M/s Merind Limited vs State of H.P. and Others

V.K. Gupta, C.J.—On a very short and limited question of law, this petition u/s 482 of the Criminal Procedure Code is being allowed in favour of the petitioner-accused with respect to and arising out of the criminal proceedings launched against him (along with some other accused persons) u/s 18(a)(i) of the Drugs and Cosmetics Act, 1940 read with Section 34 of the said Act.

With respect to a drug "Ciprofloxacin Ophthalmic Solution US" P, a sample was taken by the complainant and the sample after testing in the laboratory was found not conforming to standard quality for the reasons given in the report of the Laboratory. In so far as the petitioner-accused is concerned, its description as is found in the cause-title of the complaint is as under :-

The Promoter/General Manager (Sales), of M/s. Merind Limited, New India Centre, 17, Cooperage Road, Mumbai 400001.

Undoubtedly the expression "Promoter is as vague as could be, but theexpression �General Manager (Sales)� clearly indicates that an officer who is holding the post of General Manger (Sales) in M/s. Merind Limited has been made as an accused in the complaint. In the entire complaint, starting from para 1 para 14 including the prayer part, there is not a whisper or a murmur as to whether the accused, i.e., General Manager (Sales), or for that matter the accused �(Prompter)� were In-charge of the Company and/or also responsible to the Company for the conduct of its business at the time when the alleged offence was committed by the Company. Sub-section (1) of Section 34 of the Drugs and Cosmetics Act, 1940 reads thus:

(1) Where an offence under this Act has been committed by a company, every person who at the time the offence was committed, was in charge of, and was responsible to the company of the conduct of the business of the company, as well as the company shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly:

Provided that nothing contained in this sub-section shall render any such person liable to any punishment provided in this Act if he proves that the offence was committed without his knowledge or that he exercised all due diligence to prevent the commission of such offence.�

The aforesaid provisions came up for consideration before the Supreme Court in the case of State of Haryana Vs. Brij Lal Mittal and Others, wherein their Lordships after noticing Section 34 (supra) observed as under (Para 8):-

It is thus seen that the vicarious liability, of a person for being prosecuted for an offence committed under the Act by a company arises if at the material time he was in charge of and was also responsible to the company for the conduct of its business. Simply because a person is a director of the company it does not necessarily mean that he fulfils both the above requirements so as to make him liable. Conversely, without being a director a person can be in-charge of and responsible to the company for the conduct of its business. From the complaint in question we, however, find that except a bald statement that the respondents were directors of the manufacturers, there is no other allegation to indicate, even prima facie, that they were in-charge of the company and also responsible to the company for the conduct of its business,

Applying the aforesaid ratio to the facts of this case and clearly noticing that in the entire complaint there is no allegation or a statement (of fact) that the aforesaid accused was in-charge of the company and/or was also responsible to the company for the conduct of its business at the time when the alleged offence was committed, the only inescapable conclusion which emerges is that such allegation/statement of fact being a sine qua non for the launching and maintainability of the prosecution against the petitioner-accused. and it not being there in the complaint, the proceedings against the petitioner-accused at the threshold are held as not being maintainable and thus these deserve to be quashed. Actually a careful perusal of the complaint also reveals that what to speak of the aforesaid specific allegation, even a bald statement has not been made in this complaint about the description of the petitioner-accused, or any role having been played by him with respect to the affairs of the company.

For the foregoing reasons, this petition succeeds. The proceedings in the aforesaid complaint qua the petitioner are hereby quashed with all the consequences.