the scope

and competence of this Court to quash the criminal proceedings while

exercising power under Section 482 of Cr.PC.

9. A three-Judge Bench of the Hon'ble Apex Court in case

titled State of Karnataka v. L. Muniswamy and others, 1977 (2)

SCC 699, held that High Court while exercising power under Section

482 Cr.PC is entitled to quash the proceedings, if it comes to the

conclusion that allowing the proceeding to continue would be an 8

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abuse of the process of the Court or that the ends of justice require

that the proceeding ought to be quashed.

10. Subsequently, in case titled State of Haryana and

others v. Bhajan Lal and others, 1992 Supp (1) SCC 335, the

Hon'ble Apex Court while elaborately discussing the scope and

competence of High Court to quash criminal proceedings under

Section 482 Cr.PC laid down certain principles governing the

jurisdiction of High Court to exercise its power. After passing of

aforesaid judgment, issue with regard to exercise of power under

Section 482 Cr.PC, again came to be considered by the Hon'ble Apex

Court in case bearing Criminal Appeal No.577 of 2017 (arising out of

SLP (CrL.) No. 287 of 2017) titled Vineet Kumar and Ors. v. State of

U.P. and Anr., wherein it has been held that saving of the High

Court's inherent powers, both in civil and criminal matters, is designed

to achieve a salutary public purpose i.e. court proceedings ought not

to be permitted to degenerate into a weapon of harassment or

persecution.

11. The Hon'ble Apex Court in Prashant Bharti v. State

(NCT of Delhi), (2013) 9 SCC 293, relying upon its earlier judgment

titled as Rajiv Thapar and Ors v. Madan Lal Kapoor, (2013) 3 SCC

330, reiterated that High Court has inherent powers under Section

482 Cr.PC., to quash the proceedings against an accused, at the

stage of issuing process, or at the stage of committal, or even at the 9

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stage of framing of charge, but such power must always be used with

caution, care and circumspection. In the aforesaid judgment, the

Hon'ble Apex Court concluded that while exercising its inherent

jurisdiction under Section 482 of the Cr.PC, Court exercising such

power must be fully satisfied that the material produced by the

accused is such, that would lead to the conclusion, that his/their

defence is based on sound, reasonable, and indubitable facts and the

material adduced on record itself overrule the veracity of the

allegations contained in the accusations levelled by the

prosecution/complainant. Besides above, the Hon'ble Apex Court

further held that material relied upon by the accused should be such,

as would persuade a reasonable person to dismiss and condemn the

actual basis of the accusations as false. In such a situation, the

judicial conscience of the High Court would persuade it to exercise its

power under Section 482 of the Cr.P.C. to quash such criminal

proceedings, for that would prevent abuse of process of the court, and

secure the ends of justice. In the aforesaid judgment titled as

Prashant Bharti v. State (NCT of Delhi), (2013) 9 SCC 293, the

Hon'ble Apex Court has held as under:-

"22. The proposition of law, pertaining to quashing of criminal proceedings, initiated against an accused by a High Court under Section 482 of the Code of Criminal Procedure (hereinafter referred to as "the Cr.P.C.") has been dealt with by this Court in Rajiv Thapar & Ors. vs. 10

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Madan Lal Kapoor wherein this Court inter alia held as under: (2013) 3 SCC 330, paras 29-30)

29. The issue being examined in the instant case is the jurisdiction of the High Court under Section 482 of the Cr.P.C., if it chooses to quash the initiation of the prosecution against an accused, at the stage of issuing process, or at the stage of committal, or even at the stage of framing of charges. These are all stages before the commencement of the actual trial. The same parameters would naturally be available for later stages as well. The power vested in the High Court under Section 482 of the Cr.P.C., at the stages referred to hereinabove, would have far reaching consequences, inasmuch as, it would negate the prosecution's/complainant's case without allowing the prosecution/complainant to lead evidence. Such a determination must always be rendered with caution, care and circumspection. To invoke its inherent jurisdiction under Section 482 of the Cr.P.C. the High Court has to be fully satisfied, that the material produced by the accused is such, that would lead to the conclusion, that his/their defence is based on sound, reasonable, and indubitable facts; the material produced is such, as would rule out and displace the assertions contained in the charges levelled against the accused; and the material produced is such, as would clearly reject and overrule the veracity of the allegations contained in the accusations levelled by the prosecution/complainant. It should be sufficient to rule out, reject and discard the accusations levelled by the prosecution/complainant, without the necessity of recording any evidence. For this the material relied upon by the defence should not have been refuted, or alternatively, cannot be justifiably refuted, being material of sterling and impeccable quality. The material relied upon 11

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by the accused should be such, as would persuade a reasonable person to dismiss and condemn the actual basis of the accusations as false. In such a situation, the judicial conscience of the High Court would persuade it to exercise its power under Section 482 of the Cr.P.C. to quash such criminal proceedings, for that would prevent abuse of process of the court, and secure the ends of justice.

