The Death of Automatic Liability: Calcutta HC Clarifies Corporate Accountability

In a significant verdict that draws a bright line around corporate criminal liability in India, the Calcutta High Court has quashed a criminal proceeding that had languished against a former corporate director for over a decade. Justice Chaitali Chatterjee Das’s decision brings long-awaited relief to Sailesh Venkatesan, the former Managing Director of Mead Johnson India (MJN), clarifying that directors cannot be held automatically liable for corporate actions when the company itself has not been arraigned as an accused.

A Sour Start for a Baby Formula Giant The legal saga began in November 2015, following a private complaint filed by a parent who alleged that a container of Enfamil A+ Stage 3 infant formula contained live insects. The incident sparked a criminal case at the Charu Market Police Station, invoking various sections of the Indian Penal Code (IPC)—including those covering negligent acts and the sale of noxious food—alongside penal provisions of the Food Safety and Standards Act (FSS Act) of 2006.

For years, the investigation made little headway. It was not until six years after the incident, in late 2021, that the police submitted a charge sheet, naming the former Managing Director, Sailesh Venkatesan, as an accused, despite the parent company, MJN, remaining notably absent from the list of defendants.

The Clash of Statutes: IPC vs. FSS Act The petitioner's legal team successfully argued that the police had overstepped their jurisdiction. By relying on general IPC provisions rather than the specialized FSS Act, the prosecution ignored the fact that the FSS Act was designed to exclusively regulate the quality of food in the country—an argument bolstered by the Supreme Court’s previous rulings in cases like Ramnath vs. State of UP .

Justice Das observed that the FSS Act possesses an "overriding effect" on all other food-related laws. The prosecution’s attempt to use the IPC where the stricter, more specific FSS Act existed was viewed as a structural error in the case.

Corporate "Alter Ego" and the Burden of Proof The core of the Court's reasoning, however, lay in the principle of vicarious liability. The judgment emphasized a fundamental tenet of Indian criminal law: there is no doctrine of "automatic" vicarious liability for directors under the IPC.

"When the company is the offender, vicarious liability of the Directors cannot be imputed automatically in the absence of any statutory provision to this effect. An individual who has perpetrated the commission of an offence on behalf of a company can be made accused along with the company if there is sufficient evidence of his active role coupled with the criminal intent." — Justice Chaitali Chatterjee Das

The Court noted that in the absence of specific, documented evidence linking the Managing Director to the alleged adulteration, and given the prosecution's failure to even name the corporate entity as an accused, the case against Venkatesan could not legally stand.

A Legacy of Procedural Prejudice Beyond the legal arguments, the Court took note of the staggering six-year delay in filing the charge sheet. Under Section 77 of the FSS Act, the statutory limit for taking cognizance of an offense is one year. By waiting six years—well beyond the "best before" date of the infant formula—the investigation had essentially destroyed the petitioner's valuable, and legally provided, right to have the food product re-tested by a public laboratory.

The Final Verdict: Abuse of Process Having navigated the procedural lapses and the statutory misapplications, the High Court concluded that allowing the case to proceed would be an " abuse of the process of law ." The FIR , charge sheet , and all subsequent summons against the petitioner were ordered to be quashed.

For the corporate sector, this ruling serves as a vital precedent: it reinforces that in criminal matters, corporations and their leaders cannot be pulled into the legal fray without specific, evidence-backed allegations and proper procedural rigor. For investors and stakeholders, this outcome ends a decade of uncertainty, highlighting the judiciary’s commitment to curbing the misuse of criminal processes in regulatory disputes.

Key Observations from the Bench

  • "If the company is the offender, vicarious liability of the Directors cannot be imputed automatically in the absence of any statutory provision to this effect."
  • "The Learned Magistrate without application of mind took cognizance against the petitioner... the application of the mind of the Learned Magistrate should be reflected to his satisfaction that the allegations if proved would constitute an offence."
  • "In view of the above factual matrix coupled with the law laid down in this regard, this court does not find any materials to allow a proceeding against the petitioner against whom the proceeding is not maintainable in the eye of law."
  • "Invocation of Section 269, 270, 283 of Indian Penal Code... in absence of any allegation in that regard against the present petitioner."