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Ms SBS Biotech & Orsv.State of Himachal Pradesh

Citation:
2026 INSC 171
Date:
20 February 2026

Synopsis

This judgment, delivered by the Supreme Court of India on February 20, 2026, involves a criminal appeal under the Drugs and Cosmetics Act, 1940. The appellants, a pharmaceutical manufacturing firm and its partners, challenged the criminal proceedings initiated against them for alleged violations related to non-maintenance of statutory records and discrepancies in manufacturing records for a habit-forming drug (Pseudoephedrine). The core legal issues pertained to the proper classification of the offence (whether under Section 27(d) or Section 28-A of the Act), the applicability of the limitation period under Section 468 Cr.P.C., and the jurisdictional competence of the trial court. The Supreme Court dismissed the appeal, upholding the prosecution and affirming that record-keeping violations in drug manufacturing fall within the purview of Section 27(d), attracting a higher punishment and longer limitation period.


1. Basic Information of the Judgment

Case Title: M/s SBS Biotech & Ors. v. State of Himachal Pradesh

Citation: 2026 INSC 171

Court: Supreme Court of India

Jurisdiction: Criminal Appellate Jurisdiction

Appeal Arising From: Special Leave Petition (Criminal) No. 9281 of 2025, against the judgment and order dated 29.07.2024 of the High Court of Himachal Pradesh at Shimla in Cr. MMO No. 167 of 2018.

Coram: Justice Prashant Kumar Mishra and Justice Vipul M. Pancholi

Nature of Bench: Division Bench

Date of Judgment: February 20, 2026


2. Legal Framework and Relevant Provisions

  • Primary Statutes and Rules:
    The Drugs and Cosmetics Act, 1940:
    Section 18(a)(vi): Prohibition of manufacture, sale, or distribution of drugs in contravention of Chapter IV or any rule made thereunder.
    Section 18-B: Obligation to maintain records, registers, and furnish information.
    Section 22: Powers of Inspectors, including inspection (22(1)(a)), requiring production of records (22(1)(cca)), and issuing directions.
    Section 27(d): Penalty for manufacture/sale of drugs in contravention of Chapter IV or rules (imprisonment: 1-2 years, with fine).
    Section 28-A: Penalty for non-compliance with Section 18-B (maintenance of records) (imprisonment up to 1 year, or fine, or both).
    Section 32: Cognizance of offences and trial by Courts of Session.
    Section 36-A: Summary trial of offences punishable with imprisonment up to 3 years (excluding offences triable by Special Court under Section 36-AB).
    Section 36-AB: Special Courts for trial of offences relating to adulterated/spurious drugs.
    The Drugs and Cosmetics Rules, 1945:
    Rule 74: Conditions of license, including Clause (d) requiring retention of manufacturing records for 5 years.
    Schedule M: Good Manufacturing Practices (GMP) for premises, plant, equipment, and documentation.
    Schedule U: Particulars to be shown in manufacturing records, including raw material records.
    Code of Criminal Procedure, 1973:
    Section 468: Bar to taking cognizance after lapse of limitation period (3 years for offences punishable with imprisonment up to 2 years; 1 year for imprisonment up to 1 year).
    Section 482: Inherent powers of High Court to quash proceedings.

  • Key Precedents Considered:
    Miteshbhai J. Patel v. Drug Inspector (2025 SCC OnLine SC 2203): Regarding limitation period under Section 27.
    Cheminova (India) Ltd. v. State of Punjab (2021) 8 SCC 818: On quashing of time-barred complaints.
    Union of India v. Ashok Kumar Sharma (2021) 12 SCC 674: Distinguished by the Court.


3. Relevant Facts of the Case

  • The appellant firm (M/s SBS Biotech) was engaged in manufacturing pharmaceutical preparations under valid drug licenses (Form-25 and Form-28).

  • On July 22, 2014, a Drug Inspector inspected the firm's premises and alleged non-maintenance of requisite records as per Schedule M and Schedule U, specifically regarding the drug Pseudoephedrine (Batch No. 503413). A Spot Inspection Report was prepared, and the firm was directed to produce complete records within seven days.

  • A re-inspection on August 5, 2014, revealed that the firm had not complied. Discrepancies, tampering with records, and misleading entries were allegedly found. The drug stock (24.990 Kg) and relevant documents were seized in Form-16.

  • Despite multiple notices, the firm failed to provide complete records. Certified copies of seized documents were eventually provided to the firm on September 14, 2015.