30. Based on the factors canvassed in the foregoing paragraphs, we would delineate the following steps to determine the veracity of a prayer for quashing, raised by an accused by invoking the power vested in the High Court under Section 482 of the Cr.P.C.:-

30.1 Step one, whether the material relied upon by the accused is sound, reasonable, and indubitable, i.e., the material is of sterling and impeccable quality? 30.2 Step two, whether the material relied upon by the accused, would rule out the assertions contained in the charges levelled against the accused, i.e., the material is sufficient to reject and overrule the factual assertions contained in the complaint, i.e., the material is such, as would persuade a reasonable person to dismiss and condemn the factual basis of the accusations as false. 30.3 Step three, whether the material relied upon by the accused, has not been refuted by the prosecution/complainant; and/or the material is such, that it cannot be justifiably refuted by the prosecution/complainant?

30.4 Step four, whether proceeding with the trial would result in an abuse of process of the court, and would not serve the ends of justice?

30.5 If the answer to all the steps is in the affirmative, judicial conscience of the High Court should persuade it to quash such criminal - proceedings, in exercise of power vested in it under Section 482 of the Cr.P.C.

Such exercise of power, besides doing justice to the accused, would save precious court time, which would otherwise be wasted in holding such a trial (as well as, proceedings arising therefrom) specially when, it is clear that the same would not conclude in the conviction of the accused."

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12. It is quite apparent from the bare perusal of aforesaid

judgments passed by the Hon'ble Apex Court from time to time that

where a criminal proceeding is manifestly attended with mala fide

and/or where the proceeding is maliciously instituted with an ulterior

motive for wreaking vengeance on the accused and with a view to

spite him/her due to private and personal grudge, High Court while

exercising power under Section 482 Cr.PC can proceed to quash the

proceedings.

13. Recently, the Hon'ble Apex Court in case tilted Anand

Kumar Mohatta and Anr. v. State (Government of NCT of Delhi)

Department of Home and Anr, AIR 2019 SC 210, has held that abuse

of process caused by FIR stands aggravated if the FIR has taken the

form of a charge sheet after investigation and as such, the abuse of

law or miscarriage of justice can be rectified by the court while

exercising power under Section 482 Cr.PC. The relevant paras of the

judgment are as under:

16. Even otherwise it must be remembered that the provision invoked by the accused before the High Court is Section 482 Cr. P.C and that this Court is hearing an appeal from an order under Section 482 of Cr.P.C. Section 482 of Cr.P.C reads as follows: -

"482. Saving of inherent power of the High Court.- Nothing in this Code shall be deemed to limit or affect the inherent powers of the High Court to make such orders as may be necessary to give effect to any order under this Code, or to prevent abuse of the process of any Court or otherwise to secure the ends of justice."

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17. There is nothing in the words of this Section which restricts the exercise of the power of the Court to prevent the abuse of process of court or miscarriage of justice only to the stage of the FIR. It is settled principle of law that the High court can exercise jurisdiction under Section 482 of Cr.P.C even when the discharge application is pending with the trial court ( G. Sagar Suri and Anr. V. State of U.P. and Others, (2000) 2 SCC 636 (para 7), Umesh Kumar v. State of Andhra Pradesh and Anr. (2013) 10 SCC 591 (para 20). Indeed, it would be a travesty to hold that proceedings initiated against a person can be interfered with at the stage of FIR but not if it has advanced, and the allegations have materialized into a charge sheet. On the contrary it could be said that the abuse of process caused by FIR stands aggravated if the FIR has taken the form of a charge sheet after investigation. The power is undoubtedly conferred to prevent abuse of process of power of any court."

14. Recently, the Hon'ble Apex Court in case titled Pramod

Suryabhan Pawar v. The State of Maharashtra and Anr, (2019) 9

SCC 608, has elaborated the scope of exercise of power under

Section 482 Cr.PC, the relevant para whereof reads as under:-

"7. Section 482 is an overriding section which saves the inherent powers of the court to advance the cause of justice. Under Section 482 the inherent jurisdiction of the court can be exercised (i) to give effect to an order under the CrPC; (ii) to prevent the abuse of the process of the court; and (iii) to otherwise secure the ends of justice. The powers of the court under Section 482 are wide and the court is vested with a significant amount of 14

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discretion to decide whether or not to exercise them. The court should be guarded in the use of its extraordinary jurisdiction to quash an FIR or criminal proceeding as it denies the prosecution the opportunity to establish its case through investigation and evidence. These principles have been consistently followed and re-iterated by this Court. In Inder Mohan Goswami v State of Uttaranchal5, this Court observed. "23. This Court in a number of cases has laid down the scope and ambit of courts' powers under Section 482 CrPC. Every High Court has inherent powers to act ex debito justitiae to do real and substantial justice, for the administration of which alone it exists, or to prevent abuse of the process of the court. Inherent power under Section 482 CrPC can be exercised:

(i) to give effect to an order under the Code;

(ii) to prevent abuse of the process of the court, and

(iii) to otherwise secure the ends of justice.

