Published On: October 31st 2025
Authored By: Sameera Shetty
School of Law, Christ University
Genesis of Corporate Personhood and Criminality
Criminal law has long rested on the principle expressed in the maxim actus non facit reum nisi mens sit rea − an act does not make a person guilty unless the mind is also guilty[1]. For centuries, corporations escaped prosecution, deemed incapable of criminal intent, an untenable loophole as their wealth and power expanded. The recognition of corporate separateness in Salomon v. A. Salomon & Co.[2] reinforced this notion, granting companies an independent legal personality that functioned well in civil law but proved problematic in criminal matters. With the rise of large-scale industrial and post-industrial enterprises, corporate misconduct − fraud, environmental destruction, and gross negligence − began to inflict ruinous harm. In response, the law gradually evolved to hold corporations criminally accountable, reflecting not only a doctrinal shift but also the necessity of adapting justice to the realities of modern capitalism.[3]
The Directing Mind and Will
Doctrine of Attribution
To circumvent the inherent difficulty of attributing a mind to an artificial person, courts in England developed the “Doctrine of Attribution”.[4] This principle, also called the Identification Doctrine, sought to pierce the corporate veil and identify the individuals whose actions and intent could be considered those of the company itself. The doctrine essentially attributes the mens rea of key individuals, who are considered the company’s “directing mind and will,” to the corporation.[5]
The seminal case in this regard is Lennard’s Carrying Co. Ltd. v. Asiatic Petroleum Co Ltd. [6]. The case involved a ship, the Edward Dawson, which sank due to its unseaworthiness, resulting in the loss of cargo. The central issue was whether the negligence of the company’s managing director, Mr. Lennard, could be attributed to the company to negate its statutory exemption from liability. The House of Lords held that it could. Lord Haldane, in his definitive judgment, famously stated:
“[…]a corporation is an abstraction. It has no mind of its own any more than it has a body of its own; its active and directing will must consequently be sought in the person of somebody who for some purposes may be called an agent, but who is really the directing mind and will of the corporation, the very ego and centre of the personality of the corporation.” [7]
This judgment established the “alter ego theory,” which has since become a powerful method for imposing criminal liability on corporations, as it directly links the mental state of the company’s leaders to the entity itself, moving beyond the limitations of simple vicarious liability.[8]
Indian Jurisprudence
Indian jurisprudence has adopted a derivative model of liability, which draws heavily from both the identification and vicarious liability doctrines.[9] This approach attributes a company’s criminal liability to the actions of the individuals associated with the organization.[10] The judiciary, through a series of landmark rulings, has solidified the use of the “directing mind and will” concept to impute criminal intent to corporations.[11]
Landmark Judgments Shaping Modern Indian Jurisprudence
Standard Chartered Bank v. Directorate of Enforcement (2005)
A major obstacle to corporate criminal liability in India was the question on how to prosecute a company for an offense that mandated a punishment of imprisonment. This legal quandary was directly addressed in the case of Standard Chartered Bank v. Directorate of Enforcement. [12] The Supreme Court was asked whether a corporation could be prosecuted and held criminally liable for an offense that carried a mandatory punishment of imprisonment, which is physically impossible to impose on an artificial entity. The court, in a pivotal decision, overruled its earlier judgment in The Assistant Commissioner v. M/S. Velliappa Textiles Ltd., which had taken a contrary stance. [13] The Supreme Court held that the company could be prosecuted, and if found guilty, the court could impose the applicable fine, as the inability to impose imprisonment should not grant a company immunity from prosecution. The court clarified that the law was not rendered inapplicable simply because one of the prescribed punishments could not be enforced.[14] This judgment established a fundamental principle, removing a significant barrier and creating the foundation for modern corporate criminal liability in India.[15]
Attributing Mens Rea: Iridium India Telecom Ltd. v. Motorola Incorporated (2011)
With the question of mandatory imprisonment resolved, the next challenge was to establish how a corporation could possess the requisite criminal intent, i.e., mens rea, for an offense. The Supreme Court’s decision in Iridium India Telecom Ltd. v. Motorola Incorporated is a crucial precedent in this regard.[16] The court settled the debate, affirming that corporations could be held liable for offenses requiring mens rea. The judgment held that the criminal intent of the company’s “alter ego” − the “persons or group of persons in control of the affairs of the company or who guide the business of the company” − would be imputed to the corporation.[17] This decision solidified the application of the identification doctrine in Indian jurisprudence, recognizing that a company’s criminal intent is a function of the intent of its highest-ranking officials who constitute its “directing mind and will”.[18]
