corporate criminal liability.pptx

8/19/2019 Corporate Criminal Liability.pptx

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Corporate Criminal

Liability

Dr. Shiva Kumar Giri



General Concepts

• The doctrine of corporate criminal liability turned from it'sinfancy to almost a prevailing rule.

•

But because a corporation is not a natural person and cannotbe sub!ect to one of the most important sentencing optionsnamely imprisonment it re"uires special consideration in an

in"uiry into sentencing la#.

•

$unishing a corporation undermines the theoreticalfoundations of criminal la# #hich presupposes that crimesinvolve an act and a culpable mental state.

• Corporate criminal liability or corporate crime is very di%cultto de&ne because this phrase in present day scenario covers

#ide range of oences.

• (o#ever for understanding purpose it can be de&ned as illegalact of omission or commission punishable by criminal sanction

committed by individual or group of individual in course oftheir occupation.



General Concepts

• )t can be even de&ned as socially in!urious acts committed incourse of occupations by peoples #ho are managing the aairs

of the company to further its business interest.

• Corporate criminality also represents a *ind of instrumentalitiesthrough #hich the trust of the people continues to be betrayedby persons in positions of responsibility authority and po#er inthe business sector.

• Corporate crime has been de&ned as +the conduct of acorporation or of employees acting on behalf of a corporation#hich is proscribed and punishable by la#,.

• )n this sense +Corporate criminal Liability, refers to theimposition of criminal liability on either the corporation or itsemployees and agents. The latter is also referred to as #hite-collar crime. Braith#aite /ohn 0 Corporate Crime in the$harmaceutical )ndustry 1st 2dition 3outledge and Kegan $aul4



General Concepts

• The general perception about a Company being criminallyprosecuted is that it being a !uristic person cannot be

prosecuted for criminal oence involving mens rea.• Companies can be prosecuted for oences involving mens rea. The criminal liability of a corporation #ould arise #hen anoence is committed in relation to the business of thecorporation by a person or a body of persons in controlling its

aairs. )n such circumstances it #ould be necessary toascertain that the degree and control of the person or body ofpersons is so intense that a Corporation may be said to thin*and act through the person or the body of persons.

• 5ens rea is attributed to the Corporations on the principle of

+alter ego6 of the Company meaning thereby that the criminalintent of the persons that guide the business of the Company#ould be imputed to the Corporation. Standard Chartered

Bank v. Directorate of Enforcement [(2005) 4 SCC 405].

• )ridium )ndia Telecom Ltd. vs. 5otorola )nc. 781114 SCC 9:.



Mens Rea

• )n as much as all criminal and "uasi-criminal oences are creatures ofstatute the amenability of the corporation to prosecution necessarily

depends upon the terminology employed in the statute.

• )n the case of strict liability the terminology employed by the legislatureis such as to repeal an intent that guilt shall not be predicted upon theautomatic breach of the statute but on the establishment of the actusreus sub!ect to the defence of due diligence the la# is primarily based

on the terms of the statute.

• )n the case of absolute liability #here the legislature by the nearestintendment establishes an oence here liability arises instantly upon thebreach of the statutory prohibition no particular state of mind is a pre

re"uisite of guilt.

• Corporations and individuals persons stand on the same footing in theface of such a statutory oence. )t is a case of automatic primaryresponsibility. )t is only in the case re"uiring mens rea0 a "uestion arises#hether the corporation could be attributed #ith re"uisite mens rea to

prove the guilt.



Contd.

• ;.S. Supreme Court in <e# =or* Central and (udson 3iver 3ail3oad Co. v. ;.< clearly held that a corporation is liable for

crimes of intent.• )n (.L B>LT>< engg.4 co. ltd v. T./ Graham and sons Lord

Denning observed? – @ company may in many #ays be li*ened to a human body. They

have a brain and a nerve centre #hich controls #hat they do. They

also have hands #hich hold the tools and act in accordance #ithdirections from the centre. Some of the people in the company aremere servants and agents #ho are nothing more than hands to dothe #or* and cannot be said to represent the mind or #ill. >thers aredirectors and managers #ho represent the directing mind and #ill ofthe company and control #hat they do. The state of mind of these

managers is state of mind of company and it treated by la# as such.So you #ill &nd that in case #here the la# re"uires personal fault asa condition of liability in tort the fault of the manager #ill be thepersonal fault of company.

• That is made clear in Lord (aldene's in Lennard's Carraying

Company Ltd v. @siatic $etroleum Co. Ltd @c at pp. 91A91:4.



Contd.

• So also in the criminal la# in cases #here the la#re"uires a guilty mind of directors or the managers#ill render the company themselves guilty.

• )n )ndia in Standard Chartered case there #as noissue of mens rea so #hy it #as left open. But inelliapa Tetiles case Supreme Court held thatmens rea of person in charge shall be treated asmens rea of corporation.

• Sri*rishna /. in ma!ority on this point observed? – Though initially it #as supposed that a corporation

could not be held liable criminally for oences #heremens rea of person in charge of the aairs of thecorporation the alter ago is liable to be etrapolated tothe corporation enabling even an arti&cial person to be

prosecuted.

corporate criminal liability.pptx

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