http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 7  

PETITIONER: SWANTRAJ & ORS.

       Vs.

RESPONDENT: STATE OF MAHARASHTRA

DATE OF JUDGMENT05/02/1974

BENCH: KRISHNAIYER, V.R. BENCH: KRISHNAIYER, V.R. SARKARIA, RANJIT SINGH

CITATION:  1974 AIR  517            1974 SCR  (3) 287  CITATOR INFO :  F          1982 SC1397  (2)

ACT: Drugs and Cosmetics Act, (23 of 1940), S. 18(1)(c)--‘Stocked for sale’, if includes temporary storage for sale not at the Place  of storage but elsewhere--Whether forms for  licences Provided   are   inflexible  or   suitable   licences   with modification can be issued.

HEADNOTE: Section 18(c) of the Drugs and Cosmetics Act, 1940, provides that no person shall manufacture for sale, or sell, or stock or  exhibit for sale or distribute any drug except  under  a licence  and  s.  27(b)  provides  for  punishment  for  its contravention. The  appellant  was a wholesale dealer  and  distributor  of drugs  and had the necessary licences prescribed  under  the Act.   It had also the necessary licences authorising it  to sell,  stock or exhibit for sale or distribute by  wholesale through  its motor van.  The appellant booked certain  drugs by  lorry but as the motor van was delayed, the  drugs  were released  from the lorry and temporarily kept in the  godown of a local drugs dealer. On  the questions, (1) whether the licence  which  permitted stocking  and  selling in a specified vehicle,  covered  the brief interval of storage in the godown before loading on to the  appellant’s  van,  and  (2)  whether  the  act  of  the appellant  in temporarily storing drugs, not  for  immediate sale  there, but for ultimate sale in various parts  of  the State,  is  contrary to, s. 18(c) and  punishable  under  s. 27(b). HELD :(1)(a) A licence in terms for a vehicle cannot do duty for one to keep drugs in a fixed place.  Assuming that  none of  the prescribed forms provide for  anitinerant  wholesale distributor  and that it would be impossible to furnish  the very  many possible places where for short  intervals  drugs may  have to be stored awaiting the arrival of the  van,  an arguments  ab inconvenience cannot be a defence. if the  law requires a licence for a place and drugs are kept in such  a place  without the licence, even as a stop-gap  arrangement. The paramount purpose of regulation through licensing is, to set  in  motion  vigilant  medical  watch  over  the  proper protection  of  drugs  and medicines.  verification  of  the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 7  

expiry  of the time of their efficacy, and the rejection  of spurious  products.  If godowns, temporary stores etc.,  can be  unlicensed, they can become foci of  dubious,  deceptive and harmful drugs.  Therefore, every place where storage  is made must be licensed. [290 D-F; 292 A-0] (b)  The  rules  made under the Act,  while  they  visualise wholesale distribution licences. the forms have not provided for  licences  for  mobile vans or  distribution  depots  so essential for a wholesale distribution system.  The  licence given to the appellants’ vehicle is an improvised innovation without  the law.  ’Mere is no express power to thus  modify the  forms  or  innovate according to  need.   But  such  an authority  to  grant suitable licenses under rr. 61  and  62 (proviso),  including  the  wayside  depots  or  ’emergency’ stores.  could be implied.  The appellant  should  therefore have applied for and obtained the necessary licence for  the temporary storage. [291 C-H] (Law  Lexicon  of  British  India  compiled  and  edited  by Ramanatha Aiyar. sale there’ or ’stocked for sale  elsewhere late.   The  Central Government should however  clarify  the rules   and  provide  for  appropriate  forms.   The   first interpretation  permits abuse through loopholes,  while  the second  tightens  up but casts on the dealer the  burden  of obtaining more licences.  Since risk 288 of life and health is avoided by the latter  interpretation, it  must  be held that the storage, even  though  for  short spells  and  on ad hoc basis and without intent to  sell  at that  place but as part of the sales business, comes  within stocking for sale in s. 18(c) and r. 62. [293 C-E]