  • Prosecution sanction was granted by the State Drug Controller on September 15, 2016. Criminal Complaint No. 36/3 of 2017 was filed on February 27, 2017, alleging contravention of Sections 18(a)(vi), 18-B, and 22(1)(cca), punishable under Sections 27(d) and 28-A.

  • The Judicial Magistrate First Class took cognizance on April 6, 2017, and committed the case to the Special Judge on October 5, 2017, finding the offence under Section 27(d) exclusively triable by the Court of Sessions.

  • The appellants filed a quashing petition under Section 482 Cr.P.C. before the High Court, which was dismissed on July 29, 2024.


4. Issues Before the Supreme Court

  • Whether the alleged contravention (non-maintenance and non-furnishing of records as per Schedule M & U) constitutes an offence under Section 18(a)(vi) read with Rule 74, punishable under Section 27(d) of the Act, or falls under Section 18-B, punishable under Section 28-A?

  • Whether the complaint was barred by limitation under Section 468 Cr.P.C., considering the potential punishment under Section 28-A (up to 1 year) versus Section 27(d) (1-2 years)?

  • Whether the committal of the case to the Special Judge was illegal, given the provisions for summary trial under Section 36-A of the Act?


5. Ratio Decidendi of the Court

The Supreme Court dismissed the appeal and upheld the proceedings, with the following key findings:

  • Proper Classification of Offence (Section 27(d) applies): The Court held that the allegations in the complaint—non-maintenance of records, tampering with records, discrepancies in manufacturing and testing, and failure to account for a habit-forming drug—constituted a contravention of Section 18(a)(vi) read with Rule 74 and Schedules M & U. Such contravention, being in the course of manufacture for sale, is punishable under Section 27(d) of the Act, which provides for imprisonment of 1 to 2 years. The reference to Section 28-A in the complaint and cognizance order was incidental; the dominant allegation attracted the higher penalty provision.

  • Limitation Period (3 years applies): Since the offence fell under Section 27(d) (punishable with imprisonment up to 2 years), the limitation period under Section 468 Cr.P.C. was three years. The inspection occurred on July 22, 2014, and the complaint was filed on February 27, 2017—within two years and six months, well within the limitation period. The appellants' reliance on Miteshbhai J. Patel and Cheminova was misplaced, as those cases involved complaints filed beyond three years.

  • Trial Jurisdiction (Sessions Court, not Magistrate): The Court interpreted Sections 32(2), 36-A, and 36-AB harmoniously:
    Section 32(2) mandates that no court inferior to a Court of Session shall try an offence punishable under Chapter IV.
    Section 36-A (summary trial by Magistrate) specifically excludes "offences triable by the Special Court under Section 36-AB or Court of Session."
    Since Section 27(d) falls under Chapter IV and is punishable with imprisonment up to 2 years, it is triable by a Court of Session (or Special Court), not by a Magistrate in summary proceedings. The committal order was therefore legally valid.


6. Legal Framework Clarified

This judgment provides crucial clarifications on the interplay of provisions under the Drugs and Cosmetics Act:

  • Distinction Between Section 27(d) and Section 28-A: Non-maintenance of records under Section 18-B, when it occurs in the context of manufacturing for sale and involves contravention of manufacturing standards (Schedules M & U) under Section 18(a)(vi), attracts the higher penalty under Section 27(d). Section 28-A is reserved for purely administrative non-compliance with record-keeping obligations not linked to manufacturing contraventions.

  • Harmonious Construction of Trial Provisions: The Court resolved the apparent conflict between Section 32(2) (trial by Sessions Court) and Section 36-A (summary trial by Magistrate) by reading the exclusion clause in Section 36-A literally. All offences under Chapter IV (except those specifically excluded) must be tried by a Court of Session or Special Court, irrespective of the quantum of punishment.

  • Limitation Calculation in Drug Offences: The limitation period under Section 468 Cr.P.C. is determined by the maximum punishment prescribed for the offence as alleged in the complaint, not by the lowest possible punishment or a lesser-connected provision.


7. Court's Examination and Analysis

The Supreme Court's analysis was thorough and text-based:

  • Examination of Complaint Allegations: The Court meticulously reviewed the complaint (paragraphs 2, 3, 5, and 7) to ascertain the true nature of the allegations. It noted specific averments regarding tampering, manipulation, heavy misuse of a habit-forming drug, and failure to maintain records as per Schedule M & U—all pointing to a violation of Section 18(a)(vi) read with Rule 74.

