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CASE NO.: Appeal (crl.)  1659 of 2007

PETITIONER: Sanjay Kumar Kedia

RESPONDENT: Narcotics Control Bureau & Anr

DATE OF JUDGMENT: 03/12/2007

BENCH: S.B.SINHA & HARJIT SINGH BEDI

JUDGMENT: JUDGMENT

O R D E R  CRIMINAL APPEAL NO. 1659 OF 2007  (@SLP (Crl.) No. 3892 of 2007)  

HARJIT SINGH BEDI, J.  

1.      Special Leave granted.

2.      The appellant Sanjay Kumar Kedia, a highly qualified  individual, set up two companies M/s. Xponse Technologies  Limited (XTL) and M/s. Xponse IT Services Pvt. Ltd. (XIT) on  22.4.2002 and 8.9.2004 respectively which were duly  incorporated  under the Indian Companies Act, 1956.  On  1.2.2007 officers of the Narcotics Control Bureau (NCB)  conducted a search at the residence and office premises of  the appellant but found nothing incriminating.  He was also  called upon  to appear before the NCB on a number of  occasions pursuant to a notice issued to him under Section 67  of the Narcotic Drugs and Psychotropic Substances Act, 1985  (hereinafter referred to as the "Act") and was ultimately  arrested and the bank accounts and premises of the two  companies were also seized or sealed.  On 13.3.2007 the  appellant filed an application for bail in the High Court  which was dismissed on the ground that a prima facie case  under Sections 24 and 29 of the Act had been made out and  that the investigation was yet not complete.  The appellant  thereafter moved a second bail application before the High  Court on 16.4.2007 which too was dismissed with the  observations that the enquiry was at a critical stage and  that the department should be afforded sufficient time to  conduct its enquiry and to bring it to its  logical  conclusion as the alleged offences had widespread  ramifications for society.  It appears that a bail  application was thereafter filed by the appellant before the  Special Judge which too was rejected on 28.5.2007 with the  observations that the investigation was still in progress.   Aggrieved thereby, the appellant preferred yet another  application for bail before the High Court on 4.6.2007 which  too was dismissed on 7.6.2007.  The present appeal has been  filed against this order. 3.      Notice was issued on the Special Leave Petition on  30.7.2007 by a Division Bench noticing a contention raised by  Mr. Tulsi that service providers such as the two companies  which were intermediaries were protected from prosecution by

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Section 79 of the Information Technology Act, 2000.  An  affidavit in reply has also been filed on behalf of the  respondent \026 NCB and a rejoinder affidavit in reply thereto  by the appellant. 4.      We have heard learned counsel for the parties at length. 5.      Mr. Tulsi has first and foremost argued that the  allegations against the appellant were that he had used the  network facilities provided by his companies for arranging  the supply of banned psychotropic substances on line but  there was no evidence to suggest that the appellant had been  involved in dealing with psychotropic substances or  engaged  in or controlled any trade whereby such a substance obtained  outside India had been supplied to persons outside India and  as such no case under section 24 of the Act had been made out  against the appellant.  Elaborating this argument, he has  submitted that the two drugs which the appellant had  allegedly arranged for supply were phentermine and butalbital   and as these drugs were not included in Schedule-I of the  Narcotic Drugs or Psychotropic Substances Rules 1987 in terms  of the notification dated 21.2.2003 and were also recognized  by the Control Substances Act, a  law applicable in the  United States, as having low  potential for misuse and it was  possible to obtain these drugs either on written or oral  prescription of a doctor, the supply of these drugs did not  fall within the mischief of Section 24.  He has further  argued that in the circumstance, the companies were mere  network service providers they were protected under Section  79 of the Technology Act from any prosecution. 6.      Mr. Vikas Singh, the learned Additional Solicitor  General for the respondents has  however pointed out that the  aforesaid drugs figured in the Schedule appended to the Act  pertaining to the list of psychotropic substances (at Srl.  Nos. 70 and 93) and as such it was clear that the two drugs  were psychotropic substances and therefore subject to the  Act.  It has also been pointed out that the appellant had  been charged for offences under Sections 24 and 29 of the Act  which visualized that a person could be guilty without  personally handling a psychotropic substance and the evidence  so far  collected showed that the appellant was in fact a  facilitator between buyers and certain pharmacies either  owned or controlled by him or associated with the two  companies and that Section 79 of the Technology Act could not  by any stretch of imagination guarantee immunity from  prosecution under the provisions of the Act.  7.      It is clear from the Schedule to the Act that the two  drugs phentermine and butalbital are psychotropic substances  and therefore fall within the prohibition contained in  Section 8 thereof.  The appellant has been charged for  offences punishable under Sections 24 and 29 of the Act.   These Sections are re-produced below: 24. " Punishment for external dealings in  narcotic drugs and psychotropic substances  in contravention of section 12.-  Whoever  engages in or controls any trade whereby a  narcotic drug or a psychotropic substance  is obtained outside India and supplied to  any person outside India without the  previous authorization of the Central  Government or otherwise than in accordance  with the conditions (if any) of such  authorization granted under section 12,  shall be punishable with rigorous  imprisonment for a term which shall not be  less than ten years but which may extend  to twenty years and shall also be liable

