GAHC030001042025 IN THE GAUHATI HIGH COURT (HIGH COURT OF ASSAM, NAGALAND, MIZORAM & ARUNACHAL PRADESH) CRIMINAL PETITION NO.03 OF 2025 1. Shri Sanjeev Kumar Bhatia S/o Shri K.L. Bhatia R/o House No.562, Section-2 Pannchkula, PO: Panchkula Section-8, Dist- Panchkula Haryana- 134109. 2. Sri Virender Miglani S/o Vir Bhan Miglani R/o C-87, Sangam Apartment Sector-9, Rohini Rohini Sector-7, North West Delhi, Delhi-110085. 3. Smt. Sharda Rani Bhatia D/o Bhagwan Dass Bhatia R/o BC-7, Miyanwali Nagar Paschim Vihar, New Delhi Delhi-110087 4. Shri Manish Kumar S/o Ishwar Chand R/o H-76, Third Floor Shivaji Park, Punjabi Bagh, West Delhi, Delhi-110026 5. Shri Pramod Sethi S/o Tirath Ram Sethi R/o C-38, Shivaji Park Punjabi Bagh, West Delhi Delhi-110026 6. Shri Krishan Lal Bhatia S/o Ram Chand Bhatia R/o BC-7 AB Mianwali Nagar Paschim Vihar, New Delhi Delhi- 110087 7. Shri Mohan Singh S/o Khajan Singh R/o 496, Krishna Colony, Ward N.13, Naraingarh (219), Ambala, Haryana- 134203 8. Shri Radhe Shyam S/o Nolaram, R/o Tehsil Nawa, Lamba, Nagaur, Rajasthan, 341519 …….Petitioners -Versus- The Union of India represented by Shri Abu Hanif Imran Choudhury, Drugs Inspector, Office of the Assistant Drugs Controller (India), Central Drugs Standard Control Organization (C.D.S.C.O) Sub Zone Guwahati, RDTL Campus, Six Mile, Panjabari Road Guwahati- 781022. …….Respondent – B E F O R E – HON’BLE MR. JUSTICE KAUSHIK GOSWAMI For the Petitioner(s) :Mr. Joseph Lalchhanhima, Advocate. For the Respondent(s) :Mr. S. K. Medhi, learned CGC for the respondents. Date of Hearing : 19.05.2026. Date of Judgment : 19.05.2026. JUDGMENT & ORDER (ORAL) Heard Mr. Joseph Lalchhanhima, learned counsel appearing for the petitioners. Also heard Mr. S. K. Medhi, learned CGC appearing for all the respondents. 2. This petition under Section 528 of the Bharatiya Nagarik Suraksha Sanhita, 2023 has been instituted seeking quashing of Criminal Complaint No. 119 of 2023 pending before the Court of the learned Judicial Magistrate First Class, Aizawl District, Aizawl, Mizoram, together with the order dated 02.06.2023 whereby cognizance was taken and summons were issued against the petitioners in connection with alleged offences under the Drugs and Cosmetics Act, 1940 (hereinafter referred to as the “Act of 1940”). 3. The petitioners before this Court are arrayed as accused Nos. 2 to 9 in the complaint proceedings. Accused No. 1 is M/s Algen Healthcare Limited, a pharmaceutical manufacturing company holding licenses under the Act of 1940. 4. The prosecution case, in brief, is that on 10.11.2021, the concerned Drugs Inspector drew samples of Primaquine Tablets IP, Batch No. AHT-2768, manufactured by accused No. 1 company, from the Central Medical Store, Zemabawk, Aizawl, Mizoram, in exercise of statutory powers under Section 23 of the Act of 1940. 5. One portion of the sample was forwarded to the Government Analyst, Regional Drugs Testing Laboratory, Guwahati, for analysis. The Government Analyst, by report dated 28.04.2022, declared the subject sample to be “Not of Standard Quality”, recording that the sample did not conform to the Indian Pharmacopoeia standard with respect to dissolution and assay for Primaquine. 6. Following receipt of the analyst’s report, statutory communications were issued to the concerned authorities and the manufacturer. The manufacturer furnished certain materials including internal test records, batch documentation, invoices, and recall-related correspondence. A joint investigation thereafter came to be conducted by the regulatory authorities. 7. The investigation report records certain deficiencies concerning manufacturing processes and quality control protocols, including absence of process validation, absence of stability studies, deficiencies in analytical documentation, incomplete manufacturing records, insufficiency of retained samples, and other procedural lapses allegedly noticed during inspection 8. Thereafter, sanction was obtained from the competent authority, following which the complaint came to be instituted before the learned trial Court. 9. The complaint proceeds against the company as accused No. 1 and against the present petitioners in their respective capacities. 10. Petitioner Nos. 1 to 6 (accused Nos. 2 to 7 in the complaint) have been described as directors of the accused company, with a general assertion that they were persons responsible for day-to-day control of business activities, petitioner No. 7 (accused No. 8) has been described as the person responsible for manufacture of the subject batch and the petitioner No. 8 (accused No. 9) has been described as the person responsible for testing of the subject drug. 11. Beyond such broad assertions, the complaint ultimately alleges that the accused persons were engaged in manufacture for sale and distribution of a drug declared to be not of standard quality and was therefore liable for prosecution under the relevant provisions of the Act. 12. The learned Judicial Magistrate, upon presentation of the complaint, passed the order dated 02.06.2023. The material portion reads as under: “I find prima facie case against the accused persons … U/s 27(D) of the Drugs and Cosmetics Act, 1940. Accordingly, cognizance of offence U/s 27(D) of the Drugs and Cosmetics Act is taken against the above named accused persons. Issue summons…” 13. The above assumes significance because the order expressly records cognizance under Section 27(D). 