Shailyamanyu Singh vs The State Of Maharashtra

REPORTABLE IN THE SUPREME COURT OF INDIA CRIMINAL APPELLATE JURISDICTION

CRIMINAL APPEAL NO(S). OF 2025 (Arising out of SLP(Crl.) No (s). 5618 of 2023)

SHAILYAMANYU SINGH ….APPELLANT(S)

VERSUS

STATE OF MAHARASHTRA ….RESPONDENT(S)

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 whereby the

Signature Not Verified Digitally signed by NEETU KHAJURIA Date: 2025.08.18 18:55:07 IST Reason: 1 Hereinafter, being referred to as the ‘High Court’.

1 Criminal Application No. 1422 of 2019 filed by the

appellant under Section 482 of Code of Criminal

Procedure, 19732 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 18B punishable under

Section 28A, Section 18(a)(vi) and Section 22(1)(cca)

punishable under Section 27(d) of the Drugs &

Cosmetics Act, 19403 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

2 For short “CrPC”.

3 Hereinafter being referred to as the ‘D&C Act’.

2 Crl. Appeal@ SLP(Crl.) No (s). 5618 of 2023 Director of Procter and Gamble Hygiene and

Healthcare Limited4 (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

4 Hereinafter, referred to as the ‘P&G Ltd. or Company’

3 Crl. Appeal@ SLP(Crl.) No (s). 5618 of 2023 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.

4 Crl. Appeal@ SLP(Crl.) No (s). 5618 of 2023

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 company.

10. Pursuant to the completion of the inquiry, the

Drug Inspector proceeded to file a complaint in the

5 Crl. Appeal@ SLP(Crl.) No (s). 5618 of 2023 Court of Metropolitan Magistrate, Mazgaon, Mumbai

which came to be registered as Criminal Case No.

1500201/SW/2016. The array of the respondents in

the aforesaid complaint is as below: -

S. No. Name Description 1. Yusuf Khan Person-in-charge of M/s Action Soap Center 2. Rahis Gaman Khan Proprietor, M/s Action Soap Center 3. Girish Chamadia Director of M/s C.G. Marketing Pvt. Ltd. 4. C.G. Marketing Pvt Ltd. - 5. Amol Sawant Asst. Logistic Executive, C.G. Marketing Pvt Ltd. 6. Shailyamanyu Singh Director of P&G Ltd. 7. Procter & Gamble Company Hygiene Ltd. 8. Akums Drugs & Manufacturing Company Pharmaceutical

11. The averments set out in the complaint qua the

appellant (accused No. 6) are as below: -

“7. That the Accused No.6, is Mr. Shailyamanyu Singh - Director of M/s. Procter and Gamble Hygiene and Health Care Ltd., P & G Plaza, Cardinal Gracias Road, Chakala Andheri (E), Mumbai 400099 which is the manufacturing company which had manufactured the said drug at the manufacturing site at M/s. Akums Drugs & Pharmaceuticals Ltd., Plant V, Hardware

6 Crl. Appeal@ SLP(Crl.) No (s). 5618 of 2023 under manufacturing no. 16/UA/2010 dated 13.08.2010 and distributed the said drug to Accused No.5.”

“31. That the investigation carried out by complainant, it is revealed as under –

iv. That, Accused No.6 and 7 distributed drugs for the purpose of sale and distribution to M/s. Star Express, Navi Mumbai who is not holding any requisite license under Drugs and Cosmetics Act. 1940.

Accused No.7 and 8 have not submitted properly relevant document for destruction of the said drug and not provided relevant documents of destruction and thereby contravened Section of 18(c) p/u Section 27(b) (ii) and 18-B P/u 28 A of Drugs and Cosmetics Act, 1940.”

“36. That the Investigation carried out by complainant, it is revealed as under –

(4) That, Accused No.6 and 7 distributed drugs for the purpose of sale and distribution to M/s. Star Express, Navi Mumbai who is not holding any requisite license under Drugs and Cosmetics Act. 1940.”

(Emphasis supplied)

12. It is, in the said background, and asserting that

there is no material whatsoever on record of the

7 Crl. Appeal@ SLP(Crl.) No (s). 5618 of 2023 complaint regarding the role of the appellant in

commission of alleged offence and for the day-to-day

affairs of the company (accused No. 7), the appellant

herein approached the High Court of Bombay for

assailing the summoning order dated 3rd December,

2016 passed by the Metropolitan Magistrate, by

preferring the subject petition under Section 482

CrPC which stands rejected vide order dated 12th

April, 2023 which is under challenge in this appeal

by special leave.

