CASE NO.:
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Appeal (crl.) 1659 of 2007
PETITIONER:
Sanjay Kumar Kedia
RESPONDENT:
Narcotics Control Bureau & Anr
DATE OF JUDGMENT: 03/12/2007
BENCH:
S.B.SINHA & HARJIT SINGH BEDI
JUDGMENT:
JUDGMENT
O R D E R
CRIMINAL APPEAL NO. 1659 OF 2007
(@SLP (Crl.) No. 3892 of 2007)
HARJIT SINGH BEDI, J.
1. Special Leave granted.
2. The appellant Sanjay Kumar Kedia, a highly qualified
individual, set up two companies M/s. Xponse Technologies
Limited (XTL) and M/s. Xponse IT Services Pvt. Ltd. (XIT) on
22.4.2002 and 8.9.2004 respectively which were duly
incorporated under the Indian Companies Act, 1956. On
1.2.2007 officers of the Narcotics Control Bureau (NCB)
conducted a search at the residence and office premises of
the appellant but found nothing incriminating. He was also
called upon to appear before the NCB on a number of
occasions pursuant to a notice issued to him under Section 67
of the Narcotic Drugs and Psychotropic Substances Act, 1985
(hereinafter referred to as the "Act") and was ultimately
arrested and the bank accounts and premises of the two
companies were also seized or sealed. On 13.3.2007 the
appellant filed an application for bail in the High Court
which was dismissed on the ground that a prima facie case
under Sections 24 and 29 of the Act had been made out and
that the investigation was yet not complete. The appellant
thereafter moved a second bail application before the High
Court on 16.4.2007 which too was dismissed with the
observations that the enquiry was at a critical stage and
that the department should be afforded sufficient time to
conduct its enquiry and to bring it to its logical
conclusion as the alleged offences had widespread
ramifications for society. It appears that a bail
application was thereafter filed by the appellant before the
Special Judge which too was rejected on 28.5.2007 with the
observations that the investigation was still in progress.
Aggrieved thereby, the appellant preferred yet another
application for bail before the High Court on 4.6.2007 which
too was dismissed on 7.6.2007. The present appeal has been
filed against this order.
3. Notice was issued on the Special Leave Petition on
30.7.2007 by a Division Bench noticing a contention raised by
Mr. Tulsi that service providers such as the two companies
which were intermediaries were protected from prosecution by
Section 79 of the Information Technology Act, 2000. An
affidavit in reply has also been filed on behalf of the
respondent NCB and a rejoinder affidavit in reply thereto
by the appellant.
4. We have heard learned counsel for the parties at length.
5. Mr. Tulsi has first and foremost argued that the
allegations against the appellant were that he had used the
network facilities provided by his companies for arranging
the supply of banned psychotropic substances on line but
there was no evidence to suggest that the appellant had been
involved in dealing with psychotropic substances or engaged
in or controlled any trade whereby such a substance obtained
outside India had been supplied to persons outside India and
as such no case under section 24 of the Act had been made out
against the appellant. Elaborating this argument, he has
submitted that the two drugs which the appellant had
allegedly arranged for supply were phentermine and butalbital
and as these drugs were not included in Schedule-I of the
Narcotic Drugs or Psychotropic Substances Rules 1987 in terms
of the notification dated 21.2.2003 and were also recognized
by the Control Substances Act, a law applicable in the
United States, as having low potential for misuse and it was
possible to obtain these drugs either on written or oral
prescription of a doctor, the supply of these drugs did not
fall within the mischief of Section 24. He has further
argued that in the circumstance, the companies were mere
network service providers they were protected under Section
79 of the Technology Act from any prosecution.
6. Mr. Vikas Singh, the learned Additional Solicitor
General for the respondents has however pointed out that the
aforesaid drugs figured in the Schedule appended to the Act
pertaining to the list of psychotropic substances (at Srl.
Nos. 70 and 93) and as such it was clear that the two drugs
were psychotropic substances and therefore subject to the
Act. It has also been pointed out that the appellant had
been charged for offences under Sections 24 and 29 of the Act
which visualized that a person could be guilty without
personally handling a psychotropic substance and the evidence
so far collected showed that the appellant was in fact a
facilitator between buyers and certain pharmacies either
owned or controlled by him or associated with the two
companies and that Section 79 of the Technology Act could not
by any stretch of imagination guarantee immunity from
prosecution under the provisions of the Act.
