NATIONAL LAW UNIVERSITY ODISHA

PROJECT ON

CORPORATE CRIMINAL LIABILITY UNDER COMPANIES ACT 2013

FACULTY ADVISOR

MR. MAYANK TIWARI & MR. KAPIL SHARMA

SUBMITTED BY

AKASNKSHYA ROUTRAY 19BBA004)

&

UMESH PRASAD (19BBA054)

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 TABLE OF CONTENTS

TABLE OF AUTHORITIES .......................................................................................................... 3

ACKNOWLEDGEMENT .............................................................................................................. 5
RESEARCH METHODOLOGY.................................................................................................... 6
1. OBJECTIVE- .......................................................................................................................... 6
2. SCOPE – ................................................................................................................................. 6
3. RESEARCH METHOD - ....................................................................................................... 6
4. RESEARCH QUESTION- ..................................................................................................... 6
5. SOURCES- ............................................................................................................................. 6
INTRODUCTION .......................................................................................................................... 7
AGENCY THEORY ....................................................................................................................... 8
1. ENGLISH LAW ..................................................................................................................... 9
2. AMERICAN LAW ................................................................................................................. 9
3. RATIONALE OF VICARIOUS LIABILITY ...................................................................... 10
4. CRITICISM .......................................................................................................................... 10
CRTICAL ANAYLSIS ................................................................................................................. 11
1. CORPORATE BODY AND IT’S LIABILITIES: DOCTRIN OF IDENTIFICATION...... 11
2. CRIMINAL LIABILITY AND CIVIL LIABILTY VIS-A VIS A CORPORATE BODY . 13
HISTORICAL DEVELOPMENT OF CORPORATE CRIMINAL LIABILITY ........................ 14
DOCTRINE OF IDENTIFICATION: THE INDIAN APPROCH ............................................... 15
CONCLUSION ............................................................................................................................. 18
BIBLIIOGRAPHY ....................................................................................................................... 19
1. BOOKS .............................................................................................................................. 19
2. WEB SOURCES/ BLOGS ................................................................................................ 19

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 TABLE OF AUTHORITIES
CASES

A.K. Khosla v. S. Venkatesan, (1992) 1 CALLT 77, HC(India). .................................................. 16

Aneeta Hada v. Godfather Travels and Tours Private,(2012) SC.(India).THE CASEMINE(Mar,
31, 2021, 10:30 PM), https://www.casemine.com/judgement/in/5609af11e4b014971141581c 7
Chisholm v. Doulton, U.S. 22 QBD, 736(1889) ............................................................................. 9
Delhi municipality v. J.B. Bottling Co.(1975), Cri L.J. 1148(India)............................................ 15
Iridium India Telecom Ltd. v. Motorola Inc., AIR (2011) SC 20,(India) ..................................... 17
Iridium India Telecom Ltd. v. Motorola Inc., 2011.1 SCC 74.(India) ........................................... 7
Khanna, V.S., ‘’Corporate Criminal Liability,’’ Harvard Law Review, Vol. 109, No. 7, 1996,
pp.1482-1485 ............................................................................................................................ 14
Kusum Products Ltd. vs S.K. Sinha, (1980),126 ITR, 804 Cal, (India) ....................................... 16
Lennard’s Carrying Co. Ltd. v Asiatic Petroleum Co. Ltd, U.S. AC 705,(1915) ......................... 12
Meridian Global Funds Management Asia Ltd. v. Securities Commission, UKPC 5,(1995) ...... 13
Mousell Bros Ltd v. London and North-Western Railway Co,. 2 KB 836, 846(1917) .................. 9
N. Y. Cent. & Hudson River R.R. v. United States, U.S. 212 481, 494(1909) ........................... 10
New York Central & Hudson River Railroad Co. v. United States , U.S. 2 KB 836, 846(1917). 10
Rex v. I.C.R. Haulag Ltd., U.S., 1 KB, 551(1994) ....................................................................... 15
Salomon v. Salomon & Co,, U.S.,AC 22(1897) ........................................................................... 11
Standard Chartered Bank and Ors. v. Directorate of Enforcement and Ors., (2005) SC
2622,(India) ............................................................................................................................... 17
Standard Chartered Bank v. Directorate of Enforcement, 2005.4 SCC 530(India). ...................... 7
State of Maharashtra v. Syndicate Transport Co. (P) Ltd., AIR 1[964]Bom. 195 (India) ............ 16
State of Maharashtra v. Syndicate Transport Co. AIR (1964), Bom.195(India) .......................... 14
Tesco Supermarkets Ltd. v. Nattrass, U.S. AC 153, (1972) ......................................................... 13
Tesco, AC 153(1972) .................................................................................................................... 13
United States v. A & P Trucking Co., [1958] US 358 (US) 121, 124-27 ....................................... 9
US v. Potter, U.S. 463 (1st Cir) 28(2006) ..................................................................................... 11
York Central & Hudson River Railroad Co. v. United States, U.S. 212 , 481(1909) .................. 14
Books

