Himachal Pradesh High Court
Amit Kumar Bansal vs Union Of India on 9 April, 2026
Author: Sandeep Sharma
Bench: Sandeep Sharma
2026:HHC:11461
IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA
Cr.MMO Nos.305 & 707 of 2022
.
Reserved on: 20.03.2026
Date of Decision: 09.04.2026
__________________________________________________________________________
1. Cr.MMO No.305 of 2022
Amit Kumar Bansal .........Petitioner
Versus
Union of India .......Respondent
of
2. Cr.MMO No.707 of 2022
Amit Kumar Bansal .........Petitioner
Versus
Union of India rt .......Respondent
Coram
Hon'ble Mr. Justice Sandeep Sharma, Judge.
Whether approved for reporting? Yes.
__________________________________________________________________________
For the Petitioner: Mr. N.S. Chandel, Senior Advocate, with Mr.
Sidharth and Ms. Shwetima Dogra, Advocates, in
both the petitions.
For the Respondent: Mr. Shashi Shirshoo, Central Government Counsel,
in both the petitions.
__________________________________________________________________________
Sandeep Sharma, J.
Since common question of facts and law are involved in both
the above captioned cases, this Court after having clubbed the same, heard
them together and are now being disposed of vide common judgment.
Cr.MMO No.305 of 2022
2. By way of instant petition filed under Section 482 Cr.P.C.,
prayer has been made on behalf of petitioner for quashing of complaint case
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No.8/3 of 2022, titled as Union of India Vs. M/s Theon Pharmaceuticals
Limited and Others, pending in the Court of learned Additional Chief
.
Judicial Magistrate, Nalagarh, District Solan, as well as order dated
10.01.2022, passed in afore complaint, thereby summoning petitioner as an
accused.
3. Briefly summarised, the facts are that on 31.12.2021, Mr.
of
Fahim Khan, Drug Inspector, Central Drug Standard Control Organisation,
India, Sub-Zone Baddi, Himachal Pradesh, filed a complaint under Sections
rt
18(a)(i) and 18(a)(vi) read with Section 16 punishable under Section 27(d) of
the Drugs and Cosmetics Act, 1940, (for short, ‘the Act’) against M/s
Theon Pharmaceuticals Limited, Managing Director of afore company i.e.
petitioner herein and Mr. Puran Chand Joshi, Wholetime Director, averring
therein that Mr. V. Kaviyarasan, the then Drugs Inspector, CDSCO, Sub-
Zone Baddi, Himachal Pradesh, had drawn the sample on Form No.17,
dated 27.03.2018 of the drug “Diclofenac Sodium” with Thiocolchicoside
tablet (Theomove-4), Batch No.GT171481, DoM-11-2017, DoE-10-2019,
manufactured by M/s Theon Pharmaceuticals Ltd., village Saini Majra,
Tehsil Nalagarh, District Solan, Himachal Pradesh – 174101, from the
premises of Main Drugs Store, Govt. Multi-specialty Hospital, Sector 16,
Chandigarh, under Section 23 of the Drugs and Cosmetics Act, 1940. Afore
Drug Inspector divided the drug, so lifted as samples, into four portions and
sealed them as per the procedure prescribed under the Drugs and
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Cosmetics Act, 1940, in the presence of Mr. Anil Tanwar (Pharmacist of
Main Drug Store, Govt. Multi-specialty Hospital, Sector 16, Chandigarh)
.
and signatures of Mr. Anil Tanwar were taken on each of the sample
portions.
4. After the receipt of report from the Regional Drugs Testing
Laboratory, Chandigarh, on 23.08.2018 and after completing the codal
of
formalities, as envisaged under the Act, complaint under Sections 18(a)(i)
and 18(a)(vi) read with Section 16 punishable under Section 27(d) of the
rt
Drugs and Cosmetics Act, 1940, was filed before the learned Additional
Chief Judicial Magistrate, Nalagarh, District Solan (Annexure P-1),
impleading therein petitioner herein, who happens to be Managing Director
of M/s Theon Pharmaceuticals Limited, as one of the accused.
5. After having found prima facie case against the accused, named
in the complaint, learned Court below issued process vide order dated
10.01.2022 (Annexure P-2), thereby calling upon the accused, including
petitioner herein, to appear in aforesaid complaint. In the afore background,
petitioner has approached this Court in the instant proceedings, praying
therein to quash the complaint, detailed hereinabove, as well as summoning
order dated 10.01.2022, for the reason that no case much less case under
Sections 18(a)(i) and 18(a)(vi) read with Section 16 punishable under
Section 27(d) of the Act is made out against him.
Cr.MMO No.707 of 2022
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6. By way of instant petition filed under Section 482 Cr.P.C.,
prayer has been made on behalf of petitioner for quashing of complaint case
.
No.13/3 of 2022, titled as Union of India Vs. M/s Theon Pharmaceuticals
Limited and Others, pending in the Court of learned Additional Chief
Judicial Magistrate, Nalagarh, District Solan, as well as order dated
11.01.2022, passed in afore complaint, thereby summoning petitioner as an
of
accused.
7. Perusal of record reveals that on 30.12.2021, Mr. Fahim
rt
Khan, Drug Inspector, Central Drug Standard Control Organisation, India,
Sub-Zone Baddi, Himachal Pradesh, filed complaint under Sections
18(a)(i) and 18(a)(vi) read with Section 16 punishable under Section
27(d) of the Act against M/s Theon Pharmaceuticals Limited,
Managing Director of afore company i.e. petitioner herein and Mr. Puran
Chand Joshi, Wholetime Director, averring therein that Mr. V. Kaviyarasan,
the then Drugs Inspector, CDSCO, Sub-Zone Baddi, Himachal Pradesh, had
drawn the sample on Form No.17, dated 27.07.2018 of the drug
“Montelukast Sodium” and “Levocetirizine Hydrochloride” tablet (Lookast-
LC), Batch No.GT180886, DoM-07-18, DoE-06-2020, manufactured by
M/s Theon Pharmaceuticals Ltd., village Saini Majra, Tehsil Nalagarh,
District Solan, Himachal Pradesh – 174101, from the premises of M/s
Theon Pharmaceuticals Limited, village Saini Majra, Tehsil Nalagarh,
District Solan, Himachal Pradesh, under Section 23 of the
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Drugs and Cosmetics Act, 1940. Afore Drug Inspector further divided the
drug, so lifted as samples, into three portions and sealed them as per the
.
procedure prescribed under the Drugs and Cosmetics Act, 1940, in the
presence of Mr. P.C. Joshi (Plant Head). Signatures of Mr. P.C. Joshi were
taken on each of the sample portions.
8. After the receipt of report from the Central Drugs Laboratory, 3
of
KYD Street, Kolkata, on 27.03.2019 and after completing the codal
formalities, as envisaged under the Act, complaint under Sections 18(a)(i)
rt
and 18(a)(vi) read with Section 16 punishable under Section 27(d) of the
Drugs and Cosmetics Act, 1940, was filed before the learned Additional
Chief Judicial Magistrate, Nalagarh, District Solan (Annexure P-1),
impleading therein petitioner herein, who happens to be Managing Director
of M/s Theon Pharmaceuticals Limited, as one of the accused.
9. After having found prima facie case against the accused, named
in the complaint, learned Court below issued process vide order dated
11.01.2022 (Annexure P-2), thereby calling upon the accused, including
petitioner herein, to appear in aforesaid complaint. In the afore background,
petitioner has approached this Court in the instant proceedings, praying
therein to quash the complaint, detailed hereinabove, as well as summoning
order dated 11.01.2022, for the reason that no case much less case under
Sections 18(a)(i) and 18(a)(vi) read with Section 16 punishable under
Section 27(d) of the Act is made out against him.
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10. In nutshell, case of the petitioner, as has been highlighted in
both the petitions and further canvassed by Mr. N.S. Chandel, learned
.
Senior Counsel representing the petitioner, is that bare perusal of
complaint nowhere imputes role of the petitioner in day-to-day functioning
of company’s affair, especially manufacturing. Mr. Chandel submitted that
once M/s Theon Pharmaceuticals Limited had appointed Mr. Puran Chand
of
Joshi as Wholetime Director and authorised representative of the company,
coupled with the fact that he is also made as an accused in the complaint,
rt
detailed hereinabove, there was no occasion, if any, for complainant to
implead petitioner herein as one of the accused.
11. Mr. Chandel, learned Senior Counsel, submitted that learned
trial Court, while taking cognizance under Sections 18(a)(i) and 18(a)(vi)
read with Section 16 punishable under Section 27(d) of the Act failed to
appreciate that where the company is an accused, cognizance can only be
taken against the person, who at the time of commission of offence was in-
charge and was responsible for conducting the business of the company.
While referring to the resolution of the Company, placed on record, learned
Senior Counsel further argued that Board of Directors of M/s Theon
Pharmaceuticals Limited had passed a resolution dated 07.09.2017,
thereby appointing Mr. Puran Chand Joshi, accused No.3, as its Wholetime
Director, who is responsible for conducting the business of the company.