7. It is clear from the Schedule to the Act that the two
drugs phentermine and butalbital are psychotropic substances
and therefore fall within the prohibition contained in
Section 8 thereof. The appellant has been charged for
offences punishable under Sections 24 and 29 of the Act.
These Sections are re-produced below:
24. " Punishment for external dealings in
narcotic drugs and psychotropic substances
in contravention of section 12.- Whoever
engages in or controls any trade whereby a
narcotic drug or a psychotropic substance
is obtained outside India and supplied to
any person outside India without the
previous authorization of the Central
Government or otherwise than in accordance
with the conditions (if any) of such
authorization granted under section 12,
shall be punishable with rigorous
imprisonment for a term which shall not be
less than ten years but which may extend
to twenty years and shall also be liable
to fine which shall not be less than one
lakh rupees but may extend to two lakh
rupes:
Provided that the court may, for
reasons to be recorded in the judgment,
impose a fine exceeding two lakh rupees".
29. Punishment for abetment and
criminal conspiracy. - (1) Whoever
abets, or is a party to a criminal
conspiracy to commit an offence
punishable under this Chapter, shall,
whether such offence be or be not
committed in consequence of such
abetment or in pursuance of such
criminal conspiracy, and
notwithstanding anything contained in
section 116 of the Indian Penal Code
(45 of 1860), be punishable with the
punishment provided for the offence.
(2) A person abets, or is a party to a
criminal conspiracy to commit, an
offence, within the meaning of this
section, who, in India abets or is a
party to the criminal conspiracy to the
commission of any act in a place
without and beyond India which
(a) would constitute an offence if
committed within India; or
(b) under the laws of such place,
is an offence relating to
narcotic drugs or psychotropic
substances having all the legal
conditions required to
constitute it such an offence
the same as or analogous to the
legal conditions required to
constitute it an offence
punishable under this Chapter,
if committed within India.
8. A perusal of Section 24 would show that it deals with
the engagement or control of a trade in Narcotic Drugs and
Psychotropic Substances controlled and supplied outside India
and Section 29 provides for the penalty arising out of an
abetment or criminal conspiracy to commit an offence under
Chapter IV which includes Section 24. We have accordingly
examined the facts of the case in the light of the argument
of Mr. Tulsi that the companies only provided third party
data and information without any knowledge as to the
commission of an offence under the Act. We have gone through
the affidavit of Shri A.P. Siddiqui Deputy Director, NCB and
reproduce the conclusions drawn on the investigation, in his
words.
"(i) The accused and its associates are
not intermediary as defined under
section 79 of the said Act as their
acts and deeds was not simply
restricted to provision of third party
data or information without having
knowledge as to commission of offence
under the NDPS Act. The company
(Xponse Technologies Ltd. And Xpose IT
Services Pvt. Ltd. Headed by Sanjay
Kedia) has designed, developed, hosted
the pharmaceutical websites and was
using these websites, huge quantity of
psychotropic substances (Phentermine
and Butalbital) have been distributed
in USA with the help of his
associates. Following are the online
pharmacy websites which are owned by
Xponse or Sanjay Kedia.
(1) Brother Pharmacy.com and LessRx.com:
Brothers pharmacy.com, online pharmacy
was identified as a marketing website
(front end) for pharmaceutical drugs.
LessRx.com has been identified as a "back
end" site which was being utilized to
process orders for pharmaceutical drugs
through Brotherspharmacy.com.
LessRx.com's registrant and
administrative contact was listed True
Value Pharmacy located at 29B, Rabindra
Sarani, Kolkata, India-700073. Telephone
No.033-2335-7621 which is the address of
Sanjay Kedia. LessRx.com's IP address is
203.86.100.95. The following websites
were also utilizing this IP address:
ALADIESPHARMACY.com,
EXPRESSPHENTERMINE.com,
FAMILYYONLINEPHARMACY.com
ONLINEEXPRESSPHARMACY.com,
SHIPPEDLIPITOR.com
Domain name Servers for LessRx.com (IP
address: 203.86.100.95) were
NS.PALCOMONLINE.com and
NS2PALCOMLINE.com.
