Criminal liability of corporate bodies in India

As the advancement in science and technology has made the world borderless, the deals and
dealings of the commercial have come global with the help of communication systems,
thereby paving a sophisticated way to commit crimes. The elaboration of the conception of
commercial felonious liability in India can be classified as a long processing trouble from the
bar to fix liabilities on non-fictitious persons. This paper aims to dissect, in-depth, the corner
case laws which developed the conception of commercial felonious liability. The paper also
aims to bring to light all the applicable legislation about commercial crimes and fraudulent
conditioning. It concludes by making some recommendations for the fruitful development of
the conception.
A company can only act through mortal beings and a mortal being who commits an offense
on account of or for the benefit of a company will be responsible for that offense himself. The
significance of objectification is that it makes the company itself liable in certain
circumstances, as well as the mortal beings-Glanville Williams
Section 11 of the Indian Penal Code, 1860 (the Law) defines a 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 Law provides that “Every person shall be liable to discipline
under this Law.” Therefore, section 2 of the Law without any exception to body commercial,
provides for discipline of every person which includes a Company. Thus, by the reading of
these two vital conception of commercial felonious liability can be deduced, though it isn't
the sole legislation that provides for the discipline of commercial body, Companies Act,
2013, Income Tax Act, etc.
Corporates have now come an integral part of our society, and with the development they've
come a significant factor in our frugality, our society runs at the threat of getting victimized
by this, and thus they should be dissuaded too. Duty of discipline, upon the factors of any
kind, can be understood by colourful explanation of felonious law justice, but deterrence is
the explanation that applies to similar profitable realities as corporates. They have their own
identity, they've separate legal personalities and they're different from their members, and this
is sufficient to make it possible to hold them liable and stricture them.
Felonious Liability is the quality or state of being fairly indebted or responsible; fairly
responsible to another or to society which is enforceable by felonious discipline. And thus,
Commercial Felonious Liability means the extent to which a corporate as a legal person can
be held criminally liable for its acts and deletions and those of the natural persons employed
by it. This paper is intended to examine colourful nuances related to commercial felonious
liability, and in the end to give colourful recommendations which should be incorporated in
legislation.
UNDER COMPANIES ACT, 2013
Companies Act, 2013 which has replaced the Companies Act, 1956 has increased the
marketable liability of the directors. The Act has also increased the financial penalties and
imprisonment. Not only marketable lawless liability under the Companies Act, 2013 is
honored but the act also recognizes civil arrears. The Companies Act, 2013 not only makes
the director criminally liable but also includes officers in dereliction under the generality of
marketable lawless liability in India.
 The term Officer in dereliction is a broad term and can include whole- time director, vital
directorial help, and similar other directors in the absence of KMP who has been specified by
the Board of Directors and every other director who's alive of the dereliction which is being
done by entering of board proceedings or by sharing in same without raising any exception or
where non- compliance has taken place with his concurrence or conspiracy.
Marketable lawless liability is honored under the antedating sections of the Companies Act,
2013-
. Section 53- Prohibition on an issue of shares on reduction-The Company will be fined for
the quantum not lower than one lakh but which may extend up to five lakhs. Further, the
officer in dereliction may be locked for over to six months or penalty of a minimum of one
lakh which may extend to five lakhs or both.
Section 118 (12)-Beats of proceedings of general meeting, meeting of Board of Directors
and other meeting and judgments passed by postal ballot-If a person is planted tampering
with the beats of the meeting also such an officer in dereliction may be locked for the term
which may extend to 2 times or with penalty of not lower than twenty-five thousand but may
extend to one lakh.
Section 128 (6)- Books of account ,etc., to be kept by Company- Officer in dereliction-
Maximum imprisonment of 1 time or Fine-Not lower than One lakh and may extend to 5
lakhs or with both.
Section 129 (7)-Fiscal statement- Officer in dereliction-Maximum imprisonment of 1 time or
Fine-Not lower than one lakh and may extend to 5 lakhs or with both.
Section 134-Fiscal statement, Board’s report,etc.- Company-Fine-Not lower than one lakh
and may extend to 25 lakhs and Officer in dereliction-Maximum imprisonment of 3 times or
Fine-Not lower than one lakh and may extend to 5 lakhs or with both.
Section 188 (5)- Combined party deals-In case of unrecorded Company, be punishable with
fine which shall not be lower than rupees but which may extend to 5 lakh rupees.
