C R I M I N A L L I A B I L I T Y O F C O R P O R A T I O N
Ashok Kumar Singh, Advocate
I.
Introduction
Coal-gate scam in which CBI has registered case against
Hindalco Industry , Kumar Mangalam
Birla and former coal secretary for alleged irregularities in the allocation of
coal blocks to India’s best-known industrialist Kumar Mangalam Birla by
upturning the coal ministry screening committee’s decision not allocate Talabira ii coal block to
Hindalco.” has ignited the issue of corporate criminal
liability. Corporate crimes committed on all continents across a range of
industrial activities in various sectors (e.g. chemicals, forestry, oil,
mining, genetic engineering, nuclear, military, fishing, etc.) clearly point
towards the need for greater control, monitoring and accountability of
corporate activity in a globalize economy.
Corporate criminal liability
is complementary to individual liability. The present liability regime that
makes both corporate and individual prosecutions available to regulatory
authorities has undeniable advantages over one that does not. Where crime
arises from intra-organizational defects. Further, where individual liability
is difficult to determine, prosecution of the corporation is an attractive
alternative. There are many other situations where the prosecution of the
corporation may be the only way to allocate responsibility for white-collar
crime. Where both a corporation and its officers can be prosecuted, the
prosecution of one over the other, or both, is a matter that is largely left to
the discretion of the prosecuting authority. The prosecution’s choice should be
aimed at achieving the effective regulation of corporate activities, as well as
the general objectives of sentencing.
Corporations are as much part of our society as are
any other social institution. Corporations represent a distinct and powerful
force at regional, national and global levels and they wield enormous economic
powers. Besides governments and governmental agencies, it is the corporations
that are the more and more effective agents of action in our society,
but corporations, as we understand today, have not been same in the past. The
multitude of roles the corporations play in the present day human life have
been necessitated by the demands of the society, as it kept on ‘developing’.
The development of the society, at various points of time, has had a direct
influence on the structure and functions of the corporation. This had led to an
ever increasing demand for the law to recognize the change and suit its
applications, accordingly. Over the last few decades nature and form of a corporate sector
has grown complex. In last two decades of 20th century, we saw globalization
and privatization of every type of business entities all over the world and
this globalization further paved the way for “Global Village”, which
considerably made the changes in the form of business organization. Today, a
corporation is an artificial entity that the law treats as having its own legal
personality, separate from and independent of the persons who make up the
corporation. This means, for example, that a corporation can own and sell
property, sue or be sued, or commit a criminal offence because; a corporation
is made up of and run by people, acting as agents of the corporation. A
corporation has an existence separate from the shareholders constituting it and
they cannot be held liable for the wrongs committed by the corporation. The
corporations are run by natural persons and these peoples actions can be
criminal in nature and can sometimes even result in great economical as well as
human loss to the society, which is evident from coal-gate scam in which CBI has registered case against Kumar
Birla, India’s best-known industrialists and former coal secretary for alleged
irregularities in the allocation of coal blocks. It also put a fresh spotlight
on Prime minister Manmohan singh ,with Parakh allegation that allocation was
approved by the P M and the CBI should
have made him the “accused number one.” Hence, for a better understanding of the
concept of corporate criminal liability, it is necessary to trace the meaning
of corporation and ways in which corporation commit crime.
DEFINATION
Section 11
of the IPC reads:
“The word person includes any Company or Association or body of
persons, whether incorporated or not.” Section 11 seeks to define, person is
firstly not exhaustive. It simply declares that it includes (a) a company or
association (b) a body of persons whether incorporated or not. Secondly the
definition operates unless the context warrants otherwise. Section 3 (42)
General Clauses Act, 1987 which reads: person shall include any company or
association or body of individuals, whether incorporated or not. Vicarious
liability principle applies in case of companies also who can be held liable
for acts committed by some natural persons who are identified with it because
in such a case the acts and intentions of those who control the corporation are
deemed to those of the corporation itself. A company has none of features
that characterize a living person, a mind that can have knowledge or intention
or be negligent.