The LessRx.com's website hosting
company was identified as Pacom Web Pvt
Ltd, C-56/14,1st Floor, Institutional
Area, Sector 62, Noida-201301. Sanjay
Kedia entrusted the hosting work to
Palcom at VSNL, Delhi. These servers
have been seized. Voluntary statement of
Shri Ashish Chaudhary, Prop. Of Palcom
Web Pvt Ltd.indicates that He maintained
the websites on behal of Xponse.
According to the bank records,
funds have been wired from Brothers
pharmacy, Inc's Washington Mutual Bank
Account #0971709674 to Xponse IT services
Pvt Ltd, ABN AMRO bank account
No.1029985, Kolkata.
(2) Deliveredmedicine.com : A review of
the Xponse's website-XPONSEIT.com was
conducted and observed and advertisement
for XPONSERX. That XPONSERX was
described as a software platform
developed for the purpose of powering
online pharmacies. Xponserx was designed
to process internet pharmacy orders by
allowing customers to order drugs. Drug
Enforcement Administration (DEA), USA
conducted a "whois" reverse lookup on
domain name XPONSERX.COM was at
domaintools.Com and it revealed that
XPONSERX.COM was registered to Xponse IT
Services Pvt Ltd, Sanjay kedia,
29B,Rabindra Sarani, 12E,3rd floor,
Kolkata, WB 70073. Telephone no.+91-
9830252828 was also provided for Xponse.
Two websites were featured on the
XPONSEIT.COM websites as featured
clients. And these were
DELIVEREDMEDICINE.COM AND
TRUEVALUEPRESCRIPTIONS.COM. Review
indicated that these two websites were
internet pharmacies.
Consequently a "whois" reverse look-up on
domain name DELIVEREDMEDICINE.COM at
domainstools.com conducted by DEA revealed
that it was registered to Xponse Inc.,2760
Park Ave.,Santa Clara, CA, USA which is the
address of Sanjay Kedia.
(3) Truevalueprescriptions.com: Review of
this website indicated that this website was
a internet pharmacy. In addition
TRUEVALUEPRESCRIPTIONS listed Phentermine as
a drug available for sale. It appeared that
orders for drugs could be made without a
prescription from the TRUEVALUE website, it
was noted that orders for drugs could be
placed without seeing a doctor. According
to the website, a customer can complete an
online questionnaire when placing the order
for a drug in lieu of a physical exam in a
physician's office. Toll free telephone
number 800-590-5942 was provided on the
TRUEVALUE website for customer Service.
DEA, conducted a "whois" reverse look-up
on domain name TRUEVALUEPRESCRIPTIONS.COM
at domaintools.com and revealed that IP
address was 203.86.100.76 and the server
that hosts the website was located at
Palcom, Delhi which also belongs to Xponse.
From the above facts it is clear that the
Xponse Technologies Ltd and Xponse IT
Services Pvt Ltd were not acting merely as
a network service provider but were
actually running internet pharmacy and
dealing with prescription drugs like
Phentermine and Butalbital."
9. We thus find that the appellant and his associates were
not innocent intermediaries or network service providers as
defined under section 79 of the Technology Act but the said
business was only a fagade and camouflage for more sinister
activity. In this situation, Section 79 will not grant
immunity to an accused who has violated the provisions of the
Act as this provision gives immunity from prosecution for an
offence only under Technology Act itself.
10. We are therefore of the opinion that in the face of
overwhelming inculpatory evidence it is not possible to give
the finding envisaged under Section 37 of the Act for the
grant of bail that there were reasonable grounds for
believing that the appellant was not guilty of the offence
alleged, or that he would not resume his activities should
bail be granted.
11. For the reasons recorded above, we find no merit in
this appeal, which is accordingly dismissed. We however
qualify that the observations made above are in the context
of the arguments raised by the learned counsel on the bail
matter which obligated us to deal with them, and will not
influence the proceedings or decision in the trial in any
manner.
advocatemmmohan 
Discussion
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