14. Learned counsel for the petitioners submits that the continuation of criminal proceedings against the petitioners is wholly unsustainable in law. 15. It is contended that the learned Magistrate has proceeded in a manifestly mechanical manner, as is evident from the fact that cognizance has been purportedly taken under Section 27(D), though no such statutory provision exists. 16. It is argued that this itself demonstrates complete absence of judicial application of mind while issuing process. 17. Without prejudice to the above, it is further contended that even assuming the learned Magistrate intended reference to Section 27(d) of the Act of 1940, the complaint remains legally deficient. 18. Insofar as petitioner Nos. 1 to 6 are concerned, learned counsel submits that they have been arrayed merely because they are directors, without any specific averment disclosing their role in the alleged commission of the offence. 19. It is argued that vague and omnibus assertions that the directors were responsible for day-to-day affairs cannot satisfy the requirements of Section 34 of the Act of 1940, which creates vicarious criminal liability. 20. As regards petitioner Nos. 7 and 8, it is submitted that although they are described as technical personnel connected with manufacturing and testing, the complaint still fails to disclose specific acts or omissions attributable to them constituting the alleged offence. 21. It is also argued that the cognizance order contains no meaningful reasoning and reflects a purely mechanical exercise of jurisdiction. 22. Reliance is placed on the decision of the Hon’ble Supreme Court in the case of Lalankumar Singh v. State of Maharashtra, reported in (2023) Comp Cas 741. 23. Learned Central Government Counsel, per contra, submits that the complaint and the materials collected during investigation disclose a prima facie case warranting prosecution. 24. It is argued that the subject drug having been declared “Not of Standard Quality”, and the investigation having revealed serious deficiencies in manufacturing and quality control, criminal prosecution cannot be interdicted at the threshold. 25. It is further contended that the petitioners were not merely formal office bearers, but were persons associated with the affairs of the company in capacities relevant to the alleged contravention. 26. The respondents contend that at the stage of cognizance or quashing, a detailed appreciation of evidentiary material is impermissible, and so long as a prima facie case is disclosed, the prosecution ought to proceed. 27. Having heard learned counsel for the parties and perused the materials on record, the principal questions that arise are: i) Whether the cognizance order reflects patent non-application of mind inasmuch as it records cognizance under a non-existent statutory provision; ii) Whether, even assuming reference to Section 27(d), the complaint discloses the statutory ingredients necessary to proceed against the present petitioners; iii) Whether continuation of the impugned proceedings would amount to abuse of process warranting interference under the quashing jurisdiction of this Court. Page 9 of 36 28. The jurisdiction invoked in the present proceedings is one intended to prevent abuse of the process of Court and to secure the ends of justice. 29. It is well settled that the power to quash criminal proceedings is to be exercised sparingly and with circumspection. Equally, where the complaint, the cognizance order, or the continuation of prosecution discloses manifest legal infirmity, the Court would not be powerless to intervene. 30. The principles in State of Haryana v. Bhajan Lal reported in 1992 Supp (1) SCC 335 remain the governing touchstone. One of the recognized categories warranting interference is where the allegations, even if taken at face value, do not disclose the commission of an offence, or where the prosecution is attended by such legal infirmity that continuation of proceedings would amount to abuse of process. 31. At the same time, the power of quashing is not intended to permit a mini-trial or detailed evaluation of evidence. The enquiry at this stage is narrower, namely, whether the complaint and the judicial process founded thereon disclose a legally sustainable basis to proceed. 32. Before examining the complaint, it is necessary to notice the legal significance of the order taking cognizance. 33. Issuance of criminal process is not a routine administrative act. Page 10 of 36 34. Summoning an accused to face criminal prosecution carries serious civil, reputational, and personal consequences. The Magistrate is therefore required to apply judicial mind to the allegations, the statutory framework, and the legal basis for proceeding. 35. The requirement is not of elaborate adjudicatory reasoning at the threshold; however, the order must at least disclose conscious judicial satisfaction that the ingredients necessary to proceed are prima facie attracted. 36. A mechanical or casual invocation of criminal process is impermissible. 