Supreme Court of India
SHAILYAMANYU SINGHversusSTATE OF MAHARASHTRA
- Citation
- 2025 INSC 995
- Decided
- 22 July 2025
- Disposal
- Appeal(s) allowed
- Bench
- VIKRAM NATH
Holding
A director who is not in charge of the day‑to‑day affairs of the company cannot be vicariously liable under Section 34(2) of the Drugs & Cosmetics Act unless the complaint makes specific prima facie allegations of his consent, connivance or neglect, and therefore the summoning order was quashed.
Summary
The appellant, a non‑executive director of Procter & Gamble Hygiene Ltd., was summoned as an accused in a criminal complaint alleging that the company distributed expired drugs to an unlicensed dealer, violating the Drugs & Cosmetics Act, 1940. The appellant challenged the summoning order under Section 482 of the CrPC, arguing that the complaint did not allege any consent, connivance or neglect on his part. The High Court had rejected the petition, holding that the complaint’s averments were sufficient to invoke vicarious liability under Section 34(2) of the Act. The Supreme Court examined the language of Sections 34(1) and 34(2) and emphasized that a prima facie allegation of the director’s involvement is required at the stage of taking cognizance. Finding the complaint silent on any inquiry into the director’s role, the Court held that the prosecution of the appellant on the basis of mere directorship was unjustified. Consequently, the summoning order and all proceedings against the appellant were quashed while the case against other accused continued.
Issues considered
- Whether a non‑executive director can be held vicariously liable and prosecuted under Section 34(2) of the Drugs & Cosmetics Act, 1940 for offences committed by the company.
- Whether the complaint contains the requisite specific averments of consent, connivance or attributable neglect to justify invoking vicarious liability against the director.
Legislation cited
- Code of Criminal Procedure, 1973s. 482
- Drugs & Cosmetics Act, 1940s. 18(a)(vi), s. 18B, s. 22(1)(cca), s. 27(d), s. 28A, s. 34(1), s. 34(2)
Headnote
Issue for Consideration Issue arose 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. Headnotes† Drugs & Cosmetics Act, 1940 – s.34 – Offences by companies – Appellant summoned as an accused in the complaint case in capacity of the Director of the company which was distributor of the drug – Appellant challenged the order passed by the Magistrate taking cognizance of the offences under the various provisions of the 1943 Act and
Subjects
Non-executive Director of the companyVicarious liabilityOffences committed by the companySummoning as an accusedDistributor of the drugCognizanceDay-to-day affairs of the companySpecific avermentsValid licenseAbuse of the process of law
Judgment
[2025] 7 S.C.R. 2085 : 2025 INSC 995
Shailyamanyu Singh
v.
State of Maharashtra
(Criminal Appeal No. 3104 of 2025)
22 July 2025
[Vikram Nath and Sandeep Mehta,* JJ.]
Issue for Consideration
Issue arose 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.
Headnotes†
Drugs & Cosmetics Act, 1940 – s.34 – Offences by companies –
Vicarious liability of a Director of the company – Appellant
summoned as an accused in the complaint case in capacity
of the Director of the company which was distributor of the
drug – Appellant challenged the order passed by the Magistrate
taking cognizance of the offences under the various provisions
of the 1943 Act and issuing process – High Court dismissed
the petition – Sustainability:
Held: Prosecution of the appellant 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 – It is clear
from ss.34(1) and 34(2) that every person who is in-charge of the
day-to-day affairs of the company and the Director or Directors
would be liable to face prosecution under the Act – 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
u/s.34(2) – Complaint totally silent on this vital aspect – Finding of
the High Court that it could be inferred from the averments made
in the complaint that the appellant had distributed the drugs in
favour of the enterprise which did not possess a valid license under
the Act, is erroneous – Allegation of distributing the drugs to an
enterprise without a license is omnibus against both the appellant
* Author
2086 [2025] 7 S.C.R.
