LEGAL ISSUE: Whether a registered medical practitioner stocking small quantities of medicines for their patients amounts to “stocking for sale” under the Drugs and Cosmetics Act, 1940.
CASE TYPE: Criminal Law
Case Name: S. Athilakshmi vs. The State Rep. by the Drugs Inspector
Judgment Date: March 15, 2023
Date of the Judgment: March 15, 2023
Citation: 2023 INSC 229
Judges: Krishna Murari, J., Sudhanshu Dhulia, J.
Can a doctor be prosecuted for stocking medicines in their clinic? The Supreme Court of India recently addressed this question, clarifying the circumstances under which a registered medical practitioner can possess medicines without violating the Drugs and Cosmetics Act, 1940. The Court examined whether a doctor stocking small quantities of medicines for their patients constitutes “stocking for sale,” an offense under the Act. The judgment was delivered by a two-judge bench comprising Justice Krishna Murari and Justice Sudhanshu Dhulia, with the majority opinion authored by Justice Sudhanshu Dhulia.
Case Background
The appellant, Dr. S. Athilakshmi, is a registered medical practitioner and Head of the Dermatology Department at a Government Medical College in Chennai. In addition to her official duties, she also runs a private practice at her clinic. On March 16, 2016, a Drugs Inspector inspected her clinic and found several medicines. The inspector also found some sale bills for medicines.
The Drugs Inspector then sought sanction to prosecute the Appellant for stocking and selling drugs without a valid license under Section 18(c) of the Drugs and Cosmetics Act, 1940, punishable under Section 27(b)(ii) of the Act. The Director of Drugs Control, Tamil Nadu, granted the sanction on January 23, 2018. Consequently, a complaint was filed against the Appellant in the Court of X Metropolitan Magistrate, Egmore.
Aggrieved by these proceedings, the Appellant filed a petition in the High Court of Madras under Section 482 of the Code of Criminal Procedure, 1973, seeking to quash the criminal proceedings. The High Court dismissed her petition on June 21, 2022, leading to the present appeal before the Supreme Court.
Timeline:
| Date | Event |
|---|---|
| March 16, 2016 | Drugs Inspector inspected the Appellant’s clinic and seized medicines. |
| September 22, 2016 | Drugs Inspector sought sanction for prosecution. |
| January 23, 2018 | Director of Drugs Control, Tamil Nadu, granted sanction for prosecution. |
| June 21, 2022 | High Court of Madras dismissed the Appellant’s petition to quash criminal proceedings. |
| March 15, 2023 | Supreme Court of India delivered its judgment. |
Legal Framework
The case revolves around the interpretation of Section 18(c) of the Drugs and Cosmetics Act, 1940, which prohibits the manufacture, sale, or distribution of drugs without a license. Specifically, the section states:
“18. Prohibition of manufacture and sale of certain drugs and cosmetics. — From such date as may be fixed by the State Government by notification in the Official Gazette in this behalf, no person shall himself or by any other person on his behalf—
(a) …………………………………..
(b) [sell or stock or exhibit or offer for sale,] or distribute any drug [or cosmetic] which has been imported or manufactured in contravention of any of the provisions of this Act or any rule made thereunder;
(c) [manufacture for sale or for distribution, or sell, or stock or exhibit or offer for sale,] or distribute any drug [or cosmetic], except under, and in accordance with the conditions of, a licence issued for such purpose under this Chapter:”
The punishment for violating Section 18(c) is outlined in Section 27(b)(ii) of the same Act:
“27. Penalty for manufacture, sale, etc., of drugs in contravention of this Chapter— Whoever, himself or by any other person on his behalf, manufactures for sale or for distribution, or sells, or stocks or exhibits or offers for sale or distributes—
(a) xxxxxxxxxxxxxxxxxx
(b) any drug –
(i) xxxxxxxxxxxxxxxxxx
(ii) without a valid licence as required under clause (c) of section 18, shall be punishable with imprisonment for a term which shall [not be less than three years but which may extend to five years and with fine which shall not be less than one lakh rupees or three times the value of the drugs confiscated, whichever is more]:”
However, Rule 123 of the Drugs and Cosmetics Rules, 1945, provides an exemption for certain drugs specified in Schedule K. This rule states:
“123. The drugs specified in Schedule K shall be exempted from the provisions of Chapter IV of the Act and the rules made thereunder to the extent and subject to the conditions specified in that Schedule.”
