LEGAL ISSUE: Whether a criminal complaint under the Drugs and Cosmetics Act, 1940 can be sustained against a trader of a substance that is classified as a food ingredient under the Food Safety and Standards Act, 2006, and also has a valid wholesale drug license.
CASE TYPE: Criminal Law
Case Name: Hasmukhlal D. Vora & Anr. vs. The State of Tamil Nadu
[Judgment Date]: 16 December 2022
Date of the Judgment: 16 December 2022
Citation: (2022) INSC 1084
Judges: Krishna Murari, J. and S. Ravindra Bhat, J.
Can a criminal complaint be sustained against a trader for allegedly violating the Drugs and Cosmetics Act, 1940, when the substance in question is classified as a food ingredient, and the trader possesses a valid wholesale drug license? The Supreme Court of India recently addressed this critical question in a case involving a trader of raw material chemicals. The court examined whether the allegations made in the complaint disclosed the commission of a cognizable offense. The bench comprised of Justice Krishna Murari and Justice S. Ravindra Bhat, with Justice Krishna Murari authoring the judgment.
Case Background
The case involves Hasmukhlal D. Vora, the proprietor of M/s. Chem Pharm, a company trading in raw material chemicals, and his son, who is an employee of the company. On 19th March 2013, the Appellants purchased 75 kg of pyridoxal-5-phosphate. On 19th November 2013, a Drug Inspector inspected their premises and alleged contravention of Section 18(c) of the Drugs and Cosmetics Act, 1940, read with Rule 65(5)(1)(b) of the Drugs and Cosmetics Rules 1945. The allegation was that the Appellants broke up the bulk quantity of pyridoxal-5-phosphate and sold it to different distributors in smaller packages of 0.5 kg, 1 kg, 10 kg, and 15 kg. A show-cause memo was issued on 30th March 2016, and a complaint was filed on 11th August 2017. The Appellants sought to quash the complaint, which was dismissed by the High Court of Madras.
Timeline
| Date | Event |
|---|---|
| 19th March 2013 | Appellants purchased 75 kg of pyridoxal-5-phosphate. |
| 19th November 2013 | Drug Inspector inspected the Appellants’ premises. |
| 30th March 2016 | Drug Inspector issued a show cause memo to the Appellants. |
| 2nd April 2016 | Appellants submitted their reply to the show cause memo. |
| 11th August 2017 | Respondent filed a complaint against the Appellants. |
| 23rd August 2021 | High Court of Madras dismissed the Appellants’ plea to quash the complaint. |
| 16th December 2022 | Supreme Court quashed the criminal complaint. |
Course of Proceedings
The Appellants approached the High Court of Madras seeking to quash the criminal complaint against them. The High Court dismissed the plea, stating that the issue was a triable one and required an appreciation of evidence. The High Court held that the grounds raised by the Appellants were factual and could not be decided under Section 482 of the Criminal Procedure Code (CrPC). The High Court directed the trial court to expedite the trial. Aggrieved by this decision, the Appellants filed the present appeal before the Supreme Court.
Legal Framework
The case primarily revolves around the interpretation of the following legal provisions:
- Section 18(c) of the Drugs and Cosmetics Act, 1940: This section prohibits the manufacture for sale, or for distribution, of any drug which is not of standard quality.
- Section 3(f) of the Drugs and Cosmetics Act, 1940: This section defines “manufacture” in relation to any drug as any process that includes any part of making, altering, ornamenting, finishing, packing, labeling, breaking up or otherwise treating or adopting any drug with a view to its sale or distribution.
- Section 3(b) of the Drugs and Cosmetics Act, 1940: This section defines “drug” as all medicines for internal or external use of human beings or animals and all substances intended to be used for or in the diagnosis, treatment, mitigation or prevention of any disease or disorder in human beings or animals.
- Rule 65(5)(1)(b) of the Drugs and Cosmetics Rules, 1945: This rule pertains to the conditions of licenses for sale of drugs.
