Kumar Kedia Vs. Narcotics Control Bureau & Anr  Insc 1209 (3 December 2007)
& Harjit Singh Bedi
O R D
E R CRIMINAL APPEAL NO. 1659 OF 2007 (@SLP (Crl.) No. 3892 of 2007) HARJIT
SINGH BEDI, J.
Special Leave granted.
appellant Sanjay Kumar Kedia, a highly qualified individual, set up two
companies M/s. Xponse Technologies Limited (XTL) and M/s. Xponse IT Services
Pvt. Ltd. (XIT) on 22.4.2002 and 8.9.2004 respectively which were duly
incorporated under the Indian Companies Act, 1956. On 1.2.2007 officers of the
Narcotics Control Bureau (NCB) conducted a search at the residence and office
premises of the appellant but found nothing incriminating. He was also called
upon to appear before the NCB on a number of occasions pursuant to a notice
issued to him under Section 67 of the Narcotic Drugs and Psychotropic
Substances Act, 1985 (hereinafter referred to as the "Act") and was
ultimately arrested and the bank accounts and premises of the two companies
were also seized or sealed. On 13.3.2007 the appellant filed an application for
bail in the High Court which was dismissed on the ground that a prima facie
case under Sections 24 and 29 of the Act had been made out and that the
investigation was yet not complete. The appellant thereafter moved a second
bail application before the High Court on 16.4.2007 which too was dismissed
with the observations that the enquiry was at a critical stage and that the
department should be afforded sufficient time to conduct its enquiry and to
bring it to its logical conclusion as the alleged offences had widespread
ramifications for society. It appears that a bail application was thereafter
filed by the appellant before the Special Judge which too was rejected on
28.5.2007 with the observations that the investigation was still in progress.
thereby, the appellant preferred yet another application for bail before the
High Court on 4.6.2007 which too was dismissed on 7.6.2007. The present appeal
has been filed against this order.
Notice was issued on the Special Leave Petition on 30.7.2007 by a Division
Bench noticing a contention raised by Mr. Tulsi that service providers such as
the two companies which were intermediaries were protected from prosecution by
Section 79 of the Information Technology Act, 2000. An affidavit in reply has
also been filed on behalf of the respondent NCB and a rejoinder affidavit in
reply thereto by the appellant.
have heard learned counsel for the parties at length.
Tulsi has first and foremost argued that the allegations against the appellant
were that he had used the network facilities provided by his companies for
arranging the supply of banned psychotropic substances on line but there was no
evidence to suggest that the appellant had been involved in dealing with
psychotropic substances or engaged in or controlled any trade whereby such a
substance obtained outside India had been supplied to persons outside India and
as such no case under section 24 of the Act had been made out against the appellant.
Elaborating this argument, he has submitted that the two drugs which the
appellant had allegedly arranged for supply were phentermine and butalbital and
as these drugs were not included in Schedule-I of the Narcotic Drugs or
Psychotropic Substances Rules 1987 in terms of the notification dated 21.2.2003
and were also recognized by the Control Substances Act, a law applicable in the
United States, as having low potential for misuse and it was possible to obtain
these drugs either on written or oral prescription of a doctor, the supply of
these drugs did not fall within the mischief of Section 24. He has further
argued that in the circumstance, the companies were mere network service
providers they were protected under Section 79 of the Technology Act from any
Vikas Singh, the learned Additional Solicitor General for the respondents has
however pointed out that the aforesaid drugs figured in the Schedule appended
to the Act pertaining to the list of psychotropic substances (at Srl. Nos. 70
and 93) and as such it was clear that the two drugs were psychotropic
substances and therefore subject to the Act. It has also been pointed out that
the appellant had been charged for offences under Sections 24 and 29 of the Act
which visualized that a person could be guilty without personally handling a
psychotropic substance and the evidence so far collected showed that the
appellant was in fact a facilitator between buyers and certain pharmacies
either owned or controlled by him or associated with the two companies and that
Section 79 of the Technology Act could not by any stretch of imagination
guarantee immunity from prosecution under the provisions of the Act.
is clear from the Schedule to the Act that the two drugs phentermine and butalbital
are psychotropic substances and therefore fall within the prohibition contained
in Section 8 thereof. The appellant has been charged for offences punishable
under Sections 24 and 29 of the Act.
Sections are re-produced below:
" Punishment for external dealings in narcotic drugs and psychotropic
substances in contravention of section 12.- Whoever engages in or controls any
trade whereby a narcotic drug or a psychotropic substance is obtained outside
India and supplied to any person outside India without the previous
authorization of the Central Government or otherwise than in accordance with
the conditions (if any) of such authorization granted under section 12, shall
be punishable with rigorous imprisonment for a term which shall not be less than
ten years but which may extend to twenty years and shall also be liable to fine
which shall not be less than one lakh rupees but may extend to two lakh rupes:
that the court may, for reasons to be recorded in the judgment, impose a fine
exceeding two lakh rupees".
Punishment for abetment and criminal conspiracy. –
Whoever abets, or is a party to a criminal conspiracy to commit an offence
punishable under this Chapter, shall, whether such offence be or be not
committed in consequence of such abetment or in pursuance of such criminal
conspiracy, and notwithstanding anything contained in section 116 of the Indian
Penal Code (45 of 1860), be punishable with the punishment provided for the
person abets, or is a party to a criminal conspiracy to commit, an offence,
within the meaning of this section, who, in India abets or is a party to the
criminal conspiracy to the commission of any act in a place without and beyond
constitute an offence if committed within India; or
the laws of such place, is an offence relating to narcotic drugs or
psychotropic substances having all the legal conditions required to constitute
it such an offence the same as or analogous to the legal conditions required to
constitute it an offence punishable under this Chapter, if committed within India.
perusal of Section 24 would show that it deals with the engagement or control
of a trade in Narcotic Drugs and Psychotropic Substances controlled and
supplied outside India and Section 29 provides for the
penalty arising out of an abetment or criminal conspiracy to commit an offence
under Chapter IV which includes Section 24. We have accordingly examined the
facts of the case in the light of the argument of Mr. Tulsi that the companies
only provided third party data and information without any knowledge as to the
commission of an offence under the Act. We have gone through the affidavit of Shri
A.P. Siddiqui Deputy Director, NCB and reproduce the conclusions drawn on the
investigation, in his words.