24. Inherent powers under Section 482 CrPC though wide have to be exercised sparingly, carefully and with great caution and only when exercise is justified by the tests specifically laid down in this section itself. Authority of the court exists for the advancement of justice. If any abuse of the process leading to injustice is brought to the notice of the court, then the court would be justified in preventing injustice by invoking inherent powers in absence of specific provisions in the statute."

8. Given the varied nature of cases that come before the High Courts, any strict test as to when the court's extraordinary powers can be exercised is likely to tie the court's hands in the face of future injustices. This Court in State of Haryana v Bhajan Lal6 conducted a detailed study of the situations where the court may exercise its 15

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extraordinary jurisdiction and laid down a list of illustrative examples of where quashing may be appropriate. It is not necessary to discuss all the examples, but a few bear relevance to the present case. The court in Bhajan Lal noted that quashing may be appropriate where, (2007) 12 SCC 1 1992 Supp (1) SCC 335 "102. (1) Where the allegations made in the first information report or the complaint, even if they are taken at their face value and accepted in their entirety do not prima facie constitute any offence or make out a case against the accused.

(2) Where the allegations in the first information report and other materials, if any, accompanying the FIR do not disclose a cognizable offence, justifying an investigation by police officers under Section 156(1) of the Code except under an order of a Magistrate within the purview of Section 155(2).

..........

(7) Where a criminal proceeding is manifestly attended with mala fide and/or where the proceeding is maliciously instituted with an ulterior motive for wreaking vengeance on the accused and with a view to spite him due to private and personal grudge."

In deciding whether to exercise its jurisdiction under Section 482, the Court does not adjudicate upon the veracity of the facts alleged or enter into an appreciation of competing evidence presented. The limited question is whether on the face of the FIR, the allegations constitute a cognizable offence. As this Court noted in Dhruvaram Murlidhar Sonar v State of Maharashtra, 2018 SCC OnLine SC3100 ("Dhruvaram Sonar") :

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"13. It is clear that for quashing proceedings, meticulous analysis of factum of taking cognizance of an offence by the Magistrate is not called for. Appreciation of evidence is also not permissible in exercise of inherent powers. If the allegations set out in the complaint do not constitute the offence of which cognizance has been taken, it is open to the High Court to quash the same in exercise of its inherent powers."

15. Aforesaid law, clearly stipulates that court can exercise

power under S.482 of the Code of Criminal Procedure, to quash

criminal proceedings, in cases, where the allegations made in the first

information report or the complaint, even if they are taken at their face

value and accepted in their entirety do not prima facie constitute any

offence or make out a case against the accused.

16. Now being guided by the aforesaid proposition of law laid

down by the Hon'ble Apex Court, this Court would make an endeavor

to examine and consider the prayer made in the instant petition vis-à-

vis factual matrix of the case.

17. Prayer to quash the summoning order as well as

complaint filed by Drug Inspector under relevant provision of law has

been made on behalf of the petitioner primarily on two grounds; (i) no

criminal proceedings could have been initiated against the petitioner

being one of the Director of the company without there being

impleadment of the company as an accused and ;(ii) since there was

no ban in issuing advertisement of Ayurvedic, Siddha or Unani drugs

prior to issuance of notification 21.12.2018, issued by Ministry of

Ayurveda, Yoga and Naturopathy, Unani, Siddha and Homoeopathy, 17

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Government of India, no criminal prosecution could have been

launched against Directors of the company including the petitioner,

especially when it is not in dispute that alleged advertisement in

violation of rules was given by the company in electronic media on

25.09.2016.

18. Admittedly, in the case at hand, petitioner herein was

Director of the Company, namely Kangra Herbs Private Limited on

25.09.2016, on which date allegedly, an advertisement came to be

issued in electronic media i.e .total T.V., claiming therein that drug

manufactured by the company, named hereinabove, cures life

threatening diseases like Liver Cirrhosis and Parkinson. It is also not

in dispute that notification, thereby banning advertisement of

Ayurvedic, Siddha or Unani Drugs came to be issued by competent

authority i.e. Ministry of Ayurveda, Yoga and Naturopathy, Unani,

Siddha and Homoeopathy, Government of India, on 21.12.2018

meaning thereby, prior to issuance of aforesaid notification, there was

no ban, if any, for issuing advertisement of Ayurvedic Medicine in the

electronic media, if it is so, criminal prosecution launched against the

petitioner being Director of the Company for their allegedly issuing

advertisement dated 25.09.2016 in electronic media i.e. total T.V is

not tenable in the eye of law, especially when precise allegation

contained in the complaint lodged against Directors of the company,

is that they, being directors, had issued advertisement in electronic 18

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media, claiming therein that drug manufactured by the company cures

life threatening diseases. Similarly, this Court is persuaded to agree

with learned counsel for the petitioner that till the time company,

which allegedly contravened the provision of law, as detailed

hereinabove, by issuing advertisement in electronic media is not

arraigned as an accused, no prosecution of Director of the Company

is permissible.

