In this case, the High Court of Himachal Pradesh addressed whether a Managing Director of a marketeer company can be held vicariously liable for “Not of Standard Quality” (NSQ) drugs manufactured by a third-party firm under the Drugs and Cosmetics Act, 1940. The petitioner, who served as the Managing Director of M/s Cipla Limited (the marketeer), sought the quashing of criminal proceedings and a summoning order issued by the trial court. The High Court allowed the petition and quashed the proceedings against the petitioner, holding that holding an official designation does not automatically create vicarious liability without specific, clear factual averments in the complaint demonstrating that the individual was directly in charge of and responsible for the day-to-day business affairs and quality control at the time of the alleged offence.
- Vicarious Liability Standards: A director or Managing Director cannot be held vicariously liable under Section 34(1) of the Drugs and Cosmetics Act simply by virtue of holding that office. The complaint must contain clear, specific averments showing how the individual was in charge of and responsible for the day-to-day conduct of the business.
- Sufficiency of Pleadings: Mere bald, cursory statements or a mechanical reproduction of statutory language without factual support are insufficient to justify summoning a director and constitute an abuse of the process of law.
- Contractual Allocation of Responsibility: Where a company has contractually appointed and officially endorsed specific authorized representatives, manufacturing chemists, and analytical chemists responsible for quality control (such as through Quality and Supply Agreements), criminal liability cannot be automatically extended to the management of the marketeer company in the absence of direct control or negligence.
- Scope of Inherent Powers (BNSS Section 528): The High Court is duty-bound to exercise its inherent powers to quash criminal proceedings when the material relied upon by the accused rules out the assertions in the complaint, demonstrating that the prosecution is destined to fail and preventing the legal process from becoming an instrument of harassment.
STPL (Web) 2026 HP 451
Umang Vohra v. Union of India(D.O.J. 25.03.2026)
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