He submitted that since copy of resolution was duly supplied to the
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concerned authorities, there was no occasion, if any, to implead petitioner
herein as an accused. Mr. Chandel, learned Senior Counsel, further argued
.
that as per the case of prosecution, the samples were drawn on
27.03.2018/27.07.2018 and the Government analyst had supplied its
report on 09.08.2018/27.03.2019, whereby it came to be opined that
samples are of sub-standard quality. He submitted that as per complainant,
of
he came to know on 09.08.2018/27.03.2019 that the drugs, samples
whereof were drawn were not of standard quality. He submitted that as per
rt
Section 468 of Cr.P.C. (corresponding Section 514 of BNSS) no Court shall
take cognizance of an offence beyond the period of limitation and where the
punishment prescribed for the offence is above one year and upto three
years, limitation for taking cognizance is three years, which shall be from
the date of offence or from the date of knowledge. He submitted that since
in the present cases, petitioner herein is being prosecuted for the offence
punishable under Section 27(d) of the Act and maximum punishment for
the offence under Section 27(d) of the Act is two years, hence, the limitation
for taking cognizance is three years, however, learned trial Court, while
taking cognizance, completely ignored the afore legal position and has taken
cognizance in a cyclostyled manner and as such, proceedings initiated
against him deserve to be quashed on this sole ground. He further
submitted that in terms of Section 23 of the Act, when a sample is drawn by
an Inspector, he shall divide it into three parts and thereafter, third part of
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the sample is to be sent to the person, whose name, address and other
particulars have been disclosed under Section 18A of the Act to the
.
Inspector. However, in the present cases, there is complete non-compliance
of the aforesaid provision of law. He further submitted that Drugs in
question were recovered from main drug store, Government Multi-specialty
Hospital, Chandigarh and premises of M/s Theon Pharmaceuticals Limited,
of
detailed hereinabove, under Section 19 of the Act, however, the person from
whose possession the drug was recovered, has not been made accused. He
rt
further submitted that as per Drugs and Cosmetics and Rules, samples so
sealed should be tested within sixty days of its receipt, however, as per the
case of the prosecution, the samples were drawn on
27.03.2018/27.07.2018, which is violation of the Rules, as the same has
not been done within the stipulated period. In support of his aforesaid
submission, he placed reliance upon the judgment dated 04.07.2024
passed by this Court in Cr.MMO No.738 of 2021, titled as Anil Mediratta
and Others Vs. State of Himachal Pradesh and Others and judgment
dated 11.09.2023, passed by the Coordinate Bench of this Court in
Cr.MMO No.109 of 2020, tilted as Prithi Pal Singh Vs. State of Himachal
Pradesh, wherein it came to be ruled that in the absence of specific
averment in the complaint with regard to day-to-day functioning and over-
all control of the person, proposed to be held vicariously liable, no
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complaint is maintainable against such person and prosecution launched
beyond prescribed period of limitation is also not tenable.
.
12. Pursuant to notices issued in the instant proceedings,
respondent-UOI has filed reply in Cr.MMO No.305 of 2022, wherein facts,
as have been noticed herein above, have not been disputed, rather stand
admitted.
of
13. It is submitted at the behest of respondent that petitioner
herein, being Managing Director of the company concerned is overall in-
rt
charge of the day-to-day business of the company and he is also
responsible for the conduct of the affairs of the company. Reply filed by
respondent is completely silent about question of limitation raised at the
behest of the petitioner. Mr. Shashi Shirshoo, learned Central Government
Counsel, argued that point sought to be raised through instant petition can
only be adjudicated during trial and disputed facts cannot be adjudicated
while invoking extraordinary jurisdiction under Section 482 Cr.P.C., hence,
petitions filed by the petitioner are liable to be dismissed.
14. I have heard learned counsel for the parties and perused
material available on record.
15. Before ascertaining the genuineness and correctness of the
submissions and counter submissions having been made by the learned
counsel for the parties vis-Ã -vis prayer made in the instant petition, this
Court deems it necessary to discuss/elaborate the scope and competence of
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this Court to quash the criminal proceedings while exercising power under
Section 482 of Cr.PC.
.
16. A three-Judge Bench of the Hon’ble Apex Court in case titled
State of Karnataka v. L. Muniswamy and others, 1977 (2) SCC 699, held
that High Court, while exercising power under Section 482 Cr.PC is entitled
to quash the proceedings, if it comes to the conclusion that allowing the
of
proceeding to continue would be an abuse of the process of the Court or
that the ends of justice require that the proceeding ought to be quashed.
17.
rt
Subsequently, in case titled State of Haryana and others v.
Bhajan Lal and others, 1992 Supp (1) SCC 335, the Hon’ble Apex Court,
while elaborately discussing the scope and competence of High Court to
quash criminal proceedings under Section 482 Cr.PC laid down certain
principles governing the jurisdiction of High Court to exercise its power.
After passing of aforesaid judgment, issue with regard to exercise of power
under Section 482 Cr.PC, again came to be considered by the Hon’ble Apex
Court in Criminal Appeal No.577 of 2017 (arising out of SLP (CrL.) No. 287
of 2017) titled Vineet Kumar and Ors. v. State of U.P. and Anr., wherein it
has been held that saving of the High Court’s inherent powers, both in civil
and criminal matters, is designed to achieve a salutary public purpose i.e.
court proceedings ought not be permitted to degenerate into a weapon of
harassment or persecution.
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18. In Amish Devgan vs Union of India and Ors, (2021) 1 SCC 1,
the Hon’ble Apex Court held as under:
.
“(vii) Conclusion and relief
116. At this stage and before recording our final conclusion, we would like to refer
to decision of this Court in Pirthi Chand [State of H.P. v. Pirthi Chand, (1996) 2SCC 37 : 1996 SCC (Cri) 210] wherein it has been held : (SCC pp. 44-45, paras 12-
13)
“12. It is thus settled law that the exercise of inherent power of the Highof
Court is an exceptional one. Great care should be taken by the High Court
before embarking to scrutinise the FIR/charge-sheet/complaint. In deciding
whether the case is rarest of rare cases to scuttle the prosecution in its
inception, it first has to get into the grip of the matter whether the
rt
allegations constitute the offence. It must be remembered that FIR is only an
initiation to move the machinery and to investigate into cognizable offence.
After the investigation is conducted (sic concluded) and the charge-sheet is
laid, the prosecution produces the statements of the witnesses recorded
under Section 161 of the Code in support of the charge-sheet. At that stage
it is not the function of the court to weigh the pros and cons of the
prosecution case or to consider necessity of strict compliance with the
provisions which are considered mandatory and effect of its non-compliance.
It would be done after the trial is concluded. The court has to prima facie
consider from the averments in the charge-sheet and the statements of
witnesses on the record in support thereof whether court could take
cognizance of the offence on that evidence and proceed further with the trial.
If it reaches a conclusion that no cognizable offence is made out, no further
act could be done except to quash the charge-sheet. But only in exceptional
cases i.e. in rarest of rare cases of mala fide initiation of the proceedings to
wreak private vengeance issue of process under Criminal Procedure Code is
availed of. A reading of a [Vide Corrigendum dated 20-3-1996 issued from
Residential Office of Hon’ble Mr Justice K. Ramaswamy.] complaint or FIR
itself does not disclose at all any cognizable offence — the court may embark
upon the consideration thereof and exercise the power.”
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19. In the case of Kaptan Singh vs State of Uttar Pradesh and
Ors., (2021) 9 SCC 35, the Supreme Court held as under :
.
“9.1. At the outset, it is required to be noted that in the present case the
High Court in exercise of powers under Section 482 CrPC has quashed the
criminal proceedings for the offences under Sections 147, 148, 149, 406,329 and 386 IPC. It is required to be noted that when the High Court in
exercise of powers under Section 482 CrPC quashed the criminal
proceedings, by the time the investigating officer after recording theof
statement of the witnesses, statement of the complainant and collecting the
evidence from the incident place and after taking statement of the
independent witnesses and even statement of the accused persons, has filed
the charge-sheet before the learned Magistrate for the offences under
rt
Sections 147, 148, 149, 406, 329 and 386 IPC and even the learned
Magistrate also took the cognizance. From the impugned judgment andorder [Radhey Shyam Gupta v. State of U.P., 2020 SCC OnLine All 914]
passed by the High Court, it does not appear that the High Court took into
consideration the material collected during the investigation/inquiry andeven the statements recorded. If the petition under Section 482 CrPC was at
the stage of FIR in that case the allegations in the FIR/complaint only are
required to be considered and whether a cognizable offence is disclosed ornot is required to be considered. However, thereafter when the statements
are recorded, evidence is collected and the charge-sheet is filed afterconclusion of the investigation/inquiry the matter stands on different footing
and the Court is required to consider the material/evidence collected during
the investigation. Even at this stage also, as observed and held by this Courtin a catena of decisions, the High Court is not required to go into the merits
of the allegations and/or enter into the merits of the case as if the High
Court is exercising the appellate jurisdiction and/or conducting the trial. As
held by this Court in Dineshbhai Chandubhai Patel [Dineshbhai
Chandubhai Patel v. State of Gujarat, (2018) 3 SCC 104 : (2018) 1 SCC (Cri)
683] in order to examine as to whether factual contents of FIR disclose any
cognizable offence or not, the High Court cannot act like the investigating
agency nor can exercise the powers like an appellate court. It is further
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13view, the contents of FIR and prima facie material, if any, requiring no proof.
