Directors Of Manufacturing Company Can’t Be Prosecuted For Sub-Standard Drugs Unless They Played An “Active Role” In The Process: In Karnataka High Court
The Karnataka High Court recently quashed criminal proceedings brought against the Proprietors/Directors of a drug manufacturing company for allegedly producing sub-standard quality drugs, stating that they did not play a “active role” in the alleged crime.
In the case of Sushil Goel and others vs State at the Instance of Drug Inspector (Criminal Petition No.6875 of 2020), Honourable Justice M Nagaprasanna said, “Unless the petitioners do have an active role in the preparation and manufacture of drugs, which are alleged to be of sub-standard quality, the petitioners cannot be drawn into these proceedings”.
According to the facts of the case, Sushil Goel and Monisha Dange of M/s.Unicorn Meditech filed the lawsuit to have proceedings against them quashed for manufacturing drugs that are not of a standard quality, misbranded, adulterated, or spurious, which are punishable under Sections 18(a)(i) and 22(i)(cca), as well as Sections 27(a) and 22(3) of the Drugs and Cosmetics Act, 1940.
The case was started after certain people who had cataract surgeries at a Bengaluru hospital developed an eye infection. The Assistant Drugs Controller discovered that the subject drug was not of standard quality after conducting an investigation.
“Despite its length, the complaint does not specify the petitioners’ role in the company’s day-to-day drug manufacturing operations. The offenses against the petitioners cannot be driven home unless this is spelled out, is the consistent view of this Court in a slew of judgments dating back to the year 2000 “The Court stated right away.
In the cases of Sanjay G. Revankar V. State By Drug Inspector, U.K.District, Karwar, ILR 2002 KAR 475 and Ritesh V. State Of Karnataka, ILR 2011 KAR 592, it relied on two coordinate bench judgments.
Both of these decisions interpreted Section 34 of the Act, which deals with corporate offenses. It was held there that unless the Directors or Partners of the Company play a specific role in the manufacturing process, they cannot be held liable in criminal proceedings, as vicarious liability can only arise when specific instances are narrated in the complaint.
“The narration in the complaint, in the case at hand, insofar as it pertains to the petitioners, is absolutely vague,” it concluded. There is nothing in the narrative that indicates the petitioners’ involvement in the Company’s day-to-day drug manufacturing. The petitioners cannot be drawn into these proceedings unless they play an active role in the preparation and manufacture of drugs that are alleged to be of poor quality.
After going through the facts of the case and arguments of the respected advocates, the court ruled that the impugned proceedings against the petitioners could not be continued because there is no narrative in the complaint that addresses the petitioners’ role in the drug manufacturing. It went on to say that vague statements about them being partners or directors of the company would not be enough to bring the petitioners into the web of these proceedings.