S. Athilakshmi vs The State Rep. By The Drugs Inspector

REPORTABLE

IN THE SUPREME COURT OF INDIA CRIMINAL APPELLATE JURISDICTION CRIMINAL APPEAL NO. OF 2023 (@ SPECIAL LEAVE PETITION (CRL.) No.9978 OF 2022)

S. ATHILAKSHMI ……Appellant(s)

Versus

THE STATE REP. BY THE DRUGS ..…Respondent(s) INSPECTOR

JUDGMENT

SUDHANSHU DHULIA, J.

Leave granted.

2. The Appellant before this Court is a registered medical

practitioner who is presently working as an Associate Professor

and the Head of Dermatology Department, in the Government

Omandurar Medical College, Chennai. In the past, she has held

the post of Assistant Professor and Civil Surgeon at Royapettah Signature Not Verified Digitally signed by NIRMALA NEGI Date: 2023.03.15 16:43:51 IST

Medical College. It is permissible for her under the law to Reason:

2

practice medicine when she is not performing her official duties.

The Appellant, in her individual and independent capacity was

carrying on her medical practice at a premises which is No. 87,

Red Hills Road (North), Villivakkam, at Chennai. It is here that

she could be consulted and where she meets and examines her

patients.

3. An inspection was made on the above premises by the

Drugs Inspector, Villivakkam Range on 16.03.2016. As per

inspection report, the Drugs Inspector found the following

medicines in the inner room of her premises.

S No. Name of Drug Quantity M.R.P (Rs.)

1. Denidol Lotion 1 No. 198.50 50ml

2. Salico Lotion 30ml 4 Nos. 75/30 ml.

3. A­CN Gel 20 gms 1 No. 98/20gms

4. Tebir Gel 10 gms 9 Nos. 47.90/10gms

5. Soltop­S.6% Lotion (30ml) 4 Nos. 125/30ml

6. Mycotin Cream 15 gms 3 Nos. 115/15gms

7. Mopry 2% Ointment 4 Nos. 75.60/5gms

8. Momtop­S Ointment 1 No. 145/10gms (10gms)

9. ESM Cream (10gms) 4 Nos. 76/10gms 3

10. Nu­Whitified Ointment 7 Nos. 40/20gms (20gms)

11. Momesone Cream (15gms) 3 Nos. 82/15gms

12. Sudif Cream (10gms) 4 Nos. 99/10gms

13. CAP Gel (15gms) 1 No. 156/15gms

14. Kenozole Cream (30gms) 2 Nos. 130/30gms

15. Soltop­S 3% Ointment 1 No. 125/30gms

16. Zylo AC gel 2.5% (20gms) 1 No. 99.74/30gms

17. Ketzi cream (30gms) 1 No. 99.47/30gms

18. Ketoff lotion (60ml) 2 Nos. 150/60ml

The Drugs Inspector also referred to certain sale bills of

medicines which are as follows:

Sr. Bill No. & Date Name of the Drug Qty. Sold No. 1 409 dated Mycotin Cream 1 No. 24/02/2016 Nufoce Power 1 No. Certrezol – L tablets 10 Tablets 2 423 dated 9/03/2016 Certivera Lotion 1 No. ESM Cream 1 No. ILor or Tablets 10 Tablets Cetrezol L Tablets 10 Tablets 3 426 dated Adixied Tablets 2 Strips 11/03/2016 CAP Gel 1 No. AFK Lotion 1 No. CAN Soap 1 No. Zit care Tablets 2 strips 4 424 dated 9/03/2016 P Scab Lotion 1 No. 1 for Tablets 10 Tablets Loxip Tablets 10 Tablets

5 428 dated Cultivera Location 1 No. 11/03/2016 Momesone Cream 1 No. Cetrezol – L tablets 10 Tablets

4. The Drugs Inspector thereafter moved an application for

obtaining sanction from the office of the Director of Drugs 4

Control, Tamil Nadu, Chennai­06 on 22.09.2016 which was given

to him on 23.01.2018. Consequently, the Drugs Inspector filed a

complaint before the Court of X Metropolitan Magistrate, Egmore,

for prosecuting the Appellant under Section 18(c) of the Drugs

and Cosmetics Act, 1940 punishable under Section 27(b)(ii) of the

Act.

5. Aggrieved by these proceedings, the Appellant filed an

application under Section 482 of the Code of Criminal Procedure,

1973 before the High Court of Madras for quashing the criminal

proceedings. Her petition was dismissed by the Ld. Single Judge

on 21.06.2022. Aggrieved by this, the Appellant has filed Special

Leave Petition before this Court against the order of the Single

Judge.

