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Madhya Pradesh High Court
Shri Gaurav Airen vs The State Of Madhya Pradesh on 16 December, 2025
IN THE HIGH COURT OF MADHYA PRADESH
AT G WA L I O R
BEFORE
HON'BLE SHRI JUSTICE RAJESH KUMAR GUPTA
ON THE 16th OF DECEMBER, 2025
MISC. CRIMINAL CASE No. 49589 of 2024
SHRI GAURAV AIREN AND OTHERS
Versus
THE STATE OF MADHYA PRADESH
Appearance:
Mr. Raghvendra Dixit - Advocate for the petitioners.
Mrs. Ankita Mathur - Govt. Advocate for respondent/State.
______________________________________________________________________
ORDER
This petition under Section 482 of Cr.P.C. has been filed against the
order dated 21.08.2023, passed by Chief Judicial Magistrate, Morena, in
which cognizance has been taken against the petitioners.
2. In brief, the facts giving rise to the present petition are that a private
complaint has been filed under section 32 of the Drugs and cosmetics Act
1940 (for short "Act of 1940"), alleging that the information was tendered
to respondent vide letter dated 04-08-2021 at the instance of civil surgeon
cum Chief Hospital Superintendent, District Hospital Morena, regarding
drug compound Sodium Nitrate Injection Batch no. 10311, [date of
manufacturing March 2021 expiry date February 2023], manufactured by
M/s IVEs Drugs [India] Pvt. Ltd. It is alleged that, by using the subject
drug, a patient was felt trembling.
3. After receiving such complaint, sample was obtained by the
respondent, as per provisions of aforesaid Act, 1940, after following due
process of law, those samples collected in different 4 bags, out of which,
one sample was forwarded to the testing laboratory CDL Kolkata, for its
testing. After scrutiny laboratory test sample was found to be not of
standard quality, as declared by CDL vide its communication dated
25/11/2021. Accordingly, complaint was filed to prosecute petitioners as it
is punishable offence u/Ss 18 (a)(1) and 27 (d) of the Act of
1940(Annexure/P-1).
4. On receiving such complaint u/s 32 of the Act of 1940 learned Chief
Judicial Magistrate has taken cognizance, exercising the powers of Section
190 (1)(A) of Cr.P.C (old Provision) vide its order dated
21/08/2023(Annexure P/2). It is further submitted that before taking
cognizance on the complaint of respondent, learned court below has not
appreciated the provisions of Section 34 of the Act of 1940, according to
which without impleading concerned company as an accused, cognizance
could not have been taken against the directors like petitioners without
verifying their day to day work in discharging of duty even as an in-charge
of concerned company. Being aggrieved by registration of criminal
proceeding case no.1717/2023, present petition has been filed.
5. Counsel for the petitioners submits that impugned order and
consequential criminal proceedings of Case No.1717/2023 is utmost
illegal, bad-in-law and contrary to sprit of Section 34 of the Act of 1940,
hence deserves to be quashed.
6. It is further submitted that the petitioners are undisputedly the
directors of M/s IVES Drugs (India) Pvt. Ltd., Ghata Billod, Distt. Dhar
(M.P.). They have been made accused in the private complaint without
impleading the concerned company as an accused. Thus, such a complaint
is itself not tenable in the eyes of law.
7. A bare perusal of the memo of complaint makes it crystal clear that
no averment has been taken alleging the liability of any of the Directors, or
proving that the present petitioners were performing the day-to-day work
and discharging their duty on behalf of the company for the purpose of the
commission of an offence under Section 18 read with Section 27 of the Act
of 1940.
8. Thus, in the absence of any pleading or material to the effect that the
petitioners were in-charge of and responsible to the company for the
conduct of its business at the time the offence was committed on behalf of
the company, the impugned order could not have been passed.
Furthermore, the complaint filed by the respondent is not maintainable
because it fails to disclose the specific role of the present petitioners.
Hence, such criminal proceedings deserve to be quashed.