JUDGMENT: CRIMINAL APPELLATE JURISDICTION : Criminal Appeal No. 177 of 1970. From the judgment and order dated the 7th August 1969 of the Bombay  High Court in (Nagpur Bench) at Nagpur  in  Criminal Appeal No. 25 of 1968. S.   C. Manchanda and O. P. Verma for the appellant. M.   C. Bhandare and M. N. Shroff, for the respondent. The Judgment of the Court was delivered by KRISHNA IYER, J.-Every legislation is a social document  and judicial  construction  seeks  to  decipher  the   statutory mission,  language permitting, taking the cue from the  rule in  Heydon’s(1) case of suppressing the evil  and  advancing the remedy.  The Drugs and Cosmetics Act, 1940 (the Act, for short)  is  a life-saving statute one of the  provisions  of which,  together with a bunch of rules and forms, falls  for interpretation and application to the substantially admitted facts set out concisely in the order granting certificate of fitness  to appeal.  The Bench projected  the  factual-legal issue in these words :-               "It  is  not in dispute that  the  petitioners               have  a  wholesale dealers’ licence  to  stock               drugs at Bombay and have a further licence  to               distribute  the  drugs through the  motor  van               throughout  the  territory of  the  state,  of               Maharashtra.   Accordingly,  their  motor  van               started  filled  with drugs  and  reached  the               Vidarbha area.  The petitioners booked certain               drugs for which they have already a licence to               distribute, by lorry to Yeotmal.  The idea was               that  the  motor van, which  was  touring  the               Vidarbba  area, should reach Yeotmal by  about

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 7  

             the time when the goods were due to arrive and               the  person in charge. of the motor van  would               collect the drugs so booked from the lorry and               distribute  them as per instructions given  by               the firm.  But unfortunately the motor van was               delayed  by  about three days and one  of  the               partners of the petitioner-firm who was moving               with the van, went ahead of Yeotmal,  released               the  goods  from the  transport  operator  and               temporarily kept them in the godown of a local               drugs  dealer.  The intention was to load  the               van with those drugs and distribute the  drugs               as permitted by the licence.               In the appeal in this Court, these facts  have               been found as pleaded by the accused  persons.               However, it is held that the temporary deposit               of  the goods in the godown of a  local  drugs               dealer  amounts  to  stocking  for  sale(   as               contemplated  by clause (c) of section  18  of               the Drugs               (1)   3   CD.   Ref.  7  a  Maxwell   on   the               interpretation of Statutes-12 Edition. 40.               289               and  Cosmetic Act, 1940.  For the  purpose  of               stocking  the  drugs, either for sale  or  for               distribution,,  the  accused  persons  had  no               licence  for the premises at Yeotmal and  this               act amounted to a breach of the conditions  of               the  licence and, as such, breach of rule  62,               amounting to an ,offence under section 27  (b)               of the Drugs and Cosmetics Act, 1940.               The  point,  whether a  temporary  deposit  of               drugs  or  temporary retention of drugs  in  a               place  outside  Bombay  for  which  place  the               petitioners  have  no  licence  to  stock  the               ,goods,  amounts  to  stocking  for  sale   or               distribution, is a point ,of law which appears               to us of general importance."               The appellant has been concurrently  convicted                             but  hopefully challenged.  Sec. 18 (e ) of  the               Act  forbids manufacture for sale or  sell  or               stock  or exhibit for sale, or distribute  any               drug  without licence under this Chapter  (Ch.               IV).   Sec. 27 (b) is the penal provision  for               ,contravention of the provisions of Ch.  IV of               the Act or the rules made thereunder.  Rule 62               is claimed to have been violated and so may be               read here together with the sister rule,  i.e.               R. 61               "61.  Forms of licences to sell drugs-               (1  ) A licence to sell, stock or exhibit  for               sale,  or  distribute drugs other  than  those               specified in Schedules C and C (1) by  retail,               on restricted licence or by wholesale shall be               issued  in Form 20, 20-A or 20-B as  the  case               may be.               Provided that a licence in form 20-A shall  be               valid for only such drugs as are specified  in               the licence :               (2)   A licence to sell, stock or exhibit  for               sale,   or  distribute  drugs   specified   in               Schedules C and C(1) by retail, on  restricted               licence  or  by wholesale shall be  issued  in               Form 21, 21-A or 21-B as the case may be

