Court holds that failure to maintain stock records or account for missing psychotropic substances, without evidence of unauthorised manufacture, sale, transport, or use, is not sufficient to frame charges under Sections 22, 27A, or 29 of the NDPS Act. Affirms existing Supreme Court precedent on standards for discharge and clarifies application of NDPS Act provisions to pharmaceutical licensees; applicable as persuasive authority for similar cases involving licensed manufacturers.
Summary
| Category | Data |
|---|---|
| Case Name | CR.R/105/2023 of INTELLIGENCE OFFICER, DIRECTORATE OF REVENUE INTELLIGENCE Vs M/S M. SEA PHARMACEUTICALS AND ORS |
| CNR | HPHC010365872022 |
| Date of Registration | 02-03-2023 |
| Decision Date | 31-10-2025 |
| Disposal Nature | Dismissed |
| Judgment Author | HON’BLE MR. JUSTICE RAKESH KAINTHLA |
| Court | High Court of Himachal Pradesh |
| Bench | Single Judge |
| Precedent Value | Persuasive authority |
| Overrules / Affirms |
|
| Type of Law | Criminal (NDPS Act) |
| Questions of Law | Whether failure to account for missing quantities of regulated psychotropic substances by a licensed manufacturer, without evidence of contravention, attracts charges under Sections 22, 27A, or 29 NDPS Act. |
| Ratio Decidendi |
The court concluded that merely failing to maintain records of the consumption of Alprazolam, with no evidence of sale, transport, use, or unauthorised possession, does not meet the threshold for an offence under Sections 22, 27A, or 29 of the NDPS Act. The accused company held a valid licence, and the NDPS Rules require maintenance of accounts, whose breach attracts only Section 32 (minor penalty for unprovided offences) and not the more severe prosecution under Section 22 or 27A. As the complaint was filed beyond the limitation period stipulated under Section 468(b) CrPC, prosecution was also barred by limitation. |
| Judgments Relied Upon |
|
| Logic / Jurisprudence / Authorities Relied Upon by the Court |
The test at discharge is whether a prima facie case exists (not in-depth evaluation). NDPS Act Sections 22 & 27A require proof of specific acts (manufacture, sale, etc. without licence) and mens rea in abetment/conspiracy. Maintenance of accounts is an administrative breach, not a criminal offence under those sections. NDPS Rules, Rule 46 governs maintenance duties, Section 32 punishes unprovided offences. CrPC Section 468(b) limits prosecution for minor offences to one year. |
| Facts as Summarised by the Court |
DRI filed complaint after finding 870g of Alprazolam unaccounted in records of M/s M. Sea Pharmaceuticals, a licensed entity. No evidence of unauthorised manufacture, sale or use; only breach was account maintenance. Statements and documents corroborated only non-accounting, not diversion or criminal act as per NDPS Act. Complaint was delayed beyond the statutory period for minor offences. |
Practical Impact
| Category | Impact |
|---|---|
| Binding On | Subordinate courts within Himachal Pradesh (persuasive for other jurisdictions) |
| Persuasive For | Other High Courts, especially in cases dealing with licensed pharmaceutical entities and NDPS Act compliance |
| Follows |
|
What’s New / What Lawyers Should Note
- Reinforces that administrative lapses in maintaining accounts by licensed manufacturers under the NDPS Act and Rules, without proof of unauthorised manufacture, sale, or use, do not warrant charges under Sections 22, 27A, or 29 NDPS Act.
- Clarifies prosecutorial remedies: such breaches may only invite proceedings under Section 32 NDPS Act, subject to CrPC limitation.
- Confirms that the frame of charge/discharge must be guided by whether there is prima facie evidence for the specific ingredients of the penal provision alleged—not mere inferences from procedural lapses.
- Confirms that prosecution under Section 32 for account-keeping lapses is subject to a one-year limitation under Section 468(b) CrPC.
- This authority can be cited to resist criminal prosecution of licensed pharma companies in the absence of direct evidence of contravention or diversion of psychotropic substances.