11, STANLEY SHAW BOND, HALSBURY’S LAWS OF ENGLAND 205-06(5th ed. 2020) ... 7
Akhil Mahesh, Corporate Criminal Liablity, LAWCTOPUS, Feb. 04, 2015, Sinjini Majumdar ed
................................................................................................................................................... 12
Alex Jenkins, The Bermuda Islands blow ‘sweet & sour’ on employers’ liability for Internet
libel,25, 280-284(2009) ............................................................................................................ 13
K. Brickey,‘Corporate Criminal Liability’ TBL 324(1984) ........................................................ 10
Lavik Gupta, Sanctions In Corporate Criminal Liability And Its Environmental Issue,LCI, Feb.
9, 2012....................................................................................................................................... 14

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Mark Dsouza,The Corporate Agent In Criminal Law- An Argument For Comprehensive
Identification, 79 CLJ, 91-119 (2020). ....................................................................................... 8
V K AGGARWAL, CORPORATE CRIMINAL LIABILITY- THE ISSUE REVISITED IN
THE CONTEXT OF RECENT SUPREME COURT DECISION, (Apr. 13, 2021, 04:54 PM)
................................................................................................................................................... 12
Article

‘Corporate Criminal Responsibility – American Standards of Corporate CriminalLiability’,(Feb.

09, 2021, 01:30 PM)http://law.jrank.org/pages/744 ................................................................... 9
ANDREW MOULDEN, MASS ZETA STRESS pg.15-17(2008)(Apr. 1, 2021, 04:30
PM)https://www.scribd.com/document/11564520/Ch-4-Mass-Zeta-Stress ............................... 7
Anthony O Nwafor, Corporate Criminal Responsibility: A Comparative Analysis, 57 Journal of
African Law 81–107 (2013)...................................................................................................... 12
Deboleena Dutta, Penal Provisions In IBC- Identification Of Issue, LEGAL SERVICE
INDIA(Jan. 28, 2021, 02:55 PM), http://www.legalserviceindia.com/legal/article-2479-penal-
provisions-in-ibc-identification-of-issues.html. ........................................................................ 10
Diamantis, M.E.,Corporate Essence and Identity in Criminal Law, J Bus Ethics 154, 955–966
(2019).(Mar. 31, 2021, 3:30 PM) https://doi.org/10.1007/s10551-018-3892-4 ......................... 8

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 ACKNOWLEDGEMENT

This project is the culmination of extensive efforts and research and could not have been
made without the presence of a few vital factors.

First, we would like to extend our heartfelt gratitude towards PROF KAPIL SHARMA AND PROF
MAYANK TIWARI, our subject teacher, to help us at every step of the way and continuously
guide us towards the successful completion of this project.

We would also like to thank the college administration for providing us with the facilities
required to finish this project. Along the same lines, we would like to acknowledge the
support extended by the library staff. Lastly, we would like to thank our friends and family for
supporting us every step of the way and the Lord Almighty whose has bestowed us with her
blessings.

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 RESEARCH METHODOLOGY
1. OBJECTIVE-

This paper primarily deals with the doctrine of identification in the context of corporate criminal
liability to attribute liability to a corporation for criminal offences. The discussion has been
subdivided further into a few research questions so as to throw light on the various key aspects of
this doctrine. Further, the paper also discusses about the gradual shift in the legal standing on this
doctrine as well as the prevailing law in India in this regard. This paper is an attempt to
collectively & critically examine the doctrine of identification vis-à-vis the Indian law as well as
its origin and the traditional viewpoint.

2. SCOPE –

The scope of this project is limited to English and Indian jurisprudence.

3. RESEARCH METHOD -

The method employed by the researchers to conduct research is qualitative. It is descriptive and
involves case law analysis.

4. RESEARCH QUESTION-

Q1. What are the liabilities that can be imputed to any wrong done by a corporation?