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 7  

             Provided that, a licence in form 21 A shall be               valid for only such drugs as are specified  in               the licence. 62.  Sale  at  more  than one place-If  drugs  are  sold  or stocked   for  sale  at  more  than  one   place,   separate application  shall be made, and a separate licence shall  be issued, in respect of each such place : Provided that this shall not apply to itinerant vendors  who have no specified place of business and who will be licensed to  conduct  business  in  a  particular  area  within   the jurisdiction of the licensing authority." The appellant is a wholesale dealer and distributor-and  has a  licence  for his Bombay shop in Form 20B and  another  in Form  21B, one for drugs specified in C and C (1)  Schedules and the other for other drugs (Ex. 37 and 38).  The firm has one   more  licence  issued  under  R.61(2)  in   Form   21B authorising it to sell, stock or exhibit for 290 Sale or distribute by wholesale on the premises situated  at through  Station  Vagan  No.  No.  1279  in  the  state   of Maharashtra, the following categories of drugs specified  in Schedule C and C(1) to the Drug Rules, 1945 :- Categories  of drugs : for items of Schedule C(1) drugs  not requiring Cold Storage. 2.This licence shall be in force for two years from  the date of issue of this licence. 3.This licence is subject to the conditions stated  below and to, the Provisions of the Drugs Act, 1940 and the  rules thereunder. The  question  is  whether  the, act  of  the  appellant  in temporarily storing drugs, not for immediate sale there  but intended  for ultimate sale in various, parts of the  State, is contrary to sec. 18(c) and punishable under Sec. 27  (b)? Even  if  it is, can Ex. 39, which  permitted  stocking  and selling  in the specified vehicle of the accused, cover  the brief  interval of storage between taking delivery from  the railway  or  other  public transport and  loading  into  the appellant’s mobile van  Agreeing  with the High Court, we may make short shrift  of the second contention first.  If a brief storage for sale in the  circumstances   of this case necessitates a  licence  a legal issue we will examine separately-does Ex. 39 fill  the bill  ? A licence in terms for a vehicle cannot do duty  for one to keep drugs in a fixed place.  The grievance  assuming it to be real, that none of the prescribed forms provide for an  itinerant  wholesale distributor or that it would  be  a fantastic  impossibility  to furnish  the  possible  places- likely  to be numerous-where for short intervals  drugs  may have  to  be stored awaiting the arrival of the van,  is  no defence.  If the law asks for a licence for a place and  you do  not  have it and still keep the articles there  you  are asking  for  criminal  trouble,  whether  it  is  a  stopgap stocking or not.  The arguments ab inconvenienti affords  no answer.   The.   Act mandates the taking of  a  licence  for every  place  where you stock drugs for sale, the  words  of Sec.18(v)  and  rule  62 being plain  and  admitting  of  no exceptions. you ask four questions. is it a drug?  If it is, is  it  stored in a place or, is it in transit ?  If  it  is stored  in  a place, is the storage for sale?  If it  is,  a licence  for that place half way house, may be is the,  only answer to a prosecution.  There is none here, ex  confession of  course,  what looms large then is as to whether  such  a stop  gap  storing is one for sale even if,  admittedly.  no sale is intended in that drug shelter ? Counsel for the State Shri Bhandare counters the argument of

