Drugs & Cosmetics Act | Failed Dissolution Test When Active Content Is Within Limit Is Minor Defect, Does Not Warrant Prosecution: Rajasthan HC

"Additionally, the Government Analyst's report itself indicates that the drug in question failed the dissolution test but had an active ingredient within the standard limits. The Guidelines issued by the Central Government under Section 33-P of the 1940 Act classify such defects as minor, which do not warrant prosecution under Section 27(b)(i). The Hon'ble Supreme Court in Laborate Pharmaceuticals India Ltd. v. State of Tamil Nadu, (2018) 15 SCC 93, has held that where minor defects are noted, initiation of prosecution is impermissible". 

The court further observed that in the present case the drug's active pharmaceutical ingredient (API) was found to be within the prescribed standards, and the only deviation was in the dissolution rate. Emphasizing that a delayed dissolution did not render the drug spurious but merely implied a slower release of the active content which still remains effective, the court said that therapeutic efficacy of the drug is not entirely negated by such a delay. 

“Dissolution rates can be influenced by several factors, including the quality of excipients, manufacturing processes, temperature control, and climatic conditions during production and storage. The presence of the correct active ingredient in the specified quantity is the primary factor in determining a drug's standard quality. If the core content of the drug remains intact and effective, classifying it as substandard, spurious, or useless would be legally and scientifically untenable,” it added. 

The court said that the prosecution's "mechanical approach" in filing the complaint, without considering the nature of the defect and its actual impact on drug efficacy, substantiated the petitioners' contention that the "proceedings are an abuse of the process of law”.

Background

The Court was hearing a bunch of petitions moved by certain pharmaceutical companies and their officials, seeking quashing of a complaint filed against them pursuant to an inspection conducted in 2012. During the inspection, sample of a drug was collected and sent for analysis. The government analysis in 2013 declared the sample to be not of standard quality due to non-conformity with the dissolution test.

Subsequently, after tracing back the distribution chain of the drug, complaints were filed against multiple companies and their directors.

Findings

Sample not sent to manufacturer for reanalysis

After hearing the contentions and perusing the record, the Court observed that there were “glaring procedural lapses, which vitiated the very foundation of the prosecution”.

Among other procedural lapses, the court observed that the Drugs Control Office failed to comply with the statutory requirement under Section 25(3) of the Act that mandated sending a portion of the sample to the manufacturer for reanalysis in case of a disputed report. Referring to Supreme Court decision, the court said:

“Hon'ble Supreme Court in Medicamen Biotech Ltd. v. Rubina Bose, (2008) 7 SCC 196, categorically held that non-compliance with this statutory mandate vitiates the entire prosecution. In the present case, despite procedural irregularities and non-adherence to mandatory requirements, the complaint was filed and cognizance was taken, which is a serious lapse on the part of the prosecution,”.

Petitioners appointed as non executive directors not incharge at the time of alleged offence

Furthermore, the Court referred that the principle of vicarious liability provided under Section 34 of the Act, fastened liability only upon those individuals who were in-charge of the conduct of the business at the time of the alleged offence. This criteria of active participation of the directors was not established by the prosecution in the instant matter.

"In the present case, the petitioners, who were appointed as Additional Directors (Non-Executive) much after the relevant period, cannot be saddled with criminal liability merely by virtue of their designation," the court said. 

Complaint filed after expiry of drug

The Court also highlighted that the complaint was filed much after the expiry of "shelf life" of the drug that frustrated the right to seek retesting of the petitioners provided under the Act. Reference was made to the Supreme Court cased of State of Haryana v. Brij Lal Mittal and State of Haryana v. Unique Farmaid (P) Ltd., and it was ruled that the Apex Court had consistently held that, “when the right to retesting is denied due to the expiry of the drug, the prosecution is rendered null and void. The present case is no exception, as the petitioners have been deprived of their statutory right due to an unjustifiable delay in filing the complaint”.

Complaint filed 4 years after offence was detected

The court further ruled that the the limitation aspect cannot be ignored as the  The alleged offence was detected in 2013, yet the complaint was filed only in 2017, which was "beyond the three year statutory limitation prescribed under Section 468 Cr.P.C" for offences punishable under the Act, the court noted.

It referred to Supreme Court's decision in Cheminova (India) Ltd. v. State of Punjab, (2021) which while dealing with the Insecticides Act (a statute pari materia to the Drugs and Cosmetics Act), had held that prosecution beyond the limitation period is barred.

"The present case falls squarely within this legal framework, rendering the continuation of the proceedings against the petitioners legally untenable," the court underscored.

In this background, the Court concluded that the entire prosecution was vitiated with "multiple legal infirmities" and that continuation of proceedings shall amount to "abuse of the process of law".

Allowing the petitions, the court quashing the proceedings, not only for the petitioners before the court, but also for all those who were similarly placed but did not approach the high court, leaving no scope for further continuation of proceedings against any individual.

Case Title: Ganesh Narayan Nayak & Anr. v State of Rajasthan & Anr., and other connected petitions

Citation: 2025 LiveLaw (Raj) 130