With the industrialization and globalization, large-scale corporations are
coming up throughout the world and are acquired dominant position since the past
two centuries, with the development of corporations, they have become a
significant actor in our economy, our society runs in the risk of being
victimized by these corporations, and therefore they should be deterred too.
Some of these corporations have assets and facilities in other countries apart
from their home country as well and such corporations are known as
Multi-National Corporations (MNCs). Multinational corporations have come to play
a huge role in most aspects of human life today. Large multinational
corporations have come to dominate the national and global economic scene.
Corporations have their own identity, they have separate legal personality and
they are different from their members, and this is not sufficient to make it
possible to hold them liable and censure them. Imposition of punishment, upon
offenders of any kind, can be understood by the various rationale of criminal
law jurisprudence, but deterrence is the rationale that is applicable to such
economic entities as corporations.
For the most part, just individuals can carry
out the offence; the prior view was that an organization ought not to be liable
of wrongdoing. The criminal blame required a purpose and an organization not
having a brain could frame no aim. What's more, an enterprise had no body of its
own, which could be detained.
The special case to this standard is that the
corporate bodies can be held subject for the corporate wrongdoings. The courts
are probably going to force the risk on the officer-in-control or chiefs or
different people acting inside the extent of work. In layman's terms, the
doctrine of corporate criminal liability is essentially the doctrine of
respondent superior, which has been imported into criminal law from tort law.
This doctrine states that a corporation can be made criminally liable and
convicted for the unlawful acts of any of its agents, provided those agents were
acting within the scope of their actual or apparent authority. Corporations
have their own identity, separate from that of their members and this very fact
makes it impossible to blame and censure them. Thus, Corporate Criminal
Liability is indeed a necessity in today's world.
The Concept Of Corporate Criminal Liability
A corporation is a group of individuals deemed in law to be a single legal
entity. It is legally distinct from all the individuals who compose it. It has
legal personality in itself and can accordingly sue and be sued, hold property
and transact, and incur liability.
Criminal Liability is the quality or state
of being legally obligated or accountable, legally responsible to another or to
society, which is enforceable by criminal punishment. Therefore, Corporate
Criminal Liability means the extent to which a Corporation as a legal person can
be held criminally liable for its acts and omissions and for those of the
natural persons employed by it.
Commentators to this idea contend that the corporate criminal liability is
pointless on the accompanying two grounds, firstly they contend that it is not
the corporations that carry out violations; the people do. Besides, the
retributive impact is borne by the investors and buyers. It implies that the
expense of corporate criminal fines and sanctions borne by the inverters and the
consumers for the acts of the company.
Evolution Of Corporate Criminal Liability
It was the common intent of the general population in mid-sixteenth and
seventeenth hundreds of years that the enterprises could not be held criminally
liable it has no soul, consequently, it cannot have "actual wicked intent".
During the mid-twentieth century courts started to hold, corporate criminally at
risk in different regions in which implementation would be obstructed without
corporate liability. Real obstacles that confronted the attribution of criminal
risk on corporates. Were factors, for example, false juristic identity and
non-appearance of mens rea with respect to the corporate.
The idea of the criminal liability of companies has had an alternate advancement
under common law frameworks when contrasted with its improvement under
precedent-based law frameworks. In the meantime, under the common law or
precedent-based law frameworks, the corporate criminal liability has grown
distinctively to mirror the recorded and financial substances of various
The historical evolution of corporate criminal liability shows that
corporate criminal liability is consistent with the principles of criminal law
and the nature of corporations. Furthermore, the development of theories of
corporate criminal liability reveals that criminal liability of corporations is
part of an important "public policy bargain.
The bargain balances privileges
granted upon the legal recognition of a corporation, such as limited liability
of corporate shareholders and the capability of a group of investors to act
through a single corporate form, with law compliance and crime prevention
pressures on the managers of the resulting corporate entity." 
The advancement of corporate criminal liability has turned into a major issue
for the investigators and courts that need to decide the criminal risk. In the
customary law world, built up to standards in tort law, the English courts
perceived corporate criminal liability amidst the only remaining century for
statutory offences where mens rea was not required.
