In a landmark ruling that will have far-reaching implications for the pharmaceutical sector, the High Court of Himachal Pradesh has quashed three criminal complaints filed by the Central Drugs Standard Control Organization (CDSCO) against drug manufacturers, partners, and directors.
Justice Sandeep Sharma allowed the petitions filed under Section 482 of the Code of Criminal Procedure, setting aside the summoning orders and discharging the accused individuals. The cases arose after regional regulatory officials initiated prosecutions following report findings that labelled specific drug samples as ‘Not of a Standard Quality’.
The regulatory enforcement actions originated from inspections carried out by the central drugs inspector of the CDSCO Baddi sub-zone. During these inspections, multiple drug samples, including Levetiracetam Injection manufactured by SBS Biotech and capsules manufactured by VIP Pharmaceuticals, were seized and sent to the Regional Drugs Testing Laboratory in Chandigarh. The government analyst subsequently declared the samples to be sub-standard, prompting the central regulatory body to obtain prosecution sanctions from the Drugs Controller General of India and file complaints in regional courts.
A primary ground for the High Court’s decision was the lack of executive jurisdiction exercised by the central regulatory officers. The court clarified that under the statutory framework of the Drugs and Cosmetics Act, 1940, executive powers under Chapter IV, which governs the manufacture, sale, and distribution of drugs, are vested exclusively in drugs inspectors appointed by the state government. Central drugs inspectors are constitutionally restricted to exercising enforcement functions under Chapter III, which relates solely to the import of drugs and cosmetics. Consequently, the court deemed the prosecutions launched by the central authority under Chapter IV to be completely without lawful jurisdiction.
Further, the court heavily criticized the mechanical manner in which vicarious liability was applied to the corporate heads of the firms. The bench observed that merely holding a designation as a partner or director is insufficient to fasten criminal liability under Section 34 of the Act. For a prosecution to stand, the complaint must contain specific, clear averments demonstrating exactly how and in what manner the accused individual was in charge of and responsible for the day-to-day conduct of the business at the time of the offense. Because the CDSCO complaints relied on vague, standardised allegations without identifying distinct roles, they failed to meet the strict parameters of penal statutes.
The judgment also highlighted critical procedural failures regarding statutory timelines. Under Rule 45 of the Drugs and Cosmetics Rules, 1945, the government analyst is required to test and analyze samples within a mandatory period of 60 days. In the impugned cases, the analysis took several months without any documented extensions from the government. The court held that such prolonged delays severely prejudice the defense, as they compromise the stability of sensitive chemical formulations and strip the accused of their valuable statutory right to demand a timely re-analysis of the samples before product expiration.
Reacting to the judicial outcome, G. Koteshwar Rao, national president of the Drugs Control Officers Welfare Association (India), issued a press statement noting that while the association respects the wisdom of the judiciary regarding individual corporate roles, the verdict highlights an urgent need for greater precision in drafting regulatory complaints. Advocating for an end to systemic ambiguities, Rao strongly urged policymakers to establish a clear statutory demarcation between the enforcement jurisdictions of state and central inspectors to ensure national consistency and certainty. He emphasized that while technical or procedural lapses should never serve as a barrier to punishing those who compromise patient safety, regulatory authorities must be better trained and legally equipped to build robust cases that fully withstand judicial scrutiny.
