INTRODUCTION
The position of criminal liability of corporations has been a controversial topic for the past few years. And with the increase in MNCs all over the world the importance of corporate criminal liability has got its own significance. A corporation has a separate legal identity. Thus, separate liability is imposed on it. The liability for the wrongful act can be imposed on individual persons who were involved in that act within the corporation. This rule is based on the legal maxim ‘actus non facit reum nisi mens sit rea’ means the act is not wrongful when not with the wrong state of mind. A corporation can be held liable for its failure in ensuring safety mechanisms and any other omission. It can be held liable for offences without even having an intention. The company is considered a juristic person and is made liable done in the scope of its employment.
THE DOCTRINES RELATED TO CORPORATE CRIMINAL LIABILITY
- Doctrine of vicarious liability-
This doctrine makes the master liable for the act done by the servant. It is based on two Latin maxims:
- Respondent superior, and
- Qui facit per alium facit per se.
Vicarious liability is the concept that is applicable in civil liability but the court had made it applicable to corporate criminal liability. In one of the cases, the court has held that for the act done by the employee in the course of employment the company can be held vicariously liable. [1]
- Identification doctrine
A corporation is considered an artificial person and has its identity. The doctrine of identification makes the corporation responsible for the act that was done by its employee having decision-making authority. The liability of the natural person does not arise unless the corporate veil is lifted. In one case it was held that the employees who are identified with the corporations must act within their scope of employment. The scope of the doctrine of vicarious liability is broader than the doctrine of identification.
- Doctrine of Collective Blindness
The court makes the corporation liable even when there is no fault of any individual. And for this purpose sum knowledge of all the employees is considered by the court to come to a conclusion. This concept is called the doctrine of collective blindness.
- Doctrine of Attribution
The origin of this doctrine took place in the United Kingdom and is being implemented by the Indian courts. As per the doctrine of attribution, when due to any act or omission that leads to imprisonment due to violation of criminal law then mens rea (means guilty mind) is taken into consideration.
- Doctrine of Willful Blindness
- Doctrine of Alter Ego
As per the doctrine of alter ego, the owner and the employees who manage the corporation are considered to be alter ego of the corporation. According to the doctrine of alter ego the persons who manage the affairs of the corporation can be held liable for the act done on or behalf of the corporation since it has no mind, soul, and body. Since it is not possible to give imprisonment to a company.
CORPORATE CRIMINAL LIABILITY IN INDIA
The provisions of the companies Act, 2013 deal with corporate criminal liability. In the recent past, we can see that there has been a change in this scenario. Now, Indian courts believe that corporations can be held criminally liable for the offences that require mens rea as one of the essential elements. The various acts for which a corporation can be held criminally liable are conspiracy, public nuisance, violation of the provisions of consumer protection laws, breaching courts order, violation of licensing statutes, violation of antitrust laws, etc.
In the case of a complaint was made by Sahara under section 500 of IPC (i.e. Punishment for defamation) against Zee telefilms. The court was of the opinion that a company cannot be held liable for the criminal offence as mens rea is the essential element for criminal defamation. And the company doesn’t fulfil the criteria.[2]
In the case of Iridium v. Motorola[3], a complaint was filed against Motorola under sections 120 and 420 of IPC, 1860. The high court was of the view that the company is not capable of having malafide intention and cannot have mens rea. Thus, cannot be held liable for cheating. Further, the appeal was made to the Supreme Court, and decided the two issues:
- Whether mens rea should be considered for establishing criminal liability of the company?
- What should be the criminal liability for establishing misstatements in the case of securities offered for specific investors on a private basis?
The principle of attribution and test of identification was followed to come to a conclusion. The court held that the person who had direct control of the affairs of the company then it is deemed that the company acts through that person.
In one case of the bank was prosecuted for violation of the Foreign Exchange Regulation Act, 1973 and the Hon’ble Supreme Court held that the corporation can be prosecuted and can be liable for punishment with a fine with or without imprisonment as per the applied statutes. [4]
In another case, the high court held that a body corporate is liable for the acts and omissions done by its directors and agent, whether there be involvement of mens rea or not.[5]
CONCLUSION
The scenario of corporate criminal liability in India has changed in past few years. Provisions have been inserted in the Companies Act, 2013 to prevent corporate crime. The Supreme Court of India through various cases has overruled previous decisions which were contrary and held that corporations can be held fine should be imposed on the corporation for the offence done by any act or omission. There is a long way for making further provisions in this regard. Even the Supreme Court is now of the opinion that there is a need for making separate laws for the same.
Author’s Name: Riya Dubey (Banasthali Vidyapith, Rajasthan)
[1][1859] 4 De G & J 74, Corporate Criminal Liability – Criminal Law – India (mondaq.com) accessed on 19 October 2021
[2] (2004 Cri LJ 1576) https://indiankanoon.org/doc/512651/ accessed on 20 October 2021
[3] (2011) 1 SCC 74
[4]A.I.R. 2005 S.C. 2622, https://indiankanoon.org/doc/1915525/
[5]AIR 1964 Bom 195, (1964) 66 BOMLR 197, 1964 CriLJ 276, State Of Maharashtra v. Syndicate Transport Co. (P) Ltd. … on 26 September, 1963 (indiankanoon.org) accessed on 20 October, 2021
