State of Karnataka Vs. Pratap Chand
& Ors [1981] INSC 63 (11 March 1981)
REDDY, O. CHINNAPPA (J) REDDY, O. CHINNAPPA
(J) ISLAM, BAHARUL (J)
CITATION: 1981 AIR 872 1981 SCR (3) 200 1981
SCC (2) 335 1981 SCALE (1)529
ACT:
Drugs and Cosmetics Act 1940-Section
18A-Scope of- Information furnished under section 18A alleged to be
fictitious-Report of Inspector not proved-Inspector not examined-Validity of
report.
Section 34-"person in-charge"-Meaning
of-Tests to be applied.
HEADNOTE:
All the three respondents (respondents nos. 1
and 2 partners and respondent No. 3, the firm) were prosecuted for the alleged
contravention of section 18A, Drugs and Cosmetics Act, 1940 in that when asked
by the Drugs Inspector to disclose the name, address and other particulars of
the person from whom a certain drug was acquired by them, they gave a
fictitious address and that, therefore, they were liable to be convicted under
section 18(a) (ii) read with section 18(c) of the Act.
The Metropolitan Magistrate convicted
respondent no. 1 (the partner incharge of the business of the firm) and
respondent no. 3 (the firm) but acquitted respondent no. 2 on the ground that
it was respondent no. 1 who was in-charge of the firm and sentenced them
variously.
The High Court summarily dismissed the
State's appeal against the acquittal of respondent no. 2 and of all the
respondents under section 18A.
Dismissing the appeal,
HELD: Violation of the provisions of section
18A remained unestablished and the defence version remained unrebutted. [202E]
The Assistant Commissioner, Food and Drug Administration Bombay, North Circle,
deposed that the particulars given by the respondents as to the person from
whom the drugs were purported to have been acquired were verified by an
Inspector who in his report stated that the name and address given by the
respondents were fictitious;
but the Inspector has not been examined nor
was his report proved. The defence version, therefore, remained unrebutted.
[202 D-E] The second respondent was not
liable to be convicted merely because he had the right to participate in the
business of the firm under the terms of the partnership deed. The term
"person incharge" referred to in section 34 must mean that the person
should be in overall control of the day to day business of the firm. A person
may be a party to the policy being followed by a firm and yet not be incharge of
its business or a person may be incharge of a business but not in overall
charge or may be incharge or only some part of the business. In short, a
partner of a firm is liable to be convicted for an offence if he was in 201
charge of and was responsible to the firm for the conduct of its business or if
it is proved that the offence was committed with the consent or connivance of
or was attributable to any neglect on the part of the partner concerned.
[204A-B] G.L. Gupta v. D.N. Mehta [1971] 3 S.C.R. 748 applied.
In the instant case respondent no. 2 was not
in overall control of the business. It was respondent no. 1, who was in that
position. [204 C]
CRIMINAL APPELLATE JURISDICTION: Criminal
Appeal No. 91 of 1976.
Appeal by Special Leave from the Judgment and
Order dated 29.7.1975 of the Karnataka High Court in Criminal Appeal No. 364 of
1975.
N. Nettar for the Appellant.
A.K. Sen, S.K. Bisaria and V.P. Gupta for the
Respondents.
The Judgment of the Court was delivered by
BAHARUL ISLAM, J. This appeal by special leave has been preferred by the State
of Karnataka.
2. The three respondents being the partners
of the firm, M/s. Mafatlal and Co., and the firm itself were charged for
offences under Sections 18(c), 18(a) (ii) and 18A of the Drugs and Cosmetics
Act, 1940 read with Section 27(a) (ii), 27(a) (i) and Section 28 of the Drugs
Control Act, (hereinafter, the Act). The defence was a plea of "Not
Guilty". The Chief Metropolitan Magistrate found respondents 1 and 3, that
is, one of the partners and the firm, guilty under Section 18(a) (ii) and
Section 18(c) of the Drugs and Cosmetics Act and sentenced respondent No. 1 to
suffer rigorous imprisonment for one year under section 18(a) (ii) and to pay a
fine of Rs. 500. in default, to suffer simple imprisonment for one month, and
sentenced respondents 1 and 3 to pay a fine of Rs. 1,000 each, under section
18(c), in default, to suffer simple imprisonment for three months. The
respondent No. 2 was acquitted of these two offences as the Magistrate found
that it was respondent no. 1 and not respondent no. 2 who was in charge of the
business of the firm. All the respondents were acquitted of the offence under
section 18A.