Distinguishing Corporate and Individual Liability: Sunil Bharti Mittal v. CBI (2015)
As the legal framework for corporate liability developed, a new question emerged: could a director or key official be held vicariously liable for an offense committed by the company merely based on their designation, without specific evidence of their personal involvement? The Supreme Court addressed this question in Sunil Bharti Mittal v. CBI.[19] The court clarified that the principle of alter ego or attribution could not be applied “in reverse”.[20] It held that to summon an individual who was not named in the charge sheet, there must be “sufficient evidence of his active role coupled with criminal intent” or where the statute specifically imposes liability.[21] [22] This judgment provided a crucial safeguard against the automatic prosecution of corporate officials based solely on their corporate titles, emphasizing the necessity of specific allegations and concrete evidence of individual culpability.[23] This ruling marks a pivotal evolution, separating corporate liability from individual accountability, preventing overreach, and ensuring justice by distinguishing true conspirators.
Emerging Trends and Legislative Developments
The evolution of Indian jurisprudence has not occurred in a vacuum but has been closely intertwined with legislative changes. The Companies Act, 2013, serves as a comprehensive framework for addressing corporate offenses, with specific provisions like Section 447 (fraud) and Section 448 (false statements) that prescribe severe punishments for both the company and its “officers in default”. [24] [25] The legislation provides for a wide range of penalties, including imprisonment and fines, targeting fraudulent conduct, false statements in prospectuses, and misstatements in financial reports.[26]
A more recent and significant development is the introduction of the Bharatiya Nyaya Sanhita, 2023 (“BNS”).[27] The BNS, 2023, is a crucial step in codifying the judicial principles that have evolved over the past two decades. Section 2(26) of the BNS explicitly defines a “person” to include “any company or association or body of persons, whether incorporated or not”.[28] This provision formally enshrines the judicial position that a corporation is a “person” for the purposes of criminal law. The BNS also introduces stringent punishments for a wide range of economic offenses, reinforcing the legislative intent to address corporate crime with greater severity and to align the law with the economic realities of modern India.[29] [30]
The penalties for corporate crimes have also undergone a notable transformation. The focus has shifted from a theoretical discussion on imprisonment to a pragmatic and multi-faceted approach centred on economic sanctions, social sanctions and operational restrictions.[31] Fines are the most common sanction, but courts also have the power to order disgorgement of ill-gotten gains and impose debarment, which prohibits a company from engaging in certain activities or contracts.[32] In extreme cases, a company can even be dissolved.[33] While imprisonment remains a theoretical option for corporate crimes, in practice, it is typically applied to individual officers rather than the company itself, further solidifying the distinction between corporate and individual liability established in cases like Sunil Bharti Mittal.[34]
Challenges and a Forward-Looking Perspective
Despite progress in recognising corporate criminal liability in India, its enforcement faces hurdles.[35] It suffers from vague statutory guidance, overreliance on judicial discretion, and evidentiary difficulties, especially in proving fraud or misconduct hidden behind complex structures.[36] These gaps create uncertainty, risk judicial overreach, and undermine limited liability principles.[37] Without clearer frameworks, enforcement remains inconsistent, weakening deterrence, investor confidence, and the effectiveness of corporate governance.[38]
Conclusion
The journey of corporate criminal liability in Indian jurisprudence is a compelling narrative of legal adaptation and evolution. It began with the foundational challenge of reconciling the legal fiction of corporate personhood with the principles of criminal law, particularly the requirement for a guilty mind. The judiciary, through a series of landmark judgments, systematically dismantled these barriers. This judicial momentum was reinforced by legislative reforms, such as the Companies Act, 2013, and the BNS, 2023, which codified these principles and expanded the scope of corporate offenses. Thus, the ongoing development of corporate criminal liability jurisprudence in India reflects a commitment to ensuring that the law remains an effective tool for justice in the corporate world.
