Court Finds Lack of Specific Allegations in Complaint; Managing Director Absolved from Vicarious Liability Under Drugs and Cosmetics Act
In a significant ruling, the Himachal Pradesh High Court has quashed criminal proceedings against Umang Vohra, Managing Director of Cipla Limited, absolving him from vicarious liability in connection with a complaint under the Drugs and Cosmetics Act, 1940. The judgment, delivered by Justice Sandeep Sharma, found that the complaint lacked specific averments that the Managing Director was in charge of or responsible for the day-to-day conduct of the company's business.
The case emanated from a complaint filed by the Union of India against M/s Crest Lifesciences Pvt. Ltd., Cipla Limited, and others, alleging the manufacture and sale of substandard drugs. The complaint accused the company of producing a drug sample declared "Not of Standard Quality" by government testing laboratories.
The court scrutinized the role of the Managing Director in the context of Section 34 of the Drugs and Cosmetics Act, which imposes vicarious liability on individuals in charge of and responsible for the conduct of the business of the company. The judgment emphasized that mere designation as a director or managing director is insufficient to establish liability. Specific allegations regarding direct involvement in day-to-day affairs are mandatory.
Justice Sharma highlighted the absence of specific allegations against Vohra in the complaint. The court observed that Cipla Limited had appointed an authorized representative to manage day-to-day operations related to the drug in question, which further undermined the grounds for implicating Vohra.
The decision underscores the importance of precise allegations in complaints seeking to hold company directors vicariously liable for statutory violations. The court exercised its power under Section 482 of the Criminal Procedure Code (now Section 528 of Bharatiya Nagrik Suraksha Sanhita, 2023) to quash the proceedings, preventing abuse of process and unnecessary harassment.
This ruling serves as a reminder of the judiciary's role in ensuring that criminal proceedings do not degenerate into instruments of harassment, emphasizing the need for complaints to include specific averments to substantiate claims of vicarious liability against company officials.
Bottom line:-
Vicarious liability of Managing Director in criminal proceedings under the Drugs and Cosmetics Act, 1940 - Absence of specific averments in the complaint regarding day-to-day control and responsibility absolves the Managing Director from prosecution.
Statutory provision(s):
- Bharatiya Nagrik Suraksha Sanhita, 2023, Section 528
- Drugs and Cosmetics Act, 1940, Sections 18(a)(i), 27(d), and 34
Umang Vohra v. Union of India, (Himachal Pradesh) : Law Finder Doc id # 2888730
