A company can be held liable for criminal acts, and mens rea can be attributed to the company if it is an essential element of the crime.

Shiv Narayan Dhingra, J.

By the present petition, the petitioner has assailed an order dated 12th August, 2008 passed by learned Special Judge, CBI, whereby the learned Special Judge framed charges against the petitioner company charging the company u/s 420, 468, 471 IPC read with Section 120-B IPC. The only contention raised by the petitioner before this Court is that a company being a juristic person cannot have mens rea necessary for committing offence of criminal conspiracy as required u/s 120-B IPC. It was contended that criminal conspiracy was a personal act and company being a non living person and only a juristic person cannot have the requisite mens rea. Reliance was placed by the petitioner on Kalpnath Rai v. State AIR 1998 SC 201 and Standard Chartered Bank and Others etc. Vs. Directorate of Enforcement and Others etc. (2005) 4 SCC 530, and other similar cases.

2. This issue was raised before the Trial Court as well and the Trial Court has dealt with this issue at length. In the present case it would be relevant to note that initially the banker of this company was Indian Bank and this company was enjoying various facilities and limits there. The Indian Bank refused to extend further credits to this company on the ground of RBI restrictions. Thereafter the company switched over to Punjab & Sind Bank and it falsified its accounts and presented the same before Punjab & Sind Bank in order to obtain various credit limits & other facilities from this bank. The company showed lesser liabilities and concealed the facts regarding true liabilities. Due to this concealment of the facts, the company and its officials induced the Punjab & Sind Bank to sanction credit facilities to the tune of Rs. 618.51 lacs. Ultimately the company did not pay the amount and cheated the bank of more than Rs. 6.00 crores resulting into registration of this case.

3. No doubt, the company is a juristic person but the company has its own personality and it acts through its Board of Directors. Action of Board of Directors is considered the action of the company. If Board of Directors, in order to benefit the company, does something then such an act is to be considered as the act of the company. If the argument that a company can have no guilty mind is accepted, then the next logical thing is that a company can have no mind at all. If the argument of the counsel is accepted, the very existence of the companies will have to be negated. Board of Directors of a company is considered its mind and acting arms. Where for the benefit of company Board of Directors decides to create false documents, falsify the balance sheet; it is an act of the company as well, as a legal person, apart from the act of individuals involved in the act. For every act, whether civil or criminal thought and action, both are necessary. If company can enter into contracts & perform other legal obligations; it can also be party to criminal acts. Several Laws hold companies responsible for offences committed by it through its Board of Directors. If the company can have a right to do things through its Board of Directors, it can have necessary mens rea also through its Board of Directors.

4. In The Assistant Commissioner, Assessment-II, Bangalore and Others Vs. Velliappa Textiles Ltd. and Others, (2003) 11 SCC 405, the Supreme Court held that it was permissible to prosecute a company for offences that require mens rea or knowledge as an essential element for the reason that the acts and state of mind of the officer or agent of a company, who functions as the directing mind and will of the body corporate and controls its functions, shall, in law, be considered to be the acts and state of mind of the company.

5. Where a company produced falsified accounts to the bank and obtained benefit from the bank on the basis of falsified accounts and induced the bank to part with huge amount of funds, I consider that a company can be prosecuted for the offence committed by it and mens rea can