In a recent judgment the Madras High Court dismissed a petition filed by directors of Sunrise International Labs for quashing a criminal proceeding initiated against them alleging that the company supplied drugs of substandard quality. This was observed in the case of Vikas Rambal and others v. The State (Crl OP No 11184 of 2019) and was presided by Hon’ble Dr. Justice G. Jayachandran.
FACTS OF THE CASE:
The point raised against the petitioners was that they produced and provided subpar medication (Carbimazole pills) to government hospitals for the general population to use. Thus, Section 34 of the Drugs and Cosmetics Act was used to bring charges against the petitioners.
The petitioners argued that, out of the company’s five directors, the current petitioners were not involved in its daily operations. They claimed that as a result, they would not be held vicariously responsible for the purported wrongdoing.
SECTION 34 OF THE DRUGS AND COSMETICS ACT
It states that 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 company’s business, as well as the company, shall be deemed to have committed the offence and shall be subject to legal action and punishment in accordance with the law. If the act is committed without his knowledge and the person proves so he will not be liable.
Further, when a company violates this Act and it is demonstrated that the violation was carried out with the knowledge or complicity of, or as a result of any neglect on the part of, any director, manager, secretary, or other officer of the company, that director, manager, secretary, or other officer shall also be deemed to have violated this Act and shall be subject to legal action and punishment as appropriate.
The directors’ argument that the case against them should be dropped since they weren’t involved in the day-to-day operations of the firm was rejected by Justice G. Jayachandran. Further, the hon’ble court observed that:
“The decision to manufacture the drugs is the collective decision of the Board of Directors. Therefore, the Directors cannot claim that they are not directly involved in the product of the drugs, when the decision to produce the drugs itself is the out come of their decision. Therefore, the case of Directors signing the cheque on behalf the Company and the case of Directors participating in the decision to produce sub-standard drugs are not one and the same to hold that these petitioners are not involved in day-to-day affairs of the Company.”
Stating the objects of the Drugs and Cosmetics Act of 1940, the court mentioned that the contention of the petitioners is wholly unsustainable. If the said preposition is accepted it will go against the object and reasons of the legislations namely Drugs and Cosmetics Act.
Thus the criminal petition was dismissed.
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JUDGMENT REVIEWED BY ADITI PRIYADARSHI