3. The appellant preferred an appeal before
the High Court of Karnataka from the order of acquittal of respondent No. 2 of
the 202 offence under Section 18(a) (ii) and 18(c) and of all the respondents
under section 18A of the Act. The High Court summarily dismissed the appeal.
4. Section 18A of the Act requires that every
person who has acquired drug or cosmetic, if required, shall disclose to the
inspector the name, address and other particulars of the persons from whom the
drug or cosmetic was acquired.
The respondents pleaded that they did
disclose to the Drugs Inspector, the name, address and other particulars of the
person from whom the drugs were acquired, by section 18A of the Act and in
support of their defence they rely on Exhibit P. 20, a letter dated 17.7.1971
addressed to the Drugs Controller. The learned Chief Metropolitan Magistrate
has found that Exhibit P.20 contained the name, address and other particulars
of the person from whom the drugs were claimed to have been acquired as M/s.
Mangilal Jayantilal & Company, 65 Princess Street, Second Floor, Bombay,
which name and address, according to the prosecution, were fictitious. P.W.3, the
Assistant Commissioner, Food and Drug Administration, Bombay North Circle, has
deposed that he got it verified by his Inspector who submitted a report that
the above name and address were fictitious. But the Inspector has not been
examined, nor his report proved. Obviously, therefore, the defence version
remained unrebutted and violation of section 18A remained unestablished.
5. Regarding the acquittal of the 2nd
respondent of the offence under section 18 (a) (ii) and section 18(c), the
learned counsel for the State of Karnataka submitted that under section 34 of
the Drugs and Cosmetics Act the firm, as well as its partners were liable to be
convicted. Section 34 may be extracted here:- "S. 34. (1) Where an offence
under this Act has been committed by a company 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 offence and shall be liable to be proceeded against
and punished accordingly:
Provided that nothing contained in the
sub-section shall render any such person liable to any punishment provided in
this Act if he proves that the offence was committed without 203 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 has been committed with the consent or
connivance of or is attributable to any neglect on the part of, any director,
manager, secretary or other officer of the company, such director, manager,
secretary or other officer shall also be deemed to be guilty of that offence
and shall be liable to be proceeded against and punished accordingly.
Explanation.- For the purpose of this
section- (a) "company" means a body corporate, and includes a firm or
other association of individuals; and (b) "director" in relation to a
firm means a partner in the firm." It is seen that the partner of a firm
is also liable to be convicted for an offence committed by the firm if he was
in charge of, and was responsible to, the firm for the conduct of the business
of the firm or if it is proved that the offence was committed with the consent
or connivance of, or was attributable to any neglect on the part of the partner
concerned. In the present case the second respondent was sought to be made liable
on the ground that he alongwith the first respondent was in charge of the
conduct of the business of the firm. Section 23-C of the Foreign Exchange
Regulation Act 1947 which was identically the same as section 34 of the Drugs
and Cosmetics Act came up for interpretation in G. L. Gupta v. D. N. Mehta it
was observed as follows:
"What then does the expression "a
person in charge and responsible for the conduct of the affairs of a company
mean"? It will be noticed that the word 'company' includes a firm or other
association and the same test must apply to a director in-charge and a partner
of a firm incharge of a business. It seems to us that in the context a person
'in charge' must mean that the person should be in over all control of the day
to day 204 business of the company or firm. This inference follows from the
wording of S. 23C(2). It mentions director, who may be a party to the policy
being followed by a company and yet not be in charge of the business of the
company. Further it mentions manager, who usually is in charge of the business
but not in over-all-charge.
Similarly the other officers may be in charge
of only some part of business." The evidence in the present case shows that
it was respondent No. 1 and not respondent No. 2 who was in over all control of
the day to day business of the firm. The second respondent is not liable to be
convicted merely because he had the right to participate in the business of the
firm under the terms of the Partnership Deed.
6. This appeal has no merit and is dismissed.
P.B.R. Appeals dismissed.
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