Full Text
SLP (Crl.) No. 9281 of 2025
IN THE SUPREME COURT OF INDIA
CRIMINAL APPEAL NO. _____ OF 2026
(@ SPECIAL LEAVE PETITION (CRIMINAL) NO. 9281 OF 2025)
M/s SBS BIOTECH & OTHERS … APPELLANTS
JUDGMENT
1. Leave granted.
2. This Appeal challenges the judgment and order dated 29.07.2024 in Cr. MMO No. 167 of 2018 passed by the High Court of Himachal Pradesh at Shimla. The Appellants sought the quashing of Complaint No. 36/3 of 2017 (subsequently renumbered as Complaint No. 9 of 19.12.2017). The Appellants are being prosecuted for contravening Section 18(a)(vi) read with Rule 74 and 22(l)(cca) and 18-B, punishable under Section 27(d) and 28-A of the Drugs and Cosmetics Act, 1940 (hereinafter referred to as 'the Act') and the Rules framed thereunder.
3. Factual Matrix:
(i) The Appellant No. 1, M/s SBS Biotech, is a partnership firm engaged in the manufacturing of pharmaceutical preparations at Mauza Rampur Jattan, Nahan Road, Kala Amb, District Sirmaur, H.P.. The firm operates under valid drug licenses issued in Form-25 and Form-28 of the Drugs and Cosmetics Rules, 1945 ('the Rules'), and is mandated to adhere to Schedule-M of the Rules. Appellant No. 2, Shri Sanjeev Kumar Santoshi, is the Production Head, and Appellant No. 3, Mr. Avinash Banga, was arrayed as the alleged managing partner at the relevant time.
(ii) The chronology of events commenced with an inspection of the firm's premises conducted by the Drug Inspector on 22.07.2014. During this inspection, carried out in the presence of officials of the firm, including the Production Head, it was alleged by the Respondent that the firm had not maintained the requisite records as stipulated by Schedule-M and Schedule-U of the Rules. Specifically concerning the drug Pseudoephedrine B. No. 503413, inadequate details regarding the entry of the drug received from Neha Pharma Pvt. Ltd. were noted, and the firm failed to produce consumption records.
(iii) A Spot Inspection Report was prepared on 22.07.2014.
Through this report, the firm was directed under Section 22(d) of the Act not to dispose of the stock of the said drug until the investigation was completed. Further, directions were issued, commanding the firm, pursuant to Section 22(1)(cca) and 18-B of the Act, to produce the complete record of purchase, sale/distribution, and consumption of the said drug within a period of seven days. The Appellants subsequently contended that serving directions via the spot inspection report, rather than a separate notice, was irregular.
(iv) A re-inspection of the manufacturing premises was conducted on 05.08.2014. It was observed that the firm had neither submitted a reply nor produced the complete record as directed. During this re-inspection, it was alleged that huge discrepancies were found in the record of manufacturing, testing, and distribution. Allegations were made that the record was tampered with at certain places, including misleading entries and corrections made with fluid. The firm allegedly failed to explain these discrepancies satisfactorily.
(v) Consequent to these findings, the Drug Inspector seized the drug and corresponding documents in Form-16 on 05.08.2014 for alleged contravention of Sections 18(a)(vi) and 18-B of the Act. The seized items included 24.990 Kg of Pseudoephedrine Hydrochloride I.P. in a blue coloured PVC drum, along with numerous documents, including invoices, a register (pages 1 to 29 of the Pseudoephedrine register), and Batch Production Records (BPRs) for various batches of Eudocet tablets. On the same day (05.08.2014), a separate letter (Annexure R-1/PE) was issued to the firm, requiring them again to submit information, records, and documents under various Sections, including 22(l)(cca), 18-B, and 22(3), within 15 days. The Respondent asserted that the Appellants never responded to this notice.
(vi) On 06.08.2014, the Respondent moved an application before the learned Chief Judicial Magistrate, Nahan, for custody orders in terms of Section 23(5)(b) and (6) of the Act. The learned Judicial Magistrate, Nahan, granted the custody orders. The Appellants, however, consistently asserted that while the seized drug (the PVC drum) was produced before the Court, the records seized in Form-16 were never produced, constituting a blatant violation of Section 23(6) of the Act.
