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PETITIONER: STATE OF KARNATAKA

       Vs.

RESPONDENT: PRATAP CHAND & ORS.

DATE OF JUDGMENT11/03/1981

BENCH: REDDY, O. CHINNAPPA (J) BENCH: REDDY, O. CHINNAPPA (J) ISLAM, BAHARUL (J)

CITATION:  1981 AIR  872            1981 SCR  (3) 200  1981 SCC  (2) 335        1981 SCALE  (1)529

ACT:      Drugs and  Cosmetics  Act  1940-Section  18A-Scope  of- Information  furnished  under  section  18A  alleged  to  be fictitious-Report  of  Inspector  not  proved-Inspector  not examined-Validity of report.      Section 34-"person  incharge"-Meaning  of-Tests  to  be applied.

HEADNOTE:      All the  three respondents  (respondents nos.  1 and  2 partners and respondent No. 3, the firm) were prosecuted for the  alleged   contravention  of   section  18A,  Drugs  and Cosmetics  Act,  1940  in  that  when  asked  by  the  Drugs Inspector  to   disclose  the   name,  address   and   other particulars of  the person  from whom  a  certain  drug  was acquired by  them, they  gave a fictitious address and that, therefore, they  were liable  to be  convicted under section 18(a) (ii) read with section 18(c) of the Act.      The Metropolitan  Magistrate convicted respondent no. 1 (the partner  incharge of  the business  of  the  firm)  and respondent no.  3 (the  firm) but acquitted respondent no. 2 on the  ground that it was respondent no. 1 who was incharge of the firm and sentenced them variously.      The High  Court summarily  dismissed the State’s appeal against the  acquittal of  respondent no.  2 and  of all the respondents under section 18A.      Dismissing the appeal, ^      HELD:  Violation  of  the  provisions  of  section  18A remained unestablished  and  the  defence  version  remained unrebutted. [202E]      The   Assistant    Commissioner,    Food    and    Drug Administration  Bombay,   North  Circle,  deposed  that  the particulars given  by the  respondents as to the person from whom the  drugs were  purported to  have been  acquired were verified by  an Inspector  who in his report stated that the name and  address given  by the respondents were fictitious; but the  Inspector has  not been examined nor was his report proved. The defence version, therefore, remained unrebutted. [202 D-E]      The second  respondent was  not liable  to be convicted merely because  he had  the  right  to  participate  in  the

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business of  the firm  under the  terms of  the  partnership deed. The  term "person  incharge" referred to in section 34 must mean  that the  person should  be in overall control of the day to day business of the firm. A person may be a party to the  policy being  followed by  a firm  and  yet  not  be incharge of  its business  or a  person may be incharge of a business but  not in  overall charge  or may  be incharge or only some  part of  the business.  In short,  a partner of a firm is liable to be convicted for an offence if he was in 201 charge of and was responsible to the firm for the conduct of its business  or if  it  is  proved  that  the  offence  was committed  with   the  consent   or  connivance  of  or  was attributable to  any neglect  on the  part  of  the  partner concerned. [204A-B]      G.L. Gupta v. D.N. Mehta [1971] 3 S.C.R. 748 applied.      In the instant case respondent no. 2 was not in overall control of the business. It was respondent no. 1, who was in that position. [204 C]

JUDGMENT:      CRIMINAL APPELLATE JURISDICTION: Criminal Appeal No. 91 of 1976.      Appeal by  Special Leave  from the  Judgment and  Order dated 29.7.1975  of the  Karnataka High  Court  in  Criminal Appeal No. 364 of 1975.      N. Nettar for the Appellant.      A.K.  Sen,   S.K.  Bisaria   and  V.P.  Gupta  for  the Respondents.      The Judgment of the Court was delivered by      BAHARUL ISLAM, J. This appeal by special leave has been preferred by the State of Karnataka.      2. The  three respondents  being the  partners  of  the firm, M/s.  Mafatlal and  Co.,  and  the  firm  itself  were charged for  offences under  Sections 18(c),  18(a) (ii) and 18A of  the Drugs  and Cosmetics Act, 1940 read with Section 27(a) (ii),  27(a) (i)  and Section  28 of the Drugs Control Act, (hereinafter,  the Act). The defence was a plea of "Not Guilty". The Chief Metropolitan Magistrate found respondents 1 and  3, that  is, one of the partners and the firm, guilty under Section  18(a) (ii) and Section 18(c) of the Drugs and Cosmetics Act  and sentenced  respondent  No.  1  to  suffer rigorous imprisonment  for one year under section 18(a) (ii) and to  pay a  fine of Rs. 500. in default, to suffer simple imprisonment for  one month, and sentenced respondents 1 and 3 to  pay a  fine of Rs. 1,000 each, under section 18(c), in default, to suffer simple imprisonment for three months. The respondent No.  2 was acquitted of these two offences as the Magistrate found  that it  was  respondent  no.  1  and  not respondent no.  2 who  was in  charge of the business of the firm. All  the respondents  were acquitted  of  the  offence under section 18A.      3. The  appellant preferred  an appeal  before the High Court of Karnataka from the order of acquittal of respondent No. 2 of the 202 offence under  Section 18(a)  (ii) and  18(c) and of all the respondents under  section 18A  of the  Act. The  High Court summarily dismissed the appeal.      4. Section  18A of  the Act  requires that every person who has  acquired  drug  or  cosmetic,  if  required,  shall disclose to  the  inspector  the  name,  address  and  other particulars of  the persons  from whom  the drug or cosmetic