The development in Indian
law is similar to that in English law. Earlier, courts viewed that a judicial
entity was incapable of having mens rea, and therefore a corporation cannot be
indicated for an offence involving mens rea. However, in Gopal Khaitan v.
 courts have adopted a changed view and stated that a corporation can be
held liable for mens rea offence referring to a dictum of Lord Denning.
in India like in England, while trying to attribute criminal liability to
corporations for mens rea offence, have attempted to identify the mens rea, in a
single individual, who is to be a high ranking official. In India, the standards
of vicarious risk have additionally been stretched out to criminal law in a
constrained way to specific conditions like break of statutory commitments of a
business or other administrative offenses where mens rea isn't a basic component
of wrongdoing or where there is liability as an occupier of land as expressed in
Sec.154 of the IPC, 1860. 
Theories Of Corporate Criminal Liability
Generally, a corporate entity may commit the crime in any one of the two
- Where the crime does not require intent i.e. pollution, food
adulteration and several other acts or omissions, which give rise to tortious liability
- Where the crimes require intent, for example, offences against property,
in all its forms.
This theory specifically developed to hold corporations liable in case of
offences, which required the presence of mens rea. This theory stipulates that
the actions and the mental stage of the corporation found in the action stage of
the employees or the directors are to be considered the action and mental stage
of the corporation itself.
In Tesco Supermarkets Ltd v. Nattrass
 Lord Reid said: "The person who acts is
not speaking or acting for the company. He is acting as the company and his
mind, which directs his acts, is the mind of the company. If it is a guilty mind
then that guilt is the guilt of the company." This test is otherwise called
modify the sense of self test and as coordinating personality and will
hypothesis. This test is connected in the English courts for distinguishing
proof or controlling and coordinating the personality of the organization to
decide the criminal liability of companies.
Due to the rapid pace of globalization of business and the evolution of
transnational corporations, it has become very essential to determine the
concept of corporate criminal liability. In State of Maharastra, v Syndicate
Transport Co. Pvt. Ltd
. as quoted in Rachana Flour Mills Pvt. Ltd. v Lalchand
 the Andhra Pradesh High Court observed that:
"Numerous corporate bodies have come into existence. These corporate bodies
necessarily act through the human agency of their directors or officers and
authorized agents. These seem to be no reason to exempt them from liability for
crimes committed by their agents or servants while purporting to act for or on
behalf of the corporate bodies. The ordinary citizen is now very much exposed to
the activities of persons acting, in the name of corporate bodies."
Vicarious Liability (Respondent Superior) Theory
Originally, this doctrine developed in the context of tortious liability, which
was later imported into company liability. This particular doctrine states that
a person is liable to answer for the acts of another. In the case of companies,
the company may be held liable for the acts of its employees, agents, or any
person for whom it is responsible. This was adopted in the case of Canadian
Dredge & Dock Co. v The Queen
 The courts have provided various reasons to
justify the corporation's liability for the acts of agents.
A corporation can be
held liable for the acts of its agents:
- commit a crime
- within the scope of employment
- With the intent to benefit the corporation. This was clearly held in
United States V. A.P. Trucking Co.
The theory of Aggregation is a contribution of the American Federal Courts to
the subject of Corporate Criminality. There might be situations where a
corporate wrong might be the consequence of a blend of the blameworthy
personality of numerous people. By accumulating the acts of at least two people,
the actus reus and mens rea can be removed from the lead and learning of a few
Global Scenario Of Corporate Criminal Liability
Corporate Criminal Liability In The USA
Initially, corporations were not held criminally liable for corporate activities
as a corporation was considered a fictitious legal entity incapable of forming
the requisite mens rea necessary for the commission of a crime. The Supreme
Court ultimately rejected this notion in 1909 in New York Central and Hudson
River Rail Road Co. v. U.N
 clearly held that a corporation is liable for
crimes of intent. In H. L Bolton and Co. Ltd v. T.J Graham and sons
Lord Denning Observed:
A company may in many ways be likened to a human body. They have a brain and a
nerve center, which controls what they do.