At such stage, the High Court cannot appreciate evidence nor can it draw its
own inferences from contents of FIR and material relied on. It is further.
observed it is more so, when the material relied on is disputed. It is further
observed that in such a situation, it becomes the job of the investigating
authority at such stage to probe and then of the court to examine questionsonce the charge-sheet is filed along with such material as to how far and to
what extent reliance can be placed on such material.
12. Therefore, the High Court has grossly erred in quashing the criminal
of
proceedings by entering into the merits of the allegations as if the High
Court was exercising the appellate jurisdiction and/or conducting the trial.
The High Court has exceeded its jurisdiction in quashing the criminal
proceedings in exercise of powers under Section 482 CrPC.”
rt
20. Recently, Hon’ble Apex Court in Abhishek Singh vs Ajay
Kumar and Ors., (2025) SCC OnLine SC 1313, reiterated that:
“9. The scope of the Court’s power to quash and set aside proceedings is
well-settled to warrant any restatement. While the arguments advancedhave the potential to raise many issues for consideration, we must first
satisfy ourselves as to the propriety of the exercise of such power by the
High Court. The task of the High Court, when called upon to adjudicate anapplication seeking to quash the proceedings, is to see whether, prima facie,
an offence is made out or not. It is not to examine whether the charges may
hold up in the Court. In doing so, the area of action is circumscribed. In
Rajeev Kourav v. Baisahab, it was held:
“8. It is no more res integra that exercise of power under Section 482
CrPC to quash a criminal proceeding is only when an allegation
made in the FIR or the charge-sheet constitutes the ingredients of
the offence/offences alleged. Interference by the High Court under
Section 482 CrPC is to prevent the abuse of process of any court or
otherwise to secure the ends of justice. It is settled law that the
evidence produced by the accused in his defence cannot be looked
into by the court, except in very exceptional circumstances, at the
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14Court cannot embark upon the appreciation of evidence while
considering the petition filed under Section 482 CrPC for quashing
criminal proceedings. It is clear from the law laid down by this Court.
that if a prima facie case is made out disclosing the ingredients of
the offence alleged against the accused, the Court cannot quash a
criminal proceeding.” 15. In that view of the matter, we hold that theHigh Court had improperly quashed the proceedings initiated by the
appellant. It stands clarified that we have not expressed any opinion
on the matter, and the guilt or innocence of the respondents has toof
be established in the trial, in accordance with the law. The
proceedings out of the subject FIR, mentioned in paragraph 2 are
revived and restored to the file of the concerned Court.”
21.
rt
Reliance is also placed upon judgments passed by the Hon’ble
Apex Court in Prashant Bharti Vs. State (NCT of Delhi), (2013) 9 SCC
293, Rajiv Thapar and Others Vs. Madan Lal Kapoor, (2013) 3 SCC
330, Anand Kumar Mohatta and Anr. v. State (Government of NCT of
Delhi) Department of Home and Anr, AIR 2019 SC 210 and Pramod
Suryabhan Pawar v. The State of Maharashtra and Anr, (2019) 9 SCC
608.
22. Now being guided by the aforesaid proposition of law laid down
by the Hon’ble Apex Court, this Court would make an endeavor to examine
and consider the prayer made in the instant petition vis-Ã -vis factual matrix
of the case.
23. It is not in dispute that petitioner herein is Managing Director of
M/s Theon Pharmaceuticals Ltd. It is also not in dispute that Drugs
Inspector, CDSCO, had drawn the samples on Form No.17, dated
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27.03.2018/27.07.2018 of the drugs in question manufactured by M/s
Theon Pharmaceuticals Ltd. from the respective premises, as detailed in the
.
preceding paragraphs, under Section 23 of the Act and designate the sample
number as LS/V.K/CDG/17-18/114 and LS/V.K/CDG/18/41. It is also not
in dispute that afore Drugs were found to be of “substandard quality”, as a
result thereof, complaints under Sections 18(a)(i) and 18(a)(vi) read with
of
Section 16 punishable under Section 27(d) of the Act were filed before the
learned Additional Chief Judicial Magistrate, Nalagarh, District Solan
(Annexure P-1).
rt
24. Primarily, question which needs to be decided in the case at
hand is that whether petitioner herein, being Managing Director of the
company, named hereinabove, could also be prosecuted under aforesaid
provision of law, especially when there is no specific averment with regard to
his day-to-day functioning and control in the company, especially with
regard to manufacturing.
25. It is not in dispute that as per mandate of Section 18 of the Act,
requisite information was made available by M/s Theon Pharmaceuticals
Limited, thereby informing Drug Inspector concerned that the company
concerned has appointed Mr. Puran Chand Joshi as its Wholetime Director,
enabling him to perform the day-to-day business of company (Annexure P-
3).
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26. At this stage, it would be apt to take note of Section 18a(i) of the
Act, which reads as under:
.
18. Prohibition of manufacture and sale of certain drugs and cosmetics.–From
such date as may be fixed by the State Government by notification in the
Official Gazette in this behalf, no person shall himself or by any other person onhis behalf–
(a) [manufacture for sale or for distribution, or sell, or stock or exhibit or offer
for sale,] or distribute–
of
[(i) any drug which is not of a standard quality, or is misbranded, adulterated
or spurious;
[(ii) any cosmetic which is not of a standard quality or is misbranded,
adulterated or spurious;]]
rt
[(iii) any patent or proprietary medicine, unless there is displayed in the
prescribed manner on the label or container thereof [the true formula or list
of active ingredients contained in it together with the quantities thereof];]
(iv) any drug which by means of any statement design or device
accompanying it or by any other means, purports or claims [to prevent, cure
or mitigate] any such disease or ailment, or to have any such other effect as
may be prescribed;
[(v) any cosmetic containing any ingredient which may render it unsafe or
harmful for use under the directions indicated or recommended;
(vi) any drug or cosmetic in contravention of any of the provisions of this
Chapter or any rule made thereunder;]
(b) [sell or stock or exhibit or offer for sale,] or distribute any drug 9 [or
cosmetic] which has been been imported or manufacutred in contravention
of any of the provisions of this Act or any rule made thereunder;
(c) [manufacture for sale or for distribution, or sell, or stock or exhibit or
offer for sale,] or distribute any drug [or cosmetic], except under, and in
accordance with the conditions of, a licence issued for such purpose under
this Chapter:
Provided that nothing in this section shall apply to the manufacture, subject
to prescribed conditions, of small quantities of any drug for the purpose of
examination, test or analysis :
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17Provided further that the [Central Government] may, after consultation with
the Board, by notification in the Official Gazette, permit, subject to any
conditions specified in the notifica tion, the [manufacture for sale or for.
distribution, sale, stocking or exhibiting or offering for sale] or distribution of
any drug or class of drugs not being of standard quality.
27. Perusal of afore provision of law makes it clear that no person
can manufacture for sale or for distribution, or sell, or stock or exhibit or
of
offer for sale or distribute any drug or cosmetic, which is not of standard
quality or is misbranded, adulterous or spurious. Violation, if any, of
aforesaid provision of law, would render person concerned, liable for
rt
punishment under Section 27 of the Act, which provides for penalty.
28. Admittedly, in the case at hand, drugs in question were found
to be of sub-standard quality, as per Adverse Analysis Report given by the
Drug Testing Laboratories and as such, no illegally can be said to have been
committed by Drug Inspector, while instituting complaints, for commission
of offence punishable under Sections 18(a)(i) and 18(a)(vi) punishable under
Section 27(d) of the Act, against the accused No.1 & 3, named in the
complaints, but the question which needs determination at this stage is,
“whether case made out against the petitioner herein, being Managing
Director of M/s Theon Pharmaceuticals Limited, is sustainable on account
of certain immunities granted under Section 19(3) of the Act or not?
Section19(3) reads as under:
“19. Pleas.–(1)x x x x
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18(3) A person, not being the manufacturer of a drug or cosmetic or his agent
for the distribution thereof, shall not be liable for a contravention of section
18 if he proves–
.
(a) that he acquired the drug or cosmetic from a duly licensed manufacturer,
distributor or dealer thereof;
(b) that he did not know and could not, with reasonable diligence, have
ascertained that the drug or cosmetic in any way contravened the provisions
of that section; and
(c) that the drug or cosmetic, while in his possession, was properly stored
of
and remained in the same state as when he acquired it.”
29. Aforesaid provisions contained under Section 19(3) categorically
provide that a person, not being the manufacturer of a drug or cosmetic or
rt
his agent for the distribution thereof, shall not be liable for a contravention
of Section 18 if he proves (a) that he acquired the drug or cosmetic from a
duly licensed manufacturer, distributor or dealer thereof; (b) that he did not
know and could not, with reasonable diligence, have ascertained that the
drug or cosmetic in any way contravened the provisions of that section; and
(c) that the drug or cosmetic, while in his possession, was properly stored
and remained in the same state as when he acquired it.
