Corporate Criminal Liability — Whether a corporation can be prosecuted for an offence requiring mens rea without identification or arraignment of the natural person through whom the offence was allegedly committed — Held, non-identification and non-arraignment of a natural person do not, by themselves, justify quashing of criminal proceedings against a company at the threshold stage under S. 482 CrPC — The allegations must, however, prima facie disclose (i) that some natural person or persons acted on behalf of the corporation, (ii) that such action is referable to the offence in question, and (iii) that the surrounding circumstances do not render the existence of the requisite mens rea patently absurd or inherently improbable — Where these are shown, identification of the precise individual and his arraignment as a co-accused are matters going to the strength of the prosecution's case, to be established at trial, and not conditions precedent to maintainability of the prosecution against the corporation.
REPORTABLE
IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL NO. 4250 OF 2026
SANOFI INDIA LTD. Vs CENTRAL BUREAU OF INVESTIGATION
Author: J.B. PARDIWALA, J.
Citation: 2026 INSC 957
For the convenience of exposition, this judgment is divided into the following
parts:
A. FACTUAL MATRIX _____________________________________________ 3
B. SUBMISSIONS OF THE PARTIES ________________________________ 5
I. Submissions on behalf of the Appellant _________________________ 5
II. Submission on behalf of the Respondent ________________________ 7
C. ISSUE FOR CONSIDERATION __________________________________ 7
D. ANALYSIS _____________________________________________________ 7
I. Introduction to corporate criminal liability _______________________ 8
II. Corporate criminal liability and the attribution question: position in
England and Wales _______________________________________________ 12
(a) Tesco Supermarkets Ltd. v. Nattrass ___________________________ 16
(b) Meridian Global Funds Management Asia Ltd v. Securities
Commission ___________________________________________________ 28
(c) The Barclays Cases __________________________________________ 36
(i) Meridian Principles ____________________________________ 37
(ii) Test for Determining Attribution ________________________ 39
(iii) Application to facts ____________________________________ 43
(iv) Aspects of Divergence _________________________________ 47
(d) Developments in law post Barclays ____________________________ 49
(e) Summary __________________________________________________ 53
III. Corporate criminal liability and the attribution question: position in India ____________________________________________________________ 57
(a) Issue of Mandatory Imprisonment _____________________________ 58
(b) Issue of Mens Rea ___________________________________________ 62
(c) How do corporates possess mens rea under Indian Law __________ 71
(i) Attribution Framework ________________________________ 73
(ii) Necessary clarifications ________________________________ 78
(iii) Observations on the framework _________________________ 81
(d) Summary __________________________________________________ 83
IV. Whether Proceedings Can Be Quashed on the Sole Ground of Non identification and Non-Arraignment _______________________________ 87
(a) The Identification aspect _____________________________________ 89
(b) The Arraignment aspect ______________________________________ 92
(c) Whether the allegations make out an offence? ___________________ 96
E. CONCLUSION ________________________________________________ 98
1. Leave granted.
2. This Appeal arises from the judgment and order passed by the High Court
of Karnataka dated 15.02.2019 in the Criminal Petition No. 4280/2018 filed
by the Appellant herein (accused no.2 in the chargesheet), by which the
High Court dismissed the petition and declined to quash the criminal
proceedings in Special C.C.No. 226/2017 before the XLVI Additional City
Civil and Sessions Judge and Special Judge for CBI Cases, Bengaluru City.
A. FACTUAL MATRIX
3. The Appellant is a public limited company engaged in the primary
business of manufacturing pharmaceutical products. The Appellant,
pursuant to tender processes, supplied pharmaceutical products for the
Rare Materials Project, Bhabha Atomic Research Centre (“BARC”) in the
years 2011-12, 2013-14 and 2015-16.
4. The Appellant was arrayed as Accused No. 4 in FIR No. RC.17(A)/2015,
wherein it was alleged that Dr. P. Anand, Scientific Officer (Medical) at
BARC, had conspired with various pharmaceutical companies to procure
medicines at inflated rates and in quantities exceeding the requirements.
After investigation, the chargesheet was filed in 2017 against Dr. P. Anand
(accused no.1) and Appellant (accused no.2), alleging commission of
offences punishable under Section 120B r/w Section 420 of the Indian
Penal Code (“IPC”) and Sections 11,12,13(2) r/w 13(1)(b) and (d) of the
Prevention of Corruption Act,1988 (“PC Act”). No employee or official of
the Appellant has been arraigned as an accused in the chargesheet.
5. The prosecution’s case against the Appellant as set out in the final
report/chargesheet is as follows:
a. During the years 2011-12, 2013-14, and 2014-15, respectively, Dr. P.
Anand, a public servant, entered into a criminal conspiracy with
the Appellant in relation to the purchase of medicines and drugs
for the Rare Materials Project, BARC. The prosecution’s case is that
Criminal Appeal No. 4250 of 2026 Page 4 of 98
Dr. Anand, across these purchases, either (i) misclassified items as
proprietary to justify their procurement from the Appellant
despite there being lower bids from other companies, or (ii)
omitted competing bidders from the tender process, or (iii)
declined to place orders with the lowest bidder once quotations
were received. This conspiracy caused a wrongful loss to BARC
amounting to INR 3,53,361/-, and a corresponding wrongful gain
to the accused themselves, thereby constituting an offence under
Section 120B r/w Section 420 of the IPC.
b. Further, Dr. P. Anand received an illegal gratification of INR
42,750/- from the Appellant, without consideration, under various
pretexts, thereby committing the offence under Section 11 of the
PC Act. The Appellant abetted in the commission of this offence.
6. Based on the chargesheet, the Trial Court took cognizance of the offences
and issued process against the Appellant and Dr. P. Anand. The Appellant
thereafter filed a petition before the High Court of Karnataka, seeking to
quash the criminal proceedings against it, including the order taking
cognizance. The principal argument advanced on behalf of the Appellant
was that for the offence of criminal conspiracy, a corporate entity cannot
be prosecuted independently of the natural persons who acted on its
behalf, as only through such persons can a company be said to enter into
a criminal conspiracy at all. In the present case, since the Appellant had
been arraigned as an accused without any of its employees or officials
being arraigned alongside it, the prosecution against it could not be
sustained.
7. The High Court of Karnataka, in the impugned judgment, framed the
following issues for its consideration:
“(i)Whether prosecution is maintainable only against a corporate entity
without its directors or person in charge of the affairs being arraigned
as an accused?
Criminal Appeal No. 4250 of 2026 Page 5 of 98
(ii)Whether criminal proceedings in the instant case are liable to be
quashed?”
8. The High Court, relying on the decision of this Court in Iridium India
Telecom Ltd. v. Motorola Inc., reported in (2011) 1 SCC 74, concluded that
(i) companies can be held liable under criminal law, not just for strict
liability offences, but even for offences that require mens rea and (ii) a
complainant is entitled to an opportunity to prove the averments made in
the complaint. Answering the question before it, it held that a criminal
prosecution against a corporate entity, without its directors or persons in
charge of its affairs being arraigned, is maintainable. Further, the High
Court observed that, given the specific allegation that the Appellant had
been favoured despite not being the lowest bidder, a trial was necessary,
since the chargesheet contained details of quotations given by other
companies, which could be proved only at trial. Accordingly, the petition
was dismissed.
