SANJAY KUMAR KEDIAversusNARCOTICS CONTROL BUREAU & ANR.

A                   SANJA Y KUMAR KEDIA
                              v.
              NARCOTICS CONTROL BUREAU & ANR.

                          DECEMBER 3, 2007
B
            [S.B. SINHA AND HARJIT SINGH BEDI, JJ.]


         Narcotic Drugs and Psychotropic Substances Act: 1985:
C        s. 37-Applicationfor bail-Companies providing network
  facilities/or arranging supply of banned psychotropic substance on
  line-Owner arrested u/ss. 24 and 29-Plea of applicant that his
  companies were protected from prosecution by s. 79 of Information
   Technology Act-Held: Applicant and his associates were not innocent
D intermediaries or network service providers as defined under s. 79 of
  1. T. Act but the said business was only a facade and comoujlage for
  more sinister activity-In this situation, s. 79 will not grant immunity
  to an accused who has violated provisions ofthe Act as this provision
  gives immunity from prosecution for an offence only under I. T. Act
  itself-In the face of overwhelming inculpatory evidence it is not
E possible to give finding envisaged under s. 37 of the Act for grant of
  bail that there were reasonable grounds for believing that applicant
  was not guilty of offence alleged, or that he would not resume his
  activities should bail be granted-Information Technology Act, 2000-
  s. 79.
F
        CRIMINAL APPELLATE JURISDICTION : Criminal Appeal No.
    1659 of2007.
        From the Judgment and final Order dated 07.06.2007 of the High
    Court at Calcutta in CRM No. 5124 of 2007.
G
         K.T.S. Tulsi and Uday Umesh Lalit, Arun Kumar Srivasma, Manoj
    Prasad, Amit Pawan and G. Bhargava for the Appellant.
       Vikas Singh, ASG., B.B. Singh, Binu Tamta and Sushma Suri for
H the Respondents.
                                 812
   SANJAY KUMAR KEDIA v: NARCOTICS CONTROL                              813
         BUREAU [HARflT SINGH BEDI, J.]
      The following Order of the Court was delivered by                         A
                                 ORDER
      HARJIT SINGH BEDI, J. 1. Special Leave granted.
       2. The appellant Sanjay Kumar, Kedia, a highly qualified individual,
 set up two companies Mis. Xponse Technologies Limited (XTL) and                B
 Mis. 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      C
the NCB on a number of occasions pursuant to a notice issued to him
under Section 67 of the Narcotic Drugs and Phychotropic 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 seiz.ed or sealed. On 13.3.2007 the appellant filed an application for     D
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    E
and that the department should be afforded sufficeint 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          F
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 G
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
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    814            SUPREME COURT REPORTS                   [2007] 12 S.C.R.


A respondent - NCB and a rejoinder affidavit in reply thereto by the
  appellant.
          4. We have heard learned cotinsel for the parties at length.
        5. Mr. Tulsi has first and foremost argued that the allegations against
B 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 ):fade whereby such a substance obtained outside India had
c 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
D 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 protential 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
E 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
F the Schedule appended to the Act pertaining to the list of psychotropic
  substances (at Sri. 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 offence
  under Sections 24 and 29 of the Act which visualized that a person could
G be guilty without personally hadling 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
H
    j
           SANJA Y KUMAR KEDIA v. NARCOTICS CONTROL                           815
                  BUREAU[HARJITSINGHBEDI,J.]
        from prosecution under the provisions of the Act.                            A
             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 Section 24 and 29 of the Act.
        These Sections are re-produced below:                                     B
              24. "Punishment for external dealings in narcotic drugs and
              psychotropic substances in contravention of section J2.-
              Whoever engages in or controls any trade whereby a narcotic drug
              or a psychotropic substance is obtained outside India and supplied c
              to any person outside India without the previous authoriz.ation of
              the Central Government or otherwise than in accordance with the
              conditions (if any) of such authoriz.ation granted under section 12,
              shall be punsihable with rigorous imprisonment for a term which
              shall not be less than ten years but which may extend to twenty D
              years and shall also be liable to fine which shall not be less than
              one lakh mpees but may extend to two lakh mpes:
                 Provided that the court may, for reasons to be recorded in the
              judgment, imose a fine exceeding two lakj rupees".
                                                                                  E
              29. Punishment for abetment and Criminal conspiracy. - (1)
              Whoever abets, or is a pa.ti to a criminal conspirac 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 F
              contained in section 116 of the Indian Penal Code (45of1860),
              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 partyto the criminal conspiracy to the commission of any G
              act in a place without and beyond India which -
7
              (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 H
    816           SUPREME COURT REPORTS                   [2007] 12 S.C.R.


