While clarifying that identification and arraignment of individuals are not prerequisites for prosecution of a company, the Supreme Court has settled the long-pending question of how mens rea is to be attributed to corporations under Indian law. The Apex Court, for the first time, laid down a comprehensive three-stage, sequential and hierarchical framework for attributing mens rea to a corporation under Indian law.
At the first stage, the inquiry examines whether the corporation’s constitutional documents, or a rule implied by company law, vest the person concerned with the power to do the act in question. At the second stage, the inquiry asks whether that power was delegated to the person concerned, whether expressly or impliedly, with sufficient discretion and independence in the doing of the act. At the third stage, where the first two stages fail, the court asks whether the statutory purpose requires the fashioning of a special rule of attribution, treating the person’s act and state of mind as that of the corporation.
The Court held that the framework operates only in one direction, from the natural person to the corporation, and has no bearing on the liability of the natural person. The Court further held that the framework comes into play principally in relation to offences framed with natural persons in mind and requiring proof of mens rea and does not apply where the statute itself supplies the answer, where a legal fiction of vicarious liability is created, or where the offence is one of strict or absolute liability.
On the question of quashing under Section 482 of the Code of Criminal Procedure, 1973 (CrPC), the Court held that neither identification nor arraignment of a natural person can be read as a prerequisite for maintaining a prosecution against a corporation. The Court reasoned that the chargesheet must disclose that the corporation itself committed the offence, not that it has identified the particular individual through whom it did so, and that the corporation’s role can be disclosed through averments concerning its own conduct, decisions, and dealings without naming the individual who carried them out.
The Court held that mens rea can be averred through surrounding facts and conduct without being tied to a specifically named individual, and that the question of attribution is intricate and ultimately a matter for trial. The Court clarified that the rulings in Aneeta Hada v. Godfather Travels [(2012) 5 SCC 661] and Hindustan Unilever v. State of M.P. [(2020) 10 SCC 751], which required arraignment of the company for prosecution of natural persons under Section 141 of the Negotiable Instruments Act and similar vicarious liability provisions, cannot be read as establishing a general rule that arraignment of a natural person is a prerequisite for a corporation’s prosecution. The Court held that such principle applies only where the statute creates vicarious liability.
The Court clarified that the allegations must, at least prima facie, reveal that some natural person or persons acted on behalf of the corporation, that such action is referrable to the offence in question, and that the surrounding circumstances do not render the existence of mens rea patently absurd or inherently improbable.
A Two-Judge Bench comprising Justice J.B. Pardiwala and Justice Manoj Misra observed that the question of whether a corporation can possess mens rea was no longer res integra in India, having been settled in favour of corporate criminal liability through decisions such as Iridium India Telecom Ltd. v. Motorola Inc. [(2011) 1 SCC 74] and Standard Chartered Bank v. Directorate of Enforcement [(2005) 4 SCC 530]. The Court noted that the real gap in Indian jurisprudence lay in the second question, namely, the basis on which mens rea could be attributed to a corporation, which had remained largely unaddressed. To fill this gap, the Court undertook a detailed examination of English law, tracing the development of the identification doctrine from Lennard’s Carrying Company v. Asiatic Petroleum Company [(1915) A.C. 705] through Tesco Supermarkets Ltd. v. Nattrass [(1972) A.C. 153], and Meridian Global Funds Management Asia Ltd. v. Securities Commission [(1995) 2 A.C. 500].
The Court observed that Tesco Supermarkets case established that certain persons within a company, when they act, do not act merely as agents but as the company itself, and their acts and state of mind are accordingly the company’s own. The Court further observed that Lord Hoffmann in Meridian Global cautioned against locating the ‘directing mind and will’ in the abstract and instead laid down three rules of attribution: primary rules (found in constitutional documents), general rules (ordinary principles of agency), and special rules (fashioned by courts to give effect to the purpose of the statute).
The Court also noted that English law has since undergone legislative reform through the Economic Crime and Corporate Transparency Act 2023 and the Crime and Policing Act 2026, extending attribution to senior managers across all offences. Turning to Indian law, the Court observed that the issue of mandatory imprisonment was settled by Standard Chartered Bank, which held that companies are not immune from prosecution merely because the offence carries mandatory imprisonment, so long as fine is also prescribed.
Briefly, Sanofi India Limited, a public limited company engaged in manufacturing pharmaceutical products, supplied medicines to the Bhabha Atomic Research Centre (BARC) under the Rare Materials Project during 2011-12, 2013-14 and 2015-16 pursuant to tender processes. The company was arrayed as Accused No. 4 in FIR registered by the Central Bureau of Investigation (CBI), alleging that Dr. P. Anand, a Scientific Officer at BARC, had conspired with various pharmaceutical companies, including Sanofi, to procure medicines at inflated rates and in quantities exceeding requirements.
After investigation, a chargesheet was filed in 2017 against Dr. P. Anand (Accused No. 1) and Sanofi (Accused No. 2) for offences punishable under Section 120B read with Section 420 of the Indian Penal Code (IPC) and Sections 11, 12, 13(2) read with 13(1)(b) and (d) of the Prevention of Corruption Act, 1988 (PC Act). No employee or official of Sanofi was arraigned as an accused in the chargesheet. The prosecution alleged that Dr. Anand misclassified items as proprietary to favour Sanofi despite lower bids from other companies, omitted competing bidders from the tender process, or declined to place orders with the lowest bidder, causing a wrongful loss of INR 3,53,361 to BARC and corresponding wrongful gain to the accused. It was further alleged that Dr. Anand received an illegal gratification of INR 42,750 from Sanofi under various pretexts, with Sanofi abetting the offence.
The Trial Court took cognizance and issued process against Sanofi and Dr. Anand. Sanofi filed a petition before the Karnataka High Court seeking to quash the proceedings, contending that a corporate entity cannot be prosecuted independently of the natural persons who acted on its behalf, and since no employee was arraigned, the prosecution could not be sustained. The High Court dismissed the petition, holding that companies can be held criminally liable even for offences requiring mens rea, and that a complainant is entitled to an opportunity to prove the averments.
