Trust Cannot Be Equated Or Treated As A “Company” Or “Association Of Persons” U/S 34 Drugs & Cosmetics Act: Bombay High Court
The Court discharged Hinduja Hospital’s Managing Trustee, said “Managing Trustee” is an undefined designation and mere designation cannot sustain a prosecution without specific averments.
Bombay High Court, Justice Ranjitsinha Raja Bhonsale
The Bombay High Court has held that a Trust cannot be treated as a “company” or an “association of persons” within the Explanation to Section 34 of the Drugs and Cosmetics Act, 1940. Placing reliance on the Supreme Court’s decision in Sankar Padam Thapa v. Vijaykumar Dineshchandra Agarwal 2025 SCC OnLine SC 2194, the Court held that equating a Trust with a company is a fallacy, and that a Trust therefore falls outside the vicarious liability provision.
The Court further observed that “Managing Trustee” is not a designation defined in trust law, unlike “Managing Director” under the Companies Act, 2013. It held that a prosecution cannot rest on designation alone, and that a complaint must plead the Trustee’s overt act, knowledge or authority. On that footing, it discharged A. P. Hinduja, Managing Trustee of P. D. Hinduja Hospital & Medical Research Centre.
A Single Judge Bench of Justice Ranjitsinha Raja Bhonsale observed, “A Trust cannot be equated or treated as a ‘company’ or ‘association of persons’ under section 34 of the said Act. Section 34 of the said Act creates a criminal liability and thereafter has to be strictly adhered to and complied with. One cannot add, supplement or subtract the ambit, scope and applicability of the said sections. The Trust Act and the law related to Trust does not define the term or the designation of ‘Managing Trustee’. It is only the Trustees, who hold, the property in Trust and strive to achieve the objects of the Trust. A Trustee acts for and on behalf of the Trust. To implicate a Trustee of the Trust, it is necessary that, the complaint has at least the required prima facie pleadings and averments of the overt act or the knowledge or of having authority to take the decision or that the decision on which the impugned action is based was taken by the specific Trustee or Trustees. ‘Managing Trustee’ is not a designation defined in the Trust Act…”.
“…The term Managing Director which is defined in Section 2(54) of the Companies Act, 2013 as a person in substantial charge of management. There is no definition much less similar definition of ‘Managing Trustee’ in the Trust Act. Consequently, the prosecution cannot rely upon the mere designation to maintain a criminal prosecution against such a person even if the person is referred to as a ‘Managing Trustee’…”, the Bench further noted.
Senior Advocate Amit Desai appeared for the petitioner and Mahalaxmi Ganpathy, APP appeared for the respondent.
The complaint alleged that the ophthalmic drug Visilon, batch 24190, was used in a cataract surgery at the hospital, after which the patient developed a fungal infection and lost vision. The Government Analyst reported the sample as not of standard quality and misbranded, with microbial growth. The hospital, its pharmacist, its Deputy Director (Materials) and the Petitioner were accused of acquiring, stocking and distributing the drug. The only averment against the Petitioner was that he was Managing Trustee.
The Metropolitan Magistrate rejected the Petitioner’s discharge application on September 03, 2015, and the Sessions Court dismissed his revision on December 02, 2017. Both relied on the Madras High Court’s decision in Abraham Memorial Educational Trust, since overruled by the Supreme Court.
The Court found that the complaint lacked basic pleadings, and that merely citing Sections 27 or 34 cannot dispense with specific averments. It refused to allow the prosecution to argue a Section 27 case for the first time in submissions, noting that “by any other person on his behalf” requires averments that the accused caused, authorised or directed the act.
Treating Section 34 as pari materia with Section 141 of the NI Act, it held that the provision must be strictly construed. It added that criminal liability is not co-extensive with civil responsibility, that the presumption in S.M.S. Pharmaceuticals is confined to Managing Directors, and that the dealer’s partners had been discharged on similar grounds.
Holding that continuing the proceedings without averment or material would be an abuse of process, the Court discharged the Petitioner and allowed the petition in terms of prayer clause (b).
Cause Title: A. P. Hinduja v. State of Maharashtra & Anr. (Neutral Citation: 2026:BHC-AS:41182)
Appearances:
Petitioner: Senior Advocate Amit Desai with Gopalakrishna Shenoy, Pawan Mali, Advocates.
Respondent: Mahalaxmi Ganpathy and Megha Bajoria, APPs.