37. Reference in this regard is made to paragraph 28 of the decision of the Apex Court in the case of Lalankumar Singh (supra), which reads as under: “28. The order of issuance of process is not an empty formality. The Magistrate is required to apply his mind as to whether sufficient ground for proceeding exists in the case or not. The formation of such an opinion is required to be stated in the order itself. The order is liable to be set aside if no reasons are given therein while coming to the conclusion that there is a prima facie case against the accused. No doubt, that the order need not contain detailed reasons. A reference in this respect could be made to the judgment of this court in the case of Sunil Bharti Mittal v. Central Bureau of Investigation, which reads. thus**: See (2015) 191 Comp Cas 177 (SC); (2015) 4 SCC 609. See page 213 of 191 Comp Cas. "On the other hand, section 204 of the Code deals with the issue of process, if in the opinion of the Magistrate taking cognizance of an offence, there is sufficient ground for proceeding. This section relates to commencement of a criminal proceeding. If the Magistrate taking cognizance of a case (it may be the Magistrate receiving the complaint or to whom it has been transferred under section 192), upon a consideration of the materials before him (i. e., the complaint, examination of the complainant and his witnesses, if present, or report of inquiry, if any), thinks that there is a prima facie case for proceeding in respect of an offence, he shall issue process against the accused A wide discretion has been given as to grant or refusal of process and it must be judicially exercised. A person ought not to be dragged into court merely because a complaint has been filed. If a prima facie case has been made out, the Magistrate ought to issue process and it cannot be refused merely because he thinks that it is unlikely to result in a conviction. However, the words 'sufficient ground for proceeding' appearing in section 204 are of immense importance. It is these words which amply suggest that an opinion is to be formed only after due application of mind that there is sufficient basis for proceeding against the said accused and formation of such an opinion is to be stated in the order itself. The order is liable to be set aside if no reason is given therein while coming to the conclusion that there is prima facie case against the accused, though the order need not contain detailed reasons. A fortiori, the order would be bad in law if the reason given turns out to be ex facie incorrect." 38. In the present case, the cognizance order expressly records as follows: “I find prima facie case against the accused persons … U/s 27(D) of the Drugs and Cosmetics Act, 1940. Page 12 of 36 Accordingly, cognizance of offence U/s 27(D) of the Drugs and Cosmetics Act is taken…” 39. This is not a matter of ambiguity in reproduction. 40. The order, in express terms, records cognizance under Section 27(D). 41. At the outset, it must be noticed that the Act of 1940 contains no statutory provision designated as Section 27(D). 42. Section 27 contains sub-clauses, including clause (d), but no separately numbered provision styled as “27D”. 43. That distinction assumes significance in the present context. 44. The issue is not one of typographical elegance, but one of judicial application of mind. 45. It is apposite in this regard to reproduce Section 27 of the Act of 1940, which reads as under: “27. Penalty for manufacture, sale, etc., of drugs in contravention of this Chapter.—Whoever, himself or by any other person on his behalf, manufactures for sale or for distribution, or sells, or stocks or exhibits or offers for sale or distributes,— (a) any drug deemed to be adulterated under section 17A or spurious under section 6 [17B and which] when used by any person for or in the diagnosis, treatment, mitigation, or pre - vention of any disease or disorder is likely to cause his death or is likely to cause such harm on his body as would amount to grevious hurt within the meaning of section 320 of the Indian Penal Code (45 of 1860) solely on account of such drug being adulterated or spurious or not of standard quality, as the case may be, shall be 7 [punishable with imprisonment for a term which shall not be less than ten years but which may extend to imprisonment for life and shall also be liable to fine which shall not be less than ten lakh rupees or three times value of the drugs confiscated, whichever is more]: 8 [Provided that the fine imposed on and released from, the person convicted under this clause shall be paid, by way of compensation, to the person who had used the adulterated or spurious drugs referred to in this clause: Provided further that where the use of the adulterated or, spurious drugs referred to in this clause has caused the death of a person who used such drugs, the fine imposed on and realised from, the person convicted under this clause, shall be paid to the relative of the person who had died due to the use of the adulterated or spurious drugs referred to in this clause. (b) any drug— (i) deemed to be adulterated under section 17A but not being a drug referred to in clause (a), or (ii) without a valid licence as required under clause (c) of section 18, shall be punishable with imprisonment for a term which shall 1 [not be less than three years but which may extend to five years and with fine which shall not be less than one lakh rupees or three times the value of the drugs confiscated, whichever is more]: Provided that the Court may, for any adequate and special reasons to be recorded in the judgment, impose a sentence of imprisonment for a term of 2 [less than three years and of fine of less than one lakh rupees]; (c) any drug deemed to be spurious under section 17B, but not being a drug referred to in clause (a) shall be punishable with imprisonment for a term which shall 3 [not less than seven years but which may extend to imprisonment for life and with fine which shall not be three lakh rupees or three times the value of the drugs confiscated, whichever is more]: Provided that the Court may, for any adequate and special reasons to be recorded in the judgment, impose a sentence of imprisonment for a term of 4 [less than seven years but not less than three years and of fine of less than one lakh rupees]; (d) any drug, other than a drug referred to in clause (a) or clause (b) or clause (c), in contravention of any other provision of this Chapter or any rule made thereunder, shall be punishable with imprisonment for a term which shall not be less than one year but which may extend to two years 5 [and with fine which shall not be less than twenty thousand rupees]: Provided that the Court may, for any adequate and special reasons to be recorded in the judgment, impose a sentence of imprisonment for a term of less than one year. 27A. Penalty for manufacture, sale, etc., of cosmetics in contravention of this Chapter.