Supreme Court quashes criminal proceedings against doctor for stocking medicines: S. Athilakshmi vs. State (2023)

LEGAL ISSUE: Whether a registered medical practitioner stocking medicines for distribution to her own 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: 15 March 2023

Introduction

Date of the Judgment: 15 March 2023

Citation: 2023 INSC 2372

Judges: Krishna Murari, J., Sudhanshu Dhulia, J. (authored the judgment)

Can a doctor be prosecuted for stocking medicines in their clinic? The Supreme Court of India recently addressed this question in a case involving a dermatologist who was charged with stocking medicines for sale without a license. The Court examined whether a registered medical practitioner distributing medicines to her patients constitutes an offense under the Drugs and Cosmetics Act, 1940. The judgment clarifies the extent to which medical practitioners are exempt from certain licensing requirements when providing medication to their patients. This case was decided by a two-judge bench comprising Justice Krishna Murari and Justice Sudhanshu Dhulia, with Justice Dhulia authoring the judgment.

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 premises in Villivakkam, Chennai. On March 16, 2016, a Drugs Inspector inspected her premises and found several medicines. The inspector also found some sale bills for medicines. Subsequently, the Drugs Inspector sought sanction to prosecute her for stocking and selling drugs without a valid license under the Drugs and Cosmetics Act, 1940.

Timeline

Course of Proceedings

The Drugs Inspector filed a complaint before the X Metropolitan Magistrate, Egmore, for prosecuting Dr. Athilakshmi under Section 18(c) of the Drugs and Cosmetics Act, 1940, punishable under Section 27(b)(ii) of the Act. Aggrieved by this, Dr. Athilakshmi filed an application under Section 482 of the Code of Criminal Procedure, 1973, before the High Court of Madras to quash the criminal proceedings. The High Court dismissed her petition on 21.06.2022. Subsequently, she filed a Special Leave Petition before the Supreme Court against the High Court’s order.

Legal Framework

The case revolves around the interpretation of Section 18(c) of the Drugs and Cosmetics Act, 1940, which prohibits the manufacture, sale, stocking, or distribution of drugs without a license. Section 18 of the Drugs and Cosmetics Act, 1940 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 contravention of Section 18(c) is provided under Section 27(b)(ii) of the Act, which reads:

“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) xxxxxxxxxxxxxxxxx

(b) any drug –

(i) xxxxxxxxxxxxxxxxx

(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]:”

Rule 123 of the Drugs and Cosmetics Rules, 1945, exempts certain drugs specified in Schedule K from the provisions of Chapter IV of the Act, under certain conditions. Entry No. 5 of Schedule K provides an exemption for drugs supplied by a registered medical practitioner to their own patients, subject to specific conditions.

The relevant portion of Schedule K reads as follows:

“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.”

The conditions for this exemption include:

• The drugs must be purchased from a licensed dealer or manufacturer.
• Records of purchases must be maintained.
• For medicines containing substances specified in Schedule G, H or X, additional conditions apply:
  • The medicine must be labeled with the name and address of the medical practitioner.
  • For external use, it must be labeled “For external use only”.
  • A register must be maintained with details of the medicine, dose, patient, and date of supply.
  • The register and prescriptions must be preserved for at least two years.
• The drugs must be stored under proper conditions.
• No drug should be supplied after its expiration date.

Arguments

The prosecution argued that Dr. Athilakshmi had violated Section 18(c) of the Drugs and Cosmetics Act, 1940, by stocking medicines for sale without a valid drug license. They contended that the medicines found on her premises and the sale bills indicated that she was engaged in the sale of drugs, which is prohibited without a license. The prosecution emphasized that the intent behind the Drugs and Cosmetics Act is to protect the public from the unethical sale of medicines, and therefore, the doctor should be prosecuted.

Dr. Athilakshmi argued that she is a registered medical practitioner and was distributing the medicines to her own patients. She claimed that the medicines were not being sold in an open shop or across the counter, and that she was protected by the exemption provided under Schedule K of the Drugs and Cosmetics Rules, 1945. She also argued that the quantity of medicines found was small and could be typically found in a doctor’s consultation room. Furthermore, she submitted invoices to show that the medicines were purchased from licensed pharmaceutical shops, demonstrating her bonafide.

The Supreme Court noted that the prosecution’s case was primarily based on the allegation that the Appellant had “stocked drugs for sale”. The Court highlighted that the Appellant is a registered medical practitioner with a specialization in dermatology, and she was not running a shop to sell drugs across the counter. The court also noted that the sale bills were not even for the medicines that were seized.

Issues Framed by the Supreme Court

The Supreme Court did not explicitly frame issues in a separate section. However, the core issue before the court was:

1. Whether the actions of the appellant, a registered medical practitioner, of stocking medicines at her clinic for distribution to her own patients would amount to stocking for sale under Section 18(c) of the Drugs and Cosmetics Act, 1940, thereby attracting the penal provisions under Section 27(b)(ii) of the said Act?