Supreme Court Reports
as well as against the company and thus, something more than a
bald allegation is required which satisfies the necessary ingredients
of the offences under the Act, to make the appellant vicariously
liable for the acts and omissions of the company – Neither of the
Director, Manager or any other officer in-charge of the company
has been impleaded in the complaint – Complaint totally devoid
of averments regarding any inquiry into the role of the Directors
of the company or the person/s responsible for the conduct of the
day-to-day business of the company – Thus, there being no such
averment or material against the appellant, the order summoning
him is ex facie unjustified and uncalled for – Judgment and order
by the High Court unsustainable in the eyes of law and set aside –
Summoning order and all proceedings sought to be taken against
the appellant in the complaint quashed. [Paras 21-31]
Case Law Cited
Lalankumar Singh & Ors. v. State of Maharashtra [2022] 14
SCR 573 : (2022) SCC OnLine SC 1383; Sunita Palita & Ors. v.
Panchmani Stone Quarry [2022] 14 SCR 458 : (2022) 10 SCC
152; Siby Thomas v. Somay Ceramics Ltd. [2023] 13 SCR 821 :
(2024) 1 SCC 348; Dayle De’Souza v. Union of India (2021) 20
SCC 135; National Small Industries Corporation Limited v. Harmeet
Singh Paintal [2010] 2 SCR 805 : (2010) 3 SCC 330 – referred to.
List of Acts
Drugs & Cosmetics Act, 1940; Code of Criminal Procedure, 1973.
List of Keywords
Non-executive Director of the company; Vicarious liability; Offences
committed by the company; Vicarious liability of a Director of the
company; Summoning as an accused; Distributor of the drug;
Cognizance; Day-to-day affairs of the company; Specific averments;
Valid license; Abuse of the process of law.
Case Arising From
CRIMINAL APPELLATE JURISDICTION: Criminal Appeal No.
3104 of 2025
From the Judgment and Order dated 12.04.2023 of the High Court
of Judicature at Bombay in CRLAP No. 1422 of 2019
[2025] 7 S.C.R. 2087
Shailyamanyu Singh v. State of Maharashtra
Appearances for Parties
Advs. for the Appellant:
Sidharth Luthra, Sr. Adv., Dheeraj Nair, Kumar Kislay, Ms. Vishrutyi
Sahni, Ms. Ridhima Sharma.
Advs. for the Respondent:
Ms. Rukhmini Bobde, Siddharth Dharmadhikari, Aaditya Aniruddha
Pande, Shrirang B. Varma, Ms. Soumya Priyadarshinee, Vinayak
Aren, Amlaan Kumar, Jatin Dhamija, Naveen Kumar Bhardwaj.
Judgment / Order of the Supreme Court
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 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 Director of Procter and Gamble
1 Hereinafter, being referred to as the ‘High Court’.
2 For short “CrPC”.
3 Hereinafter being referred to as the ‘D&C Act’.
2088 [2025] 7 S.C.R.
Supreme Court Reports
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 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
4 Hereinafter, referred to as the ‘P&G Ltd. or Company’
[2025] 7 S.C.R. 2089
Shailyamanyu Singh v. State of Maharashtra
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 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 under manufacturing no. 16/
UA/2010 dated 13.08.2010 and distributed the said drug
to Accused No.5.”
2090 [2025] 7 S.C.R.
Supreme Court Reports
“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 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 3 rd 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
[2025] 7 S.C.R. 2091
Shailyamanyu Singh v. State of Maharashtra
of the appellant. He took us through the complaint and supporting
documents 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 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 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/
5 2022 SCC OnLine SC 1383.
6 (2022) 10 SCC 135.
7 (2024) 1 SCC 348.
8 (2021) 20 SCC 135.
2092 [2025] 7 S.C.R.
Supreme Court Reports
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. 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
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
[2025] 7 S.C.R. 2093
Shailyamanyu Singh v. State of Maharashtra
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 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
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.
9 (2021) 20 SCC 135.
10 (2010) 3 SCC 330.
2094 [2025] 7 S.C.R.
Supreme Court Reports
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 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 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).
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
[2025] 7 S.C.R. 2095
Shailyamanyu Singh v. State of Maharashtra
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 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.
32. Pending application(s), if any, shall stand disposed of.
Result of the case: Appeal allowed.
†
Headnotes prepared by: Nidhi Jain
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