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K.Anil Kumnar Vs Union of India — Corruption | Madras HC (2024)

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Madras HC
2024
K.Anil Kumnar Vs Union of IndiaK.Anil Kumnar v. Union of India

Dismissed

K.Anil Kumnar v. Union of India

Madras HC21 Dec 2024CRL OP/7293/2022

Case brief

AI extract

What is this about?

This Criminal Original Petition sought quashing of proceedings against petitioners, company directors, for manufacturing drugs not of standard quality under the Drugs and Cosmetics Act. The Court dismissed the petition, holding that allegations regarding directors' involvement in daily affairs require trial, and delays in testing predated relevant Government orders.

What did the court decide?

The criminal original petition was dismissed. Connected miscellaneous petitions were closed. Personal appearance of petitioners in trial court was dispensed with.

What the court decided

AI extract

Outcome

The criminal original petition was dismissed. Connected miscellaneous petitions were closed. Personal appearance of petitioners in trial court was dispensed with.

Issue for consideration

Whether the allegations in the complaint sufficiently establish that petitioners as company directors were involved in day-to-day affairs warranting prosecution under Section 482 Cr.P.C. +2 more

Detailed headnote1 paragraphs

The High Court dismissed a petition under Section 482 Cr.P.C. seeking quashment of proceedings against directors of a pharmaceutical company for manufacturing sub-standard drugs. The Court held that mere directorship does not establish liability without specific pleadings showing day-to-day involvement or consent, such matters being for trial. Procedural defenses regarding lab report delays were also held to be for trial.

A compact analysis

This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.

A

CRL O.P. No.7293 of 2022

IN THE HIGH COURT OF JUDICATURE AT MADRAS

Reserved on: 30.10.2024

Pronounced on: 21.12.2024

CORAM:

The Hon`ble Mr.Justice P.DHANABAL

CRL OP.No.7293 of 2022

and

Crl. M.P. Nos.4167, 4168 of 2022 and 12036 of 2024

K. Anil Kumar Karusala S/o. K. Tata Rao

K. Aruna W/o. K. Tata Rao

Vijetha Gorrepati W/o. K. Anil Kumar…Petitioners / Accused 2 to 4 Vs.

Union of India represented by its Drugs Inspector, office of the Deputy Drugs Controller (India), Central Drugs Standard Control Organization, South Zone, 2nd Floor, Shastri Bhawan Annex, Chennai-600 006. .... Respondent / Complainant.

PRAYER :- This Criminal Original Petition has been filed under Section

482 of Criminal Procedure Code to call for the records in respect of

Criminal case in C.C. No.2109 of 2019 on the file of the X Metropolitan

Magistrate Court, Egmore, Chennai pending as against the petitioners / accused 2 to 4 and to quash the same.

For petitioners : Mr. T. Saikrishnan

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For Respondents : Mr. L. Infant Dinesh, Central Government Standing Counsel.

ORDER

This Criminal original petition has been filed to quash the

proceedings in C.C. No.2109 of 2019 on the file of the X Metropolitan Magistrate Court, Egmore, Chennai as against the petitioners / accused 2 to 4.

The case of the prosecution is that the 1st accused is the company namely M/s. Mino Pharm Laboratories Pvt. Ltd., and now functioning in the changed name of M/s. Revat Laboratories Private Limited represented by Managing Director K. Anil Kumar Karusala, Andhra Pradesh. The 2nd accused is the Managing Director, 3rd and 4th accused are the Directors and the 5th accused is the Chief Operating Officer of the said company. On 23.02.2016, the authorities conducted an investigation at Government Medical College Hospital, Kilpauk, Chennai and drawn the samples under section 23 of the Drugs and Cosmetics Act of Erythromycin Stearate Tablets IP 250 mg, Batch

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No.ES-169, Date of Manufacturing - November 2015, Date of expiry -

October 2017, quantity - 400 tablets manufactured by M/s.Minopharm Laboratories Pvt. Ltd., now functioning in the new name of M/s. Revat Laboratories Private Limited. Thereafter on the same day, they sent samples for the chemical analysis through Form-18 and on 02.05.2016, they received a report in Form-13 from the Central Drugs Testing Laboratory, Chennai dated 29.04.2016. As per the report, the drugs was declared as not of standard quality with respect to test for 'dissolution' (Claim 250 mgs, Result - Average Drugs release 3.34 to 38.34 % of claim, Limit: not less than 70%). After receipt of said report, they issued a letter to the Medical Stores Officer and directed to furnish the data from whom they acquired the said product. In turn, the Medical College Hospital replied that they procured medicine from the Tamil Nadu Medical Services Corporation Ltd., K.K. Nagar, Chennai. Thereafter, a letter dated 01.07.2016 was issued to the Drug Warehouse, TNMSC and they informed that the drugs were supplied by the 1st accused company M/s. Minopharm Laboratories Pvt. Ltd. Thereafter on 14.10.2016, a Show Cause Notice was issued to the 1st accused company along with