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was acquired.      The respondents  pleaded that  they did disclose to the Drugs Inspector,  the name, address and other particulars of the person from whom the drugs were acquired, by section 18A of the  Act and  in support  of their  defence they  rely on Exhibit P.  20, a  letter dated  17.7.1971 addressed  to the Drugs Controller.  The learned Chief Metropolitan Magistrate has found  that Exhibit P.20 contained the name, address and other particulars  of the  person from  whom the  drugs were claimed to  have been acquired as M/s. Mangilal Jayantilal & Company, 65  Princess Street,  Second Floor,  Bombay,  which name  and   address,  according  to  the  prosecution,  were fictitious. P.W.3, the Assistant Commissioner, Food and Drug Administration, Bombay North Circle, has deposed that he got it verified by his Inspector who submitted a report that the above name  and address  were fictitious.  But the Inspector has not  been examined,  nor his  report proved.  Obviously, therefore,  the  defence  version  remained  unrebutted  and violation of section 18A remained unestablished.      5. Regarding the acquittal of the 2nd respondent of the offence under  section 18  (a) (ii)  and section  18(c), the learned counsel  for the  State of  Karnataka submitted that under section 34 of the Drugs and Cosmetics Act the firm, as well as its partners were liable to be convicted. Section 34 may be extracted here:-           "S. 34.  (1) Where  an offence  under this Act has      been committed  by a  company every  person who  at the      time the  offence was  committed, was in charge of, and      was responsible  to the  company for the conduct of the      business of  the company,  as well as the company shall      be deemed  to be  guilty of  the offence  and shall  be      liable   to   be   proceeded   against   and   punished      accordingly:           Provided that nothing contained in the sub-section      shall render  any such  person liable to any punishment      provided in  this Act if he proves that the offence was      committed without 203      his knowledge or that he exercised all due diligence to      prevent the commission of such offence.           (2) Notwithstanding  anything  contained  in  sub-      section (1),  where an  offence under this Act has been      committed by  a company  and  it  is  proved  that  the      offence  has   been  committed   with  the  consent  or      connivance of  or is attributable to any neglect on the      part of,  any director,  manager,  secretary  or  other      officer  of   the  company,   such  director,  manager,      secretary or  other officer  shall also be deemed to be      guilty of  that offence  and  shall  be  liable  to  be      proceeded against and punished accordingly.      Explanation.- For the purpose of this section-      (a)  "company" means  a body  corporate, and includes a           firm or other association of individuals; and      (b)  "director" in  relation to  a firm means a partner           in the firm."      It is seen that the partner of a firm is also liable to be convicted  for an offence committed by the firm if he was in charge  of, and  was responsible  to, the  firm  for  the conduct of  the business of the firm or if it is proved that the offence was committed with the consent or connivance of, or was  attributable to  any neglect  on  the  part  of  the partner concerned. In the present case the second respondent was sought to be made liable on the ground that he alongwith the first  respondent was  in charge  of the  conduct of the business of  the firm.  Section 23-C of the Foreign Exchange

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Regulation Act  1947  which  was  identically  the  same  as section 34  of the  Drugs and  Cosmetics  Act  came  up  for interpretation in G. L. Gupta v. D. N. Mehta it was observed as follows:           "What then does the expression "a person in charge      and responsible  for the  conduct of  the affairs  of a      company  mean"?  It  will  be  noticed  that  the  word      ’company’ includes  a firm or other association and the      same test  must apply  to a  director in-charge  and  a      partner of  a firm  incharge of a business. It seems to      us that  in the  context a person ’in charge’ must mean      that the  person should  be in  over all control of the      day to day 204      business of the company or firm. This inference follows      from the  wording of  S. 23C(2).  It mentions director,      who may  be a  party to  the policy being followed by a      company and yet not be in charge of the business of the      company. Further it mentions manager, who usually is in      charge of  the business  but  not  in  over-all-charge.      Similarly the  other officers  may be in charge of only      some part of business."      The evidence  in the  present case  shows that  it  was respondent No.  1 and  not respondent  No. 2 who was in over all control  of the  day to  day business  of the  firm. The second respondent  is not  liable  to  be  convicted  merely because he  had the  right to participate in the business of the firm under the terms of the Partnership Deed.      6. This appeal has no merit and is dismissed. P.B.R.    Appeals dismissed. 205