30. No doubt, report of Drug Testing Laboratories suggest that
samples drawn were not of standard quality, hence, case under Sections
18(a)(i) and 18(a)(vi) read with Section 16 punishable under Section 27(d) of
the Drugs and Cosmetics Act, 1940, is maintainable against the
manufacturer, stockiest and the trader, but question is, “whether petitioner,
being Managing Director of the company, can be prosecuted, especially
when nothing has been adduced on record to suggest that on the date of
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19
drawing samples, petitioner, being Managing Director of the company, was
responsible for day-to-day affairs of the company”.
.
31. At this stage, it would be apt to take note of Section 34 of the
unamended Act, 1940, which reads as under:
“34. Offences by companies.–
(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 ofof
and was responsible to the company for 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
rt
such person liable to any punishment provided in this Act if he
proves that the offence was committed without his knowledge or thathe exercised all due diligence to prevent the commission of such
offence.
(2) Notwithstanding anything contained in sub-section (1), where an
offence under this Act has been committed by a company and it is proved
that the offence has been committed with the consent or connivance of, or is
attributable to any neglect on the part of, any director, manager, secretary orother officer of the company, such director, manager, secretary or other
officer shall also be deemed to be guilty of that offence and shall be liable tobe proceeded against and punished accordingly.
Explanation.–For the purposes of this section–
(a) “company” means a body corporate, and includes a firm or other
association of individuals; and
(b) “director” in relation to a firm means a partner in the firm.”
32. Aforesaid provision of law deals with offence, if any, committed
by company. Aforesaid provision provides that 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
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20
company for 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.
33. Proviso to the aforesaid Section provides 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
of
knowledge or that he exercised all due diligence to prevent the commission
of such offence.
34.
rt
Bare perusal of aforesaid law suggests that though company is
primarily liable for the commission of an offence punishable under the Act,
however, vicarious liability has been fastened upon the person, who, at the
time the offence was committed, was in charge of and was responsible to the
company for the conduct of the business of the company.
35. Hon’ble Apex Court in Susela Padmavathy Amma v. Bharti
Airtel Ltd., 2024 SCC OnLine SC 311, held that a person can be
vicariously liable, if he is in charge and responsible to the company for the
conduct of its business. Hon’ble Apex Court in the aforesaid judgment held
as under:
“18. In the case of State of Haryana v. Brij Lal Mittal (1998) 5 SCC 343, this Court
observed thus:
“8. Nonetheless, we find that the impugned judgment of the High Court has
got to be upheld for an altogether different reason. Admittedly, the three
respondents were being prosecuted as directors of the manufacturers with
the aid of Section 34(1) of the Act, which reads as under:
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21“34. Offences by companies.–(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 for.
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 subsection 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 dueof
diligence to prevent the commission of such offence.”
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
rt
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 for 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.”
19. It could thus be seen that this Court had held that simply because a person is a
director of the company, it does not necessarily mean that he fulfils the twin
requirements of Section 34(1) of the said Act so as to make him liable. It has been
held that a person cannot be made liable unless, at the material time, he was in
charge of and was also responsible to the company for the conduct of its business.
20. In the case of S.M.S. Pharmaceuticals Ltd. (supra), this Court was considering
the question as to whether it was sufficient to make the person liable for being a
director of a company under Section 141 of the Negotiable Instruments Act, 1881.
This Court considered the definition of the word “director” as defined in Section
2(13) of the Companies Act, 1956. This Court observed thus:
“8. ……. There is nothing which suggests that simply by being a director in a
company, one is supposed to discharge particular functions on behalf of a
company. It happens that a person may be a director in a company, but he::: Downloaded on – 09/04/2026 20:35:09 :::CIS
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22may not know anything about the day-to-day functioning of the company. As
a director, he may be attending meetings of the Board of Directors of the
company, where they usually decide policy matters and guide the course of.
business of the company. It may be that a Board of Directors may appoint
sub-committees consisting of one or two directors out of the Board of the
company who may be made responsible for the day-today functions of thecompany. These are matters which form part of the resolutions of the Board
of Directors of a company. Nothing is oral. What emerges from this is that
the role of a director in a company is a question of fact depending on theof
peculiar facts in each case. There is no universal rule that a director of a
company is in charge of its everyday affairs. We have discussed about the
position of a director in a company in order to illustrate the point that there
is no magic as such in a particular word, be it director, manager or
rt
secretary. It all depends upon the respective roles assigned to the officers in
a company. …..”
21. It was held that merely because a person is a director of a company, it is
not necessary that he is aware of the day-today functioning of the company.
This Court held that there is no universal rule that a director of a company is
in charge of its everyday affairs. It was, therefore, necessary to aver as to
how the director of the company was in charge of the day-to-day affairs of
the company or responsible to the affairs of the company. This Court,
however, clarified that the position of a managing director or a joint
managing director in a company may be different. This Court further held
that these persons, as the designation of their office suggests, are in charge
of a company and are responsible for the conduct of the business of the
company. To escape liability, they will have to prove that when the offence
was committed, they had no knowledge of the offence or that they exercised
all due diligence to prevent the commission of the offence.
22. In the case of Pooja Ravinder Devidasani v. State of Maharashtra (2014)
16 SCC 1, this Court observed thus:
“17. …… Every person connected with the Company will not fall into
the ambit of the provision. Time and again, it has been asserted by
this Court that only those persons who were in charge of and
responsible for the conduct of the business of the Company at the
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23
time of the commission of an offence will be liable for criminal action.
A Director, who was not in charge of and was not responsible for the
conduct of the business of the Company at the relevant time, will not
.
be liable for an offence under Section 141 of the NI Act. In National
Small Industries Corpn. [National Small Industries Corpn. Ltd. v.
Harmeet Singh Paintal, (2010) 3 SCC 330 : (2010) 1 SCC (Civ) 677 :
(2010) 2 SCC (Cri) 1113] this Court observed : (SCC p. 336, paras 13-
14)
“13. Section 141 is a penal provision creating vicarious liability, which, asof
per settled law, must be strictly construed. It is therefore not sufficient to
make a bald, cursory statement in a complaint that the Director (arrayed as
an accused) is in charge of and responsible to the company for the conduct
of the business of the company without anything more as to the role of the
rt
Director. But the complaint should spell out as to how and in what manner
Respondent 1 was in charge of or was responsible to the accused Companyfor the conduct of its business. This is in consonance with a strict
interpretation of penal statutes, especially where such statutes create
vicarious liability. 14. A company may have a number of Directors and to
make any or all the Directors as accused in a complaint merely on the basisof a statement that they are in charge of and responsible for the conduct of
the business of the company without anything more is not a sufficient or
adequate fulfilment of the requirements under Section 141.”(emphasis inoriginal)
18. In Girdhari Lal Gupta v. D.H. Mehta [Girdhari Lal Gupta v. D.H. Mehta,
(1971) 3 SCC 189: 1971 SCC (Cri) 2025:HHC:14089 279: AIR 1971 SC
2162], this Court observed that a person “in charge of a business” means
that the person should be in overall control of the day-to-day business of the
Company.
19. A Director of a company is liable to be convicted for an offence committed
by the company if he/she was in charge of and was responsible to the
company for the conduct of its business or if it is proved that the offence was
committed with the consent or connivance of, or was attributable to any
negligence on the part of the Director concerned (see State of Karnataka v.
Pratap Chand [State of Karnataka v. Pratap Chand, (1981) 2 SCC 335: 1981
SCC (Cri) 453] ).
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24
20. In other words, the law laid down by this Court is that for making a
Director of a company liable for the offences committed by the company
under Section 141 of the NI Act, there must be specific averments against
.
the Director showing as to how and in what manner the Director was
responsible for the conduct of the business of the company.
21. In Sabitha Ramamurthy v. R.B.S. Channabasavaradhya [Sabitha
Ramamurthy v. R.B.S. Channabasavaradhya,(2006) 10 SCC 581(2007) 1
SCC (Cri) 621], it was held by this Court that: (SCC pp. 584-85, para 7)
of
“7. … It is not necessary for the complainant to specifically reproduce the wordings
of the section, but what is required is a clear statement of fact so as to enable the
court to arrive at a prima facie opinion that the accused is vicariously liable. Section
141 raises a legal fiction. By reason of the said provision, a person although is not
rt
personally liable for the commission of such an offence would be vicariously liable
therefor. Such vicarious liability can be inferred so far as a company registered or
incorporated under the Companies Act, 1956 is concerned only if the requisite
statements, which are required to be averred in the complaint petition, are made so
as to make the accused therein vicariously liable for the offence committed by the
company.”(emphasis supplied)
By verbatim reproducing the words of the section without a clear statement of fact
supported by proper evidence, so as to make the accused vicariously liable, is a
ground for quashing proceedings initiated against such person under Section 141 of
the NI Act.”
23. It could thus clearly be seen that this Court has held that merely reproducing
the words of the section without a clear statement of fact as to how and in what
manner a director of the company was responsible for the conduct of the business of
the company, would not ipso facto make the director vicariously liable.
24. A similar view has previously been taken by this Court in the case of K.K. Ahuja
v. V.K. Vora (2009) 10 SCC 48.