Q2. What is the way ahead in the doctrine of identification in the Indian jurisprudence?

5. SOURCES-

This doctrinal research has been done by using both primary sources and secondary sources for
the research. The primary sources include mainly the Indian Penal Code, various Indian as well
as foreign cases. The secondary sources include mainly books by prominent authors, research
papers and journals on criminal law. The research is purely doctrinal in nature.

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 INTRODUCTION

A corporation, which is a juristic person, is in the same position as a natural person in regard to
liability for criminal prosecution 1 and akin to a natural person 2 ; it may be convicted for
breaching common law and committing statutory offences, including those offences which
require the presence of mens rea for their commission.3 The mere fact that the offence for which
the corporation is being prosecuted entails mandatory imprisonment and fine does not provide it
any immunity from such prosecution.4

In order for one to be made criminally liable for the commission of any offence, two primary
requisites need to be proved- i.e. the actus reus (physical act) and the mens rea (mental intent)5.
In the absence of any of these the offender cannot be held liable for the commission of such act
despite the fact that the offence is a criminal one. But, this ascertainment of criminal liability
becomes pretty complex when it comes to cases involving corporate bodies for the fact that a
corporate body cannot possess mens rea, at least this is what the traditional view had been before
a shift in the legal standing on this issue took place. This paper is an attempt to critically examine
this shift that occurred from the traditional view to a more victim-friendly law on the Doctrine of
Identification in the context of Corporate Criminal Liability6. We will also introduce the two
other theories, Agency Theory and Aggregation Theory through case laws for better
understanding.

1
11, STANLEY SHAW BOND, HALSBURY’S LAWS OF ENGLAND 205-06(5th ed. 2020).
2
Aneeta Hada v. Godfather Travels and Tours Private,(2012) SC.(India).THE CASEMINE(Mar, 31, 2021, 10:30
PM), https://www.casemine.com/judgement/in/5609af11e4b014971141581c.
3
Iridium India Telecom Ltd. v. Motorola Inc., 2011.1 SCC74.(India).
4
Standard Chartered Bank v. Directorate of Enforcement, 2005.4 SCC 530(India).
5
ANDREW MOULDEN, MASS ZETA STRESS pg.15-17(2008)(Apr. 1, 2021, 04:30
PM)https://www.scribd.com/document/11564520/Ch-4-Mass-Zeta-Stress.
6
Mark Dsouza,The Corporate Agent In Criminal Law- An Argument For Comprehensive Identification, 79 CLJ, 91-
119 (2020).

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The topic of discussion has been further split into some research questions in order to narrow
down our discussion to the key fragments that collectively form the doctrine of identification,
aggregation and agency theories in the case of Corporate Criminal Liability (CCL)7.

AGENCY THEORY

The corporations were immune to criminal liability for a long period of time as there is a
requirement of intention or mens rea to commit an offence and, also, the obvious inability to
award them imprisonment or arrest them. Owing to the Doctrine of Attribution, now the
corporations can be liable for the acts of the directing minds (or agents), i.e., managers and
directors8.

Thus, making it now plausible to attribute the criminal intentions of the directors of the company
to the company to make the company liable but is the reverse also true? Can the officials of the
company be held liable for the acts of the company? This is what we seek to answer through
understanding of Agency theory.

Now, with changing times the courts have started holding corporations vicariously liable for the
acts committed by their agents within the scope of their employment. England was a pioneer in
establishingthe theory of vicarious liability and was followed by America’s Respondeat
Superiortheory. America’s principle is broader of the two as it encompasses both tort and
contract laws outlining that “a corporation may be held criminally liable for the acts of any of its
agents who (1) commit a crime (2) within the scope of employment (3) with the intent to benefit
the corporation.”9

7
Devika Sharma,, & “Ankoosh Mehta, Corporations:Legal Fiction Or An Unborn Predator?,SCC,(2020) ,(Mar. 26,
2021, 12:30 AM)https://www.scconline.com/blog/?p=232120.
8Diamantis, M.E.,Corporate Essence and Identity in Criminal Law, J Bus Ethics 154, 955–966 (2019).(Mar. 31,
2021, 3:30 PM) https://doi.org/10.1007/s10551-018-3892-4.
9
United States v. A & P Trucking Co., [1958] US 358 (US) 121, 124-27

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This parameter adopts a very wide interpretation which makes the employee or agent working
even at the lowest levels of operations in a company vicariously liable for the acts undertaken by
it.10

1. ENGLISH LAW

The English courts were reluctant in regard to the implication of criminal liability in this sphere
because it is unjust to condemn or punish someone for somebody else’s conduct. The only
exception in this case is when relating to certain offences which are regulatory or statutory in
nature where legislature already imposes an absolute duty on the employer or the principal.
Existence of such duties renders the employer liable even though he did not consent to or
authorize11 the commission of the act as discussed in Mousell Bros Ltd v London and North-
Western Railway Co.12 As opposed to the American Courts which look into the matter more
broadly, the English courts look into the factors of damage and public nuisance.

