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UNIVERSITY OF PETROLEUM & ENERGY STUDIES

COLLEGE OF LEGAL STUDIES

BA., LLB (HONS.)


SEMESTER-VI
ACADEMIC YEAR: 2016-17

SESSION: JAN- MAY

PROJECT
FOR
COMPANY LAW II
ON
CORPORATE CRIMINAL LIABILITY IN INDIA
(LLBL 422)
UNDER THE SUPERVISION OF: Prof. Shruti Reddy

Name:

Prateek Semwal

Sap No:

500028319

Roll No

R4213082

INDEX

1. INTRODUCTION ................................................................................................................. 03
2. TWIN MODEL OF CORPORATE CRIMINAL LIABILITY .........................................................05
3. A NEW PERSPECTIVE: EVALUATING CORPORATE CRIME AS A MANAGEABLE DEFECT.... 08
4. RATIONALE OF CORPORATE CRIME .................................................................................. 10
5. CONSTRAINTS OF CORPORATE LIABILITY .........................................................................13
6. PROVISIONS OF CORPORATE CRIMINAL LIABILITY IN COMPANYS ACT 2013 .................16
CONCLUSION ............................................................................................................... 20
BIBLIOGRAPHY ........................................................................................................... 21

INTRODUCTION

Section 11 of Indian Penal Code, 1860 (the Code) define person. It reads the word person
includes any Company or Association or a body of persons, whether incorporated or not.
Further section 2 of the Code provides that Every person shall be liable to punishment under
this Code. Thus, section 2 of the Code without any exception to body corporate, provides for
punishment of every person which obviously includes a Company. Therefore, by reading of
these two provision concept of corporate criminal liability can be derived, though it is not the
sole legislation which provides for the punishment of corporate body, Companies Act, 2013,
Income Tax Act, etc.
Corporations have now became an integral part of our society, and with development of
corporations they have become significant actor in our economy, our society runs in the risk
of getting victimized by these corporation, and therefore they should be deterred too.
Imposition of punishment, upon offenders of any kind, can be understood by various
rationale of criminal law jurisprudence, but deterrence is the rationale that is applicable to
such economic entities as corporations. Corporations have their own identity, they have
separate legal personality and they are different from their members , and this is sufficient to
makes it possible to held them liable and censure them.1
Criminal Liability is the quality or state of being legally obligated or accountable; legally
responsible to another or to society which is enforceable by criminal punishment. And
therefore, Corporate Criminal Liability means the extent to which a Corporation as a legal
person can be held criminally liable for its acts and omissions and for those of the natural
persons employed by it. This paper is intended to examine various nuances related to
corporate criminal liability, and at the end to provide various recommendation which should
be incorporated in in legislations.

II. HISTORICAL BACKGROUND


1 John T. Byam, The Economic Inefficiency of Corporate Criminal Liability (Vol. 2), 1982, pp. 582-585.

The growth of Corporate criminal liability can be traced in the terms of the following four
stages. This is also a chronological account of how the courts overcame the following
obstacles:
1. Public Nuisance - Courts in England and the United States first imposed corporate criminal
liability in cases involving non-feasances of quasi-public corporations such as municipalities,
that resulted in public nuisances.2
2. Crimes not requiring criminal intent - As the presence and importance of corporations
grew, courts extended corporate criminal liability from public nuisance to all offences that did
not require criminal intent. In the Queen v. Great North of England Railways Co.3 Lord
Denman ruled that corporations could be criminally liable for misfeasance and American
courts soon began following this trend.4 This development eventually encouraged courts to
extend corporate criminal liability to all crimes not requiring intent.
3. Crimes of intent - Courts were slow to extend corporate criminal liability to crimes of
intent. Not until New York Central and Hudson River Rail Road Co. v. United States5 in
1909 did the Supreme Court clearly hold a corporation liable for crimes of intent. The
motivating factor of this result was the need for effective enforcement of law against
corporations. Creation of corporate personality had otherwise created too large a vacuum visa-vis application of criminal law to corporations.
2 The King v. Inhabitants of Lifton, 101 Eng Rep 280 (KB 1794), Rex v. Inhabitants of Great
Broughton, 9B Eng Rep 418 (KB 1771), Case of Lanford Bridge, 79 Eng. Rep. 919 (KB
1635).
3 115 Eng Rep 1294 (QB 1846).
4 State v. Morris & Essex Rail Road Co., 23 N J L 360 (1852); see Commonwealth v.
Proprietors of New Bedford Bridge, 68 Mass (2 Gray) 339 (1854). American Courts followed
English precedents and indicated corporations for affirmative acts (misfeasance) that resulted
in public nuisance.
5 115 Eng Rep 1294 (QB 1846).