The accused and its associates are not intermediary as defined under section 79
of the said Act as their acts and deeds was not simply restricted to provision
of third party data or information without having knowledge as to commission of
offence under the NDPS Act. The company (Xponse Technologies Ltd. And Xpose IT
Services Pvt. Ltd. Headed by Sanjay Kedia) has designed, developed, hosted the
pharmaceutical websites and was using these websites, huge quantity of psychotropic
substances (Phentermine and Butalbital) have been distributed in USA with the help of his associates. Following are the
online pharmacy websites which are owned by Xponse or Sanjay Kedia.
Brother Pharmacy.com and LessRx.com:
pharmacy.com, online pharmacy was identified as a marketing website (front end)
for pharmaceutical drugs.
has been identified as a "back end" site which was being utilized to
process orders for pharmaceutical drugs through Brotherspharmacy.com.
registrant and administrative contact was listed True Value Pharmacy located at
29B, Rabindra Sarani, Kolkata, India-700073. Telephone No.033-2335-7621 which
is the address of Sanjay Kedia. LessRx.com's IP address is 188.8.131.52. The
following websites were also utilizing this IP address:
EXPRESSPHENTERMINE.com, FAMILYYONLINEPHARMACY.com ONLINEEXPRESSPHARMACY.com,
SHIPPEDLIPITOR.com Domain name Servers for LessRx.com (IP address:
184.108.40.206) were NS.PALCOMONLINE.com and NS2PALCOMLINE.com.
website hosting company was identified as Pacom Web Pvt Ltd, C-56/14,1st Floor,
Institutional Area, Sector 62, Noida-201301. Sanjay Kedia entrusted the hosting
work to Palcom at VSNL, Delhi. These servers have been seized. Voluntary
statement of Shri Ashish Chaudhary, Prop. Of Palcom Web Pvt Ltd.indicates that
He maintained the websites on behal of Xponse.
to the bank records, funds have been wired from Brothers pharmacy, Inc's
Washington Mutual Bank Account #0971709674 to Xponse IT services Pvt Ltd, ABN
AMRO bank account No.1029985, Kolkata.
: A review of the Xponse's website-XPONSEIT.com was conducted and observed and
advertisement for XPONSERX. That XPONSERX was described as a software platform
developed for the purpose of powering online pharmacies. Xponserx was designed
to process internet pharmacy orders by allowing customers to order drugs. Drug
Enforcement Administration (DEA), USA
conducted a "whois" reverse lookup on domain name XPONSERX.COM was at
domaintools.Com and it revealed that XPONSERX.COM was registered to Xponse IT
Services Pvt Ltd, Sanjay kedia, 29B,Rabindra Sarani, 12E,3rd floor, Kolkata, WB
70073. Telephone no.+91- 9830252828 was also provided for Xponse.
websites were featured on the XPONSEIT.COM websites as featured clients. And
these were DELIVEREDMEDICINE.COM AND TRUEVALUEPRESCRIPTIONS.COM. Review
indicated that these two websites were internet pharmacies.
a "whois" reverse look-up on domain name DELIVEREDMEDICINE.COM at
domainstools.com conducted by DEA revealed that it was registered to Xponse
Inc.,2760 Park Ave.,Santa Clara, CA, USA which is the address of Sanjay Kedia.
Truevalueprescriptions.com: Review of this website indicated that this website
was a internet pharmacy. In addition TRUEVALUEPRESCRIPTIONS listed Phentermine
as a drug available for sale. It appeared that orders for drugs could be made
without a prescription from the TRUEVALUE website, it was noted that orders for
drugs could be placed without seeing a doctor. According to the website, a
customer can complete an online questionnaire when placing the order for a drug
in lieu of a physical exam in a physician's office. Toll free telephone number
800-590-5942 was provided on the TRUEVALUE website for customer Service.
conducted a "whois" reverse look-up on domain name
TRUEVALUEPRESCRIPTIONS.COM at domaintools.com and revealed that IP address was
220.127.116.11 and the server that hosts the website was located at Palcom, Delhi which also belongs to Xponse.
the above facts it is clear that the Xponse Technologies Ltd and Xponse IT
Services Pvt Ltd were not acting merely as a network service provider but were
actually running internet pharmacy and dealing with prescription drugs like Phentermine
thus find that the appellant and his associates were not innocent
intermediaries or network service providers as defined under section 79 of the
Technology Act but the said business was only a fagade and camouflage for more
sinister activity. In this situation, Section 79 will not grant immunity to an
accused who has violated the provisions of the Act as this provision gives
immunity from prosecution for an offence only under Technology Act itself.
are therefore of the opinion that in the face of overwhelming inculpatory
evidence it is not possible to give the finding envisaged under Section 37 of
the Act for the grant of bail that there were reasonable grounds for believing
that the appellant was not guilty of the offence alleged, or that he would not
resume his activities should bail be granted.
For the reasons recorded above, we find no merit in this appeal, which is
accordingly dismissed. We however qualify that the observations made above are
in the context of the arguments raised by the learned counsel on the bail
matter which obligated us to deal with them, and will not influence the
proceedings or decision in the trial in any manner.