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original test report in Form-13 and sealed samples were also sent and thereafter, a reminder letters dated 30.11.2016 and 09.02.2017 were also sent. But no reply was received from the 1st accused company. Thereafter, on 12.10.2017 and 13.10.2017, joint investigation was carried out by the complainant at M/s. Minopharm Laboratories Pvt Ltd., and reported that the manufacturer M/s. Minopharm Laboratories has not manufactured as per the Master formula, not carried out the production activities as per the required timing during granulation, drying, moisture content etc., which are the critical steps in the manufacturing of the product. All the critical steps were not verified by the Quality Assurance personnel, no validated compression parameters were followed, no hold time study was carried out by the firm, log book of the equipments were not maintained. The analysed equipments were not calibrated as per the requirements. Hence the 1st accused company grossly violated the good manufacturing practices for the manufacturing of the tablet preparation. Thereafter, prosecution permission was obtained on 27.09.2019. The accused manufactured the drug which is prohibited to manufacture for sale or for distribution, or sell or stock or exhibit or offer for sale or

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distribute as per Section 18(a)(i) of the Act. Therefore, they lodged a complaint.

The learned counsel appearing for the petitioners would contend that the respondent has filed a criminal complaint under Section 200 Cr.P.C. and Section 32 of Drugs and Cosmetics Act against the petitioners and others for violation of Section 18a(i) of Drugs and Cosmetics Act punishable under Section 27(d) of Drugs and Cosmetics Act. The X Metropolitan Magistrate Court, Egmore has taken cognizance and the same is pending in C.C. No.2109 of 2019. M/s. Revat Laboratories Private Limited, previously known as M/s. Minopharm Laboratories Private Limited is a company manufacturing quality drugs in accordance with license procured by it from the competent authorities. The company has manufactured Erythromycin Stearate tablets IP 250 mgs among the many other drugs. On 23.02.2016, the respondent Drugs Inspector visited the premises of Medical Stores, Government Hospital for Women and Children, Egmore, Chennai and drawn the samples of Erythromycin Stearate tablets IP 250

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mg, Batch No.ES-169, date of manufacture - November 2015, date of expiry - October 2017, Quantity - 400 tablets manufactured by M/s. Revat Laboratories Private Limited previously known as M/s. Minopharm Laboratories Pvt Ltd., M/s. Revat Laboratories Private Limited is a company manufactured quality drugs in accordance with license procured by the company from the competent authorities. On 14.10.2016, the respondent issued a Show Cause Notice to the 1st accused company to explain the contravention of the provision of Section 18(a)(i) of the Drugs and Cosmetics Act to the accused, who has manufactured and sold the drugs of not of standard quality. Thereafter, 'stop production order' was issued by the concerned authorities through an order dated 26.02.2016. In the complaint, nowhere stated that these petitioners are involved in day to day affairs of the company and they were involved in the manufacturing process of the company. In the complaint, it is alleged that all the accused are responsible for the manufacturing of not of standard quality drug, all the directors are responsible for the day to day activity, marketing, selling and getting business profit by selling and marketing of not of standard quality drug.

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These petitioners are the Directors of M/s. Minopharm Laboratories Pvt. Ltd., but merely because they are the Directors, that itself is not sufficient to bring them within the clutches of law, if the said directors are not responsible for the day to day affairs of the company. The allegations are vague and bald and therefore, pending proceedings against the petitioners are liable to be quashed.