9. In such circumstances referred to above, the Appellant is before this Court
with the present appeal.
B. SUBMISSIONS OF THE PARTIES
I. SUBMISSIONS ON BEHALF OF THE APPELLANT
10. Mr. Siddharth Luthra, the learned senior advocate appearing for the
Appellant, made the following submissions :
a. The question here is whether, in cases where the offence charged
requires proof of mens rea, prosecution of the alter ego or the
governing mind of the corporate entity is essential to prosecute the
company itself.
b. The ‘identification principle’ prescribes that the conduct and state of
mind of a corporation’s key personnel is attributable to the
corporation and such persons are said to represent the directing
Criminal Appeal No. 4250 of 2026 Page 6 of 98
mind of the corporation. The House of Lords in Tesco
Supermarkets Ltd. v. Nattrass, reported in [1972] A.C. 153, held
that a corporate body is deemed to act and to acquire knowledge
only through those individuals who can be identified as the
“directing mind and will of the corporation”. The Crown
Prosecution Guidelines also prescribe applying the ‘identification
principle’ for ascertaining criminal liability of corporations for
offences requiring mens rea.
c. Further, various rulings of this Court also establish the principle
that, for offences which require proof of mens rea, it is a
corporation’s alter ego, or governing mind, whose act and state of
mind must be identified and attributed to the company. Absent the
identification and arraignment of such a person, a prosecution
against the company cannot be sustained.
d. In the present case, the Respondent has failed to identify and
arraign any alter ego or directing mind whose mens rea can be
attributed to the Appellant. Consequently, there is no basis to
attribute to the Appellant either: (a) the commission of an offence
involving mens rea or (b) the commission of some overt act which
demonstrates the existence of conspiracy. Consequently, the
Appellant cannot and ought not to have been prosecuted.
e. The High Court, in holding that the prosecution against a
corporate entity is maintainable without its directors or persons in
charge of its affairs being arraigned, had completely bypassed the
identification principle and omitted to see that there had to be
material against specific individuals who were the governing
mind or the alter ego of the company, before liability could be
imputed to the company itself.
11. In the circumstances referred to above, the learned counsel prayed that,
there being merit in his appeal, it be allowed.
Criminal Appeal No. 4250 of 2026 Page 7 of 98
II. SUBMISSION ON BEHALF OF THE RESPONDENT
12. The Respondent, through their counter affidavit, submitted as follows:
a. The decisions of this Court in Iridium India (supra) and Standard
Chartered Bank v. Directorate of Enforcement, reported in (2005)
4 SCC 530, allow for the prosecution of the Appellant even without
identifying or arraigning any of its employees individually.
b. There is sufficient oral and documentary evidence which prima
facie proves that the Appellant received undue favours from
accused no.1 fraudulently and in reciprocity, the Appellant paid a
bribe to him. The evidence on record clearly establishes that there
existed a conspiracy between the Appellant and accused no.1.
13. In the circumstances referred to above, the Respondent prayed that, there
being no merit in the appeal, it be dismissed.
C. ISSUE FOR CONSIDERATION
14. Having heard the learned counsel for the parties and having gone through
the materials on record, the following question falls for our consideration:
a. Whether the High Court ought to have quashed the criminal
proceedings instituted against the Appellant company on the
ground that no natural person had been identified and arraigned
alongside it?
D. ANALYSIS
15. At first blush, the question framed above may appear to be a simple one.
On closer examination, it proves to be a good deal more complex, and its
resolution requires us to work through several preliminary questions in
turn. Foremost among these is how corporate criminal liability is
envisaged, i.e., whether, and in what manner, a corporation may be
conceived as capable of committing a crime. It is with this foundational
question that we begin.
Criminal Appeal No. 4250 of 2026 Page 8 of 98
I. INTRODUCTION TO CORPORATE CRIMINAL LIABILITY
16. Corporate criminal liability is a notoriously vexed issue, and the difficulty
traces back to two fundamental notions we simultaneously hold about
corporations. First, a corporation is an artificial person with an identity
distinct from that of its members. Second, a corporation is merely an
abstraction, i.e., an impalpable thing or, as is famously said, a corporation
has “no soul to damn and no body to kick”.1
17. Generally, there are two constituent elements in a crime: (a) the offending
act or conduct called the “actus reus” and (b) the mental element of guilty
mind, called the “mens rea”. In other words, the blameworthy act which is
backed by a guilty mind constitutes a crime. Criminal law thus focuses on
an individualistic model of responsibility, i.e., it looks to the accused’s own
act and own mind. Herein lies the difficulty for a corporation. Precisely
because a corporation is a separate legal entity, criminal law would require
the corporation itself to supply this act and this guilty mind. Yet, being an
abstraction, the corporation appears incapable of possessing either.2
Common sense would therefore dictate that a corporation should fall
outside the realm of criminal liability altogether.
18. This is one of the central arguments that jurists opposed to the concept of
corporate criminal liability rely upon.3 They argue that if a corporation is
incapable of acting on its own and must necessarily act through its human
instrumentalities, what is the point in holding it guilty of an offence? In
real terms, the liability is that of the individuals who are responsible for
the corporate offence, and it is they who should be targeted by law.
1 Stevens J. in Citizens United v Federal Election Commission, 130 S.Ct. 876 (2010) captured the same
duality in the American constitutional context: Corporations have no consciences, no beliefs, no feelings, no
thoughts, no desires. Corporations help structure and facilitate the activities of human beings, to be sure, and
their 'personhood' often serves as a useful legal fiction. But they are not themselves members of 'We the People'
by whom and for whom our Constitution was established.
2 Mark Pieth & Radha Ivory, Emergence and Convergence: Corporate Criminal Liability Principles in
Overview, in Corporate Criminal Liability: Emergence, Convergence, and Risk 3, 4–5 (Mark Pieth & Radha
Ivory eds., 2011).
3 Pradip Ghosh, Criminal Liability of Corporate Entities: With Special Reference to the Law in India 21–24
(2017).
Criminal Appeal No. 4250 of 2026 Page 9 of 98
Further, scholars belonging to this school of thought have also contended
that corporate civil liability can achieve the same outcomes as that of
corporate criminal liability, while largely avoiding its undesirable
features, thereby obviating the need for corporate criminal liability.4
19. Jurists in favour of corporate criminal liability, on the other hand, prefer
to focus on the social realities of the contemporary world.5 They argue that
while corporations may have a fictional personality in law, in the modern
world they are very much real, and it would be naïve to ignore the
potential they have to cause substantial harm. They also argue that it is not
always easy to identify and secure the punishment of individuals hiding
behind the corporate façade.
20. While the academic debate goes on, it is beyond question that, both in
India and elsewhere, corporations can and are being subjected to criminal
liability (as will be discussed more thoroughly in the later parts of this
judgment). This has been primarily driven by the pragmatic recognition
that corporations, as institutions commanding vast financial and sociopolitical
power, possess the ability to cause serious harm. Another aspect
which has contributed to the growing recognition of corporate criminal
liability is the burgeoning anxiety that recognising the corporation as a
legal person has conferred protections without imposing corresponding
responsibilities.