References
[1] Actus non facit reum, nisi mens sit rea, Black’s Law Dictionary (11th ed. 2019).
[2] Salomon v. A. Salomon & Co. Ltd. [1897] A.C. 22 (H.L.).
[3] Sara Sun Beale, The Development and Evolution of the U.S. Law of Corporate Criminal Liability and the Yates Memo, 46 Stetson L. Rev. 41 (2016).
[4] Lennard’s Carrying Co. Ltd. v. Asiatic Petroleum Co. Ltd., [1915] A.C. 705 (H.L.).
[5] Dinesh Babu Eedi, Doctrine of Attribution in Corporate Criminal Liability, Lakshmikumaran & Sridharan Attorneys (n.d.), available at https://www.lakshmisri.com/insights/articles/doctrine-of-attribution-in-corporate-criminal-liability/
[6] Id. at 1.
[7] Lennard’s Carrying Co. Ltd. v. Asiatic Petroleum Co. Ltd., [1915] A.C. 705 (H.L.).
[8] Id.
[9] Rohit Dhingra & Shruti Kakkad, Corporate Criminal Liability: An Emerging Issue, 4 Int’l J. L. Mgmt. & Hum. (2021).
[10] Id.
[11] Iridium India Telecom Ltd. v. Motorola Inc., (2011) 1 SCC 74 (India).
[12] Standard Chartered Bank v. Directorate of Enforcement, (2005) 4 SCC 530 (India).
[13] Asst. Commissioner v. Velliappa Textiles Ltd., (2004) SCC(CRI) 1214 (India).
[14] Pratiksha Mohanty, Regulating Corporate Criminal Liability: Global Perspectives and Lessons for India, 3 IJLSSS 512 (2025).
[15] Id.
[16] Iridium India Telecom Ltd. v. Motorola Inc., (2011) 1 S.C.C. 74 (India).
[17] Id.
[18] “Criminal Liability of Corporate Officials in India,” India Corporate Law (Cyril Amarchand Mangaldas blog), Apr. 2017, available at corporate.cyrilamarchandblogs.com/2017/04/criminal-liability-corporate-officials-india/
[19] Id.
[20] Sunil Bharti Mittal v. CBI, (2015) 4 S.C.C. 609 (India).
[21] Id.
[22] T.V. Ganesan, Supreme Court’s Landmark Ruling on Criminal Prosecution of Directors—Expert Opinion, [2019] 109 Taxmann.com 459 (Article), https://www.taxmann.com/research/company-and-sebi/top-story/105010000000016818
[23] Id.
[24] Companies Act, 2013, § 447 (India).
[25] Companies Act, 2013, § 448 (India).
[26] Sunita Banerjee Jiyauddin, A Critical Analysis of Corporate Criminal Liability in India, 10 Int’l J. of L. 99 (2024).
[27] Bharatiya Nyaya Sanhita, No. 45 of 2023, INDIA CODE (2023).
[28] Bharatiya Nyaya Sanhita, No. 45 of 2023, § 2(26), INDIA CODE (2023).
[29] Id.
[30] BUREAU OF POLICE RESEARCH & DEVELOPMENT, MINISTRY OF HOME AFFAIRS, GOV’T OF INDIA, ORGANISED CRIME, TERRORISM (Jan. 29, 2024), https://bprd.nic.in/uploads/pdf/202401290403347155356Organisedcrime,terrorism.pdf
[31] Angira Singhvi, Corporate Crime and Sentencing in India: Required Amendments in Law, 1 IJCJS. 2 (2006).
[32] Id.
[33] Id.
[34] Sunil Bharti Mittal v. CBI, (2015) 4 S.C.C. 609 (India).
[35] Pratiksha Mohanty, Regulating Corporate Criminal Liability: Global Perspectives and Lessons for India, 3 IJLSSS 512 (2025).
[36] Jai Aggarwal & Sharan Ajay Nambiar, Lifting the Corporate Veil Under the Companies Act, 2013, 4 IJIRL. 236 (2023).
[37] Id.
[38] Id.
