FOWRENCE LAB JEEDIMETLA HYDERABAD Vs. DRUG INSPECTOR MAHABOOBNAGAR

JUDGEMENT

(1.) This is a petition to quash the proceedings in C.C No.96 of 2002 on the file of the Court of Judicial First Class Magistrate, Mahaboobnagar, against the petitioners, who are A1 and A2 in the said case.

(2.) The case of the prosecution is that the drug 'Flowstrep capsules,' manufactured by the first petitioner, is not of standard quality and so the petitioners and A3 are liable to be punished under Section 27 (b) of the Drugs and Cosmetics Act, 1940 for contravention of Section 18(a)(1) of the Act. The contention of the learned Counsel for the petitioners is that since as per Section 34 of the Act persons in-charge of the affairs of a company only can be made liable for offences under the Act, and since there is no averment in the complaint that 2nd petitioner, who is the proprietrix of the 1st petitioner, is in-charge of the affairs of 1st petitioner, complaint against 2nd petitioner is liable to be quashed. Strong reliance is placed on State of Haryana v. Brij Lal Mittal and others (1998 (2) ALT (Crl.) 92 (SC)), where it was held that the Directors of a company can be made liable under Section 34 of the Act only if it is shown that they are in- charge of and were responsible for the company for the conduct of its business and when the complaint does not disclose any allegations against the Directors that they are responsible for the conduct of the business, they cannot be prosecuted under the provisions of the Act.

(3.) First petitioner admittedly is a proprietary concern, of which the second petitioner is the proprietrix. Proprietary concern is not the something as a company or firm. Proprietor, or proprietrix, of a concern, carries on business in another name for the benefit of himself/herself, and the profits and loss of the business being carried on by him/her would be enjoyed or suffered by him/her without being shared by others, unlike in the case of a film or a company. Company, being a juristic person, is different from its share-holders and has to be run by some human agency. So if a crime is committed by a company it can be punished. In cases where a proprietary concern commits a crime, since proprietor/proprietrix himself/herself would be running the business for his/her benefit and since the concern is not different from proprietor/proprietrix and has no separation or individual existence without the proposal/promise, the proprietor/ proprietrix only has to undergo the punishment for the offence. Therefore, it cannot be said that the second petitioner, who admittedly is the proprietrix of first petitioner concern, has no knowledge about the manufacture or running of the business of the first petitioner concern. What Section 34 of the Act lays down is that if an offence under the Act is committed by a company, not only the company but the persons who were in-charge of the affairs of the company and who were responsible to the company for the conduct of its business at the time of commission of the offence would also be liable for punishment for the said offence, and if a person prosecuted is able to establish that the offence alleged was committed without his knowledge, or after the exercise of due diligence by him to prevent the commission of the same, he would not be liable for punishment. So even assuming that Section 34 of the Act applies to this case since 2nd petitioner admittedly is the proprietrix of 1st petitioner, which manufacture the drug, she should be deemed to be responsible for conduct of business of 1 st petitioner. Second petitioner, cannot at this stage, be heard to say that offence was committed without her knowledge. She can adduce evidence and establish that fact. In case of a proprietary concern there is no necessity or need for an averment being made in the complaint that the offence was committed with the knowledge of its proprietor/proprietrix, because his/her knowledge can be implied, because none else would have interest therein. By adducing evidence the proprietor/proprietrix may establish that the offence was committed without his/her knowledge. In the circumstances of this case, the decision relied on by the learned Counsel for petitioner has no application to the facts of the case.