4. Expansion of corporate criminal liability - Various historical developments in Western


Europe as well as United States further contributed to the growth and expansion of corporate
criminal liability. However one of the most important factors favouring criminal liability over
civil liability was that the public civil enforcers did not possess as much enforcement power
as criminal enforcers did.

TWIN MODEL OF CORPORATE CRIMINAL LIABILITY


DERIVATIVE MODEL
This model is individual centred model. It derives to attach the liability to the corporation
only because an individual connected to the corporation incurred some liability for which the
individual is to be punished, but since it is connected to the corporation the liability is put on
the corporation to having that individual with it and letting it incurred some liability.
Derivative model can be understood in two sub-categorises: a) Vicarious Liability; b)
Identification Doctrine.
I.VICARIOUS

LIABILITY

The concept of vicarious liability is based on two latin maxims- first, qui facit per alium facit
per se, it means that he who acts through another shall deemed to have acted on his own, and
second, respondeat superior which means let the master answer. In Bartonshill Coal Co. v.
McGuire6 , Lord Chelmsford LC said: every act which is done by an employee in the course
of his duty is regarded as done by his employers orders, and consequently is the same as if it
were his employers own act.
Vicarious liability generally applies to civil liability but Massachusetts court in
Commonwealth v. Beneficial Finance CO.7 , held three corporations criminally liable for a
conspiracy to bribe, the first company, for the acts of its employee, the second, for the act of
its Director, and the third, for the acts of the Vice-President of a wholly owned subsidiary.
The Court seemed to believe that corporate criminal liability was necessary since, a
corporation is a legal fiction comprising only of individuals. US courts are not the only courts
which have incorporated the concept of vicarious liability in the cases of criminal liability,
6 (1858) 3Macq 300.
7 State of Maharashtra vs. M/s Syndicate Transport Co. (P) Ltd. AIR 1964 Bom 195.

but now this model has been rejected considering it to be unjust to condemn one person for
the wrongful conduct of another.

II.IDENTIFICATION

DOCTRINE

This doctrine is an English law doctrine which tries to identify certain key persons of a
corporation who acts in its behalf, and whose conduct and state of mind can be attributed to
that of the corporation. In case of Salomon v. Salomon & Co.8 House of Lords held that
corporate entity is separate from the persons who acts on its behalf. The Courts in England
had in various judgments like DPP v. Kent & Sussex Contractors Ltd.9, R v. ICR Haulage
Ltd.10, ruled that the corporate entities could be subjected to criminal liability and the
companies were held liable for crimes requiring intent. Judgment like these led to the
promulgation of identification doctrine.
As to the liability of these key persons who act on behalf of company, it was held in Moore v.
Brisler11 that the persons who are identified with the corporations must be acting within the
scope of their employment or authority. The conduct must occur within an assigned area of
operation even though particulars may be unauthorised. It will be wise to infer that
identification doctrine is narrower in scope than the vicarious liability doctrine, instead of
holding corporation liable for act of any employee, identification doctrine narrows it down to
certain persons.
ORGANIZATIONAL MODEL
Unlike derivative model which focuses on individual, organizational model takes corporation
into consideration. Offences require mental state (mens rea) to commit a crime along with
physical act (actus reus), but the problem that arises while holding corporations criminally
8 Salomon v. Salomon & Co., 1897 AC 22: (1895-99) All ER Rep 9 (HL).
9 DPP v. Kent & Sussex Contractors Ltd., (1944) 1 All E.R.119.
10 DPP v. Kent & Sussex Contractors Ltd., (1944) 1 All E.R. 691.
11 Moore v. Brisler, [1944] 2 All ER 515.

liable is how a corporation which is juristic person could possess requisite mental state to
commit a crime.
Derivative model was one way to attribute mental state to corporation. Other way could be by
proving that there existed an environment in the corporation which directed, tolerated, led-on,
and even encouraged the non-compliance of specific law which made it offence. Moreover,
physical act that too is required to complete the requirement of commission of an offence can
be derived rather be proved from the act of its employees, officers, directors, etc. Thus,
culture of a corporation is to be seen while determining its criminal liability.
Corporate culture may help for commission of an offence requiring mental state by- firstly,
providing the environment or necessary encouragement that it was believed by the offender
working in the corporation that it was perfectly alright to commit that offence, or corporation
has psychologically supported the commission of offence; secondly, it is quite possible that
the corporation created an environment which led to commission of crime. Both ways it was
the corporation and its working culture that let the offence committed.