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to fine which shall not be less than one  lakh rupees but may extend to two lakh  rupes:

    Provided that the court may, for  reasons to be recorded in the judgment,  impose a fine exceeding two lakh rupees".

29. Punishment for abetment and  criminal conspiracy. -  (1) Whoever  abets, or is a party to a criminal  conspiracy to commit an offence  punishable under this Chapter, shall,  whether such offence be or be not  committed in consequence of such  abetment or in pursuance of such  criminal conspiracy, and  notwithstanding anything contained in  section 116 of the Indian Penal Code  (45 of 1860), be punishable with the  punishment provided for the offence.

(2)  A person abets, or is a party to a  criminal conspiracy to commit, an  offence, within the meaning of this  section, who, in India abets or is a  party to the criminal conspiracy to the  commission of any act in a place  without and beyond India which \026          (a)     would constitute an offence if  committed within India; or

(b)     under the laws of such place,  is an offence relating to  narcotic drugs or psychotropic  substances having all the legal  conditions required to  constitute it such an offence  the same as or analogous to the  legal conditions required to  constitute it an offence  punishable under this Chapter,  if committed within India.

8.    A perusal of Section 24 would show that it deals with  the engagement or control of a trade in Narcotic Drugs and  Psychotropic Substances controlled and supplied outside India  and Section 29 provides for the penalty arising out of an  abetment or criminal conspiracy to commit an offence under  Chapter IV which includes Section 24.  We have accordingly  examined the facts of the case in the light of the argument  of Mr. Tulsi that the companies only provided third party  data and information without any knowledge as to the  commission of an offence under the Act. We have gone through  the affidavit of Shri A.P. Siddiqui Deputy Director, NCB and  reproduce the conclusions drawn on the investigation, in his  words.                                                   "(i) The accused and its associates are  not intermediary as defined under

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section 79 of the said Act as their  acts and deeds was not simply  restricted to provision of third party  data or information without having  knowledge as to commission of offence  under the NDPS Act.  The company  (Xponse Technologies Ltd. And Xpose IT  Services Pvt. Ltd. Headed by Sanjay  Kedia) has designed, developed, hosted  the pharmaceutical websites and was  using these websites, huge quantity of  psychotropic substances (Phentermine  and Butalbital) have been distributed  in USA with the  help of his  associates.  Following are the online  pharmacy websites which are owned by  Xponse or Sanjay Kedia.

(1)     Brother Pharmacy.com and LessRx.com:   Brothers pharmacy.com, online pharmacy  was identified as a marketing website  (front end) for pharmaceutical drugs.  LessRx.com has been identified as a "back  end" site which was being utilized to  process orders for pharmaceutical drugs  through Brotherspharmacy.com.   LessRx.com’s registrant and  administrative contact was listed True  Value Pharmacy located at 29B, Rabindra  Sarani, Kolkata, India-700073.  Telephone  No.033-2335-7621 which is the address of  Sanjay Kedia.  LessRx.com’s IP address is  203.86.100.95.  The following websites  were also utilizing this IP address:

ALADIESPHARMACY.com, EXPRESSPHENTERMINE.com, FAMILYYONLINEPHARMACY.com ONLINEEXPRESSPHARMACY.com, SHIPPEDLIPITOR.com Domain name Servers for LessRx.com (IP  address: 203.86.100.95) were  NS.PALCOMONLINE.com and  NS2PALCOMLINE.com.