An officer
in a case had committed irregularities in relation to matters of investment of
the company, without the knowledge of the Board of directors. He was considered
identifiable with the corporation as he was the directing mind and will of the
corporation and his knowledge was attributable to the company. Glanville Williams says, “The
independent legal existence of a company is useful because individual
shareholders may come and go; and it has the great advantage of creating
limited liability”, e.g. the company is responsible for its debts in case of
insolvency of the company the creditors to the company cannot proceed against
the private property of the shareholders. When an offence is committed by the
partners of a firm, there is no general rule that firm, an artificial person is
liable. All depends on the particular facts of the case. Resistance prior to the twentieth
century to extension of the doctrine of corporate criminal liability was tied
to the widely-held juridical belief that a corporation lacked the requisite
mens rea essential to sustain a criminal conviction. It was widely prevalent
and followed that: A Corporate has ‘no soul to damn, and no body to kick.’
(ii)WAYS IN WHICH CORPORATIONS COMMIT
CRIMES
(a)On the population
as a whole: The
Supreme Court of India ordered the government to pay a remaining $325.5 million
(15.03 billion rupees) due to Bhopal gas tragedy victims. The U.S. based Union
Carbide Company, now owned by Dow Chemical Co., paid $470 million in
compensation to victims in 1989. The story goes back to the 1984 Union
Carbide accident in Bhopal, India, which released a cloud of methyl isocyanides
(MIC), hydrogen cyanide, and other toxins. Somewhere between 4000 and 8000
people died at the time, and victims' advocates estimate that in total over
20,000 have died as a result of this largest industrial accident ever, with
1,50,000 suffering continuing injuries and medical problems.
The
cause was extreme corporate malfeasance. The plant was not up to minimal Union
Carbide safety standards - large quantities of MIC were unwisely stored in a
heavily populated area, the refrigeration unit for the MIC (which is supposed
to kept at temperatures below 32 F) was deliberately kept turned off to save
$40 per day in costs, the safety systems were dismantled, and the alarm system was
turned off. This was in spite of the fact that the same plant had earlier
suffered potentially lethal accidental releases of gases like the deadly nerve
agent phosgene.
(b)On the investors: One of the
major havoc that is created in present times is because of mysterious
disappearance of corporations. Of the 5,651 companies listed on Bombay Stock
exchange, 2750 have vanished. It means that one out of two companies that come
to the stock exchange to raise crores of rupees from investors, loot and run away.
Many corporations came up with huge publicity stunts but after raising money,
vanished into the thin air. About 11 million investors have invested Rs. 10,000
crore in these 2750 companies. We have Securities Exchange Board of India,
Reserve Bank of India and Department of Companies Affairs to monitor the stock
exchange transactions but none has documented the whereabouts of these 2750 odd
companies suspended from the stock exchange. Many of the promoters and merchant
bankers who are responsible for these are roaming scot-free. The market
regulators and stock exchanges are unable to penalize them or recover their
funds. The regulators have been able to identify only 229 of 2750 vanishing
companies so far. The Supreme court ordered CBI probe into possible criminality
indicated in corporate lobbyist Niira Radia’s
intercepted telephone calls lead the agency to look into some of high
value deals linked to big corporate houses headed by Mukesh Ambani, Anil Ambani
and the Tatas.
(c) On their own Work Force: Corporations also commit a number of crimes
against their own workforce. With increasing globalization workers find
themselves being pushed against the wall and shrinking avenues for redress.
Take the case of public sector undertakings where many irregularities can be
seen in. Factories were opened in some areas where the raw material was not
available and where the location was correct, imported machinery was defective.
Lavishness on the part of management was one of the factors, which led to these
institutions becoming sick. No doubt that the labourers suffer the most in such
cases. The plight of Mumbai’s textile workers is even worse. Legal dues have
not been paid to 2 lakhs jobless mill workers. Trade unions are fighting with
the reality of worker suicides and growing unemployment and the worker’s
families are struggling to get over their misery, leave alone fight for dues
from faceless management.