Entry No. 5 of Schedule K exempts drugs supplied by a registered medical practitioner to their own patients under certain conditions.
The relevant provision of Schedule K reads as under:
“5. Drugs supplied by a registered medical practitioner to his own patient or any drug specified in Schedule C supplied by a registered medical practitioner at the request of another such practitioner if it is specially prepared with reference to the condition and for the use of an individual patient provided the registered medical practitioner is not (a) keeping an open shop or (b) selling across the counter or (c) engaged in the importation, manufacture, distribution or sale of drugs in India to a degree which render him liable to the provisions of Chapter IV of the Act and the rules thereunder.”
Arguments
The core argument of the prosecution was that the Appellant had stocked and sold medicines without a valid drug license, violating Section 18(c) of the Drugs and Cosmetics Act, 1940. The prosecution contended that the seized medicines and the sale bills were evidence of the Appellant’s illegal activity.
The Appellant argued that she was a registered medical practitioner and was only distributing medicines to her patients for emergency uses, which is protected under Schedule K of the Drugs and Cosmetics Rules, 1945. She emphasized that she was not running an open shop or selling medicines across the counter. She also submitted invoices to show that she had purchased the medicines from licensed pharmaceutical shops.
The Appellant further argued that the seized medicines were of standard quality, as confirmed by the Drugs Testing Laboratory, Tamil Nadu, and that the delay in granting sanction for prosecution was unexplained and unreasonable.
The innovativeness of the Appellant’s argument lies in highlighting that the provisions of the Act should not apply to medical practitioners who stock medicines for their patients, as they are protected under Schedule K of the Rules.
| Main Submissions | Sub-Submissions | Party |
|---|---|---|
| Violation of Section 18(c) of the Drugs and Cosmetics Act, 1940 | Stocked and sold medicines without a valid drug license | Respondent |
| Seized medicines and sale bills as evidence of illegal activity | Respondent | |
| Exemption under Schedule K of the Drugs and Cosmetics Rules, 1945 | Registered medical practitioner distributing medicines to patients for emergency uses | Appellant |
| Not running an open shop or selling medicines across the counter | Appellant | |
| Medicines purchased from licensed pharmaceutical shops | Appellant | |
| Medicines were of standard quality | Appellant | |
| Delay in granting sanction for prosecution | Unexplained and unreasonable delay | Appellant |
Issues Framed by the Supreme Court
The Supreme Court framed the following issues for consideration:
- Whether the Appellant, a registered medical practitioner, could be prosecuted for stocking medicines found in her clinic, considering the exception provided under Schedule K of the Drugs and Cosmetics Rules, 1945?
- Whether the seized medicines could be considered as “stocked for sale” as contemplated under Section 18(c) of the Drugs and Cosmetics Act, 1940?
- Whether the delay in granting sanction for prosecution was a valid ground for quashing the criminal proceedings?
Treatment of the Issue by the Court
The following table demonstrates as to how the Court decided the issues
| Issue | Court’s Decision | Brief Reasons |
|---|---|---|
| Whether a registered medical practitioner could be prosecuted for stocking medicines found in her clinic? | No | The Court held that a registered medical practitioner is protected under Schedule K of the Drugs and Cosmetics Rules, 1945, if they are not running an open shop or selling across the counter. The small quantity of medicines found in the Appellant’s clinic did not amount to stocking for sale. |
| Whether the seized medicines could be considered as “stocked for sale” under Section 18(c) of the Act? | No | The Court stated that the prosecution failed to prove that the medicines were stocked for the purpose of sale. The Appellant was a practicing doctor, and the medicines were likely for the use of her patients. |
| Whether the delay in granting sanction for prosecution was a valid ground for quashing the criminal proceedings? | Yes | The Court considered the unexplained delay in granting sanction as a crucial factor, indicating a possible sinister motive behind the prosecution. |
Authorities
The Supreme Court considered the following authorities:
| Authority | Court | How it was used |
|---|---|---|