A NEW PERSPECTIVE: EVALUATING CORPORATE CRIME AS A MANAGEABLE


DEFECT
POSITION OF CORPORATE CRIMINAL LIABILITY IN INDIA

Until recently, courts in India were hesitant to attribute criminal liability to a company for an
offence that required a criminal intent and they were of the opinion that they could not
prosecute companies for offences that entailed a mandatory sentence of imprisonment
because the corporations could not be criminally prosecuted for offenses requiring mens rea
as they could not possess the requisite mens rea. In A. K. Khosla v. S. Venkatesan12 , two
corporations were charged for committing fraud under the Indian Penal Code. The
Magistrate issued orders against the corporations and the Court observed that in order to
prosecute corporate bodies, there were two prerequisites, the first being that of mens rea and
the other being the ability to impose the mandatory sentence of imprisonment. A corporate
body could not be said to have the necessary mens rea , nor can it be sentenced to
imprisonment as it has no physical body.

12 A. K. Khosla v. S. Venkatesan (1992) Cr.L.J. 1448

In Oswal Vanaspati & Allied Industries v. State of U.P.13 , the Full Bench of the Allahabad
High Court held that a company being a juristic person cannot obviously be sentenced to
imprisonment as it cannot suffer imprisonment.
In Zee Tele films Ltd. v. Sahara India Co. Corp. Ltd .14, the court dismissed a complaint
which was filed against Zee Tele films under Section 500 of the IPC. In this case, it was
alleged that Zee had telecasted a program which was based on falsehood and thereby
defamed Sahara India. The court held that mens rea was one of the essential elements of the
offense of criminal defamation and that a company could not have the requisite mens rea. In
Motorola Inc. v. Union of India15 , the Bombay High Court quashed a proceeding against a
corporation for alleged cheating and the court concluded that it was impossible for a
corporation to form the requisite mens rea, which was the essential ingredient of the offense.
Thus, the corporation could not be prosecuted for cheating under section 420 of the IPC.
In the case of The Assistant Commissioner, Assessment-II, Bangalore & Ors. v. Velliappa
Textiles16 , a private company was prosecuted for violation of certain sections under the
Income Tax Act. Sections 276-C and 277 of the Income Tax Act provided for a sentence of
imprisonment and a fine in the event of a violation. The Supreme Court held that the
respondent company could not be prosecuted for offenses under certain sections of the
Income Tax Act because each of these sections required the imposition of a mandatory term
of imprisonment coupled with a fine and the court could not only impose fine on the
corporation. After strict interpretation, the Court held that a corporation did not have a
physical body to be imprisoned and therefore could not be sentenced to imprisonment. The
Court also noted that while interpreting a penal statute, if more than one view is possible, the
court is obliged to lean in favor of the construction that exempts an accused from penalty
rather than the one that imposes the penalty.
13 1993 1 Comp LJ 172.
14 2004 Cri LJ 1576.
15 Motorola Inc. v. Union of India,(2004) Cri.L.J. 1576.
16 The Assistant Commissioner, Assessment-II, Bangalore & Ors. V. Velliappa Textiles,
(2004) 1 Comp. L.J. 21.

In MV Javali v. Mahajan Borewell & Co and Ors17 where the Supreme Court held that
mandatory sentence of imprisonment and fine is to be imposed where it can be imposed, but
where it cannot be imposed ,namely on a company then fine will be the only punishment.
Thus the Indian courts never felt about inclusion of company on certain criminal liability. The
legal difficulty arising out of the above situation was noticed by the Law Commission and in
the 41st Report of Law commission of India, the Law Commission suggested amendment to
Section 62 of the Indian Penal Code by adding the following lines:
In every case in which the offence is only punishable with imprisonment or with
imprisonment and fine and the offender is a company or other body corporate or an
association of individuals, it shall be competent to the court to sentence such offender to fine
only.

