RAHUL CHAUDHARY Vs. STATE OF UTTARAKHAND

JUDGEMENT

(1.) The present Criminal Revision has been filed impugning the judgment and order dtd. 12/12/2019 rendered by the learned Special Judge (NDPS) Act, Dehradun, in Special Sessions Trial No.26 of 2014, whereby learned trial Court had proceeded to frame charges against the revisionist under Ss. 9-A, 25-A, 26 and 29 of the Narcotic Drugs and Psychotropic Substances Act, 1985, as well as Ss. 420 and 467 of the Indian Penal Code, 1860.

(2.) According to the revisionist, he is one of the Directors of M/s Francis Remedies India Pvt. Ltd., a company duly incorporated in February 2006, along with Late Shri Anuj Singh, Shri Kirpal Singh, and Shri Gaurav Ahlawat. The said company is engaged in the manufacturing and distribution of over 400 pharmaceutical formulations throughout the territory of India. The revisionist was primarily entrusted with the management and supervision of the marketing operations of the company. Further, the revisionist was appointed as an Additional Director in another pharmaceutical concern, namely, M/s Alto Healthcare Pvt. Ltd., where he was similarly charged with the responsibility of overseeing marketing activities. It is stated that M/s Francis Remedies India Pvt. Ltd. is engaged in the production of a wide range of pharmaceutical formulations, including tablets, dry powder injections, injectable solutions, syrups, ointments, and capsules. The company operates under a valid manufacturing license issued by the Drug Controller, Uttarakhand, and possesses an approved list of drugs/products duly authorized by the Drug Controller for the purposes of manufacturing and distribution. According to the revisionist, on 28/12/2011, the NOC, Sub Zone, Dehradun received an intimation from the NOC, Zone, Lucknow, alleging that M/s Francis Remedies India Pvt. Ltd., Roorkee, District Haridwar, had illicitly exported Pseudo Ephedrine to Mexico. The communication directed the Sub Zone office to initiate a thorough inquiry into the alleged contravention. Pursuant thereto, the NOC, Sub Zone, Dehradun undertook a detailed investigation into the matter at its level. During the course of the investigation, it was ascertained that M/s Francis Remedies Pvt. Ltd., in conjunction with several other entities, had engaged in multiple commercial transactions. An examination of the available sale and stock registers disclosed a total of forty-two transactions executed between the said companies. To verify the details, notices were issued under Sec. 67 of the NDPS Act to 11 firms with whom the firm of the revisionist used to deal in order to collect their statements and relevant documents. The director of M/s Francis Remedies Pvt. Ltd. was asked to present all documents relating to business transactions with these 11 firms. The investigation concluded that these 11 companies were involved in selling medicines allegedly containing Pseudo Ephedrine and Ephedrine and all related documents such as bills, purchase orders, and stock registers were found to be skillfully fabricated. In reality, the companies did not receive or sell the Pseudo Ephedrine or Ephedrine products they claimed to have handled. During the course of the investigation, it was discerned that M/s Francis Remedies India Pvt. Ltd. had failed to prepare the RCS Order 1993, Form No. 5, and Form No. 2, in the manner prescribed under the statutory provisions. In the course of the inquiry, a notice was issued to the accused, Shri Gaurav Ahlawat, Director of M/s Francis Remedies India Pvt. Ltd., directing him to appear before the Investigating Officer and furnish a statement disclosing the accurate facts. Notwithstanding the same, the accused evaded appearance and failed to disclose the correct facts to the investigator. Consequent to the investigation, it was concluded that the accused-Gaurav Ahlawat had unlawfully sold 98 kilograms of Pseudoephedrine and 231 kilograms of Ephedrine, both being scheduled controlled substances through clandestine channels, without valid documentation. The act constituted illicit trafficking, resulting in the accrual of unlawful financial gains, thereby amounting to a serious contravention of the provisions of the Narcotic Drugs and Psychotropic Substances Act, 1985. Subsequently, summons were duly issued to the revisionist, who appeared before the Intelligence Officer on 12/12/2013, and was apprehended on the same date. Thereafter, the revisionist preferred an application under Sec. 227 of the Code of Criminal Procedure before the learned Special Judge (NDPS) Act, Dehradun, seeking discharge, which application was, however, rejected by the Court vide order dtd. 12/12/2019. It is against the said order that the present Criminal Revision has been preferred.

(3.) Learned counsel for the applicant submits that M/s Francis Remedies India Pvt. Ltd. is engaged in the production of various pharmaceutical formulations, including tablets, dry powder injections, injectable solutions, syrups, ointments, and capsules; that the company operates under a valid manufacturing license issued by the Drug Controller, Uttarakhand, and holds an approved list of drugs/products authorized by the Drug Controller for manufacturing purposes; that the revisionist was neither in-charge of the day-to-day affairs of the company nor involved in the manufacture, sale, distribution, transportation, or possession of any controlled substance; that the revisionist was only responsible for the marketing of the products and was concerned with the registered office of the company, not with the manufacturing centres or factories; that the revisionist had no role whatsoever in the diversion, if any, of controlled substances and had absolutely no knowledge of such diversion, since he was not involved in the manufacturing activity of the company; that the prosecution has failed to establish that the revisionist was in-charge of the company at the time of the alleged offence or that he was responsible for the conduct of its business, as required under Sec. 34 of the Drugs and Cosmetics Act, 1940 and Sec. 38 of the NDPS Act, 1985. Learned counsel for the revisionist submits that the aforesaid provision ordains that when an offence is committed by a company, every person, who at the time of the offence was in-charge of and responsible for the conduct of the business, shall be deemed guilty along with the company and that if the accused proves that the offence was committed without his knowledge or that he had exercised due diligence to prevent its commission, he cannot be held liable. He submits that the prosecution has not provided any evidence to prove the revisionist's direct involvement or responsibility, which is a fundamental flaw in their case; that the revisionist cannot be held vicariously liable for the alleged offence of the company, inasmuch as, merely being a Director, is not sufficient to establish guilt and there must be a prima facie evidence showing that the person was in-charge of and responsible for the day-to-day operations of the company. In order to buttress his argument, learned counsel for the revisionist placed reliance upon the judgment passed by Co-ordinate Bench of this Court rendered in the case of co-accused Kirpal Singh in Criminal Misc. Application No.198 of 2014, decided on 20/11/2019., whereby entire proceedings of S.S.T. No.26 of 2014, qua the applicant-Kripal Singh, were quashed by this Court and the Court observed that the responsibility for the company's affairs lay with Late Shri Anuj Singh. Learned counsel for the revisionist submits that the aforesaid observation reinforces the revisionist's claim that vicarious liability falls only upon the individual actually managing the company's daily operations. Learned counsel for the revisionist arged that the revisionist should not have been charged under the NDPS Act, inasmuch as, he was not personally involved in the alleged offence, which was instead the responsibility of co-accused, namely, Gaurav Ahlawat. Furthermore, the charges against him are unsupported by evidence, and the prosecution has failed to properly allege or prove his direct involvement in the offence.