19. Before taking note of the law laid down by this Court as

well as Hon'ble Apex Court with regard to consequences of non-

impleadment of the company as an accused, especially in the cases

where offence alleged to be committed is attributable to the company,

it would be apt to take note of some of the Sections of the Drugs and

Magic Remedies Act,1954 under which, criminal prosecution came to

be launched against the petitioner:-

"Section -2 (Definitions).--

;(b) „drug‟ includes--

(i) a medicine for the internal or external use of human beings or animals;

(ii) ( any substance intended to be used for or in the diagnosis, cure, mitigation, treatment or prevention of disease in human beings or animals;

(iii) any article, other than food, intended to affect or influence in any way the structure or any organic function of the body of human beings or animals;

(iv) any article intended for use as a component of any medicine, substance or article, referred to in sub-clauses (i), (ii) and (iii);

"3. Prohibition of advertisement of certain drugs for treatment of certain diseases and disorders.--Subject to the 19

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provisions of this Act, no person shall take any part in the publication of any advertisement referring to any drug in terms which suggest or are calculated to lead to the use of that drug for--

(a) the procurement of miscarriage in women or prevention of conception in women; or

(b) the maintenance or improvement of the capacity of human beings for sexual pleasure; or

(c) the correction of menstrual disorder in women; or 2 [(d) the diagnosis, cure, mitigation, treatment or prevention of any disease, disorder or condition specified in the Schedule, or any other disease, disorder or condition (by whatsoever name called) which may be specified in the rules made under this Act:

Provided that no such rule shall be made except--

(i) in respect of any disease, disorder or condition which requires timely treatment in consultation with a registered medical practitioner or for which there are normally no accepted remedies; and

(ii) after consultation with the Drugs Technical Advisory Board constituted under the Drugs and Cosmetics Act, 1940 (23 of 1940), and if the Central Government considers necessary, with such other persons having special knowledge or practical experience in respect of Ayurvedic or Unani systems of medicines as that Government deems fit.]

4. Prohibition of misleading advertisements relating to drugs.--Subject to the provisions of this Act, no person shall take any part in the publication of any advertisement relating to a drug if the advertisement contains any matters which--

(a) directly or indirectly gives a false impression regarding the true character of the drug; or

(b) makes a false claim for the drug; or

(c) is otherwise false or misleading in any material particular."

9. Offences by companies.--

(1) If the person contravening any of the provisions of this Act is a company, every person who, at the time the offence was 20

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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 contravention 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 was committed with the consent or connivance of, or is attributable to any neglect on the part of, any director or manager, secretary or other officer of the company, such director, manager, secretary or other officer of the company, shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly.

20. Careful perusal of Section 9 of the aforesaid Act, talks about

contravention any of the provision of the Act by a company, however

to make company liable for its having contravened the provisions

contained in the act, it has been further provided in the aforesaid

provision of law that 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 contravention and shall be liable to

be proceeded against, and punished accordingly. If the aforesaid

provision is read in its entirety, it clearly reveals that every person,

who at the time of commission of offence by a Company, was In- 21

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charge of, and in any manner was responsible for day to day

business of the company shall be deemed to be guilty of the

contravention alongwith company. Sub clause (2) of aforesaid

provision of law provides that notwithstanding anything contained in

sub-section (1) where an offence under this Act is committed by a

company and it is proved that the offence was committed with the

consent or connivance of, or is attributable to any neglect on the part

of, any director or manager, secretary or other officer of the company,

such director, manager, secretary or other officer of the company,

shall also be deemed to be guilty of that offence and shall be liable to

be proceeded against and punished accordingly. Expression used i.e.

"also be deemed to be guilty of that offence", clearly indicates that

before ascertaining the wrong, if any, committed by the director of the

company, guilt, if any, of the company is also required to be

established. Till the time, offence alleged to have been committed by

the company is not proved/established, Director/Manger/Secretary or

other Officer of the company, who had allegedly consented in the

commission of the offence cannot be held guilty.

21. No doubt, prosecution of the company as well as its

Director can go simultaneously, but certainly Director of the company

cannot be criminally prosecuted without there being impleadment of

the company as an accused, especially when offence is alleged to be

committed by the company. In the case at hand, precise allegation as 22

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contained in the complaint, is that company namely, Kangra Herbs

Private Limited issued advertisement on 25.09.2016 in electronic

media i.e. on Total T.V claiming therein that drug manufactured by it

cures life threatening diseases like Liver Cirrhosis and Parkinson.

Advertisement was issued by the company, as such, it was also

required to be arraigned as an accused before initiation of criminal

prosecution, if any, against the Director of the company. As per

Sections 3 and 4 of the Act, there is prohibition on advertisement of

certain drugs for treatment of certain diseases and disorders and said

prohibition also extends to making false claims with respect to the

drugs.