They also have hands, which hold the tools and act in accordance with directions
from the center. Some of the people in the company are mere servants and agents
who are nothing more than hands to do the work and cannot be said to represent
the mind or will. Others are directors and managers who represent the directing
mind and will of the company and control what they do.
The state of mind of these managers is the state of mind of the company and is
treated by law as such. Therefore, will find that in a case where the law
requires personal fault as a condition of liability in tort, the fault of the
manager will be the personal fault of the company. Lennard's Carrying Company
Ltd v. Asiatic Petroleum Co. Ltd Lord Haldene's held that, in the criminal
law, in cases where the law requires a guilty mind of directors or the managers
will render the company themselves guilty.
Corporate Criminal Liability In The United Kingdom
Mousell v. London and North Western Railway
 this is the first case in
the UK. The company, in this case, was held liable for an offence, which
required mens rea, the act of its manager in giving a false account with intent
to avoid payment of tolls. In R v ICR Haulage Ltd
 the court of
criminal intrigue held that there was no reason in law why such an arraignment
ought not to lie.
On the realities, there was obviously no inquiry that, if corporate risk were to
join in any conditions, that the contemptibility of overseeing executive of a
two-chief private family organization would be imputable to the organization. In
applying this thinking to the custom- based law offense of trick to cheat, for
this situation court took the recognizable proof or change sense of self
hypothesis above and beyond. Despite the fact that the judgment stayed saved,
still, it is by the by an extraordinary improvement in the criminal liability of
In the case of Tesco Supermarkets Limited v. Nattrass
, Tesco relied
on the defense of the "act or omission of another person" who in this case was a
store employee, to show that they had taken all reasonable precautions and due
diligence necessary to not be criminally liable. Lord Reid held that, in order
for liability to attach to the actions of a person, it must be the case that:
"The person who acts is not speaking or acting for the company. He is acting as
the company and his mind, which directs his acts, is the mind of the company. If
it is a guilty mind then that guilt is the guilt of the company."
Corporate Criminal Liability In India
State of Maharashtra v/s Syndicate Transport
 It was held that the
company cannot be prosecuted for offences which necessarily entail consequences
of a corporal punishment or imprisonment and prosecuting a company for such
offences would only result in the court stultifying itself by embarking on a
trial in which the verdict of guilty is returned and no effective order by way
of sentence can be made.
In the case of Assistant Commissioner v/s Velliappa Textiles Ltd
was held by a larger part choice that an organization can't be arraigned for
offences, which require inconvenience of a compulsory term of detainment
combined with a fine. Where the discipline gave is both detainment and fine, the
court can't just force fine.
This difficulty was noticed by the Law Commission of India and in its 41st
report the Law Commission of India suggested an amendment to section 62 of
Indian Penal Code by adding the 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."
In A.K.Khosla v/s S.Venkatesan
, two corporations were charged with
having committed fraud under the IPC. The Magistrate issued process against the
corporations. The court, in this case, pointed out that there were two
pre-requisites for the prosecution of corporate bodies, the first being that of
mens rea and the other being the ability to impose the mandatory sentence of
imprisonment. A corporate body could not be said to have the necessary mens rea,
nor can it be sentenced to imprisonment, as it has no physical body.
It was held by the Allahabad High Court that "A company is a juristic person
cannot obviously be sentenced to imprisonment as it cannot suffer imprisonment.
It is settled law that sentence or punishment must follow conviction; and if
only corporal punishment is prescribed, a company, which is a juristic person,
cannot be prosecuted, as it cannot be punished.
If, however, both sentence of imprisonment and fine is prescribed for natural
persons and juristic persons jointly, then, though the sentence of imprisonment
cannot be awarded to a company, the sentence of the fine can be imposed on it.