2. AMERICAN LAW

Under American law there are a few things that are required to be proved before making a
company vicariously liable for a criminal act. Firstly, it must be established that an individual
agent or employee of the company committed the crime. The requisite state of mind for the
commission of the crime is a “guilty mind”. If such a state of mind is proved in the court of law
then the element of mens rea can be imputed to the corporation itself. Even though not even a
single employee had sufficient information to know that a crime is being committed, mens rea
can be established on the basis of collective knowledge of the group of employees. Secondly, the
acts of the employee must be within the scope of employment 13. It may include occurrence of
any act while carrying out the assigned job by the offending employee. Lastly, the employee
should have acted with an intention to benefit the corporation.14

‘Corporate Criminal Responsibility – American Standards of Corporate CriminalLiability’,(Feb. 09, 2021, 01:30
10

PM)http://law.jrank.org/pages/744.
11
Chisholm v. Doulton, U.S. 22 QBD, 736(1889).
12
Mousell Bros Ltd v. London and North-Western Railway Co,. 2 KB 836, 846(1917).
13
Deboleena Dutta, Penal Provisions In IBC- Identification Of Issue, LEGAL SERVICE INDIA(Jan. 28, 2021,
02:55 PM), http://www.legalserviceindia.com/legal/article-2479-penal-provisions-in-ibc-identification-of-
issues.html.
14
New York Central & Hudson River Railroad Co. v. United States , U.S. 2 KB 836, 846(1917).

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3. RATIONALE OF VICARIOUS LIABILITY

Out of a number of reasons as to why a corporation should be liable for the acts of its agents one
of the most widely accepted rationales is the theory of loss distribution. Meaning that the loss
should not be suffered by the victim or the innocent party but it should be borne by the pocket
which was eager to take the profit. Additionally, the corporations bear the losses in a better
manner as it can distribute the losses to the society by increasing the prices of its products or by
insurance.

The principle of vicarious liability in cases of criminal matters motivates an organization to be

very careful while hiring, selecting and supervising its employees.15 This way the companies are
extra precautions and take every possible step to ensure that their business is carried out safely.16

Also, there are some special offences that can only be attributed to the company as an entity so it
the corporation is not made vicariously liable many offences will go unpunished.17

4. CRITICISM

This theory is mostly criticized because the fault of an agent is transferred to the company
without any necessary misfeasance or malfeasance on latter’s part. It can be easily ignored that
the corporation took all the needful measures and put efforts to prevent any sort of illegal activity
by the employees when the doctrine of vicarious liability is applied. The actions and the mental
states of the employees in individual capacity, acting within the scope of employment, can be
attributed to the corporation even the act done was against the express order of the principal.

The essence of the criticism can be broken into-

 That the acts of the employee must be for the benefit of the corporation or with
knowledge or belief that the corporation will benefit as a result.
 The employee having mere apparent authority to act on the behalf of the
corporation is enough.

15
Supra note 15.
16
K. Brickey,‘Corporate Criminal Liability’ TBL 324(1984).
17
N. Y. Cent. & Hudson River R.R. v. United States, U.S. 212 481, 494(1909)

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  The employee’s actions and mental state would be attributed to the company even
though it was against the specific orders of the principal.

A manager of a company paid bribe to one speaker of the Rhodes Island House of
Representatives, it was later established that the president after considering the proposed course
of action denied its operation.18

CRTICAL ANAYLSIS
1. CORPORATE BODY AND IT’SLIABILITIES: DOCTRIN OF IDENTIFICATION

Corporations or corporate bodies are distinct legal entities having an independent existence like
any other legal entity. A corporate body, in law, is a person and is vested with a unique corporate
existence which is independent of its members. This principle of independence of corporate
existence was established in the popular case of Salomon v. Salomon & Co.19wherein it was
held that20-

"The company is at law a different person altogether from the [shareholders] ...; and, though it
may be that after incorporation the business is precisely the same as it was before, and the same
persons are managers, and the same hands received the profits, the company is not in law the
agent of the [shareholders] or trustee for them. Nor are the [shareholders], as members, liable in
any shape or form, except to the extent and in the manner provided for by the Act."