—Whoever himself or by any other person on his behalf manufactures for sale or for distribution, or sells, or stocks or exhibits or offers for sale— [(i) any cosmetic deemed to be spurious under section 17D or adulterated under section 17E shall be punishable with imprisonment for a term which may extend to three years and with fine which shall not be less than fifty thousand rupees or three times the value of the cosmetics confiscated, whichever is more; (ii) any cosmetic other than a cosmetic referred to in clause (i) in contravention of any provisions of this Chapter or any rule made thereunder shall be punishable with imprisonment for a term which may extend to one year or with fine which may extend to twenty thousand rupees, or with both.]]” 46. A Magistrate taking cognizance of a criminal offence is expected to identify the statutory offence under which prosecution is considered prima facie maintainable. Page 15 of 36 47. Where the order records cognizance under a non- existent penal provision, the Court cannot lightly brush aside the defect as inconsequential. 48. Such an error, viewed in isolation, may perhaps in some circumstances be explained as inadvertent shorthand. However, the legal effect must be assessed in the context of the order as a whole. 49. The present cognizance order does not merely contain an incorrect statutory reference. 50. It also discloses no reasoning whatsoever as to: i) how the ingredients of the alleged offence were prima facie made out; ii) whether the complaint satisfied the statutory conditions for prosecuting company officers; iii) whether the allegations against each accused were legally distinguishable; iv) whether the penal provision invoked was correctly attracted. 51. The order simply notes: i) complaint filed; ii) complainant being public servant need not be examined; iii) prima facie case exists; iv) cognizance taken; v) summons issued. Page 16 of 36 52. The absence of reasoning, when read together with the invocation of a non-existent statutory provision, makes the defect far more serious. 53. The cumulative impression is unmistakable: the judicial exercise appears mechanical rather than deliberative. 54. Issuance of summons cannot be reduced to a ritualistic endorsement of the prosecution’s request. 55. The criminal process of Court is not to be set in motion as a matter of routine. 56. Learned counsel for the respondents may contend that the reference to “27(D)” should be read as a reference to Section 27(d) of the Act of 1940, and that the defect is merely stylistic. 57. Even if the Court were to extend that charitable construction, the difficulty does not disappear. 58. The question would then become whether the learned Magistrate actually examined whether Section 27(d) of the Act of 1940 was attracted and whether the statutory basis existed to prosecute each of the present petitioners. 59. Nothing in the order indicates any such exercise. 60. Thus, even assuming the reference was intended to mean Section 27(d) of the Act of 1940, the order still remains vulnerable for non-application of mind. The defect is therefore not merely semantic. It goes to the manner in which jurisdiction was exercised. 61. This Court is therefore constrained to observe that the order dated 02.06.2023 prima facie reflects patent absence of judicial application of mind. 62. The invocation of a non-existent penal provision, coupled with complete absence of reasoning, materially strengthens the petitioners’ challenge that issuance of process was undertaken mechanically. 63. However, since the respondents contend that the complaint independently discloses a prosecutable offence, it becomes necessary to examine whether, even assuming the intended reference was to Section 27(d) of the Act of 1940, the prosecution against the present petitioners can otherwise be sustained in law. 64. That question now falls for consideration. 65. Even assuming, for the sake of argument, that the learned Magistrate intended reference to Section 27(d) of the Act of 1940, the prosecution against the present petitioners must still satisfy the statutory framework governing criminal liability of officers of a company. 66. The complaint itself proceeds on the footing that the alleged contravention was committed by the manufacturing company. Page 18 of 36 67. Once that is so, prosecution of the individual petitioners cannot be treated as automatic. 68. The governing provision in that regard is Section 34 of the Act of 1940, which deals with offences by companies. 69. Section 34 of the Act of 1940 reads as under: “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 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.” 70. Section 34 of the Act of 1940 creates a statutory exception to the ordinary rule of criminal jurisprudence that penal liability is personal and not vicarious. 71. Since vicarious criminal liability is a creature of statute, the conditions prescribed by the legislature must be strictly fulfilled. 