| Section 18(c) of the Drugs and Cosmetics Act, 1940 | Statute | Explained the prohibition on stocking drugs for sale without a license. |
| Section 27(b)(ii) of the Drugs and Cosmetics Act, 1940 | Statute | Explained the punishment for contravention of Section 18(c). |
| Rule 123 of the Drugs and Cosmetics Rules, 1945 | Rules | Explained the exemption for drugs specified in Schedule K. |
| Schedule K of the Drugs and Cosmetics Rules, 1945 | Rules | Explained the conditions under which a registered medical practitioner is exempt from the provisions of Chapter IV of the Act. |
| Hasmukhlal D. Vohra and Anr. v. State of Tamil Nadu, 2022 SCC OnLine SC 1732 | Supreme Court of India | Cited for the principle that unexplained delay in proceedings can be a ground for quashing criminal complaints. |
| Mansukhlal Vithaldas Chauhan v. State of Gujarat, (1997) 7 SCC 622 | Supreme Court of India | Cited for the importance of the sanctioning authority applying its mind to the facts and evidence before granting sanction. |
| Mohd. Shabir v. State of Maharashtra, (1979) 1 SCC 568 | Supreme Court of India | Cited for the principle that possession of drugs alone is not an offense, and the prosecution must prove that the drugs were stocked for sale. |
Judgment
The Supreme Court allowed the appeal, setting aside the order of the High Court and quashing the criminal proceedings against the Appellant. The Court held that the Appellant, being a registered medical practitioner, was protected under the exception provided in Schedule K of the Drugs and Cosmetics Rules, 1945. The Court emphasized that the prosecution had failed to prove that the Appellant was stocking medicines for the purpose of sale.
| Submission | How it was treated by the Court |
|---|---|
| Appellant stocked and sold medicines without a valid drug license | Rejected. The Court held that the Appellant, being a registered medical practitioner, was protected under Schedule K of the Drugs and Cosmetics Rules, 1945. |
| Seized medicines and sale bills as evidence of illegal activity | Rejected. The Court noted that the sale bills were not even for the medicines seized from the Appellant’s premises. |
| Appellant is a registered medical practitioner distributing medicines to patients for emergency uses | Accepted. The Court agreed that the Appellant was a registered medical practitioner and was likely distributing medicines to her patients for emergency uses. |
| Appellant was not running an open shop or selling medicines across the counter | Accepted. The Court noted that it was not the case of the prosecution that the Appellant was selling drugs from an open shop across the counter. |
| Medicines purchased from licensed pharmaceutical shops | Accepted. The Court noted that the Appellant had produced invoices from pharmaceutical shops to show her bonafides. |
| Medicines were of standard quality | Accepted. The Court noted that the Drugs Testing Laboratory, Tamil Nadu, had confirmed that the drugs were of standard quality. |
| Unexplained and unreasonable delay in granting sanction for prosecution | Accepted. The Court considered the unexplained delay in granting sanction as a crucial factor, indicating a possible sinister motive behind the prosecution. |
The court viewed the authorities as follows:
✓ Section 18(c) of the Drugs and Cosmetics Act, 1940*: The Court acknowledged the prohibition on stocking drugs for sale without a license but held that it did not apply to the Appellant due to the exception under Schedule K.
✓ Section 27(b)(ii) of the Drugs and Cosmetics Act, 1940*: The Court acknowledged the punishment for contravention of Section 18(c) but held that the Appellant had not contravened the provision.
✓ Rule 123 of the Drugs and Cosmetics Rules, 1945*: The Court relied on this rule to highlight the exemption for drugs specified in Schedule K.
✓ Schedule K of the Drugs and Cosmetics Rules, 1945*: The Court relied on this schedule to hold that a registered medical practitioner is exempt from the provisions of Chapter IV of the Act under certain conditions.
✓ Hasmukhlal D. Vohra and Anr. v. State of Tamil Nadu [2022 SCC OnLine SC 1732]*: The Court followed this case to emphasize that unexplained delay in proceedings can be a ground for quashing criminal complaints.
✓ Mansukhlal Vithaldas Chauhan v. State of Gujarat [(1997) 7 SCC 622]*: The Court followed this case to emphasize the importance of the sanctioning authority applying its mind to the facts and evidence before granting sanction.
✓ Mohd. Shabir v. State of Maharashtra [(1979) 1 SCC 568]*: The Court followed this case to emphasize that possession of drugs alone is not an offense, and the prosecution must prove that the drugs were stocked for sale.
