High Court refuses to quash complaint over ‘Not of Standard Quality’ drug

HC gives public health priority over hyper-technical objections

13/08/2026

JAMMU, Aug 12: The High Court of Jammu & Kashmir and Ladakh has refused to quash criminal proceedings against three directors of pharmaceutical company Corona Remedies Pvt Ltd in a case concerning a batch of "Locipil Tablets" declared "Not of Standard Quality", holding that questions regarding their responsibility for the company's affairs and their alleged liability under the Drugs and Cosmetics Act must be examined during trial.
Justice Wasim Sadiq Nargal dismissed a petition filed by Ankur Kirtikumar Mehta, Dr Kirtikimar Laxmidas Mehta and Nirav Kirti Kumar Mehta, who had challenged a complaint filed by the Drugs Inspector, Central Drugs Standard Control Organization (CDSCO), and the July 26, 2018 order of the Chief Judicial Magistrate, Jammu, taking cognizance of offences under Section 18(a)(i) read with Section 27(d) of the Drugs and Cosmetics Act, 1940.
The petitioners, represented by Advocates Varut Kumar Gupta, Umar Javed and Vikas Khair, are directors of Corona Remedies Pvt Ltd, which was arrayed as accused No. 1 in the complaint. The respondent, Drugs Inspector Bharti Bachloo, was represented by Advocate Prem N Sadotra.
The case arose from the manufacture and supply of "Locipil Tablets", Batch No. CHI15020, manufactured in September 2015 with an expiry date of May 2018. A sample of the drug was lifted from the premises of ESIC Model Hospital, Bari Brahmana, Jammu, and sent for statutory testing.
The Government Analyst, Regional Drugs Testing Laboratory, Chandigarh, in a report dated August 31, 2016, declared the drug "Not of Standard Quality". The Drugs Inspector subsequently traced the supply to Corona Remedies and issued a statutory notice to the company.
The company replied that it had stopped sale of the concerned batch and that no stock remained with it. A joint inspection of its manufacturing unit in Himachal Pradesh was subsequently conducted on November 4, 2016.
The joint inspection recorded, among other things, that the batch had been manufactured under Good Manufacturing Practices and that the required quantity of bulk drug had been used. However, the report, while taking note of the Government Analyst's finding, recommended action in accordance with the applicable guidelines governing drugs declared spurious or "Not of Standard Quality".
A criminal complaint was thereafter filed before the Chief Judicial Magistrate, Jammu, against the company and other accused, with the three petitioners arrayed as accused Nos. 2, 4 and 7. The Magistrate took cognizance and issued process against them on July 26, 2018.
The High Court had stayed the proceedings before the trial court on May 3, 2019, and the interim order remained in force until the present judgment.
The petitioners argued that although they were directors of the company, they were neither responsible for nor involved in the manufacture or production of the drug.
Their counsel submitted that the manufacturing unit was situated in Solan, Himachal Pradesh, while the directors were based in Ahmedabad and were not present at the manufacturing facility when the inspection was conducted. It was argued that the manufacturing process was under the supervision of qualified technical personnel and that the joint inspection report did not attribute any criminal liability or specific role to the petitioners.
The petitioners also challenged the procedure adopted by the Drugs Inspector, contending that they had not been afforded an effective opportunity to controvert the Government Analyst's report and that the statutory requirements concerning preservation and production of samples under Section 23(4) of the Act had not been followed.
They further argued that the complaint did not contain the necessary specific allegations required under Section 34 of the Act to fasten criminal liability upon individual directors.
Opposing the petition, Advocate Prem N Sadotra relied upon Section 34 of the Drugs and Cosmetics Act and submitted that the complaint specifically alleged that the petitioners, along with other directors, were responsible for conducting the company's day-to-day business when the drug was manufactured.
The respondent argued that the question whether the directors were actually in charge of and responsible for the company's affairs, whether the offence was committed with their knowledge or whether they exercised due diligence were questions of fact which should be determined by the trial court after evidence was led.
The respondent also emphasised the public-health implications of offences involving drugs that do not conform to prescribed standards and argued that the directors could not escape criminal liability merely by attributing responsibility for manufacturing decisions to subordinate employees or technical personnel.
Justice Nargal examined the statutory scheme under Section 34 of the Drugs and Cosmetics Act, which provides for liability of persons who, at the time of an offence, were in charge of and responsible to the company for the conduct of its business.
The court observed that whether the ingredients of Section 34 were ultimately established required appreciation of evidence and could not ordinarily be determined at the threshold while exercising inherent jurisdiction under Section 561-A of the erstwhile Code of Criminal Procedure, corresponding to Section 482 CrPC.
The court relied upon the Supreme Court's judgment in Dinesh B. Patel and Others v. State of Gujarat and Another, in which the Supreme Court declined to adopt a technical approach to proceedings against directors under the Drugs and Cosmetics Act, particularly in view of the public-health implications of such offences.