9. For ready reference to this Hon'ble Court, the provisions of Section
34 of the Act of 1940 are reproduced hereunder:
Section 34- Offences by companies -(1) Where an offence under
this Act has been committed by a company, every person who at the time
the offence was committed, was in charge of, and was responsible to the
company for the conduct of the business of the company, as well as the
company shall be deemed to be guilty of the offence and shall be liable to
be proceeded against and punished accordingly.
Provide that nothing contained in this sub section shall render any
such person liable to any punishment provided in this Act if he proves that
the offence was committed without his knowledge or that he exercised all
due diligence to prevent the commission of such offence.
10. From bare perusal of aforesaid provision, it clearly reveals that, the
liability of a person/persons [including Director/Directors] of the company,
for being prosecuted for an offence committed under provisions of the Act
of 1940, by any such person of the company arises, only if at the relevant
point of time he/they were in-charge of and were also responsible to the
company for the conduct of its business. There is no provision of vicarious
liability of Directors, under the provisions of Section 34 of the Act of
1940. Simply because a person is a director of the company, it does not
necessarily mean that he fulfills both the above requirement, so as to make
him liable for commission of an offence u/s 18 read with 27 of the Act of
1940. From bare perusal of the memo of complaint it is revealed that no
single reference is ever made about the direct or indirect role of present
petitioners, while commission of an offence as alleged in the complaint in
question, upon which learned court below has taken cognizance, moreover
when concerned company has not been impleaded as an accused. Thus,
such complaint and order impugned passed by learned court below are not
tenable, hence deserves to be quashed.
11. Counsel for the petitioners has relied upon the judgment passed by
the Hon'ble Apex Court in the case of State of Haryana Vs. Brijlal Mittal
and others reported in 1998 (5) SCC 343, wherein the Court has held
in para 8 of the said Relevant para 8 of the said judgment dealt with the
identical issue and Hon'ble Apex court was pleased to quash the order
taking cognizance against the director of the company as per scope of Act
of 1940. Further in the case of Sunil Bharti Mittal V/s Central Bureau of
Investigation reported in 2015 (4) SCC 609 role and day to day business
and work of Directors of the concerned company were taken into
consideration. Hon'ble Apex court has considered in para 44 that when the
company is an offender, vicarious liability of the Directors cannot be
imputed automatically, in the absence of statutory provisions to this effect.
Further Hon'ble Apex court again held in the case of Shiv Kumar Jatia
V/s State of NCT of Dehli reported in 2019 (17) SCC 193 in para 22
that, while examining the allegations made against the managing Director
of the company, in which, company was not made a party, and allegations
made against the managing Directors are vague in nature, same can be the
ground for quashing the proceedings u/s 482 of Cr.P.C. In the absence of
specific allegations against the managing Director of the company and
having regard to the nature of allegations made which are vague in nature
Hon'ble Apex court, found the case fit for quashing the proceedings.
12. Present case is on better footing. As here-in, there is no single
averment ever made in the complaint about the duty, work and functions of
the Directors. Undisputedly company was not made an accused and there
is no reference or specific role ever mentioned in the memo of complaint
with regard to present petitioners, thus entire complaint is vague in nature
and impugned order taking cognizance against the petitioners, while
registering criminal proceedings are contrary to law and deserve to be
quashed.
13. He further submits that the company is not made an accused and in
absence of the company being made an accused in the complaint, the
vicarious liability cannot be fastened against the petitioners who are the
Directors of the company. To buttress his argument, he relied in the case of
Sunil Bharti Mittal (Supra), paragraph nos. 42, 43, 44 and 48 of the said
judgment are quoted.
42. No doubt, a corporate entity is an artificial person
which acts through its officers, directors, managing
director, chairman etc. If such a company commits an
offence involving mens rea, it would normally be the
intent and action of that individual who would act on
behalf of the company. It would be more so, when the
criminal act is that of conspiracy. However, at the same
time, it is the cardinal principle of criminal jurisprudence
that there is no vicarious liability unless the statute
specifically provides so.
