Company Law Corporate Law LAW EXPLAINED
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There were many challenges in front of lawmakers on how to make laws on a fictional body because the corporation is not a single body or does not consist of only one person in many cases and many of the corporations does not only have their facilities in one country but in various other countries where laws are not same or have many rules and regulations which differ from the corporation’s origin country. A company cannot be sent to jail or given some punishment such as the death penalty because it is not a physical being. A company does not have a physical existence. A company is not a physical being so it is impossible to prove or identify its criminal intent it. Finding mens rea of a corporation is quite an obstacle for the lawmakers or for the court. In criminal law, sanctions are very important or we can say is an important part of criminal law, a Corporation cannot be put to death or given imprisonment, this was also an important challenge to overcome for the lawmakers. During a case hearing the accused needs to be physically present in court, exceptions are there in any case but in most of them, the accused needs to be present as a company is not a physical being it cannot be brought to court.


In today’s world Companies are no longer immune to the problem of finding mens rea or any other problems nowadays every difficulty which was faced by the lawmakers of that time has been overcome. In today’s world the directors, employees, and officers are all liable for criminal acts committed by them which they have actual authority to perform or appear to have authority to perform as observed by an average reasonable man. Further, the directors and officers may also be subject to criminal liability under the “accomplice theory” which states that they either encouraged or instructed a subordinate to commit a criminal act or failed to exercise due care and supervision of their subordinate which in turn led to the commission of a crime. This theory states that a person is criminally liable by virtue of his “responsible relation” to the misconduct regardless of whether or not he possesses any knowledge regarding the criminal activity. In any law or in any act it is not written that the director or the officers will always be liable for any offence that was committed by the company. Under the said provision, the director, manager or the secretary or any other official of the company may also be held liable if it is shown that the offence was with his consent or connivance.

Now obviously there are basic points which need to be seen in order to punish a staff or the officer or anyone in the office some basic rules are, that they must be an employee of the company, they must have done that in order to benefit the company and must have done in good faith and have been in full consciousness. Now, this all points are seen once the case reaches the court the judge is the one who deiced.

Case  law

Now lets see some of the case law which will help us understand this even more:-

In the case of Standard Chartered Bank and ors v director of enforcement and ors AIR 2005 SC 2622. overruled the previous views. The majority held that there is no immunity to the company from prosecution merely because the prosecution is in respect to the offence for which punishment prescribed is mandatory imprisonment. As the company cannot be sent to court and cannot go to jail. With a majority of 3:2 the court held that a corporation is criminally liable for both imprisonments and for fine.  In this case, the law court held that in case of company fault they cannot go to jail but sure can pay the fine but if any particular person is held liable from the company then the person held liable has to suffer both the fine and imprisonment.

In the case of Iridium India Telecom Ltd v Motorola Incorporated 2003(6) Bom CR 511 proceedings started in front of the magistrate against Motorola. It moved Bombay high court against the prosecution. Allegations were cheating and criminal conspiracy. The Supreme court held that a corporate body can be prosecuted under IPC. There are several acts that punished the company like Income-tax Act, essential commodities act. The court allowed the prosecution to go on stating that companies and corporate houses cannot claim immunity from criminal prosecution on the ground that they are incapable of possessing the necessary mens rea for the commission of criminal offences.


Well, we can say that Corporate Criminal Liability is not fully grown or developed in India as of now. But soon we will have proper laws. As the corporate sector is developing quickly we need proper assistance and law regarding this. India is still developing so we need to figure out how to overcome it myself



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