Paragraph numbers below are the court’s original numbering, recovered from the source text.
21. A perusal of clause 2 of Form 25 which is a licence issued under Rule 70 of the said Rules would reveal that it authorizes the sale by way of wholesale dealing and storage for sale by the licensee of the drugs manufactured under the licence, subject to the conditions applicable to licence for sale. It is the contention of the respondent that the licence under Form 25 is subject to Form 20B and since accused No.3 did not have a licence under Form 20B, the sale to accused No.3 by the appellants was in contravention of Section 18 (a)(vi) of the said Act.
22. It is undisputed that both the accused i.e. appellant No.1 and accused No.3 possessed licence under Form 25. The allegation is that since accused No.3 did not possess a licence under Form 20B, appellant No.1 could not have sold the drugs to accused No.3 for further sale thereof. [2025] 1 S.C.R. INOX Air Products Limited now known as INOX Air Products Private Limited and Another v. The State of Andhra Pradesh
23. We find the said argument to be totally fallacious in nature. As discussed hereinabove, the term ‘manufacture’ is an inclusive term and has a wide scope. It includes any process or part of a process for making, altering, ornamenting, finishing, packing, labelling, breaking up or otherwise treating or adopting any drug or cosmetic with a view to its sale or distribution.
24. For appreciating the rival contention, it will be apposite to explain the nature of processes that are undertaken by appellant No.1 and accused No.3. Appellant No.1 purchases Nitrous Oxide I.P. in bulk and after storing them in bulk containers sells them for further sale. Accused No.3 purchases the large containers from appellant No.1, opens the seal and stores them in smaller containers and reseals them for further distribution and sale.
25. Since both accused No.3 and appellant No.1 are holding the licence for manufacture, they will be entitled to carry out any process or part of process which includes altering or breaking up with a view to its further sale or distribution.
26. Since accused No.3 also possesses licence under Form 25 for manufacture it is not only entitled to alter, break up, repack and relabel the product received from appellant No.1, it is also entitled to do it with a view for further sale or distribution. Since accused No.3 is also holding the licence under Form 25, it is entitled to sell and distribute the product received from appellant No.1 after altering, breaking it up and packing it in smaller containers. On a plain and literal interpretation of the term ‘manufacture’ as defined in the said Act, we find that the contention of the State is totally untenable. It would have been a different matter if accused No.3 did not have a licence under Form 25 which apart from permitting accused No.3 from altering, breaking it up and packing the product received from appellant No.1 in a smaller container also authorizes it to further sell the same by wholesale dealings. Only in the absence of any licence with accused No.3 which permitted it to further sell and distribute the product received from appellant No.1, sale of the product by appellant No.1 to it would have contravened the provisions of Section 18(a)(vi) and constituted an offence punishable under Section 27(d) of the said Act.
27. Ms. Prerna, learned counsel for the State vehemently argued that since the licence under Form 25 is ‘subject to’ the licence for sale i.e. 1250 Form 20B, there was a violation of Section 18(a)(vi) of the said Act.
28. Even if the contention of the learned counsel for the State is to be accepted, still an offence would not be made out.
29. The term ‘subject to’ has been defined in the Black Law’s Dictionary, 5th Edition at Page 1278, which reads thus: “Liable, subordinate, subservient, inferior, obedient to; governed or affected by; provided that; provided; answerable for.”
30. As such, the licence under Form 25 would be liable, subordinate, subservient, inferior, obedient to; governed or affected by the licence under Form 20B. However, for that, the prosecution will have to show that appellant No.1 who possesses the licence under Form 25 has violated any of the provisions under licence in Form 20B. The learned counsel for the State has not been in a position to point out violation of any of the conditions as stipulated in Form 20B.
31. In that view of the matter, we find that even if the allegations made in the complaint are taken at its face value, no case is made out for an offence punishable under Section 18(a)(vi) read with Section 27 (d) of the said Act.
