Cipla MD Gets Relief: Himachal Pradesh HC Quashes Drug Prosecution For Absence of Specific Averment on Day-to-Day Role

"The complaint is completely silent on the petitioner's role in day-to-day working — no specific averment that the Managing Director was responsible for manufacturing or marketing operations", Himachal Pradesh High Court has quashed a criminal complaint filed under the Drugs and Cosmetics Act, 1940 against the Managing Director of M/s Cipla Limited — one of India's largest pharmaceutical companies — holding that mere designation as Managing Director is insufficient to attract vicarious liability under Section 34 of the Act unless the complaint specifically avers how and in what manner the accused was in charge of and responsible for the day-to-day affairs of the company.

Justice Sandeep Sharma allowed the petition filed by Umang Vohra, Managing Director of Cipla, and quashed Complaint No. 15 of 2024 and the consequent summoning order dated January 18, 2024 issued by the Additional Chief Judicial Magistrate, Nalagarh, discharging him from the proceedings entirely.

Background of the Case

The drug "Oflox OZ Suspension 30 ML" — a combination of Ofloxacin and Metronidazole — was manufactured by M/s Crest Lifesciences Pvt. Ltd. at its facility in Jharmajri, Baddi, Himachal Pradesh, and marketed by M/s Cipla Limited. A sample bearing Batch No. CLOF14014 was drawn by the Drugs Inspector from the manufacturer's finished goods store in September 2021.

The sample was sent to the Regional Drugs Testing Laboratory (RDTL), Chandigarh. The result was alarming: the Government Analyst declared it "Not of Standard Quality," noting that Ofloxacin was found at only 81.92% against the permissible limit of 90%-110%, while Metronidazole Benzoate was found at a staggering 182.66% — nearly double the upper permissible limit.

Dissatisfied, the manufacturer sought re-testing. The sample was sent to the Central Drugs Laboratory, Kolkata. The second report confirmed the failure: Ofloxacin was found at 71.34% and Metronidazole Benzoate at 195.21%, both severely outside limits. Following a joint inspection of the manufacturing facility and the Drugs Controller General (India)'s sanction for prosecution in July 2023, a complaint was lodged against M/s Crest Lifesciences Pvt. Ltd., M/s Cipla Limited, and their officers including the petitioner as Accused No. 5.

The petitioner challenged the complaint and summoning order before the High Court under Section 528 of the Bharatiya Nagarik Suraksha Sanhita, 2023.

Legal Issues

The core legal question was whether the Managing Director of the marketer company could be vicariously prosecuted under Section 34 of the Drugs and Cosmetics Act, 1940 when the complaint contained no specific averment about his role in day-to-day affairs, and when the company had already appointed an authorized representative — Accused No. 6, Hazi Khajesaheb Momin — responsible for day-to-day operations.

Court's Observations and Judgment

On the Scope of Inherent Powers Under Section 528 BNSS / Section 482 CrPC

The Court surveyed the settled legal landscape on quashing jurisdiction, drawing on the Supreme Court's foundational rulings in State of Karnataka v. L. Muniswamy, State of Haryana v. Bhajan Lal, and the more recent test laid down in Rajiv Thapar v. Madan Lal Kapoor and Prashant Bharti v. State (NCT of Delhi). The Court reiterated that inherent powers, though wide, must be exercised sparingly — but quashing is appropriate where allowing proceedings to continue would be an abuse of the process of court, or where the prosecution is bound to fail in all probabilities.

On Vicarious Liability Under Section 34 — The "Twin Requirements" Test

The Court turned to Section 34 of the Drugs and Cosmetics Act, which fastens vicarious liability only on a person who, at the time the offence was committed, was in charge of and responsible to the company for the conduct of its business. Mere holding of a designation, the Court firmly held, is not enough.

Relying on a long and consistent line of Supreme Court authority beginning with S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla, the Court held that both twin requirements — being "in charge of" and "responsible to the company" for business conduct — must be specifically averred in the complaint. A bald, cursory statement reproducing the words of the section, without a clear factual narration of how and in what manner the accused exercised control, is wholly insufficient.

"It is therefore not sufficient to make a bald, cursory statement in a complaint that the Director (arrayed as an accused) is in charge of and responsible to the company for the conduct of the business of the company without anything more as to the role of the Director."

The Court also drew on the Supreme Court's recent decisions in Siby Thomas v. Somany Ceramics Ltd. (2024) and K.S. Mehta v. Morgan Securities & Credits Pvt. Ltd. (2025), which reinforced that the primary responsibility to make specific averments lies on the complainant, and that vicarious liability must be pleaded and proved — not inferred.

On the Managing Director's Position — A Presumption, Not an Absolute Rule

The Court acknowledged that the Supreme Court has drawn a distinction between an ordinary director and a Managing Director — noting that a Managing Director's designation does raise a presumption of responsibility. However, the Court held that this does not entirely dispense with the requirement of specific averments when the complaint is otherwise silent on actual involvement.

In the present case, the complaint was wholly silent on the petitioner's role in day-to-day manufacturing or marketing operations. Critically, Cipla had already appointed Hazi Khajesaheb Momin as its authorized representative — Accused No. 6 — specifically for conducting day-to-day business related to the pharmaceutical product. This fact, coupled with the quality agreement between Cipla and Crest Lifesciences which placed manufacturing responsibility squarely on the latter's named personnel, made impleading the Managing Director of the marketer company without any specific averment legally untenable.

"The complaint does not satisfy the requirement of law laid down by the Hon'ble Apex Court. There is no specific averment in the complaint that the petitioner, being Managing Director of the company, is responsible for day-to-day affairs of the company, especially manufacturing."

On Continuation of Proceedings as Abuse of Process

The Court found that the prosecution was bound to fail against the petitioner in all probabilities, and that subjecting him to the ordeal of a protracted trial in these circumstances would itself be an abuse of process. The Court also drew comfort from its own coordinate bench ruling in Anil Mediratta v. State of Himachal Pradesh (CrMMO No. 738 of 2021) and Ashish Mittal v. State of Himachal Pradesh (CrMMO No. 111 of 2013), which had quashed similar proceedings under the Drugs Act in the absence of specific averments against company officers.

Decision

The petition was allowed. Complaint No. 15 of 2024 and all consequent proceedings pending before the Additional Chief Judicial Magistrate, Nalagarh were quashed and set aside insofar as the petitioner (Accused No. 5) was concerned. The petitioner was discharged. The quashing, however, was only qua the petitioner — proceedings against the remaining accused, including the manufacturer and its responsible officers, were left undisturbed.

Date of Decision: March 25, 2026