'Not of Standard Quality' Drug Case: J&K High Court Refuses Relief to Pharma Directors

Jammu: The Jammu & Kashmir and Ladakh High Court has declined to quash criminal proceedings against directors of a pharmaceutical company in a case involving a drug declared "Not of Standard Quality".

According to the news reported by Daily Excelsior, the Court observed that the Drugs and Cosmetics Act is intended not only to regulate the pharmaceutical sector but also to protect the health and life of citizens under Article 21 of the Constitution.

Justice Wasim Sadiq Nargal held that the safeguards governing the manufacture, sale and distribution of medicines have a direct connection with public health and safety. The Court observed that consumers have a legitimate expectation that medicines meant for human consumption will comply with prescribed standards and will not be unsafe or sub-standard.

The observations were made while hearing a Criminal Miscellaneous Petition arising out of criminal proceedings against the directors of M/s Corona Remedies Pvt. Ltd. The matter concerns Locipil Tablets, a sample of which was collected by a Drugs Inspector of CDSCO from ESIC Model Hospital, Bari Brahmana, Jammu.

The sample was forwarded to the Regional Drugs Testing Laboratory in Chandigarh. Following examination, the Government Analyst declared the medicine to be “Not of Standard Quality”. The company was subsequently informed of the report and submitted its response, after which a joint inspection of the manufacturing facility in Solan, Himachal Pradesh, was conducted.

The directors approached the High Court claiming that they were primarily involved in the company’s financial and policy-related affairs and were based in Ahmedabad. They argued that they were not present at the Solan manufacturing facility and had no direct involvement in the manufacture or production of the drug.

They further relied on the joint inspection report, arguing that it did not attribute any specific role or criminal responsibility to them. They also challenged alleged procedural violations under the Drugs and Cosmetics Act, particularly concerning the Government Analyst’s report and the production of the sample before the trial court.

The High Court, however, declined to quash the proceedings at the preliminary stage merely on the basis of these objections. It noted that the Drugs and Cosmetics Act was enacted to regulate the manufacture, import, sale and distribution of drugs and cosmetics while ensuring that medicines supplied to the public meet prescribed standards of quality, safety and efficacy.

The Court said these legislative safeguards become especially important when allegations concern a medicine that has been declared “Not of Standard Quality”. It also referred to the Supreme Court’s approach in Dinesh B Patel, where a technical approach to pleadings in a drug-related prosecution involving company directors was not adopted because of the direct impact of such offences on public health.

The Bench clarified that the directors could still establish during the trial that they had no involvement in the manufacturing process. However, whether they were actually in charge of and responsible for the conduct of the company’s business, and whether they ultimately attract liability under Section 34 of the Drugs and Cosmetics Act, would have to be determined on the basis of evidence.

The Court further observed that the mere presence of qualified technical personnel supervising manufacturing operations does not automatically absolve company directors of potential liability under Section 34. Their degree of responsibility, control over the company’s affairs and the applicability of the statutory provisions would have to be assessed on the basis of evidence.

On the issue of its inherent powers, the High Court reiterated that the power to quash criminal proceedings must be exercised sparingly and with great caution. Referring to the Supreme Court ruling in State of Karnataka v. M. Devendrappa, the Bench noted that such powers should not be used to stifle a legitimate prosecution, particularly when factual issues remain unresolved and evidence has not been fully collected.

The Court said it was not appropriate at the pre-trial stage to conduct a meticulous examination of the evidence to determine whether the accused would ultimately be convicted or acquitted. Where a complaint, read as a whole, discloses the ingredients of an offence and is not shown to be frivolous, vexatious or mala fide, interference at the initial stage would not be justified.

The Bench found that the directors’ objections regarding their alleged lack of involvement, their responsibility for the company’s affairs, the findings of the joint inspection and the alleged procedural shortcomings involved questions of fact and evidence. Such issues, it held, should properly be considered by the trial court.

Justice Nargal also cautioned that the High Court’s inherent jurisdiction cannot be converted into a roving or fishing inquiry into the reliability or genuineness of the material forming the basis of the complaint. The Court concluded that the complaint did not suffer from any fundamental deficiency warranting the exercise of its inherent jurisdiction.

The High Court further held that the objections concerning the statutory procedure and the joint investigation report did not establish at this stage that the proceedings were legally barred or that the allegations, even if taken at face value, failed to disclose the alleged offences.

The Bench found no patent illegality, jurisdictional error or perversity in the order of the Chief Judicial Magistrate, Jammu, whereby cognizance had been taken. It therefore dismissed the petition filed by the directors and vacated the interim order under which further proceedings before the Chief Judicial Magistrate, Jammu, had been stayed.

The trial court has consequently been directed to proceed with the matter in accordance with law and adjudicate it independently on its own merits. The High Court also clarified that its observations should not influence the trial court while determining the guilt or innocence of the accused, Daily Excelsior reports.