32. There is another ground on which the impugned judgment and order is liable to be quashed and set aside. It will be relevant to refer to the order passed by the learned Magistrate while issuing the process which reads thus: “The Drugs Inspector Kadapa filed complaint against A1 and A2 U/s 32 of Drugs and Cosmetics Act 1940 and 1945 for the contravention of the sec 18(c) Punishable under section 27(b)(ii) on A1 to A4 and contravention of section 18(a)(vi) r/w condition of the license in form 25 point No. 03 r/w Rule 65(5)(1)(b) of the Act, punishable under section 27(d) on A5 and A6. It is submitted that all the concerned records i.e., document number 1 to 6, 7 (72 pages of carbon copy bills on which the payment order passed by Superintendent, RIMS General Hospital, Kadapa) Serial No.8 to 19 and Serial No. 20 containing (pages 1 to 15 along with cover) shown [2025] 1 S.C.R. INOX Air Products Limited now known as INOX Air Products Private Limited and Another v. The State of Andhra Pradesh and filed along with the complaint and other connected records are verified and found it on correct lines. It is further submitted in this case No property seized in this case except the above said documents. Hence, if your honour pleases the case may be taken on file against A1 and A6 and may be pass orders for issue of C.C. No. and also summons to A1 to A6. Submitted Taken on file U/Secs.32 of Drugs and Cosmetics Act 1940 and 1945 for the contravention of the sec 13(c) Punishable under section 27(b)(ii) on A1 to A4 and Contravention of section 18(a)(vi) r/w condition of the license in form 25 point No. 03 r/ow Rule 65(5)(1)(b) of the Act, punishable under section 27 (d) on A5 and A6 of the said Act. Issue summons to A1 to A6. Call on 5/3/18.”
33. It could be seen from the aforesaid order that except recording the submissions of the complainant, no reasons are recorded for issuing the process against the accused persons.
34. In this respect, it will be relevant to refer to the following observations of this Court in the case of Pepsi Foods Ltd. (supra): “28. Summoning of an accused in a criminal case is a serious matter. Criminal law cannot be set into motion as a matter of course. It is not that the complainant has to bring only two witnesses to support his allegations in the complaint to have the criminal law set into motion. The order of the Magistrate summoning the accused must reflect that he has applied his mind to the facts of the case and the law applicable thereto. He has to examine the nature of allegations made in the complaint and the evidence both oral and documentary in support thereof and would that be sufficient for the complainant to succeed in bringing charge home to the accused. It is not that the Magistrate is a silent spectator at the time of recording of 1252 preliminary evidence before summoning of the accused. The Magistrate has to carefully scrutinise the evidence brought on record and may even himself put questions to the complainant and his witnesses to elicit answers to find out the truthfulness of the allegations or otherwise and then examine if any offence is prima facie committed by all or any of the accused.”
35. This Court has clearly held that summoning of an accused in a criminal case is a serious matter. It has been held that the order of the Magistrate summoning the accused must reflect that he has applied his mind to the facts of the case and the law applicable thereto. This Court held that the Magistrate is required to examine the nature of allegations made in the complaint and the evidence, both oral and documentary in support thereof and as to whether that would be sufficient for proceeding against the accused. It has been held that the Magistrate is not a silent spectator at the time of recording of preliminary evidence before summoning the accused.
36. The said law would be consistently following by this Court in a catena of judgments including in the cases of Sunil Bharti Mittal v. Central Bureau of Investigation7, Mehmood Ul Rehman v. Khazir Mohammad Tunda and Others8 and Krishna Lal Chawla and Others v. State of Uttar Pradesh and Another9.