22. As per Rules 106 and 170 of the Drugs and Cosmetic

Rules by way of notification dated 21.12.2018, it is evident that there

was no prohibition on advertisement of Ayurvedic, Siddha and Unani

drugs prior to the publication of aforesaid notification.

23. Section 9 of the Act, as discussed in detailed

hereinabove, does not make all the Directors liable for the offence,

rather criminal liability can be fastened only on those, who at the time

of the commission of the offence were In-charge of and were

responsible for the conduct of business of the company. However, in

the instant case, complaint nowhere discloses role, if any, played by

the petitioner in issuance of advertisement in violation of Rule-3 of the

Act.

23

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24. Reliance in this regard is placed upon the judgment

passed by this Court in Cr.MMO No.738 of 2021, titled Anil Mediratta

and others State of Himachal Pradesh and others, decided on 4th

July, 2024, wherein this Court having taken note of the law laid down

by the Hon'ble Apex Court with regard to consequences of non-

impleadment of the company as an accused, has held as under:-

"39 Till the time, company is arrayed as an accused, offence, if any, committed by company, cannot be ascertained. For the of- fence, if any, committed by a company, person responsible for conduct of business of the company is to be dealt in accordance with law, but admittedly, for doing so, such company is essentially required to be impleaded as accused. However, in the instant case, M/s Generica India Limited has not been arrayed as party till date. Since aforesaid company has not been arrayed as accused, it is not understood how prosecution would prove case against its Di- rectors i.e. petitioners herein.

40. Reliance in this regard is placed upon a judgment ren- dered by Hon'ble Apex Court in Aneeta Hada v. Godfather Travels & Tours (P) Ltd., (2012) 5 SCC 661, wherein, a similar provision enacted in the Negotiable Instruments Act was considered by the Hon'ble Supreme Court and it was held that prosecution of the company is sine qua non for prosecuting the officials of the company. It is not permissible to prosecute the officials without prosecuting the company. It was observed:-

"58. Applying the doctrine of strict construction, we are of the considered opinion that the commission of an offence by the company is an express condition precedent to attract the vicarious liability of others. Thus, the words "as well as the company" appearing in the section make it absolutely unmistakably clear that when the company can be prosecuted, then only the persons mentioned in the other categories could be vicariously liable for the offence subject to the averments in the petition and proof thereof. One cannot be oblivious of the fact that the company is a juristic 24

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person and it has its own respectability. If a finding is recorded against it, it would create a concavity in its reputation. There can be situations when the corporate reputation is affected when a Director is indicted.

59. In view of our aforesaid analysis, we arrive at the irresistible conclusion that for maintaining the prosecution under Section 141 of the Act, arraigning of a company as an accused is imperative. The other categories of offenders can only be brought in the dragnet on the touchstone of vicarious liability as the same has been stipulated in the provision itself. We say so on the basis of the ratio laid down in C.V. Parekh [(1970) 3 SCC 491: 1971 SCC (Cri) 97] which is a three-judge Bench decision. Thus, the view expressed in Sheoratan Agarwal [(1984) 4 SCC 352: 1984 SCC (Cri) 620] does not correctly lay down the law and, accordingly, is hereby overruled. The decision in Anil Hada [(2000) 1 SCC 1: 2001 SCC (Cri) 174] is overruled with the qualifier as stated in para 51. The decision in Modi Distillery [(1987) 3 SCC 684: 1987 SCC (Cri) 632] has to be treated to be restricted to its own facts as has been explained by us hereinabove.

41. A similar view was taken by Hon'ble Apex Court in Dayle De'souza v. Govt. of India, 2021 SCC OnLine SC 1012, wherein it was observed:-

"24. There is yet another difficulty for the prosecution in the present case as the Company has not been made an accused or even summoned to be tried for the offence. The position of law as propounded in State of Madras v. C.V. Parekh (1970) 3 SCC 491, reads:

"3. Learned Counsel for the appellant, however, sought conviction of the two respondents on the basis of Section 10 of the Essential Commodities Act under which, if the person contravening an order made under Section 3 (which covers an order under the Iron and Steel Control Order, 1956), is a company, every person who, at the time the contravention 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 contravention and shall be liable to be proceeded against and punished accordingly. It was urged that the two respondents were in charge of, and were responsible to, the Company for the conduct of the business of the Company and, consequently, they must be held responsible for the sale and for thus contravening the provisions of clause (5) of the Iron and Steel Control Order. This argument cannot be accepted, because it ignores the first condition for the applicability of Section 10 to the effect that the person contravening the order must be a company itself. In the present case, there is no finding either by the Magistrate or by the High Court that the sale in contravention of clause (5) of the Iron and Steel Control Order was made by the 25

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Company. In fact, the Company was not charged with the offence at all. The liability of the persons in charge of the Company only arises when the contravention is by the Company itself. Since, in this case, there is no evidence and no finding that the Company contravened clause (5) of the Iron and Steel Control Order, the two respondents could not be held responsible. The actual contravention was by Kamdar and Vallabhdas Thacker and any contravention by them would not fasten responsibility on the respondents. The acquittal of the respondents is, therefore, fully justified. The appeal fails and is dismissed."