The Supreme Court had left it open to the directors to establish before the trial court that they had no role in the manufacturing process.
Justice Nargal also referred to the Supreme Court's recent judgment in State of Kerala and another v. M/s Panacea Biotec Ltd. and another, 2026 INSC 200, which held that whether directors were "in charge of" and "responsible to the company for the conduct of the business" were questions of fact best left to the trial court at the appropriate stage.
The High Court held that the petitioners' assertion that they were not personally involved in the manufacture of the drug could not, by itself, constitute a ground for quashing the proceedings.
It observed that merely because manufacturing activities were carried out under the supervision of qualified technical personnel did not automatically absolve the directors from the operation of Section 34. Their actual responsibility, degree of control over the company's affairs and whether they fulfilled the statutory requirements were matters requiring appreciation of evidence at trial.
The court also considered the stand taken by the company immediately after receiving the statutory notice from the Drugs Department.
The company had informed the authorities that it had stopped sale of the batch and that no stock remained with it. In its reply, it stated, "We admire your findings and honor your judgment" and requested the Directorate to take a lenient view.
Justice Nargal held that the company's contemporaneous response assumed significance because it did not dispute the department's findings at that stage and instead acted upon them and sought leniency.
The court held that the petitioners could not subsequently adopt an inconsistent position to challenge the foundation of the proceedings, applying the principle of "estoppel by conduct" and the doctrine of approbation and reprobation.
The court referred to Supreme Court decisions including Rajasthan State Industrial Development and Investment Corporation v. Diamond & Gem Development Corporation Ltd. and Union of India v. N. Murugesan on the principle that a party cannot accept and reject the same position or "blow hot and cold" in the same proceedings.
On the alleged procedural violations under Sections 23 and 25 of the Drugs and Cosmetics Act, the High Court held that the material available at the present stage did not furnish sufficient ground to quash the proceedings.
It noted that the statutory notice had been issued, the Government Analyst's report had been communicated to the company and a reply had been submitted. Whether there had been complete compliance with every procedural requirement, or whether any prejudice had been caused to the petitioners, could appropriately be examined by the trial court on the basis of the evidence.
The court separately considered the public-health purpose of the Drugs and Cosmetics Act.
Justice Nargal observed that the legislation is intended to regulate the manufacture, import, sale and distribution of drugs and cosmetics and ensure that medicines made available to the public meet prescribed standards of quality, safety and efficacy.
The court said the statutory scheme has a direct and vital connection with protection of public health and safety, particularly where the allegation concerns a drug declared "Not of Standard Quality".
The judgment further linked the statutory safeguards to the fundamental right to life under Article 21 of the Constitution, observing that the right to life encompasses health and well-being and that consumers of medicines are entitled to expect that drugs made available for human consumption conform to prescribed standards.
The court therefore declined to quash the proceedings on what it described as a "hyper-technical approach" at the threshold. It answered the third issue in favour of the respondent and against the petitioners.
On the scope of its inherent jurisdiction, the High Court referred to the Supreme Court's judgment in State of Karnataka v. M. Devendrappa, reiterating that the wide powers under Section 482 CrPC must be exercised with great caution and should not be used to stifle legitimate prosecution.
It also referred to Neeharika Infrastructure Pvt. Ltd. v. State of Maharashtra, reiterating that interference with criminal proceedings is warranted only in exceptional cases.
The High Court held that the issues raised by the petitioners, including their alleged non-involvement in manufacturing, the extent of their responsibility in the company's affairs, the effect of the joint investigation report and alleged procedural deficiencies, involved factual and evidentiary questions which could be adjudicated by the trial court.
It held that the complaint did not suffer from any fundamental deficiency warranting exercise of the court's inherent jurisdiction and found no patent illegality, jurisdictional error or perversity in the Magistrate's July 26, 2018 order.
Consequently, Justice Wasim Sadiq Nargal dismissed the petition as devoid of merit and vacated the interim order of May 3, 2019 that had stayed proceedings before the Chief Judicial Magistrate, Jammu.
The trial court was directed to proceed with the matter in accordance with law and adjudicate it independently on its own merits, uninfluenced by observations made in the High Court judgment.
The High Court specifically clarified that its judgment should not be construed as an expression of opinion on the ultimate guilt or innocence of the petitioners or on any issue required to be determined by the trial court after appreciation of evidence.
All such questions were left open for determination in accordance with law. The petition was disposed of along with connected applications. The judgment was pronounced on August 12, 2026 and marked as reportable.

Photo Gallery

BSE Sensex

NSE Nifty