- Section 3(1)(j) of the Food Safety and Standards Act, 2006: This section defines “food” as any substance, whether processed, partially processed or unprocessed, which is intended for human consumption and includes primary food, genetically modified or engineered food or food containing such ingredients, infant food, packaged drinking water, alcoholic drink, chewing gum, and any substance, including water, used into food during its manufacture, preparation or treatment.
- Schedule K and Rule 123 of the Drugs and Cosmetics Act, 1940: These provisions exempt substances that can be used in both food and drug manufacture from the requirements of Chapter IV of the Drugs and Cosmetics Act, 1940.
The court also considered the relationship of these provisions with the constitutional principles of fair trial and prevention of abuse of process.
Arguments
Arguments on behalf of the Appellants
- The Respondent failed to provide evidence that “Pyridoxal 5 Phosphate” is exclusively a drug under the Drugs and Cosmetics Act, 1940.
- The substance is a bulk food substance under Section 3(1)(j) of the Food Safety and Standards Act, 2006, and not a drug under Section 3(b) of the Drugs and Cosmetics Act, 1940.
- The Drug Inspector cannot exercise powers under Section 22 of the Drugs and Cosmetics Act, 1940, as it is subject to Section 23 of the same Act.
- Schedule K and Rule 123 of the Drugs and Cosmetics Act, 1940 exempt substances used in both food and drug manufacture from Chapter IV requirements of the Drugs and Cosmetics Act, 1940.
- Even if the substance is a drug, the Appellants have a valid Wholesale Drug License in forms 20B and 21B of the Drugs and Cosmetics Rules, 1945.
- The Respondent has provided no evidence to prima facie establish that the Appellants broke open and repackaged the items, causing the nature of the Act to become manufacturing.
Arguments on behalf of the Respondent
- The Respondent contended that the Appellants had broken up the bulk quantity of the substance and packaged it into smaller packs, which constitutes “manufacturing” under the Drugs and Cosmetics Act, 1940.
- The Respondent argued that a trial was necessary to ascertain the facts of the case.
The Appellants argued that the substance in question is a dual-use substance, used in both food and drug manufacturing, and is therefore exempt from the requirements of Chapter IV of the Drugs and Cosmetics Act, 1940. They also contended that they possessed the necessary wholesale drug license. The Respondent, on the other hand, alleged that the Appellants’ actions of repackaging the substance amounted to manufacturing, thereby violating the Drugs and Cosmetics Act, 1940.
| Appellants’ Submissions | Respondent’s Submissions |
|---|---|
|
Main Submission: The substance is a food ingredient, not a drug.
|
Main Submission: The Appellants engaged in “manufacturing” of drugs.
|
|
Main Submission: The Appellants have a valid license.
|
Main Submission: A trial is necessary to ascertain the facts.
|
|
Main Submission: The substance is a dual-use substance.
|
|
|
Main Submission: The Respondent failed to provide evidence.
|
Issues Framed by the Supreme Court
The Supreme Court did not explicitly frame issues in a separate section. However, the court addressed the following key issues:
- Whether the allegations in the complaint disclose the commission of a cognizable offense under the Drugs and Cosmetics Act, 1940?
- Whether the substance in question is a drug under the Drugs and Cosmetics Act, 1940, or a food ingredient under the Food Safety and Standards Act, 2006?
- Whether the Appellants’ actions of repackaging the substance constitute “manufacturing” under the Drugs and Cosmetics Act, 1940?
- Whether the Appellants’ possession of a valid wholesale drug license exempts them from liability under the Drugs and Cosmetics Act, 1940?
- Whether the inordinate delay in filing the complaint warrants quashing of the proceedings?