25. In the case of State of NCT of Delhi through Prosecuting Officer, Insecticides,
Government of NCT, Delhi v. Rajiv Khurana (2010) 11 SCC 469, this Court
reiterated the position thus:
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25“17. The ratio of all these cases is that the complainant is required to state in
the complaint how a Director who is sought to be made an accused was in.
charge of the business of the company or responsible for the conduct of the
company’s business. Every Director does not needto be and is not in charge
of the business of the company. If that is the position with regard to a
Director, it is needless to emphasise that in the case of non-director officers,
it is all the more necessary to state what were his duties and responsibilities
in the conduct of the business of the company and how and in what manner
of
he is responsible or liable.”
26. In the case of Ashoka Mal Bafna (supra), this Court observed thus:
“9. To fasten vicarious liability under Section 141 of the Act on a person, the
rt
law is well settled by this Court in a catena of cases that the complainant
should specifically show as to how and in what manner the accused wasresponsible. Simply because a person is a Director of a defaulter Company,
does not make him liable under the Act. Time and again, it has been
asserted by this Court that only the person who was at the helm of affairs of
the Company and in charge of and responsible for the conduct of thebusiness at the time of the commission of an offence will be liable for
criminal action. (See Pooja Ravinder Devidasani v. State of Maharashtra
[Pooja Ravinder Devidasani v. State of Maharashtra, (2014) 16 SCC 1 :
(2015) 3 SCC (Civ) 384 : (2015) 3 SCC (Cri) 378: AIR 2015 SC 675].)
10. In other words, the law laid down by this Court is that for making a
Director of a Company liable for the offences committed by the Companyunder Section 141 of the Act, there must be specific averments against the
Director showing as to how and in what manner the Director was responsible
for the conduct of the business of the Company.”
27. A similar view has been taken by this Court in the case of Lalankumar Singh v.
State of Maharashtra 2022 SCC OnLine SC 1383, to which one of us (B.R. Gavai, J.)
was a party.
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26
36. While dealing with Section 141 of Negotiable Instruments Act,
which is similar to Section 34 of the Drugs and Cosmetics Act, the Hon’ble
.
Supreme Court considered the liability of the Company and its Directors in
Pawan Kumar Goel v. State of U.P., 2022 SCC OnLine SC 1598, and
ruled that only a person, who is in charge of and responsible to the
Company for its affairs can be summoned and punished for the acts of the
of
Company. Hon’ble Apex Court observed as under:
“22. A two-judge Bench of this Court in the case of K.K. Ahuja v. V.K. Vora(2005) 8
SCC 89, after analysing the provisions contained in Section 141 of the Act, observed
rt
as under:–
“16. Having regard to section 141, when a cheque issued by a company
(incorporated under the Companies Act, 1956) is dishonoured, in addition to the
company, the following persons are deemed to be guilty of the offence and shall be
liable to be proceeded against and punished:
(i) every person who at the time the offence was committed was in charge of and
was responsible to the company for the conduct of the business of the company;
(ii) any Director, Manager, Secretary or other officer of the company with whose
consent and connivance, the offence under section 138 has been committed; and
(iii) any Director, Manager, Secretary or other officer of the company whose
negligence resulted in the offence under section 138 of the Act being committed by
the company.
While the liability of persons in the first category arises under sub-section (1) of
Section 141, the liability of persons mentioned in categories (ii) and (iii) arises under
sub-section (2). The scheme of the Act, therefore, is that a person who is responsible
to the company for the conduct of the business of the company and who is in charge
of the business of the company is vicariously liable by reason only of his fulfilling
the requirements of subsection (1). But if the person responsible to the company for
the conduct of business of the company, was not in charge of the conduct of the
business of the company, then he can be made liable only if the offence was
committed with his consent or connivance or as a result of his negligence.
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27
17. The criminal liability for the offence by a company under section 138 is fastened
vicariously on the persons referred to in sub-section (1) of section 141 by virtue of a
legal fiction. Penal statutes are to be construed strictly. Penal statutes providing
.
constructive vicarious liability should be construed much more strictly. When
conditions are prescribed for extending such constructive criminal liability to others,
courts will insist upon strict literal compliance. There is no question of inferential or
implied compliance. Therefore, a specific averment complying with the requirements
of section 141 is imperative. As pointed out in K. Srikanth Singh v. North East
Securities Ltd. – (2007) 12 SCC 788, the mere fact that at some point of time, an
of
officer of a company had played some role in the financial affairs of the company,
will not be sufficient to attract the constructive liability under section 141 of the Act.
18. Sub-section (2) of section 141 provides that a Director, Manager, Secretary or
other officer, though not in charge of the conduct of the business of the company
rt
will be liable if the offence had been committed with his consent or connivance or if
the offence was a result of any negligence on his part. The liability of persons
mentioned in subsection (2) is not on account of any legal fiction but on account of
the specific part played-consent and connivance, or negligence. If a person is to be
made liable under sub-section (2) of section 141, then it is necessary to aver consent
and connivance, or negligence on his part.” 23. The scope of Section 141 of the NI
Act was again exhaustively considered by this Court in S.M.S Pharmaceuticals Ltd.
v. Neeta Bhalla (2005) 8 SCC 89.:
“10. ….What is required is that the persons who are sought to be made
criminally liable under Section 141 should be, at the time the offence was
committed, in charge of and responsible to the company for the conduct of
the business of the company. Every person connected with the company
shall not fall within the ambit of the provision. It is only those persons whowere in charge of and responsible for the conduct of the business of the
company at the time of the commission of an offence who will be liable for
criminal action. It follows from this that if a director of a Company who was
not in charge of and was not responsible for the conduct of the business of
the company at the relevant time, will not be liable under the provision. The
liability arises from being in charge of and responsible for the conduct of the
business of the company at the relevant time when the offence was
committed, and not on the basis of merely holding a designation or office in a
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28Company may be liable if he satisfies the main requirement of being in
charge of and responsible for the conduct of the business of a Company at
the relevant time. Liability depends on the role one plays in the affairs of a.
Company and not on designation or status. If being a Director or Manager,
or Secretary was enough to cast criminal liability, the Section would have
said so. Instead of “every person”, the section would have said “everyDirector, Manager or Secretary in a Company is liable”,..etc. The legislature
is aware that it is a case of criminal liability which means serious
consequences so far as the person sought to be made liable is concerned.
of
Therefore, only persons who can be said to be connected with the
commission of a crime at the relevant time have been subjected to action…
18. To sum up, there is an almost unanimous judicial opinion that necessary
rt
averments ought to be contained in a complaint before a person can be subjected to
criminal process. A liability under Section 141 of the Act is sought to be fastenedvicariously on a person connected with a company, the principal accused being the
company itself. It is a departure from the rule in criminal law against vicarious
liability. A clear case should be spelt out in the complaint against the person sought
to be made liable. Section 141 of the Act contains the requirements for making aperson liable under the said provision. That the respondent falls within the
parameters of Section 141 has to be spelt out. A complaint has to be examined by
the Magistrate in the first instance on the basis of the averments contained therein.
If the Magistrate is satisfied that there are averments which bring the case within
Section 141, he would issue the process. We have seen that merely being described
as a director in a company is not sufficient to satisfy the requirement of Section 141.
Even a non-director can be liable under Section 141 of the Act. The averments inthe complaint would also serve the purpose that the person sought to be made liable
would know what the case is which is alleged against him. This will enable him to
meet the case at the trial.”(emphasis supplied)
37. In Rajesh Viren Shah v. Redington India Ltd., (2024) 4 SCC
305: 2024 SCC OnLine SC 143, Hon’ble Apex Court reiterated the afore
position, while observing as under:
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29“3. The position of law as to the liability that can be fastened upon a Director for
non-realisation of a cheque is no longer res integra. Before adverting to the judicial
position, we must also take note of the statutory provision — Section 141 of the NI.
Act, which states that every person who at the time of the offence was responsible
for the affairs/conduct of the business of the company, shall be held liable and
proceeded against under Section 138 of the NI Act, with exception thereto being that
such an act if done without his knowledge or after him having taken all necessary
precautions, would not be held liable. However, if it is proved that any act of a
company is proved to have been done with the connivance or consent or may be
of
attributable to (i) a Director; (ii) a Manager; (iii) a Secretary; or (iv) any other officer
— they shall be deemed to be guilty of that offence and shall be proceeded against
accordingly.
4. Coming to the judicial position, we notice a judgment of this Court in
rt
Monaben Ketanbhai Shah v. State of Gujarat [Monaben Ketanbhai Shah v. State of
Gujarat, (2004) 7 SCC 15: 2004 SCC (Cri) 1857] wherein it was observed that: (SCC
pp. 18-19, para 6)
6. … The primary responsibility is on the complainant to make necessary
averments in the complaint so as to make the accused vicariously liable. For
fastening criminal liability, there is no presumption that every partner knows
about the transaction. The obligation of the appellants to prove that at the
time the offence was committed, they were not in charge of and were not
responsible to the firm for the conduct of the business of the firm would
arise only when first the complainant makes necessary averments in the
complaint and establishes that fact.”
