Authored By: Sujal Vasant Jain
Vidyavardhaka Law College, Mysore
Abstract
Corporate criminal liability in India has developed almost entirely through judicial decision rather than statute. The Supreme Court has resolved the central question of forward attribution, confirming in Standard Chartered and Iridium that companies may be prosecuted and are capable of possessing mens rea, and has erected protective safeguards against the reverse attribution of corporate fault to individual directors. Yet this jurisprudence rests on no general statutory foundation. The Bharatiya Nyaya Sanhita 2023 recodified Indian criminal law without inserting any general provision on corporate attribution, leaving liability to operate through a fragmented patchwork of sector-specific deeming clauses. This article traces the doctrinal evolution of the field, situates it against the contrasting models adopted in the United Kingdom, the United States and Australia, and identifies three structural weaknesses in the present regime. It argues that the path forward lies not in further judicial refinement but in legislative codification, and proposes three targeted statutory reforms.
Keywords: corporate criminal liability; attribution; mens rea; identification doctrine; Bharatiya Nyaya Sanhita 2023; failure to prevent; deferred prosecution agreements.
1. Introduction
In January 2025, the Supreme Court of India quashed a criminal prosecution against the Managing Director and senior officers of a Tata group company in a tree-felling matter, reaffirming that mere authorisation of an act at the company’s behest cannot render a director vicariously liable.[1] Six months earlier, the Bharatiya Nyaya Sanhita 2023 had replaced the Indian Penal Code without inserting a single general provision on corporate criminal liability.[2] This article examines the doctrinal evolution of corporate criminal liability in India, places it in comparative perspective, and argues that the 2023 recodification has missed a generational opportunity to codify a coherent framework.
2. The Concept of Corporate Criminal Liability
A corporation, being an artificial person, has no body capable of being imprisoned and no mind capable of forming intention. The criminal law must therefore borrow both: a rule of attribution converts the act of a human officer into the act of the company, and a parallel rule imputes the officer’s mental state to the company. Four families of attribution have evolved across common law jurisdictions: vicarious liability or respondeat superior; the identification doctrine, which imputes only the acts of the “directing mind and will”; the corporate-culture model, which treats organisational ethos itself as a source of fault; and the failure-to-prevent model, which imposes strict liability subject to a defence of adequate procedures. Each represents a different answer to the same conceptual puzzle, and each carries different consequences for the reach of corporate criminal law.
3. Comparative Overview
The United Kingdom developed the narrowest model. Tesco v Nattrass restricted attribution to those at the “very ego and centre of the personality of the corporation”.[3] Recognising the inadequacy of this test for modern corporations, Parliament enacted the Economic Crime and Corporate Transparency Act 2023, which now extends attribution to “senior managers” and creates a strict-liability offence of failure to prevent fraud.[4] The United States adopted a far broader rule in New York Central, attributing to a corporation any criminal act of an employee committed within the scope of employment to benefit it; Chapter 8 of the United States Sentencing Guidelines calibrates corporate fines through a culpability score.[5] Australia has gone furthest. Section 12.3 of the Commonwealth Criminal Code attributes fault to a corporation where a “corporate culture” directed, encouraged or tolerated non-compliance — the only major common law model that detaches corporate fault from an identifiable human mind.[6]
4. The Indian Legal Framework
Indian law contains no general statutory rule of corporate attribution. Section 2(26) of the BNS, like section 11 of the IPC before it, merely includes a company within the definition of “person”. The Bharatiya Nagarik Suraksha Sanhita 2023 carries forward the procedural provisions on summons and trial of corporations almost unchanged. In the absence of a general framework, corporate liability operates through a patchwork of sector-specific deeming clauses — section 141 of the Negotiable Instruments Act 1881, section 70 of the Prevention of Money-Laundering Act 2002, section 278B of the Income Tax Act 1961, section 27 of the SEBI Act 1992, and analogous provisions in environmental and food-safety statutes — each imposing vicarious liability on persons “in charge of and responsible to” the company.[7] The Companies Act 2013 layers on its own framework through the “officer in default” definition in section 2(60) and the safe harbour for independent directors in section 149(12), even as the Companies (Amendment) Acts of 2019 and 2020 have decriminalised over sixty offences in pursuit of ease of doing business.[8]
5. Evolving Judicial and Statutory Perspectives
Indian corporate criminal liability has been built case-by-case. In Standard Chartered Bank v Directorate of Enforcement, a Constitution Bench overruled the earlier view in Velliappa Textiles and held that a company may be prosecuted even where the statute mandates imprisonment together with fine; the court is to impose the fine alone.[9] Six years later, Iridium India Telecom v Motorola confirmed that a company is capable of possessing mens rea, expressly adopting the Tesco identification test.[10]
The Court has, however, refused to apply this attribution in reverse. In Sunil Bharti Mittal v CBI, it quashed summonses against telecom chairmen, holding that a director cannot be made personally liable for company conduct absent either an express statutory provision or specific evidence of “active role coupled with criminal intent”. Aneeta Hada had earlier required the company to be arraigned as a co-accused before its directors could be prosecuted.[11] This protective line has hardened in Ravindranath Bajpe, Susela Padmavathy Amma (2024) and KS Mehta (2025), which together extend the safeguard to non-executive and independent directors.[12] On the statutory side, by contrast, neither the BNS nor the BNSS has codified this jurisprudence.