43. Thus, 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
criminal intent. Second situation in which he can be
implicated is in those cases where the statutory regime
itself attracts the doctrine of vicarious liability, by
specifically incorporating such a provision.
44. When the company is the offendor, vicarious
liability of the Directors cannot be imputed
automatically, in the absence of any statutory provision
to this effect. One such example is Section 141 of the
Negotiable Instruments Act, 1881. In Aneeta
Hada (supra), the Court noted that if a group of
persons that guide the business of the company have
the criminal intent, that would be imputed to the body
corporate and it is in this backdrop, Section 141 of the
Negotiable Instruments Act has to be understood. Such
a position is, therefore, because of statutory
intendment making it a deeming fiction. Here also, the
principle of "alter ego", was applied only in one
direction namely where a group of persons that guide
the business had criminal intent, that is to be imputed
to the body corporate and not the vice versa.
Otherwise, there has to be a specific act attributed to
the Director or any other person allegedly in control
and management of the company, to the effect that
such a person was responsible for the acts committed
by or on behalf of the company.
48. Sine Qua Non for taking cognizance of the offence
is the application of mind by the Magistrate and his
satisfaction that the allegations, if proved, would
constitute an offence. It is, therefore, imperative that
on a complaint or on a police report, the Magistrate is
bound to consider the question as to whether the same
discloses commission of an offence and is required to
form such an opinion in this respect. When he does so
and decides to issue process, he shall be said to have
taken cognizance. At the stage of taking cognizance,
the only consideration before the Court remains to
consider judiciously whether the material on which the
prosecution proposes to prosecute the accused brings
out a prima facie case or not.
14. On the same point he further relied in the case of Shiv Kumar Jatia
(Supra) and relied on para. Nos. 21 and 22 of the said judgment which are
quoted hereinbelow.
"21. By applying the ratio laid down by this Court in the
case of Sunil Bharti Mittal it is clear that an individual
either as a Director or a Managing Director or Chairman
of the company can be made an accused, along with the
company, only if there is sufficient material to prove his
active role coupled with the criminal intent. Further the
criminal intent alleged must have direct nexus with the
accused. Further in the case of Maksud Saiyed vs. State
of Gujarat & Ors.3 this Court has examined the vicarious
liability of Directors for the charges levelled against the
Company. In the aforesaid judgment this Court has held
that, the Penal Code does not contain any provision for
attaching vicarious liability on the part of the Managing
Director or the Directors of the Company, when the
accused is a Company. It is held that vicarious liability of
the Managing Director and Director would arise provided
any provision exists in that behalf in the Statute. It is
further held that Statutes indisputably must provide fixing
such vicarious liability. It is also held that, even for the
said purpose, it is obligatory on the part of the
complainant to make requisite allegations which would
attract the provisions constituting vicarious liability.
22. In the judgment of this Court in the case of Sharad
Kumar Sanghi vs. Sangita Rane while examining the
allegations made against the Managing Director of a
Company, in which, company was not made a party, this
Court has held that when the allegations made against the
Managing Director are vague in nature, same can be the
ground for quashing the proceedings under Section 482 of
Cr.P.C. In the case on hand principally the allegations are
made against the first accused-company which runs Hotel
Hyatt Regency. At the same time, the Managing Director
of such company who is accused no.2 is a party by
making vague allegations that he was attending all the
meetings of the company and various decisions were
being taken under his signatures. Applying the ratio laid
down in the aforesaid cases, it is clear that principally the
allegations are made only against the company and other
staff members who are incharge of day to day affairs of
the company. In the absence of specific allegations
against the Managing Director of the company and
having regard to nature of allegations made which are
vague in nature, we are of the view that it is a fit case for
quashing the proceedings, so far as the Managing
Director is concerned. "
15. He submits that under Section 34 of the said Act the petitioners are
not vecariously liable as the company is not made accused and in view of
the above judgment, the petition is fit to be allowed.
