Justice Vikram Nath, Justice Sandeep Mehta, Supreme Court
Proof Of Active Involvement Of Director Or Person Concerned In Affairs Of Company Required To Invoke Section 34(2) Of Drugs & Cosmetics Act: Supreme Court
|The appeal before the Supreme Court was preferred against the judgment passed by the Bombay High Court rejecting the criminal application filed under Section 482 of the CrPC.
The Supreme Court has dismissed a summoning order passed against P&G’s former Non-Executive Director Shailyamanyu Singh under the Drugs & Cosmetics Act, 1940 and observed that Section 34(2) begins with a caveat, that the prosecution would be required to provide proof regarding the active involvement of the Director or person concerned in the affairs of the company which would justify drawing an inference about his/her inculpability.
The appeal before the Apex Court was preferred against the judgment passed by the Bombay High Court rejecting the criminal application filed under Section 482 of Code of Criminal Procedure whereby the appellant had challenged an order taking cognizance of the offences under Section 18B punishable under Section 28A, Section 18(a)(vi) and Section 22(1)(cca) punishable under Section 27(d) of the Drugs & Cosmetics Act, 1940.
The Division Bench of Justice Vikram Nath and Justice Sandeep Mehta said, “....something more than a bald assertion would be necessary because Section 34(2) begin with a caveat, that the prosecution would be required to provide proof regarding the active involvement of the Director or person concerned in the affairs of the company which would justify drawing an inference about his/her inculpability.”
Senior Advocate Sidharth Luthra represented the Appellant while Advocate Rukhmini Bobde represented the Respondent.
Factual Background
The appellant accused was summoned as an accused in the complaint case in the capacity of the Director of Procter and Gamble Hygiene and Healthcare Limited (seventh accused), which was the distributor of the drug in question, i.e., Vicks Multi Pain Relief Gel. The said drug was manufactured by its licensed manufacturer, Akums Drugs and Pharmaceuticals Ltd. (eighth accused). The expiry date of the drug was January, 2016. As per the Standard Operating Procedure (SOP) of P&G Ltd., drugs set to expire within the next six months were required to be destroyed. Accordingly, the company initiated the process of recalling and destroying the said batch of the subject drug in May 2015.
In the year 2016, when the Drug Inspector visited the premises of an enterprise, namely, M/s Action Soap Center, it was revealed that a stock of the aforesaid drug whose expiry date had already lapsed, was illegally stored in the godown. A notice was sent by the Drug Inspector to P&G Ltd. inquiring about the drugs seized. The appellant, in discharge of his duties as the legal officer of the company, responded to these show cause notices. A complaint was registered against the appellant and others. The appellant approached the High Court, assailing the summoning order, which had been rejected. This order thus became a subject matter of challenge in the appeal before the Apex Court.
Reasoning
Referring to Sections 34(1) and 34(2) of the D&C Act, the Bench explained that every person who is in charge of the day-to-day affairs of the company would be liable to face prosecution under the Act. The Director or Directors, other than the one who is in charge of the day-to-day affairs of the company, can also be prosecuted ‘where it is proved’ that the offence has been committed with the consent, connivance or is attributable to any neglect on the part of such Director.
The High Court, while rejecting the quashing petition filed by the appellant, was persuaded by the fact that by virtue of the averments made in the complaint, it could be inferred that the appellant had distributed the drugs in favour of M/s Star Express which did not possess a valid license under the D&C Act. This finding according to the Bench was erroneous on the face of record. “The allegation of distributing the drugs to an enterprise without a license is omnibus against both i.e., accused No. 6 (appellant) as well as against accused No. 7 (P&G Ltd.) and thus, something more than a bald allegation is required which satisfies the necessary ingredients of the offences under the D&C Act, to make the appellant vicariously liable for the acts and omissions of the company ”, it said.
The Bench also noticed that the complaint was totally devoid of averments regarding any inquiry into the role of the Directors of the P&G Ltd. or the person/s responsible for the conduct of the day-to-day business of P&G Ltd. Thus, there being no such averment or material against the appellant, the order summoning him was ex facie unjustified and uncalled for, the Bench noted.
Allowing the appeal, the Bench quashed the summoning order and all proceedings sought to be taken against the appellant. “However, the proceedings of the complaint shall continue against the other accused arraigned therein”, it concluded.
Cause Title: Shailyamanyu Singh v. The State of Maharashtra (Neutral Citation: 2025 INSC 995)
Appearance
Appellant: Senior Advocate Sidharth Luthra, AOR Dheeraj Nair, Advocates Kumar Kislay, Vishrutyi Sahni, Ridhima Sharma
Respondent: Advocates Rukhmini Bobde, Siddharth Dharmadhikari, AOR Aaditya Aniruddha Pande, Shrirang B. Varma, Soumya Priyadarshinee, Vinayak Aren, Amlaan Kumar, Jatin Dhamija, Naveen Kumar Bhardwaj