Justice Sumeet Goel made it clear that having licences or running a registered business did not automatically protect an accused, if the material on record pointed to possible illegal activity
The Punjab and Haryana High Court has held that bail pleas have to be considered strictly in cases alleging organised diversion of regulated medicines into illegal channels. The observation came as Justice Sumeet Goel refused regular bail to the accused in an NCB case involving the alleged recovery of over 1.37 crore tablets.
Justice Goel made it clear that having licences or running a registered business did not automatically protect an accused, if the material on record pointed to possible illegal activity. The court said “legality of form cannot defeat scrutiny of substance” and held that the conditions for granting bail under Section 37 of the NDPS Act, which applies to commercial quantity cases, were not satisfied.
Eight petitions were filed before the high court seeking regular bail in NCB crime case dated December 8, 2024, registered under provisions of the Narcotic Drugs and Psychotropic Substances Act at NCB police station, Amritsar Zonal Unit.
At the outset, Justice Goel observed that the court at the stage of regular bail was not required “to undertake a meticulous examination of the legality of commercial transactions or to record definitive findings on the merits of the competing claims,” which were to be tested during trial. Nevertheless, the court added, it “cannot remain oblivious to the broader factual backdrop emerging from the record while assessing whether discretion ought to be exercised in favour of the petitioners.
The NCB was represented in the matter by special public prosecutor Rajiv Sharma (Hisarwale). Justice Goel’s Bench was told that the complaint pertained to recovery of a commercial quantity of contraband containing Alprazolam, Tramadol and Zolpidem Tartrate.
Dealing with the plea that the petitioners were operating through licensed entities and formal commercial channels, Justice Goel referred to the limited scope of discretion in such matters. “The grant of bail, though discretionary, assumes a narrower compass where allegations pertain to organised diversion of regulated pharmaceutical substances into illicit channels under the guise of lawful business operations,” the court held.
Justice Goel cautioned that entities in the pharmaceutical sector could not be permitted “to cloak unlawful activities behind the facade of licences or corporate structures, particularly where the allegations disclose large-scale commercial dealings capable of undermining the statutory framework of the NDPS Act.”
The Bench reiterated it was settled principle that legality of form could not defeat scrutiny of substance and the mere existence of licences or corporate entities did not, by itself, dispel a prima facie inference arising from surrounding circumstances.
On the argument that transactions were carried out through licensed firms, Justice Goel observed a cautious approach was warranted in cases involving alleged diversion through layered business arrangements or intermediary entities. “Complex offences pertaining to narcotics, often employ structured transactions or shell arrangements to distance principal actors from the physical recovery of contraband,” the Bench added.
Justice Goel further added the submission that the petitioners were operating through licensed entities or formal commercial channels could not be accepted at face value at the current, “particularly when the magnitude of the alleged recovery indicates a coordinated supply chain extending beyond isolated transactions. Commercial sophistication cannot be permitted to become a shield against criminal accountability.”
The court recorded that the petitioners had been arrested, investigation carried out and challan presented. Out of 50 cited prosecution witnesses, none had been examined so far and the trial was underway. The Bench observed: “Indubitably, the petitioners are involved in the complaint in question pertaining to huge commercial quantity of contraband as per NDPS Act, 1985. Prima facie, the petitioner(s) are accused of having dealings in narcotic substances with the firm(s) which exist only on papers and not physically.”
Concluding that “no cause is made out in favour of the petitioner(s) to meet with the rigors of Section 37 of the NDPS Act,” the Court held the petitions deserved to be dismissed keeping in view “the entirety of the factual milieu of the case in hand; especially the contraband alleged to be recovered being commercial in nature.”
