LALANKUMAR SINGH & ORS. versus STATE OF MAHARASHTRA

Citation: [2022] 14 S.C.R. 573 · Decided: 11-10-2022 · Supreme Court of India · Bench: BHUSHAN RAMKRISHNA GAVAI · Disposal: Appeal(s) allowed

Cited by 3 judgment(s) · cites 7 · see the full citation network in Lexace

Judgment (excerpt)

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[2022] 14 S.C.R. 573
573
LALANKUMAR SINGH & ORS.
v.
STATE OF MAHARASHTRA
(Criminal Appeal No. 1757 of 2022)
OCTOBER 11, 2022
[B. R. GAVAI AND C. T. RAVIKUMAR, JJ.]
Drugs and Cosmetics Act, 1940: ss.34, 16, 18 – Vicarious
liability – Appellants are the directors of M/s Cachet
Pharmaceuticals Private Ltd. (CPPL) – Test report of the sample of
the drug manufactured by CPPL stated that it was not of standard
quality – Complaint filed before CJM u/s.18(a)(i) r/w ss. 16 and 34
of the Act – CJM issued summons to all the accused including the
appellants – Appellants filed revision petition against the summoning
order before the Sessions Judge which was rejected on the ground
that there was a specific averment in the complaint that the appellants
were concerned with the manufacture, distribution and sale of drug
in question – Writ petition by appellants before High Court was
also dismissed – On appeal, held: A person cannot be made liable
u/s.34 of the Act unless at the material time, he was in-charge of
and was also responsible to the company for the conduct of its
business – Merely because a person is a director of a company, it is
not necessary that he is aware about its day-to-day functioning –
There is no universal rule that a director of a company is in-charge
of its everyday affairs – It is necessary to aver as to how the director
of the company was in charge of day-to-day affairs or responsible
to the affairs of the company – The managing director or a joint
managing director in a company, 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 – Appellants are neither
the managing director nor the whole-time directors of the accused
company – Complaint totally lacked requirement of s.34 of the Act
– Order of issuance of process quashed – Negotiable Instruments
Act,1881 – s.141 – Companies Act, 1956 – s.2(13).
Practice and Procedure: Criminal procedure – Issue of Process
by Magistrate – Held: The order of issuance of process is not an
empty formality – The Magistrate is required to apply his mind as to
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SUPREME COURT REPORTS
[2022] 14 S.C.R.
whether sufficient ground for proceeding exists in the case or not –
The formation of such an opinion is required to be stated in the
order itself – The order is liable to be set aside if no reasons are
given therein while coming to the conclusion that there is a prima
facie case against the accused.
Allowing the appeal, the Court
HELD : 1. In the present case, there are no specific
averments insofar as the appellants are concerned. It is further
to be noted that the appellants are neither the managing director
nor the whole-time directors of the accused company. It is further
to be noted that, in accordance with the provisions of Rule 76 of
the said Rules read with Form 28, the Accused Nos. 9 and 10
have specifically been approved by the licensing authority in Form
28. Accused No.9 was approved as a person under whose active
direction and personal supervision the manufacture would be
conducted as required under sub rule (1) of Rule 76 of the said
Rules. Similarly, Accused No.10, who was approved as a head of
the testing unit, was to be incharge for carrying out the test of
the strength, quality and purity of the substances as may be
required under the provisions of Part X of the said Rules. The
Court was therefore of the considered view that the complaint is
totally lacking the requirement of Section 34 of the said Act.
[Paras 23 & 24][587-F-H; 588-A-B]
2. The order of issuance of process is not an empty
formality. The Magistrate is required to apply his mind as to
whether sufficient ground for proceeding exists in the case or
not. The formation of such an opinion is required to be stated in
the order itself. The order is liable to be set aside if no reasons
are given therein while coming to the conclusion that there is a
prima facie case against the accused. No doubt, that the order
need not contain detailed reasons. In instant case, it is clear from
the order of the Single Judge of the High Court, that there was
no such order passed at all. The Single Judge of the High Court,
based on the record, has presumed that there was an order of
issuance of process. Such an approach is unsustainable in law.
[Paras 28 & 30][588-G-H; 590-A-B]
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S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla and
another (2005) 8 SCC 89 : [2005] 3 Suppl. SCR 371;
Pooja Ravi

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