Thirty-four years after a cataract operation went wrong, a hospital's managing trustee is discharged

Justice Ranjitsinha Raja Bhonsale holds that apart from stating the petitioner's designation the complaint contains no averment at all, that provisions imposing vicarious liability must be strictly construed, and that continuing the prosecution would be an abuse of process.

In June 1992 an ophthalmic drug was used during a cataract operation at a Mumbai hospital. A fungal infection developed in the operated eye, and the patient lost his sight in it. The Government Analyst found the drug not of standard quality, short of the labelled quantity of its active ingredient, and — when tested for sterility — growing microbes. Twelve people and entities were prosecuted, among them the hospital's managing trustee. On 1 October 2026, thirty-four years later, Justice Ranjitsinha Raja Bhonsale discharged him, for a reason that has nothing to do with the merits of the drug: the complaint said what office he held and then said nothing else about him.

Visilon, and an eye that went blind

On 15 June 1992 a complaint was received from a doctor regarding the ophthalmic drug Visilon. A batch of it, manufactured by a Kolkata firm, had been used during the cataract surgery of a patient, after which a fungal infection developed in the operated eye. The infection resulted in blindness.

On 22 June 1992 the Drugs Inspector visited the hospital and drew a sample of the drug, procuring one unit in a prefilled syringe for investigation and sending a counterpart to the Government Analyst. The report dated 20 August 1992 declared the sample not of standard quality and misbranded under Rule 96 and Section 17(b) of the Drugs and Cosmetics Act, 1940, because the content of methyl cellulose was less than the labelled amount; and when the sample was tested for sterility, microbial growth was observed.

Orders of prosecution were received from the Joint Commissioner, Food and Drug Administration on 4 September 1994. Documents collected from the manufacturer and distributor showed a licensing history: the eye lotion was permitted in March 1986 under a licence, endorsed in August 1988 under a slightly different description, and in December 1989 permitted to be manufactured in prepacked 2 ml syringes. The complaint's case was that although the licensed name of the drug was Visilon — methyl cellulose eye drops 2 per cent — the sample carton was labelled hydroxypropyl methyl cellulose 2 per cent; and since the drug was manufactured under a name belonging to another drug, it was spurious under Section 17B(a).

The accused ran from the hospital's pharmacist and its Deputy Director (material), through the partners of the dealer and the proprietor of the manufacturing firm, to the directors of a second manufacturer. The petitioner was arraigned as accused No. 3 in his capacity as managing trustee of the hospital, which was itself accused No. 4.

Is a trust a company?

Much of the judgment is taken up with a question that has troubled the High Courts for years: whether a trust can be equated with a company, so that a trustee stands in the position of a director for the purposes of vicarious criminal liability. The Court surveyed the Supreme Court's treatment of the subject in Sankar Padam Thapa, which arose under the Negotiable Instruments Act.

The observations extracted are pointed. A trust may be treated as an entity for certain legal purposes and not for all; in substance it is an obligation imposed on the ostensible owner of property to use it for a particular object, and it is the trustees who are bound to maintain and defend suits and to take the steps needed to preserve the trust property and assert title to it. Confining itself to the Negotiable Instruments Act, the Supreme Court held that a complaint on a dishonoured cheque is maintainable against the trustee who signed it without arraying the trust as an accused.

In reaching that conclusion it held that an earlier decision, Mukund, “principally proceeded on equating a Trust with a ‘company’, which is a fallacy”, invoking Salomon v. A Salomon and Co. Ltd. for the proposition that a company is at law a different person altogether from its subscribers. “The legal status accorded to a ‘company’ cannot be imported to a Trust, in the eyes of law.” Views to the contrary expressed by several High Courts were overruled, without disturbing their effect between the parties to those cases.

The judgment also notes that “Trustee” is not defined under the trust laws and therefore cannot be equated with a director, and that the legislative intent in the vicarious liability provisions is explicit in the language it uses. Penal provisions and provisions providing vicarious liability, it records, are required to be strictly construed.

A designation is not a pleading

Having set all that out, the Court decided the case on a narrower and more immediate ground.

“To conclude, it is clear that there is no averment or pleading as against the Petitioner so as to invocation of Section 27 or 34 of the said Act. The complaint does not contain any pleading or averment whatsoever.” Apart from stating the petitioner's designation, there was nothing further. No case was made out against him, and there were no circumstances or material on record on the basis of which any suspicion could be raised against him.

One fact about the prosecution's own conduct weighed in the balance: in the same criminal proceedings, the dealer of the drugs had been discharged on similar grounds. Whatever the reason for pursuing the trustee, it was not a reason the complaint disclosed.

Order

On those facts, the submissions and the law laid down by the Supreme Court, the Court held that the case warranted the exercise of its inherent powers under Section 482 of the Code. A prima facie case had been made out by the petitioner to seek discharge. Allowing the criminal proceedings against him to continue “without any averment, pleading or material would amount to abuse of the process of law”, and in the interest of justice he was discharged from the proceedings.

The petition was allowed in terms of the prayer seeking that relief. The prosecution of the remaining accused is untouched by the order — the drug, the label and the sterility report are still for the trial court. What has ended, after thirty-four years, is the case against the man whose name appeared in the complaint because of the office he held.