21. If there is an acceptance of the fact that corporations can be held criminally
liable, the very next question is: how can we do so? How can we hold an
abstract entity liable for something which requires not only an act but also
a state of mind? Since a corporation acts through the medium of natural
persons, criminal liability can be established by attributing the acts and
mental states of such natural persons to the corporation itself. This, in
4 Vikramaditya S. Khanna, Is the Notion of Corporate Fault a Faulty Notion?: The Case of Corporate Mens
Rea, 79 B.U. L. Rev. 355 (1999); Vikramaditya S. Khanna, Corporate Criminal Liability: What Purpose Does
It Serve?, 109 Harv. L. Rev. 1477 (1996).
5 Supra note 3 at 21-40.
Criminal Appeal No. 4250 of 2026 Page 10 of 98
essence, is an exercise in moulding corporate liability to fit into existing
notions of criminal jurisprudence.6
22. This process of attribution is the legal reasoning by which the conduct, or
the state of mind, of a natural person is treated, in law, as the conduct or
state of mind of the corporation itself. Through this process, the acts and
the mind of a human being become the acts and the mind of a corporation,
for the purpose of fixing it with legal liability, whether civil or criminal.7
23. Attributing acts of natural persons to a corporation, standing alone, was a
relatively less controversial exercise. Consequently, corporate criminal
liability first took root in relation to offences which did not require proof
of mens rea. Attributing the state of mind of a natural person to a
corporation has proved a good deal more contentious. This may be
envisaged as a two-fold question. First, whether a corporation can be said
to possess mens rea, and accordingly be held criminally liable for offences
which require proof of mens rea (“first question”). Secondly, and only once
the first is answered in the affirmative, on what basis can a corporation be
said to possess such mens rea ("second question"). This inquiry invariably
becomes a question of attribution, namely, what is the basis on which the
mens rea of a natural person is to be attributed to the corporation. Once
answered, this inquiry itself yields the answers to further questions such
as: (i) what is the kind of liability that such attribution imposes on the
corporation, and (ii) whose state of mind is to be attributed to the
corporation and in what circumstances.
24. The answer to the first and second questions determines the scope and
contours of corporate criminal liability in a particular jurisdiction. In India,
as the discussion later will indicate more clearly, there is no disagreement
that the first question has been answered in the affirmative, i.e.,
corporations can possess mens rea, and thereby accordingly be held liable
6 T.K. Bhaskar & V. Umakanth, Corporate Criminality and Law, 38 J. Indian L. Inst. 218, 220 (1996).
7 Moulin Global Eyecare Trading Ltd. (In Liquidation) v. Commissioner of Inland Revenue, (2014) 17
HKCFAR 218.
Criminal Appeal No. 4250 of 2026 Page 11 of 98
for offences which require such proof. There has, however, been little to
no discussion on the second question.8
25. It would be trite to observe that the question before us in the present case
does not press upon the first question. The impugned judgment and the
submissions canvassed before us both proceed on the understanding that
corporations can possess mens rea. However, consideration of the issue
before us requires us to venture into, and at least broadly understand, the
position under Indian law regarding the second question. This is because
whether non-identification and non-arraignment render a prosecution not
maintainable cannot be answered without first understanding, in broad
terms, how attribution operates. This understanding will anchor our
answer to the issue before us.
26. To guide us in this pursuit, we turn to the English law. We do so because
Indian law offers little to no independent discussion of the second
question. English law, whose broad framework most closely resembles the
one within which corporate criminal liability must operate in India, offers
the most useful starting point. For this reason, the discussion of English
law that follows is detailed. It examines not only the ratio of each decision,
but also, where relevant, the underlying principles and their application
to the facts. This detail is necessary because the framework we ultimately
adopt draws on that reasoning and factual application, and not merely on
the conclusions English law has reached.
27. Accordingly, we shall first trace the development of corporate criminal
liability in England, with particular focus on how English law has sought
to answer the second question. Thereafter, the discussion moves to India,
where we briefly examine the developments that have occurred on
corporate criminal liability thus far, before turning to how the second
question may be answered under Indian law. Finally, equipped with an
8 See Umakanth Varottil & Mihir Naniwadekar, Corporate Criminal Liability and Securities Offerings:
Rationalizing the Iridium-Motorola Case, 28 Nat'l L. Sch. India Rev. 144 (2013).
Criminal Appeal No. 4250 of 2026 Page 12 of 98
understanding of how attribution operates under Indian law, we turn to
the question before us in this appeal.
II. CORPORATE CRIMINAL LIABILITY AND THE ATTRIBUTION QUESTION:
POSITION IN ENGLAND AND WALES
28. Early English common law did not envisage any criminal liability for a
corporation. As Blackstone observed in the second half of the eighteenth
century, a corporation could not commit treason, felony, or any other
crime in its corporate capacity, though its members might do so in their
distinct, individual capacities.9 This position has since undergone a
gradual development over a significant period of time.
29. The earliest signs of corporate criminal liability under English law appear
in cases of public nuisance arising from nonfeasance. Corporations were
held liable where they failed to perform duties imposed on them by
charter, prescription, or statute. This was because it was recognised that a
corporation could be said to have failed to do something as much as an
individual. However, it was questionable whether corporations could be
held criminally liable for misfeasance (positive act) rather than
nonfeasance (omission).
30. Regina vs Great North of England Railway Company, reported in (1846)
9 QB 315, concerned an instance wherein the workmen employed by the
defendant company unlawfully cut a trench through the highway and
caused great damage to the general public. For the defendant company, it
was argued that no indictment for misfeasance could lie against a
corporation. Lord Denman CJ roundly dismissed that submission and
went on to state:
“The law is often entangled in technical embarrassments; but there is
none here. It is as easy to charge one person, or a body corporate, with
erecting a bar across a public road as with the non-repair of it; and they
may as well be compelled to pay a fine for the act or for the omission.”
9 Supra note 3 at 41; L.H. Leigh, The Criminal Liability of Corporations in English Law 15 (1969).
Criminal Appeal No. 4250 of 2026 Page 13 of 98
[Emphasis supplied]
Thus, the Court refused to draw a technical distinction between nonfeasance
and misfeasance and held that a corporation could be held equally
liable for positive acts as it was for omissions. It appears that the courts
imposed liability on corporations in such cases because the corporation
itself owed the duty. Thereby, a failure to discharge that duty, whether
through omission or through a positive act, was accordingly treated as a
failure of the corporation itself.
31. By 1850, a corporation could accordingly be indicted for public nuisance
and for failure to perform a public duty imposed on it by statute. This
period also saw a marked increase in regulatory statutes directed at
corporations, leading in turn to a growing number of corporate
convictions. The early development of corporate criminal liability under
English Law was thus driven largely by this regulatory regime, which
imposed duties on corporations operating in areas of public interest.
Around the same time, vicarious liability opened up another avenue for
attributing acts to a corporation. This was used primarily to hold
corporations liable for strict or absolute liability offences.