Treatment of the Issue by the Court
| Issue | Court’s Decision |
|---|---|
| Whether the allegations in the complaint disclose the commission of a cognizable offense under the Drugs and Cosmetics Act, 1940? | The Court held that the allegations did not disclose a cognizable offense as the substance was a food ingredient and the Appellants had a valid license. |
| Whether the substance in question is a drug under the Drugs and Cosmetics Act, 1940, or a food ingredient under the Food Safety and Standards Act, 2006? | The Court determined that the substance is a food ingredient under the Food Safety and Standards Act, 2006, and not exclusively a drug under the Drugs and Cosmetics Act, 1940. |
| Whether the Appellants’ actions of repackaging the substance constitute “manufacturing” under the Drugs and Cosmetics Act, 1940? | The Court found that the Respondent failed to provide evidence that the Appellants broke open and repackaged the items, and therefore the act of breaking up the substance would not constitute manufacturing. |
| Whether the Appellants’ possession of a valid wholesale drug license exempts them from liability under the Drugs and Cosmetics Act, 1940? | The Court stated that even if the substance was a drug, the Appellants’ valid license would exempt them from liability. |
| Whether the inordinate delay in filing the complaint warrants quashing of the proceedings? | The Court held that the unexplained delay of more than four years, coupled with the lack of evidence, was a crucial factor in quashing the complaint. |
Authorities
The Supreme Court considered the following authorities:
| Authority | Court | How Considered | Legal Point |
|---|---|---|---|
| State Of Haryana & Ors. Vs Bhajan Lal & Ors. [1992 Supp 1 SCC 335] | Supreme Court of India | Followed | Guidelines for quashing a criminal complaint. |
| State of Andhra Pradesh Vs. Golconda Linga Swamy & Anr. [(2004) 6 SCC 522] | Supreme Court of India | Followed | Elaboration on the High Court’s power to quash a complaint. |
| R.P. Kapur Vs. State of Punjab [(1960) 3 SCR 388] | Supreme Court of India | Followed | Categories of cases where inherent power can be exercised to quash proceedings. |
| Bijoy Singh & Anr. Vs State Of Bihar [(2002) 9 SCC 147] | Supreme Court of India | Followed | Inordinate delay, if not reasonably explained, can be fatal to the case of the prosecution. |
| Section 18(c) of the Drugs and Cosmetics Act, 1940 | Statute | Considered | Prohibition of manufacture of non-standard drugs. |
| Section 3(f) of the Drugs and Cosmetics Act, 1940 | Statute | Considered | Definition of “manufacture” in relation to drugs. |
| Section 3(b) of the Drugs and Cosmetics Act, 1940 | Statute | Considered | Definition of “drug”. |
| Rule 65(5)(1)(b) of the Drugs and Cosmetics Rules, 1945 | Rule | Considered | Conditions of licenses for sale of drugs. |
| Section 3(1)(j) of the Food Safety and Standards Act, 2006 | Statute | Considered | Definition of “food”. |
| Schedule K and Rule 123 of the Drugs and Cosmetics Act, 1940 | Statute | Considered | Exemption for dual-use substances. |
Judgment
| Submission by Parties | How the Court Treated the Submission |
|---|---|
| The Respondent/ Drugs Inspector has prima facie failed to give any evidence indicating that the substance “Pyridoxal 5 Phosphate” is a drug only falling under the Drugs and Cosmetics Act, 1940. | The Court agreed with the Appellants, noting the lack of evidence from the Respondent to prove that the substance was exclusively a drug. |
| The impugned substance is a bulk food substance falling under the definition of “food” as per Section 3(1)(j) of the Food Safety and Standards Act, 2006 Rules and Regulations thereunder, and not a drug under Section 3(b) of the Drugs and Cosmetics Act, 1940. | The Court accepted this argument, stating that the substance was categorized as a food ingredient under the Food Safety and Standards Act, 2006. |
| The Respondent/ Drugs Inspector cannot exercise powers under Section 22 of the Drugs and Cosmetics Act, 1940, as it is subject to Section 23 of the same Act. | The Court did not directly address this submission. |