16. Per contra, Counsel appearing for the respondent-State submits that
in view of Section 34 of the said Act whereunder the offence under this Act
is committed by any person when the offence was committed and was the
Incharge and responsible for the company for conduct of the day to day
affairs of the company as well as the company shall be deemed to be liable
and punished accordingly. He submits that in the identical situation, the
Hon'ble Supreme Court in the case of Dinesh B.Patel and Others v. State
of Gujarat and Another, (2010) 11 SCC 125 has not interfered. He relied
on paragraph no.10 of the said judgment which is quoted hereinbelow:
"10. Under the peculiar circumstances of this case and
realising the seriousness of the allegations, we would not
take a technical view based on pleadings in the
complaint. Mr Raichura contended that as per the settled
law by this Court in complaints under Section 138 of the
Negotiable Instruments Act, 1881 against a company and
its directors also specific averment about the active role
of directors in running the company has to be made,
failing which the directors cannot be proceeded against.
The same logic should apply even in the present case. We
connot agree. Firstly, the language of Section 34(2) of the
Act substantially differs from the language of Section
141 of the Negotiable Instruments Act. Secondly, here we
are dealing with an offence which has a direct impact on
public health. We, therefore, would choose not to
interfere with the order of the High Court. It will be open
for the Directors to show to the trial court that they had
nothing to do with the manufacturing process and,
therefore, they should not be held liable under Section
34(2) of the Act."
17. Relying on this judgment, he submits that this case is also arising out
of Drugs and Cosmetics Act, 1940 and section 34 of the said Act was
considered by the Hon'ble Supreme Court and looking to this judgment,
this petition is fit to be dismissed.
18. Heard counsel for the parties and perused the documents appended
thereto.
19. From perusal of the complaint (Annexure P/1), it is noted in
Paragraph 7 that the Central Drugs Testing Laboratory (CDTL), Kolkata,
vide letter No. 7-2/2021-SS/MP-03/1684, dated 25/11/2021, declared the
sample to be of substandard quality. When the firm expressed
dissatisfaction, the sample was re-sent to the same laboratory in Kolkata,
and the sample was again declared substandard.
20. In my opinion, the averments in Paras 7, 8, 11, 12 and 16 of the
complaint cannot be described as bald statements. The emphasised portion
in Para 12 of the complaint suggests manufacturing of the medicine by the
Company and its Directors. The averments in all these paras would have to
be read together and Para 16 of the complaint would have to be read in the
light of the other averments. It seems that in the reported decision in the
complaint, there was no link pleaded in the Directors and the
manufacturing process. That is not the situation here. This was a case of
the manufacture of the drug for human consumption and, after it was tested
in laboratory, was found to be defective/substendared, which is a very
serious matter related to public health.
21. Under the peculiar circumstances of this case and realizing the
seriousness of the allegations, this Court would not take a technical view
based on the pleadings in the complaint. Mr. Dixit contended that as per
the settled law by Hon'ble Supreme Court, in a complaint under Section 32
of the Drugs Act, 1940 against a company and its directors, a specific
averment regarding the active role of the directors in running the company
has to be made. Failing this, the directors cannot be proceeded against. He
argued that the same logic should apply in the present case, as the Court is
dealing with an offense that has a direct impact on public health. It will be
open for the Directors to show to the Trial Court that they had nothing to
do with the manufacturing process and, therefore, should not be held liable
under Section 32 of the Drugs Act, 1940. In such circumstances, the Trial
Court is directed to communicate with the concerned Drug
Inspector/competent Authority and shall join the respondent company as a
party respondent and proceed in accordance with law on a day-to-day
basis.
With the aforesaid observation, the petition stand disposed of.
Let a copy of this order be communicated to the trial Court
concerned for necessary compliance.
(RAJESH KUMAR GUPTA)
JUDGE
LJ*
