Vicarious liability of directors under Drugs Act requires specific allegations beyond mere corporate designation.

Through five consolidated petitions under Section 482 of the CrPC, the petitioners challenged criminal complaints and summoning orders for offences under Section 18(a)(i) read with Section 27(d) of the Drugs and Cosmetics Act, 1940 ("the Act")

The complaints were filed following reports by government analysts that drug samples (Ceftriaxone Inj. and others) manufactured by M/s Theon Pharmaceuticals Ltd. were "not of standard quality"

The respondent impleaded the company, its Managing Director, Whole-Time Directors, Directors, and technical staff (AGM-Production and Quality Control Manager), alleging they were all responsible for the conduct of the business

The petitioners contended that the company had specifically nominated Sh. Puran Chand Joshi (a Director) as the "person in charge" under Section 34 of the Act, and that no specific roles were ascribed to the other directors in the complaints

1. Whether officers or directors of a company can be prosecuted for offences under the Drugs and Cosmetics Act, 1940, solely by virtue of their designation in the absence of specific allegations regarding their role in the commission of the offence

2. Whether the nomination of a specific person under Section 34 of the Act as being responsible for the conduct of business precludes the prosecution of other high-ranking officers based on vague or bald allegations

The court primarily applied Section 34 of the Drugs and Cosmetics Act, 1940, which stipulates that when a company commits an offence, the company and every person "in charge of and responsible to the company for the conduct of its business" shall be deemed guilty

It further relied on the Supreme Court’s ruling in M/s Cheminova India Limited and anr v. State of Punjab and Ors (2021) 8 SCC 818, which established that once a company nominates a specific person as responsible for quality control and conduct of business under a statutory provision, other officers (like the Managing Director) cannot be prosecuted on "bald and vague" allegations merely due to their overall supervisory role

The court reasoned that under Section 34, the presumption of being "responsible for the conduct of business" is rebuttable and specifically triggers against the person nominated by the company for that purpose

In all five cases, the court found that the company had officially informed the authorities that Sh. Puran Chand Joshi was the person responsible for manufacturing and analysis, a fact endorsed by the State Drugs Controller

Regarding the petitioners who were Managing Directors or Directors (Petitioners 1–7 in most petitions), the court observed that the complaints failed to ascribe any specific role or act to them connecting them to the manufacture of the sub-standard drugs; they were impleaded solely because of their designations

However, the court distinguished the case of the technical staff (AGM-Production and Senior Manager Quality Control in CRMC 44/2018 and 64/2018), noting that the complaints contained specific allegations that they were "actively involved in manufacturing and production," thus justifying the continuation of proceedings against them

Consequently, the court quashed the complaints and proceedings against the Managing Director and Directors (Petitioners 1-7 in CRMC 450/2018, 690/2017, 44/2018, 64/2018, and Petitioners 1, 2, 4 in CRMC 720/2017)

However, the court dismissed the petitions and allowed the trial to proceed against the manufacturing company, the nominated person (Sh. Puran Chand Joshi), and the technical staff (Petitioners 8 and 9 in CRMC 44/2018 and 64/2018) against whom specific allegations of active involvement were made