AADITHYA ARAVINDH Drafted for The Chambers of Bharat Chugh

RESEARCH NOTE – CORPORATE CRIMINAL INTENT

ASHISH DAMIJA V. UNION TERRITORY OF JAMMU & KASHMIR, 2023 CRI LJ 1186
8. From a perusal of the aforesaid provision, it appears that when an offence has been
committed by a company, every person, who, at the time when the offence was committed,
was incharge 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. The provision
extends the concept of vicarious liability to the persons responsible for conduct of business of
the company in a case where the offence has been committed by the company. In criminal
law, there is no concept of criminal liability and it is only if there is a statute which makes a
person vicariously liable for the acts of another person that such a person can be prosecuted
for a criminal offence. One such example is the provision contained in Section 34 of the
Drugs and Cosmetic Act whereby the persons incharge of and responsible for the conduct of
business of the company are made vicariously liable for the offences committed by the
company. However, the said provision makes it clear that not only those persons but even the
company would be deemed to be guilty of the offence.
HDFC SECURITIES V. STATE OF MAHARASHTRA, (2017) 1 SCC 640
19. The learned counsel for the respondents have not rebutted this issue in any of his
arguments. With the meticulous understanding of the orders of the courts below in the instant
case, we can see that general and bald allegations are made in the context of Appellant 1 who
is a juristic person and not a natural person. The Penal Code, 1860, does not provide for
vicarious liability for any offence alleged to be committed by a company. If and when a
statute contemplates creation of such a legal fiction, it provides specifically therefor e.g. the
Negotiable Instruments Act, 1881. Further, reliance was made on S.K. Alagh v. State of U.P.
[S.K. Alagh v. State of U.P., (2008) 5 SCC 662 : (2008) 2 SCC (Cri) 686] , wherein at para
16, this Court observed that : (SCC p. 666)
“16. The Penal Code, save and except some provisions specifically providing therefor, does
not contemplate any vicarious liability on the part of a party who is not charged directly for
commission of an offence.”
MAKSUD SAIYED V. STATE OF GUJARAT, (2008) 5 SCC 668
13. Where a jurisdiction is exercised on a complaint petition filed in terms of Section 156(3)
or Section 200 of the Code of Criminal Procedure, the Magistrate is required to apply his
mind. The Penal Code does not contain any provision for attaching vicarious liability on the
part of the Managing Director or the Directors of the Company when the accused is the
Company. The learned Magistrate failed to pose unto himself the correct question viz. as to

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AADITHYA ARAVINDH Drafted for The Chambers of Bharat Chugh

whether the complaint petition, even if given face value and taken to be correct in its entirety,
would lead to the conclusion that the respondents herein were personally liable for any
offence. The Bank is a body corporate. Vicarious liability of the Managing Director and
Director would arise provided any provision exists in that behalf in the statute. Statutes
indisputably must contain provision fixing such vicarious liabilities. Even for the said
purpose, it is obligatory on the part of the complainant to make requisite allegations which
would attract the provisions constituting vicarious liability.
STATE OF MAHARASHTRA V. SYNDICATE TRANSPORT COMPANY PRIVATE LTD., AIR
1964 BOM 195
4. Sections 2 and 11 of the Penal Code, 1860 are in the following words: —
“S. 2. Every person shall be liable to punishment under this Code and not
otherwise for every act or omission, contrary to the provisions thereof, of
which he shall be guilty within India.”
“S. 11. The word ‘person’ includes any Company or Association, or body of
persons, whether incorporated or not.”
5. A plain reading of these two sections together would show that a company or a corporate
body shall be liable for indictment for all kinds of offences. It is not disputed that there are
several offences which could be committed only by an individual human being, for instance,
murder, treason, bigamy, rape, perjury etc. A company which does not act by or for itself but
acts through some agent or servant would obviously not be capable of commission of the
aforesaid offences and would, therefore, not be liable for indictment for such offences, Again,
there are certain other offences which necessarily entail the consequences of corporal
punishment or imprisonment. A body corporate or a company cannot be subjected to such
corporal punishment or imprisonment. Prosecuting a company for such offences would only
result in the Court “stultifying itself by embarking on a trial in which, if a verdict of guilty is
returned, no effective order by way of sentence can be made”. That will mean that the broad
definition of a “person” which includes a corporate body will have to be read as being subject
to some kind of limitations.
ASSTT. COMMR. V. VELLIAPPA TEXTILES LTD., (2003) 11 SCC 405
28. The question of criminal liability of a juristic person has troubled legislatures and judges
for long. Though, initially, it was supposed that a corporation could not be held liable
criminally for offences where mens rea was requisite, the current judicial thinking appears to
be that the mens rea of the person in charge of the affairs of the corporation, the alter ego, is
liable to be extrapolated to the corporation, enabling even an artificial person to be

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AADITHYA ARAVINDH Drafted for The Chambers of Bharat Chugh

prosecuted for such an offence. I am fully in agreement with the view expressed on this
aspect of the matter in the judgment of Brother Mathur, J. What troubles me is the question
whether a corporation can be prosecuted for an offence even when the punishment is a
mandatory sentence of imprisonment.
29. That in India the situation has not been free from doubt is evident from two reports of the
Law Commission of India which recommended specific amendments in order to get over this
difficulty. The Law Commission of India in its 41st Report at paragraph 24.7 recommended
as under:
“24.7. As it is impossible to imprison a corporation, practically the only
punishment which can be imposed on it for committing an offence is fine. If
the penal law under which a corporation is to be prosecuted does not
provide for a sentence of fine, there will be a difficulty. As aptly put by a
learned writer,—
‘Where the only punishment which the court can impose is death, penal
servitude, imprisonment or whipping, or a punishment which is otherwise
inappropriate to a body corporate, such as a declaration that the offender is a
rogue and a vagabond, the court will not stultify itself by embarking on a
trial in which, if the verdict of guilt is returned no effective order by way of
sentence can be made.’
In order to get over this difficulty we recommend that a provision should be
made in the Penal Code, 1860 e.g., as Section 62 in Chapter III relating to
punishments, on the following lines:
‘In every case in which the offence is only punishable with imprisonment or
with imprisonment and fine and the offender is a company or other body
corporate or an association of individuals, it shall be competent to the court
to sentence such offender to fine only.’”

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