A              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
B       8. A perusal of Section 24 woulod 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 abetrnent or criminal conspiracy to commit
  an offfence under Chapter IV which includes Section 24. We have
  accordingly examined the facts of the case in the light of the argument of
C Mr. Tulsi that the companies only provided third party data and infotmation
  without any knowledge as to the commission of an offence under the Act.
  We have gone through the affidavit ofShri A.P. Siddiqui Deputy Director,
  NCB and reproduce the conclusions drawn on the investigation, in his
  words.
D
          "(i) The accused and its associates are not intetmediary 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 offece under the
E         NDPS Act. The company (Xponse Technologies Ltd. And Xpose
          IT Services Pvt. Ltd. Headed by Sanjay Kedia) has designed,
          developed, hosted the phatmaceutical 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 phatmacy website which are
F
          owned by Xponse or Sanjay Kedia.
          (1) Brother Phacmacy.Com and LessRx.Com: Brothers
              phatmacy.com, online phatmacy was identified as a marketing
              website (front end) for phannaceutical drugs. LessRx..com has
G             been identified as a "back end" site which was being utilized
              to process orders for pharmaceutical drugs through
              Brotherpharmacy.com. LessRx.com's registrant and
              administrative contract was listed True Value Phatmacy located
              at 29B, Rabindra Sarani, Kolkata, India-700073. Telephone
H             No. 033-2335-7621 which is the address is 203.86.100.95.
SANJAYKUMARKEDIAv. NARCOTICS CONTROL                           817
      BUREAU[HARJITSINGHBEDI,J.]
     The following websites were also utilizing this IP address:     A
  ALADIESPHARMACY.com,
  EXPRESSPHENTERMINE.com,
  FAMIL YYONLINEPHARMACY.com,
                                                                     B
  ONLINEEXPRESSPHARMACY.com,
  SHIPPEDLIPITOR.com
  Domain name Servers for LessRx.com (IP address:
  203.86.100.95) were NS. PALCOMONLINE.com and C
  NS2PALCOMLINE.com.
      The LessRx.com's website hosting company was identified as
  Pacom Web Pvt Ltd, C-56/14, I st Floor, Institutional Area, Sector
  62, Noida-201301. Sanjay Kedia entrusted the hosting work to D
  Palcom at VSNL, Delhi. These servers have been seized. Voluntary
  statement ofShri Ashish Chaudhary, Prop. of Palcom Web Pvt
  Ltd. indicates that He maintained the websites on behal ofXponse.
     According to the bank records, funds have been wired from
  Brothers pharmacy, Inc's Washington Mutual Bank Account E
  #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 F
 platform developed for the purpose of powering online pharmacies.
 Xponserx was designed to process internet pharmacy orders. Drug
 Enforcement Administration (DEA), USA conducted a "whois"
 reverse lookup on domain name XPONSERX.COM was at
 domaintools.com was at domaintools.Com was registered to G
 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
 also provided for Xponse. Two websites were featured on the
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    818            SUPREME COURT REPORTS                    [2007] 12 S.C.R.


A          XPONSEIT.COM websites as featured clients. And these were
           DELIVEREDMEDICINE.COM                               AND
           TRUEV ALUEPRESCRIPTIONS.COM. Review indicated that
           these two websites were internet phannacies.
           Consequently a "whois" reverse look-up on domain name
B
           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.

c          (3) Truevalueprescriptions.com: Review of this website indicated
           that this website was TRUEV ALUEPRESCRIPTIONS 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
D          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 liew 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.
E          DEA, conducted a "whosi" 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.
F
           From the aboce facts it is clear that the Xponse Tecnologies 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."
G
         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 facade
    and camouflage for more sinister activity. In this situation, Section 79 will
H
       SANJA Y KUMAR KEDIA v. NARCOTICS CONTROL                           819
r             BUREAU[HARJITSINGHBEDI,J.]
    not grant immunity to an accused who has violated the provisions of the A
    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 3 7 of the Act for the grant of bail that there were reasonable B
    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     c
    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 proceedins or decision in the trial in any manner.
    RP.                                                   Appeal dismissed.