(d)On the Natural
Resources: The
government across the world have given a free hand to corporations to exploit
the natural and community resources, while depriving the common people of their
right on these resources. For instance, in India, Corporations at Eloor,
Kodaikanal and Gujarat have not only destroyed the water and land resources in
these areas, but also impoverished communities by degrading their livelihood
resources and health. All these communities suffer from disasters similar to
Bhopal. Inaccessible to clean and safe drinking water was found to be a major
problem in all these areas. The companies either pollute the water resources to
an extent where it is no more portable or over exploit it till the water table
goes down or dry up the wells. A befitting example could be of Coco Cola
bottling plant in Kerala where the company extract excess amount of water from
the ground due to which the water level has gone very low and the nearby
villages are suffering from scarcity of water. In this connection it is pertinent to mention
allocation of coal blocks in which
decision was reversed after a
meeting between coal secretary P
C Parakh and Kumar Mangalam Birla , as alleged in FIR registered by CBI.
It is important to note that most of the damages caused to the environment is
irreversible.
(e)Corporations in the political
environment: The
convicted corporations are also involved into dirty game of politics.
Corporate Crime Reporter, a U.S. based legal newsletter published a report in
July 2003 titled as ‘Dirty Money: Corporate Criminal Donations to the Two Major
Parties.’ This report grew out of the question that how much money are common
criminal corporations dumping into the Republican and Democratic parties in
U.S.?
The
report found that 31 corporate criminals gave more than $9 million to the
Democratic and Republican parties during the 2002 election cycle, which runs
from January 1, 2001 to December 31, 2002. These corporate criminals gave $7.2
million to Republicans and $2.1 million to Democrats. Many of these corporate
criminals are large, multinational corporations, with billions of dollars in assets.
To get a sense of this, let's look at the top two corporate criminal donors to
the Republican and Democratic parties. Archer Daniels Midland (ADM) tops the
list. ADM pled guilty in 1996 to one of the largest antitrust crimes ever. The
company paid a $100 million criminal fine -- at the time, the largest criminal
antitrust fine ever. Same is the case in India. These corporate criminals give
huge sums of money to the political parties in return of favours from these
parties. Who suffers the most is the common man including the shareholders and
workers.
Independent India’s first scam was of 1948 Jeep Scandal. The Cycle
Import Scam was reported in 1951. the Defense Scam starting from Bofors scam
1990’s witnessed innumerable scam involving crores of rupees such as Medical Equipment Scam (5000 crores). Waqf
Scam (1600 crores) Fodder Scam (1000 crores) Sukhram Telecom scandle (1500
crores) 21St century corruption scams made
India to feel ashamed due to various mega scam including the recent 2 G
spectrum scam and coal scam . In recent reports of Transparency
International, India’s image on tackling corruption has not improved with
Transparency International's Corruption Perception Index (CPI) placing it at
94th rank out of 176 nations this year. Though India was ranked at 95th
position last year, the international watchdog said it has started evaluating
the positions through a different formula beginning this year and hence this
cannot be compared to last year's ranking.
Coal-gate scam in which CBI has
registered case against Kumar Mangalam Birla, India’s best-known industrialists
and former coal secretary for alleged irregularities in the allocation of coal
blocks. It also put a fresh spotlight on Prime minister Manmohan singh ,with
Parakh allegation that allocation was approved by the P M and the CBI should have made him the “accused
number one. (III)History of Corporations liability
In Halsbury’s Laws of England which lays down. “In
general, a corporation is in the same position in relation to criminal
liability as a natural person and may be convicted in common law for statutory
offences including those requiring Mens Rea. There are, however, crimes which a
corporation is incapable of committing or of which a corporation cannot be
found guilty as a principal; nor can a corporation be convicted of a crime for
which death or imprisonment is the only punishment.” This view has been adopted
in various Indian cases. Kenny
lies down: Corporations formerly lay outside the ambit of criminal law due to
technical rules, these expected prisoners to stand at their bar, and did not
allow appearance by attorney. A corporation could not have a guilty will and
even if by legal fiction, a will is created it must be such as to cover those
activities which can be consistently ascribed to the fictitious will thus
created with the purposes which it was created to accomplish. The House of
Lords have held that, a company will be liable if the action of the defaulting
person is the very action of the company itself. With
the increasing involvement of corporations in the daily life of the people it
was considered important that the immunity available to the corporations should
be taken away as it hindered the interests of the people, thus an innovation
was introduced by drawing a distinction between misfeasance and non-feasance ,
on the ground that, whilst in the case of a criminal misfeasance the servant or
agent who actually did the criminal act could always be himself indicted, no
such indictment would be available in the case of non-feasance; for the
omission would not be imputable to any individual agent but solely to the
corporation itself. Hence, in 1840, an indictment for non-feasnace in omitting
to repair highway, was allowed against a corporation in R. v. Birmingham &
Gloucester Ry. Co ., soon afterwards, in the case of R.