72. Under Section 34(1) of the Act of 1940, liability may extend to every person who, at the time the offence was committed, was in charge of the company; and responsible to the company for the conduct of its business. These are not ornamental words. 73. The statute does not render every director or every person associated with the company criminally liable merely by reason of corporate association. 74. The statutory threshold is functional responsibility coupled with control over business conduct at the relevant time. 75. Section 34(2) of the Act of 1940 creates an additional basis of liability where the offence is shown to have been committed with the consent, connivance, or attributable neglect of a director, manager, secretary, or other officer. 76. Thus, liability may arise either: i) by reason of being in charge of and responsible for the conduct of business; or ii) by specific culpable participation through consent, connivance, or neglect. 77. Absent satisfaction of either statutory route, criminal prosecution cannot be sustained. 78. The legal position is now firmly settled. 79. The Apex Court has repeatedly held that where a statute creates vicarious criminal liability, prosecution cannot be founded on vague or omnibus assertions. 80. In Lalankumar Singh (supra), the Apex Court reiterated that merely because a person is a director of a company does not automatically make such person liable for offences allegedly committed by the company. Relevant paragraphs of the aforesaid judgment reads as under: “16. It was held that merely because a person is a director of a company, it is not necessary that he is aware about the day-to-day functioning of the company. This court held that there is no universal rule that a director of a company is in charge of its everyday affairs. It was, therefore, necessary, to aver as to how the director of the company was in charge of day-to-day affairs of the company or responsible to the affairs of the company. This court, however, clarified that the position of a managing director or a joint managing director in a company may be different. This court further held that these persons, as the designation of their office suggests, are in charge See (2005) 127 Comp Cas 563 (SC); (2005) 8 SCC 89. See page 571 of 127 Comp Cas. of a company and are responsible for the conduct of the business of the company. To escape liability, they will have to prove that when the offence was committed, they had no knowledge of the offence or that they exercised all due diligence to prevent the commission of the offence. 17. In the case of Pooja Ravinder Devidasani v. State of Maharashtra this court observed thus**: 'Every person connected with the company will not fall into the ambit of the provision. Time and again, it has been asserted by this court that only those persons who were in charge of and responsible for the conduct of the business of the company at the time of commission of an offence will be liable for criminal action, A director, who was not in charge of and was not responsible for the conduct of the business of the company at the relevant time, will not be liable for an offence under section 141 of the N.I. Act. In National Small Industries Corporation Ltd. v. Harmeet Singh Paintal (2010) 3 SCC 330 (2010) 1 SCC (Clv) 677; (2010) 2 SCC (Cri) 1113' this court observed#: (SCC page 336, paragraphs 13-14) 'Section 141 is a penal provision creating vicarious liability, and which, as per settled law, must be strictly construed. 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. But the complaint should spell out as to how and in what manner respondent No. 1 was in charge of or was responsible to the accused company for the conduct of its business. This is in consonance with strict interpretation of penal statutes, especially, where such statutes create vicarious liability. A company may have a number of directors and to make any or all the directors as accused in a complaint merely on the basis of a statement that they are in charge of and responsible for the conduct of the business of the company without anything more is not a sufficient or adequate fulfilment of the requirements under section 141.' (emphasis in original) In Girdhari Lal Gupta v. D.H. Mehta (1971) 3 SCC 189; [1971] SCC (Cri) 279; AIR 1971 SC 2162, this court observed that a person See (2015) 190 Comp Cas 106 (SC); (2014) 16 SCC 1. See page 116 of 190 Comp Cas. See (2010) 154 Comp Cas 313 (SC). #See page 320 of 154 Comp Cas. 'in charge of a business' means that the person should be in overall control of the day- to-day business of the company. A director of a company is liable to be convicted for an offence committed by the company if he/she was in charge of and was responsible to the company for the conduct of its business or if it is proved that the offence was committed with the consent or connivance of, or was attributable to any negligence on the part of the director concerned (see State of Karnataka v. Pratap Chand (1981) 2 SCC 335; [1981] SCC (Cri) 453)*. In other words, the law laid down by this court is that for making a director of a company liable for the offences committed by the company under section 141 of the N.I. Act, there must be specific averments against the director showing as to how and in what manner the director was responsible for the conduct of the business of the company. In Sabitha Ramamurthy v. R.B.S. Channabasavaradhya (2006) 10 SCC 581; (2007) 1 SCC (Cri) 621**, it was held by this court that***: (SCC pages 584-85, paragraph 7) ... it is not necessary for the complainant to specifically reproduce the wordings of the section but what is required is a clear