Company can face fine for offence carrying jail term: SC

NEW DELHI: A company having no physical body cannot be imprisoned and having no mind cannot possess mens rea (guilty mind), which is essential for conviction in a criminal case. So can a firm be convicted and punished?SC Monday answered the tricky questions by holding that a company can be convicted even when it cannot have a guilty mind of its own and can also be punished, though the punishment of a jail term can be substituted by a fine.A bench of Justices J B Pardiwala and Manoj Misra said there is a need to bring a law for corporate criminal liability but said the issue comes within the legislature’s prerogative and it cannot be done by a court. It held that a company is not rendered immune to prosecution merely because the offence carries a mandatory sentence of imprisonment. Referring to a constitution bench ruling, the bench said a judicial discretion to impose a fine alone must be read into such provisions when dealing with juristic persons.“The position under Indian law is thus clear that a corporation can be prosecuted for an offence notwithstanding that it carries a mandatory sentence of imprisonment or requires proof of mens rea. It appears that a corporation cannot be prosecuted only where the offence is punishable with imprisonment alone, or where the offence, by its nature, requires personal malicious intent, such that it is incapable of commission by a corporation at all,” the bench said. SC passed the order on a plea by Sanofi India Ltd which said a prosecution against a corporation like it, for an offence requiring mens rea, is maintainable only where a natural person has been identified and arraigned as an accused alongside it. It said that corporations alone cannot be convicted and pleaded that proceedings against it should be quashed. Rejecting the plea of the company, the bench said non-identification of the natural person does not, by itself, render the allegations incapable of disclosing the corporation’s role in the offence.The case pertains to the supply of pharmaceutical products by Sanofi India to Bhabha Atomic Research Centre. As per CBI, a BARC officer had conspired with the company to procure medicines at inflated prices and in quantities exceeding the requirement. A case was registered against Sanofi, which challenged its prosecution on the ground that none of its employees had been made accused and a company alone cannot be prosecuted.

“… where the surrounding facts and circumstances, taken as a whole, disclose the possibility that the corporation acted with the requisite mens rea, that disclosure is not defeated merely because no particular individual has been identified as its source. Therefore, the ingredient of mens rea can still be disclosed even where no individual has been identified,” the bench said while rejecting the plea of the company.