  • Interpretation of Relevant Provisions: The Court examined Sections 18, 27(d), 18-B, and 28-A, along with Rule 74 and Schedules M & U. It concluded that the allegations squarely fell within Section 18(a)(vi) because they related to manufacturing standards and documentation requirements integral to the manufacturing process.

  • Typographical Error in Committal Order: The Court noted that the omission of Section 27(d) in the hand-written committal order was a curable typographical error. The substance of the complaint and the cognizance order clearly indicated prosecution under Section 27(d).

  • Limitation Analysis: Applying Section 468 Cr.P.C., the Court held that the maximum punishment for the offence alleged was 2 years (under Section 27(d)), attracting a 3-year limitation period. The complaint was filed within 3 years from the date of inspection, hence not time-barred.

  • Jurisdictional Analysis: The Court harmonized Sections 32(2), 36-A, and 36-AB. It held that Section 36-A's notwithstanding clause does not override Section 32(2); rather, Section 36-A itself excludes offences triable by the Court of Session. Since Section 27(d) falls under Chapter IV and is triable by Sessions Court under Section 32(2), the Magistrate correctly committed the case.


8. Critical Analysis and Final Outcome

  • Outcome: The Supreme Court dismissed the appeal and upheld the criminal proceedings against the appellants. The complaint was held to be maintainable, within limitation, and properly triable by the Special Judge.

  • Critical Perspectives:
    Strengths: The judgment provides much-needed clarity on the distinction between purely administrative record-keeping violations (Section 18-B/28-A) and manufacturing-standard violations (Section 18(a)(vi)/27(d)). This prevents offenders from exploiting the lower penalty and shorter limitation of Section 28-A when the gravamen of the charge involves manufacturing irregularities.
    Protection of Public Health: The Court's interpretation reinforces the stringent regulatory framework for drug manufacturing, particularly for habit-forming substances. It sends a strong message that non-compliance with manufacturing standards and record tampering will be treated as serious offences attracting higher punishment.
    Harmonious Interpretation: The Court's resolution of the jurisdictional conflict ensures that offences under Chapter IV are tried by courts of appropriate competence (Sessions/Special Courts), maintaining judicial consistency.
    Potential Concern: One could argue that the distinction between Section 18(a)(vi) and Section 18-B may not always be clear-cut. However, the Court's fact-specific approach, examining the substance of allegations rather than labels, provides a workable test.
    Guidance for Prosecution: The judgment implicitly guides investigating officers and prosecutors to draft complaints with precision, clearly linking record-keeping violations to manufacturing standards to attract the appropriate penal provision.

  • Core Final Directive: In prosecutions under the Drugs and Cosmetics Act, the true nature of the alleged contravention must be determined from the substance of the complaint. Violations of manufacturing standards and record-keeping integral to manufacturing fall under Section 18(a)(vi) punishable under Section 27(d), attracting a 3-year limitation period and trial by Sessions Court. Such complaints cannot be quashed on technical grounds of limitation or jurisdiction if filed within the prescribed period.


(MCQs)


1. Under Section 468 of the Code of Criminal Procedure, 1973, what is the limitation period for taking cognizance of an offence punishable with imprisonment for a term of two years?
A) One year
B) Two years
C) Three years
D) Five years


2. In M/s SBS Biotech v. State of Himachal Pradesh, the Supreme Court held that non-maintenance of records as per Schedule M & U, when linked to manufacturing for sale, constitutes an offence primarily under which provision of the Drugs and Cosmetics Act, 1940?
A) Section 18-B punishable under Section 28-A
B) Section 18(a)(vi) punishable under Section 27(d)
C) Section 22(1)(cca) punishable under Section 27(c)
D) Section 18(a)(i) punishable under Section 27(a)


3. According to the judgment, which provision of the Drugs and Cosmetics Act, 1940 mandates that no court inferior to a Court of Session shall try an offence punishable under Chapter IV?
A) Section 36-A
B) Section 36-AB
C) Section 32(2)
D) Section 27(d)


4. The Supreme Court distinguished the appellants' reliance on Miteshbhai J. Patel v. Drug Inspector on the ground that?
A) The case involved a different statute altogether.
B) The complaints in that case were filed much later than three years, whereas in the present case the complaint was within the limitation period.
C) The Supreme Court overruled that decision.
D) The case dealt with civil liability, not criminal prosecution.

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