37. Recently, a Bench of this Court to which one of us (Gavai, J.) was a Member, in the case of Lalankumar Singh (supra), has observed thus: “38. The order of issuance of process is not an empty formality. The Magistrate is required to apply his mind as to whether sufficient ground for proceeding exists in the case or not. The formation of such an opinion is required to be stated in the order itself. The order is liable to be set aside if no reasons are given therein while coming to the conclusion that there is a prima facie case against the accused. No doubt, that the order need not contain (2015) 4 SCC 609 : 2015 INSC 18 (2015) 12 SCC 420 : 2015 INSC 983 (2021) 5 SCC 435 : 2021 INSC 160 [2025] 1 S.C.R. INOX Air Products Limited now known as INOX Air Products Private Limited and Another v. The State of Andhra Pradesh detailed reasons. A reference in this respect could be made to the judgment of this Court in the case of Sunil Bharti Mittal v. Central Bureau of Investigation9, which reads thus: “51. On the other hand, Section 204 of the Code deals with the issue of process, if in the opinion of the Magistrate taking cognizance of an offence, there is sufficient ground for proceeding. This section relates to commencement of a criminal proceeding. If the Magistrate taking cognizance of a case (it may be the Magistrate receiving the complaint or to whom it has been transferred under Section 192), upon a consideration of the materials before him (i.e. the complaint, examination of the complainant and his witnesses, if present, or report of inquiry, if any), thinks that there is a prima facie case for proceeding in respect of an offence, he shall issue process against the accused. 52. A wide discretion has been given as to grant or refusal of process and it must be judicially exercised. A person ought not to be dragged into court merely because a complaint has been filed. If a prima facie case has been made out, the Magistrate ought to issue process and it cannot be refused merely because he thinks that it is unlikely to result in a conviction. 53. However, the words “sufficient ground for proceeding” appearing in Section 204 are of immense importance. It is these words which amply suggest that an opinion is to be formed only after due application of mind that there is sufficient basis for proceeding against the said accused and formation of such an opinion is to be stated in the order itself. The order is liable to be set aside if no reason is given therein while coming to the conclusion that there is prima facie case against the accused, though the order need not contain detailed reasons. 1254 A fortiori, the order would be bad in law if the reason given turns out to be ex facie incorrect.” 39. A similar view has been taken by this Court in the case of Ashoke Mal Bafna (supra). 40. In the present case, leaving aside there being no reasons in support of the order of the issuance of process, as a matter of fact, it is clear from the order of the learned Single Judge of the High Court, that there was no such order passed at all. The learned Single Judge of the High Court, based on the record, has presumed that there was an order of issuance of process. We find that such an approach is unsustainable in law. The appeal therefore deserves to be allowed.” 38. In the present case also, we find that there is no application of mind even for the namesake by the learned Magistrate while issuing the process. On this ground also, the impugned judgment and order is liable to be quashed and set aside. 39. We also find that the High Court has totally misdirected itself in the present matter. It will be relevant to refer to the following observations of the High Court: "24. Admittedly, petitioners/accused have sold the nitrous oxide to Accused 3 & 4 without producing the license. Accused No.3 firm was given permission for manufacturing of nitrous oxide. 25. On repetition, as discussed supra, the 3rd accused has given licence to manufacture the Nitrous Oxide and Oxygen and the petitioner/A5 firm is also given licence to manufacture Nitrous Oxide. 26. In the instant case, the petitioners/accused have sold the drug in contravention of the Act and Rules and, therefore, in view of the provisions under Section 18(a)(vi) r/w Section 27 of the Act, 1940 is liable to be prosecuted.” 40. Having observed all this, the learned Single Judge of the High Court goes on to observe that the definition of ‘manufacture’ as defined under Section 3(f) of the said Act was not relevant for deciding the present issue. It goes on to say that since accused No.3 was [2025] 1 S.C.R. INOX Air Products Limited now known as INOX Air Products Private Limited and Another v. The State of Andhra Pradesh given licence to manufacture, he was not authorized to purchase it from accused No.5. We find that the said interpretation is without considering the plain nature of Section 3(f) of the said Act and is totally unsustainable in law. 41. In view of the detailed elaborations made by us hereinabove, we pass the following order: (i) The appeal is allowed; (ii) The impugned judgment and order 12th January 2024 passed by the High Court of Judicature of Andhra Pradesh at Amravati in Criminal Petition No. 4148 of 2018 is quashed and set aside; and (iii) The summoning order dated 20th January 2018 passed by the Trial Court in C.C. No. 71 of 2018 and the proceedings arising therefrom are also quashed and set aside. 42. Pending application(s), if any, shall stand disposed of. Result of the case: Appeal allowed. †Headnotes prepared by: Nidhi Jain