Drugs & Cosmetics Act, 1940 – s.34 – Offences by companies – Vicarious liability of a Director of the company – Appellant summoned as an accused in the complaint case in capacity of the Director of the company which was distributor of the drug – Appellant challenged the order passed by the Magistrate taking cognizance of the offences under the various provisions of the 1943 Act and issuing process – High Court dismissed the petition – Sustainability:
Held: Prosecution of the appellant on the anvil of vicarious liability simply being a Director of the company is absolutely unjustified and tantamounts to a gross abuse of the process of law – It is clear from ss.34(1) and 34(2) that every person who is in-charge of the day-to-day affairs of the company and the Director or Directors would be liable to face prosecution under the Act – There definitely has to exist a prima facie allegation in the complaint which can satisfy the Court regarding the consent, connivance or attributable neglect on the part of the Director who is sought to be prosecuted by taking recourse to the concept of vicarious liability as provided u/s.34(2) – Complaint totally silent on this vital aspect – Finding of the High Court that it could be inferred from the averments made in the complaint that the appellant had distributed the drugs in favour of the enterprise which did not possess a valid license under the Act, is erroneous – Allegation of distributing the drugs to an enterprise without a license is omnibus against both the appellant as well as against the company and thus, something more than a bald allegation is required which satisfies the necessary ingredients of the offences under the Act, to make the appellant vicariously liable for the acts and omissions of the company – Neither of the Director, Manager or any other officer in-charge of the company has been impleaded in the complaint – Complaint totally devoid of averments regarding any inquiry into the role of the Directors of the company or the person/s responsible for the conduct of the day-to-day business of the company – Thus, there being no such averment or material against the appellant, the order summoning him is ex facie unjustified and uncalled for – Judgment and order by the High Court unsustainable in the eyes of law and set aside – Summoning order and all proceedings sought to be taken against the appellant in the complaint quashed. [Paras 21-31]
As published in the Supreme Court Reports, Supreme Court of India. Headnotes prepared by: Nidhi Jain. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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