32. Broadly speaking, corporate criminal liability had, up to this point,
developed along narrow lines and was confined largely to situations
where no proof of mens rea was required. Vicarious liability could not be
used for those offences requiring mens rea, for it was a settled principle of
English law that vicarious liability had no general application in the
criminal sphere, i.e., the doctrine did not ascribe to a principal the state of
mind of his agent. In short, where only the attribution of acts was required,
the law had an answer, but where attribution of both act and mind was
required, it did not. One plausible reason behind this might have been that
while it may make sense to talk of corporate bodies causing something to
happen or failing to do something, it is less natural to talk about companies
as holders of mental states. A new doctrinal basis was therefore required
Criminal Appeal No. 4250 of 2026 Page 14 of 98
to attribute to a corporation the state of mind of the natural persons acting
for it.
33. It is often said that the three cases decided in 194410 were the first to
conclusively establish that a corporation could be held liable for offences
involving a mens rea element. These cases, however, do not warrant
detailed discussion here. While their end point was that a corporation
could indeed be held liable for such offences, the result, as one scholar
observed, was confusion rather than clarity.11 The courts in these cases
failed to articulate any clear or principled basis for how such liability was
to be established. This came only in 1971, with the House of Lords decision
in Tesco Supermarkets (supra). However, before discussing Tesco
Supermarkets (supra), it is necessary to consider the House of Lords
decision in Lennard's Carrying Company v. Asiatic Petroleum Company,
reported in [1915] A.C. 705. Not only was this decision relied upon by the
House of Lords in Tesco Supermarkets (supra), but it also provided the
foundation upon which courts have since sought to answer the question
of whose act or state of mind is to be attributed to a corporation.
34. Lennard’s Carrying (supra) arose from a cargo claim. The ship carrying the
cargo had sunk after her boiler caught fire, and the claim followed from
the resulting loss of cargo. It was found that the boiler was defective,
rendering the ship unseaworthy. The claim was sought to be resisted by
the company by contending that under the English Merchant Shipping
Act, 1894, the owner was not liable unless there was actual fault or privity
on his part. The House of Lords held that there were known defects in the
ship’s boiler and that Mr Lennard, a director of the company who had been
managing the affairs of the ship, did know or should have known about
the said defects in the boiler. The issue was whether the fault of the
appropriate organ, such as the board of directors or managing director,
could be attributed to the company. Dismissing the appeal and holding
10 D.P.P. v. Kent and Sussex Contractors, [1944] KB 146; Rex v. I.C.R. Haulage Ltd, [1944] KB 551; Moore
v. I. Bresler Ltd., [1944] 2 All ER 515.
11 L.H Leigh, Supra note 9 at 31.
Criminal Appeal No. 4250 of 2026 Page 15 of 98
the company liable, Viscount Haldane made the following pertinent
observations:
“Now, my Lords, did what happened take place without the actual fault
or privity of the owners of the ship who were the appellants? My Lords,
a corporation is an abstraction. It has no mind of its own any more than
it has a body of its own; its active and directing will must consequently
be sought in the person of somebody who for some purposes may be
called an agent, but who is really the directing mind and will of the
corporation, the very ego and centre of the personality of the
corporation. That person may be under the direction of the shareholders
in general meeting; that person may be the board of directors itself, or
it may be, and in some companies it is so, that that person has an
authority co-ordinate with the board of directors given to him under the
articles of association, and is appointed by the general meeting of the
company, and can only be removed by the general meeting of the
company. My Lords, whatever is not known about Mr. Lennard's
position, this is known for certain, Mr. Lennard took the active part in
the management of this ship on behalf of the owners, and Mr. Lennard,
as I have said, was registered as the person designated for this purpose
in the ship's register. [...] For if Mr. Lennard was the directing mind
of the company, then his action must, unless a corporation is not to be
liable at all, have been an action which was the action of the company
itself within the meaning of s. 502. It has not been contended at the Bar,
and it could not have been successfully contended, that s. 502 is so
worded as to exempt a corporation altogether which happens to be the
owner of a ship, merely because it happens to be a corporation. It must
be upon the true construction of that section in such a case as the
present one that the fault or privity is the fault or privity of somebody
who is not merely a servant or agent for whom the company is liable
upon the footing respondeat superior, but somebody for whom the
company is liable because his action is the very action of the company
itself. [...]”
[Emphasis Supplied]
35. From the above extract, three things become abundantly clear:
a. First, a company, being an abstraction, has no mind or body of its
own; consequently, its active and directing will must be sought in
a person, who is the very ego and centre of the personality of the
corporation and may be referred to as its “directing mind and
will”.
Criminal Appeal No. 4250 of 2026 Page 16 of 98
b. Secondly, the action of the person recognised as the directing mind
and will of the company is considered to be the action of the
company itself.
c. Thirdly, such a person is not to be treated as a mere servant or
agent, for whose actions the company would be liable only on the
footing of respondeat superior; rather, the company is liable because
his action is, in law, the very action of the company itself, i.e. direct
liability.
Applying these principles to the facts before him, Viscount Haldane found
that Mr. Lennard, who took an active part in managing the ship on the
owners’ behalf, and who was registered as the person designated for this
purpose in the ship’s register, was the directing mind and will of the
company for the purposes of Section 502. His actions were, therefore, the
very actions of the company itself and thus the company couldn’t argue
that the loss occurred without its actual fault or privity.
36. It is these observations of Viscount Haldane that gave rise to the notion of
“directing mind and will” of the company. However, it is important to
note that the House of Lords in Lennard's Carrying (supra) was not dealing
with a criminal offence. Rather, the question was whether the appellant
was entitled to a statutory defence exempting a shipowner from liability
as the loss had occurred without its “actual fault or privity”. Further, the
House of Lords does not explicitly hold that where a person acts as the
company, that person’s state of mind is, for that reason, also to be treated
as the state of mind of the company. Such explicit recognition came only
later, in Tesco Supermarkets (supra).
(a) Tesco Supermarkets Ltd. v. Nattrass
37. In Tesco Supermarkets (supra), the appellants, owners of a large number
of supermarkets, from time to time sold “flash packs” by way of
advertisement at prices lower than the normal price. In September 1969
they were selling Radiant washing powder in this way. Posters were
Criminal Appeal No. 4250 of 2026 Page 17 of 98
displayed in the shops drawing attention to the reduction in price. This
was also the case in the appellants’ shop at Northwich, where an old age
pensioner saw the poster and went to buy a pack. He could only find packs
marked at the normal price. He took one to the cashier, who told him that
there were none in stock at the reduced price. He paid the normal price
and complained to an inspector of weights and measures, which resulted
in a prosecution under the Trade Descriptions Act 1968.
38. This had come about because the evening before, the shop assistant had
found the discounted “flash pack” stock exhausted and restocked the shelf
with ordinary priced packets, but failed to inform the manager of this. The
manager, who was responsible for ensuring the correct packs were
displayed, failed to check the shelf himself and incorrectly recorded in his
daily return that all special offers were “OK”.
39. Section 11(2) of the Act made it an offence for any person offering to
supply goods to indicate that the goods were being offered at a price lower
than that at which they were in fact offered. It was not disputed that the
section applied to this case. The appellants relied on the defence under
Section 24(1), which required proof that: (a) the commission of the offence
was, among other things, due to the act or default of “another person”;
and (b) all reasonable precautions and due diligence were exercised to
avoid the commission of the offence, whether by himself or any person
under his control.
