Sanofi India Ltd. vs. Central Bureau of Investigation – Criminal Appeal No. 4250 of 2026 – 2026 INSC 957 – 7th September, 2026 – Hon’ble Mr.Justice J.B. Pardiwala, Hon’ble Mr.Justice Manoj Misra.
Appeal and Impugned Order
The appeal is filed by Sanofi India Ltd., challenging the judgment and order dated February 15, 2019, passed by the High Court of Karnataka in Criminal Petition No. 4280/2018. The High Court had dismissed the appellant’s petition and declined to quash the criminal proceedings pending before the Special Judge for CBI Cases, Bengaluru City, under Section 482 of the Code of Criminal Procedure [1][2][7].
Factual Matrix and Subordinate Courts’ Verdicts
The case originated from an FIR alleging that a Scientific Officer at the Bhabha Atomic Research Centre conspired with pharmaceutical companies to procure medicines at inflated rates and in excessive quantities. The chargesheet accused the corporate entity of criminal conspiracy and cheating by receiving undue favours in the tender process and paying illegal gratification, though no individual employee was arraigned as an accused. Taking cognizance of the chargesheet, the Trial Court issued process against the company. The High Court subsequently dismissed the quashing petition, holding that a criminal prosecution against a corporate entity is maintainable even without its directors or officers being arraigned, and that the allegations required a full trial to prove [4][5][6][8].
Core Legal Arguments
The appellant argued that for offences requiring proof of mens rea, the prosecution must identify and arraign the natural person acting as the “directing mind and will” of the company, and failing to do so renders the prosecution against the corporation legally unsustainable. Conversely, the respondent contended that prevailing legal precedents allow for the prosecution of a company without identifying individual employees, as sufficient prima facie evidence existed on record to demonstrate a conspiracy and the payment of illegal gratification by the corporate entity [10][12].
The Court held that the prosecution of a corporation for offences involving mens rea cannot be quashed at the threshold solely on the ground that no natural person has been identified or arraigned alongside it. While a corporation can possess mens rea only through the attribution of a natural person’s acts and mental state—determined through a three-stage test of constitutional vesting, implied delegation, or special statutory rules—this attribution is an intricate, fact-specific inquiry meant for trial. At the quashing stage, it is sufficient if the allegations prima facie disclose that a natural person acted on behalf of the company in connection with the offence and that the surrounding circumstances do not render the existence of the requisite mens rea inherently improbable [185][187][193][196].
Important paragraphs
C. Issue for consideration
14. Having heard the learned counsel for the parties and having gone through the materials on record, the following question falls for our consideration:
a. Whether the High Court ought to have quashed the criminal proceedings instituted against the Appellant company on the ground that no natural person had been identified and arraigned alongside it?
I. INTRODUCTION TO CORPORATE CRIMINAL LIABILITY
16. Corporate criminal liability is a notoriously vexed issue, and the difficulty traces back to two fundamental notions we simultaneously hold about corporations. First, a corporation is an artificial person with an identity distinct from that of its members. Second, a corporation is merely an abstraction, i.e., an impalpable thing or, as is famously said, a corporation has “no soul to damn and no body to kick”[1].
17. Generally, there are two constituent elements in a crime: (a) the offending act or conduct called the “actus reus” and (b) the mental element of guilty mind, called the “mens rea”. In other words, the blameworthy act which is backed by a guilty mind constitutes a crime. Criminal law thus focuses on an individualistic model of responsibility, i.e., it looks to the accused’s own act and own mind. Herein lies the difficulty for a corporation. Precisely because a corporation is a separate legal entity, criminal law would require the corporation itself to supply this act and this guilty mind. Yet, being an abstraction, the corporation appears incapable of possessing either.2 Common sense would therefore dictate that a corporation should fall outside the realm of criminal liability altogether
23. Attributing acts of natural persons to a corporation, standing alone, was a relatively less controversial exercise. Consequently, corporate criminal liability first took root in relation to offences which did not require proof of mens rea. Attributing the state of mind of a natural person to a corporation has proved a good deal more contentious. This may be envisaged as a two-fold question. First, whether a corporation can be said to possess mens rea, and accordingly be held criminally liable for offences which require proof of mens rea (“first question”). Secondly, and only once the first is answered in the affirmative, on what basis can a corporation be said to possess such mens rea (“second question“). This inquiry invariably becomes a question of attribution, namely, what is the basis on which the mens rea of a natural person is to be attributed to the corporation. Once answered, this inquiry itself yields the answers to further questions such as: (i) what is the kind of liability that such attribution imposes on the corporation, and (ii) whose state of mind is to be attributed to the corporation and in what circumstances.
