SC Refuses Relief to Himachal Pharma Firm in Drugs Act Case, Upholds HC Order on Prosecution

New Delhi: The Supreme Court has dismissed a criminal appeal filed by SBS Biotech and its officials, upholding the Himachal Pradesh High Court's decision refusing to quash prosecution proceedings initiated under the Drugs and Cosmetics Act, 1940.

The judgment, delivered on February 20, 2026, confirms that the complaint alleging regulatory violations related to manufacturing practices and statutory record maintenance was legally sustainable.

The case stems from criminal proceedings launched against Kala Amb–based pharmaceutical manufacturer SBS Biotech, a partnership firm engaged in the production of drug formulations under valid licences issued under the Drugs and Cosmetics Rules, 1945. The firm, along with its Production Head and an alleged managing partner, faced prosecution for alleged contraventions of provisions concerning compliance with Schedule M (Good Manufacturing Practices) and Schedule U (Manufacturing Records).

The dispute originated from an inspection conducted by a Drug Inspector on July 22, 2014. During this inspection, authorities alleged that the firm had failed to maintain the requisite records mandated under the Rules. Specific discrepancies were noted in relation to the handling and accounting of pseudoephedrine hydrochloride, a regulated substance. The inspector directed the firm not to dispose of the concerned stock and required submission of complete purchase, sale, and consumption records.

Upon re-inspection on August 5, 2014, officials recorded that the firm had neither submitted a reply nor produced the complete records sought earlier. The inspection reportedly revealed serious discrepancies in manufacturing, testing, and distribution documentation. Authorities further alleged that certain entries appeared tampered, with misleading corrections and missing details. Consequently, regulators seized approximately 24.990 kg of pseudoephedrine hydrochloride along with registers and batch production records.

Subsequent regulatory action included issuance of a show cause notice in July 2015, to which the firm responded by disputing the alleged violations and requesting return of seized documents. After scrutiny of the replies, the State Drug Controller granted prosecution sanction in September 2016. A criminal complaint was thereafter filed in February 2017 alleging contraventions of Sections 18(a)(vi), 18-B, and related provisions, punishable under Sections 27(d) and 28-A of the Act.

The appellants challenged the prosecution before the High Court under Section 482 of the CrPC, primarily arguing that the allegations pertained only to non-maintenance and non-furnishing of records, which should attract Section 18-B punishable under Section 28-A, carrying a maximum imprisonment of one year. They contended that invocation of Section 18(a)(vi) punishable under Section 27(d) was legally untenable.

The appellants further argued that since Section 28-A prescribes punishment up to one year, the limitation period under Section 468 of the CrPC would be one year. As the complaint was filed more than two years after the inspection, the proceedings were claimed to be barred by limitation. They also challenged the Magistrate’s committal order, asserting that offences punishable with imprisonment not exceeding three years ought to be tried summarily by a Judicial Magistrate under Section 36-A of the Act.

Opposing the appeal, the Himachal Pradesh government submitted that inspections had revealed serious irregularities, including total non-maintenance of statutory registers required under Schedules M and U. The State argued that the firm repeatedly failed to furnish complete records despite directions and notices. Authorities maintained that such violations constituted offences under Section 18(a)(vi) read with Rule 74, punishable under Section 27(d).

The State further contended that Section 27(d) prescribes imprisonment ranging from one to two years, thereby attracting a three-year limitation period under Section 468 of the CrPC. Consequently, the complaint filed within two-and-a-half years was not time-barred. The committal to the Special Judge, the State argued, was in accordance with statutory provisions.

Examining the rival submissions, the Supreme Court undertook a detailed analysis of Sections 18(a)(vi), 18-B, 27(d), and 28-A of the Drugs and Cosmetics Act, along with Rule 74 and Schedules M and U. The Court observed that the complaint did not merely allege non-furnishing of records but also referred to discrepancies, alleged manipulation, and violations concerning manufacturing and testing processes.

The bench held that where allegations disclose contravention of provisions of Chapter IV or Rules framed thereunder, Section 18(a)(vi) would be attracted. Such contravention is punishable under Section 27(d), which prescribes imprisonment of not less than one year extendable to two years. Accordingly, the applicable limitation period would be three years.

Rejecting the appellants’ plea of limitation, the Court held that the complaint filed within two years and six months was within the statutory period. The Court also agreed with the High Court’s finding that omission of Section 27(d) in the handwritten cognizance order constituted a clerical error.

On the question of jurisdiction, the Supreme Court observed that Section 32(2) of the Act bars courts inferior to a Sessions Court from trying offences punishable under Chapter IV unless otherwise provided. The Court held that Section 36-A, which provides for summary trials, excludes offences triable by Special Courts or Courts of Session. The Magistrate’s committal order was therefore held valid.

The Supreme Court distinguished judgments relied upon by the appellants, including Miteshbhai J. Patel and Cheminova (India) Ltd, noting that those cases involved complaints filed beyond the limitation period. Finding no infirmity in the High Court’s ruling, the bench dismissed the appeal.

“Accordingly, the present appeal stands dismissed,” the court held.

To view the order, click the link below: