The criminal liability of corporate bodies in India under the Penal Code determines the extent to which a company, as a body corporate or a separate legal entity, is liable for the actions of the company's employees. Corporate criminal liability in India is governed by norms of vicarious liability, as opposed to scenarios where a statutory offense specifically makes the company liable for that particular offence.

In general, in connection with the liability of legal entities (liability of legal entities in the event of a criminal offense), the question is asked whether a legal entity, which is an artificial person, is capable of committing a criminal offense and whether the legal entity is criminally responsible for the said criminal offense. It has traditionally been argued that corporations cannot commit a crime because the main test of criminal activity lies in intent. However, the concept of criminal liability of legal entities under the Companies Act has been recognized.

Criminal liability of legal entities in India as a concept has gained importance in previous years especially in areas of social status such as consumer protection, environmental law, occupational health and safety standards. The concept of corporate responsibility is closely related to the corporate governance policy of an organization, as when a corporation follows the structure of good governance, then the possibility of crime is negated and the question of corporate criminal responsibility does not arise.

Over time, even the Indian judiciary has pointed out that a corporation can be part of a criminal conspiracy and be held criminally liable. This was first said by the Supreme Court in the case of Iridium India Telecom Limited Vs. Motorola Incorporated & Ors. Thus, it can be said that the criminal liability of corporate bodies has been recognized in India as one of the liabilities of corporate bodies under the Companies Act as well as under the Criminal Laws.

Criminal liability of legal entities under the Companies Act 2013

The Companies Act 2013, which replaced the Companies Act 1956, increased the corporate liability of directors. The law also increased fines and prison sentences. Under the Companies Act 2013, not only the criminal liability of legal entities is recognized but the law also recognizes civil liabilities. The Companies Act 2013 not only makes directors criminally liable but also includes defaulting officers under the concept of corporate criminal liability in India.

The term officer in default is a broad term and may include whole-time directors, key management personnel and other directors in the absence of a KMP designated by the board, and any other director who is aware of the default. is done on the basis of receiving or participating in the meeting of the board of directors without raising any objection or if the non-compliance occurred with its consent or permission.

Models of criminal liability of legal entities:

There are two models of corporate criminal liability in India which are described below:

Derivative Model:

As the name suggests, in this model of corporate criminal liability in India, the liability of the organization is derivative liability. A corporation's liability is derived from the actions of an individual who was employed or associated with the organization and committed a wrongful act. Responsibility is placed on the organization because of the individual's association with it. The derived model of corporate criminal liability is further divided into two categories - Vicarious Liability and the Identification Doctrine.

Vicarious liability:

The doctrine of vicarious liability is based on two legal Latin maxims, the first principle meaning that he who acts through another will be considered as having acted himself, and the second, respondent superior, which means to let the master answer. Vicarious liability is a concept that is generally applicable in civil liability cases, but courts have stated that because a corporation is an artificial person and a separate legal entity, vicarious liability must apply in corporate tort cases. responsibility.

Doctrine of Identification:

This doctrine is an English legal doctrine which seeks to identify certain key persons of a corporation who act on its behalf and whose conduct and state of mind are attributable to that of the corporation. As to the liability of these key persons acting on behalf of the corporation, Moore v. Brisley held that persons who are identified with corporations must act within the scope of their employment or authority. The action must occur within the assigned area of operation, even though the data may be unauthorized. The scope of the doctrine of identification is narrower than that of vicarious liability.

Organizational Model:

This model of corporate criminal liability in India focuses on the model of organization while defining the corporate liability of an organization in criminal cases. A crime is said to be committed when the men rea (intent to commit a crime) and the actus reus (criminal act or omission) are present, but the problem that arises when a corporation is criminally liable is that an artificial person can having the mental intent to commit a crime.

Corporate culture can help the commission of a mental state crime by providing the environment or necessary encouragement that an offender working for the corporation believed it was perfectly fine to commit the crime, or the corporation psychologically encouraged the commission of the offense; second, it is quite possible that the corporation created an environment conducive to criminal activity. Either way, it was the company and its work culture that allowed the crime to be committed.

Necessity of Corporate Criminal Liability in India

The need and necessity of corporate criminal liability in India has been questioned time and again. They have been asked that when dealing with corporate criminal liability we are dealing with "corporate criminals" or "criminal organisations". There is no general correct answer to this question. Each case must be carefully examined and then a decision must be made regarding the corporation's liability.

Critics of corporate criminal liability have criticized the theory for two reasons - firstly, it has been criticized on the grounds that there is no value in providing penalties and other criminal sanctions against corporations because it is not corporations that commit the crime, the crime is committed by individuals in law trading companies.

A second objection by critics of corporate criminal liability is that the costs of fines and penalties for corporations are borne by shareholders and consumers, and this also seems unfounded.

However, even after objections and criticisms, the theory of corporate criminal liability survives well in Indian criminal laws.