Submissions on behalf of appellant: -

13. Mr. Sidharth Luthra, learned senior counsel

appearing for the appellant, vehemently and fervently

urged that the High Court fell in grave error by

holding that the averments made in the complaint

and the supporting material are sufficient to invoke

the mischief of Section 34(2) of the D&C Act thereby

validating the prosecution of the appellant. He took

us through the complaint and supporting documents

8 Crl. Appeal@ SLP(Crl.) No (s). 5618 of 2023 to urge that there is no averment whatsoever that the

Drug Inspector had made any inquiry/investigation

in relation to any Director (including the appellant),

Manager, Secretary, or other responsible Officer of

the company (accused No. 7), with whose connivance

or neglect, the alleged offence was committed. He

urged that the only inquiry the Drug Inspector carried

out regarding the active role of the Director/person

responsible of the company was qua the

manufacturing company (accused No. 8).

14. He urged that as per the communication issued

from the Registrar of Companies, the appellant was a

Non-Executive Director in the company and hence, to

hold the appellant as vicariously liable for the alleged

offence in the capacity of the person in-charge of P&G

Ltd. (accused No. 7) is uncalled for.

15. To buttress his submissions, learned senior

counsel relied upon the judgments of this Court in

9 Crl. Appeal@ SLP(Crl.) No (s). 5618 of 2023 Lalankumar Singh & Ors. v. State of

Maharashtra5, Sunita Palita & Ors. v.

Panchmani Stone Quarry6, Siby Thomas v. Somay

Ceramics Ltd.7 and Dayle De’Souza v. Union of

India8 and urged that summoning order qua the

appellant is absolutely unjustified and liable to be

quashed.

16. He further urged that in the entire complaint,

there is not even a whisper about the inquiry made

by the Drug Inspector, if any, regarding the active

participation or responsibility of the appellant in the

day-to-day affairs of the company (accused No. 7).

Submissions on behalf of respondent-State: -

17. Per contra, Ms. Rukhmini Bobde, learned

counsel for the respondent vehemently and fervently

urged that the judgments relied upon by the learned

5 (2022) SCC OnLine SC 1383.

6 (2022) 10 SCC 135.

7 (2024) 1 SCC 348.

8 (2021) 20 SCC 135.

10 Crl. Appeal@ SLP(Crl.) No (s). 5618 of 2023 counsel for the appellant do not deal with the concept

of vicarious liability with reference to Section 34(2) of

the D&C Act. She urged that, by virtue of the

aforesaid provision, any Director who is responsible

for the conduct of business of the company can be

held vicariously liable and made to face prosecution

for the acts/omissions by the company leading to the

commission of offence/s under the provisions of the

D&C Act. As per Ms. Bobde, the appellant responded

to the show cause notice of the Drug Inspector in the

capacity of the Director of the company, hence, the

arraignment of the appellant was logical and justified

because it is he who was having exclusive knowledge

about the functioning and business of the company.

18. She further submitted that the appellant’s

contention that he was not responsible for the day-

to-day affairs of the company can only be agitated as

a defence when evidence is recorded at the trial.

11 Crl. Appeal@ SLP(Crl.) No (s). 5618 of 2023 Claim of such immunity in a quashing petition that

too based on disputed questions of facts is

premature, and therefore, the High Court did not

commit any error in rejecting the appellant’s prayer

for quashing of the proceedings.

19. We have given our thoughtful consideration to

the submissions advanced by learned counsel for the

parties and have gone through the impugned

judgment and the material available on record.

Discussion and Conclusion: -

20. Section 34 of the D&C Act provides the

procedure for prosecution of companies and its

Directors, etc., for the offences under the Act and is

being reproduced hereinbelow for the sake of ready

reference: -

“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

12 Crl. Appeal@ SLP(Crl.) No (s). 5618 of 2023 well as the company shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly:

Provided 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.

(2) Notwithstanding anything contained in sub-

section (1), where an offence under this Act has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to any neglect on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly.”

(Emphasis supplied)

21. A holistic reading of the language of Sections

34(1) and 34(2) of the D&C Act would make it clear

that every person who is in-charge of the day-to-day

affairs of the company would be liable to face

prosecution under the Act. The Director or Directors,

other than the one who is in-charge of the day-to-day

affairs of the company can also be prosecuted ‘where

13 Crl. Appeal@ SLP(Crl.) No (s). 5618 of 2023 it is proved’ that the offence has been committed

with the consent, connivance or is attributable to any

neglect on the part of such Director.

22. No doubt, at the stage of taking cognizance, the

standard of proof required would be much lower than

that required at the stage of final decision of a

criminal case. Nevertheless, there definitely has to

exist a prima facie allegation in the complaint which

can satisfy the Court regarding the consent,

connivance or attributable neglect on the part of the

Director who is sought to be prosecuted by taking

recourse to the concept of vicarious liability as

provided under Section 34(2) of the D&C Act.