6. Under Section 18 of Drugs and Cosmetics Act 1940, a

prohibition has been imposed as to the manufacture, sale etc. of

certain drugs and cosmetics. Section 18 reads as follows:

18. Prohibition of manufacture and sale of certain drugs and cosmetics. — From such date as may be fixed by the State Government by notification in the Official Gazette in this behalf, no person shall himself or by any other person on his behalf—

(a) …………………………………..

(b) [sell or stock or exhibit or offer for sale,] or distribute any drug [or cosmetic] which has been imported or 5

manufactured in contravention of any of the provisions of this Act or any rule made thereunder;

(c) [manufacture for sale or for distribution, or sell, or stock or exhibit or offer for sale,] or distribute any drug [or cosmetic], except under, and in accordance with the conditions of, a licence issued for such purpose under this Chapter:

Provided that nothing in this section shall apply to the manufacture, subject to prescribed conditions, of small quantities of any drug for the purpose of examination, test or analysis:

Provided further that the [Central Government] may, after consultation with the Board, by notification in the Official Gazette, permit, subject to any conditions specified in the notification, the [manufacture for sale or for distribution, sale, stocking or exhibiting or offering for sale] or distribution of any drug or class of drugs not being of standard quality.

The punishment for contravention of Section 18(c) is provided

under Section 27(b)(ii) which reads as follows:

27. Penalty for manufacture, sale, etc., of drugs in contravention of this Chapter— Whoever, himself or by any other person on his behalf, manufactures for sale or for distribution, or sells, or stocks or exhibits or offers for sale or distributes—

(a) xxxxxxxxxxxxxxxxxx

(b) any drug –

(i) xxxxxxxxxxxxxxxxxx

(ii) without a valid licence as required under clause (c) of section 18, shall be punishable with imprisonment for a term which shall [not be less than three years but which may extend to five years and with fine which shall not be less than one lakh rupees or three times the value of the drugs confiscated, whichever is more]:

Provided that the Court may, for any adequate and special reasons to be recorded in the judgment, impose a sentence of imprisonment for a term of [less than three years and of fine of less than one lakh rupees];

6 7. As we can see the prohibition under Section 18(c) is on the

manufacturing, distribution, stocking or exhibition of medicines

for the purposes of sale. The charge in the present case is that

the Appellant had “stocked” medicines for “sale”. The entire

emphasis is on “sale” of these medicines. This is evident from the

sanction being sought by the Drug Inspector from the office of the

Director, Drugs Control, Tamil Nadu wherein as per the sanction

letter dated 23.01.2018, he had said that the Appellant be

prosecuted for the contravention of:

“Section 18(c) of Drugs and Cosmetics Act 1940 for having ∙stocked drugs for sale and sold the drugs without having a valid drug license, which is punishable under section 27(b)(ii) of the said Act”.

Thus, as per the prosecution she had stocked the drugs and sold

them. What the Director of Drugs Control and the High Court lost

sight of is the fact that the Appellant is a registered medical

practitioner, her area of specialization being dermatology. She

has an M.D. (DVL) degree in this specialisation. It is not a case

that she had opened a shop in her premises from where she was

selling drugs and cosmetics across the counter! It is possible that

she was distributing these drugs to her patients for emergency

uses and thus she is protected by the Act itself. Schedule (K) 7

which is a part of the Drugs and Cosmetics Rules, 1945 provides

an exemption which we shall examine hereafter.

8. Under Section 33 of the Act, the Central Government can

make rules which have to be laid before the Parliament for its

ratification under Section 38 of the Act. These rules have been

framed which is known as Drugs and Cosmetics Rules, 1940.

Rule 123 of the rules exempts certain drugs from the provisions

of Chapter IV of the Act (which includes both Section 18 and

Section 27 referred above, which are penal provisions), under

certain conditions Rule 123 reads as under:

“123. The drugs specified in Schedule K shall be exempted from the provisions of Chapter IV of the Act and the rules made thereunder to the extent and subject to the conditions specified in that Schedule.”

Entry No. 5 under Schedule (K) are the drugs which are supplied

by a registered medical practitioner with which we are presently

concerned. The relevant provision of Schedule (K) reads as

under:­

Schedule K (See Rule 123)

Class of Drugs Extent and Conditions of Exemptions

1.xxxxxxxxxxxx xxxxxxxxxxxxxxxxx 8

2. xxxxxxxxxxx xxxxxxxxxxxxxxxxx

3. xxxxxxxxxxx xxxxxxxxxxxxxxxxx

4. xxxxxxxxxxx xxxxxxxxxxxxxxxxx

5. Drugs supplied by a registered All the provisions of Chapter medical practitioner to his own IV of the Act and the Rules patient or any drug specified in made thereunder, subject to Schedule C supplied by a registered the following conditions:

medical practitioner at the request of [1. The drugs shall be another such practitioner if it is purchased only from a dealer specially prepared with reference to or a manufacturer licensed the condition and for the use of an under these rules, and individual patient provided the records of such purchases registered medical practitioner is not showing the names and

(a) keeping an open shop or (b) quantities of such drugs, selling across the counter or (c) together with their batch engaged in the importation, numbers and names and manufacture, distribution or sale of addresses of the drugs in India to a degree which manufacturers shall be render him liable to the provisions of maintained. Such records Chapter IV of the Act and the rules shall be open to inspection by thereunder. an Inspector appointed under the Act, who may, if necessary, make enquiries about purchases of the drugs and may also take samples for test.]

