Corporate Criminal Liability In India: Evolution, Challenges, And The Path Forward
- IJLLR Journal
- Dec 26, 2025
- 2 min read
Noorin Jahan, LLM, IILM University, Greater Noida
ABSTRACT
In today’s rapidly evolving economy, Indian companies often find themselves making impactful decisions that can influence millions of lives. But what occurs when these decisions step over the line into the realm of crime? This concept, known as corporate criminal liability, asserts that businesses, regarded as legal entities, can be held accountable for illegal actions carried out by their employees or executives, much like individuals can be.
This study delves into how India navigates this complex terrain, working to ensure that businesses face consequences for wrongdoings such as fraud, pollution, and the distribution of unsafe products, all while protecting legitimate enterprises from undue harm.
Historically, Indian courts have shown reluctance in this area. For instance, the Indian Penal Code (IPC) established back in 1860 viewed companies as distinct from individuals, complicating the attribution of a “guilty mind” (mens rea) to them, given that they lack physical form or consciousness.
However, pivotal cases have reshaped this landscape. For example, in the 2005 case of Standard Chartered Bank v. Directorate of Enforcement, the Supreme Court determined that businesses could indeed be prosecuted for crimes that typically require imprisonment, although the only consequence would be financial penalties, as companies themselves cannot serve time.
Further, the ruling in Iridium India Telecom Ltd. v. Motorola Inc. in 2011 clarified that the intent of senior management could be attributed to the company itself, utilizing principles like vicarious liability (holding a superior accountable for their subordinate's actions) or identification (the idea that the leader represents the company).
Support from laws like the Companies Act of 2013 and the Prevention of Money Laundering Act has fortified this stance, emphasizing the importance of addressing economic crimes. Yet, there are still significant hurdles. Establishing intent remains a challenging task—how can one assign blame to an abstract entity? Additionally, the fines imposed often feel insignificant to well-resourced corporations, especially since companies cannot face imprisonment.
In contrast to the United States, where the collective knowledge of all employees can contribute to the company's liability, India's framework is more stringent but lacks flexibility. This analysis, anchored in a review of relevant laws and case precedents, indicates that although progress has been made, limitations within the IPC and the Criminal Procedure Code hinder effective deterrence.
Corporate offenses can inflict greater harm on society—think of contaminated water supplies or economic downturns—compared to street crimes, which calls for more robust measures. In conclusion, India stands in need of reforms: revising the IPC to introduce fines universally, establishing a specific law for corporate offenses, and permitting sanctions like business closures. Such changes would compel companies to reconsider their actions, promoting ethical development without apprehension. In the end, holding corporations accountable is essential for fostering trust in India’s economic narrative, prioritizing people over profits.
Keywords: corporate criminal liability, mens rea, vicarious liability, Indian Penal Code, Companies Act 2013, Supreme Court judgments, economic offenses.