Being a person, it is bound to commit wrongs (obviously through its directing officials) and
hence the subsequent liability accrued to such corporations differs according to the nature of
such liability. Civil liability, as in the case of vicarious liability, can be imputed to a corporation
for any act committed by its employee, agent, etc. during the course of employment21. However,
things become pretty complex when it comes to the imputation of liability in cases involving

18
US v. Potter, U.S. 463 (1st Cir) 28(2006).
19
Salomon v. Salomon & Co,, U.S.,AC 22(1897).
20
Supra note 14.

21
Anthony O Nwafor, Corporate Criminal Responsibility: A Comparative Analysis, 57 Journal of African Law 81–
107 (2013).

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criminal offences committed by such agents, employees, etc. This complexity arises due to the
fact that no mens rea i.e. criminal guilt or intent can be possibly attributed to a corporation in
order to hold it criminally liable as required by the principle contained in the famous latin maxim
actus non facitreum, nisi sit mens rea22.

It was only at the beginning of the 20th century that corporate criminal liability was extended so
as to include cases of crimes involving mens rea. This inclusion was necessitated by the fact that
the corporations took undue advantage of such immunity and hence they couldn't be held liable
for the criminal wrongs committed by its controlling officer. It was felt imminently necessary to
lift the corporate veil of independent existence in order to hold corporations liable for the
criminal wrongs committed by its officers or employees. The guiding principle in this regard was
established in the case of Lennard’s Carrying Co. Ltd. v Asiatic Petroleum Co. Ltd.23with the
introduction of the doctrine of identification or attribution. In this case, criminal liability was
attributed to the company for the negligence of its "controlling officer" in the conduct of his
business. It was held that in the case of corporations, criminal liability can be attributed to the
corporation for any act/omission carried on by its officer who turns out to possess the "directing
mind" in the conduct of such business 24 . This attribution of liability was not based on the
principle of respondent superior rather primary liability was attributed to the corporation by
identifying it as an alter ego of the person controlling it. Doctrine of Identification thus, in the
context of CCL, was established as the guiding doctrine for the adjudication of corporate
disputes involving criminal liability, specifically for the purpose of the ascertainment of criminal
liability. However, complexities still existed in the doctrine and its applicability to corporations,
specifically with regards to the absence of any clear rule concerning the identification of an
individual as the company. This deadlock was resolved in the case of “Tesco Supermarkets Ltd.
v. Nattrass25wherein the court considered the overall corporate structure vis-à-vis the individual
and proposed a test for the identification of an individual as the company. The court observed

22
V K AGGARWAL, CORPORATE CRIMINAL LIABILITY- THE ISSUE REVISITED IN THE CONTEXT OF
RECENT SUPREME COURT DECISION, (Apr. 13, 2021, 04:54
PM)https://www.icsi.edu/media/webmodules/programmes/33nc/33CONV%20BACKGROUNDER.pdf.
23
Lennard’s Carrying Co. Ltd. v Asiatic Petroleum Co. Ltd, U.S. AC 705,(1915).
24
Akhil Mahesh, Corporate Criminal Liablity, LAWCTOPUS, Feb. 04, 2015, Sinjini Majumdar ed.
25
Tesco Supermarkets Ltd. v. Nattrass, U.S. AC 153, (1972).

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that the position of such individual in the corporate structure needs to be kept in mind while
identifying that person as the company and affixing liability thereof. Although, Tesco 26
established an authority on this doctrine yet it suffered from a few criticisms, especially due to
narrow scope of the officials to whom this doctrine shall be applicable." These criticisms were
collectively addressed in the landmark case of Meridian Global Funds Management Asia Ltd.
v. Securities Commission27 which widened the scope of this doctrine through the adoption of a
new approach for the identification of individuals whose acts/omissions could be affixed to the
company. The court relaxed the stringent tests adopted in Tesco28and took a more expansive
view on the doctrine of attribution observing as follows-

“Any proposition about a company necessarily involves a reference to a set of rules. A company
exists because there is a rule (usually in a statute) which says that a persona ficta shall be deemed
to exist and to have certain of the powers, rights and duties of a natural person. But there would
be little sense in deeming such a persona ficta to exist unless there were also rules to tell one
what acts were to count as acts of the company. It is therefore a necessary part of corporate
personality that there should be rules by which acts are attributed to the company. These may be
called "the rules of attribution" 29 .” This case finally established a much exhaustive &well-
defined law on the doctrine of identification/ identification theory.