Section 57-Discipline for personation of the shareholder-Similar person in dereliction-
Minimal 1 time to Maximum 3 times imprisonment or Fine-Not lower than 1 lakh and may
extend to 5 lakhs.
Section 58 (6)- Declination of enrollment and appeal against a declination-Similar person in
dereliction-Minimal 1 time to Maximum 3 times imprisonment or Fine-Not lower than 1 lakh
and may extend to 5 lakhs.
Section 182 (4)- Proscriptions and restrictions regarding political benefactions. - Company-
Fine-5 times of the quantum of donation in violation and Officer in dereliction-Maximum
imprisonment of 6 months and Fine-5 times of the quantum of donation in violation.
Section 184 (4)-Disclosure of interest by the director-Similar person in dereliction-Minimal
1- time imprisonment or Fine-Not lower than and may extend to 1 lakh or both.
Section 187 (4)- Investments of Company to be held in its name- Company-Fine-Not lower
than and may extend to 25 lakhs and Officer in dereliction-Maximum imprisonment of 6
months or Fine-Not lower than and may extend to 1 lakh or with both.
 Section 447-Discipline for the fraud-Any person who's a plan to be shamefaced of fraud-
Maximum imprisonment of 6 months may extend to 10 times. Such a person is also liable to
a penalty which may extend up to 3 times the quantum involved.
A commercial can approach a top marketable counsel in case of an issue of marketable
lawless liability has arisen against him.
MODELS OF CORPORATE CRIMINAL LIABILITY
There are binary models of commercial felonious liability in India which are bandied below-
-Secondary Model-As the name suggests under this model of commercial felonious liability
in India the liability of an association is a deduced liability. The liability of a corporate is
deduced from the conduct of an existent who has been employed or connected with the
association and commits a unlawful act. The liability is put on the association because of the
connection of the individual with it. The secondary model of commercial felonious liability is
farther subdivided into two orders-Vicarious Liability and Identification Doctrine.
-Vicarious Liability-The doctrine of vicarious liability is grounded on the two legal Latin
bywords the first sententia mean that he who acts through another shall be supposed to have
acted on his own, and the second, replier superior which means let the master answer.
Vicarious liability is the conception that's generally applicable in the cases of civil liability
but the Courts have said that because a corporate is an artificial person and a separate legal
reality therefore it's necessary to bring the connection of vicarious liability in the case of
commercial felonious liability.
-Identification Doctrine-This doctrine is an English law doctrine that tries to identify certain
crucial persons of a corporate who acts on its behalf, and whose conduct and state of mind
can be attributed to that of the corporate. As to the liability of these crucial persons who act
on behalf of a company, it was held in Moore v. Brisler that the persons who are linked with
the corporates must be acting within the compass of their employment or authority. The
conduct must do within an assigned area of operation indeed though particulars may be
unauthorized. The compass of identification doctrine is narrower than that of vicarious
liability.
- Organizational Model-This model of commercial felonious liability in India focuses on the
model of the association while defining the commercial liability of an association in felonious
cases. A crime is said to be committed when there's a presence of men's rea ( intent to commit
a crime) and actus reus ( felonious act or elision) but the problem which arises while holding
a commercial criminally liable is how an artificial person can have a internal intent to commit
a crime. The culture of the commercial may help for the commission of an offence taking
internal state by- originally, furnishing the terrain or necessary stimulant that it was believed
by the lawbreaker working in the corporate that it was impeccably each right to commit that
offence, or corporate has psychologically supported the commission of the offence; secondly,
it's relatively possible that the corporate created an terrain which led to the commission of a
crime. Both ways it was the corporate and its working culture that let the offence be
committed.
RECOMMENDATION AND CONCLUSION
The 47th law commission report has recommended colourful results to deal with similar
problems
Some discretion is to be given to judges to put penalties as they suppose fit for the case.
Para 8 (3) of the the47th law commission report recommended that “in every case in which
the offence is punishable with imprisonment only or with imprisonment and forfeiture, and
the lawbreaker is the corporate, it shall be competent to the court to doom similar lawbreaker
to fine only.”
In every case in which the offence is punishable with imprisonment and any other discipline
not being fine and the lawbreaker is a corporate, it shall be competent to the court to doom
similar lawbreaker to fine.
Unfortunately, the houses have ignored these recommendations by the law commission and
failed to incorporate these, and therefore the problem is where it was before. It's still veritably
delicate for the court to discipline the malefactors. Thus, it can be said that indeed though
Commercial Crimes are important in vogue moment, the styles to attack them are still in their
pre-mature stage.