26. To guide us in this pursuit, we turn to the English law. We do so because Indian law offers little to no independent discussion of the second question. English law, whose broad framework most closely resembles the one within which corporate criminal liability must operate in India, offers the most useful starting point. For this reason, the discussion of English law that follows is detailed. It examines not only the ratio of each decision, but also, where relevant, the underlying principles and their application to the facts. This detail is necessary because the framework we ultimately adopt draws on that reasoning and factual application, and not merely on the conclusions English law has reached.
27. Accordingly, we shall first trace the development of corporate criminal liability in England, with particular focus on how English law has sought to answer the second question. Thereafter, the discussion moves to India, where we briefly examine the developments that have occurred on corporate criminal liability thus far, before turning to how the second question may be answered under Indian law. Finally, equipped with an understanding of how attribution operates under Indian law, we turn to the question before us in this appeal.
35. From the above extract, three things become abundantly clear:
a. First, a company, being an abstraction, has no mind or body of its own; consequently, its active and directing will must be sought in a person, who is the very ego and centre of the personality of the corporation and may be referred to as its “directing mind and will”.
b. Secondly, the action of the person recognised as the directing mind and will of the company is considered to be the action of the company itself. c. Thirdly, such a person is not to be treated as a mere servant or agent, for whose actions the company would be liable only on the footing of respondeat superior; rather, the company is liable because his action is, in law, the very action of the company itself, i.e. direct liability.
Applying these principles to the facts before him, Viscount Haldane found that Mr. Lennard, who took an active part in managing the ship on the owners’ behalf, and who was registered as the person designated for this purpose in the ship’s register, was the directing mind and will of the company for the purposes of Section 502. His actions were, therefore, the very actions of the company itself and thus the company couldn’t argue that the loss occurred without its actual fault or privity.
113. Lest any confusion arise, it must be understood that the framework discussed above, comprising the identification doctrine and the rules of attribution, does not govern every criminal offence in which a corporation may be implicated under English law. As we had alluded to, where an offence requires proof of conduct alone, and no mens rea, simpler routes to liability are generally available. In some cases, the company alone can properly be said to have done the act in question, such that no attribution is required at all. This may be so either because the offence imposes a duty on the company directly, or because the conduct in question can be conceived as having been done by the company itself. Where the act admits of no such direct characterisation, but neither does the offence require mens rea, English courts have generally been willing to read in a presumption of vicarious liability, particularly for offences of strict or absolute liability. It is only where an offence has been framed with natural persons in mind, and requires proof of mens rea, that the identification doctrine seems to come into play.
III. CORPORATE CRIMINAL LIABILITY AND THE ATTRIBUTION QUESTION: POSITION IN INDIA
114. The core issues surrounding corporate criminal liability in India appear to be twofold: first, whether a corporation could be prosecuted for an offence where mandatory imprisonment has been prescribed; and secondly, whether a corporation could be held liable for offences involving an element of mens rea. The traditional view, as held by various High Courts for a considerable period, answered both propositions in the negative.
115. It appears that the reasoning underlying this traditional view was rooted in the fact that a corporation is a juristic person and not a natural person. Accordingly, it was held that since a corporation does not possess a physical body, it cannot be imprisoned, and consequently, provisions prescribing mandatory imprisonment were inapplicable.72 Similarly, since a juristic person cannot possess a state of mind, it cannot possess mens rea and thereby could not be held liable for offences requiring mens rea. It may, however, be noted that on both these aspects, certain High Courts had taken a contrary view.
(a) Issue of Mandatory Imprisonment
116. Let us first briefly deal with the issue of mandatory imprisonment, as the position on that aspect is now fairly settled. This court addressed the question directly in M.V. Javali v. Mahajan Borewell & Co. & Anr, reported in (1997) 8 SCC 72. The provision under consideration there was from the Income Tax Act, which provided that a company could be held liable for the offence in question, yet simultaneously prescribed a mandatory punishment of both imprisonment and fine. This gave rise to an anomalous situation as a juristic person, incapable of being imprisoned, could nonetheless be found guilty of an offence for which imprisonment was mandatory. The Court held that this anomaly could only be resolved through a proper interpretation of the section, and that the only harmonious construction available was one under which the company, though liable to be prosecuted, would be made liable to a fine alone. The upshot of the Court’s ruling was that where a statute prescribes both fine and imprisonment for an offence, companies could be prosecuted for such offences but only a fine would be imposed on them.
If Corporation or Company is an accused and the case is proved then the mandatory punishment shall be both imprisonment and fine
118. The issue was finally resolved by this Court’s ruling in Standard Chartered Bank (supra), wherein, by a majority of 3:2, it was held that there is no immunity to the companies from prosecution merely because the prosecution is in respect of offences for which the punishment prescribed is mandatory imprisonment (and fine). The decision in Velliappa Textiles (supra) on this aspect was accordingly held to be overruled. It needs to be noted that the Court recognised that where imprisonment alone is prescribed, a company cannot be prosecuted for that offence and thus the ruling was confined to provisions prescribing a mandatory punishment of both imprisonment and fine.