v. The Great North of England Railway Co
an indictment was allowed for misfeasance, that of actually obstructing a
highway. The principle has obtained legislative approval by Interpretation Act, 1889, which provides that
in the construction of every statutory enactment relating to an offence, the
expression ‘person’ shall, unless a contrary intention appears, include a body corporate
Iv. Corporate
criminal liability India
Corporate criminal
liability has been an important issue on a legal agenda for a long time.
Corporations play a significant role not only in creating and managing business
but also in common lives of most people. That is why most modern criminal law
systems foresee the possibility to hold the corporation criminally liable for
the perpetration of a criminal offence. The doctrine of corporate criminal
liability turned from it's infancy to almost a prevailing rule. But, because a
corporation is not a natural person and cannot be subject to one of the most
important sentencing options, namely, imprisonment, it requires special
consideration in an inquiry into sentencing law. Punishing a corporation
undermines the theoretical foundations of criminal law, which presupposes that
crimes involve an act and a culpable mental state. Corporate criminal liability
or corporate crime is very difficult to define because this phrase in present
day scenario covers wide range of offences. However for understanding purpose
it can be defined as illegal act of omission or commission, punishable by
criminal sanction committed by individual or group of individual in course of
their occupation. It can be even
defined as socially injurious acts committed in course of occupations by
peoples who are managing the affairs of the company to further its business
interest. Corporate criminality
also represents a kind of instrumentalities through which the trust of the
people continues to be betrayed by persons in positions of responsibility,
authority and power in the business sector. Corporate crime has been defined as
“the conduct of a corporation or of employees acting on behalf of a
corporation, which is proscribed and punishable by law”. In this sense,
“Corporate criminal Liability” refers to the imposition of criminal liability
on either the corporation or its employees and agents. The latter is also
referred to as white-collar crime.
In the above context it will be proper
to mention recent legislation in which corporation has been made responsible
for offences:-
The N D P S Act,1985
(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 be deemed
to be guilty of that offence and shall be liable to be proceeded against and
punished accordingly.
Explanation.-For the purposes of this section,-
(a)
"company" means any body corporate and includes a firm or other
association of individuals; and
(b)
"director", in relation to a firm, means a partner in the firm.
The Transplantation of human Organ Act,
1994
Section
21. Offences by companies (1).
Where any offence, punishable 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, 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
punishable 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. Explanation: For the purposes
of this section:
(a)
“company” means any body corporate and includes a firm or other a
association
of individuals; and (b) “director”, in relation to a firm, means a partner in
the firm.
Food and Safety Standard Act ,2006
66. Offences by companies. (l)
Where an offence under this Act which 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 where a company
has different establishments or branches or different units in any
establishment or branch, the concerned Head or the person in-charge of such establishment,
branch, unit nominated by the company as responsible for food safety shall be
liable for contravention in respect of such establishment, branch or unit:
Provided further 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.
Explanation
.—For the purpose of this
section,—
(a) “company” means anybody corporate
and includes a firm or other association of individuals; and (b) “director” in
relation to a firm, means a partner in the firm.
P C Act Amendment Bill 2013
Section
9(1) A commercial organisation shall
be guilty of an offence and shall be punishable with fine, if any person
associated with the commercial organisation offers, promises or gives a
financial or other advantage to a public servant intending—
(a)
to obtain or retain business for such commercial organisation; and
(b)
to obtain or retain an advantage in the conduct of business for such commercial
organisation: Provided that it shall be a defence for the commercial
organisation to prove that it had in place adequate procedures designed to
prevent persons associated with it from undertaking such conduct.
(2) For the purposes of this
section, a person offers, promises or gives a financial or other advantage to a
public servant if, and only if, such person is, or would be, guilty of an
offence under section 8, whether or not the person has been prosecuted for such
an offence.