RATIONALE OF CORPORATE CRIME

In every case in which the offense is punishable with imprisonment and any other punishment
not being fine and the offender is a corporation, it shall be competent to the court to sentence
such offender to fine. In this section, corporation means an incorporated company or other
body corporate, and includes a firm and other association of individuals.
But this bill prepared on the basis of the recommendations of the law commission lapsed and
it did not become law. However few of these recommendations were accepted by parliament
and by suitable amendment some of the provisions in the taxation statutes were amended. The
Law Commission has tried consistently to find a formula which would solve the problem of
fixing appropriate punishment for the Corporations which commit offences; this has been
done with a view to punish a corporation where mandatory minimum punishment is both
17 AIR 1997 SC 3964.

punishment and fine, in such a case it needs to be fixed as to how the law courts would
advance if this question comes up before them.
But the view of the courts on corporate criminal liability was changed in a landmark case of
Standard Chartered Bank and Ors. v. Directorate of Enforcement.18 In this case,
Standard Chartered Bank was prosecuted for the alleged violation of certain provisions of the
Foreign Exchange Regulation Act, 1973 and the Supreme Court did not go by the literal and
strict interpretation rule required to be done for the penal statutes and held that the
corporation could be prosecuted and punished with fines, regardless of the mandatory
punishment required under the respective statute. The Court observed that all the penal
statutes are to be strictly construed in the sense that the Court must see that the thing charged
as an offence is within the plain meaning of the words used and must not strain the words on
any notion that there has been a slip that the thing is so clearly within the mischief that it
must have been intended to be included and would have included if thought of later.19 After
the decision of the Standard chartered bank case, the courts were generally of the view that
the companies wont be exempted from prosecution merely because the prosecution is in
respect of offences for which punishment prescribed is a mandatory imprisonment.
In Iridium India Telecom Ltd. v. Motorola Incorporated and Ors20 , the Honble Supreme
court held that a corporation is virtually in the same position as any individual and may be
convicted under common law as well as statutory offences including those requiring mens
rea. The criminal liability of a corporation would arise when an offence is committed in
relation to the business of the corporation by a person or body of persons in control of its
affairs. In such circumstances, it would be necessary to ascertain that the degree and control
of the person or body of persons is so intense that a corporation may be said to think and act
through the person or the body of persons. In this case, it was also held that the corporations
can no longer claim immunity from criminal prosecution on the grounds that they are
incapable of possessing the necessary mens rea for the commission of criminal offences.

18 [2005] 4 SCC 530.


19 Tolaram Relumal and Anr. v. The State of Bombay MANU/SC/0057/1954.
20 AIR 2011 SC 20

In CBI v. M/s Blue-Sky Tie-up Ltd and Ors21 , an appeal arose from criminal application
which was quashed by the Calcutta High Court. The Appellant filed criminal applications
against the respondents for committing criminal offences under the provisions of the Indian
Penal Code and under Section 13(2) read with 13(1)(c) and (d) of the Prevention of
Corruption Act, 1988. Pursuant to that, the Respondents filed applications under Section 482
of the Criminal Procedure Code for quashing of the said proceedings. The Calcutta HC
quashed the proceedings against the Respondent No. 1 on the false premise that the company
being a body corporate cannot be prosecuted, but the Supreme Court held that the companies
are liable to be prosecuted for criminal offences and fines may be imposed on the companies.
The criminal intent of the alter ego of the company or corporate body, i.e. the person or
group of people that guide the business of the company would be imputed to the corporation.
It is now an established legal position in India that a corporation can be convicted of offences
that require possession of a criminal intent, and that corporation cannot escape liability for a
criminal offence, merely because the punishment prescribed is imprisonment and fine.
But it is always a controversial issue that Corporations cannot be sentenced to
imprisonment and since, there is no explicit provision relating to it, the Supreme court have
held in various cases that it is better to impose fine upon the corporation even in the cases
where there is a punishment for imprisonment. The imposition of fines may be made in four
different ways as provided in the IPC. It is the sole punishment for certain offences and the
limit of maximum fine has been laid down; in certain cases, it is an alternative punishment
but the amount is limited; in certain offences, it is imperative to impose fine in addition to
some other punishment and in some it is obligatory to impose fine but no pecuniary limit is
laid down.22
Section 357, Cr PC, empowers a Court imposing a punishment of fine or a sentence of
which fine forms a part, to order payment of compensation, out of the fine recovered, to a
person for any loss or injury caused to him by the offence. Even the environmental
degradation arising out of industrial pollution in recent years has become a positive danger to

