P L D 1991 Supreme Court 893 (PLP)

NAIMUDDIN, J.‑‑This is an appeal, by leave, from the judgment of the High Court of Sindh dated 6‑2‑1986, whereby the High Court upheld the conviction and sentence awarded to the appellants by the trial Court and dismissed the appeal filed by the appellants in the following circumstances.

2. The appellants are the General Manager and Director, Plant Manager, Production Manager, Quality Control Manager and Controller respectively of Lederle Laboratories Division Cynamed (Pakistan) Limited, having registered office at Karachi. 3 The appellants were tried and convicted by the Drug Court Of Sindh and Balochistan for offence under section 27(2)(b) and (4) of the Drugs Act, 1076. The Drug Court sentenced each of the appellants under section 27(2)(b) of the Act to undergo imprisonment till the rising of the Court and to pay a fine of Rs.8,000 or in default to further undergo simple imprisonment for four months, and also to pay a fine of Rs.2,000 or in default to further undergo simple imprisonment for one month under section 27(4) of the Act.

4. The prosecution case in brief was that Lederle Laboratories Division Cynamed (Pakistan) Limited (hereinafter to be referred to as 'the Company') manufactured for sale a drug known as 'Incremin B‑Complex Lysine Iron Syrup (hereinafter referred to as 'the drug') of which Batch No.278 is alleged to have been sold under a false warranty to M/s. Pharmed Limited under invoice No.10 116‑S dated 18‑10‑1979 and a sample of the drug was ultimately secured on 1‑3 1980 by Mr. Ghularn Rasool Halepota, Drug Inspector from M/s. Muslim Medical and General Store, AI‑Azam Square, F.B. Area, Karachi. The drug on analysis in the Central Drugs Laboratory, Karachi was alleged to be misbranded and also substandard in quality; misbranded as its label showed Ferric Pyrophosphate soluble 250 mg. and Iron (as Ferric Pyrophosphate) 30 mg. and substandard because they found iron contents of the product to be 36 mg. against 55 mg. per 5 ml calculated by them, and Thiamine Hydrochloride 9.96 mg against the stated amount of 10 mg/5 ml. The Drug Inspector thereafter obtained sanction from the Provincial Quality Control Board for prosecution of the Company and filed complaint against the appellants for aforesaid offences.

5. Leave was granted inter alia to consider the submission that the trial of the appellants was illegal, in that, sanction from the Quality Control Board was obtained against the company and not against the appellants and that the company as such was not impleaded as an accused and that the learned Judges of the Division Bench in the High Court erred in invoking section 34 of the Act. in this behalf.

6. After hearing Mr. Munawar Malik, learned counsel for the appellants and Mr. Abdul Ghafoor Mangi, Assistant Advocate‑General, Sindh, we are of the view that the appeal could, and should, succeed alone on the point that the company was not impleaded as an accused in the proceedings constituted against the appellants. The appellants being the employees and director of the company, could be held to be guilty of the offence, provided the company was found guilty of the offence. Section 34 of the Act reads as under: "

34. Offences by companies, etc.‑‑‑Where the person guilty of an offence under this Act is a company, corporation, firm or institution, every director, partner and employee of the company,‑ corporation, firm or institution shall, unless he proves that the offence was committed without his knowledge or consent, be guilty of the offence."

7. We are fortified in our view by a judgment of our own Court in the case of Superintendent of Police, Federal Investigation Agency, Lahore and another v. Akhtar Hussain Bhutta PLD 1978 SC 193, wherein Ghulam Safdar Shah, J. as he then was, dealing with a similar point in relation to section 38 of the Drugs Act, 1940, made the following observations at page 199 of the Report:‑‑ "Now by comparing this section with sections 18, 19 and 27, which appear in Chapter IV, it would be seen that whereas it deals with all offences committed under the Act, the latter three sections only deal with the offences mentioned in the various sections appearing in Chapter IV. It is true that according to section 38 if the person guilty of an offence under the Drugs Act is a company, corporation or firm, then every director, partner or officer of the company, corporation or firm, with whose knowledge and consent the offence was committed, shall be guilty of the like offence. This being the clear connotation of the said section, it would follow that under section 38(ibid), the principal accused has to be a company, corporation or firm, then the burden would lie on it to show that the said offence had been committed within their knowledge and consent."

8. An attempt was made to distinguish present section 34 and section 38 of the Drugs Act, 1940. Therefore, it is necessary first to set out the provision of section 38 of the old Act, which reads as follows: "

38. Offences by companies etc.‑‑‑Where the person guilty of an offence under this Act is a company, corporation or firm every director, partner, and officer of the company, corporati6h or firm with whose knowledge and consent the offence was committed shall be guilty of the like offence."

9. A persusal of the two sections would show that the opening words arid effect of the first part of two sections is the same. The only difference between the two sections is that under the old section 38 the burden to prove the existence of knowledge or consent on the part of the directors or employees of the company was on the prosecution but under section 34 of the new ' Act, if the company is found guilty of the offence then the burden is on the directors or the employees of the company. Therefore, a finding that the company is guilty of the offence is sine qua non to convict the directors or employees of the company that they are guilty of the offence. But, if the company is not before the Court then no adverse finding can be given against the company. In such a situation the directors or employees could not be held vicariously liable, Therefore, non prosecution of the company itself was fatal.

10. It was, however, submitted by Mr. Abdul Ghafoor Mangi, Assistant Advocate‑General, Sindh, that the company was before the trial Court as all the appellants represented the company as would appear from their f6flowing description‑ (1) Qasim Shah s/o Mubarak Shah Khan, General Manger/Director. (2) Muhammad Tahir Khan s/o Nazar Muhammad Khan, Plant Manager (3) Sikandar Bakht Mir s/o Mir Muhammad Bashir, Production Manager (4) Anwarul Hassan Siddiqui s/o Athar Ali Siddiqui, Quality Control Manager. (5) Mukhtar Sharique s/o. Muhammad Shafique, Controller of M/s. Lederle Laboratories Division Cynamed (Pakistan) Limited, S‑33, Hawksbay Road, S.I.T.E., Karachi. The submission is not sound. The name of M/s. Lederle Laboratories Division Cynamea (Pakistan) Limited only described the appellants that they are the Managers and the first of them is also a Director of the company. The company as such was not prosecuted. If the company was to be prosecuted it had to be named as such and a charge had to be framed against it.

11. It was also argued that the company could not suffer imprisonment not being a physical person. It is true that the company is not a physical person but only juristic person, being a corporate body and it acts through agents in. accordance with its Articles of Association. It could, however, pay fine for violation of the provisions of the Drugs Act or any other offence. Further, if any physical penalty was to be imposed to check and stop the violation of the Drugs Act then the prosecution of its directors and/or employees, through whom ii committed the offence, was necessary and that is why the directors and employees are also held vicariously responsible for any offence committed by the company. But, as stated before, the company had to be found guilty of the offence before its directors and/or employees could be convicted. This submission has, therefore, no force. We may, however, clarify that once a finding is given that the company is guilty of an offence under the Act then the directors and/or the employees of the company can also be convicted for the offence unless it is pleaded and proved by them that the offence was committed without their knowledge or consent.

12. Therefore, we set aside the judgment of the trial Court as well as of the High Court. We do not consider it necessary to go into the other questions. M.BA./39‑Q/S Convictions set aside.