The Court says prosecution against a corporation cannot be quashed merely because no director, employee or individual offender has been identified.
New Delhi : In a significant ruling on corporate criminal liability, the Supreme Court has held that a company can be prosecuted for a criminal offence even if investigators have not identified or named a specific director, employee or other individual through whom the alleged crime was committed.
A Bench comprising Justice J.B. Pardiwala and Justice Manoj Misra clarified that the absence of a named natural person does not automatically shield a corporation from criminal proceedings. The Court said the focus at the initial stage is whether the allegations disclose the company’s involvement in the offence, not whether a particular individual has already been identified.
Identification of an Individual Is Not Mandatory
The Bench observed that under Indian law, corporations can be held criminally liable even for offences that require proof of mens rea (criminal intent) or prescribe mandatory imprisonment, subject to the nature of the offence.
However, the Court noted that prosecution may not be possible only in exceptional situations where the offence is inherently personal in nature or where the punishment consists exclusively of imprisonment, making it impossible to impose the sentence on a corporate entity.
According to the judgment, the chargesheet must prima facie demonstrate that the corporation itself committed the offence, rather than necessarily identifying the specific person who acted on its behalf.
“The mere inability to identify a particular individual does not mean that the allegations fail to disclose the corporation’s role in the commission of the offence,” the Bench held.
Criminal Intent Can Still Be Attributed to a Company
The Supreme Court said criminal intent may still be inferred from the surrounding facts and circumstances, even when the exact individual responsible has not been identified.
The judges observed that in many cases, a complainant may know only that someone within the corporation committed the act, without knowing who that person was. The same situation may continue even after investigation if the agency is unable to identify the individual but gathers sufficient material indicating the corporation’s criminal conduct.
The Court warned that insisting on identifying a specific individual in every case would allow many corporate prosecutions to fail at the threshold.
No Special Immunity for Corporations
The Bench also clarified that companies do not enjoy any special exemption from the general legal principles governing the quashing of criminal proceedings.
To determine whether criminal intent can be attributed to a corporation, the Court laid down a three-stage analytical framework. It said courts should first examine the company’s constitutional and organisational documents to identify who had the authority to act on behalf of the corporation before assessing the corporation’s liability.
Sanofi India Appeal Dismissed
The judgment came while dismissing an appeal filed by Sanofi India Limited, a public limited pharmaceutical company, against an order of the Karnataka High Court.
Sanofi had challenged criminal proceedings arising from a CBI investigation into the alleged procurement of medicines for the Bhabha Atomic Research Centre (BARC).
According to the chargesheet, a BARC official allegedly conspired with Sanofi India to procure medicines at inflated prices and accepted illegal gratification. Although no employee or officer of the company was named as a co-accused, the company argued that it could not be prosecuted because criminal intent could not be attributed to it and it could not be imprisoned upon conviction.
Rejecting the argument, the Supreme Court held that the absence of a named individual is not, by itself, a valid ground to quash criminal proceedings against a corporation.
Why the Ruling Matters
The judgment reinforces the principle that powerful corporate entities can be held accountable for alleged criminal misconduct, even where the investigation has not conclusively identified the individual actor within the organisation. It is expected to have significant implications for future prosecutions involving corporate fraud, corruption and other economic offences.
