(1) Where an offence under Chapter IV 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 if he proves that the offence was committed without his knowledge or that he had exercised all due diligence to prevent the commission of such offence.
(2) Notwithstanding anything contained in sub-section (1), where any offence under Chapter IV 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.
Legal Commentary & Landmark Judgments: Section 38
Section 38 of the NDPS Act establishes statutory corporate criminal liability, deeming both the company and every person in charge of and responsible to it for the conduct of its business guilty of offences under Chapter IV, while providing a statutory defense of lack of knowledge or due diligence.
For non-executive directors, independent directors, or nominee directors named in pharmaceutical NDPS complaints, immediately file a quashing petition under Section 482 CrPC (Section 528 BNSS) citing Sunil Bharti Mittal and S.M.S. Pharmaceuticals, demonstrating the absence of specific averments regarding day-to-day operational control and pleading the due diligence proviso under Section 38(1).