ANALYSIS OF THE PROVISIONS

GOVERNING CORPORATE
CRIMINAL LIABILITY

By: Sanjukta Sen

LLM, 1ST Year
WBNUJS.
 INTRODUCTION
 Corporate bodies play a pivotal role in enhancing and assisting the evolution of
the world economy and the society.
 Consequently Corporate bodies are also under an obligation to not pollute food
and water that are essential for human sustenance, to keep the river, air and
other natural resources clean; not to endanger the lives and safety of the
employees and the public and to ensure safety in providing commodities and
transportation, to prevent killing and injuring people.
 But when the activities of the corporate bodies result in such disasters, these
entities are made criminally liable.
 To ensure proper regulation and maximum utilization of the corporations, these
have been entrusted with few features and powers;
 Distinct identity separate from its members.
 Right to hire and fire at will
 Get the first right over natural and community resources.
 ‘Person’ under Section 11 of the IPC includes any company, association or body
of person, whether incorporated or not.
 Under Section 3 (42) of the General Clauses Act, 1987, ‘person’ includes any
company or association or body of individuals, whether incorporated or not.
 Therefore if a corporation commits any act which endangers social interests, it
would constitute a crime and the corporation would be liable to punishment like
any individual/ person.
 Basic principle underlying the imposition of criminal liability on any person,
individual or company, is actus non facit reum nisi mens sit rea:

An act does not make a person guilty without the presence of a guilty mind.
 Corporation neither has a body nor a mind, therefore lacks the requisite mens
rea.
 Corporation does not have a physical existence/body, therefore cannot be
imprisoned.
 There is no separate legislation governing corporate criminal liability.
 Courts have tried vehemently to establish a just and workable doctrine of corporate
criminal liability.
 Present doctrine is based on the landmark judgement of Standard Chartered Bank
& Ors. v Directorate of Enforcement [(2005) 4 SCC 530].
 STATEMENT OF PROBLEM
 A juridical person is distinct from a natural person; i.e. company and its members
are separate legal entities.
 This status of a company as a ‘non-living person’ or ‘virtual entity’ affords it with
the immunity from being imprisoned.
 Furthermore, corporations lack the requisite mens rea and thus could not be made
criminally liable as well.
 Where an offence reads as ‘shall be punished with imprisonment and also with
fine’, the word ‘shall’ indicates that imprisonment is bound to be awarded and the
court cannot award a sentence of only fine for such offences. Thus previously,
corporate accountability was restricted to crimes in which imprisonment was not
mandatory as a punishment, viz. less severe offences.
 Imposition of fines might also not have a serious deterrent effect on corporate
bodies. If a considerably heavy amount of fine is imposed on the companies they
may quite easily raise the penalized amount from their consumers and customers
by increasing the price of their products and services.
 India does not have a separate legislation to deal with corporate manslaughter
cases. It lacks a statute and a proper legal framework to prevent criminal offences
by corporations or to atleast ensure imposition of proper punishment for
commission of such offences.
 RESEARCH QUESTIONS

 How adequate are the sanctions that are imposed upon the corporate
bodies, to curb the occurrence of criminal activities by companies in
future?

 How can the existing provisions be changed or modified to make them

more competent in handling criminal offences committed by corporate
bodies?

 How important is it to enact a new legislation, with reference to the UK

Act, which would exclusively deal with offences of corporate
manslaughter?
 HYPOTHESIS
Having a personality separate from that of its members and directors’ only derives
benefits for the company, like owing assets and suing others, but is practically of
no use when it comes to being sued. The developments that have taken place till
date with regards to corporate criminal liability have been through case laws,
depending on the facts of each case. There are no established rules or set
jurisprudence to form a legal framework for the exclusive governance of corporate
crimes; hence for the proper management of the same, modifications and new laws
must be brought forth.
 OBJECTIVE OF RESEARCH
 The first objective of the research will be to restate and analyze the already existing
legislations and theories prevalent in India, to determine their competence to deal
with corporate criminal liability.
 The second objective will be to analyze the laws currently in force in other major
jurisdictions and the amendments that they have been subjected to.
 Finally, the most important objective of the research would be to conclude whether
the current Indian legislations are adequate or not and if any modifications or new
enactments need to be made.
 SCOPE OF STUDY
 Analysis of the provisions governing corporate criminal liability.
 Examine the issues and loopholes in the existing doctrine and the gradual
modification in the Court’s perception of the concept of corporate criminal liability.
 Draw reference with Corporate crime legislations existing in several common and
civil law countries.
 Recommend on the plausible changes that can be brought forth in the existing
provisions and
 Decide whether or not there is need for the introduction of a separate statute to deal
with corporate criminal liability.
 RESEARCH METHODOLOGY
Methodology followed involves both;

 Doctrinal research
 Case studies.

Research done is analytical in nature.

 TENTATIVE CHAPTERIZATION
 INTRODUCTION

 CORPORATE CRIMINAL LIABILITY DOCTINE: THE INDIAN STANDPOINT

 CORPORATE CRIMES

 LEGAL FRAMEWORK GOVERNING CORPORATE CRIMINAL LIABILITY:

UK AND US.

 CONCLUSION AND RECOMMENDATIONS

Thank you