Reason for mandatory punishment or both imprisonment and fine is discussed
119. The crux of the majority’s reasoning was: (i) all statutes, including penal statutes, ought to be fairly construed according to the legislative intent as expressed in the enactment; (ii) reading the provision as granting companies blanket immunity wherever imprisonment is mandatory would produce the anomalous result that companies remain liable for lesser offences, while escaping liability altogether for graver ones- a result Parliament could not have intended; and (iii) since imprisonment cannot possibly be imposed on a company and the law does not compel the impossible, a judicial discretion to impose fine alone has to be read into such provisions, but only insofar as the offender is a juristic person. This reasoning is reflected in the following paragraphs from Justice K.G. Balakrishnan’s (as he then was) opinion:
“29. The contention of the appellants is that when an offence is punishable with imprisonment and fine, the court is not left with any discretion to impose any one of them and consequently the company being a juristic person cannot be prosecuted for the offence for which custodial sentence is the mandatory punishment. If the custodial sentence is the only punishment prescribed for the offence, this plea is acceptable, but when the custodial sentence and fine are the prescribed mode of punishment, the court can impose the sentence of fine on a company which is found guilty as the sentence of imprisonment is impossible to be carried out. It is an acceptable legal maxim that law does not compel a man to do that which cannot possibly be performed (impotentia excusat legem). This principle can be found in Bennion’s Statutory Interpretation, 4th Edn. at p. 969. “All civilized systems of law import the principle that lex non cogit ad impossibilia….” As Patterson, J. said “the law compels no impossibility”. Bennion discussing about legal impossibility at p. 970 states that: “If an enactment requires what is legally impossible it will be presumed that Parliament intended it to be modified so as to remove the impossibility element.” This Court applied the doctrine of impossibility of performance (lex non cogit ad impossibilia) in numerous cases (State of Rajasthan v. Shamsher Singh and Special Reference No. 1 of 2002, In re)
30. As the company cannot be sentenced to imprisonment, the court has to resort to punishment of imposition of fine which is also a prescribed punishment. As per the scheme of various enactments and also the Penal Code, 1860, mandatory custodial sentence is prescribed for graver offences. If the appellants’ plea is accepted, no company or corporate bodies could be prosecuted for the graver offences whereas they could be prosecuted for minor offences as the sentence prescribed therein is custodial sentence or fine. We do not think that the intention of the legislature is to give complete immunity from prosecution to the corporate bodies for these grave offences. The offences mentioned under Section 56(1) of the FERA Act, 1973, namely, those under Section 13; clause (a) of sub-section (1) of Section 18; Section 18-A; clause (a) of sub-section (1) of Section 19; sub-section (2) of Section 44, for which the minimum sentence of six months’ imprisonment is prescribed, are serious offences and if committed would have serious financial consequences affecting the economy of the country. All those offences could be committed by company or corporate bodies. We do not think that the legislative intent is not to prosecute the companies for these serious offences, if these offences involve the amount or value of more than Rs one lakh, and that they could be prosecuted only when the offences involve an amount or value less than Rs one lakh.
31. As the company cannot be sentenced to imprisonment, the court cannot impose that punishment, but when imprisonment and fine is the prescribed punishment the court can impose the punishment of fine which could be enforced against the company. Such a discretion is to be read into the section so far as the juristic person is concerned. Of course, the court cannot exercise the same discretion as regards a natural person. Then the court would not be passing the sentence in accordance with law. As regards company, the court can always impose a sentence of fine and the sentence of imprisonment can be ignored as it is impossible to be carried out in respect of a company. This appears to be the intention of the legislature and we find no difficulty in construing the statute in such a way. We do not think that there is a blanket immunity for any company from any prosecution for serious offences merely because the prosecution would ultimately entail a sentence of mandatory imprisonment. The corporate bodies, such as a firm or company undertake a series of activities that affect the life, liberty and property of the citizens. Large-scale financial irregularities are done by various corporations. The corporate vehicle now occupies such a large portion of the industrial, commercial and sociological sectors that amenability of the corporation to a criminal law is essential to have a peaceful society with stable economy.” [Emphasis Supplied]
On the other hand, Srikrishna J.’s dissent (for himself and Hegde J.) carried forward the position the majority held in Velliappa Textiles (supra), i.e., the problem was one of legislative drafting error rather than genuine ambiguity, and hence was curable only by Parliament and not by judicial construction.
120. Further, this Court in Standard Chartered Bank (supra) affirmed that: (i) the generally accepted modern rule permits a corporation to be indicted for criminal offences save those it is incapable of committing by reason that such offences require personal malicious intent, and (ii) the word “person” in a penal statute is ordinarily construed to include a corporation even where not expressly defined to do so. However, the Court expressly declined to express any opinion on whether a corporation could be held liable for offences requiring mens rea, holding that the question did not arise for consideration in the reference before it.