25. However, this proposition was later deviated from in Sheoratan Agarwal v. State of Madhya Pradesh (1984) 4 SCC

352. This case pertained to the pari materia provision under Section 10 of the Essential Commodities Act, 1955. The court held that anyone among the company itself; every person in charge of and responsible to the company for the conduct of the business; or any director, manager, secretary or other officers of the company with whose consent or connivance or because of whose neglect offence had been committed, could be prosecuted alone. However, the person in charge or an officer of the company could be held guilty in that capacity only after it has been established that there has been a contravention by the company as well. However, this will not mean that the person in charge or an officer of the company must be arraigned simultaneously along with the company if he is to be found guilty and punished.

26. Relying upon the reasoning in Sheoratan Agarwal (supra) and limiting the interpretation of C.V. Parekh (supra), this Court in Anil Hada v. Indian Acrylic Ltd. (2000) 1 SCC 1 had held that:

"13. If the offence was committed by a company it can be punished only if the company is prosecuted. But instead of prosecuting the company if a payee opts to prosecute only the persons falling within the second or third category, the payee can succeed in the case only if he succeeds in showing that the offence was actually committed by the company. In such a prosecution the accused can show that the company has not committed the offence, though such a company is not made an accused, and hence the prosecuted accused is not liable to be punished. The provisions do not contain a condition that prosecution of the company is sine qua non for prosecution of the other persons who fall within the second and the third categories mentioned above. No doubt a finding that the offence was committed by the company is sine qua non for convicting those other persons. But if a company is not prosecuted due to any legal snag or otherwise, the other prosecuted persons cannot, on that score alone, escape from the penal liability created through the legal fiction envisaged in Section 141 of the Act."

26 2024:HHC:10204

27. However, subsequent decisions of this Court have emphasised that the provision imposes vicarious liability by way of deeming fiction which presupposes and requires the commission of the offence by the company itself as it is a separate juristic entity. Therefore, unless the company as a principal accused has committed the offence, the persons mentioned in sub-section (1) would not be liable and cannot be prosecuted. Section 141(1) of the Negotiable Instruments Act, extends vicarious criminal liability to the officers of a company by deeming fiction, which arises only when the offence is committed by the company itself and not otherwise. Overruling Sheoratan Agarwal and Anil Hada, in Aneeta Hada v. Godfather Travels and Tours Private Limited (2012)5 SCC 661, a 3- judge bench of this court expounding on the vicarious liability under Section 141 of the Negotiable Instruments Act, has held:

"51. We have already opined that the decision in Sheoratan Agarwal runs counter to the ratio laid down in C.V. Parekh which is by a larger Bench and hence, is a binding precedent. On the aforesaid ratiocination, the decision in Anil Hada has to be treated as not laying down the correct law as far as it states that the Director or any other officer can be prosecuted without impleadment of the company. Needless to emphasise, the matter would stand on a different footing where there is some legal impediment and the doctrine of lex non cogit ad impossibilia gets attracted.

xxxxxxxx

59. In view of our aforesaid analysis, we arrive at the irresistible conclusion that for maintaining the prosecution under Section 141 of the Act, arraigning of a company as an accused is imperative. 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. We say so on the basis of the ratio laid down in C.V. Parekh which is a three-judge Bench decision. Thus, the view expressed in Sheoratan Agarwal does not correctly lay down the law and, accordingly, is hereby overruled. The decision in Anil Hada is overruled with the qualifier as stated in para 51. The decision in Modi Distillery has to be treated to be restricted to its own facts as has been explained by us hereinabove."

27 2024:HHC:10204

42. From the aforesaid exposition of law laid down by Hon'ble Apex Court, it is thus clear that, a company, being a ju- ristic person, cannot be imprisoned, but it can be subjected to a fine, which in itself is a punishment. Every punishment has adverse consequences, and therefore, prosecution of the company is mandatory. The exception would possibly be when the company itself has ceased to exist or cannot be prosecuted due to a statutory bar. However, such exceptions are of no re- levance in the present case. Thus, the present prosecution must fail for this reason as well. Therefore, it is not permissible to prosecute the petitioners without prosecuting the company. Since the company has not been arrayed as an accused, therefore, it is not permissible to prosecute the petitioners, be- ing Directors of the Company, in view of the binding prece- dents of the Hon'ble Supreme Court.

43. Reliance is also placed upon judgment rendered by Hon'ble Apex Court in Lalankumar Singh v. State of Maha- rashtra, 2022 (Supp.) Shim. LC 260, wherein, Hon'ble Apex Court held as under:

"14. It could thus be seen that this Court had held that simply because a person is a director of the company, it does not necessarily mean that he fulfils the twin requirements of Section 34(1) of the said Act so as to make him liable. It has been held that a person cannot be made liable unless, at the material time, he was incharge of and was also responsible to the company for the conduct of its business.