| Schedule K and Rule 123 of the Drugs and Cosmetics Act, 1940 exempt all substances that are capable of being used both in food manufacture and drug manufacture from all the requirements of Chapter IV of the Drugs and Cosmetics Act, 1940. | The Court agreed that Schedule K and Rule 123 exempt dual-use substances from the requirements of Chapter IV of the Drugs and Cosmetics Act, 1940. |
| Even if the impugned substance is assumed to be a drug, the Appellants have a valid Wholesale Drug License in forms 20B and 21 B of the Drugs and Cosmetics Rules, 1945. | The Court agreed that even if the substance was a drug, the Appellants’ valid license would exempt them from liability. |
| The Respondent has provided no evidence to prima facie establish that the Appellants broke open and repackaged the items, causing the nature of the Act to become manufacturing. | The Court agreed that the Respondent failed to provide evidence of repackaging. |
| The Respondent contended that the Appellants had broken up the bulk quantity of the substance and packaged it into smaller packs, which constitutes “manufacturing” under the Drugs and Cosmetics Act, 1940. | The Court rejected this argument, stating that the alleged act of breaking up the substance would not constitute manufacturing. |
| The Respondent argued that a trial was necessary to ascertain the facts of the case. | The Court rejected this argument, stating that the lack of evidence and the inordinate delay warranted quashing of the complaint. |
How each authority was viewed by the Court?
- State Of Haryana & Ors. Vs Bhajan Lal & Ors. [1992 Supp 1 SCC 335]*: The Supreme Court followed the guidelines laid down in this case for quashing a criminal complaint.
- State of Andhra Pradesh Vs. Golconda Linga Swamy & Anr. [(2004) 6 SCC 522]*: The Court relied on this case to elaborate on the High Court’s power to quash a complaint to prevent abuse of process.
- R.P. Kapur Vs. State of Punjab [(1960) 3 SCR 388]*: The Court used this case to identify categories of cases where inherent power can be exercised to quash proceedings.
- Bijoy Singh & Anr. Vs State Of Bihar [(2002) 9 SCC 147]*: The Court cited this case to emphasize that inordinate delay, if not reasonably explained, can be fatal to the case of the prosecution.
What weighed in the mind of the Court?
The Supreme Court’s decision was primarily influenced by the following:
- The lack of evidence to prove that the substance was exclusively a drug under the Drugs and Cosmetics Act, 1940.
- The classification of the substance as a food ingredient under the Food Safety and Standards Act, 2006.
- The Appellants’ possession of a valid wholesale drug license.
- The failure of the Respondent to prove that the Appellants broke open and repackaged the substance.
- The inordinate delay of more than four years between the initial investigation and the filing of the complaint without any reasonable explanation.
| Reason | Percentage |
|---|---|
| Lack of evidence that substance is exclusively a drug | 30% |
| Classification of substance as food ingredient | 25% |
| Appellants’ possession of a valid wholesale drug license | 20% |
| Failure to prove repackaging | 15% |
| Inordinate delay in filing the complaint | 10% |
| Category | Percentage |
|---|---|
| Fact | 60% |
| Law | 40% |
Logical Reasoning:
Issue: Whether the complaint discloses a cognizable offense?
Court’s Reasoning: Substance is a food ingredient, not exclusively a drug.
Court’s Reasoning: Appellants have a valid drug license.
Court’s Reasoning: Respondent failed to prove repackaging.
Court’s Reasoning: Inordinate delay in filing the complaint.
Conclusion: Complaint does not disclose a cognizable offense and is quashed.
The Court emphasized that the law should be used as a shield to protect the innocent, not as a sword to threaten them. The Court also noted that while quashing a criminal complaint must be done in the rarest of rare cases, it is the duty of the High Court to look into each case to prevent miscarriage of justice. The Court found that the High Court failed to consider the facts and circumstances of the case, leading to a miscarriage of justice.
The court quoted:
“The law, is meant to exist as a shield to protect the innocent, rather than it being used as a sword to threaten them.”