What weighed in the mind of the Court?
The Supreme Court’s decision was primarily influenced by the fact that the Appellant was a registered medical practitioner, and the seized medicines were of a small quantity, which could be reasonably found in a doctor’s consultation room. The Court emphasized that the prosecution had failed to prove that the medicines were stocked for the purpose of sale, and that the Appellant was protected under the exception provided in Schedule K of the Drugs and Cosmetics Rules, 1945. The Court also took note of the unexplained delay in granting sanction for prosecution.
| Reason | Percentage |
|---|---|
| Appellant is a registered medical practitioner | 30% |
| Small quantity of medicines | 25% |
| Medicines likely for use of patients | 20% |
| No evidence of stocking for sale | 15% |
| Unexplained delay in sanction | 10% |
| Category | Percentage |
|---|---|
| Fact | 60% |
| Law | 40% |
The Court’s reasoning was based on a combination of factual considerations (the Appellant’s status as a doctor, the small quantity of medicines, and the lack of evidence of sale) and legal considerations (the exception provided under Schedule K and the interpretation of Section 18(c) of the Act).
Yes
No
No
Yes
The Court considered the alternative interpretation that the Appellant was indeed stocking the medicines for sale. However, this was rejected because the prosecution failed to provide any evidence to support this claim. The Court also considered the fact that the Appellant was a registered medical practitioner and that the quantity of medicines was small, which made it more likely that the medicines were for the use of her patients.
The Court’s decision was based on the interpretation of the provisions of the Drugs and Cosmetics Act, 1940, and the Drugs and Cosmetics Rules, 1945, in light of the facts of the case.
The majority opinion was delivered by Justice Sudhanshu Dhulia.
The court quoted the following from the judgment:
“It is not a case that she had opened a shop in her premises from where she was selling drugs and cosmetics across the counter! It is possible that she was distributing these drugs to her patients for emergency uses and thus she is protected by the Act itself.”
“Considering the small quantity of medicines, most of which are in the category of lotions and ointments, it cannot be said by any stretch of imagination that such medicines could be ‘stocked’ for sale and would come in the category of stocking of medicines for the purpose of sale.”
“The possession simpliciter of the articles does not appear to be punishable under any of the provisions of the Act. If, therefore, the essential ingredients of Section 27 are not satisfied the plea of guilty cannot lead the Court to convict the appellant.”
Key Takeaways
- Registered medical practitioners are protected under Schedule K of the Drugs and Cosmetics Rules, 1945, when they stock small quantities of medicines for their patients, provided they are not running an open shop or selling across the counter.
- The prosecution must prove that the medicines were stocked for the purpose of sale, and mere possession of medicines is not sufficient to establish an offense.
- Unexplained delay in granting sanction for prosecution can be a valid ground for quashing criminal proceedings.
This judgment clarifies the legal position for medical practitioners regarding the stocking of medicines. It ensures that doctors are not unduly harassed for possessing small quantities of medicines for the benefit of their patients. This decision may impact future cases where similar issues are raised, ensuring that the law is not misused to target medical practitioners who are genuinely serving their patients.
Directions
The Supreme Court set aside the order of the Madras High Court and quashed the criminal proceedings against the Appellant.
Development of Law
The ratio decidendi of this case is that a registered medical practitioner who stocks a small quantity of medicines for the use of their patients is protected under Schedule K of the Drugs and Cosmetics Rules, 1945 and cannot be prosecuted under Section 18(c) of the Drugs and Cosmetics Act, 1940 unless the prosecution proves that the medicines were stocked for the purpose of sale. This judgment clarifies and reinforces the existing legal position, ensuring that medical practitioners are not unduly harassed for possessing small quantities of medicines for their patients. It also emphasizes that mere possession of medicines is not sufficient to establish an offense under the Act.
Conclusion
The Supreme Court’s judgment in S. Athilakshmi vs. The State Rep. by the Drugs Inspector clarifies that a registered medical practitioner stocking small quantities of medicines for their patients does not automatically constitute “stocking for sale” under the Drugs and Cosmetics Act, 1940. This decision provides relief to doctors who maintain medicines for their patients’ immediate needs and sets a precedent for similar cases, emphasizing the importance of considering the context and purpose of possessing medicines.
Source: S. Athilakshmi vs. State