(3)
For the purposes of section 8 and this section,—
(a) "commercial
orgnisation" means—
(i) a body which is
incorporated in India and which carries on a
business, whether in India or
outside India;
(ii) any other body which is
incorporated outside India and which
carries on a business, or
part of a business, in any part of India;
(iii) a partnership firm or
any association of persons formed in Indiaand which carries on a business
(whether in India or outside India); or
(iv)
any other partnership or association of persons which is formed outside India
and which carries on a business, or part of a business, in any part of India;
(b) "business"
includes a trade or profession or providing service including
charitable service;
(c)
a person is said to be associated with the commercial organisation if, disregarding
any offer, promise or giving a financial or other advantage which constitutes
offence under sub-section (1), such person is a person who performs services
for or on behalf of the commercial organisation.
Explanation
1.—The
capacity in which the person performs services for or onbehalf of the
commercial organisation shall not matter irrespective of whether such person is
employee or agent or subsidiary of such commercial organisation.
Explanation
2.—Whether
or not the person is a person who performs services for or on behalf of the
commercial organisation is to be determined by reference to all the relevant
circumstances and not merely by reference to the nature of the relationship between
such person and the commercial organisation.
Explanation
3.—If
the person is an employee of the commercial organisation, it
shall
be presumed unless the contrary is proved that such person is a person who performs
services for or on behalf of the commercial organisation.
(4)
Notwithstanding anything contained in the Code of Criminal Procedure,1973, the
offence under section 8 and this section shall be cognizable.
Section10. (1) Where a commercial organisation has been guilty of an
offence under section 9, every person who at the time the offence was committed
was in charge of, and was responsible to, the commercial organisation for the
conduct of the business of the commercial organisation shall be deemed to be
guilty of the offence and shall be punishable with imprisonment which shall not
be less than three years but which may
extend
to seven years and shall also be liable to fine:
Section 305 of the Code of Criminal Procedure provides that when a
corporation is an accused person, or when it is one of the accused persons, in
an inquiry or trial, it may appoint a representative for the purpose of the
inquiry or the trial. Such an appointment need not be under the seal of the
corporation.When such a representative appears, any requirement of the Code
that anything is to be done in the presence of the accused or anything is to be
read or explained to the accused, is to be construed to refer to the
representative. Similarly, any requirement that the accused should be examined
is to be construed as a requirement that such a representative should be
examined.
It
is further provided that when a statement in writing purporting to be signed by
the Managing Director of the corporation or by any person having the management
of its affairs, to the effect that the person named in that statement has been
appointed as the representative of the corporation for the purpose of S. 305,
is filed before the Court, the Court must presume that such a person has been
so nominated, unless, of course, the contrary is proved.
If
any question arises as to whether any person appearing before the Court as the
representative of a corporation is or is not, in fact, such a representative,
this question is also to be determined by the Court itself.
For the purpose of S. 305,
the term “corporation” means an incorporated company, or any other body
corporate, and includes a society registered under the Societies Registration
Act, 1860.
Under
Section 305 of Cr. PC a Company can nominate an individual to represent it in
Court in a case where the Company is accused. Since this representative is not
personally liable, no punishment can be personally
imposed upon him. The only punishment which can be imposed upon
conviction is monetary fine because the company not being a natural person can
not be imprisoned. Since the company cannot be arrested and the provisions of bail
do not apply to a Company.
