Determining the Scope of Vicarious Liability for Company Directors Under Section 66 of the FSS Act

The Food Safety and Standards Act, 2006 (FSS Act) serves as the primary regulatory framework in India to ensure that food available for human consumption is safe and wholesome. While the Act primarily targets food business operators, one of its most contentious areas is the imposition of criminal liability on corporate officers. When a company violates food safety standards, the law does not stop at the corporate entity; it extends to the individuals who steer the ship. For many corporate executives, the question regarding FSS Act Section 66: Director Liability is a matter of critical concern, as it determines whether a director can be held personally accountable for the operational failures of a company.

The Statutory Framework of Section 66

Section 66 of the FSS Act establishes a mechanism for vicarious liability. It stipulates that when an offense is committed by a company, every person who, at the time the offense was committed, was in charge of and responsible to the company for the conduct of the business shall be deemed guilty of the offense. This means that directors, managers, or secretaries may be prosecuted alongside the company for violations such as adulteration, misbranding, or the distribution of unsafe food.

However, the application of this section is not automatic. Judicial interpretations have clarified that the mere holding of a corporate office does not suffice for criminal prosecution. The prosecution must demonstrate a direct link between the individual's role and the specific offense committed.

Essential Judicial Principles for Establishing Liability

Indian courts have developed a rigorous set of standards to prevent the arbitrary prosecution of directors. To sustain a charge under Section 66, several criteria must be met:

The Necessity of Impleading the Company

A fundamental principle is that directors cannot be held vicariously liable if the company itself is not prosecuted. The company is the primary offender; the directors are secondary. For instance, in a matter involving adulterated chocolate, the court quashed proceedings against a company nominee because the manufacturer company not implicated as accused -- nominee of company cannot be made accused in personal capacity -- not vicariously liable for act of company 2023 0 Supreme(MP) 379. This principle is echoed in wider jurisprudence, ensuring that individuals are not targeted while the corporate entity escapes liability 2023 0 Supreme(MP) 102.

The Requirement of Specific Averments

The corporate veil cannot be pierced based on a title alone. A complaint must contain specific averments—detailed allegations—that link the individual to the daily management of the business and the specific violation.

Courts have consistently noted that if there is no single averment stating that the applicant was a Director of the company and responsible for day-to-day affairs, the issuance of notices can be questioned and proceedings may be quashed

Subrata Roy Sahara VS State of Gujarat

Ashok Roy Chaudhary VS State of Gujarat

Distinctions from Other Statutory Provisions

It is important to note that Section 66 is not pari materia (identical in nature) to similar provisions in other laws, such as Section 141 of the Negotiable Instruments Act 2018 0 Supreme(Jhk) 850. The legislature intended to hold responsible persons independently liable, but only when the pleadings are precise and the responsibility is clearly established.

Procedural Safeguards and the Power to Quash

Given the potential for mechanical prosecutions, the courts often utilize Section 482 of the Code of Criminal Procedure (CrPC) to quash proceedings that lack legal merit. Common grounds for quashing include:

• Lack of Verification: Magistrates are cautioned against taking cognizance without verifying if the director actually managed the daily affairs

  Subrata Roy Sahara VS State of Gujarat

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• Time-Barred Complaints: Prosecutions initiated beyond the limits prescribed under Section 77 are generally considered invalid 2021 0 Supreme(Mad) 2571 and 2022 0 Supreme(Telangana) 799.
• Absence of Standards: If no FSSAI standards exist for a specific product (for example, certain traditional food preparations like biryani), the proceedings may fail for lack of a benchmark 2022 0 Supreme(Telangana) 799.
• Analytical Failures: In a case involving maida samples containing weevils, the court quashed the proceedings due to mechanical cognizance without mind application, highlighting the need for judicial training in these matters 2021 0 Supreme(Mad) 2571.

Lessons from Case Studies

The application of Section 66 varies significantly based on the evidence presented. In one instance involving a restaurant, the court upheld proceedings against directors for unsafe food, noting the discretion of Commissioner under Section 77 and the directors' deemed guilt under Section 66(1) due to their specific documented roles 2023 0 Supreme(Mad) 3143.

Conversely, in the high-profile Maggi noodles case, proceedings were quashed because the food analysis was conducted in labs that were not NABL accredited, which violated Section 43 of the Act. This demonstrated that Section 66 cannot save a prosecution if the underlying evidence (the lab report) is legally flawed 2025 Supreme(Bom) 469 and 2025 0 Supreme(Bom) 287. Similarly, in cases involving milk chilling centers, liability was upheld only for those whose roles were specifically linked to the non-compliance, emphasizing that separate licenses for different business units are essential for clarity in liability 2024 0 Supreme(Bom) 362.

Strategic Compliance for Food Business Operators

To mitigate the risk of vicarious liability under Section 66, companies should adopt a proactive compliance strategy:

1. Role Definition: Maintain clear, written records of management roles and responsibilities. Avoid granting blanket authority to all directors.
2. Accreditation Rigor: Ensure all product testing is performed by NABL-accredited laboratories to avoid procedural dismissals 2025 Supreme(Bom) 469.
3. Licensing Precision: Ensure that every unit, such as a chilling center or a manufacturing plant, has its own specific FSSAI license 2024 0 Supreme(Bom) 362.
4. Early Intervention: If a complaint is vague or lacks specific averments, challenge it early using the quashing powers of the High Court under CrPC 482.
5. Staff Training: Sensitize personnel on Contaminants Regulations and other FSSAI standards 2023 0 Supreme(Ker) 224.

Broader Legal Context: Article 21 and Fair Procedure

The prosecution of food safety offenses is not just a regulatory matter but a public health necessity. Unsafe food endangers the right to life under Article 21 of the Constitution of India. However, the courts balance this public interest with the requirement that any legal procedure must be fair, just, reasonable 1978 0 Supreme(SC) 29. Arbitrary prosecutions that ignore the nuances of corporate structure undermine business confidence and violate the principles of a fair trial.

Summary of Key Takeaways

• Not Automatic Liability: Liability under Section 66 is vicarious, but it requires the company to be impleaded and specific allegations of the director's role to be made.
• Pleadings Matter: A simple designation as Director is insufficient for prosecution; the complaint must prove responsibility for the conduct of the business.
• Procedural Rigor: Lab reports must be from NABL-accredited facilities, and complaints must be filed within statutory timelines to survive judicial scrutiny.
• Preventative Compliance: Clear documentation of roles and strict adherence to FSSAI licensing can protect individual directors from unwarranted litigation.

While these principles generally guide the courts, the outcome of any specific case depends on the unique facts and evidence presented. Therefore, professional legal guidance is typically essential for navigating FSS Act disputes.