2. In the case of medicine containing a substance specified in [Schedule G, H or X] of the following additional conditions shall be complied with:­

a. the medicine shall be labelled with the name and address of the registered medical practitioner by whom it is supplied;

b. if the medicine is for external application, it shall be labelled with the words [***] ― “For external use only” or, if it is for internal use with the dose;

c. the name of the medicine or 9

ingredients of the preparation and the quantities thereof, the dose prescribed, the name of the patient & the date of supply and the name of the person who gave the prescription shall be entered at the time of supply in register to be maintained for the purpose;

d. the entry in the register shall be given a number and that number shall be entered on the label of the container;

e. the register and the prescription, if any, on which the medicines are issued shall be preserved for not less than two years from the date of the last entry in the register or the date of the prescription, as the case may be.

3. The drug will be stored under proper storage conditions as directed on the label.]

4. No drug shall be supplied or dispensed after the date of expiration of potency recorded on its container, label or wrapper or in violation of any statement or direction recorded on such container, label or wrapper.]

(emphasis supplied)

It is not the case of the prosecution that the Appellant was selling

drugs from an open shop across the counter. She is a senior 10

doctor who is engaged as an Associate Professor and Head of

Department, Dermatology in a Government Medical College, and

being a medical practitioner, under certain conditions, she is also

protected under the law which has been referred to above.

9. Considering the small quantity of medicines, most of which

are in the category of lotions and ointments, it cannot be said by

any stretch of imagination that such medicines could be ‘stocked’

for sale and would come in the category of stocking of medicines

for the purpose of sale. When small quantity of medicine has

been found in the premises of a registered medical practitioner, it

would not amount to selling their medicines across the counter

in an open shop. In fact, this is not even the allegation against

the Appellant. Undoubtedly, the provisions of Section 18 and 27

are relevant provisions under the law, which have a social

purpose, which is to protect ordinary citizens from being

exploited inter alia, by unethical medical practitioners, and for

this reason the punishment under Section 27 can extend up to 5

years under the law, and has a minimum punishment of 3 years.

But given the facts and circumstances of the case and

considering that the Appellant is a registered medical 11

practitioner, along with the fact that the quantity of medicines

which have been seized is extremely small, a quantity which can

be easily found in the house or a consultation room of a doctor,

in our considered view no offence is made out in the present

case. In fact, an exception has been created under Schedule ‘K’

read with Rule 123 to the rules, the appellant ought to have been

given the benefit of these provisions and such a registered

medical practitioner should not have been allowed to face a trial

where in all likelihood the prosecution would have failed to prove

its case beyond reasonable doubt. The learned single judge while

dismissing the application under Section 482 Cr.P.C of the

appellant has relied upon a decision of this Court:

"9. It is too late in the day to seek reference to any authority for the proposition that while invoking the power under Section 482 Cr.P.C. for quashing a complaint or a charge, the Court should not embark upon an enquiry into the validity of the evidence available. All that the Court should see is as to whether there are allegations in the complaint which form the basis for the ingredients that constitute certain offences complained of The Court may also be entitled to see {i) whether the preconditions requisite for taking cognizance have been complied with or not; and {ii) whether the allegations contained in the complaint, even if accepted in entirety, would not constitute the offence alleged …….

13. A look at the complaint filed by the appellant would show that the appellant had incorporated the ingredients necessary for prosecuting the respondents for the offences alleged. The question whether the appellant will be able to prove the 12

allegations in a manner known to law would arise only at a later stage ... ... ........ ..... "

10. But what the High Court failed to consider, however, is the

provisions contained in Rule 123 read with Schedule ‘K’ to the

1945 Rules and when admittedly it is not the case of the

prosecution that the drugs which were seized were being sold in

an open shop across the counter. Since this was not being done

as visualized above, and an exception is created under the law in

favour of the medical practitioner where the drugs given in

Schedule ‘K’ would be exempted from the purview of Chapter 4 of

the Act, we are of the considered view that prosecution against

the Appellant is unwarranted.