40. In essence, the appellant’s contention was as follows: (i) as the manager
was merely a cog in a vast machine, not the alter ego of the company, the
manager’s failure to check the shelf and correctly verify the stock meant
the offence was committed due to the act or default of “another person”,
thereby satisfying Section 24(1)(a); and (ii) they had taken all reasonable
precautions and exercised all due diligence to avoid the commission of the
offence, thereby satisfying Section 24(1)(b).
Criminal Appeal No. 4250 of 2026 Page 18 of 98
41. The judges agreed that the conduct of the manager in this case could not
be treated as an act of the company itself and, thereby, his actions would
be considered as that of “another person” under Section 24(1)(a). First, let
us consider the often-cited speech of Lord Reid. The following are the
relevant extracts:
“I must start by considering the nature of the personality which by a
fiction the law attributes to a corporation. A living person has a mind
which can have knowledge or intention or be negligent and he has hands
to carry out his intentions. A corporation has none of these: it must act
through living persons, though not always one or the same person. Then
the person who acts is not speaking or acting for the company. He is
acting as the company and his mind which directs his acts is the mind
of the company. There is no question of the company being vicariously
liable. He is not acting as a servant, representative, agent or delegate.
He is an embodiment of the company or, one could say, he hears and
speaks through the persona of the company, within his appropriate
sphere, and his mind is the mind of the company. If it is a guilty mind
then that guilt is the guilt of the company. It must be a question of law
whether, once the facts have been ascertained, a person in doing
particular things is to be regarded as the company or merely as the
company's servant or agent. In that case any liability of the company
can only be a statutory or vicarious liability.
In Lennard's Carrying Co. Ltd. v. Asiatic Petroleum Co. Ltd. [1915]
A.C. 705 the question was whether damage had occurred without the
“actual fault or privity” of the owner of a ship. The owners were a
company. The fault was that of the registered managing owner who
managed the ship on behalf of the owners and it was held that the
company could not dissociate itself from him so as to say that there was
no actual fault or privity on the part of the company. Viscount Haldane
L.C. said, at pp. 713, 714:
“For if Mr. Lennard was the directing mind of the company,
then his action must, unless a corporation is not to be liable
at all, have been an action which was the action of the
company itself within the meaning of section 502 … It must
be upon the true construction of that section in such a case
as the present one that the fault or privity is the fault or
privity of somebody who is not merely a servant or agent for
whom the company is liable upon the footing respond eat
superior, but somebody for whom the company is liable
because his action is the very action of the company itself.”
Criminal Appeal No. 4250 of 2026 Page 19 of 98
Reference is frequently made to the judgment of Denning L.J. in H. L.
Bolton (Engineering) Co. Ltd. v. T. J. Graham & Sons Ltd. [1957] 1
Q.B. 159. He said, at p. 172:
“A company may in many ways be likened to a human body.
It has a brain and nerve centre which controls what it does.
It also has 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 it does. The state of mind of these
managers is the state of mind of the company and is treated
by the law as such.”
In that case the directors of the company only met once a year: they left
the management of the business to others, and it was the intention of
those managers which was imputed to the company. I think that was
right. There have been attempts to apply Lord Denning's words to all
servants of a company whose work is brain work, or who exercise some
managerial discretion under the direction of superior officers of the
company. I do not think that Lord Denning intended to refer to them.
He only referred to those who “represent the directing mind and will of
the company, and control what it does.”
I think that is right for this reason. Normally the board of directors, the
managing director and perhaps other superior officers of a company
carry out the functions of management and speak and act as the
company. Their subordinates do not. They carry out orders from above
and it can make no difference that they are given some measure of
discretion. But the board of directors may delegate some part of their
functions of management giving to their delegate full discretion to act
independently of instructions from them. I see no difficulty in holding
that they have thereby put such a delegate in their place so that within
the scope of the delegation he can act as the company. It may not always
be easy to draw the line but there are cases in which the line must be
drawn. Lennard's case [1915] A.C. 705 was one of them.
In some cases the phrase alter ego has been used. I think it is misleading.
When dealing with a company the word alter is I think misleading. The
person who speaks and acts as the company is not alter. He is identified
with the company. And when dealing with an individual no other
individual can be his alter ego. The other individual can be a servant,
agent, delegate or representative but I know of neither principle nor
authority which warrants the confusion (in the literal or original sense)
of two separate individuals.
Criminal Appeal No. 4250 of 2026 Page 20 of 98
XXX
The Divisional Court decided this case on a theory of delegation. In that
they were following some earlier authorities. But they gave far too wide
a meaning to delegation. I have said that a board of directors can
delegate part of their functions of management so as to make their
delegate an embodiment of the company within the sphere of the
delegation. But here the board never delegated any part of their
functions. They set up a chain of command through regional and
district supervisors, but they remained in control. The shop managers
had to obey their general directions and also take orders from their
superiors. The acts or omissions of shop managers were not acts of the
company itself.
[Emphasis Supplied]
42. To put it concisely, the central points that emerge from Lord Reid’s speech
are as follows:
a. First, there are certain instances where a person is not acting “on
behalf of” the company but rather as its “embodiment”. In such
instances, the guilty mind of the person is the guilty mind of the
company. This is distinct from vicarious liability, where the person
is still acting as the “agent/servant” of the company rather than as
the company itself. Reliance was placed upon the decision of the
House of Lords in Lennard's Carrying (supra).
b. Secondly, it must be a question of law whether, once the facts have
been ascertained, a person in doing particular things is to be
regarded as the company or merely as the company’s servant or
agent.
c. Thirdly, normally it is the board of directors, the managing
director, and perhaps other superior officers of a company who
carry out the management of the company and can accordingly be
regarded as acting as the company. A person may also be said to
act as the company where the board delegates its powers to that
person and thereby vests in them full discretion to act
independently of the board’s instructions. Mere exercise of some
Criminal Appeal No. 4250 of 2026 Page 21 of 98
“managerial discretion” under the supervision of the superior
officers will not make a person the “directing mind and will” of
the company.
d. Fourthly, in the facts of the present case, there was no delegation of
their functions by the board of directors to the store manager, and
thus the manager could not be considered as an embodiment of the
company.
43. Let us also briefly consider the other four speeches by Lord Morris,
Viscount Dilhorne, Lord Pearson and Lord Diplock respectively:
Lord Morris
“[...] The very basis of section 24 involves that some contraventions of
the Act may take place and may be contraventions by persons under the
control of the company even though the company itself has taken all
reasonable precautions and exercised all due diligence and that the
company will not be criminally answerable for such contraventions.
How, then, does a company act? When is some act the act of the
company as opposed to the act of a servant or agent of the company (for
which, if done within the scope of employment, the company will be
civilly answerable)?
XXX
[...] The question in the present case becomes a question whether the
company as a company took all reasonable precautions and exercised all
due diligence. The magistrates so found and so held. The magistrates
found and held that “they” (i.e. the company) had satisfied the
provisions of section 24 (1) ( b ). The reason why the Divisional Court
felt that they could not accept that finding was that they considered that
the company had delegated its duty to the manager of the shop. The
manager was, they thought, “a person whom the appellants had
delegated in respect of that particular shop their duty to take all
reasonable precautions and exercise all due diligence to avoid the
commission” of an offence. Though the magistrates were satisfied that
the company had set up an efficient system there had been “a failure by
someone to whom the duty of carrying out the system was delegated
properly to carry out that function.”