(vii) The Appellants further averred that the Respondent informed the State Drug Controller about the inspection and seizure only after a period of 11 months (via letter dated 02.07.2015). It was contended that this delay, combined with the non-return of the seized original records, constituted a violation of Section 22(2-A) of the Act, which mandates the return of seized records within 20 days (after certified copies are taken).
(viii) A Show Cause Notice dated 29.07.2015 was received by the firm from the Assistant State Drug Controller-cum- Licensing Authority, seeking an explanation regarding the discrepancies observed. The firm responded via letter dated 13.08.2015, specifically requesting the return of the original documents and records seized in Form-16, or certified copies thereof, noting that their absence prevented the firm from formulating a complete reply. Certified copies of the seized documents were eventually received by the firm's representative on 14.09.2015.
(ix) The firm submitted a comprehensive and detailed reply dated 03.10.2015. In this reply, the firm contended that there was no violation of Schedule-M or Schedule-U and, therefore, no irregularity in maintaining the records. The firm asserted that the deficiencies pointed out were minor, routine, and generalized. The firm simultaneously requested the release of the seized drug and original records. The Respondent, in their counter-affidavit, asserted that this reply was found to be totally incomplete and unsatisfactory.
(x) The Prosecution Sanction was granted by the State Drug
Controller dated 15.09.2016. The sanction noted the finding of the Screening Committee regarding "irregularities with respect to maintenance of records as required under Schedule M and Schedule U. The sanction was accorded for prosecution under Section 18(a)(vi) read with Rule 74, 18-B, and 22(l)(cca) of the Act and Rules. The Appellants asserted that the prosecution sanction nowhere averred that the manufactured drugs were substandard, misbranded, adulterated, or spurious, arguing that the maximum alleged offence related only to record keeping punishable under Section 18-B/28-A.
(xi) Pursuant to the sanction, the criminal Complaint NO. 36/3 of 2017 was filed on 27.02.2017. The complaint alleged contravention of Sections 18(a)(vi) read with Rule 74 and 22(l)(cca) and 18-B, punishable under Section 27(d) and 28-A of the Act.
(xii) The learned Judicial Magistrate First Class, Nahan, vide
Order dated 06.04.2017, took cognizance of the Complaint and summoned the Appellants for offences punishable under Section 18(a)(vi), 18-B, and 28A of the Act. The Appellants contended that this order of cognizance was non-reasoned and failed to apply judicial mind. Furthermore, the Appellants contended that the proceedings were barred by limitation under Section 468 of Code of Criminal Procedure, 1973 (hereinafter referred to as ‘Cr.P.C’), arguing that the offence under Section 18- B/28-A carries a punishment extending up to one year, meaning the one-year limitation applied, whereas cognizance was taken more than two and a half years after the inspection (22.07.2014 to 06.04.2017).
(xiii) Thereafter, the learned Judicial Magistrate First Class, vide Order dated 05.10.2017, committed the case to the learned Special Judge-I, Sirmaur. This committal was made on the finding that the offence punishable under Section 27(d) read with Section 28-A is exclusively triable by the Court of Special Judge. The case was renumbered as Complaint No. 9 of 19.12.2017.
(xiv) The Appellants, being aggrieved by the Cognizance Order dated 06.04.2017 and the Committal Order dated 05.10.2017, filed a Petition under Section 482 Cr.P.C (Cr. MMO No. 167 of 2018) before the High Court of Himachal Pradesh. They argued that the committal was illegal in view of the saving clause under Section 32(2) read with Section 36-A of the Act, which provides for summary trial by a Judicial Magistrate First Class for offences punishable with imprisonment for a term not exceeding three years.
(xv) The High Court of Himachal Pradesh, vide the final impugned Judgment dated 29.07.2024, dismissed the Petition. The High Court held that the learned Special Judge-I, Sirmaur, has jurisdiction to try the offences under Chapter IV of the Act. The High Court determined that the limitation period was three years under Section 468 Cr.P.C because the offence punishable under Section 27(d) carries imprisonment up to two years, thereby rejecting the limitation plea. The High Court also concluded that the omission of Section 27(d) in the cognizance order was a clerical error.
4. Being aggrieved and dissatisfied with the dismissal of quashing petition, the appellants have preferred the present appeal.
