While quashing a complaint registered under the Drugs and Cosmetics Act, 1940 against the Partners of a drug manufacturing company, the Himachal Pradesh High Court has explained that the complainant needs to aver in the complaint that the person sought to be vicariously liable is not only in charge but also responsible to the Company for its affairs.

The High Court has, however, refused to quash the complaint against the Company.

The Petitioners had approached the High Court seeking quashing of the complaint filed against them for the commission of offences punishable under Sections 16, 18 (a) (i), 18(a) (vi), read with Section 27(d) of the Drugs and Cosmetics Act, 1940.

The Single Bench of Justice Rakesh Kainthla observed, “Thus, the complainant needs to aver in the complaint that the person sought to be vicariously liable is not only in charge but also responsible to the Company for its affairs.”

Senior Advocate Anand Sharma represented the Petitioners while Senior Panel Counsel Shashi Shirshoo represented the Respondent.

Factual Background

A complaint was filed before the Trial Court against the accused for the commission of offences punishable under Sections 16, 18(a)(i), 18(a)(vi), read with Section 27(d) of the Drugs and Cosmetics Act, 1940 and Rules 1945. It was asserted that a sample of Lycoyat manufactured by M/s Unison Pharmaceuticals was sent for test and analysis, and the drug was not found to be of standard quality. The drug did not conform to the claim as per Patent & Proprietary with respect to the uniformity of filled weight and the Assay of Vitamin D3, Calcium Pantothenate.

The Drugs Inspector served a notice upon M/s Unison Pharmaceuticals. The necessary investigation was conducted, and it was found that the name of M/s Unison Pharmaceuticals was changed to M/s VADSP Pharmaceuticals. In the second round of testing, the Central Drugs Testing Laboratory, Kolkata, issued a report declaring that the sample was not of standard quality. A complaint was filed against Accused 1 to 3, considering that the manufacturing firm had manufactured a drug which was not of standard quality. The Trial Court found sufficient reasons to summon the accused. Being aggrieved by the filing of the complaint and summoning order, the petitioners/accused approached the High Court.

Reasoning

Referring to section 34 of the Drugs and Cosmetics Act, the Bench explained that a Company is primarily liable for the commission of an offence punishable under the Drugs and Cosmetics Act. Vicarious liability has been fastened upon a person who, at the time the offence was committed, was in charge of and responsible to the Company for the conduct of its business.

On a perusal of the complaint, the Bench found that the averments were silent regarding the second and third accused, who were the partners of the firm, being in charge of the first accused Company and also responsible for its affairs. Reference was also made to the judgment in Siby Thomas v. Somany Ceramics Ltd., (2024) wherein it has been observed that the primary responsibility to make the averment, that the accused is in charge and responsible for the Firm for its affairs lies upon the complainant in the absence of which the accused cannot be held liable.

The Bench held that the proceedings against the second and third accused petitioners were not maintainable and were liable to be quashed. However, the Bench made it clear that the first petitioner is the Firm which had manufactured the drugs, and it was primarily liable for the manufacturing of the substandard drugs. Therefore, the proceedings couldn’t be quashed against it.

One of the arguments raised was that the report of the analyst was not as per the requirements of Rules 57 and 46 of the Drugs and Cosmetics Rules. The Bench refused to accept this submission in light of the fact that Rule 46 deals with the procedure to be adopted after the receipt of the sample and Rule 57 provides for the procedure for the dispatch of samples to the Government analyst. These rules do not contain any requirement that the full protocols of the test are to be mentioned in the report of analysis. “Whether the analysis was carried out as per the protocol or not is a question of fact, which can be determined after examining the evidence. Therefore, this submission will also not help the petitioners”, it said.

The Bench also explained that the complaint, in this case, was made by the public servant in the discharge of his official duties and was saved by the proviso to Section 200 of the CrPC. Thus, partly allowing the appeal, the Bench quashed the complaint pending before the Trial Court against the first and second accused, whereas the complaint was asked to continue qua the petitioner Company.

Cause Title: M/s VADSP Pharmaceuticals & others v. Union of India (Neutral Citation: 2025:HHC:14089)

Appearance:

Petitioners: Senior Advocate Anand Sharma, Advocate Karan Sharma

Respondent: Senior Panel Counsel Shashi Shirshoo

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Himachal Pradesh High CourtJustice Rakesh Kainthla

Tulip Kanth

Assistant Editor

Tulip Kanth is an Assistant Editor at Verdictum having over 5 years of experience in the field of legal journalism and editing. She extensively covers judgments of the Supreme Court, High Courts as well as Tribunals. She has previously worked with a legal publishing website where she oversaw the work of other editors and has also created updates on notifications of different Government Ministries. She holds an English Honours Degree from SGTB Khalsa College, Delhi University and has completed her LLB course with specialisation in Corporate Law from Amity University.