11. The backbone of the Respondent’s case is the sales bills

with the list of 18 drugs seized from the premises of the

Appellant. However, the details of the sales bills and seized drugs

in the Show Cause Notice issued by the Respondent it is seen

that the sales bills are not even for the medicines which have

been seized by the Respondent.

12. On the contrary, upon being served with the Show Cause

Notice, the Appellant was directed, under Section 18­A, to reveal 13

the name and addresses of persons from whom she obtained the

drugs which were seized. In compliance with the same, Appellant

has produced multiple invoices from pharmaceutical shops to

show her bonafides. Further, upon inspection of the drugs by the

Drugs Testing Laboratory, Tamil Nadu they returned a finding

that the drugs were of ‘standard quality’ which indicates it is not

a case where the Appellant was operating a shop to sell spurious

medicines over the counter.

13. Another factor which must be considered is that the search

was carried out on 16.03.2016 and sanction for prosecution was

sought on 22.09.2016 and the sanction ultimately was given on

23.01.2018. There is no explanation which has been given for

this delay in getting the approval. In the recently decided case of

Hasmukhlal D. Vohra and Anr. v. State of Tamil Nadu 1,

criminal proceedings were quashed against a Petitioner on the

grounds that the substance in question was not a drug under

Indian Pharmacopoeia. One of the considerations was the delay

in the proceedings against which the following observations were

made,

1 2022 SCC OnLine SC 1732 14

‘25. In the present case, the Respondent has provided no explanation for the extraordinary delay of more than four years between the initial site inspection, the show cause notice, and the complaint. In fact, the absence of such an explanation only prompts the Court to infer some sinister motive behind initiating the criminal proceedings.

26. While inordinate delay in itself may not be ground for quashing of a criminal complaint, in such cases, unexplained inordinate delay of such length must be taken into consideration as a very crucial factor as grounds for quashing a criminal complaint.

27. While this court does not expect a full­ blown investigation at the stage of a criminal complaint, however, in such cases where the accused has been subjected to the anxiety of a potential initiation of criminal proceedings for such a length of time, it is only reasonable for the court to expect bare­minimum evidence from the Investigating Authorities.’

14. The sanction for prosecution given in the present case

appears, prima facie, to suffer from the vice of non­application of

mind. There is no reference to any of the documents, evidence or

the submissions submitted by either of the parties, no reasons

assigned or even an explanation pertaining to the delay which

indicates it has been passed in a mechani cal manner. This 15

Court in the case of Mansukhlal Vithaldas Chauhan v. State

of Gujarat2, highlighted the importance of a prior sanction

granted under Section 197 of the Code of Criminal Procedure,

1973 while quashing the criminal proceedings instituted against

a Divisional Accountant engaged with the Medium Irrigation

Project Division, Gujarat. It was observed as follows:

‘19. Since the validity of “sanction” depends on the applicability of mind by the sanctioning authority to the facts of the case as also the material and evidence collected during investigation, it necessarily follows that the sanctioning authority has to apply its own independent mind for the generation of genuine satisfaction whether prosecution has to be sanctioned or not.’

15. The possession of the drugs is not disputed in this case by

either side. However, this Court in the case of Mohd. Shabir v.

State of Maharashtra3 while allowing an appeal in part and

directing the release of an Appellant who had been prosecuted

under the provision 18(c) of the 1940 Act, this Court observed

that possession simpliciter would not itself be an offence but the

prosecution had to prove the essential ingredient under Section

2 (1997) 7 SCC 622 3 (1979) 1 SCC 568 16

27 which was that even a ‘stock’ of the medicine was for sale. It

was observed as follows:

‘4. …We, therefore, hold that before a person can be liable for prosecution or conviction under Section 27(a)(i)(ii) read with Section 18(c) of the Act, it must be proved by the prosecution affirmatively that he was manufacturing the drugs for sale or was selling the same or had stocked them or exhibited the articles for sale. The possession simpliciter of the articles does not appear to be punishable under any of the provisions of the Act. If, therefore, the essential ingredients of Section 27 are not satisfied the plea of guilty cannot lead the Court to convict the appellant.’

16. The sanctioning authority had not examined at all whether

a practising doctor could be prosecuted under the facts of the

case, considering the small quantity of the drugs and the

exception created in favour of medical practitioner under Rule

123, read with the Schedule “K”. All these factors ought to have

been considered by the sanctioning authority. Under these

circumstances we allow this appeal and set aside the order of

the learned Single Judge of the Madras High Court and quash 17

the criminal proceedings in Criminal Case No. 7315 of 2018 on

the file of X Metropolitan Magistrate, Egmore, Chennai.

…....…...………….………………. J.

(Krishna Murari)

…………….....……………………. J.

(Sudhanshu Dhulia)

New Delhi, March 15, 2023.