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 7  

absence  of prescribed forms and difficulties in  mentioning many  places  for temporary storage of drugs, in  two  ways. Firstly,  statutory  forms are samples  for  guidance,  not- exhaustive prescriptions unamenable to addition modification or improvisation as the circumstances require.  The forms in the  appendices to the Civil Procedure Code illustrate  this point  of course, it is not as sample as that  Sec.18  which regulates  manufacture  and sale of  drugs  prohibits  these activities,  "except  under  and  in  accordance  with   the conditions  of a licence issued for such purpose........  No inflexible formula nor petrified 291 form  is built into the section, suitable forms dictated  by pragmatic  considerations and conditions of  business  being not ruled out.  The rules, however, are a little confusing Rule 2(b) defines ’Form’ as a form set forth in Sch.  A  and does  not  profess  to be  illustrative  and  that  Schedule applies  6  forms  under  R. 61 (1) and  (2)  and  none  for peripatetic wholesale distributors who may transport to  and stock  in  central places and radiate from there  to  remote retailers.  The licence Ex. 39 for the accused’s vehicle  is an  improvised  innovation without the law but  prompted  by practical  sense.   The  sub-rules  of  Rs.  61  state  that licences there under shall be issued in forms 20A, B and  C, 21A, B and C. Rule 62 leaves no room for variations to  suit exigencies  although  its  proviso  envisages  licences  for itinerant vendors for an area and R 62A takes cognisance  of travelling agents and itinerant vendors who are required  to take  licences in Form 21A.  But it is a glaring  deficiency that  while  the  rules  visualise  wholesale   distribution licences the forms do not spell out licences for mobile vans or   distribution  depots  so  essential  for  a   wholesale distribution system.  There is no doubt that if a scientific system  of over-seeing wholesale distribution and  a  viable scheme of protected distribution is to be devised,  licences for  large and well equipped conveyances and storage  depots is  desirable, nay, necessary.  Indeed, storage  in  transit must also be licensed so that medicines do not suffer in the process.  At present, no rules take care of transit by  road or   rail.   Actually,  cold  storage   or   air-conditioned facilities   for   sensitive   medicines   are   scarce   in nationalised  and private transport services and  the  drugs legislation winks at it.  Likewise, the forms do not provide for  storage depots or medical vans for wholesale  supplies. Social guilt attaches to legal lacunae, the community  being the  victim.   Arguments in this case  have  exposed  these, shortfalls  in  the law and we state  them  for  legislative attention. The  statutory scheme does provide for retail and  wholesale sales  and storages for sale.  It does prescribe  forms  for itinerant   retailers   for  specified   areas,   travelling representatives supplying samples and the like.  But storage for sale in mobile wagons or vans resorted to by wholesalers is  not expressly covered by statutory forms.  That  is  why Ex.  39  is  an adaptation not found in  the  fasciculus  of prescribed  forms.  There is no express power to modify  the forms conferred by the rules, or innovate according to need, desirable  though  it is.  As the law now  stands,  we  are, disinclined to invalidate Ex. 39. on the other hand, the Act and the rules must prevail over the forms and, therefore, we are  inclined to overlook the technical deficiencies in  the rules and, bending the law to save life, uphold the  implied authority  to  grant suitable licences under R.  61  and  62 (proviso)  even  if liberties have to be  taken  with  those given  in  Schedule  A. This Will extend to  grant  of  such