2. CRIMINAL LIABILITY AND CIVIL LIABILTY VIS-A VIS A CORPORATE BODY

The nature of punishment is considered to be the primary difference between civil liability &
criminal liability for the fact that while civil misconduct carries with itself sanctions in the form
of fine/damages, the same is clubbed with imprisonment as a form of sanction in the cases
involving criminal misconduct. Practically, therefore, it becomes almost unimaginable to affix
criminal liability to a corporation as that would require imprisoning the corporation itself in a
plethora of cases, which surely becomes an impossible task. In order to fill up this void in the
traditional legal standing, a transition was felt imminently necessary so as to do away with such

26
Supra note 26.
27
Meridian Global Funds Management Asia Ltd. v. Securities Commission,UKPC 5,(1995).
28
Tesco,AC 153(1972).
29
Alex Jenkins,The Bermuda Islands blow ‘sweet & sour’ on employers’ liability for Internet libel,25, 280-
284(2009)

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fake immunity acquired by the corporations against criminal liability. As already discussed in the
preceding paragraphs, the doctrine of identification was established in the celebrated case of
Lennard's Carrying Co Ltd v Asiatic Petroleum Co Ltd.30which clearly established the rule of
affixing criminal liability to corporations in mens rea offences. With the passage of time, plenty
of developments took place in this regard thereby assisting in an even lucid interpretation of this
doctrine.

HISTORICAL DEVELOPMENT OF CORPORATE CRIMINAL LIABILITY

In,1909, in New York Central & Hudson River Railroad Co. v. United States, the Supreme
Court clearly held that a corporation could be held liable for crimes of intent.31 The court based
this upon the principle of respondent superior32. Following this judgment, all courts were willing
to hold corporations criminally liable for almost all wrongs except rape, murder, bigamy, and
other crimes of malicious intent.33 The development has been slow in India; we have been slow
to even adopt the practices used in any foreign country. As late as in 1964, courts were unwilling
to hold corporations responsible for crimes that were done with intent. In State of Maharashtra
v. Syndicate Transport Co.34Paranjpe.J., held that it would depend on the nature of the offence
to hold a corporation responsible for criminal action resulting from the action of its individual
members. Section 2, IPC reads that every person shall be held liable under the code for
punishment. Under Section 11, a corporate body is included in the definition of “person”. It was
argued that though a corporate body was included in the definition, there were certain offences
that could be committed only by an individual. So, where the IPC provided that certain offences
were to be punished only with imprisonment, it would not be possible to impose this on
companies35.

30
Supra note 29.
31
York Central & Hudson River Railroad Co. v. United States, U.S. 212 , 481(1909).
32
Lavik Gupta, Sanctions In Corporate Criminal Liability And Its Environmental Issue,LCI, Feb. 9, 2012.
33
Khanna, V.S., ‘’Corporate Criminal Liability,’’ Harvard Law Review, Vol. 109, No. 7, 1996, pp.1482-1485.
34
State of Maharashtra v. Syndicate Transport Co. AIR (1964), Bom.195(India).
35
Supra note 7.

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The court observed that the definition of a “person” would be read as being subject to the
qualifying clause “unless there is anything repugnant in the subject or context,” as using section
2(42) of the general clauses act. Where a provision provided for fine and imprisonment, it was
held to be inappropriate for the courts to impose only the fine, therefore, the entire provision
would be in applicable, and the company would not be guilty36. This is a very strict interpretation
considering that the IPC was qualified in 1860 and more than a century has elapsed, the judges
should have realized that the legislation would not have provided for corporate crimes and their
punishment. It was not until 1975 in the case of Delhi municipality v. J.B. Bottling Co.37 that
this was changed. Dayal J. Observed that where punishment imposed both fine and
imprisonment, the court could impose only the fine on the corporate body.