(b) Issue of Mens Rea
121. While the question of whether a corporation could be prosecuted for offences carrying mandatory imprisonment reached a closure, the question of whether a corporation could be held liable for offences requiring mens rea remained open. This was despite the fact that this Court, as far back as 1953, had in passing taken note of developments in English law recognising that a company could be convicted even for an offence requiring an act of will or a state of mind.
Till recent decisions Supreme Court never got an opportunity to explicitly deal with the question of whether corporations could possess mens rea
129. While the High Courts were dealing with the issue, it appears that, until very recently, this Court never got an opportunity to explicitly deal with the question of whether corporations could possess mens rea. A peripheral reference to the issue comes through this Court’s judgment in Kalpnath Rai v. State, reported in (1997) 8 SCC 732, where one of the accused was a company which had been convicted under Section 3(4) of the Terrorist and Disruptive Activities (Prevention) Act, 1987, for harbouring a terrorist in a hotel. Section 3(4) was an offence which the Court held required proof of mens rea. The Court thereby set aside the conviction of the Company on the ground that, being a juristic person, it could not itself have mens rea. It noted that companies are, under several penal statutes, deemed offenders on the strength of acts committed by persons responsible for their management or affairs, but observed that no such provision existed in TADA. It appears to us, however, that this Court in Kalpnath Rai (supra) was not addressed on the developments surrounding the issue of attributing mens rea to corporations dehors such statutory deeming provisions. A more serious and detailed consideration of the question appears in Velliappa Textiles (supra).
130. This Court in Velliappa Textiles (supra) considered whether a corporation could possess mens rea. Although the decision was subsequently overruled in Standard Chartered Bank (supra), the reversal was confined to the question of mandatory imprisonment. Indeed, this Court in Standard Chartered Bank (supra), as already noted, categorically stated that the mens rea issue was beyond the scope of the reference before it. In Velliappa Textiles (supra), two of the three learned Judges accepted that a company could be made liable for offences which require proof of mens rea. Mathur J. surveyed the position under English law and other jurisdictions, all of which clearly indicated that companies could be held liable even for offences which require mens rea. Srikrishna J., for his part, held that judicial thinking across the world was that the mens rea of the person in charge of the affairs of the corporation could be extrapolated to the corporation, thereby enabling even an artificial person to be prosecuted for such offences. He expressed his agreement with the view taken by Mathur J. on this aspect. Rajendra Babu J., however, disagreed with both Mathur J. and Srikrishna J. on this question, and held that companies could not be made liable for offences requiring proof of mens rea. The issue once again came up for consideration before this Court in Iridium India (supra).
132. It was in this setting that this Court in Iridium India (supra) was called upon to decide whether a company could be held liable at all for an offence requiring mens rea. Had the answer been in the negative, the High Court’s approach would have stood vindicated. This Court, however, held that virtually across every jurisdiction governed by the rule of law, companies and corporate houses could no longer claim immunity from criminal prosecution on the ground that they were incapable of possessing the necessary mens rea. Having examined the position in the United States and in England, the Court concluded that the legal position in both jurisdictions had crystallised to leave no doubt that a corporation would be liable for crimes of intent. On this basis, this Court held that the High Court’s conclusion that the respondent could not have the necessary mens rea was clearly erroneous.
133. The discussion thus far makes clear that a corporation could be prosecuted for an offence, notwithstanding that the offence carried a mandatory sentence of imprisonment or that it required proof of mens rea. Consequently, it appears that a corporation cannot be prosecuted only where the offence was punishable with imprisonment alone or where the offence, by its nature, required personal malicious intent, such that it was incapable of commission by a corporation at all.
134. However, it is apparent that the question before this Court in Iridium India (supra) was confined to whether a company could, at all, possess mens rea. The question of how, or through whom, such mens rea is to be attributed to a company did not arise for consideration. In other words, the second question, i.e., the basis on which mens rea could be attributed to a corporation, did not arise for consideration and remained unaddressed.
(c) How do corporates possess mens rea under Indian Law
Corporation could possess mens rea but how a corporation could be said to possess such mens rea
137. The discussion above shows that this Court relied upon practical considerations and prevailing trends in judicial thinking across the world to hold that corporations could possess mens rea, and could accordingly be held liable for offences requiring proof of such mens rea. What remains is to explain how a corporation could be said to possess such mens rea in the first place. It is the answer to this question that supplies the theoretical foundation for corporate mens rea. Now, when discussing how a corporation can possess mens rea, the inquiry is invariably one of how the mens rea of a natural person is to be attributed to a corporation. In answering this question, we also find the answers to further connected questions such as: (i) what is the kind of liability that such attribution imposes on the corporation, and (ii) whose state of mind is to be attributed to the corporation and in what circumstances.
