Corporate Criminal Liability: A Need of the Hour
Aanchal Lamba
Aditi Khanna
Abstract
The purpose of this article is to throw light on the current need for a legislation to deter the crimes committed by corporate firms. The paper describes the concept of corporate criminal liability, its diverse interpretation adopted over the years and the current scenario of corporate crimes in India. It discusses the need to intensify the current punishment given to corporations and proposes alternative sanctions which would further discourage corporations from indulging in corporate crimes. Introduction:
Today, corporations play an indispensable role in the society and their actions have a direct or indirect effect on individuals all over the world. …show more content…
This concept was applied in a number of cases which were planted on corporate crime. These cases hold precedential value even today. One of the earliest example of such a case is the controversy of the Bhopal Gas Tragedy. After which a number of cases, especially those involving environment issues, based their decision on these principles.
In The Assistant Commissioner... v. M/S. Velliappa Textiles Ltd. & Anr, under the Income Tax Act some sections were violated by a private company. Section 276C and 277 of the said Act, imposed a fine along with imprisonment. The Supreme Court discussed the controversy related to mens rea and held that the mens rea of person in charge is liable to be extrapolated to the corporation, enabling an artificial person to be prosecuted. Srikrishna J. in majority observed:
“The doctrine of alter ego identifies actions and thought patterns of certain individuals within the corporation called corporate organs who act within the scope of their authority and on behalf of the corporate body, as the behaviour of the legal body itself. Hence, the name of the doctrine: the theory of corporate organs or the alter ego doctrine referring to these individuals as the embodiment of the legal body. We hold that there is no immunity to the companies from prosecution merely because the prosecution is in respect of offences for which punishment prescribed is mandatory
Aanchal Lamba
Aditi Khanna
Abstract
The purpose of this article is to throw light on the current need for a legislation to deter the crimes committed by corporate firms. The paper describes the concept of corporate criminal liability, its diverse interpretation adopted over the years and the current scenario of corporate crimes in India. It discusses the need to intensify the current punishment given to corporations and proposes alternative sanctions which would further discourage corporations from indulging in corporate crimes. Introduction:
Today, corporations play an indispensable role in the society and their actions have a direct or indirect effect on individuals all over the world. …show more content…
This concept was applied in a number of cases which were planted on corporate crime. These cases hold precedential value even today. One of the earliest example of such a case is the controversy of the Bhopal Gas Tragedy. After which a number of cases, especially those involving environment issues, based their decision on these principles.
In The Assistant Commissioner... v. M/S. Velliappa Textiles Ltd. & Anr, under the Income Tax Act some sections were violated by a private company. Section 276C and 277 of the said Act, imposed a fine along with imprisonment. The Supreme Court discussed the controversy related to mens rea and held that the mens rea of person in charge is liable to be extrapolated to the corporation, enabling an artificial person to be prosecuted. Srikrishna J. in majority observed:
“The doctrine of alter ego identifies actions and thought patterns of certain individuals within the corporation called corporate organs who act within the scope of their authority and on behalf of the corporate body, as the behaviour of the legal body itself. Hence, the name of the doctrine: the theory of corporate organs or the alter ego doctrine referring to these individuals as the embodiment of the legal body. We hold that there is no immunity to the companies from prosecution merely because the prosecution is in respect of offences for which punishment prescribed is mandatory