It is of no importance that the offending employee holds a superior or inferior post in order to
make the company vicariously liable. The commonwealth nations have rejected this theory in
criminal law basically because under no pretense the act or omission should be done by the
company itself as it is made liable for the act or fault of another. Hence, distorting the whole
concept of fault and liability since no proof of company’s misfeasance or malfeasance is required
to deem it guilty. The corporate criminal liability is imposed for a wide variety of offences,
including currency reporting prosecution and many other offences that require specific intent.

DOCTRINE OF IDENTIFICATION: THE INDIAN APPROCH

For decades, there have been heated debates on the practical applicability of this doctrine to
corporations in order to make them criminally liable. While various High Courts have explicitly
rejected this principle, others have just refrained from taking a stand altogether. In general, the
courts were pretty hesitant towards affixing criminal liability to a corporation and regarded such
attribution as an impossible task since it was difficult to ascertain the requisite mens rea for
offences entailing mandatory imprisonment. In determining whether a corporate body can be

36
This principle has been used in number of cases, Rex v. I.C.R. Haulag Ltd., U.S., 1 KB, 551(1994).
37
Delhi municipality v. J.B. Bottling Co.(1975), Cri L.J. 1148(India).

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made criminally liable, the Bombay High Court in the case of State of Maharashtra v. Syndicate
Transport Co. (P) Ltd.38 observed as follows-

"The question whether a corporate body should or should not be liable for criminal action
resulting from the acts of some individual must depend on the nature of the offence disclosed by
the allegations in the complaint or in the charge-sheet, the relative position of the officer or agent
vis-a-vis the corporate body and the other relevant facts and circumstances which could show
that the corporate body, as such, meant or intended to commit that act."

The ratio adopted by the jury in this case and the well-explained principle might force us into
thinking that the legal standing on the doctrine of identification was uniformly acceptable &
applicable throughout whereas the reality was different. The law on the doctrine of identification
was practically undefined for a long time with different high courts coming up with diverse
opinions. In the case of A.K. Khosla v. S. Venkatesan39while deciding upon the question as to
whether a corporation can be made criminally liable for committing fraud, the court observed
that the pre-requisites for prosecuting corporate bodies are- mens rea & the possibility of
imprisonment whereas a corporation cannot be expected to possess the requisite mens rea nor
could it be punished with any imprisonment40. The same view was expressed by the Calcutta
High Court in the landmark case of Kusum Products Ltd. vs S.K. Sinha41wherein the court
observed as follows-

"A company or a juristic person cannot possibly be sent to prison, and it is not open to a court to
impose a sentence of fine or not to award any punishment if the court finds a company guilty
under the said section. If the court does so it would be altering the very scheme of the Act and
usurping the legislative function."

38
State of Maharashtra v. Syndicate Transport Co. (P) Ltd., AIR 1[964]Bom. 195 (India).
39
A.K. Khosla v. S. Venkatesan, (1992) 1 CALLT 77, HC(India).
40
Supra note 33.
41
Kusum Products Ltd. vs S.K. Sinha, (1980),126 ITR,804 Cal, (India).

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However, this ambiguity was done away with to a great extent after the recent landmark ruling in
the case of Iridium India Telecom Ltd. v. Motorola Inc.42wherein the apex court interpreted the
doctrine of attribution in a much lucid manner observing as follows-

"…. a corporation is virtually in the same position as any individual and may be convicted of
common law as well as statutory offences including those requiring mens rea. The criminal
liability of a corporation would arise when an offence is committed in relation to the business of
the corporation by a person or body of persons in control of its affairs. In such circumstances, it
would be necessary to ascertain that the degree and control of the person or body of persons is so
intense that a corporation may be said to think and act through the person or the body of
persons.... Mens rea is attributed to corporations on the principle of `alter ego' of the company."

It becomes pretty evident that the legal position in India on the doctrine of attribution is
established now and the criminal intent in mens rea offences of the alter ego of the corporation,
i.e. the individual or group of individuals is to be attributed to the corporation itself. This makes
crystal clear the fact that a corporation cannot escape liability in criminal cases involving mens
rea offences & can be prosecuted. However, as already discussed briefly in the opening
paragraphs, there lies a practical impossibility of imprisoning the corporation and hence this
might lead this doctrine to be redundant in offences prescribing mandatory imprisonment. Hence,
a strict principle/rule was the need of the hour to check for any such redundancy. This deadlock
was finally resolved in the case of Standard Chartered Bank and Ors. V. Directorate of
Enforcement and Ors.43Wherein the apex court observed as follows-

"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 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

42
Iridium India Telecom Ltd. v. Motorola Inc., AIR(2011) SC 20,(India).
43
Standard Chartered Bank and Ors. v. Directorate of Enforcement and Ors., (2005) SC 2622,(India).