My Lords, with respect I do not think that there was any feature of
delegation in the present case. The company had its responsibilities in
Criminal Appeal No. 4250 of 2026 Page 22 of 98
regard to taking all reasonable precautions and exercising all due
diligence. The careful and effective discharge of those responsibilities
required the directing mind and will of the company. A system had to
be created which could rationally be said to be so designed that the
commission of offences would be avoided. There was no delegation of
the duty of taking precautions and exercising diligence. There was no
such delegation to the manager of a particular store. He did not function
as the directing mind or will of the company. His duties as the manager
of one store did not involve managing the company. He was one who
was being directed. He was one who was employed but he was not a
delegate to whom the company passed on its responsibilities. He had
certain duties which were the result of the taking by the company of all
reasonable precautions and of the exercising by the company of all due
diligence. He was a person under the control of the company and on the
assumption that there could be proceedings against him, the company
would by section 24 (1) ( b ) be absolved if the company had taken all
proper steps to avoid the commission of an offence by him. To make the
company automatically liable for an offence committed by him would be
to ignore the subsection. He was, so to speak, a cog in the machine which
was devised: it was not left to him to devise it. Nor was he within what
has been called the “brain area” of the company. If the company had
taken all reasonable precautions and exercised all due diligence to
ensure that the machine could and should run effectively then some
breakdown due to some action or failure on the part of “another person”
ought not to be attributed to the company or to be regarded as the action
or failure of the company itself for which the company was to be
criminally responsible. The defence provided by section 24 (1) would
otherwise be illusory.”
Viscount Dilhorne
“If an offence under section 11 (2) is committed by a company, the acts
necessary to constitute the offence must have been done by individuals
in their employ. Here the question is not whether the company is
criminally liable and responsible for the act of a particular servant but
whether it can escape from that liability by proving that it exercised all
due diligence and took all reasonable precautions and that the
commission of the offence was due to the act or omission of another
person. That, in my view, is a very different question from that of a
company's criminal responsibility for its servants' acts.
XXX
[...] In my view, a person who is in actual control of the operations of a
company or of part of them and who is not responsible to another person
in the company for the manner in which he discharges his duties in the
sense of being under his orders, cannot be regarded as “another person”
within the meaning of sections 23 and 24 (1) ( a).
Criminal Appeal No. 4250 of 2026 Page 23 of 98
XXX
However this may be, shop managers in a business such as that
conducted by the appellants — and their number may be of the order of
eight hundred if the appellants have that number of shops — cannot
properly be regarded as part of the appellants' directing mind and will
and so can come within the reference to “another person” in sections 23
and 24 (1) ( a ).”
Lord Pearson
“Section 24 requires a dividing line to be drawn between the master and
any other person. The defendant cannot disclaim liability for an act or
omission of his ego or his alter ego. In the case of an individual
defendant, his ego is simply himself, but he may have an alter ego. For
instance, if he has only one shop and he appoints a manager of that shop
with full discretion to manage it as he thinks fit, the manager is doing
what the employer would normally do and may be held to be the
employer's alter ego. But if the defendant has hundreds of shops, he
could not be expected personally to manage each one of them and the
manager of one of his shops cannot in the absence of exceptional
circumstances be considered his alter ego. In the case of a company, the
ego is located in several persons, for example, those mentioned in section
20 of the Act or other persons in a similar position of direction or
general management. A company may have an alter ego, if those
persons who are or have its ego delegate to some other person the control
and management, with full discretionary powers, of some section of the
company's business. In the case of a company, it may be difficult, and
in most cases for practical purposes unnecessary, to draw the
distinction between its ego and its alter ego, but theoretically there is
that distinction.
Mr. Clement, being the manager of one of the company's several
hundreds of shops, could not be identified with the company's ego nor
was he an alter ego of the company. He was an employee in a relatively
subordinate post. In the company's hierarchy there were a branch
inspector and an area controller and a regional director interposed
between him and the board of directors.”
Lord Diplock
“My Lords, a corporation incorporated under the Companies Act 1948
owes its corporate personality and its powers to its constitution, the
memorandum and articles of association. The obvious and the only
place to look to discover by what natural persons its powers are
exercisable, is in its constitution. [...]
Criminal Appeal No. 4250 of 2026 Page 24 of 98
In my view, therefore, the question: what natural persons are to be
treated in law as being the company for the purpose of acts done in the
course of its business, including the taking of precautions and the
exercise or due diligence to avoid the commission of a criminal offence,
is to be found by identifying those natural persons who by the
memorandum and articles of association or as a result of action taken
by the directors, or by the company in general meeting pursuant to the
articles, are entrusted with the exercise of the powers of the company.
XXX
My Lords, there may be criminal statutes which upon their true
construction ascribe to a corporation criminal responsibility for the acts
of servants and agents who would be excluded by the test that I have
stated to be appropriate in determining whether a corporation has itself
committed a criminal offence. The Trade Descriptions Act 1968 ,
however, so far from containing anything which compels one to reject
that test, recognises, by section 20, the distinction between “any
director, manager, secretary or other similar officer of a body corporate”
and other persons who are merely its servants or agents. [...]
The natural persons described in this subsection correspond with those
who under the memorandum and articles of association of a company
exercise the powers of the company itself. From this it follows that if
any of them is guilty of neglect in the exercise of those powers such
neglect is that of the company itself. That it cannot be relied upon as
“the act or default of another person,” so as to entitle the company to a
defence under section 24 (1), is implicit in the provision in section 20
(1) that a person in the described category shall be guilty of an offence
“as well as the body corporate.” Without section 20 it would have been
open to doubt whether persons whose acts were in law the acts of the
company itself would have been guilty in their personal capacity also of
the offence committed by the company.”
[Emphasis Supplied]
44. First and foremost, it is worth situating the ruling in Tesco Supermarkets
(supra) within the context in which it arose. As Viscount Dilhorne
observed, the question before the House was not whether the company
was criminally liable for the acts of a particular servant at all, but whether
it could escape such liability by showing that it had exercised due
diligence and that the offence was due to the act or default of another
person. This, in his view, was a materially different question from that of
a company’s criminal responsibility for the acts of its servant.
Criminal Appeal No. 4250 of 2026 Page 25 of 98
45. While the five judges employed differing terminology to refer to such
persons (describing them, variously, as the company’s “alter ego” its
“directing mind and will” or its “embodiment”) they all converged on the
understanding that there exist certain persons who, when they act, act as
the company itself, such that their acts and state of mind are, in law, the
acts and state of mind of the company. This understanding thereby
supplied the necessary basis for holding that a company could possess
mens rea and thereby be held liable for offences requiring it.