5. A Bench of three learned Judges in S.M.S. Pharmaceuticals Ltd. v. Neeta
Bhalla [S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla, (2005) 8 SCC 89: 2005 SCC
(Cri) 1975] observed: (SCC p. 102, para 18) “18. To sum up, there is an almost
unanimous judicial opinion that necessary averments ought to be contained in a
complaint before a person can be subjected to criminal process. … A clear case
should be spelt out in the complaint made against the person sought to be made
liable. Section 141 of the Act contains the requirements for making a person liable
under the said provision. That the respondent falls within the parameters of Section
141 has to be spelt out.”
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30
6. We also notice this Court to have observed, in regard to the exercise of the
inherent powers under Section 482CrPC, in cases involving negotiable instruments
that interference would not be called for, in the absence of “some unimpeachable,
.
incontrovertible evidence which is beyond suspicion or doubt or totally acceptable
circumstances which may clearly indicate that the Director could not have been
concerned with the issuance of cheques and asking him to stand the trial would be
abuse of process of Court. (Ashutosh Ashok Parasrampuriya case [Ashutosh Ashok
Parasrampuriya v. Gharrkul Industries (P) Ltd., (2023) 14 SCC 770: 2021 SCC
OnLine SC 915], SCC para 24)” This principle, as held in S.M.S. Pharmaceuticals
of
[S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla, (2005) 8 SCC 89: 2005 SCC (Cri)
1975], was followed in Ashutosh Ashok Parasrampuriya v. Gharrkul Industries (P)
Ltd. [Ashutosh Ashok Parasrampuriya v. Gharrkul Industries (P) Ltd., (2023) 14
SCC 770: 2021 SCC OnLine SC 915].
rt
38. Most importantly, Hon’ble Apex Court recently in Siby Thomas
v. Somany Ceramics Ltd., (2024) 1 SCC 348, 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. Hon’ble Apex Court
observed in judgment supra, as under:
“9. Bearing in mind the averments made in the complaint in relation to the role
of the appellant and sub-section (1) of Section 141, we will have to appreciate the
rival contentions. Going by the decision relied on by the respondent in the S.P. Manicase [S.P. Mani & Mohan Dairy v. Snehalatha Elangovan, (2023) 10 SCC 685 :
(2024) 1 SCC (Cri) 203] it is the primary responsibility of the complainant to make
specific averments in the complaint, so as to make the accused vicariously liable.
Relying on para 58.2 of the said decision the learned counsel appearing for the
respondent would also submit that the complainant is supposed to know only
generally as to who were in charge of the affairs of the company or firm, as the case
may be and he relied on mainly the following recitals thereunder : (SCC p. 716, para
58)
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“58. … 58.2. The complainant is supposed to know only generally as to who were in
charge of the affairs of the company or firm, as the case may be. The other
administrative matters would be within the special knowledge of the company or the
.
firm, and those who are in charge of it. In such circumstances, the complainant is
expected to allege that the persons named in the complaint are in charge of the
affairs of the company/firm.”
10. We are of the considered view that the respondent has misread the said
decision. Under the sub-caption “Specific averments in the complaint”, in para 51 of
of
S.P. Mani case [S.P. Mani & Mohan Dairy v. Snehalatha Elangovan, (2023) 10 SCC
685 : (2024) 1 SCC (Cri) 203] and paras 34.1 and 34.4 of Gunmala Sales case
[Gunmala Sales (P) Ltd. v. Anu Mehta, (2015) 1 SCC 103 : (2015) 1 SCC (Civ) 433 :
(2015) 1 SCC (Cri) 580] as also in para 52 of S.P. Mani case [S.P. Mani & Mohan
rt
Dairy v. Snehalatha Elangovan, (2023) 10 SCC 685 : (2024) 1 SCC (Cri) 203], it was
held in the decision in S.P. Mani case [S.P. Mani & Mohan Dairy v. SnehalathaElangovan, (2023) 10 SCC 685 : (2024) 1 SCC (Cri) 203] thus : (SCC pp. 714-715,
paras 51-52)
“51. In Gunmala Sales [Gunmala Sales (P) Ltd. v. Anu Mehta, (2015) 1 SCC
103: (2015) 1 SCC (Civ) 433 : (2015) 1 SCC (Cri) 580], this Court after anexhaustive review of its earlier decisions on Section 141 of the NI Act,
summarised its conclusion as under : (SCC pp. 126-27, para 34)’34. … 34.1. Once in a complaint filed under Section 138 read with Section 141 of
the NI Act, the basic averment is made that the Director was in charge of and
responsible for the conduct of the business of the company at the relevant time
when the offence was committed, the Magistrate can issue process against suchDirector.
34.2.-34.3. * * *
34.4. No restriction can be placed on the High Court’s powers under Section 482 of
the Code. The High Court always uses and must use this power sparingly and with
great circumspection to prevent inter alia the abuse of the process of the Court.
There are no fixed formulae to be followed by the High Court in this regard, and the
exercise of this power depends upon the facts and circumstances of each case. The
High Court at that stage does not conduct a mini-trial or roving inquiry, but nothing
prevents it from taking unimpeachable evidence or totally acceptable circumstances
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32
into account which may lead it to conclude that no trial is necessary qua a
particular Director.’
.
52. The principles of law and the dictum as laid in Gunmala Sales
[Gunmala Sales (P) Ltd. v. Anu Mehta, (2015) 1 SCC 103 : (2015) 1 SCC (Civ)
433 : (2015) 1 SCC (Cri) 580], in our opinion, still holds the field and reflects
the correct position of law.
11. In the light of the afore-extracted recitals from the decision in Gunmala Sales
(P) Ltd. v. Anu Mehta [Gunmala Sales (P) Ltd. v. Anu Mehta, (2015) 1 SCC 103 :
of
(2015) 1 SCC (Civ) 433 : (2015) 1 SCC (Cri) 580], quoted with an agreement in S.P.
Mani case [S.P. Mani & Mohan Dairy v. Snehalatha Elangovan, (2023) 10 SCC 685 :
(2024) 1 SCC (Cri) 203] and in view of sub-section (1) of Section 141 of the NI Act, it
cannot be said that in a complaint filed under Section 138 read with Section 141 of
rt
the NI Act to constitute basic averment it is not required to aver that the accused
concerned is a person who was in charge of and responsible for the conduct of thebusiness of the company at the relevant time when the offence was committed. In
para 53 of S.P. Mani case [S.P. Mani & Mohan Dairy v. Snehalatha Elangovan,
(2023) 10 SCC 685 : (2024) 1 SCC (Cri) 203] it was held thus : (SCC p. 715)
“53. In the case on hand, we find clear and specific averments not only in thecomplaint but also in the statutory notice issued to the respondent.”
It is thereafter that in the decision in S.P. Mani case [S.P. Mani & Mohan Dairy v.
Snehalatha Elangovan, (2023) 10 SCC 685 : (2024) 1 SCC (Cri) 203] in para 58.1 it
was held that the primary responsibility of the complainant is to make specific
averments in the complaint so as to make the accused vicariously liable.
12. Bearing in mind the afore-extracted recitals from the decisions in Gunmala
Sales [Gunmala Sales (P) Ltd. v. Anu Mehta, (2015) 1 SCC 103 : (2015) 1 SCC (Civ)
433 : (2015) 1 SCC (Cri) 580] and S.P. Mani case [S.P. Mani & Mohan Dairy v.
Snehalatha Elangovan, (2023) 10 SCC 685 : (2024) 1 SCC (Cri) 203], we have
carefully gone through the complaint filed by the respondent. It is not averred
anywhere in the complaint that the appellant was in charge of the conduct of the
business of the company at the relevant time when the offence was committed. What
is stated in the complaint is only that Accused 2 to 6 being the partners, are
responsible for the day-to-day conduct and business of the company. It is also
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33
relevant to note that an overall reading of the complaint would not disclose any clear
and specific role of the appellant.
.
39. Reliance is also placed upon a judgment rendered by Hon’ble
Apex Court in K.S. Mehta v. Morgan Securities & Credits (P) Ltd., 2025
SCC OnLine SC 492, wherein Hon’ble Apex Court held as under:
“16. This Court has consistently held that non-executive and independent director(s)
of
cannot be held liable under Section 138 read with Section 141 of the NI Act unless
specific allegations demonstrate their direct involvement in affairs of the company at
the relevant time.
16.1. This Court in National Small Industries Corpn. Ltd. v. Harmeet Singh Paintal,
rt
(2010) 3 SCC 330 observed:
“13. Section 141 is a penal provision creating vicarious liability, and which, as per
settled law, must be strictly construed. It is therefore not sufficient to make a bald,
cursory statement in a complaint that the Director (arrayed as an accused) is in
charge of and responsible to the company for the conduct of the business of the
company without anything more as to the role of the Director. But the complaintshould spell out as to how and in what manner Respondent 1 was in charge of or
was responsible to the accused Company for the conduct of its business. This is in
consonance with a strict interpretation of penal statutes, especially where suchstatutes create vicarious liability.
22. Therefore, this Court has distinguished the case of persons who are incharge of
and responsible for the conduct of the business of the company at the time of theoffence and the persons who are merely holding the post in a company and are not
in charge of and responsible for the conduct of the business of the company.