Treatment of the Issue by the Court

The following table demonstrates as to how the Court decided the issues

Authorities

The Supreme Court considered the following authorities:

Judgment

Authorities Viewed by the Court:

• The court relied on Rule 123 read with Schedule K of the Drugs and Cosmetics Rules, 1945* to emphasize that a registered medical practitioner is exempt from the licensing requirements under Chapter IV of the Drugs and Cosmetics Act, 1940, when supplying medicines to their own patients, provided they are not operating an open shop or selling across the counter.
• The court followed the principle laid down in Mohd. Shabir v. State of Maharashtra, (1979) 1 SCC 568* to hold that mere possession of drugs is not an offense unless it is proven that the drugs were stocked for sale.
• The court also considered the delay in the proceedings as highlighted in Hasmukhlal D. Vohra and Anr. v. State of Tamil Nadu, 2022 SCC OnLine SC 1732* which indicated a non-application of mind by the authorities.
• The court also relied on Mansukhlal Vithaldas Chauhan v. State of Gujarat, (1997) 7 SCC 622* to emphasize that the sanctioning authority must apply its independent mind before granting sanction for prosecution.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the fact that Dr. Athilakshmi is a registered medical practitioner and was distributing medicines to her own patients, not selling them in an open shop. The court emphasized the exemption provided under Schedule K of the Drugs and Cosmetics Rules, 1945, which protects doctors who supply medicines to their patients. The small quantity of medicines found was also a significant factor, as it was considered typical for a doctor’s consultation room. The court also noted the delay in the proceedings and the fact that the sale bills were not even for the medicines that were seized, indicating a lack of proper application of mind by the sanctioning authority.

The court also considered the social purpose of the Drugs and Cosmetics Act, which is to protect ordinary citizens from being exploited by unethical medical practitioners. However, the court found that the facts of the present case did not warrant such an interpretation, as the doctor was a registered medical practitioner and the quantity of medicines was small.

The court’s reasoning was based on a combination of factual considerations and legal principles. The factual aspects, such as the doctor’s status as a registered medical practitioner, the small quantity of medicines, and the absence of an open shop, were given significant weight. The legal considerations included the interpretation of Section 18(c) of the Drugs and Cosmetics Act, 1940, and the exemption provided under Schedule K of the Drugs and Cosmetics Rules, 1945.

Logical Reasoning

The court considered the alternative interpretation that any stocking of medicines by a doctor, regardless of intent, would constitute an offense under Section 18(c). However, the court rejected this interpretation, emphasizing that the exemption under Schedule K was specifically created to protect registered medical practitioners who supply medicines to their patients. The court reasoned that a strict interpretation of Section 18(c) would undermine the purpose of the exemption and would lead to unnecessary prosecution of doctors.

The court’s decision was based on a holistic reading of the Drugs and Cosmetics Act, 1940, and the Rules framed thereunder, giving due consideration to the social context and the role of medical practitioners in society.

The Supreme Court held that the prosecution against Dr. Athilakshmi was unwarranted. The court emphasized that the small quantity of medicines found was typical for a doctor’s consultation room and that the doctor was not selling medicines in an open shop. The court also noted that the sale bills were not even for the medicines that were seized.

The Supreme Court quoted from the judgment:

“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.”

“When small quantity of medicine has been found in the premises of a registered medical practitioner, it would not amount to selling their medicines across the counter in an open shop.”

“In fact, an exception has been created under Schedule ‘K’ read with Rule 123 to the rules, the appellant ought to have been given the benefit of these provisions and such a registered medical practitioner should not have been allowed to face a trial where in all likelihood the prosecution would have failed to prove its case beyond reasonable doubt.”

There were no dissenting opinions in this case. The judgment was delivered by a two-judge bench, with Justice Sudhanshu Dhulia authoring the opinion.

The Supreme Court analyzed the reasoning, legal interpretation, and application of the Drugs and Cosmetics Act, 1940, and the Drugs and Cosmetics Rules, 1945, to the facts of the case. The court emphasized that the exemption provided under Schedule K was specifically created to protect medical practitioners who supply medicines to their patients.

This judgment has potential implications for future cases involving medical practitioners who stock medicines for their patients. It clarifies that such actions, when done in good faith and within the conditions of Schedule K, do not constitute an offense under Section 18(c) of the Drugs and Cosmetics Act, 1940.

The Supreme Court did not introduce any new doctrines or legal principles. Instead, it clarified the existing legal framework and its application to the specific facts of the case. The court emphasized that the exemption under Schedule K should be given its full effect to protect registered medical practitioners who are supplying medicines to their own patients.

Key Takeaways

• Registered medical practitioners are exempt from certain licensing requirements when supplying medicines to their own patients.
• The exemption applies if the doctor is not running an open shop or selling medicines across the counter.
• The quantity of medicines stocked should be reasonable and typical for a doctor’s consultation room.
• The medicines must be purchased from a licensed dealer or manufacturer, and records of purchases must be maintained.
• The sanctioning authority must apply its independent mind before granting sanction for prosecution.

Directions

The Supreme Court quashed the criminal proceedings in Criminal Case No. 7135 of 2018 on the file of X Metropolitan Magistrate, Egmore, Chennai.

Development of Law

The ratio decidendi of this case is that a registered medical practitioner who stocks medicines for distribution to their own patients does not violate Section 18(c) of the Drugs and Cosmetics Act, 1940, if they meet the conditions specified in Schedule K of the Drugs and Cosmetics Rules, 1945. This judgment clarifies the scope of the exemption available to medical practitioners and emphasizes that mere possession of medicines by a doctor is not an offense unless it is proven that the medicines were stocked for sale. This judgment does not change the previous position of law, but rather clarifies the existing law.

Conclusion

In conclusion, the Supreme Court quashed the criminal proceedings against Dr. S. Athilakshmi, holding that as a registered medical practitioner, she was protected by the exemption under Schedule K of the Drugs and Cosmetics Rules, 1945. The court emphasized that the doctor was not running an open shop or selling medicines across the counter, and the small quantity of medicines found was typical for a doctor’s consultation room. This judgment clarifies the legal position for medical practitioners who supply medicines to their own patients, ensuring that they are not unnecessarily prosecuted under the Drugs and Cosmetics Act, 1940.