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 6 of 7  

licences  for  way side depots or ’emergency’  stores.   But licences there must be for every storage for sale (S. 18(C). Sri  Manchanda’s plea’ that licences should not be  insisted on for every place of make-shift storage in a far-flung area served  by  a wholesaler may look  reasonable.   The  police power of the State is 292 exercised  to  ensure  safe and potent drugs  for  a  people peculiarly  susceptible to ailments and largely ignorant  of health hazards.  The paramount purpose of regulation through licensing is, inter alia, to set in motion vigilant  medical watch over the proper protection of drugs and medicines  and the  verification  of  the  expiry of  their  life  and  the spuriousness of the products.  If godowns, temporary  stores and  depots  can  remain unlicensed,  they  escape  official attention  and  can  deteriorate into  foci  of  dubious  or deceptive  drugs  harmful  to society.   Every  place  where storage  for  sale is made must be licensed.   That  is  the plain  meaning  of Sec. 18 (c) in fulfillment of  the  clear purpose, the sensitive defence of the sick. The  only surviving issue is whether the medicines  in  this case  were  stocked  for sale in the  house  of  Jaswani  at Yootmal.   Admittedly, they were kept not for sale in  those premises.   Admittedly, they were meant for sale  eventually to rural retailers elsewhere.  If so, were they stocked  for sale?   Either contention has some claims to acceptance  but what  must tilt the balance is the purpose of the,  statute, its  potential  frustration and judicial  avoidance  of  the mischief  by a construction whereby the means  of  licensing meet  the ends of ensuring pure and potent remedies for  the people.   This liberty with language is sanctified by  great judges  and  textbooks.  Maxwell(1) instructs  us  in  these words :-               "There  is  no doubt that ’the office  of  the               Judge  is, to make such construction  as  will               suppress the mischief, and advance the remedy,               and   to   suppress  all  evasions   for   the               continuance  of  the mischief.’ To  carry  out               effectually  the object of a statute, it  must               be  so construed as to defeat all attempts  to               do, or avoid doing, in an indirect or  circui-               tous  manner that which it has  prohibited  or               enjoined : quando liquid prohibit,  prohibetur               et omne per quod devenitur ad illud.               This  manner of construction has two  aspects.               One  is  that  the  courts,  mindful  of   the               mischief  rule, will not be astute  to  narrow               the language of a statute so as to allow  per-               sons  within  its purview to escape  its  net.               The  other is that the statute may  be-applied               to the substance rather than the mere form  of               transactions,  thus defeating any  shifts  and               contrivances which parties may have devised in               the  hope of thereby falling outside the  Act.               When   the   courts   find   an   attempt   at               concealment, they will, in the words of Wilson               C.J., ’brush away the cobweb varnish, and chew               the transactions in their true light."               This  benignant rule originated  four  hundred               years ago in Heydon’s case which resolved               "that for the sure and true interpretation  of               all  statutes  in general (be  they  penal  or               beneficial,  restrictive or enlarging  of  the               common  law) four things are to  be  discerned               and  considered : (1st).  What was the  common

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 7 of 7  

             law before               (1)   Marwell   on   the   Interpretation   of               Statutes-12th Edition p. 137.               293               the  making  of the Act. (2nd)  What  was  the               mischief. and defect for which the common  law               did  not  provide.  (3rd).   What  remedy  the               Parliament hath resolved and appointed to cure               the disease of the commonwealth.  And,  (4th).               The  true reason of the remedy; and  then  the               office  of  all the Judges is always  to  make               such   construction  as  shall  suppress   the               mischief,  and  advance  the  remedy,  and  to               suppress  subtle inventions and  evasions  for               continuance  of the mischief, and pro  private               commode, and to add force and life to the cure               and  remedy, according to the true  intent  of               the makers of the Act, pro bono publico." If  any  godown,  depot  or premises  become  the  nidus  of spurious. time-expired or unscientifically stored drugs, can they be allowed to escape the coils of the penal law on  the plea that they are not to be sold there, without great peril to  patients? Then legal shelter for spurious  drug  rackets would be judicially ensured. And this colours  construction. Stocked for sale there and then? or to be sold certainly but elsewhere later ? are the two alternatives flowing from  the language  of  Sec.     18(1) (c). The former  permits  abuse through,  loopholes,  the latter tightens up but  loads  the dealer with expenses and need for more licences. Since  risk to life and health is avoided by the latter  interpretation, we  hold that the storage, even though for short spells  and on ad hoc basis and without intent to sell at that place but as  part  of the sales business, comes within the  scope  of storage  for sale’ in Sec. 1.8(c) and R. 62. To  loosen  the law  in its joints is to play with life and therefore  anti- humanist.      On  the admitted facts, the offence is not serious.  On the  face  of  it,  the  law  is  a  little  defective.  Our interpretation  makes the accused guilty and  clarifies  the legal position although the Central Government will do  well to tidy up and tighten the provisions by a close second look at  the  law in the book. We need hardly say that a  law  is effective not by making it perfect on paper but by providing a sufficient and conscientious cadre of officers.      The sentence is light but here it is enough. We dismiss the appeal for the reasons above set out. V. P. S. Appeal dismissed. 294