statement of fact so as to enable the court to arrive at a prima facie opinion that the accused is vicariously liable. Section 141 raises a legal fiction. By reason of the said provision, a person although is not personally liable for commission of such an offence would be vicariously liable therefor. Such vicarious liability can be inferred so far as a company registered or incorporated under the Companies Act, 1956 is concerned only if the requisite statements, which are required to be averred in the complaint petition, are made so as to make the accused therein vicariously liable for the offence committed by the company.' (emphasis supplied) By verbatim reproducing the words of the section without a clear statement of fact supported by proper evidence, so as to make the accused vicariously liable, is a ground for quashing proceedings Initiated against such person under section 141 of the N.I. Act.' 18. It could thus clearly be seen that this court has held that merely reproducing the words of the section without a clear statement of fact as to how See (1981) 51 Comp Cas 198 (SC); (1981) 128 ITR 573 (SC). See (2006) 133 Comp Cas 680 (SC). See (2006) 133 Comp Cas 680 (SC). Page 24 of 36 and in what manner a director of the company was responsible for the conduct of the business of the company, would not ipso facto make the director vicariously liable. 19. A similar view has previously been taken by this court in the case of K.K. Ahuja v. V.K. Vora* 20. In the case of State of NCT of Delhi v. Rajiv Khurana**, this court reiterated the position thus***: 'The ratio of all these cases is that the complainant is required to state in the complaint how a director who is sought to be made an accused, was in charge of the business of the company or responsible for the conduct of the company's business. Every director need not be and is not in charge of the business of the company. If that is the position with regard to a director, it is needless to emphasise that in the case of non-director officers, it is all the more necessary to state what were his duties and responsibilities in the conduct of business of the company and how and in what manner he is responsible or liable.' 21. Recently, in the case of Ashoke Mal Bafna v. Upper India Steel Manufacturing and Engineering Co. Ltd., this court observed thus: '9. To fasten vicarious liability under section 141 of the Act on a person, the law is well settled by this court in a catena of cases that the complainant should specifically show as to how and in what manner the accused was responsible. Simply because a person is a director of a defaulter company, does not make him liable under the Act. Time and again, it has been asserted by this court that only the person who was at the helm of affairs of the company and in charge of and responsible for the conduct of the business at the time of commission of an offence will be liable for criminal action. (See Pooja Ravinder Devidasani v. State of Maharashtra (2014) 16 SCC 1; (2015) 3 SCC (Clv) 384; (2015) 3 SCC (Cri) 378; AIR 2015 SC 675##.) In other words, the law laid down by this court is that for making a director of a company liable for the offences committed by the company under section 141 of the Act, there must be specific averments against the director showing as to how and in what manner the director was responsible for the conduct of the business of the company." See (2009) 152 Comp Cas 520 (SC); (2009) 10 SCC 48. See (2010) 158 Comp Cas 151 (SC); (2010) 11 SCC 469. See page 157 of 158 Comp Cas. #(2018) 14 SCC 202, 206. ## See (2015) 190 Comp Cas 106 (SC). 22. In the light of these observations, let us examine the averments made in the complaint in so far as the present appellants are concerned: "3. That, accused Nos. 5 to 8 are the directors of the M/s. Cachet Pharmaceuticals P. Ltd. village Thana Baddi, Tehsil Nalagarh dist. Solan (H.P.), Pincode-173 205 head office 415, Shahanahar, Worli, Mumbal- 400 018, and looking after day-to-day activities of the company. That, accused No. 4 is the private limited company and is doing the business of manufacturing, buying, selling, Importing and exporting of and/or dealers in pharmaceuticals, cosmetics, beauty alds, oils, chemicals, food products and provisions, veterinary and surgical equipments, medicinal preparations including spirit. Page 26 of 36 That, accused No. 4 has mfg. unit at No. (1) Village Thana Baddi, Tehsil Nalagarh Dist. Solan (H.P.) Pincode-173 205 and No. (2) at C582, Ricco Ind. Area Bhiwadi, Dist. Alwar, Rajasthan. That, accused No. 4 are holding drug mgf. License No. MNB/05/267 in form 25 and licence No. MB/05/268 in form 28 granted on March 17, 2006 valid up to March 16, 2011... 25. That, on February 12, 2009, the complainant visited and inspected the premises of M/s. Cachet Pharmaceuticals P. Ltd. villageThana Baddi, Tehsil Nalagarh Dist. Solan (H.P.) Pincode-173 205 that is accused No. 4. At the time of inspection, Shri Ajay Prakash Gupta Vice-President Technical, accused Nos. 9 and 10 were present. During enquiry, it was revealed that accused Nos. 4 to 10 manufactured 'Hemfer syrup Mfg. Lic. No. MB/05/268/B. No. HMS/6015 CMfg. Date May 2006 which has been declared to be not of standard quality at the premises of M/s. Cachet Pharmaceuticals P. Ltd. village Thana Baddi, Tehsil Nalagarh Dist. Solan (H.P.) Pincode-173 205 that is accused No. 4 under licence No. MB/05/268 and sold the above said drugs to M/s. Priya Agencies Behind Dr. Vaidya Hospital Jalna Road, Beed, Dist. Beed through M/s. Alkem Laboratories Ltd. situated at reality warehousing P. Ltd., Gut No. 2323/1 property No. 115, Pune Nagar road, At. Post Wagholl, Tal. Haveli, Dist. Pune- 412 207." 