138. The next question that arises is what method has to be adopted to attribute the mens rea of a natural person to a corporation. At the outset, it is to be noted that in several jurisdictions, the penal codes guide on when and how attribution is to occur. As already noted above, the penal codes of Canada and Australia, amongst others, provide such answers.91 No comparable guidance exists in the IPC nor the recently enacted Bharatiya Nyaya Sanhita, 2023.
139. In this context, we may look to the English approach to guide us. The American approach, developed through the doctrine of respondeat superior, bears a close resemblance to the doctrine of vicarious liability. The position under Indian law, however, is well settled that the ordinary rule in criminal law runs against vicarious liability, i.e., no person is to be held criminally liable for the act of another. This rule admits exception only where a statute specifically creates a legal fiction imposing such liability. No such difficulty attends the approach taken under English law, since it proceeds on the footing that the act and state of mind in question are those of the corporation itself. Further, the decision in Meridian Global (supra) has attained the status of a locus classicus on this aspect and has been followed across a range of common law jurisdictions as the basis for attribution.
141. The English law approach, with which we are in agreement with, answers this question in a simple manner. It holds that there are certain situations in which a natural person, in doing a particular act, is to be regarded as acting as the corporation itself, or, put another way, there are certain situations in which the act of the natural person is to be regarded as the act of the corporation itself. Seen either way, what is involved is the same exercise: equating the natural person, or the natural person’s act, with the corporation, such that the act and state of mind of the natural person in doing that act are attributed to the corporation. However, as our discussion of English law shows, considerable difficulty arises in developing a framework capable of answering when such attribution is to be permitted. It is to develop such a framework in the Indian context that we now turn.
143. To answer this question, the sequential, hierarchical approach adopted in Barclays cases (supra) finds favour with us. Thus, the inquiry under Indian law will also proceed through three stages, movement to the next stage occurring only where the preceding stage fails to establish that X’s act, and the state of mind accompanying it, can be treated as that of the corporation. The scope of each stage of this inquiry, broadly speaking, mirrors that of each rule of attribution identified in Meridian Global (supra).
144. The first stage of this inquiry is the narrowest of the three in scope. This is because it primarily involves examining the constitutional documents of the corporation, i.e., the memorandum and articles of association, to determine in whom they vest the power to do or undertake the act in question. This stage is not, however, confined to what the constitutional documents expressly provide. It also extends to certain rules which, though not found in the constitutional documents, are implied by company law itself, and which likewise identify whose doing of an act is to be treated as the act of the corporation. Applied to the case of X, the inquiry at this stage is thus: whether the constitutional documents vest X with the power to do the act in question, or whether there exists a rule implied by company law under which X’s doing of the act is to be treated as the corporation acting itself. Where either is answered in the affirmative, X’s state of mind in doing the act is treated as that of the corporation.
145. This stage, however, will rarely furnish an answer on its own. As Lord Hoffmann himself remarked in Meridian Global (supra), it is not always possible for every decision and action of a company to be traced to what is stated in its constitutional documents. Consider, for instance, a situation where every act of the company required a board resolution before it could be undertaken. Where the constitutional documents and the rules implied by company law are silent as to X, it becomes necessary to ask whether the power to do the act was nonetheless delegated to X. It is here that the general rules of agency step in to supplement the first stage, and the second stage of the inquiry requires an examination on these lines.
146. The second stage of inquiry proceeds on the footing that the question posed at the first stage, namely, in whom the corporation vests the power to do the act in question, is not necessarily confined to what the constitutional documents provide. In most cases, we envisage this stage of the inquiry as proceeding along the lines illustrated in Tesco Supermarkets (supra) and Barclays cases (supra) i.e., examining whether the power to do the act in question has been delegated, whether expressly or impliedly, to X. Whether the delegation is express or implied, the same questions arise for consideration at this stage: whether such delegation to X was permissible; and what was the scope of such delegation.
148. On a close examination, it will be seen that the primary focus at both stages is to identify in whom the power to do the act in question vested. At the first stage, this is done through the lens of the constitutional documents; at the second, through the lens of delegation. To put it in the terms employed in Barclays cases (supra), what we are seeking to identify is in whom the corporation vested the authority to do the act. The logic underlying this exercise is straightforward: where it can be said that a person has been vested with the authority to do the act by the corporation, it is only natural that the act, and the state of mind accompanying it, be treated as that of the corporation itself.
d) Summary
A summary of our discussion on corporate criminal liability and attribution under Indian law is as follows:
164. Indian courts confronted two questions on corporate criminal liability: (i) whether a corporation could be prosecuted for an offence carrying mandatory imprisonment; and (ii) whether a corporation could be prosecuted for offences requiring mens rea. For a considerable period, several High Courts answered both in the negative. The reasoning was rooted in the understanding that a corporation having no physical body could not be imprisoned and, having no mind, could not possess mens rea.