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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 blanket immunity for any
company from any prosecution for serious offences merely because the prosecution would
ultimately entail a sentence of mandatory imprisonment."

CONCLUSION

The doctrine of identification, undoubtedly, has been a major breakthrough in the field of
corporate law involving criminal offences. The illusionary immunity acquired by the
corporations against criminal liability posed a serious danger to the very foundations of criminal
law and hence a guiding principle was necessarily required so as to protect the rights of the
victims of such criminal misconduct. While the traditional view was more concerned with the
possibility of affixing criminal liability to a corporation, the modern view lucidly established the
doctrine as it exists now. The doctrine clearly laid down the method to be adopted by courts in
matters concerning CCL cases for the ascertainment of the directing mind & will of the company
for the attribution of such criminal liability to the company.

The Indian approach to this doctrine has been pretty identical to the legal approach adopted in
various UK & US cases, marking a gradual shift from the traditional view to a more victim-
friendly legislation. The complexity in relation to the possibility of imprisoning the corporation
was also resolved in the Standard Chartered Bank 44 case, granting the courts discretion in
relation to offences prescribing mandatory imprisonment and fine.

The legal position on the doctrine of identification had been primarily two pronged- i.e. based on
the holdings in the case of Tesco &Meridian. While the former dealt with the doctrine in a much
narrower sense, the latter established the law, as it is today, making this doctrine practical as well
as exhaustive in the real sense. Also, the courts have been interpreting this doctrine according to
their whims & fancies since the early 20th century but we can unanimously agree over the fact
that at least now the doctrine has been finally established and the corporations have lost the fake-
immunity acquired by them against any sort of criminal liability.

44
Supra note 44.

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 BIBLIIOGRAPHY
1. BOOKS

 Company Law by Avtar Singh (Sixteenth Edition)

 Corporate Law by Robert C. Clark (Little, Brown & Co. 1986)
 Corporate Criminal Responsibility: A Comparative Analysis by Anthony O
Nwafor
 The Corporate Agent In Criminal Law- An Argument For Comprehensive
Identification by Mark Dsouza
 Halsbury’s Laws Of England by Stanley shaw Bond(Fifth edition)

2. WEB SOURCES/ BLOGS

 Lavik Gupta, Sanctions In Corporate Criminal Liability And Its Environmental

Issue,LCI, Feb. 9, 2012.

 Khanna, V.S., ‘’Corporate Criminal Liability,’’ Harvard Law Review, Vol. 109, No. 7,
1996, pp.1482-1485

 Tesco,AC 153(1972).

 Alex Jenkins, The Bermuda Islands blow ‘sweet & sour’ on employers’ liability for
Internet libel,25, 280-284(2009)
 Akhil Mahesh, Corporate Criminal Liablity, LAWCTOPUS, Feb. 04, 2015, Sinjini
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 V K AGGARWAL, CORPORATE CRIMINAL LIABILITY- THE ISSUE REVISITED

IN THE CONTEXT OF RECENT SUPREME COURT
DECISION,https://www.icsi.edu/media/webmodules/programmes/33nc/33CONV%20B
ACKGROUNDER.pdf.

 Deboleena Dutta, Penal Provisions In IBC- Identification Of Issue, LEGAL SERVICE

INDIAP,http://www.legalserviceindia.com/legal/article-2479-penal-provisions-in-ibc-
identification-of-issues.html.

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 ‘Corporate Criminal Responsibility – American Standards of Corporate
CriminalLiability’,http://law.jrank.org/pages/744.

 Devika Sharma,, & “Ankoosh Mehta, Corporations: Legal Fiction Or An Unborn

Predator?,SCC,(2020) https://www.scconline.com/blog/?p=232120.

 Diamantis, M.E.,Corporate Essence and Identity in Criminal Law, J Bus Ethics 154, 955–
966 (2019). https://doi.org/10.1007/s10551-018-3892-4.

 ANDREW MOULDEN, MASS ZETA STRESS pg.15-

17(2008)https://www.scribd.com/document/11564520/Ch-4-Mass-Zeta-Stress.

 Aneeta Hada v. Godfather Travels and Tours Private,(2012) SC.(India).THE

CASEMINE, https://www.casemine.com/judgement/in/5609af11e4b014971141581c.

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