15. In the case of S.M.S. Pharmaceuticals Ltd. vs. Neeta Bhalla and another, this Court was considering the question as to whether it was sufficient to make the person liable for being a director of a company under Section 141 of the negotiable Instruments Act, 1881. This Court considered the definition of the 28

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word "director" as defined in Section 2(13) of the Companies Act, 1956. This Court observed thus:

"8. ....... There is nothing which suggests that simply by being a director in a company, one is supposed to discharge particular functions on behalf of a company. It happens that a person may be a director in a company but he may not know anything about the daytoday functioning of the company. As a director he may be attending meetings of the Board of Directors of the company where usually they decide policy matters and guide the course of business of a company. It may be that a Board of Directors may appoint subcommittees consisting of one or two directors out of the Board of the company who may be made responsible for the daytoday functions of the company. These are 4 (2005) 8 SCC 89 matters which form part of resolutions of the Board of Directors of a company. Nothing is oral. What emerges from this is that the role of a director in a company is a question of fact depending on the peculiar facts in each case. There is no universal rule that a director of a company is in charge of its everyday affairs. We have discussed about the position of a director in a company in order to illustrate the point that there is no magic as such in a particular word, be it director, manager or secretary. It all depends upon the respective roles assigned to the officers in a company. ....."

16. It was held that merely because a person is a director of a company, it is not necessary that he is aware about the daytoday functioning of the company. This Court held that there is no universal rule that a director of a company is in charge of its everyday affairs. It was, therefore, necessary, to aver as to how the director of the company was in charge of daytoday affairs of the company or responsible to the affairs of the company. This Court, however, clarified that the position of a managing director or a joint managing director in a company may be different. This Court further held that these persons, as the designation of their office suggests, are in charge of a company and are responsible for the conduct of the business of the company. To escape liability, they will have to prove that when the offence was committed, they had no knowledge of the offence or that they exercised all due diligence to prevent the commission of the offence.

17. In the case of Pooja Ravinder Devidasani vs. State of Maharashtra and another this Court observed thus:

"17. ...... Every person connected with the Company will not fall into the ambit of the provision. Time and again, it has 29

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been asserted by this Court that only those persons who were in charge of and responsible for the conduct of the business of the Company at the time of commission of an offence will be liable for criminal action. A Director, who was not in charge of and was not responsible for the conduct of the business of the Company at the relevant time, will not be liable for an offence under Section 141 of the NI Act. In National Small Industries Corpn. [National Small Industries Corpn. Ltd. v. Harmeet Singh Paintal, (2010) 3 SCC 330 : (2010) 1 SCC (Civ) 677 : (2010) 2 SCC (Cri) 1113] this Court observed: (SCC p. 336, paras 1314) 5 (2014) 16 SCC 1

"13. Section 141 is a penal provision creating vicarious liability, and which, as per settled law, must be strictly construed. It is therefore, not sufficient to make a bald cursory statement in a complaint that the Director (arrayed as an accused) is in charge of and responsible to the company for the conduct of the business of the company without anything more as to the role of the Director. But the complaint should spell out as to how and in what manner Respondent 1 was in charge of or was responsible to the accused Company for the conduct of its business. This is in consonance with strict interpretation of penal statutes, especially, where such statutes create vicarious liability.

14. A company may have a number of Directors and to make any or all the Directors as accused in a complaint merely on the basis of a statement that they are in charge of and responsible for the conduct of the business of the company without anything more is not a sufficient or adequate fulfilment of the requirements under Section 141."

(emphasis in original)

18. In Girdhari Lal Gupta v. D.H. Mehta [Girdhari Lal Gupta v. D.H. Mehta, (1971) 3 SCC 189 : 1971 SCC (Cri) 279 :AIR 1971 SC 2162], this Court observed that a person "in charge of a business" means that the person should be in overall control of the daytoday business of the Company."

44. There is another aspect of the matter, that once there is no dispute qua the fact, that M/s Generica India Limited had appointed Mr. Hem Raj Thakur as its autho- rized signatory, as is evident from Annexure P-1, (para 8 of complaint) and he was otherwise responsible for day-to- day functions of the company, there was otherwise no oc- 30

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casion, if any, for Drug Inspector concerned to implead pe- titioners, being Directors of company as accused.

