Abstract
Corporate criminal liability holds corporations accountable for illegal actions committed by employees or executives, recognizing them as distinct legal entities capable of committing crimes. It relies on doctrines like vicarious liability, identification, and mens rea attribution to determine liability. This concept, though initially absent, has evolved through judicial interpretations, legal reforms, and landmark cases, shaping modern corporate governance and accountability in India.
Keywords
Corporate Criminal Liability, Mens Rea, Vicarious Liability, Corporate Governance, White Collar Crimes, Companies Act 2013,Standard Chartered Bank Case, Officer in Default.
Introduction:
Corporate criminal liability holds corporations accountable for unlawful acts committed by their employees or executives, recognizing that corporations, as separate legal entities, can commit crimes. While earlier courts in India hesitated to impose liability due to the absence of physical presence or mens rea, evolving jurisprudence and landmark cases like Standard Chartered Bank v. Directorate of Enforcement have established that corporations can be held criminally liable. This paper explores the development of corporate criminal liability in India, key doctrines, and its impact on governance and legal accountability in the corporate sector.
Corporate Criminal Liability
Corporate criminal liability means holding a company responsible forillegal actionscommitted by its employees or executives. Itacknowledges that a corporation can commit crimes just like a personcan.A corporation is considered as a separate legal entity distinct from itsshareholders. It can be described to imply as an association ofpersons for some common object, and it has no strictly any legal ortechnical meaning. It is understood that criminal liability is attachedwhere there is a violation as per criminal law. The criminal liability ofany act is based on the Latin maxim Actus non facitreumnisi menssit rea which means that to make a person or any entity liable, it mustbe shown that there is an act or omission which is forbidden by law and with mens rea which is legally understood as having a guiltymind. It comes under the category of White-collar crimes.
Corporate criminal liability can be defined as a crime which has beencommitted by an individual or association of individuals who, forpursuing a common purpose or making business gain in the course oftheir occupation, commit such acts or omissions which are forbiddenby law and with a guilty mind, where it is for the benefit of thecorporation or any individual out of the association of individuals.Earlier, in many situations when the concept of holding a corporationliable was not introduced, there was not any corporation held liablefor any criminal act as it is an artificial legal person, so it could not beimprisoned, and being an artificial person, there was an absence of mens rea.
When a corporation is held criminally liable, it not only affects thebusiness of the corporation but also the individuals in the corporationwho are engaged in criminal conduct; it may make them suffercriminally and financially. However, it has been suggested that in thecase of punishment to be imposed on the corporation, a fine shouldbe imposed rather than imprisonment.