The legal sentence is the sentence prescribed by law. A sentence which is in
excess of the sentence prescribed is always illegal, but a sentence which is
less than the sentence prescribed may not in all cases be illegal."Assistant
Commissioner v/s Velliappa Textiles Ltd
 in this case, the Court focused
on two of the important maxims:
- "Lex non cogit ad impossibilia" which means "the law forces not to
- "Impotentia excusat legem" which means, "impossibilities excuses the
The Supreme Court held that the respondent organization could not be
prosecuted for offences under specific segments of the ITA in light of the fact
that every one of these areas required the burden of an obligatory term of
detainment combined with a fine. The segments being referred to left the court
helpless to force just a fine.
Enjoying a strict and exacting investigation, the Court held that a company did
not have a physical body to detain and thusly couldn't be condemned to
detainment. Further, the Indian Supreme Court was of the view that the
administrative command was to disallow the courts from going astray from the
base compulsory discipline endorsed by the Act.
The Court noticed that when deciphering a corrective resolution, if more than
one view is conceivable, the court is obliged to lean for the development that
exempts a charged from punishment as opposed to the one that forces the
punishment. In the case of Iridium India Telecom Ltd v. Motorola Incorporated
Co., the apex court emphasized: "... a corporation is virtually in the same
position as an individual and may be convicted of common law as well as
statutory offences including those requiring mens rea.
The criminal liability of 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 are so
tense that a corporation may be said to think and act through the person or the
body of persons."
The Apex Court in Standard Chartered Bank and Ors. v. Directorate of Enforcement
and Ors. made the situation perfectly clear. It had overruled the past
perspectives in regards to the precept of corporate criminal obligation. The
court held that there is no sweeping resistance for any enterprise from the
arraignment of offences in light of the fact that the indictment requests a
required detainment. The summit court chose that in instances of offenses, which
command both detainment and fine, the enterprises ought to be rebuffed with a
Corporations have attracted the life of people for good and bad with the
development of society. Corporate criminal liability is steadily gaining
importance in the spheres of social concern such as consumer protection,
environmental law, and occupational health and safety norms. To the betterment
of society and to protect the innocent public from exploitation, the crimes by
the higher units of the society should be controlled or stopped if possible.
India has attempted strict methodology in deciding the risk of a corporate body
for the proposed demonstrations submitted by its chiefs, people utilized and
different operators. Corporate crimes cannot be dealt with by implementing more
laws or governance practices, but rather by effective and stringent action
against the perpetrators. To combat corporate crimes, the regulatory mechanism
would have to be strengthened and provisions would have to be made for the
imposition of stringent legal penalties.
- Walker, The Oxford Companion to Law, Clarendon Press (1980), p.20.
- Black's Law Dictionary (9th edition), p. 997
- Richard Gruner, Corporate Criminal Liability and Prevention 2-7, Law
Journal Press ed.,2nd Release,2005, pp. 2-7.
- Sunil Chandra Banerjee v. Krishna Chandra Nah A.I.R. 1949 Ca1.689.
- A.I.R. 1969 Ca1.132.
- 1972 ac 153
- AIR 1964 BOM.195
- (1987) 62 COMP CAS 15 AP
- (1985) 1SC R662
- 358 U.S. 121 (1958)
- 53 L Ed; 613: 212 U.S 481, 1908.
- 3 ALL ER 624 at, 1956, 632.
- 1915 AC 705: 113 LJ 195.
- 1917 2 KB 845.
- 1944 KB 551,559
- (1971) UKHL 1
- 1963 Bom. L.R, 197
- AIR 2004 SC 86.
- Cr LJ. 1448, 1992.
- Oswal Vanaspati & Allied Industries V State Of Uttar Pradesh (1993) 1
Comp. LJ 172
- (2004) 1. Comp. L.J. 21.
- (2011) 1 SCC 74
- (2005) 4 SCC 530
- Salomon v. Salomon & Co., 1897 AC 22: (1895-99) All ER Rep 9 (HL)
- International Journal of Research and Analytical Reviews 521, Vol.5,
Issue 2, April - June 2018 4 Ibid