23. It can thus be seen that there are no specific averments insofar as the present appellants are concerned. It is further to be noted that the present appellants are neither the managing director nor the wholetime directors of the accused company. 24. It is further to be noted that, in accordance with the provisions of rule 76 of the said Rules read with form 28, accused Nos. 9 and 10 have specifically been approved by the licensing authority in form 28. Accused No. 9 was approved as a person under whose active direction, and personal supervision the manufacture would be conducted as required under sub-rule (1) of rule 76 of the sald Rules. Similarly, accused No. 10, who was approved as a head of the testing unit, was to be incharge for carrying out the test of the strength, quality and purity of the substances as may be required under the provisions of Part X of the said Rules. We are therefore, of the considered view that the complaint is totally lacking the requirement of section 34 of the said Act. 25. The impugned orders are liable to be quashed and set aside on another ground also.” 81. It is thus evident that the Apex Court in the aforesaid case clearly emphasized that a complaint must disclose how and in what manner the person concerned was responsible for the conduct of the company’s business. 82. A bald recital reproducing statutory phraseology is insufficient. 83. The rationale is obvious. 84. A company may have multiple directors with varying roles. Some may be actively involved in management; others may be non-executive or only formally associated. Criminal law cannot proceed on presumptive collective guilt. 85. Where prosecution is sought against individual officers, the complaint must disclose the factual foundation that legally connects them with the alleged offence. Page 28 of 36 86. This principle assumes even greater significance where prosecution is initiated at the threshold by issuance of criminal summons. 87. Tested against the above principles, the complaint in the present case does not satisfy the statutory threshold insofar as petitioner Nos. 1 to 6 are concerned. 88. Paragraph 5 of the complaint states that accused Nos. 2 to 7 are directors of the accused company and describes them in broad terms as persons responsible for day-to-day control of business activity. Beyond this, there is nothing of substance. 89. The complaint does not disclose: i) which of the petitioners exercised actual operational control; ii) what role each petitioner played in manufacture of the impugned batch; iii) whether any of them participated in approval, release, supervision, testing, or distribution of the drug; iv) whether any decision attributable to them resulted in the alleged contravention; v) whether the alleged offence occurred with their consent; vi) whether any act of connivance is attributed to them; vii) whether any neglect on their part is specifically pleaded. 90. The complaint thus proceeds on generalized attribution rather than particularized pleading. That is legally insufficient. 91. A mere assertion that directors were responsible for day-to-day affairs, without factual particulars, is precisely the kind of pleading repeatedly disapproved by the Apex Court. 92. The respondents have attempted to place petitioner No. 1 on a somewhat different footing by contending that he actively participated in company affairs, corresponded with authorities, and was involved during the investigation. 93. That argument does not materially advance the respondents’ case at this stage. 94. The Court is required to examine the legal sufficiency of the prosecution as instituted, not reconstruct the prosecution through subsequent explanatory submissions. 95. If the complaint intended to rely on specific involvement of petitioner No. 1, such foundational facts ought to have been clearly pleaded. 96. Criminal prosecution cannot be sustained on the basis of explanations subsequently supplied across the bar. 97. That said, if the complaint had clearly disclosed that petitioner No. 1 occupied a position such as Managing Director with specific operational control, the legal position may have required separate examination. 98. But the prosecution, as presently structured, does not furnish that factual foundation in legally adequate terms. 99. Thus, even assuming that the learned Magistrate intended reference to Section 27(d) of the Act of 1940, the prosecution of petitioner Nos. 1 to 6 suffers from a foundational legal defect. 100. Their arraignment appears to proceed not on the basis of pleaded culpability, but on the impermissible assumption that corporate office itself is sufficient to attract criminal prosecution. 101. That is contrary to the statutory scheme of Section 34 of the Act of 1940, and the settled principles governing vicarious liability. 102. The position of petitioner Nos. 7 and 8, however, stands on a somewhat different footing because they are technical personnel specifically identified with manufacturing and testing functions. 103. That requires separate examinations. 104. The position of petitioner Nos. 7 and 8 stands on a footing distinct from petitioner Nos. 1 to 6. 105. Unlike petitioner Nos. 1 to 6, whose prosecution is sought to be sustained essentially on the basis of their status as directors coupled with broad and omnibus assertions regarding responsibility for day-to-day affairs, petitioner No. 7 has been specifically described as the person responsible for manufacture of the subject batch, while petitioner No. 8 has been identified as the person responsible for testing of the impugned drug. 106. The complaint, read as a whole, thus seeks to connect petitioner Nos. 7 and 8 with the impugned batch in a direct functional capacity rather than merely through principles of vicarious liability. 