21 CBI v. M/s Blue-Sky Tie-up Ltd and Ors ,Crl. Appeal No(s). 950 of 2004.
22 Angira Singhvi ,Corporate Crime and Sentencing in India: Required Amendments in Law, International
Journal of Criminal Justice Sciences ,Vol 1 Issue.2 July 2006.

social security. Thus, Legal provisions have been incorporated in the Indian Penal Code,23 to
punish industrial and business organizations which pose danger to public life by polluting
water,24 and District Magistrate can initiate proceedings against them under Section 133 of
the code of Criminal Procedure, 1973. Section 16 of Environment (Protection) Act, 1986 and
Section 47(2) of the Water (Prevention and Control Pollution) Act, 1974 also explicitly lays
down provision for the offences by companies. It states companies can be prosecuted under
certain circumstances and thus, reflects the concept of vicarious criminal liability. Corporate
liability may appear incompatible with the aim of deterrence because a corporation is a
fictional legal entity and thus cannot itself be deterred. In reality, the law aims to deter the
unlawful acts or omissions of a corporations agents. To defend corporate liability in
deterrence terms, one must show that it deters corporate managers or employees better than
does direct individual liability.25

CONSTRAINTS OF CORPORATE LIABILITY


A.IMPRISONMENT
23 Indian Penal Code, 1860 S. 277. Fouling water of public spring or reservoir: Whoever
voluntarily corrupts or fouls the water of any public spring or reservoir, so as to render it less
fit for the purpose for which it is ordinarily used, shall be punished with imprisonment of
either description for a term which may extend to three months, or with fine which may
extend to five hundred rupees, or with both.
24 Water Pollution (Amendment) Act,1978.
25 Lewis A. Kornhauser , An Economic Analysis of the Choice Between Enterprise and Personal Liability for
Accidents, 70 CAL. L. REV. 1345 passim (1982).

As has been discussed above that a company is recognized as a juristic person, and being a
person it has to face the punishment that has been provided by the various acts. There are
various provisions in Companies Act, 2013 itself which hold a company liable for its
wrongdoing. However, there are provisions which provides mandatory imprisonment for a
person including company, such as Section 447 of Companies Act, 2013 Act, Section 420 of
The IPC, 276B of The Income Tax Act etc.
The Courts found themselves in dead end in these kind of situations where a company is
charged under sections which provides for necessary imprisonment, as the company being a
legal person cannot be imprisoned for its criminal acts, it can only be punished with fine and
not otherwise. The Supreme Court has to face similar difficulty in case of M.V. Javali vs.
Mahajan Borewell & Co. and Others26 , The Company was found guilty under Section 276B
read with 278B of The Income Tax Act, which gives mandatory punishment of at least 3
months, but the Court found itself in a fix about how to imprison a company. J. Mukhrjee
said that, Even though in view of the above provisions of Section 278B, a company can be
prosecuted and punished for an offence committed under Section 276B the sentence of
imprisonment which has got to be imposed there under cannot be imposed, it being a juristic
person and we are of the opinion that the only harmonious construction that can be given to
Section 276B is that the mandatory sentence of imprisonment and fine is to be imposed where
it can be imposed namely on persons coming under categories (ii) and (iii) above, but where
it cannot be imposed, namely on a company, fine will be the only punishment.
Therefore, the solution as of now is that a person is juristic person then punishment relating
to imprisonment would not apply to it instead he will be liable for fine. The court can do one
thing though, if it cannot imprison a corporate body but it can charge greater amount of fine
in such cases in comparison to what it charges to the person who are capable of being
imprisoned for the same offence.

