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Rules Companies Can Face Criminal Trial Without Naming Individual Officers
In a significant judgment on , the dismissed an appeal by pharmaceutical company , ruling that criminal proceedings against a company cannot be quashed merely because the investigating agency has not identified or arraigned the specific individual through whom the alleged offence was committed.
A bench of Justices J.B. Pardiwala and Manoj Misra held that the absence of an identified natural person does not, by itself, render the allegations incapable of disclosing an offence against the corporation. The Court also laid down a detailed three-stage framework for determining when the acts and guilty mind of an individual may be attributed to a company.
The Case: Alleged Bribery in BARC Medicine Procurement
The case originated from a investigation into the supply of pharmaceutical products by Sanofi India to the Rare Materials Project of the between . The chargesheet alleged that Dr. P. Anand, a Scientific Officer at BARC, conspired with Sanofi India to procure medicines at inflated rates and in quantities exceeding requirements, causing a wrongful loss of ₹3.53 lakh to BARC. It was further alleged that Dr. Anand received an illegal gratification of ₹42,750 from Sanofi.
Crucially, the chargesheet did not name any employee or official of Sanofi as an accused alongside the company. The trial court took cognizance, and the refused to quash the proceedings, prompting Sanofi to appeal to the .
Sanofi's Argument: The '' Defence
Sanofi contended that for offences requiring proof of (guilty mind), the prosecution must identify and arraign the "" or "" of the company before criminal liability can be attributed to the corporation itself. Relying on English precedents like , Sanofi argued that in the absence of such identification, the proceedings were not maintainable.
The 's Three-Stage Attribution Framework
The , while acknowledging that a corporation possesses only through attribution from a natural person, rejected Sanofi's argument that non-identification warrants quashing at the threshold.
Justice Pardiwala, authoring the 98-page judgment, held that attribution is ultimately a matter for trial and cannot be used as a tool to stifle prosecution at the outset. The Court laid down a hierarchy of rules for courts to apply when deciding whose act and state of mind should count as the company's own:
- : The court first examines the company's constitutional documents (memorandum and articles of association) to see in whom the power to do the relevant act is vested.
- : If the constitutional documents do not provide an answer, the court examines whether the power was expressly or impliedly delegated to the person concerned, with sufficient discretion and independence.
- : If the first two stages fail, the court may fashion a special rule based on the purpose of the criminal statute. For narrow statutory purposes, the question is abstract; for broader purposes, it is case-specific.
The Court clarified that this framework applies primarily to offences requiring proof of , while and cases where statutes explicitly create fall outside its scope.
Key Observations from the Judgment
"What the chargesheet must disclose, on its face, is that the corporation itself has committed the offence, not that it has also identified the particular individual through whom it did so."
" is a notoriously vexed issue… a corporation has 'no soul to damn and no body to kick'."
"Non-identification of the natural person does not, by itself, render the allegations incapable of disclosing the corporation’s role in the offence."
The Court also emphasized that if making it easier to convict companies is the policy objective, that task falls to the legislature, not the judiciary. It observed that the law would benefit from a systematic study akin to the options paper prepared in the United Kingdom.
The Court's Final Decision
Dismissing Sanofi India’s appeal, the held that the chargesheet disclosed actions undertaken on behalf of the company and that the surrounding circumstances gave rise to the possibility of the requisite . The Court concluded that the High Court had rightly declined to quash the proceedings.
The judgment reinforces that corporations do not enjoy any special exemption from the ordinary principles governing quashing of criminal proceedings, and that the absence of a named individual is not a free pass to escape prosecution.
