REVACURE LIFESCIENCES LLP & ORS. V. STATE GOVT OF NCT DELHI & ORS 2025:DHC:8558

DATE:  23.09.2025

COURT: High Court of Delhi

BENCH: Justice Neena Bansal Krishna

FACTS:

In this case, Petitioner No. 1, Revacure Lifesciences LLP, and its partners and employees faced a criminal complaint filed by Respondent No. 2, M/s Bhardwaj India Private Limited, alleging that the Petitioners supplied defective medicines, specifically Docetaxel 20 mg vials with broken glass and visible foreign particles. The complaint led the learned Metropolitan Magistrate, Delhi, to direct registration of FIR No. 0053/2019 under Sections 274 and 275 IPC and Section 13 of the Drugs and Cosmetics Act, 1940 (D&C Act), under Section 156(3) Cr.P.C. The Petitioners contended that the drugs were manufactured under a Loan License Agreement, whereby Respondent No. 2 retained full responsibility for product quality, strength, and purity, while Petitioners merely provided their manufacturing facility, staff, and equipment. They argued that the allegations were part of a commercial dispute and an attempt by Respondent No. 2 to extort money or defame the Petitioners after failing to sell the products in the market.

The Petitioners further claimed that Respondent No. 3, Mr. Mohan Bhardwaj, intentionally contaminated the products after delivery and coerced an employee of the Petitioners to falsely accept liability. Multiple inspections, including by the Central Drugs Standard Control Organization and State Drug Inspectors, reportedly cleared the Petitioners of wrongdoing, confirming that the products met pharmacopeial standards for assay and sterility. They also contended that offences under the D&C Act are non-cognizable and only a Drug Inspector has the authority to initiate criminal proceedings, making the police registration of the FIR improper. The Petitioners argued that the MM’s order directing the FIR was non-speaking and ignored key facts, such as the Loan License arrangement and the reports absolving them, thereby amounting to abuse of process and necessitating quashing under Section 482 Cr.P.C.

ISSUES:

The main issues in this case were whether the FIR registered against Petitioner No. 1 under Sections 274 and 275 IPC and Section 13 of the Drugs & Cosmetics Act, 1940 (D&C Act) disclosed a prima facie cognizable offence, whether the Petitioners could be held responsible for alleged adulteration of drugs manufactured under a Loan License Agreement, and whether the police had jurisdiction to register the FIR or if the matter fell exclusively within the authority of the Drugs Inspector. Additionally, the court considered whether continuation of the FIR after a long delay violated principles of expediency and limitation under the Criminal Procedure Code.

JUDGEMENT WITH REASONING:

The Court allowed the petition and quashed FIR No. 053/2019 under Sections 274 and 275 IPC and Section 13 of the D&C Act, registered at PS Okhla Industrial Area. The Court clarified that the observations pertained only to the quashing of this FIR and did not constitute an opinion on any other proceedings under the D&C Act or other laws.

The Court observed that Section 275 IPC pertains to the sale of adulterated drugs, whereas the complaint only involved the manufacturing of drugs, and there was no allegation that the products were sold in the market. Similarly, Section 274 IPC applies to adulteration intended for sale or medicinal use. The Court analyzed the Loan License Agreement between the parties, noting that Petitioner No. 1 merely provided its manufacturing facility, staff, and equipment while Respondent No. 2, the loan licensee, retained sole responsibility for the quality, purity, and strength of the drugs. Joint inspections by the Drugs Inspector and CDSCO confirmed that the control samples from the Petitioner’s premises were of standard quality, and no adulteration was observed at the time of dispatch. The adulteration, in the form of foreign particles, was only reported after the products reached the Respondent’s premises, indicating that the Petitioners could not be held responsible.

The Court further emphasized that under the D&C Act, only a competent Drugs Inspector has authority to initiate prosecution, making the police registration of the FIR under Section 13 of the Act without jurisdiction. Additionally, the FIR was registered in 2019, but the investigation had not been concluded for over six years, exceeding the limitation period under Section 468 Cr.P.C. for the IPC offences, which rendered the continuation of the investigation legally and practically untenable. Considering these facts, the Court held that there was no prima facie case against the Petitioners under either IPC or the D&C Act, and continuation of the FIR amounted to an abuse of process, thereby justifying its quashing in the interest of justice.

ANALYSIS:

This case highlights the legal significance of the Loan License framework under the Drugs and Cosmetics Act, 1940. The Petitioners, as owners of the manufacturing facility, were not involved in the actual production or quality control of the drugs, which was the responsibility of the loan licensee, Respondent No. 2. The Court’s analysis demonstrates that mere possession of manufacturing infrastructure does not automatically confer liability for alleged defects in products, especially when inspections confirm compliance with pharmacopeial standards at the time of dispatch. The sequence of events indicated that the alleged adulteration or contamination occurred after the products left the Petitioners’ premises, emphasizing the importance of establishing causation and responsibility before initiating criminal proceedings.

The case also underscores procedural safeguards and limitations in criminal law. The FIR was registered by the police under Sections 274 and 275 IPC and Section 13 of the D&C Act, even though the Act itself grants prosecutorial authority only to a competent Drugs Inspector, rendering the FIR procedurally improper. Moreover, the FIR was filed in 2019, but investigations remained incomplete for over six years, surpassing statutory limitation periods under the Cr.P.C., which could render any eventual prosecution legally indefensible. The Court’s decision to quash the FIR under Section 482 Cr.P.C. thus reflects a careful balancing of substantive and procedural law, preventing misuse of criminal process in commercial disputes and ensuring that liability is attributed only where prima facie evidence justifies prosecution.