45. Once, Mr. Hem Raj Thakur being authorized sig- natory was responsible for conduct of business of firm in question and invoice, vide which drug was sold to M/s Aar Kay Surgicals Sujanpur, contained his signatures, coupled with the fact that no material came to be adduced on record qua the fact that petitioners, being Directors of M/s Generica India Limited were looking after day-to-day affairs of the company, no case, if any, under S.18(a)(i), punish- able under S.27(d) of the Act could be registered against petitioners being Directors of company

46. This court in similar circumstances, where com- pany was not arrayed as an accused, straightway pro- ceeded to quash the proceedings, vide order dated 16.9.2023 passed in CrMMO No. 111 of 2013, titled Ashish Mittal v. State of Himachal Pradesh, relevant pa- ras whereof read as under:

"11. A similar proposition was dealt with by the Apex Court in Aneeta Hada v. Godhfather Travels and Tours Private Limited, (2012) 5 SCC 661, while dealing with Section 141 of the Negotiable Instruments Act quoted above, held that when a person, which is a Company commits an offence, then certain categories of persons incharge as well as the Company would be deemed to be liable for the offences under Section 138 of the Negotiable Instruments Act. Thus, the statutory intendment is absolutely plain. The provision makes the functionaries and the Companies/ firms liable and that is by deeming fiction, which has its own significance.

12. Also on the comparative reading of the above Sections under the different statutes, it can safely be concluded that every person connected with Company shall not fall within the ambit of Section 34 of the Act, which 31

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has a marked similarity with the similar provisions of Negotiable Instruments Act. The conclusion is obvious that only those persons, who are incharge of and responsible for the conduct of the business of the Company at the time of commission of the offence are liable for the criminal action. The explanation added to Section 34 ibid shows that the Company means a body corporate and includes a firm or other association of individuals and Directos in relation to a firm means a Partner.

13. In the instant case, the petitioner is alleged to be a Partner of "M/s. Legen Healthcare". The said firm has not been impleaded as an accused and also there is no allegation in the complaint that the petitioner in the capacity as a Partner was incharge of and responsible for the conduct-business of the said firm. Therefore, in my opinion, summoning of the petitioner for the alleged offence in his capacity as a Partner is wrong and illegal.

14. Thus, the logical conclusion is that the summoning of the petitioner as a Partner of the said firm as an accused is unsustainable, hence, quashed and set aside., but, however, it shall open to the Drug Inspector to implead the Company as an accused by moving an appropriate application before the learned trial Court and in case there is any evidence during the trial that a particular person is incharge of or responsible for the conduct of the business or the Company including the petitioner, he can also be impleaded as an accused. The record of learned trial Court be returned forthwith and shall reach before it on or before 21.10.2013."

47. In the aforesaid judgment, Coordinate Bench of this Court, having taken note of the fact that the firm, of which petitioner in that case was a partner, was not impleaded as an accused, coupled with the fact that there was no allegation against the pe- titioner, being partner or in charge or responsible for conduct of business of said firm, held summoning of petitioner in that case bad in law.

32

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48. Similar is present case. In the instant case, though petition- ers being Directors of company have been arrayed as accused, but the company namely, M/s Generica India Limited has not been arrayed as accused, as such, prosecution of the petition- ers alone, is bound to fail. Most importantly, protection under S.19(3) of Act is also available to petitioners being stock- iest/traders, for the reason that sale of drug in question by man- ufacture to M/s Generica India Limited has not been denied by M/s Legen Healthcare, the admitted manufacturer of drug. It clearly emerges from the complaint that M/s Generica India Limited being duly licenced stockiest, purchased drug from duly licenced manufacturer and sold the same thereafter to M/s Aar Kay Surgicals, vide proper invoice dated 23.12.2008".

25. In the aforesaid judgment, this Court having taken note

of the fact that firm, which allegedly violated the provisions contained

under Drugs and Cosmetic Act, was not impleaded as an accused

and no allegation ever came to be levelled in the complaint against

one of the partner of the company that he was responsible for day to

day business of the said firm, is persuaded to quash the criminal

proceedings.

26. Having scanned the entire material adduced on record,

vis-à-vis prayer made in the instant petition, this court is persuaded to

agree with Mr. Vikrant Thakur, learned counsel appearing for the

petitioner, that this court, while exercising power under S.482 Cr.P.C

may proceed to quash the complaint against the petitioner, because

continuance thereof would be sheer abuse of process of law, since, 33

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for the reasons stated herein above, case of prosecution is bound to

fail against the petitioner in all probabilities.

27. Otherwise also, in case prayer made on behalf of the

petitioner is not accepted she would be subjected to unnecessary

ordeal of facing protracted trial, which otherwise is bound to fail.

28. In view of the detailed discussion made herein above and

law taken into consideration, present petition is allowed. Summoning

order dated 13.09.2017 as well as complaint i.e. case No.59 of 2017,

titled as State of Himachal Pradesh versus Rajesh Guleria and

others under Sections 3 and 4 of the Drugs and Magic Remedies Act,

1954, pending in the Court of learned Chief Judicial Magistrate,

Dharamshala, District Kangra, Himachal Pradesh(Annexure P-4) are

quashed and set-aside qua the petitioner. The petitioner is discharged

henceforth. All pending applications stand disposed of.

(Sandeep Sharma), Judge October 18, 2024 (shankar)