5. Heard learned counsel for the appellants and learned counsel for the Respondent-State.
6. Learned counsel for the appellants would mainly contend that the impugned complaint has been filed alleging contravention of the provisions of Section 18 (a) (vi) read with Rule 74 and 22 (1)(cca) and 18-B punishable under Section 27 (d) and 28-A of the Act of 1940. However, the cognizance has been taken for contravening Section 18 (a) (vi) and 18-B punishable under Section 28-A of the Act of 1940. Learned counsel urged that the High Court has committed an error by observing that the omission on the part of the Magistrate referred under Section 27 (d) of the act is a typographical error. At this stage, it is also submitted that in the present case, the question arises as to whether non-maintenance and non-furnishing of the records as prescribed under Schedule M & U of Rules of 1945 would constitute an offence under Section 18 (a) (vi) read with Rule 74 punishable under Section 27 (d) or would fall under Section 18-B punishable under Section 28-A of the Act of 1940.
7. Learned Counsel referred provisions contained in Section 18, 27 (d), 18-B as well as Section 28-A of the Act. Learned counsel also referred the relevant rules as well as Schedule M & U of the Rules. After referring to the same, learned counsel would contend that Section 18 provides for Prohibition of manufacture and sale of certain drugs and cosmetics and not for maintenance of record or non-furnishing of information. Further, the contravention shall have to be in relation to manufacture, sale, or stock or exhibit or offer for sale of drugs & cosmetics in contravention of any provisions of the said Chapter (Chapter IV) or any Rule made thereunder. Learned counsel, therefore, urged that primarily Section 27 (d) could be invoked where the contravention is regarding any drug or cosmetic but not in relation to maintenance of record and nonfurnishing of information.
8. At this stage, it is also contended that Section 18-B specifically provides for non-maintenance of record and non-furnishing of information and the same is made punishable under Section 28-A of the Act, for which the Trial Court has rightly taken cognizance. At this stage, it is pointed out that Section 28-A is punishable for a maximum period of one year and, therefore, limitation under Section 468 of Cr.P.C would be one year. Thus, in the present case, the complaint which has been filed after a period of two and a half years would be barred by limitation.
9. Learned counsel has placed reliance upon the decision rendered by this Court in the case of Miteshbhai J. Patel Vs. Drug Inspector, 2025 SCC online SC 2203. Learned counsel has also relied upon decision in the case of Cheminova (India) Ltd. Vs. State of Punjab reported in 2021 (8) SCC 818.
10. Learned counsel for the appellant further submits that another question arises for consideration is whether the offence punishable with imprisonment for less than 03 years and not to be tried by the Special Court under Section 36-AB, or by the Court of Sessions, shall have to be tried by the Magistrate Court in view of saving clause under Section 32(2) read with Section 36-A of the Act of 1940.
11. Learned counsel referred the provisions contained in Section 32(2), 36-A and Section 36AB of the Act and, thereafter, submitted that Section 32(2) starting with the saving clause would give way to the applicability of Section 36-A of the Act and, therefore, the offences punishable with imprisonment not exceeding 03 years but not related to spurious or adulterated drugs to be tried by Special Court under Section 36-AB or by the Court of Sessions, shall essentially to be tried by the Magistrate under Section 36A of the Act. Learned counsel, therefore, contended that finding recorded by the High Court regarding the offences falling under Chapter IV to be tried by the Court of Sessions or by the Special Court, as the case may be, is fallacious and deserves to be set aside.
12. Learned counsel for the appellants further submits that the High Court has committed an error while placing reliance upon decision rendered by this Court in the case of Union of India Vs. Ashok Kumar Sharma reported in 2021 (12) SCC
674. It is submitted that the said judgment was rendered by this Court in different context and has no bearing on the facts or law in the present case.
13. Learned counsel for the appellants, therefore, urged that the impugned order passed by the High Court be set aside and thereby the proceedings filed by the respondent against the appellants as well as the order of taking cognizance be quashed and thereby the present appeal be allowed.
14. Per contra, learned DAG for the respondent-State has vehemently opposed the present appeal. He would contend that the concerned Inspector in the Spot Inspection Report dated 22.07.2014 had recorded that the petitioners were instructed not to dispose of the stock of the relevant drug batch until the completion of the investigation. The petitioners were also directed to furnish the remaining records, as the documents produced at the time of inspection were found to be incomplete. Further, during the seizure of the records certain serious irregularities including total non-maintenance of raw material, registers required under Schedules M & U of the Act and the Rules were found. Most of the batches had no entries or stock release records showing clear misuse and lack of accountability thereby rendering the petitioners liable to be punished under Section 27 (d) for violation of Section 18 (a)
(vi) of the Act read with Rule 74 of the Rules,1945.