The learned counsel appearing for the respondent / defacto complainant would submit that the 1st accused company manufactured various drugs declared as not of standard quality since 2016. Hence the company suddenly changed its name as M/s. Revat Laboratories Private Limited with effect from 23.02.2016. The 2nd accused is the Managing Director, 3 and 4 are the Directors and the 5th accused is the Chief Operating Officer of the 1st accused company. On 23.02.2016, the complainant inspected the Kilpauk Medical College Hospital and at that time, they had drawn the samples of Erythromycin Stearate tablets IP 250 mg, Batch No.ES-169, date of manufacture - November 2015, date of expiry - October 2017, Quantity - 400 tablets manufactured by the 1st

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accused company, under section 23 of the Drugs and Cosmetics Act. Thereafter, on the same day, the samples were sent to the Central Drugs Testing Laboratory, Chennai for chemical analysis and received a report dated 02.05.2016 in Form-13 stating that the drugs are declared as 'not of standard quality', as the sample does not conform to IP standards with respect to test for 'Dissolution' (Claim 250 mgs, Result - Average Drugs release 3.34 to 38.34 % of claim, Limit: not less than 70%). Thereafter, a Show Cause Notice dated 14.10.2016 was sent to the 1st accused company to explain the contravention of provision of Section 18(a)(i) of the Drugs and Cosmetics Act. The original test report in Form-13 and a portion sealed sample were also sent along with letter. The reminders were also sent on 30.11.2016 and 09.02.2017 respectively, but no reply was received from the 1st accused company. The 1st accused grossly violated the good manufacturing procedures for the production of tablets preparations. Therefore, they filed a complaint. The participation of the Directors in day to day activities of the company is to be decided by the trial Court after evidence, but not at this stage. The accused 2 to 5 have actively participated in the day to day activities of the 1st accused

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company and hence they are liable to be prosecuted.

This Court heard both sides and perused the materials available

on record.

In this case, there is no dispute that 1st accused company

manufactured the drugs which were seized by the concerned authorities. As per the lab report, the samples drawn were declared as 'not of standard quality'. There is no dispute in this case that a Show Cause Notice was issued to the 1st accused company and the license was also cancelled. The main contention of the petitioners is that in the complaint, nowhere stated about the involvement of the petitioners in day to day affairs of the company and the manufacturing products of the company. In the complaint, there is a mention about the 2nd accused, who is the Managing Director, 3rd and 4th accused, who are the Directors and the 5th accused, who is the Chief Operating Officer. Therefore, all the accused are responsible for the conduct of the business of the company and also stated that all the accused are responsible for the day-to-day

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activities, marketing, selling and getting business profit by selling and marketing of not of standard quality drug. The above said averments are prima facie show the day to day affairs of the company and the contention of the petitioners that whether these petitioners actively participated in the day to day affairs of the company has to be decided through trial and not at this stage.

The ground raised by the petitioner is that in the complaint, the respondent by relying on Section 34 of the Drugs and Cosmetics Act made the Directors of the company vicariously liable is totally silent in respect of the role of the petitioners in the M/s.Minopharm Laboratories Pvt. Ltd., Further, the learned counsel appearing for the petitioners has relied upon the following judgments:

(i) State of Haryana vs. Brijlal Mittal reported in (1998) 5 SCC

343

(ii) Medipol Pharmaceuticals India Pvt. Ltd., and another vs. State of Gujarat.

(iii) Ramprakash Gulati A.N. Gulati and Ors vs. State of

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Maharashtra reported in 2018(1) Bom CR (Cri) 112.

(iv) Rajesh Kumar and another vs. Drug Inspector Kishtwar

reported in 2017 SCC Online Jammu & Kashmir 471.

8. On perusal of the above said judgments, it is clear that simply because a person is a Director, it does not necessarily mean that he fulfills both the requirements and at the material time, he was incharge and was also responsible to the company for the conduct of its business to make him liable. If the director, Manager, Secretar7 or any other officer of the company is shown to be an accused in the complaint, it is obligatory on the part of the complainant to show that the offence is committed with the consent or connivance. Merely because that a person is director is not self sufficient to establish that the offence is committed with his consent or connivance in the absence of basic pleading in that behalf.

In the case on hand, in the complaint, there are pleadings in respect of the day to day affairs of the company, marketing, selling and getting business profit by selling and marketing of not of standard quality

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drug. Moreover, apart from the lab report, other procedural violations were also found at the time of joint inspection and those violations are to be tested through trial, not at this stage. Therefore, it is to be decided before the trial Court and the same cannot be decided under Section 482 of Criminal Procedure Code. Therefore, the said case laws will not be applicable to the present facts of the case.

Yet another contention raised by the learned counsel appearing for the petitioner is that as per the Central Government order dated 02.12.2017, the lab has to conduct the test within 60 days from the date of receipt of the samples. But in this case, the test was not conducted within 60 days from the date of receipt of samples by the lab authorities. Therefore, the complaint has to be quashed.

