InCRL. M.C. 3424/201 -DEL HC- Delhi High Court quashes case against Cipla's Managing Directors for alleged Drug Act violations, says they were not in charge of day-to-day operations at the relevant time
Justice Amit Sharma [06-09-2023]

Read Order: M K Hameid & Anr V. State Thr. Abhijit Singh

Chahat Varma

New Delhi, September 8, 2023: The Delhi High Court has quashed a case against the Managing Directors of M/s. Cipla Ltd., M.K. Hameid and Dr. Y.K. Hameid, for alleged violations of the Drugs and Cosmetics Act, 1940.

In the said case, M.K. Hameid (petitioner no. 1) held the position of Joint Managing Director at M/s Cipla Ltd, while Dr. Y.K. Hameid (petitioner no. 2) served as its Chairman and Managing Director. A complaint was filed by the Drugs Inspector of the Drugs Control Department, Government of NCT of Delhi, which sought the initiation of prosecution against several individuals, including the petitioners. The complaint alleged violations of Sections 18(a)(i) and 27(d) of the Drugs and Cosmetics Act. On 06.12.2010, the Metropolitan Magistrate had accepted the complaint and had initiated proceedings against all the accused individuals named in the complaint, including the petitioners.

The single-judge bench of Justice Amit Sharma noted that in the present case, the disclosure required under Section 18A of the Drugs and Cosmetics Act was made when filling out Form-17. On this form, it was explicitly mentioned that the drug was manufactured by ‘M/s Cipla Ltd.’. It was documented that the Drugs Inspector recorded the name of the manufacturer, which was printed on the drug label. Given these circumstances, the Drugs Inspector was aware of the manufacturer's identity at the time of seizing the sample from the retailer. Therefore, the requirement for disclosure under Section 18A of the Act was deemed to be fulfilled.

However, the bench noted that as a logical consequence of the disclosure made on Form-17, a portion of the sample and the report of the government analyst should have been sent to the manufacturer, as mandated by Section 23(4)(iii) and Section 25(2) of the Drugs and Cosmetics Act. Sending the sample and the report to the distributor instead of the manufacturer in the present case did not constitute compliance with the requirements of Section 23(4)(iii) and Section 25(2) of the Act.

Additionally, the bench highlighted, that in the present case, it was an established fact that a Power of Attorney was executed in favour of Mr. Talat Fakhri by petitioner no. 1. This unimpeachable document served as evidence that the petitioners were not in charge of the day-to-day business operations of M/s Cipla Ltd. at the relevant time. As a result, they cannot be held liable under Section 34 of the Drugs and Cosmetics Act.

The bench remarked that it was the responsibility of the Metropolitan Magistrate to assess this fact before issuing summons to the present petitioners. Even if the complainant, who was a public servant, was exempted from being examined, the documents presented on record should have been taken into account by the Metropolitan Magistrate. Consequently, the bench held that the summoning order dated 06.12.2010, was not tenable with regard to the present petitioners.

In light of these findings, the present petition was allowed, and the case titled 'State through Sh. Abhijit Ghosh, Drugs Inspector vs. Sh. Virender Sindhwani & Ors.' (arising from the complaint dated December 6, 2010), along with all other subsequent proceedings originating from it, pending before the Court of the Metropolitan Magistrate, Rohini, Delhi, were quashed with respect to the present petitioners.