107. However, this Court consciously refrains from recording any concluded finding on whether the allegations against petitioner Nos. 7 and 8 are sufficient to justify cognizance under the correct statutory framework. 108. The reason is not far to seek. 109. As already noticed, the learned Magistrate has purported to take cognizance under Section 27(D) of the Act of 1940. 110. No such statutory provision exists. 111. This is not a mere typographical irregularity viewed in isolation. 112. The order also discloses no independent reasoning, no discernible examination of the ingredients of the alleged offence, and no judicial analysis of the statutory framework governing prosecution of company officers. Page 32 of 36 113. The cumulative effect leaves little room for doubt that the exercise of jurisdiction was undertaken mechanically. 114. Once the judicial act of taking cognizance itself stands vitiated by patent non-application of mind, it would be internally inconsistent for this Court to sustain any part of that exercise while simultaneously holding the cognizance order to be legally unsustainable. 115. If the very foundation is defective, selective preservation of portions of the resulting order would not be jurisprudentially sound. 116. The proper course, therefore, is to set aside the cognizance order in its entirety. 117. That said, the consequence of setting aside the cognizance order need not be identical for all petitioners. 118. Insofar as petitioner Nos. 1 to 6 are concerned, the complaint itself suffers from a foundational legal defect. 119. Even assuming the intended reference was to Section 27(d) of the Act of 1940, the complaint contains no specific averments disclosing how and in what manner these petitioners were responsible for the alleged commission of the offence, nor does it contain allegations satisfying the statutory requirements of Section 34 of the Act of 1940. Page 33 of 36 120. Their prosecution is thus unsustainable not merely because of the defective cognizance order, but because the complaint itself fails to disclose the minimum legal basis necessary to proceed against them. 121. Accordingly, permitting the complaint to survive against petitioner Nos. 1 to 6 would amount to allowing criminal prosecution to continue in the absence of foundational statutory pleadings, which would constitute abuse of process. 122. The complaint therefore deserves to be quashed insofar as petitioner Nos. 1 to 6 are concerned. However, the same conclusion cannot be automatically extended to the remaining accused. 123. As already noticed, petitioner Nos. 7 and 8 stand on a different factual footing, and the company itself is the principal accused against whom the complaint has been instituted. 124. Since this Court is setting aside the cognizance order on account of patent legal infirmity, and since reconsideration by the learned Magistrate under the correct statutory framework remains necessary, it would be inappropriate for this Court to pre-empt that exercise by expressing concluded views on the maintainability of proceedings against the remaining accused. 125. The appropriate course is therefore to remit the matter for fresh consideration of the complaint qua the remaining accused in accordance with law. 126. It is clarified that such remand is for reconsideration of the existing complaint and shall not require reinstitution of proceedings. 127. Accordingly, this Court arrives at the following conclusions: First, the order dated 02.06.2023 passed by the learned Judicial Magistrate First Class, Aizawl District, Aizawl, taking cognizance under Section 27(D) of the Act of 1940, reflects patent non- application of mind and is legally unsustainable. Second, even assuming the intended statutory reference was to Section 27(d), the complaint does not disclose the statutory ingredients necessary to sustain prosecution against petitioner Nos. 1 to 6, whose arraignment rests solely upon vague and omnibus assertions unsupported by factual particulars as required under Section 34 of the Act. Third, the complaint qua the remaining accused requires fresh judicial consideration by the learned Magistrate under the correct statutory framework and upon independent application of mind. 128. Accordingly, the petition is allowed in part in the following terms: (i) The criminal complaint being Criminal Complaint No. 119 of 2023, insofar as it relates to petitioner Nos. 1 to 6, is hereby quashed. (ii) The order dated 02.06.2023 passed by the learned Judicial Magistrate First Class, Aizawl District, Aizawl, taking cognizance of the complaint, is hereby set aside in its entirety. (iii) The matter is remanded to the learned Judicial Magistrate First Class, Aizawl District, Aizawl, for fresh consideration of the complaint qua the remaining accused in accordance with law, upon identification of the applicable statutory provision(s) and upon independent application of judicial mind. (iv) It is clarified that this remand is for reconsideration of the existing complaint and shall not require reinstitution of proceedings. (v) It is further clarified that this Court has expressed no opinion on the merits of the allegations against the remaining accused, and all issues in that regard are left open. 129. Pending applications, if any, shall stand disposed of. 130. No order as to costs. JUDGE Comparing Assistant