Suppliers Possessing Valid License Cannot Be Prosecuted Simply Because Distributor Has No Valid License To Distribute Drugs: Madras HC

While considering a specific allegation that has been made against the petitioners that they had sold the drug to M/s.Oxiad (India) Gases (P) Limited, which did not possess a license to run the unit at Royapettah and in fact, had a license to run the unit only at Tiruchirapalli, the Madras High Court found that the two Companies from which M/s Oxiad (India) Gases purchased the drugs i.e. M/s Linde India Limited and M/s TN Oxygen (p) limited possess a valid license to run business, and therefore, the petitioners have not contravened any of the provisions of the Act, the Rules or the conditions of license and hence, they cannot be prosecuted by the respondent.

The allegations made in the complaint do not constitute an offence against the petitioners, added the Court.

The Single Judge Bench of Justice N. Anand Venkatesh observed that “there is no dispute regarding the fact that M/s Oxiad (India) Gases (P) Limited had purchased these drugs from M/s Linde India Limited and M/s TN Oxygen (p) limited and supplied them to hospitals. Even in the reply that was given on behalf of these two companies namely M/s. Linde India Limited and M/s.TN Oxygen (P) Limited, it has been clearly stated that these two companies were in possession of a license”.

At the same time the bench clarified that “M/s.Linde India Limited and M/s.TN Oxygen (P) Limited satisfied themselves regarding the fact that M/s. Oxiad (India) Gases (P) Limited had a valid license. These two entities can't follow up with M/s.Oxiad (India) Gases (P) Limited and see where all the drugs are being supplied/sold by them. That is not definitely within the control of these two entities”.

Senior Counsel V. Karthic appeared for the Petitioner, whereas Additional Public Prosecutor A. Damodaran appeared for the Respondents.

The brief facts of the case were that a criminal complaint was initiated by the Respondent against the Petitioners for contravention of section 18(c) of the Drugs and Cosmetics Act, 1940. An inspection was conducted by the Respondent dated January 30, 2018, on the premises of M/s Oxaid (India) Gases and during the process it came to the notice of the Respondent that the concerned company didn’t hold a drug license for its day-to-day business transaction. On detail enquiry, it was revealed that M/s Oxaid India was purchasing Oxygen IP and Nitrous Oxide from two companies namely M/s India Limited and M/s TN Oxygen (P) Limited and later on M/s Oxaid Gases Limited selling the products to various Hospitals.

After considering the submission, the Bench found that M/s Oxaid Gases Limited had a license to run the unit at Tiruchirapalli whereas the unit at Royepettah was barred from selling drugs since it didn’t possess a valid license to run the business and the specific allegation concerned the latter unit.

The Bench found that after the petitioners received the show cause notice from the respondent, they had given their reply along with all particulars, however, the respondent has not properly considered the reply given by the petitioners but went ahead on the premise that the petitioners had admitted the violation.

“Such an understanding on the part of the respondent about the reply given by the petitioners suffers from non-application of mind and is unsustainable”, added the Bench.

Accordingly, the High Court allowed the criminal original petitions.

Cause Title: Moloy Banerjee and Ors v. State

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