165. Clarity on the issue of mandatory imprisonment was reached only with this Court’s decision in Standard Chartered Bank (supra). By a majority of 3:2, this Court held that a company is not rendered immune from prosecution merely because the offence carries a mandatory sentence of imprisonment, so long as the provision also prescribes a fine. The reasoning adopted by the majority was that since imprisonment cannot possibly be imposed on a company, and the law does not compel the impossible, a judicial discretion to impose a fine alone must be read into such provisions when dealing with juristic persons.
166. On the issue of mens rea, some High Court decisions took a position contrary to the traditional view, holding that a corporation could be held liable for offences requiring mens rea. According to such rulings, this was achieved by attributing to the corporation the act and the state of mind of an agent acting on its behalf. These rulings went a step further and also considered the basis on which such attribution was to occur, though they did not speak with one voice on this aspect. In Syndicate Transport (supra) and A.D. Jayaveerapandia (supra), the Bombay and Madras High Courts, respectively, adopted a flexible, case-to-case approach, leaving the question of attribution to be determined on the facts and circumstances of each case. In Esso Standard (supra), however, the Bombay High Court took a more stringent view, rejecting a case-to- case approach in favour of attribution traceable either to the officer’s authority or to the company’s intention as expressed under its constitutional documents.
167. While the High Courts were grappling with the issue of mens rea, it was only in Velliappa Textiles (supra) and Iridium India (supra) that this Court came to express its view explicitly. In both decisions, this Court held that a corporation is capable of possessing mens rea, and can accordingly be held liable for offences requiring proof of such mens rea.
168. The position under Indian Law is thus clear that a corporation can be prosecuted for an offence notwithstanding that it carries a mandatory sentence of imprisonment, or requires proof of mens rea. It appears that a corporation cannot be prosecuted only where the offence is punishable with imprisonment alone, or where the offence, by its nature, requires personal malicious intent, such that it is incapable of commission by a corporation at all.
169. It bears noting that, unlike the High Court decisions, which went on to consider the basis on which mens rea could be attributed to a corporation, this Court in Velliappa Textiles (supra) and Iridium India (supra) did not address the question of attribution at all. The discussion in both decisions was confined to whether a corporation could possess mens rea, not to how, or through whom, such mens rea was to be attributed to it. On this aspect, therefore, no ready answer exists. The gap remains to be filled.
184. The same holds for the ingredient angle. Corporate mens rea, as discussed, exists only because some natural person holds it. However, it does not follow that the materials before the court dealing with quashing must identify particular persons for the allegations to disclose the ingredient of mens rea. In most circumstances, mens rea can be averred through the surrounding facts and conduct themselves, without being tied to a specifically named individual.106 Thus, where the surrounding facts and circumstances, taken as a whole, disclose the possibility that the corporation acted with the requisite mens rea, that disclosure is not defeated merely because no particular individual has been identified as its source. Therefore, the ingredient of mens rea can still be disclosed even where no individual has been identified.
194. We reiterate that we have considered the questions of identification and arraignment of a natural person specifically in the context of the exercise of power under Section 482 CrPC, and not otherwise. Since we were concerned only with whether non-identification and non-arraignment justify the exercise of that power, we have not generally examined whether such identification and arraignment are necessary at all, and if so, at what stage. That question is beyond the scope of the matter before us.
195. Our discussion above should not be read and understood to suggest that the power under Section 482 CrPC can never be exercised at the threshold stage where the accused is a corporation. All that is being said is that neither identification nor arraignment of a natural person can be read in as a prerequisite, such that their absence alone would justify quashing in every case. For corporations, as for natural persons, the ordinary test is retained, i.e., the allegations must disclose the commission of the offence. Where they do not, or where they amount to bald allegations unsupported by any material, quashing would remain warranted. It is only by adopting such an approach that the two undesirable outcomes can be avoided: genuine prosecutions against corporations are not stifled at the threshold, and, at the same time, vexatious or baseless prosecutions are not permitted to continue merely because the accused is a corporation.
196. The considerations that should ordinarily weigh while determining whether the allegations disclose commission of any offence, or whether they amount to mere bald allegations, would remain the same where the accused is a corporation. However, as a corporation is a juristic person, it is not just sufficient to state or allege that the corporation committed the act or possessed the requisite mens rea. While identification and arraignment of a natural person is not necessary, the allegations must, at least prima facie, reveal that: (i) some natural person or persons acted on behalf of the corporation, (ii) such action is referable to the offence in question, and (iii) the surrounding circumstances of such actions do not render the existence of mens rea patently absurd or inherently improbable. Where the allegations do not reveal these things, the proceedings would remain liable to be quashed. It bears emphasising that the inquiry at this stage is not detailed or microscopic. It is broad, and confined to examining whether the allegations disclose actions undertaken on behalf of the corporation, and whether the context in which such actions were undertaken discloses the possibility that the requisite mens rea was present.