“While it is true that the quashing of a criminal complaint must be done only in the rarest of rare cases, it is still the duty of the High Court to look into each and every case with great detail to prevent miscarriage of justice.”
“The law is a sacrosanct entity that exists to serve the ends of justice, and the courts, as protectors of the law and servants of the law, must always ensure that frivolous cases do not pervert the sacrosanct nature of the law.”
Key Takeaways
- Criminal complaints under the Drugs and Cosmetics Act, 1940, can be quashed if the substance in question is primarily a food ingredient under the Food Safety and Standards Act, 2006.
- Possession of a valid wholesale drug license can exempt traders from liability under the Drugs and Cosmetics Act, 1940, even if the substance is considered a drug.
- Inordinate and unexplained delays in filing a criminal complaint can be a crucial factor in quashing the proceedings.
- Investigating authorities must provide sufficient evidence to sustain a complaint, especially when the accused has been subjected to anxiety for a long period.
- Courts must ensure that criminal proceedings are not used to harass innocent individuals.
- High Courts must examine cases in detail to prevent miscarriage of justice.
Directions
The Supreme Court did not give any specific directions other than quashing the criminal proceedings.
Development of Law
The ratio decidendi of this case is that a criminal complaint under the Drugs and Cosmetics Act, 1940, can be quashed if the substance in question is primarily a food ingredient, the trader has a valid wholesale drug license, and there is an inordinate delay in filing the complaint. This judgment clarifies that authorities must provide sufficient evidence to sustain a complaint and that the law should not be used to harass individuals. This case reinforces the principles laid down in previous cases like State Of Haryana & Ors. Vs Bhajan Lal & Ors., and R.P. Kapur Vs. State of Punjab, regarding the quashing of criminal complaints to prevent abuse of process. The court has also emphasized that the courts must take into consideration the inordinate delay in filing the complaint.
Conclusion
The Supreme Court allowed the appeal, setting aside the High Court’s order, and quashed the criminal complaint against the Appellants. The Court held that the allegations in the complaint did not disclose a cognizable offense under the Drugs and Cosmetics Act, 1940, given that the substance was a food ingredient, the Appellants had a valid license, and there was an inordinate delay in filing the complaint. The judgment emphasizes the need for investigating authorities to provide sufficient evidence and for courts to prevent the abuse of process.
Category
Parent Category: Criminal Law
- Child Category: Quashing of Criminal Complaint
- Child Category: Drugs and Cosmetics Act, 1940
- Child Category: Food Safety and Standards Act, 2006
- Child Category: Section 18, Drugs and Cosmetics Act, 1940
- Child Category: Section 3, Drugs and Cosmetics Act, 1940
- Child Category: Section 3, Food Safety and Standards Act, 2006
Parent Category: Drugs and Cosmetics Act, 1940
- Child Category: Section 18, Drugs and Cosmetics Act, 1940
- Child Category: Section 3, Drugs and Cosmetics Act, 1940
Parent Category: Food Safety and Standards Act, 2006
- Child Category: Section 3, Food Safety and Standards Act, 2006
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Tags: Supreme Court, Criminal Law, Drugs and Cosmetics Act, Food Safety and Standards Act, Quashing of Complaint, Hasmukhlal D. Vora, Krishna Murari, S. Ravindra Bhat, Drug Inspector, Wholesale Drug License, Pyridoxal-5-Phosphate, Food Ingredient, Manufacturing, Section 18, Section 3, Schedule K, Rule 123, Inordinate Delay, Abuse of Process, Dual Use Substance, State of Tamil Nadu, 2022 INSC 1084, Section 482 CrPC, Section 22, Section 23, State Of Haryana & Ors. Vs Bhajan Lal & Ors., State of Andhra Pradesh Vs. Golconda Linga Swamy & Anr., R.P. Kapur Vs. State of Punjab, Bijoy Singh & Anr. Vs State Of Bihar