Commercial Sophistication Cannot Become a Shield Against Criminal Accountability: Punjab & Haryana High Court Declines Bail in 1.37 Crore Tablet NDPS Case

“Legality of Form Cannot Defeat Scrutiny of Substance” –  In a stern reaffirmation of the statutory embargo under the Narcotic Drugs and Psychotropic Substances Act, 1985, the High Court of Punjab and Haryana at Chandigarh, on 11 February 2026, dismissed eight connected petitions seeking regular bail in a case involving alleged recovery of 1,37,11,610 psychotropic tablets weighing 5772.584 kilograms (with strips).

Justice Sumeet Goel held that the allegations disclose a case involving huge commercial quantity and organised diversion of NRx medicines, thereby attracting the full rigours of Section 37 NDPS Act.

The Court ruled that no reasonable grounds existed at this stage to believe that the petitioners were not guilty, and that the twin statutory conditions under Section 37 had not been satisfied.

Section 37 NDPS Act Reaffirmed as a “Mandatory and Cumulative” Threshold

The petitions were filed under Section 483 of the Bharatiya Nagarik Suraksha Sanhita, 2023 seeking regular bail in NCB Crime Case No. 51 dated 08.12.2024 registered under Sections 8, 8(a), 22, 25, 27-A, 29, 35, 54 and 60 of the NDPS Act.

The core issue before the Court was whether the petitioners, accused of participating in an alleged organised chain of diversion of psychotropic medicines including Alprazolam, Tramadol and Zolpidem, could overcome the statutory embargo imposed by Section 37 in cases involving commercial quantity.

Declining bail, the Court observed that “the twin conditions contained in Section 37(1)(b) of NDPS Act are cumulative in nature and not alternative,” and both must be satisfied before bail can be granted.

Alleged Organised Diversion Through Licensed and Fictitious Firms

According to the Narcotics Control Bureau, the complaint pertains to recovery of 1.37 crore tablets containing psychotropic substances. The prosecution alleged a coordinated supply chain involving manufacturers, marketing entities and distributors who diverted NRx medicines into illicit markets.

It was alleged that certain firms operated only on paper, that some premises were found closed or non-existent, and that licences of certain entities had been cancelled by Drug Authorities due to involvement in trafficking of NRx medicines.

The petitioners contended that they were directors or proprietors of duly licensed pharmaceutical entities and that transactions were lawful under the Drugs and Cosmetics Act, 1945. They argued that there was no direct sale to unauthorised persons and that the rigours of Section 37 were not attracted.

The Court, however, cautioned that at the stage of bail, it is neither required nor appropriate to undertake a meticulous examination of commercial legality but must examine whether prima facie material satisfies Section 37.

“Commercial Sophistication Cannot Be Permitted to Become a Shield”

In a significant observation for pharmaceutical diversion cases, the Court held:

“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 further clarified:

“It is a settled principle that legality of form cannot defeat scrutiny of substance; the mere existence of licences or corporate entities does not, by itself, dispel a prima facie inference arising from surrounding circumstances.”

Rejecting the argument that valid licences insulated the accused from criminal liability at the bail stage, the Court emphatically stated:

“Commercial sophistication cannot be permitted to become a shield against criminal accountability.”

The Court noted that narcotics offences often involve structured transactions and layered business arrangements to distance principal actors from physical recovery of contraband, and such arrangements must be judicially scrutinised with caution.

Section 37 NDPS Act: Twin Conditions “In Addition to” General Bail Principles

The Court reiterated that the conditions under Section 37(1)(b) are in addition to the general parameters governing bail. It emphasised that satisfaction regarding “not guilty” requires a prima facie assessment of material without conducting a mini-trial.

Relying upon recent Supreme Court decisions including Union of India v. Namdeo Ashruba Nakade and Union of India v. Vigin K. Varghese, the Court held that findings under Section 37 cannot be returned casually and must be based on careful appraisal of prosecution assertions.

Upon examining the material, the Court concluded that no cause had been made out to satisfy the statutory threshold.

Long Incarceration and Trial Delay: No Article 21 Exception Made Out

The petitioners argued that they had been in custody since December 2024 to May 2025 and that though 50 prosecution witnesses were cited, none had been examined.

The Court, however, held that the incarceration period was not such as to dilute the rigour of Section 37, particularly in view of the seriousness and magnitude of allegations.

Relying upon Supreme Court precedent, the Court observed that in offences punishable with ten to twenty years’ rigorous imprisonment, custody of about one year cannot automatically be termed unreasonable so as to override the statutory embargo.

Gravity of Offence and Societal Impact

The Court also referred to Supreme Court observations highlighting the menace of drug abuse and its impact on public health and youth.

It noted that the case involved alleged large-scale commercial quantity affecting public health and therefore required “heightened caution” in exercise of bail discretion.

Bail Denied in Organised Pharmaceutical Diversion Case

After considering rival submissions and material on record, the Court held:

“From the rival submissions as also the material brought forth before me, no cause is made out in favour of the petitioner(s) to meet with the rigors of Section 37 of the NDPS Act.”

All eight petitions were dismissed. The Court clarified that its observations shall not be construed as an expression on the merits of the case.

This ruling stands as a clear judicial message that in cases of alleged organised diversion of psychotropic medicines in commercial quantities, statutory safeguards under Section 37 NDPS Act will be strictly enforced, irrespective of corporate structures or licensing frameworks invoked by the accused.

Date of Decision: 11 February 2026