Judgments Cited
- Iridium India Telecom Ltd. v. Motorola Inc., (2011) 1 SCC 74: Held that companies and corporate entities cannot claim immunity from criminal prosecution on the ground that they are incapable of possessing mens rea, establishing that corporations can be convicted of common law and statutory offences requiring a guilty mind.
- Standard Chartered Bank v. Directorate of Enforcement, (2005) 4 SCC 530: Overruled earlier jurisprudence to hold that a company does not enjoy blanket immunity from prosecution merely because the prescribed punishment for an offence includes mandatory imprisonment. In such scenarios, the court can impose a fine alone on the corporate entity.
- Tesco Supermarkets Ltd. v. Nattrass, [1972] A.C. 153: Established the “identification principle” (or doctrine) under English law, holding that a corporate body is deemed to act and acquire knowledge only through specific individuals who represent the “directing mind and will” of the corporation, such as the board of directors or managers fully delegated with independent discretion.
- Meridian Global Funds Management Asia Ltd v. Securities Commission, [1995] 2 A.C. 500: Laid down the “rules of attribution,” determining that a company’s criminal liability is assessed by primary rules (constitutional documents), general rules (agency), or special rules of attribution fashioned by courts to fulfill the specific purpose and policy of the statutory provision in question.
- Lennard’s Carrying Company v. Asiatic Petroleum Company, [1915] A.C. 705: A foundational case observing that a corporation is an abstraction and its “active and directing will” must be sought in the person who is the very ego and centre of the corporation, rendering that person’s actions the direct actions of the company itself.
- The Queen v. Barclays PLC & Barclays Bank PLC / The Serious Fraud Office v. Barclays PLC & Anr (The Barclays Cases), [2018] EWHC 3055 (QB): Affirmed that the Tesco identification doctrine remains the primary test for criminal attribution in the UK. The courts held that even senior executives cannot bind a company criminally without explicit or implied delegation of complete “authority to do the deal.”
- Regina vs Great North of England Railway Company, (1846) 9 QB 315: An early English decision ruling that a corporation could be held criminally liable for misfeasance (positive acts) just as it could for non-feasance (omissions).
- D.P.P. v. Kent and Sussex Contractors, [1944] KB 146; Rex v. I.C.R. Haulage Ltd, [1944] KB 551; Moore v. I. Bresler Ltd., [1944] 2 All ER 515: A trio of cases recognized as the first to conclusively establish that a corporation could be held liable for offences involving a mens rea element.
- H. L. Bolton (Engineering) Co. Ltd. v. T. J. Graham & Sons Ltd. [1957] 1 Q.B. 159: Likened a company to a human body, noting that directors and managers represent the “brain and nerve centre” (directing mind and will) whose state of mind is treated by law as the state of mind of the company.
- In re Supply of Ready Mixed Concrete (No. 2), [1995] 1 A.C. 456: Demonstrated a special rule of attribution where the act and state of mind of an employee acting within the course of employment were attributed to the company to prevent corporations from easily evading liability for statutory restrictions.
- M.V. Javali v. Mahajan Borewell & Co. & Anr, (1997) 8 SCC 72: Addressed the anomaly of prosecuting companies for offences carrying mandatory imprisonment by harmoniously construing the statute to allow prosecution while subjecting the company to a fine alone.
- Assistant Commissioner, Assessment-II, Bangalore & Ors v. Velliappa Textiles Ltd. & Anr, (2003) 11 SCC 405: A 3-judge bench decision which temporarily held that a company could not be prosecuted for an offence where mandatory imprisonment was prescribed. (Overruled by Standard Chartered Bank).
- State of Maharashtra v. Syndicate Transport Co. (P) Ltd., 1963 SCC OnLine Bom 57: Held that corporate bodies are indictable for offences requiring mens rea committed by agents acting under their authority, utilizing a flexible, case-by-case approach to attribution.
- A.D. Jayaveerapandia Nadar & Co. v. Income-Tax Officer, (1975) 101 ITR 390: Ruled that a company can be liable for crimes requiring mens rea unless explicitly ruled out by statute, establishing that an agent’s guilty mind can be imputed to the corporation based on facts and circumstances.
- Esso Standard Inc. v. Udharam Bhagwandas Japanwalla, 1973 SCC OnLine Bom 56: Quashed a cheating complaint against a company by strictly applying attribution principles, finding that the accused officers’ actions did not reflect the company’s intent via its constitutional documents or conferred authority.
- Kalpnath Rai v. State, (1997) 8 SCC 732: Set aside a company’s conviction under the Terrorist and Disruptive Activities (Prevention) Act, observing at the time that a juristic person could not possess the necessary mens rea to harbour a terrorist.
- Aneeta Hada v. Godfather Travels and Tours Pvt. Ltd., (2012) 5 SCC 661: Held that under Section 141 of the Negotiable Instruments Act, arraigning the company itself as an accused is a strict, imperative condition precedent to maintaining a vicarious prosecution against its directors.