23. This Court in the case of Dayle De’Souza v.

Union of India9, while relying upon an earlier

judgment in National Small Industries

9 (2021) 20 SCC 135.

14 Crl. Appeal@ SLP(Crl.) No (s). 5618 of 2023 Corporation Limited v. Harmeet Singh Paintal10

held that the primary responsibility is upon the

complainant to make specific averments in the

complaint so as to make the accused vicariously

liable for the offence committed by the company.

While fastening the criminal liability, there is no

presumption that every Director knows about the

transactions of the company. Criminal liability can

be fastened only upon those directors or persons,

who, at the time of the commission of the offence,

were in-charge of and were responsible for the day-

to-day business of the company.

24. To establish this, something more than a bald

assertion would be necessary because Section 34(2)

begin with a caveat, that the prosecution would be

required to provide proof regarding the active

involvement of the Director or person concerned in

10 (2010) 3 SCC 330.

15 Crl. Appeal@ SLP(Crl.) No (s). 5618 of 2023 the affairs of the company which would justify

drawing an inference about his/her inculpability.

25. It may be reiterated that the complaint in the

present case is totally silent on this vital aspect.

26. The High Court, while rejecting the quashing

petition filed by the appellant, was persuaded by the

fact that by virtue of the averments made in Para

No.31(iv) and 36(4) of the complaint, it could be

inferred that the appellant (accused No. 6) had

distributed the drugs in favour of M/s Star Express

which did not possess a valid license under the D&C

Act.

27. However, the said finding is erroneous on the

face of record. The allegation of distributing the

drugs to an enterprise without a license is omnibus

against both i.e., accused No. 6 (appellant) as well as

against accused No. 7 (P&G Ltd.) and thus,

something more than a bald allegation is required

16 Crl. Appeal@ SLP(Crl.) No (s). 5618 of 2023 which satisfies the necessary ingredients of the

offences under the D&C Act, to make the appellant

vicariously liable for the acts and omissions of the

company.

28. It is observed that neither of the Director,

Manager or any other officer in-charge of the

company (accused No. 7) has been impleaded in the

complaint by virtue of procedure provided under

Section 34(1) of the D&C Act. The conclusion drawn

by the High Court on the aspect of inquiry made by

the Drug Inspector, regarding the persons with whose

consent, connivance or attributable neglect the

offence was committed in light of Section 34(2) of the

D&C Act, is also erroneous and contrary to record

because in the entire complaint, there is no such

assertion regarding such an inquiry with respect to

P&G Ltd. (accused No. 7).

17 Crl. Appeal@ SLP(Crl.) No (s). 5618 of 2023

29. Upon thorough perusal of the documents

annexed with the complaint, it transpires that the

Drug Inspector had addressed a letter dated 14th

July, 2016 to P&G Ltd. seeking information regarding

the affairs of the company. In response, the Associate

Manager of P&G Ltd., vide letter dated 29th July,

2016, stated that the list of Directors along with the

Articles and Memorandum of Association of the

company had already been furnished to the Drug

Inspector vide letter dated 15th July, 2016. It is,

however, significant to note that the complaint itself

makes no reference whatsoever to the afore-

mentioned communications exchanged between the

Drug Inspector and the P&G Ltd. We may also note

that the complaint is totally devoid of averments

regarding any inquiry into the role of the Directors of

the P&G Ltd. (accused No. 7) or the person/s

responsible for the conduct of the day-to-day

business of P&G Ltd. (accused No. 7). Thus, there

18 Crl. Appeal@ SLP(Crl.) No (s). 5618 of 2023 being no such averment or material against the

appellant, the order summoning him is ex facie

unjustified and uncalled for.

30. Resultantly, we conclude that prosecution of the

appellant herein on the anvil of vicarious liability

simply being a Director of the company is absolutely

unjustified and tantamounts to a gross abuse of the

process of law. The impugned judgment and order

dated 12th April, 2023 rendered by the High Court is

unsustainable in the eyes of law and hence, the same

is set aside. The summoning order and all

proceedings sought to be taken against the appellant

in Complaint No. 1500201/SW/2016 are hereby

quashed. However, the proceedings of the complaint

shall continue against the other accused arraigned

therein.

31. Accordingly, the appeal is allowed.

19 Crl. Appeal@ SLP(Crl.) No (s). 5618 of 2023

32. Pending application(s), if any, shall stand

disposed of.

….……………………J. (VIKRAM NATH)

...…………………….J. (SANDEEP MEHTA) NEW DELHI;

JULY 22, 2025.

20 Crl. Appeal@ SLP(Crl.) No (s). 5618 of 2023