MENS REA

26 M.V. Javali vs. Mahajan Borewell & Co. and Others, (1997) 8 SCC 72.

Another problem faced by the Judges was how to try a company for the offences where mens
rea was an essential. How can a juristic person have a mental element to commit a crime?
The trend was such that the company was only tried for cases where mens rea was not an
essential and it was accepted that it cannot be tried for offences where mens rea is required.
In the case of Motorola Inc. vs. Union of India27 the Bombay High Court quashed a
proceeding against a corporation for alleged cheating, as it came to the conclusion that it was
impossible for a corporation to form the requisite mens rea, which was the essential
ingredient of the offense. Thus, the corporation could not be prosecuted under section 420 of
the IPC, but this idea of company not possessing mens rea came to an end Lord Dennings
view in the case of H.R. Bolton (engg.) Co. Ltd. vs. T.J. Graham28 was accepted that A
company may in many ways be likened to a human body. They have a brain and a nerve
centre, which controls what they do. They also have hands, which hold the tools and act in
accordance with directions from the centre. Some of the people in the company are mere
servants and agents who are nothing more than hands to do the work and cannot be said to
represent the mind or will. Others are directors and managers who represent the directing
mind and will of the company and control what they do. The state of mind of these managers
is state of mind of company and it treated by law as such. So you will find that in case where
the law requires personal fault as a condition of liability in tort, the fault of the manager will
be the personal fault of company.
The concept of alter ego was evolved subsequently in India to tackle with the problem. The
alter ego doctrine revolves around the concept of personification of the legal body. The
Corporation is considered to be the alter ego of the individual. Therefore, the corporation can
be rendered liable for the criminal act of the individual done in his scope of work. mens Rea
of the individual is considered to be the mens rea of the corporation itself. In the case of The
Assistant Commissioner, Assessment-II, Bangalore & Ors. vs. M/s. Velliappa Textiles Ltd. &
Anr29 , the Supreme Court has held that, Though, initially, it was supposed that Corporation
27 Motorola Inc. vs. Union of India, 2004 Cri LJ 1576.
28 The Assistant Commissioner, Assessment-II, Bangalore & Ors. vs. M/s. Velliappa Textiles
Ltd. & Anr, (2003)11 SCC 405.
29 Supra at 16.

could not be held liable criminally for offences where mens rea was requisite, the current
judicial thinking appears to be that the mens rea of the person in-charge of the affairs of the
Corporation, the alter ego, is liable to be extrapolated to the Corporation, enabling even an
artificial person to be prosecuted for such an offence.
Thus, this doctrine of alter ego allowed the courts to frame corporate houses for the offences
which had mens rea as an essential ingredient, and it is now less tiresome for the court to hold
a corporation criminally liable.

PROVISIONS OF CORPORATE CRIMINAL LIABILITY IN COMPANYS ACT 2013


Companies Act 2013 has increased monetary penalties and imprisonment. The civil and
criminal liabilities are not just on directors but includes Officers in Default. There is
heightened corporate governance requirements even for startups and unlisted companies,
even though there is no public money invested.
Officer in default would broadly cover whole-time directors, Key Managerial Personnel
(KMP) and such other directors as specified by the Board in the absence of KMP and every
director who is aware of contravention of law by virtue of receipt of board proceedings or
participation therein without raising any objection or where non-compliance has taken place
with his consent or connivance.
Below table is indicative of some of the sections which deal with imprisonment.

Section

Who is liable and the Civil/Criminal liability involved

Company-Fine- Not less than Rs. 1 lakh and may extend to Rs. 5
lakhs

Officer in default- Maximum imprisonment of 6 months or Fine-

53- Prohibition on issue of

Not less than Rs. 1 lakh and may extend to Rs. 5 lakhs or with

shares at discount

both.

Company-Fine- Not less than Rs. 1 lakh and may extend to Rs. 3
lakhs

68(11)- Power of Company

Officer in default- Maximum imprisonment of 3 years or Fine-

to purchase its own

Not less than Rs. 1 lakh and may extend to Rs. 3 lakhs or with

securities

both.

71(11)- Debentures

Officer in default- Maximum imprisonment of 3 years or FineNot less than Rs. 2 lakh and may extend to Rs. 5 lakhs or with

both.

Company-Fine- Not less than Rs. 50,000 Thousand and may


extend to Rs. 5 lakhs

Officer in default- Maximum imprisonment of six months or FineNot less than Rs. 50,000 Thousand and may extend to Rs. 5 lakhs

92(5)- Annual return

or with both.

118(12)- Minutes of
proceedings of general
meeting, meeting of Board
of Directors and other

Any person found guilty of tampering with the minutes-

meeting and resolutions

Maximum imprisonment for 2 years and Fine- Not less than Rs.

passed by postal ballot.

25,000 but which may extend to Rs. 1 lakh

128(6)- Books of account,

etc., to be kept by Company

Officer in default- Maximum imprisonment of 1 year or Fine- Not


less than Rs. 50,000 and may extend to Rs. 5 lakhs or with both.

129(7)- Financial statement

Officer in default- Maximum imprisonment of 1 year or Fine- Not


less than Rs. 50,000 and may extend to Rs. 5 lakhs or with both.