- Hindustan Unilever Ltd. v. State of M.P., (2020) 10 SCC 751: Followed the Aneeta Hada precedent, holding that a company must be explicitly arraigned as an accused for a prosecution to be maintainable against individuals under Section 17 of the Prevention of Food Adulteration Act.
- Citizens United v Federal Election Commission, 130 S.Ct. 876 (2010): Mentioned in a footnote to highlight the duality of corporate legal fictions, noting that corporations structurally facilitate human activities but possess no consciences, beliefs, or feelings of their own.
- Various Procedural and Substantive Footnoted Precedents: The document relies on several cases to outline the parameters of Section 482 CrPC quashing powers (e.g., Neeharika Infrastructure, State of Haryana v. Bhajan Lal, Medchl Chemicals) reinforcing that quashing is strictly based on whether allegations prima facie disclose an offence without conducting a mini-trial. It also cites cases governing vicarious corporate liability (e.g., Shiv Kumar Jatia, Maksud Saiyed, SMS Pharmaceuticals), stipulating that specific roles must be averred to prosecute natural persons for corporate acts.
The following judgments were explicitly stated as being overruled
- Assistant Commissioner, Assessment-II, Bangalore & Ors v. Velliappa Textiles Ltd. & Anr, (2003) 11 SCC 405: This decision, which held that a company could not be prosecuted for an offence where a sentence of imprisonment is mandatory, was overruled by the majority decision in Standard Chartered Bank v. Directorate of Enforcement.
- Sheoratan Agarwal: Overruled by the three-judge bench decision in Aneeta Hada v. Godfather Travels and Tours Pvt. Ltd., which held that arraigning a company as an accused is an imperative condition precedent to maintaining a prosecution against individuals under Section 141 of the Negotiable Instruments Act.
- Anil Hada: Overruled by Aneeta Hada v. Godfather Travels and Tours Pvt. Ltd. (with a specific qualifier stated in paragraph 51 of that decision) regarding the requirements for fastening vicarious criminal liability under Section 141.
Acts and Sections
- Indian Penal Code, 1860 (IPC): Sections 34, 120B, 420.
- Prevention of Corruption Act, 1988 (PC Act): Sections 9, 11, 12, 13(1)(b), 13(1)(d), 13(2).
- Code of Criminal Procedure, 1973 (CrPC): Section 482.
- Negotiable Instruments Act, 1881: Sections 138, 141.
- Income Tax Act, 1961: Section 277.
- Prevention of Food Adulteration Act, 1954: Section 17.
Editor’s note
This Sanofi India case considers the criminal liability of corporations generally and applies those principles to Sanofi India Ltd., which is a company.
Understanding the Standard Chartered Bank case [Standard Chartered Bank v. Directorate of Enforcement, (2005) 4 SCC 530]
A company can ordinarily be charged and prosecuted for a criminal offence, just like an individual.
However, a company cannot be charged with certain offences that, by their nature, can be committed only by a human being with intention (here there is no good or bad intention; but, just ‘intention’).
When a criminal law uses the word “person,” it will normally include a corporation, even if the law does not specifically mention a corporation.
In the Standard Chartered Bank case, the Supreme Court did not decide whether a company can be held guilty of an offence requiring mens rea i.e., that is, a guilty mind or criminal intention. The Court left that question undecided because it was not necessary for resolving the issue before it in that case.
Understanding Iridium India case [Iridium India Telecom Ltd. v. Motorola Inc., (2011) 1 SCC 74]
The Iridium India case answered only one question that is can a company have criminal intention? The Hon’ble Supreme Court has answered as yes.
But the Iridium India case did not answer the next question: Whose intention inside the company should be treated as the company’s intention, such as
For example, should it be the intention of a director, manager, or employee?
Considering Barclays case
The Barclays Cases — The Queen v. Barclays PLC and Barclays Bank PLC / Serious Fraud Office v. Barclays PLC, [2018] EWHC 3055 (QB)
- This is the English authority whose method or framework was most directly accepted by the Hon’ble Supreme Court.
- The Hon’ble Supreme Court expressly said that the “sequential, hierarchical approach” adopted in the Barclays cases finds favour with us.”
- The accepted approach asks, in order:
- Did the company’s constitutional documents or company law give the person authority to perform the act?
- If not, was that authority expressly or impliedly delegated to the person?
- If neither answers the question, does the purpose of the particular criminal law require a special rule of attribution?
- The Supreme Court used this approach to construct the Indian three-stage attribution test.
[1] Stevens J. in Citizens United v Federal Election Commission, 130 S.Ct. 876 (2010) captured the same duality in the American constitutional context: Corporations have no consciences, no beliefs, no feelings, no thoughts, no desires. Corporations help structure and facilitate the activities of human beings, to be sure, and their ‘personhood’ often serves as a useful legal fiction. But they are not themselves members of ‘We the People’ by whom and for whom our Constitution was established