6. Crosscutting Challenges
Three structural problems persist. First, the Standard Chartered fix — judicially substituting fine for mandatory imprisonment — is workable but inelegant; corporate fines remain trivial relative to turnover, and there is no structured sentencing matrix. Second, the rigid Tesco identification test breaks down in diffuse multinational organisations where decision-making sits well below board level, leaving the prosecution unable to locate any single “directing mind”. Third, the sector-specific deeming model produces inconsistent attribution rules across statutes, while the decriminalisation drive under the Companies Act amendments pulls in the opposite direction. India also lacks any statutory framework for deferred prosecution agreements, leaving prosecutors with a binary choice between full conviction and no resolution.
7. Proposed Reforms
Three legislative interventions would meaningfully close these gaps. First, a general attribution provision should be inserted into the BNS, drawing selectively from the Australian model to attribute physical acts of employees within actual or apparent authority, and to attribute fault either through senior management decisions or through demonstrable corporate culture. Second, a “failure to prevent” offence should be introduced for fraud and corruption on the model of section 199 of the ECCTA 2023 and section 7 of the UK Bribery Act 2010, with a reverse-burden defence of adequate procedures to incentivise genuine compliance. Third, the BNSS should be amended to introduce a judicially supervised regime of deferred prosecution agreements modelled on Schedule 17 of the UK Crime and Courts Act 2013; the SEBI Settlement Regulations and Companies Act compounding provisions are no substitute.[13] The Law Commission of India recommended elements of this agenda over fifty years ago in its Forty-First and Forty-Seventh Reports; a fresh, dedicated reference would consolidate those proposals with two decades of post-Standard Chartered jurisprudence.[14]
8. Conclusion
Indian corporate criminal law has reached a stable but unsatisfying equilibrium. The judiciary has answered the question of forward attribution and erected sensible safeguards against the reverse attribution of corporate fault to individual directors. Yet this achievement has come without statutory underpinning, and the Bharatiya Nyaya Sanhita 2023 has treated the entire subject as though the past two decades of Supreme Court jurisprudence had not happened. The result is a regime that protects directors more reliably than it punishes corporations. Comparative experience from the United Kingdom, the United States and Australia demonstrates that better answers exist: senior-manager attribution, failure-to-prevent offences, corporate-culture fault, and structured sentencing. India’s task is no longer further judicial refinement, but legislative codification. Until the BNS contains a general provision on corporate criminal liability, the framework will remain incomplete in principle and inadequate in practice.
Reference(S):
[1]Sanjay Dutt v State of Haryana 2025 INSC 34.
[2]Bharatiya Nyaya Sanhita 2023, s 2(26); cf Indian Penal Code 1860, s 11; General Clauses Act 1897, s 3(42).
[3]Tesco Supermarkets Ltd v Nattrass [1972] AC 153 (HL); see also Meridian Global Funds Management Asia Ltd v Securities Commission [1995] 2 AC 500 (PC).
[4]Economic Crime and Corporate Transparency Act 2023 (UK), ss 196 and 199; Bribery Act 2010 (UK), s 7.
[5]New York Central and Hudson River Railroad Co v United States 212 US 481 (1909); United States Sentencing Guidelines, ch 8.
[6]Criminal Code Act 1995 (Cth), s 12.3(2)(c)–(d).
[7]See Negotiable Instruments Act 1881, s 141; Prevention of Money-Laundering Act 2002, s 70; Income Tax Act 1961, s 278B; SEBI Act 1992, s 27.
[8]Companies Act 2013, ss 2(60) and 149(12); Companies (Amendment) Acts 2019 and 2020.
[9]Standard Chartered Bank v Directorate of Enforcement (2005) 4 SCC 530, overruling Assistant Commissioner v Velliappa Textiles Ltd (2003) 11 SCC 405.
[10]Iridium India Telecom Ltd v Motorola Inc (2011) 1 SCC 74.
[11]Sunil Bharti Mittal v CBI (2015) 4 SCC 609; Aneeta Hada v Godfather Travels & Tours (P) Ltd (2012) 5 SCC 661.
[12]Ravindranath Bajpe v Mangalore SEZ Ltd (2022) 15 SCC 430; Susela Padmavathy Amma v Bharti Airtel Ltd 2024 INSC 206; KS Mehta v Morgan Securities and Credits (P) Ltd 2025 LiveLaw (SC) 286.
[13]Crime and Courts Act 2013 (UK), sch 17; cf SEBI (Settlement Proceedings) Regulations 2018; Companies Act 2013, s 441.
[14]Law Commission of India, Forty-First Report (1969); Forty-Seventh Report (1972).