     The LessRx.com’s website hosting  company was identified as Pacom Web Pvt  Ltd, C-56/14,1st Floor, Institutional  Area, Sector 62, Noida-201301.  Sanjay  Kedia entrusted the hosting work to  Palcom at VSNL, Delhi.  These servers  have been seized.  Voluntary statement of  Shri Ashish Chaudhary, Prop. Of Palcom  Web Pvt Ltd.indicates that He maintained  the websites on behal of Xponse.

     According to the bank records,  funds have been wired from Brothers  pharmacy, Inc’s Washington Mutual Bank  Account #0971709674 to Xponse IT services  Pvt Ltd, ABN AMRO bank account  No.1029985, Kolkata.

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(2) Deliveredmedicine.com   : A review of  the Xponse’s website-XPONSEIT.com was  conducted and observed and advertisement  for XPONSERX.  That XPONSERX was  described as a software platform  developed for the purpose of powering  online pharmacies.  Xponserx was designed  to process internet pharmacy orders by  allowing customers to order drugs.  Drug  Enforcement Administration (DEA), USA  conducted a "whois" reverse lookup on  domain name XPONSERX.COM was at  domaintools.Com and it revealed that  XPONSERX.COM was registered to Xponse IT  Services Pvt Ltd, Sanjay kedia,  29B,Rabindra Sarani, 12E,3rd floor,  Kolkata, WB 70073. Telephone no.+91- 9830252828 was also provided for Xponse.   Two websites were featured on the  XPONSEIT.COM websites as featured  clients. And these were  DELIVEREDMEDICINE.COM             AND  TRUEVALUEPRESCRIPTIONS.COM.  Review  indicated that these two websites were  internet pharmacies.

Consequently a "whois" reverse look-up on  domain name DELIVEREDMEDICINE.COM at  domainstools.com conducted by DEA revealed  that it was registered to Xponse Inc.,2760  Park Ave.,Santa Clara, CA, USA which is the  address of Sanjay Kedia.

(3) Truevalueprescriptions.com:  Review of  this website indicated that this website was  a internet pharmacy.  In addition  TRUEVALUEPRESCRIPTIONS listed Phentermine as  a drug available for sale.  It appeared that  orders for drugs could be made without a  prescription from the TRUEVALUE website, it  was noted that orders for drugs could be  placed without seeing a doctor.  According  to the website, a customer can complete an  online questionnaire when placing the order  for a drug in lieu of a physical exam in a  physician’s office.  Toll free telephone  number 800-590-5942 was provided on the  TRUEVALUE website for customer Service.

DEA, conducted a "whois" reverse look-up  on domain name TRUEVALUEPRESCRIPTIONS.COM  at domaintools.com and revealed that IP  address was 203.86.100.76 and the server  that hosts the website was located at  Palcom, Delhi which also belongs to Xponse.

From the above facts it is clear that the  Xponse Technologies Ltd and Xponse IT  Services Pvt Ltd were not acting merely as  a network service provider but were  actually running internet pharmacy and  dealing with prescription drugs like  Phentermine and Butalbital."

9.   We thus find that the  appellant and his associates were

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not innocent intermediaries or network service providers as  defined under section 79 of the Technology Act but the said  business was only a fagade and camouflage for more sinister  activity. In this situation, Section 79 will not grant  immunity to an accused who has violated the provisions of the  Act as this provision gives immunity from prosecution for an  offence only under Technology Act itself. 10.   We are therefore of the opinion that in the face of  overwhelming inculpatory evidence it is not possible to give  the finding envisaged under Section 37 of the Act for the  grant of bail that there were reasonable grounds for  believing that the appellant was  not guilty of the offence  alleged,  or that he would not resume his activities should  bail be granted. 11.    For the reasons recorded above, we find no merit in  this appeal, which is accordingly dismissed.  We however  qualify that the observations made above are in the context  of the arguments raised by the learned counsel on the bail  matter which obligated us to deal with them, and will not  influence the proceedings or decision in the trial in any  manner.