HON’BLE SUPREME COURT HOLDS THAT DRUGS CAN BE ALTERED OR RELABELLED IF MANUFACTURERS HOLD LICENSE
A two Judge Bench of the Hon’ble Supreme Court constituting Justice B.R Gavai and Justice Augustine George Masih recently held in the judgement of Inox Air Products Private Limited and Another v. The State of Andhra Pradesh (Arising out of SLP (Crl.) No. 2345 of 2024) dated 30.01.2025 related to the purchase and sale of Oxygen I.P. and Nitrous Oxide I.P that the learned Magistrate can issue process only if a sufficient case is made out under the provisions of the Drugs and Cosmetics Act,1940 and its Rules, and also held that the lower Courts have to correctly interpret statutes for its decision to be unsustainable under law.
FACTS
The first Appellant i.e. M/s. INOX Air Products Private Limited, a company engaged in manufacture and sale of medical and industrial gases in India having its registered office in Navi Mumbai, Maharashtra and the second Appellant i.e. Pavan Kumar Jain, who is the Managing Director of the first Appellant company was arraigned as Accused No.5 and Accused No.6 respectively in a complaint bearing C.C. No. 71 of 2018 dated 22.12.2017 by the learned Drugs Inspector, Kadapa before the learned Additional Judicial Magistrate of First Class, Kadapa (Trial Court). The Complainant i.e. The Drugs Inspector, along with 2 panch witnesses went to the RIMS General Hospital, Kadapa on the basis of information received dated 03.05.2016 where he inquired about the purchase bills and their mode of procurement of Oxygen I.P. and Nitrous Oxide I.P. It was conveyed that the Hospital had procured Oxygen I.P. and Nitrous Oxide I.P. from M/s. Varasi Oxygen firm (Accused No.1) in the matter. The Complainant undertook the verification of the 72 purchase bills which have been seized and the purchase agreement between Accused No.1 and the Hospital, wherein he found that Accused No.1 had license only for Oxygen I.P. and not for Nitrous Oxide I.P. Upon letters being issued to Accused No.1 firm dated 05.01.2017 and 06.01.2017 directing them to produce the concerned purchase agreement and drug licenses, purchase and sale bills, sale drugs etc. respectively. The representative of Accused No.1 firm i.e. G. Raghunadha Reddy (Accused No.2) replied that Nitrous Oxide I.P. gas was procured through M/s. R.S. Gas Products (Accused No. 3) and purchase bills were submitted to substantiate the same. This led the Complainant to issue a letter to Accused No.3 to produce the required drug license and purchase bills related to Nitrous Oxide I.P., however, the Accused No.3 in its reply submitted that they had purchased the drug from M/s INOX Air Products (Accused No. 5), i.e. Appellant No. 1 herein. Accused No.3 did not submit any license for the purchase of Nitrous Oxide I.P.
The Complainant issued a letter dated 19.05.2017 for the same purpose to Appellant No.1. This led Appellant No.2 to file a reply on behalf of Appellant No.1 dated 07.06.2017 containing the licenses for manufacturing and selling Nitrous Oxide I.P. The Complainant, on the basis of his findings, held that Accused No.5,represented by Pavan Kumar Jain (Accused No.6),sold the Nitrous Oxide I.P. to the unlicensed Accused No.3 firm which contravened the provisions of Section 18(a)(vi) (Any drug or cosmetic in contravention of any of the provisions of this Chapter or any rule made thereunder)of the Drugs and Cosmetics Act, 1940 read with conditions of the license prescribed under Form 26 (Conditions of import license) along with Section 65(5)(1)(b) (Condition of licenses) of the Drugs and Cosmetics Rules,1945.
On the basis of this complaint, the learned Trial Court vide order dated 20.01.2018 issued summons to all the Accused persons including the Appellants. This led the Appellants to file Criminal Petition No. 4148 of 2018 before the Hon’ble High Court of Andhra Pradesh at Amravati under Section 482 (Saving of inherent powers of the High Court) of the Code of Criminal Procedure,1973 (CrPC) wherein they prayed for calling of the records in relation to the Complaint Case which was present with the Additional Judicial Magistrate and quashing of Complaint against the Appellants. The Hon’ble High Court dismissed the Petition filed by the Appellants vide Judgement and Order dated 12.01.2024. This led the Appellants to file the present appeal before the Hon’ble Supreme Court.
ISSUE
- Whether any case can be made against the Appellants under Section 18(a)(vi) read with Section 27(d) of the Drugs and Cosmetics Act,1940?
- Whether the Additional Judicial Magistrate of First Class, Kadapa can summon the Appellants in relation withC. No. 71 of 2018?
DECISION OF THE HON’BLE SUPREME COURT
The Hon’ble Supreme Court undertook a careful examination of Section 3(f) (Definition of Manufacture); Section 18(Prohibition of manufacture and sale of certain drugs and cosmetics); Section 27(Penalty for manufacture, sale, etc., of drugs in contravention of this Chapter) of the Drugs and Cosmetics Act,1940 and provisions of the Drugs and Cosmetics Rules,1945. The argument raised by the Counsel for the Respondent that the Appellant No.1 and Accused No.3 did not possess the license to sell or distribute Nitrous Oxide I.P. under Form 20-B of the said Rules was considered to be wrong by the Hon’ble Court. The Court held that the term “manufacture” as prescribed under the said Act encompasses a wide scope which includes processes related to making, altering, ornamenting, finishing, packing, labelling etc. for sale and distribution of a drug. It was also held by the Court that since Appellant No.1 and Accused No.3 hold the license for manufacture under Form 25 of the said Rules, they can be permitted to alter, break, relabel or repack the goods which have been received to undertake further sale and distribution. Further, it has been held that the sale and distribution of the concerned goods would be in contravention of Section 18(a)(vi) and attract penalty under Section 27 (d) of the Drugs and Cosmetics Act,1940. It has also been noted by the Supreme Court that the Appellants had not violated any of the conditions stipulated for a license according to Form 20-B. Accordingly, it was held that there exists no case against the Appellants under the Drugs and Cosmetics Act,1940.
The Supreme Court also clarified that the learned Magistrate should carefully assess the nature of allegations and evidence levelled against the Accused persons to determine whether proceedings should commence against them. On perusing the findings in this matter, the Hon’ble Court found that except for keeping a record of the submissions made by the Complainant, there were no other reasons that have been raised for issuing summons against the Appellants. Therefore, on the basis of these findings, the Hon’ble Supreme Court allowed the Appeal and set aside the impugned Judgement and Order dated 12.01.2024 passed by the Hon’ble High Court of Andhra Pradesh.
CONCLUSION
The Hon’ble Supreme Court held that the lower Courts have to abide by the correct interpretation of statutes to ensure that they encompass its wide meaning as prescribed and that the Magistrate has to carefully examine the nature of allegations and evidence before issuing process in a criminal matter.
PARVATI ARUN
INTERN
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