Prosecution of a Non-Executive Director for corporate offences requires specific averments of involvement; absence of such averments renders the prosecution unjustified.

JUDGMENT :

Mehta, J.

1. Heard.

2. Leave granted.

3. The instant appeal is preferred against the judgment and order dated 12th April, 2023 passed by the High Court of Judicature at Bombay¹[Hereinafter, being referred to as the ‘High Court’] whereby the Criminal Application No. 1422 of 2019 filed by the appellant under Section 482 of Code of Criminal Procedure, 1973²[For short “CrPC”] came to be rejected.

4. By way of the said petition filed under Section 482 CrPC, the appellant had challenged the order dated 3rd December, 2016 passed by the Metropolitan Magistrate 15th Court, Mazgaon, Mumbai in Criminal Case No. 1500201/SW/2016, taking cognizance of the offences under Section 18 B punishable under Section 28A, Section 18 (a)(vi) and Section 22 (1)(cca) punishable under Section 27 (d) of the Drugs & Cosmetics Act, 1940³[Hereinafter being referred to as the ‘D&C Act’] and issuing process against numerous accused including the appellant.

Brief Facts: -

5. The appellant (accused No.6) was summoned as an accused in the complaint case in capacity of the Director of Procter and Gamble Hygiene and Healthcare Limited⁴[Hereinafter, referred to as the ‘P&G Ltd. or Company’] (accused No.7), which was the distributor of the drug in question, i.e., Vicks Multi Pain Relief Gel. The said drug was manufactured by its licensed manufacturer, Akums Drugs and Pharmaceuticals Ltd. (accused No. 8). The expiry date of the drug was January, 2016. As per the Standard Operating Procedure (SOP) of P&G Ltd., drugs set to expire within the next six months were required to be destroyed. Accordingly, the company initiated the process of recalling and destroying the said batch of the subject drug in May 2015.

6. On 3rd June, 2016, upon receiving information from the Vigilance Department, the Drug Inspector visited the premises of an enterprise namely, M/s Action Soap Center. The inspection revealed that a stock of the aforesaid drug of which expiry date had already lapsed, was illegally stored in the godown. On questioning the person-in-charge of M/s Action Soap Center, it came to light that the drug had been procured from P&G Ltd. Subsequently, on 7th June, 2016 a notice was sent by the Drug Inspector to P&G Ltd. inquiring about the drugs seized from the premises of M/s Action Soap Center.

7. The inquiry notice dated 7th June, 2016 was responded to vide letter dated 13th June, 2016, by Ms. Saumya Ranjan in the capacity of the competent person acting on behalf of P&G Ltd. explaining that the purchase and sale of the drug was being carried out under her supervision. Thereafter, two further show cause notices dated 15th June, 2016 and 17th June 2016 were issued to P&G Ltd. seeking explanation for supply of drug to M/s Star Express, an enterprise which did not possess a valid license under the D&C Act.

8. The appellant in discharge of his duties as the legal officer of the company responded to these show cause notices and the queries raised therein by the Drug Inspector vide letter dated 5th July, 2016. It was stated in the reply that the drugs in question were in the legal custody of the Clearing and Forwarding Agent (C&F) i.e. M/s. KD Supply Chains Solution Pvt. Ltd. and were forwarded to M/s Star Express by the said C&F Agent.

9. However, it is not necessary to delve into the above aspect of the matter, as the controversy in the present appeal is confined to the question as to whether the appellant, being a Non-Executive Director of the company, can be held vicariously liable and prosecuted for the alleged offences committed by the com