The development of the
law relating to corporate criminal liability in India is not only similar to
that in English law, but also greatly influenced by the English Law. At one
point of time, ‘corporations’ were viewed as a convenient shield to evade
liability. However, under our present penal structure, for an offence by the
corporation, both the corporation and its officer can be made liable. The law
on corporate criminal liability is however, not confined to the general
criminal law in the penal code but it is, in fact, scattered over a plethora of
statutes with specific provisions for the same. The need for proper law
relating to corporate criminal liability in a legal system, specially in the
developing countries like India was observed by the Supreme Court in the
following terms:
There
is no controversy when fine is only punishment given under any statute. There are
also no lies when statute entrusts the court with discretion to inflict fine or
imprisonment, as in this case court shall inflict only fine on company. Because
a company being a Juristic person cannot obviously be sentenced to imprisonment
as cannot suffer imprisonment. Judicial controversy lies in that situation when
statute prescribes mandatory imprisonment with fine as a punishment for an
offence. In Municipal Corporation of Delhi vs. J.B. Bolting Company (P) Ltd. ,
the court was confronted with a very interesting question: whether a company
can be awarded a punishment of fine when the mandatory punishment is both
imprisonment and fine. The company had been found guilty of committing an
offence under Prevention of Food Adulteration Act, 1954. The Court held the
company guilty of the offence under the said act, declared that it could be
punished with fine only. In
2003 Supreme Court in Assistant Commissioner, Assessment-ll, Banglore
& Ors. v. Velliappa Textiles Ltd & Anr. Took
the view that since an artificial person like a company could not be physically
punished to a term of imprisonment, such a section, which makes it mandatory to
impose minimum term of imprisonment, cannot apply to the case of artificial
person. The majority was
of the view that the legislative mandate is to prohibit the courts from
deviating from the minimum mandatory punishment prescribed by the Statute and
that while interpreting a penal statute, if more than one view is possible, the
court is obliged to lean in favour of the construction which exempts a citizen
from penalty than the one which imposes the penalty. In this case B.N. Srikrishna and
G.P. Mathur held that a company can be attributed with mens rea on the basis that
those who work or are working for it have committed a crime and can be
convicted in a criminal case, the judges held that the corporations are liable
even where the offence requires a criminal intent. The other question raised in
this case was, “ whether a company is liable for punishment of fine if the
provision of law contemplates punishment by way of imprisonment only or a
minimum period of punishment by imprisonment plus fine whether fine alone can
be imposed?”, to this question Mathur J., was of the view that the courts would
be shirking their responsibility of imparting justice by holding that
prosecution of a company is unsustainable merely on the ground that being a
juristic person it cannot be sent to jail to undergo the sentence, However,
Supreme Court in 2005 in Standard Charted Bank v. Directorate Of
Enforcement in majority decision of 3:2 expressly
overruled the Velliapa Textiles case on this issue. K.J Balkrishanan J. in
majority opinion held:"There is no dispute that a company is liable to
be prosecuted and punished for criminal Offences... the generally accepted
modern rule is that except for such crimes as a corporation is held incapable
of committing by reason of the fact that they involve personal malicious the
criminal act is committed act is committed through its agent." The court also considered the proposition that
a company could avoid criminal prosecution in cases where custodial sentence is
mandatory and took the view that: 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 fined no difficulty in construing the
statute in such a way. We do not think that there is blanket immunity for any
company from any prosecution for serious offences merely because the
prosecution would ultimately entail a sentence of mandatory imprisonment."
The court opined that there is no immunity to companies from prosecution merely
because the prosecution is in respect of offences for which the punishment
prescribed is mandatory imprisonment, and it overruled the views expressed by
the majority in Ast Commr v Velliappa
Textiles Ltd.
There is no dispute that company is liable to be prosecuted and punished for
criminal offences. Although there are earlier authorities to the fact that the
corporation can not be subject to prosecution although the criminal act may be
committed through its agent. There is no immunity to the companies from
prosecution merely because the prosecution is in respect of offences for which
punishment is mandatory imprisonment and fine.
(V) Conclusion
It can safely be concluded that laws relating to
corporate criminal liability in India are vastly insufficient. The legislature
needs to be active in this regard and form certain concrete laws which would
ensure that the corporations do not go unpunished and a better social order is
established. Certain Provisions relating to procedural law also need to be
created and modified so that the corporations can be adequately dealt with.
The Supreme Court
in Iridium appears to have crystallized the law and further confirmed by Aneet
Hada’s case. it lays emphasis on the theory through which the intention of the
directing mind and will of a company is attributed to the company, and confirms
that a corporation can be held liable for crimes of intent (i.e., offences
involving mens rea.). The judgments
further clarifies that a company is not immune from any prosecution for
criminal offences for which a sentence of mandatory imprisonment its
prescribed, as the sentence can imposed in terms of penalty and fine.
Ashok Kumar
Singh
Advocate
High Court Calcutta
.