Summary of Legal Reasoning
- The High Court strictly applied the principle that at the stage of discharge, the court must determine if there is a prima facie case from the material presented, not scrutinise its probative value or likelihood of conviction (Vishnu Kumar Shukla v. State of U.P.; Yuvraj Laxmilal Kanther v. State of Maharashtra).
- Analysis of Section 22 NDPS Act revealed that the offence is made out only when there is unauthorised manufacture, possession, sale, transport, import, or use. Licensed manufacture, without evidence of illicit diversion or sales, is not punishable under this provision.
- Section 27A requires proof of financing or harbouring illicit traffic—no such act or intent was alleged or evidenced.
- Section 29 (abetment/conspiracy): No evidence led on the accused abetting or conspiring in any NDPS Act offence.
- The court noted NDPS Rules (Rule 46) place an administrative duty on licensees to keep accurate accounts and file returns, and Section 32 NDPS Act provides for only minor penalties (imprisonment up to 6 months/fine) if no separate penalty provided.
- As the only violation apparent was a failure to maintain account records, prosecution for this offence (if at all) would fall under Section 32, but was time-barred under CrPC Section 468(b), as the complaint was filed over a year after the incident.
- On facts, no evidence linked the accused (especially those who had left the company before the alleged offence, or had no formal role) to any act or omission justifying trial under Sections 22, 27A or 29 NDPS Act.
Arguments by the Parties
Petitioner
- Asserted that 870 grams of Alprazolam (a commercial quantity) were missing from records and the accused failed to account for it.
- Argued that this failure violated the NDPS Act and warranted framing of charges under Sections 22, 27A, and 29.
- Contended that the trial court erroneously found insufficient grounds to proceed, misinterpreting the evidentiary threshold.
- Submitted that discharge is a rare remedy, only for cases with no material to connect the accused.
Respondent
- Argued that mere failure to maintain or explain stock records does not amount to an offence under Sections 22, 27A, or 29 NDPS Act.
- Pointed out absence of any evidence of unauthorised manufacture, sale, or diversion—thus, no basis for criminal prosecution.
- Emphasised that respondents’ roles or lack of formal association with the company precluded liability.
- Prayed for dismissal of the revision.
Factual Background
The dispute arose from a DRI complaint alleging that 870g of Alprazolam, a psychotropic substance, was missing from the stock records of M/s M. Sea Pharmaceuticals, a licensed manufacturer. DRI action followed statements under Section 67 NDPS Act and an on-site factory search, but found no evidence of unauthorised sales or stock outside the regulated system. The only breach was failure to account for the entire stock, with some accused not formally connected to the company during the relevant period. The complaint was filed well after the period of the alleged violation.
Statutory Analysis
- Section 22 NDPS Act: Offence requires actual unauthorised manufacture, possession, sale, etc., of a psychotropic substance. Mere administrative lapses, without evidence of these activities, do not fulfil the section’s requirement.
- Section 27A NDPS Act: Involvement in financing or harbouring offenders in illicit traffic must be specifically alleged and evidenced.
- Section 29 NDPS Act: Requires abetment or conspiracy in a substantive NDPS offence, absent here.
- NDPS Rules, Rule 46: Mandates maintenance and reporting of all drug transactions and stock; breach is administrative, not essentially criminal under Sections 22/27A.
- Section 32 NDPS Act: Provides for penalty where no specific punishment exists; applicable for failure to maintain required accounts.
- Section 468(b) CrPC: Sets one-year limitation for prosecution of offences punishable by up to one year; the administrative complaint here was out of time.
Dissenting / Concurring Opinion Summary
No dissenting or concurring opinions are recorded in this single-judge judgment.
Procedural Innovations
- The court reaffirmed application of statutory limitation (Section 468(b) CrPC) to administrative offences under the NDPS regime, reinforcing that delay bars prosecution for minor breaches.
Alert Indicators
- ✔ Precedent Followed – Affirms existing standards set by the Supreme Court regarding primacy of prima facie case at discharge stage, and the strict interpretation of penal sections of the NDPS Act in the context of administrative lapses by licensed pharmaceutical entities.