Vicarious liability under Section 34 of the Drugs and Cosmetics Act requires impleading the company as primary accused.

The appellant, a Director of M/s Quest Laboratories Pvt. Ltd., was convicted under Section 27(d) of the Drugs and Cosmetics Act, 1940, by the Trial Court.

On 30.03.2015, a Drug Inspector collected samples of "Paracetamol Oral Suspension" from Sadar Hospital, Jamtara.

The Government Analyst reported the sample as "Not of Standard Quality" due to hard cake formation and solid lumps.

During the trial, witnesses admitted to a lack of temperature control in the hospital store (reaching 44–45°C) and the absence of the manufacturer during sampling.

The appellant challenged the conviction on the grounds that the company was not made an accused and that vicarious liability was improperly fastened.

Section 34 of the Drugs and Cosmetics Act, 1940, which governs offences by companies and defines vicarious liability for directors/partners.

The precedent set by the Hon’ble Supreme Court in Dilip Hariramani v. Bank of Baroda (2024) 15 SCC 443, which established that under deeming fictions (similar to Section 141 of the NI Act), a person cannot be convicted vicariously unless the company or firm—as the primary offender—has been prosecuted or committed the offence.

The High Court found that the prosecution failed to implead the manufacturing company as a party to the proceedings, which is a sine qua non for fastening vicarious liability on its directors.

Following the ratio in Dilip Hariramani, the Court reasoned that vicarious criminal liability is a legal fiction that presupposes the commission of an offence by the company as the principal accused.

Since the company was not made an accused, the appellant could not be held liable solely by virtue of his position. Furthermore, the Court noted procedural infirmities, including vague charges and an inadequate statement recorded under Section 313 Cr.P.C., which undermined the requirement of a fair trial.

The High Court allowed the appeal, set aside the judgment of conviction and the order of punishment dated 29.01.2024, and discharged the appellant from his bail bonds.