15. Learned DAG further submits that the petitioners failed to respond to the notice issued to them along with the Spot Inspection Report. Despite repeated notices, the petitioners failed to produce the requisite documents and, therefore, on 15.09.2016, the respondents applied for grant of sanction to prosecute the petitioners under Section 18 (a) (vi) read with Rule 74, 18-B and 22(1)(cca). After getting the sanction from the Competent Authority, the impugned complaint came to be filed upon which the cognizance was taken by the learned Judicial Magistrate First Class on 06.04.2017.
16. At this stage, learned DAG has also referred relevant provisions of the Act as well as the Rules and, thereafter, contended that by not providing the complete records, the petitioners have violated Section 27 (d) of the Act as well as the Rules.
17. Learned counsel for the respondent further submits that the plea of limitation raised by the petitioners is misconceived. Learned DAG submits that violation of Section 18 (a) (vi) is punishable under Section 27 (d) of the Act which provides punishment for a period of not less than one year which may extend up to two years. Thus, the complaint is not barred by limitation under Section 468 of Cr.P.C as contended by learned counsel for the appellants.
18. Learned DAG lastly contended that the learned JMFC has rightly committed the case of the learned Special Judge (I) as the offence punishable under Section 27 (d) read with Section 28-A is exclusively triable by the Court of Special Judge.
19. Learned DAG, therefore, urged that the High Court has not committed any error while rejecting the quashing petition filed by the present appellants and, therefore, this Court may not interfere with the impugned order.
20. Having heard learned counsel appearing for the appellants and having gone through the material placed on record as well as the provisions of law and the decisions relied upon by the learned Advocates, it transpires that the complaint has been filed against the appellants on 22.02.2017 wherein specific allegations are levelled with regard to the contravention of Section 18 (a) (vi) read with Rule 74 and Section 22 (1)(cca) and Section 18-B punishable under Section 27 (d) as well as under Section 28-A of the Act. From the record it further transpires that the appellant had not maintained the requisite records as stipulated under Schedule M & U of the Rules.
21. At this stage, we would like to refer the relevant provisions of the Act as well as the Rules. Section 18 - Prohibition of manufacture and sale of certain drugs and cosmetics.—From such date as may be fixed by the State Government by notification in the Official Gazette in this behalf, no person shall himself or by any other person on his behalf— (a) [manufacture for sale or for distribution, or sell, or stock or exhibit or offer for sale,] or distribute……………………………………………………………… …………… ……………………………..
(vi) any drug or cosmetic in contravention of any of the provisions of this Chapter or any rule made thereunder. Section 18B-Maintenance of records and furnishing of information.—Every person holding a licence under clause
(c) of section 18 shall keep and maintain such records, registers and other documents as may be prescribed and shall furnish to any officer or authority exercising any power or discharging any function under this Act such information as is required by such officer or authority for carrying out the purposes of this Act.] Section 22- Powers of Inspectors.—(1) Subject to the provisions of section 23 and of any rules made by the Central Government in this behalf, an Inspector may, within the local limits of the area for which he is appointed (a) inspect,— (i) any premises wherein any drug or cosmetic is being manufactured and the means employed for standardising and testing the drug or cosmetic; (ii) any premises wherein any drug or cosmetic is being sold, or stocked or exhibited or offered for sale, or distributed;………………………………………………………… (cca) require any person to produce any record, register, or other document relating to the manufacture for sale or for distribution, stocking, exhibition for sale, offer for sale or distribution of any drug or cosmetic in respect of which he has reason to believe that an offence under this Chapter has been, or is being, committed. Section 27- Penalty for manufacture, sale, etc., of drugs in contravention of this Chapter —Whoever, himself or by any other person on his behalf, manufactures for sale or for distribution, or sells, or stocks or exhibits or offers for sale or distributes. (a)………………………………………………………………………… ….
(d) any drug, other than a drug referred to in clause (a) or clause (b) or clause (c), in contravention of any other provision of this Chapter or any rule made thereunder, shall be punishable with imprisonment for a term which shall not be less than one year but which may extend to two years [and with fine which shall not be less than twenty thousand rupees]: Provided that the Court may, for any adequate and special reasons to be recorded in the judgment, impose a sentence of imprisonment for a term of less than one year.