Further, in order to fasten the vicarious liability in accordance with Section 141, the
averment as to the role of the Directors concerned should be specific. The
description should be clear, and there should be some unambiguous allegations as
to how the Directors concerned were alleged to be in charge of and were responsible
for the conduct and affairs of the company. 39. From the above discussion, the
following principles emerge: (i) The primary responsibility is on the complainant to
make specific averments as are required under the law in the complaint so as to::: Downloaded on – 09/04/2026 20:35:09 :::CIS
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34make the accused vicariously liable. For fastening the criminal liability, there is no
presumption that every Director knows about the transaction. (ii) Section 141 does
not make all the Directors liable for the offence. The criminal liability can be.
fastened only on those who, at the time of the commission of the offence, were in
charge of and were responsible for the conduct of the business of the company. (iii)
Vicarious liability can be inferred against a company registered or incorporatedunder the Companies Act, 1956 only if the requisite statements, which are required
to be averred in the complaint/petition, are made so as to make the accused therein
vicariously liable for offence committed by the company along with averments in theof
petition containing that the accused were in charge of and responsible for the
business of the company and by virtue of their position they are liable to be
proceeded with. (iv) Vicarious liability on the part of a person must be pleaded and
proved and not inferred. (v) If the accused is a Managing Director or a Joint
rt
Managing Director, then it is not necessary to make a specific averment in the
complaint and by virtue of their position, they are liable to be proceeded with. (vi) Ifthe accused is a Director or an officer of a company who signed the cheques on
behalf of the company, then also it is not necessary to make a specific averment in
the complaint. (vii) The person sought to be made liable should be in charge of and
responsible for the conduct of the business of the company at the relevant time.
This has to be averred as a fact as there is no deemed liability of a Director in such
cases.”
16.2. In N.K. Wahi v. Shekhar Singh, (2007) 9 SCC 481, this Court in Para 8
observed:
“To launch a prosecution against the alleged Directors, there must be a
specific allegation in the complaint as to the part played by them in thetransaction. There should be a clear and unambiguous allegation as to how
the Directors are in charge and responsible for the conduct of the business of
the company. The description should be clear. It is true that precise words
from the provisions of the Act need not be reproduced, and the court can
always come to a conclusion in the facts of each case. But still, in the
absence of any averment or specific evidence, the net result would be that
the complaint would not be entertainable.”
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16.3. In S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla, (2005) 8 SCC 89, this Court
laid down that mere designation as a director is not sufficient; a specific role and
responsibility must be established in the complaint.
.
16.4. In Pooja Ravinder Devidasani v. State of Maharashtra, (2014) 16 SCC 1, this
Court while taking into consideration that a non-executive director plays a
governance role, they are not involved in the daily operations or financial
management of the company, held that to attract liability under Section 141 of the
NI Act, the accused must have been actively in charge of the company’s business at
the relevant time. Mere directorship does not create automatic liability under the
of
Act. The law has consistently held that only those who are responsible for the day-
to-day conduct of business can be held accountable.
16.5. In Ashok Shewakramani v. State of Andhra Pradesh, (2023) 8 SCC 473, this
rt
Court held:
“8. After having considered the submissions, we are of the view that there is
non-compliance on the part of the second Respondent with the requirements
of Sub-section (1) of Section 141 of the NI Act. We may note here that we are
dealing with the Appellants who have been alleged to be the Directors of the
Accused No. 1 company. We are not dealing with the cases of a ManagingDirector or a wholetime Director. The Appellants have not signed the
cheques. In the facts of these three cases, the cheques have been signed by
the Managing Director and not by any of the Appellants.”
16.6. In Hitesh Verma v. Health Care at Home India Pvt. Ltd., Crl. Appeal No. 462
of 2025, this Court held:
“4. As the appellant is not a signatory to the cheque, he is not liable under
Section 138 of the 1881 Act. “As it is only the signatory to the cheque who is
liable under Section 138 unless the case is brought within the four corners
of Section 141 of the 1881 Act, no other person can be held liable….”
5. There are twin requirements under sub-Section (1) of Section 141 of the
1881 Act. In the complaint, it must be alleged that the person, who is sought
to be held liable by virtue of vicarious liability, at the time when the offence
was committed, was in charge of, and was responsible to the company for
the conduct of the business of the company. A Director who is in charge of
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the company and a Director who was responsible for the company for the
conduct of the business are two different aspects. The requirement of law is
that both the ingredients of SubSection (1) of Section 141 of the 1881 Act
.
must be incorporated in the complaint. Admittedly, there is no assertion in
the complaints that the appellant, at the time of the commission of the
offence, was in charge of the business of the company. Therefore, on a plain
reading of the complaints, the appellant cannot be prosecuted with the aid of
sub-Section (1) of Section 141 of the 1881 Act.”
40. This Court in Anil Mediratta (supra), had an occasion to deal
of
with similar facts and circumstances, wherein, this Court held as under:
“42. From the aforesaid exposition of law laid down by Hon’ble Apex Court, it is
rt
thus clear that, a company, being a juristic person, cannot be imprisoned, but it can
be subjected to a fine, which in itself is a punishment. Every punishment hasadverse consequences, and therefore, prosecution of the company is mandatory. The
exception would possibly be when the company itself has ceased to exist or cannot
be prosecuted due to a statutory bar. However, such exceptions are of no relevance
in the present case. Thus, the present prosecution must fail for this reason as well.
Therefore, it is not permissible to prosecute the petitioners without prosecuting the
company. Since the company has not been arrayed as an accused, therefore, it is
not permissible to prosecute the petitioners, being Directors of the Company, inview of the binding precedents of the Hon’ble Supreme Court.
43. Reliance is also placed upon judgment rendered by Hon’ble Apex Court in
Lalankumar Singh v. State of Maharashtra, 2022 (Supp.) Shim. LC 260, wherein,
Hon’ble Apex Court held as under:
“14. It could thus be seen that this Court had held that simply because a
person is a director of the company, it does not necessarily mean that he
fulfils the twin requirements of Section 34(1) of the said Act so as to make
him liable. It has been held that a person cannot be made liable unless, at
the material time, he was incharge of and was also responsible to the
company for the conduct of its business.
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15. In the case of S.M.S. Pharmaceuticals Ltd. vs. Neeta Bhalla and
another, this Court was considering the question as to whether it was
sufficient to make the person liable for being a director of a company.
under Section 141 of the negotiable Instruments Act, 1881. This Court
considered the definition of the word “director” as defined in Section 2(13) of
the Companies Act, 1956. This Court observed thus:
“8. ……. There is nothing which suggests that simply by being a director in a
company, one is supposed to discharge particular functions on behalf of a company.
of
It happens that a person may be a director in a company but he may not know
anything about the day-today functioning of the company. As a director he may be
attending meetings of the Board of Directors of the company where usually they
decide policy matters and guide the course of business of a company. It may be that
rt
a Board of Directors may appoint subcommittees consisting of one or two directors
out of the Board of the company who may be made responsible for the day-to-dayfunctions of the company. These are 4 (2005) 8 SCC 89 matters which form part of
resolutions of the Board of Directors of a company. Nothing is oral. What emerges
from this is that the role of a director in a company is a question of fact depending
on the peculiar facts in each case. There is no universal rule that a director of acompany is in charge of its everyday affairs. We have discussed about the position of
a director in a company in order to illustrate the point that there is no magic as
such in a particular word, be it director, manager or secretary. It all depends uponthe respective roles assigned to the officers in a company. …..”
16. It was held that merely because a person is a director of a company, it is not
necessary that he is aware about the day-to-day functioning of the company. This
Court held that there is no universal rule that a director of a company is in charge
of its everyday affairs. It was, therefore, necessary, to aver as to how the director of
the company was in charge of day-to-day affairs of the company or responsible to
the affairs of the company. This Court, however, clarified that the position of a
managing director or a joint managing director in a company may be different.
This Court further held that these persons, as the designation of their
office suggests, are in charge of a company and are responsible for the conduct of
the business of the company. To escape liability, they will have to prove that when
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38
the offence was committed, they had no knowledge of the offence or that they
exercised all due diligence to prevent the commission of the offence.
.
17. In the case of Pooja Ravinder Devidasani vs. State of Maharashtra and
another this Court observed thus:
“17. …… Every person connected with the Company will not fall into the
ambit of the provision. Time and again, it has been asserted by this Court
that only those persons who were in charge of and responsible for theof
conduct of the business of the Company at the time of commission of an
offence will be liable for criminal action. A Director, who was not in charge of
and was not responsible for the conduct of the business of the Company at
the relevant time, will not be liable for an offence under Section 141 of the NI
rt
Act. In National Small Industries Corpn. [National Small Industries Corpn.
Ltd. v. Harmeet Singh Paintal, (2010) 3 SCC 330 : (2010) 1 SCC (Civ) 677 :
(2010) 2 SCC (Cri) 1113] this Court observed: (SCC p. 336, paras 1314) 5
(2014) 16 SCC 1“13. Section 141 is a penal provision creating vicarious liability, and which, as
per settled law, must be strictly construed. It is therefore, not sufficient to make a
bald cursory statement in a complaint that the Director (arrayed as an accused) is
in charge of and responsible to the company for the conduct of the business of thecompany without anything more as to the role of the Director. But the complaint
should spell out as to how and in what manner Respondent 1 was in charge of or
was responsible to the accused Company for the conduct of its business. This is in
consonance with strict interpretation of penal statutes, especially, where suchstatutes create vicarious liability.