46. On the question of who, precisely, qualifies to be a company’s
embodiment, the judges did not speak with one voice. For Lord Reid, this
would normally be the board of directors, the managing director, and
perhaps other superior officers of the company. For Viscount Dilhorne, it
would be those in actual control of the company’s operations, or a part of
them, who are answerable to no one else within the company for how they
discharge their duties. For Lord Pearson, it would be those described in
Section 20 of the Act (a director, manager, secretary, or other similar
officer) or persons in a similar position of direction or management. For
Lord Diplock, it would be those persons who, under the company’s
constitutional documents, i.e., its memorandum and articles of association,
are entrusted with the exercise of the company’s powers.
47. Notwithstanding this divergence, there is clarity to the extent that all the
judges, in one form or another, accepted the delegation principle: where a
person has been delegated power with full discretion, i.e., power exercised
without being subject to instructions or oversight from anyone above
them, that person too becomes an embodiment of the company. This
principle bore squarely on the facts before the House of Lords, since the
central question was whether the board had delegated any part of its
functions to the store managers, and all five judges answered this in the
negative.
48. A closer look at the extracts of Lord Reid and Lord Pearson set out above,
and, on a liberal reading, even that of Lord Diplock, suggests that they
Criminal Appeal No. 4250 of 2026 Page 26 of 98
were saying something more than this. Apart from the delegation
principle, they also seem to accept that senior management can act as the
embodiment of the company. However, with respect to such persons, they
do not explicitly refer to any requirement of full discretion. This may be
because the full discretion threshold exists specifically to circumscribe the
delegation principle. Almost every employee exercises some discretion,
and without the requirement that this discretion be full, i. e, exercised free
of any residual check from above, almost every employee could be said to
bind the company. That concern does not arise in the same way for senior
management, who, even without a grant of such discretion, typically enjoy
a wide scope to act independently and possess the ability to influence
decisions and outcomes. Consequently, status itself may be said to operate
as a standalone route to attribution, independent of the delegation
principle. Whether the House of Lords itself intended to establish such a
route is not entirely clear, since the position of such senior officers was not
directly in issue on the facts before it. What can be said, however, is that
Tesco Supermarkets (supra) was applied in practice as though it did
establish such a route.
49. This process of identifying those persons who, when they act, act as the
company itself, such that their acts and state of mind may in law be treated
as those of the company, has since come to be known as the identification
doctrine. From our discussion above, it appears to us that the House of
Lords in Tesco Supermarkets (supra) envisages two possible pathways
under the identification doctrine. First, the delegation method, under
which those natural persons are identified as the company who have been
delegated power to act with full discretion, unfettered by the control of
any superior authority within the company. Second, the status based
method, under which certain natural persons are identified as the
company by virtue of the status of the office they hold within the
company’s management.
Criminal Appeal No. 4250 of 2026 Page 27 of 98
50. As Lord Reid and Lord Pearson remarked, it is not always easy to identify
persons who can be said to act as the company. In Tesco Supermarkets
(supra), this difficulty was substantially resolved by common sense, as in
an 800-store supermarket chain, the manager of a single store could not
sensibly be regarded as its directing mind and will, and it was in any event
clear that the board had delegated no part of its functions to him. A further
consideration reinforcing this outcome, referred to by Lord Morris and
Lord Diplock in their speeches, was that if a company which had taken all
reasonable precautions and exercised due diligence could nonetheless be
held liable for the actions or failures of its manager, the defence provided
under section 24(1) would be rendered illusory. The position in Lennard's
Carrying (supra) was similarly straightforward, given that Mr. Lennard
had himself taken an active part in managing the ship and was registered
as the designated person for that purpose. As the cases discussed below
will show, the facts will not always yield such an easy answer.
51. The identification doctrine, as laid down in Tesco Supermarkets (supra),
came under heavy criticism because of the narrow scope it provided for
attribution. On the formulation that emerged from the case, there were
only two plausible pathways by which a person could be said to be acting
as the company, both of which captured a very small group of people: (i)
delegation with full discretion, which in many cases will be difficult to
establish; and (ii) the route of senior management, which meant that a
company could be held liable for offences requiring mens rea only where
one of its senior officers had acted with the requisite fault. Compounding
this narrowness was the further difficulty that it was not clear as to who
would or would not count as senior management.
52. Further, this formulation of the identification doctrine came to be
misunderstood in two ways. First, it was treated as a universal test,
applicable regardless of context. Second, it was treated as providing an
exhaustive list of those whose acts or state of mind could be attributed to
Criminal Appeal No. 4250 of 2026 Page 28 of 98
a corporation.12 Such rigidity proved untenable, and it was the Privy
Council’s decision in Meridian Global Funds Management Asia Ltd. v.
Securities Commission, reported at [1995] 2 A.C. 500, that paved the way
for the necessary course correction.
(b) Meridian Global Funds Management Asia Ltd v. Securities
Commission
53. In Meridian Global (supra), a group of persons in New Zealand, Malaysia,
and Hong Kong sought to gain control of a publicly listed New Zealand
company, Euro-National Corporation Ltd. (“ENC”), with a view to using
ENC’s assets for their own purposes. Among them were K (Meridian’s
chief investment officer) and N (Meridian’s senior portfolio manager).
Their scheme required them to acquire a controlling holding in ENC, with
the intention of ultimately funding this acquisition out of ENC’s own
assets. This, however, required bridging finance to cover the gap between
acquiring the shares and gaining control of ENC’s money. It was this
bridging finance that K and N supplied by improperly using their
authority over funds managed by Meridian and channelling it towards the
purchase of the ENC shares. This was done without the knowledge of the
company’s board of directors or managing director.
54. As a result of such purchase of ENC shares, Meridian became a
“substantial security holder” in ENC, triggering a duty to give notice
under section 20(3) of the Securities Amendment Act 1988. A duty the
company failed to discharge. The Securities Commission accordingly
instituted proceedings against the company in the High Court of New
Zealand, which held that the company was in breach of section 20(3),
attributing the knowledge of K and N to the company. The Court of
Appeal of New Zealand upheld this finding, holding that K was the
directing mind and will of the company, such that his knowledge was
properly attributable to it.
12 Supra note 3 at 63.
Criminal Appeal No. 4250 of 2026 Page 29 of 98
55. Before the Privy Council, the company argued that it had neither actual
nor constructive knowledge of having acquired a “relevant interest” in the
issuer. Any inquiry into whether a person is to be identified with a
company, it contended, must begin with the company’s constitutional
instruments, i.e., its memorandum and articles of association, which show
where the power to act on the company’s behalf is located. Prima facie, this
would be its managing director and board of directors. While a single
director or other individual could, in a particular context, be the directing
mind and will of the company, this required that person to enjoy full
independence from the board, something distinct from a mere measure of
discretion. On the facts, neither K nor N was an officer identified in the
company’s constitutional instruments. Further, K performed his duties in
the field of investment activity under the supervision of the managing
director, and thus held only some discretion, without ultimate
responsibility for the company’s investment activities. Consequently, the
company argued, K could not be regarded as its directing mind and will.
56. Before turning to the decision of the Privy Council, it is useful to first set
out, in simple terms, the framework Lord Hoffmann laid down in
Meridian Global (supra). According to Lord Hoffmann, since a company
is an abstraction, the law must therefore supply rules to decide whose acts,
in a given situation, will be treated as the company’s own acts. He
described these as “rules of attribution” and captured their essence in the
following manner:
“There is in fact no such thing as the company as such, no ding an sich,
only the applicable rules. To say that a company cannot do something
means only that there is no one whose doing of that act would, under
the applicable rules of attribution, count as an act of the company.”