Company-Fine- Not less than Rs. 50,000 and may extend


to Rs.25 lakhs

Officer in default- Maximum imprisonment of 3 years or Fine-

134- Financial statement,

Not less than Rs. 50,000 and may extend to Rs. 5 lakhs or with

Boards report, etc

both.

167- Vacation of office of

director

Director Maximum imprisonment for 1 year or Fine- Not be less


than Rs. 1 lakh and may extend to Rs. 5 lakhs or with both.

Company-Fine- Not less than Rs. 5 lakhs and may extend


to Rs.25 lakhs

Officer in default- Maximum imprisonment of 6 months or Fine-

185(2)- Loan to directors,

Not less than Rs. 5 lakhs and may extend to Rs. 25 lakhs or with

etc.

both.

Company-Fine- Not less than Rs.25,000 and may extend to Rs. 5


lakhs

Officer in default- Maximum imprisonment of 2 years or Fine-

186(13) Loan and

Not less than Rs. 25,000 and may extend to Rs. 1 lakh or with

investment by Company

both.

In case of unlisted Company, be punishable with fine which shall

188(5)- Related party

not be less than 25,000 rupees but which may extend to 5 lakh

transactions

rupees

Such person in default- Minimum 1 year to Maximum 3 years

57- Punishment for

imprisonment or Fine- Not less than Rs. 1 lakh and may extend to

personation of shareholder

Rs. 5 lakhs.

58(6)- Refusal of

Such person in default- Minimum 1 year to Maximum 3 years

registration and appeal

imprisonment or Fine- Not less than Rs. 1 lakh and may extend to

against refusal

Rs. 5 lakhs.

Company-Fine- Not less than Rs.1 lakh and may extend to Rs.5
lakhs

Officer in default- Maximum imprisonment of 1 years or Fine-

59(5)- Rectification of

Not less than Rs. 1 lakh and may extend to Rs. 3 lakhs or with

register of members

both.

Company-Fine- Not less than Rs.1 lakh and may extend


to Rs.10 lakhs

Officer in default- Maximum imprisonment of six months or Fine-

Chapter-IV- Registration of

Not less than Rs. 25,000 and may extend to Rs. 1 lakh or with

Charges

both.

Company-Fine- Not less than Rs.1000 for every day in default


but not more than 10 lakhs

137(3)- Copy of financial

Officer in default- Maximum imprisonment of 6 months or Fine-

statement to be filed with

Not less than Rs. 1 lakh and may extend to Rs. 5 lakhs or with

Registrar

both.

contravention

182(4)- Prohibitions and


restrictions regarding

political contributions.

184(4)- Disclosure of

Company-Fine- 5 times of the amount of contribution in

Officer in default- Maximum imprisonment of 6 months and Fine5 times of the amount of contribution in contravention

interest by director

Such person in default- Minimum 1 year imprisonment or FineNot less than Rs. 50,000 and may extend to Rs. 1 lakh or both.

Company-Fine- Not less than Rs.25,000 and may extend


to Rs.25 lakhs

187(4)- Investments of

Officer in default- Maximum imprisonment of 6 months or Fine-

Company to be held in its

Not less than Rs. 25,000 and may extend to Rs. 1 lakh or with

own name

both

Any person who is found to be guilty of fraud- Maximum


imprisonment of 6 months may extend to 10 years

447- Punishment for fraud

Such person also liable to fine which may extent to 3 times the
amount involved.

CONCLUSION

At one point of time, the concept of a separate legal personality of a corporation was
exploited by individuals to evade personal liability. But now it is well established that a
corporation cannot escape liability for offences simply on the basis that they have no body or
soul and cannot possess any mental state. The statutes in India are not in pace with these
developments and they do not make corporations criminally liable and even if they do so, the
statutes impose no other punishments except for fines. The laws relating to corporate criminal
liability in India are vastly insufficient. The legislature needs to be active in this regard and
form certain concrete laws which would ensure that the corporations do not go unpunished
and a better social order needs to be established. Certain Provisions relating to procedural law
also needs to be created and modified so that the corporations can be adequately dealt with. It
is therefore recommended that amendments should be carried out by the legislature to avoid
the judiciary from defining the law and make certain provisions relating to procedural laws so
that the corporations can be adequately dealt with and the courts are also required to make the
statutes fit for strict interpretation by providing for infliction of criminal liability on the
corporations as also providing for various kinds of punishments apart from fines only.

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