14. A company may have a number of Directors and to make any or all the
Directors as accused in a complaint merely on the basis of a statement that they
are in charge of and responsible for the conduct of the business of the company
without anything more is not a sufficient or adequate fulfilment of the
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18. In Girdhari Lal Gupta v. D.H. Mehta [Girdhari Lal Gupta v. D.H. Mehta,
(1971) 3 SCC 189 : 1971 SCC (Cri) 279 :AIR 1971 SC 2162], this Court observed
that a person “in charge of a business” means that the person should be in overall
.
control of the daytoday business of the Company.”
44. There is another aspect of the matter, that once there is no dispute qua the
fact, that M/s Generica India Limited had appointed Mr. Hem Raj Thakur as its
authorized signatory, as is evident from Annexure P-1, (para 8 of complaint) and he
was otherwise responsible for day-to-day functions of the company, there was
of
otherwise no occasion, if any, for Drug Inspector concerned to implead petitioners,
being Directors of company as accused.
45. Once, Mr. Hem Raj Thakur being authorized signatory was responsible for
rt
conduct of business of firm in question and invoice, vide which drug was sold to
M/s Aar Kay Surgicals Sujanpur, contained his signatures, coupled with the fact
that no material came to be adduced on record qua the fact that petitioners, being
Directors of M/s Generica India Limited were looking after day-to-day affairs of the
company, no case, if any, under S.18(a)(i), punishable under S.27(d) of the Act could
be registered against petitioners being Directors of company
46. This court in similar circumstances, where company was not arrayed as an
accused, straightway proceeded to quash the proceedings, vide order dated
16.9.2023 passed in CrMMO No. 111 of 2013, titled Ashish Mittal v. State of
Himachal Pradesh, relevant paras whereof read as under:
“11. A similar proposition was dealt with by the Apex Court in Aneeta
Hada v. Godhfather Travels and Tours Private Limited, (2012) 5 SCC
661, while dealing with Section 141 of the Negotiable Instruments Actquoted above, held that when a person, which is a Company commits an
offence, then certain categories of persons incharge as well as the Company
would be deemed to be liable for the offences under Section 138 of the
Negotiable Instruments Act. Thus, the statutory intendment is absolutely
plain. The provision makes the functionaries and the Companies/ firms
liable and that is by deeming fiction, which has its own significance.
12. Also on the comparative reading of the above Sections under the
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40with Company shall not fall within the ambit of Section 34 of the Act, which
has a marked similarity with the similar provisions of Negotiable
Instruments Act. The conclusion is obvious that only those persons, who are.
incharge of and responsible for the conduct of the business of the Company
at the time of commission of the offence are liable for the criminal action.
The explanation added to Section 34 ibid shows that the Company means abody corporate and includes a firm or other association of individuals and
Directos in relation to a firm means a Partner.
of
13. In the instant case, the petitioner is alleged to be a Partner of “M/s.
Legen Healthcare”. The said firm has not been impleaded as an accused and
also there is no allegation in the complaint that the petitioner in the capacity
as a Partner was incharge of and responsible for the conduct-business of the
rt
said firm. Therefore, in my opinion, summoning of the petitioner for the
alleged offence in his capacity as a Partner is wrong and illegal.
14. Thus, the logical conclusion is that the summoning of the petitioner
as a Partner of the said firm as an accused is unsustainable, hence,
quashed and set aside., but, however, it shall open to the Drug Inspector toimplead the Company as an accused by moving an appropriate application
before the learned trial Court and in case there is any evidence during the
trial that a particular person is incharge of or responsible for the conduct ofthe business or the Company including the petitioner, he can also be
impleaded as an accused. The record of learned trial Court be returned
forthwith and shall reach before it on or before 21.10.2013.”
47. In the aforesaid judgment, Coordinate Bench of this Court, having taken
note of the fact that the firm, of which petitioner in that case was a partner, was not
impleaded as an accused, coupled with the fact that there was no allegation against
the petitioner, being partner or in charge or responsible for conduct of business of
said firm, held summoning of petitioner in that case bad in law.”
41. In the aforesaid judgment this Court held that once, an
authorized person responsible for conduct of the business of the firm
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41
concerned, is appointed and it is endorsed by the Department, no case
under Sections 18(a)(i) and 18(a)(vi) punishable under Section 27(d) of the
.
Act can be registered against the Directors of Company.
42. It is quite apparent from the judgment referred to hereinabove
that the complainant is required to specifically aver in the complaint that
the person, sought to be held vicariously liable, is not only in-charge of the
of
company but is also responsible to the company for its affairs. However,
such averment is totally missing in the complaint. There is no specific
rt
averment in the complaints that petitioner, being Managing Director of the
company is responsible for day-to-day affairs of the company, especially
manufacturing, hence, the complaints do not satisfy the requirement of law
laid down by Hon’ble Apex Court in the judgments noted above.
43. In view of the discussion made hereinabove and law taken note
hereinabove, this Court holds the proceedings against the petitioner to be
not maintainable.
44. There is another aspect of the matter that as per case of the
prosecution, samples were drawn on 27.03.2018/27.07.2018 and the
Government analyst had supplied its reports on 09.08.2018/27.03.2019,
whereby it came to be opined that samples are of sub-standard quality. As
per complainant, he came to know on 09.08.2018/27.03.2019, the Drugs,
samples whereof were drawn, were not of standard quality. As per Section
468 Cr.P.C. (corresponding Section 514 of BNSS) no Court shall take
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42
cognizance beyond the period of limitation and where the punishment
prescribed for the offence is above one year and is upto three years,
.
limitation for taking cognizance is three years, which shall be from the date
of offence or from the date of knowledge. In the present cases, petitioner is
being prosecuted for the offence punishable under Section 27(d) of the Act
and maximum punishment for the offence under Section 27(d) of the Act is
of
two years, hence, the limitation for taking cognizance is three years. At this
stage, it would be apt to take note of Sections 468 and 469 of Cr.P.C., which
read as under:
rt
“468. Bar to taking cognizance after lapse of the period of limitation.
(1)Except as otherwise provided elsewhere in this Code, no Court shall take
cognizance of an offence of the category specified in sub-section (2), after the
expiry of the period of limitation.
(2)The period of limitation shall be –
(a)six months, if the offence is punishable with fine only;
(b)one year, if the offence is punishable with imprisonment for a term not
exceeding one year;
(c)three years, if the offence is punishable with imprisonment for a term
exceeding one year but not exceeding three years.
(3)[ For the purposes of this section, the period of limitation, in relation to
offences which may be tried together, shall be determined with reference to
the offence which is punishable with the more severe punishment or, as the
case may be, the most severe punishment.] [Inserted by Act of 1978, Section
33 (w.e.f. 18-12-1978).]
469. Commencement of the period of limitation.
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(1)The period of limitation, in relation to an offender, shall commence, –
(a)on the date of the offence; or
.
(b)where the commission of the offence was not known to the person
aggrieved by the offence or to any police officer, the first day on which such
offence comes to the knowledge of such person or to any police officer,
whichever is earlier; or
(c)where it is not known by whom the offence was committed, the first day on
of
which the identity of the offender is known to the person aggrieved by the
offence or to the police officer making investigation into the offence,
whichever is earlier.
rt
(2)In computing the said period, the day from which such period is to be
computed shall be excluded.”
45. Keeping in view the punishment, as provided for the offence
punishable under Section 27(d) of the Act, the complaint has to be filed
within a period of three years and as per provisions contained under Section
468 of the Cr.P.C., the period of limitation in the present case, commenced
from the date of the offence i.e. 09.08.2018/27.03.2019, when the reports of
Government analyst were received. However, in the instant cases, Court
took cognizance on 10.01.2022/11.01.2022 i.e. beyond the prescribed
period of three years of limitation. While issuing notice, learned Court below
failed to take cognizance of aforesaid aspect of the matter, as a result
thereof, great prejudice has been caused to the petitioner.
46. Having scanned the entire material adduced on record, vis-Ã -vis
prayer made in the instant petition, this Court is persuaded to agree with
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learned Senior Counsel, appearing for the petitioner that this Court, while
exercising power under Section 482 Cr.P.C. may proceed to quash the
.
complaints against the petitioner, because continuance thereof would be
sheer abuse of process of law, since, for the reasons stated herein above,
case of prosecution is bound to fail against the petitioner in all probabilities.
Otherwise also, in case prayer made on behalf of the petitioner is not
of
accepted, he would be subjected to unnecessary ordeal of facing protracted
trial, which otherwise is bound to fail.
47.
rt
Consequently, in view of detailed discussion made herein above
and law taken into consideration, present petition is allowed. Complaints
case No.8/3 of 2022 and 13/3 of 2022, tilted as Union of India Vs. M/s
Theon Pharmaceuticals Limited and Others, pending in the Court of learned
Additional Chief Judicial Magistrate, Nalagarh, District Solan, as well as
orders dated 10.01.2022/11.01.2022, are quashed and set aside qua the
petitioner. The petitioner is discharged henceforth in both the cases.
All pending applications, stand disposed of.
April 09, 2026 (Sandeep Sharma),
Rajeev Raturi Judge
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