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Corporate Criminal Liability

A corporation could also be a separate legal entity established through some legislation or registration method. They have rights and liabilities become independent from that of their shareholders. Variety of those companies have assets and facilities in different countries apart from their home country additionally and such companies’ area unit mentioned as transnational companies (MNCs). Transnational companies have come back to play a huge role in most aspects of human life nowadays. Their powers have big at associate degree astonishing rate over the previous few centuries, such tons so as that they are typically compared to entire nations. Therefore, imposing some quite suggests that of answerableness and management over these multinationals and companies is of preponderating importance and can be extraordinarily high on the list of priorities for every nation.

"Corporate crime is that the conduct of a corporation or of its staff functioning on behalf of the corporation, that is prescribed and reproved by law."- J. Braithwaite

The existence of special legislation like firms Act simply just in case of corporates do minimize the appliance of general law that is IPC. However the thought of criminal liability of corporates area unit typically derived from IPC. The thought of criminal liability is based on the maxim “Actus non facitreum, inconclusive mens sit rea”, that suggests associate degree act committed will not become a criminal offense unless there exists a guilty mind. Therefore, inside the case of company criminal liability, the guilty minds of the persons World Health Organization area unit inside the capability of managing the affairs of the body company is taken into consideration.

Models of company Criminal Liability

The models beneath the corporate Criminal Liability area unit as follows-

1. The Identification Doctrine-

It is associate degree English law philosophical system whereby it tries to identify that sure persons World Health Organization acts on behalf of corporation and whose leading mind and conduct area unit typically attributed to the corporation. The liability of these persons wherever the persons functioning on behalf of corporation is restricted to the scope of them operating used or authority.

2. The organizational Model-

In terms of criminal cases model of company criminal liability in India focuses on organizing model whereas process the corporate criminal liability of a company. The corporate culture could offer associate degree surroundings that may cause Commission of Crime.

3. The derivatives Model-

The liability of a company springs liability in terms of company Criminal liability whereby the liability is placed on the organization as a result of the people World Health Organization commit the crime area unit in respect to the organization.

Corporate criminal liability? Is it really necessary?

Time and once more, the question has arisen concerning the need for company criminal liability. It’s typically asked whether or not we'd wish to traumatize the problem of “corporate criminals” or ‘criminal corporations”. There is no general correct answer to the current question. Every case has to be rigorously examined then a selection has to be taken relating to the companies liability.

Critics argue that this philosophical system is completely gratuitous on 2 grounds. first they challenge the deterrent impact of fines and different sanctions against companies on the grounds that it is not the companies that commit crimes, it is the people World Health Organization do and thus the second being that the retributive impact is borne by innocent shareholders (by decreasing the value of their shares) and shoppers (by driving up the prices of commodities and services).

The critics’ 1st objection is extraordinarily simple inside the undeniable fact that it doesn’t account for the labyrinthine structure of companies in today’s world that makes it nigh not possible to pinpoint individual responsibility for any specific call. Also, the existence of company criminal liability provides the very best officers with a superb incentive to supervise middle and lower level management very closely. The existence of individual liability would encourage a “don’t raise, don’t tell” quite angle from the best brass, thereby keeping themselves on the far side all liability while reaping the profits from outlawed acts.

The second objection is that the worth of company criminal fines and sanctions is borne by shareholders and shoppers, and this too appears groundless. Shareholders area unit cognizant of the risks concerned in investment in any venture and area unit apparently happy once outlawed acts bring them profits thus it's solely honest to expect them connected a region of the force once those illegalities are discovered and punctually sanctioned. As for the force borne by the shoppers, it appears extremely illogical that a sanctioned corporation would conceive to expire the fine to them by raising costs of product and services as a result of that may solely cause shoppers attempting to search out alternate sources which could in turn cause loss of profit and reduced viability of the company, and in some cases leading to irreparable hurt that’d push the company down the slippery slope towards bankruptcy.

Legal position for corporate Crimes

Until the thought of company criminal liability was established, Courts in India did not penalize companies as they felt that essential ingredient that is. Provision is absent in corporation it being a fictitious legal entity having no physical existence thus additionally could not be brought physically for the proceedings. but due to such thought several legal difficulties started arising that was detected by the Law Commission in its forty first report of Law Commission of India wherever modification was prompt in section sixty two of the IPC however the bill that was created was non church going however the read of Courts in terms with this concept .

Therefore, it's so necessary to incorporate sure provisions inside the IPC to prosecute the corporates even in cases wherever the sections attracted have necessary penalization of imprisonment. Further, the companies Act has recognized the thought of criminal liability and thus the philosophical system of lifting the corporate veil. These ideas beneath the companies Act have provided associate degree alternate to penalize the corporates World Health Organization are not command liable beneath IPC due to the shortcomings in imposing punishments. There area unit offences inside the Indian code that describe the offences of nice nature wherever beneath a corporation body additionally might even be found guilty, and thus the penalization prescribed could also be a compulsory guardian sentence. inside the case of Standard Chartered Bank vs. Directorate Of Enforcement, AIR 2005 SC 2622, it had been command that the company is at risk of be prosecuted and reproved for criminal offences. The Supreme Court rejected the notion that the company might avoid prosecution in cases wherever a guardian sentence is necessary. As a result of the corporate cannot be sentenced to imprisonment, the court cannot impose that penalization, however once imprisonment and fine area unit prescribed as penalization the court will impose the penalization of fine which could be enforces against the company.


Corporate criminal liability is steady gaining importance inside the spheres of social concern like client protection, surroundings law and activity health and safety norms. Until the recent past, company governance wasn’t given abundant thought, however with the emergence of this specific philosophical system that focuses on structure guiltiness and answerableness of superiors, this attitude is dynamical rather chop-chop. Problems relating to the operation of companies area unit currently being closely joined to their governance thus on avoid doubtless triggering criminal liability. There is a demand to attach the importance of company Culture in each formal and informal polices, in rules and practices whereby the corporation is taken into consideration as a conduct component of offence that has been committed by it once their cause was inspired by the culture of Corporation. Through this concept it becomes doable for a corporation in cases wherever there is no involvement of individual in committing an offence.

The existing standards in terms of assessing the corporate Criminal liability has typically been criticized and has additionally been termed phantasmagorical, inconsistent with the fundamentals of the criminal laws. In terms of company context thus on discourage crimes the state ought to induce the companies to want policing measures. Simply just in case of skilled assessment of the corporation, the court ought to have the power to appoint appropriate person or persons to prepare report on corporation. Once a corporation is sentenced in addition to imposing a fine or instead of imposing a fine it ought to build one or a lot of orders in such however that it considers that it will bring home the bacon the objectives of sentencing. Stricter punishments ought to be obligatory like company dissolution whereby the courts area unit attending to be able to see whether or not any reincorporation will happen in cases wherever there is fined company.

- Krish Bhatia

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