This Court perused the entire records. In this case, the sample was sent to the lab on 23.02.2016 and the test report was received by the authorities on 22.05.2016. The Central Government Order is dated 02.12.2017. Therefore, the sample drugs involved in this case were sent to the lab for analysis prior to the date of the Central Government order.

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Therefore, the applicability of the Central Government Order to this case is also to be decided after full trial. Further the question that whether the said government order is mandatory or not has to be decided after trial. The lab authorities have to be given opportunity to explain about the delay in testing the samples and without giving opportunity to the lab authorities to explain the delay, it is not appropriate to decide the case at this stage without any evidence. Therefore, the petitioners are at liberty to agitate all the grounds raised in this petition as defence in the trial Court.

In view of the above discussions, this Court is of the opinion that this petition has no merits and deserves to be dismissed.

Accordingly, the criminal original petition is dismissed. No costs. Consequently, the connected miscellaneous petitions are closed.

At the time of pronouncing orders and before signing, the learned counsel appearing for the petitioners requested this Court to

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CRL O.P. No.7293 of 2022

dispense with the personal appearance of the petitioners before the trial Court. Considering the facts and circumstances of the case, the request of the learned counsel appearing for the petitioners is accepted and the personal appearance of the petitioners before the trial Court is dispensed and it is for the learned trial Judge to decide the appearance of the petitioners as and when required for adjudication during the trial proceedings.

21.12.2024

index: Yes/No Internet: Yes/No Speaking/Non Speaking order mjs

To

The X Metropolitan Magistrate Court, Egmore, Chennai. 2. The Public Prosecutor, High Court, Madras.

Union of India represented by its Drugs Inspector, office of the Deputy Drugs Controller (India), Central Drugs Standard Control Organization, South Zone, 2nd Floor, Shastri Bhawan Annex, Chennai-600 006.

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P.DHANABAL, J mjs

CRL O.P. No.7293 of 2022

21.12.2024

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Issues for consideration

3 issues framed by the court

AI extract

1.
Whether the allegations in the complaint sufficiently establish that petitioners as company directors were involved in day-to-day affairs warranting prosecution under Section 482 Cr.P.C.
2.
Whether delay in laboratory testing under a subsequent Central Government Order warrants quashing of the criminal complaint.
3.
Whether matters of consent or connivance and procedural violations should be decided at the trial stage or by the High Court at the threshold.

Cases cited

Colour shows how this judgement treated each authority

AI extract

State of Haryana vs. Brijlal MittalDistinguished¶67
State of Haryana vs. Brijlal Mittal reported in (1998) 5 SCC 343 · Who else cites this
Medipol Pharmaceuticals India Pvt. Ltd.Distinguished¶67
Medipol Pharmaceuticals India Pvt. Ltd., and another vs. State of Gujarat.
Ramprakash GulatiDistinguished¶67
Ramprakash Gulati A.N. Gulati and Ors vs. State of Maharashtra reported in 2018(1) Bom CR (Cri) 112. · Who else cites this
Rajesh KumarDistinguished¶67
Rajesh Kumar and another vs. Drug Inspector Kishtwar reported in 2017 SCC Online Jammu & Kashmir 471. · Who else cites this

Statutes considered

3 provisions across 2 enactments

AI extract

Criminal Procedure Code482
Drugs and Cosmetics Act18(a)(i)27(d)

Parties & counsel

AI extract

petitioner
K. Anil Kumar Karusala
petitioner
K. Aruna
petitioner
Vijetha Gorrepati
respondent
Union of India

Coram

AI extract

P. DHANABAL

Case details

As recorded by the court registry

Court: Madras HC
Decided on: 21 Dec 2024 · December
Registered: 28 Mar 2022
Case no.: CRL OP/7293/2022
CNR: HCMA010434342022
Topic: Corruption
Bench: P. Dhanabal
Disposal: DISMISSED

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Cite this judgement

K.Anil Kumnar v. Union of India, CRL OP/7293/2022 (MAD), decided on 21 December 2024.

The Madras High Court publishes no neutral citation for this judgement — cite it by case number and date of decision.

Cases cited4

State of Haryana vs. Brijlal MittalDistinguished¶67
Medipol Pharmaceuticals India Pvt. Ltd.Distinguished¶67
Ramprakash GulatiDistinguished¶67

View all cases cited

Statutes3

Criminal Procedure Code482
Drugs and Cosmetics Act18(a)(i) · 27(d)

View all statutes

Bench / Coram

P. DHANABAL

Parties & counsel