[Emphasis Supplied]
57. Lord Hoffmann identified three distinct kinds of rules of attribution:
a. First, the primary rules of attribution. These are found in a
company’s own constitutional documents, typically its articles of
Criminal Appeal No. 4250 of 2026 Page 30 of 98
association, and will say things such as “for the purpose of
appointing members of the board, a majority vote of the
shareholders shall be a decision of the company” or “the decisions
of the board in managing the company’s business shall be the
decisions of the company”. There are also primary rules of
attribution which are not expressly stated in the articles but
implied by company law. These primary rules of attribution are
obviously not enough to enable a company to go out into the world
and do business. Not every act on behalf of the company could be
expected to be the subject of a resolution of the board or a
unanimous decision of the shareholders.
b. This is where the second kind of rules come in: the general rules of
attribution. The company builds upon the primary rules of
attribution by using general rules of attribution which are equally
available to natural persons, i.e., the principles of agency. It will
appoint servants and agents whose acts, by a combination of the
general principles of agency and the company’s primary rules of
attribution, count as the acts of the company. Between the primary
rules and the general rules, a company can function, and its
employees, even those well below board level, can bind it.
c. The company’s primary rules of attribution together with the
general principles of agency, vicarious liability and so forth are
usually sufficient to enable one to determine its rights and
obligations. In exceptional cases, however, they will not provide
an answer. This will be the case when a rule of law, either expressly
or by implication, excludes attribution based on the general
principles of agency or vicarious liability. For example, a rule may
be stated in language primarily applicable to a natural person and
require some act or state of mind on the part of that person
“himself,” as opposed to his servants or agents. This is generally
true of rules of the criminal law, which ordinarily impose liability
Criminal Appeal No. 4250 of 2026 Page 31 of 98
only for the actus reus and mens rea of the defendant himself. How
is such a rule to be applied to a company? In such cases, the court
may conclude that the rule was not intended to apply to companies
at all, or it may interpret the law to allow attribution only based on
the primary rules. But there will be many cases in which neither
of these solutions is satisfactory. These are cases where the court
considers that the law was intended to apply to companies and
that, although it excludes ordinary vicarious liability, insistence on
the primary rules of attribution would in practice defeat that
intention. In such situations, the third kind of rule comes: a special
rule of attribution, fashioned by the court and tailored to the
particular statutory provision in question, to give effect to what the
legislature actually intended.
58. On the question of when a court should fashion a special rule of
attribution, Lord Hoffmann said as follows:
“This is always a matter of interpretation: given that it was intended to
apply to a company, how was it intended to apply? Whose act (or
knowledge, or state of mind) was for this purpose intended to count as
the act etc. of the company? One finds the answer to this question by
applying the usual canons of interpretation, taking into account the
language of the rule (if it is a statute) and its content and policy.”
[Emphasis Supplied]
59. Further, as per Lord Hoffman, the fact that the rule of attribution is a
matter of interpretation or construction of the relevant substantive rule is
shown by the contrast between two decisions of the House of Lords in
Tesco Supermarkets (supra) and in In re Supply of Ready Mixed Concrete
(No. 2), reported in [1995] 1 A.C. 456. As we noted above, in Tesco
Supermarkets (supra), on examining the purpose of section 24(1), some
Lords concluded that the acts and defaults of the manager were not
intended to be attributed to the company. In contrast, in Ready Mixed
Concrete (supra), based on the substantive rule before it, the House of
Lords concluded that the acts and the state of mind of the employees ought
Criminal Appeal No. 4250 of 2026 Page 32 of 98
to be attributed to the company. The following is Lord Hoffmann’s own
account of Ready Mixed Concrete (supra):
“On the other hand, in In re Supply of Ready Mixed Concrete (No. 2)
[1995] 1 A.C. 456, a restrictive arrangement in breach of an
undertaking by a company to the Restrictive Practices Court was made
by executives of the company acting within the scope of their
employment. The board knew nothing of the arrangement; it had in fact
given instructions to the company's employees that they were not to
make such arrangements. But the House of Lords held that for the
purposes of deciding whether the company was in contempt, the act and
state of mind of an employee who entered into an arrangement in the
course of his employment should be attributed to the company. This
attribution rule was derived from a construction of the undertaking
against the background of the Restrictive Trade Practices Act 1976:
such undertakings by corporations would be worth little if the company
could avoid liability for what its employees had actually done on the
ground that the board did not know about it. As Lord Templeman said,
at p. 465, an uncritical transposition of the construction in Tesco
Supermarkets Ltd. v. Nattrass [1972] A.C. 153:
“would allow a company to enjoy the benefit of restrictions
outlawed by Parliament and the benefit of arrangements
prohibited by the courts provided that the restrictions were
accepted and implemented and the arrangements were
negotiated by one or more employees who had been forbidden
to do so by some superior employee identified in argument
as a member of the ‘higher management’ of the company or
by one or more directors of the company identified in
argument as ‘the guiding will’ of the company.””
[Emphasis Supplied]
60. There is one other point from Lord Hoffmann’s opinion which merits
discussion. According to Lord Hoffmann, the phrase “directing mind and
will” has come to be misconstrued in the years since Lennard's Carrying
(supra). A closer look at that case shows that Viscount Haldane was using
the notion of directing mind and will simply to apply the attribution rule
derived from section 502, i.e., to identify the person in the company whose
functions corresponded to those expected of an individual shipowner, to
whom the language of section 502 primarily applied. On the facts, this
turned out to be Mr. Lennard, who also happened to be the person who
ran the company’s business generally, since the company’s activities were
Criminal Appeal No. 4250 of 2026 Page 33 of 98
confined entirely to ships. It was this coincidence (that the same person
satisfied both roles) which left Viscount Haldane’s speech open to the
interpretation that he was expounding a general metaphysic of companies,
when in fact he was engaged in a statute-specific inquiry, and not the
discovery of some general, all-purpose “directing mind” of the company.
61. Later courts, by placing undue emphasis on the phrase rather than on the
purpose for which Viscount Haldane used it, misconstrued the exercise.
The error lay in chasing the label itself (asking simply “who is the directing
mind of this company?”). This chase, as Lord Hoffmann shows, produced
real anomalies. It led to cases where the person identified as the company’s
“directing mind and will” had little real connection to the act in question.
The real exercise was, however, never to locate a company’s “brain” in the
abstract. As Lord Hoffmann remarked, the term “directing mind and will”
will often be the most appropriate description of the person designated by the
relevant attribution rule, but it might be better to acknowledge that not every such
rule has to be forced into the same formula.
62. Having laid down the three rules of attribution and established that the
question is one of construction, Lord Hoffmann proceeded to apply this
framework to the facts before him as follows:
“Once it is appreciated that the question is one of construction rather
than metaphysics, the answer in this case seems to their Lordships to be
as straightforward as it did to Heron J. The policy of section 20 of the
Securities Amendment Act 1988 is to compel, in fast-moving markets,
the immediate disclosure of the identity of persons who become
substantial security holders in public issuers. Notice must be given as
soon as that person knows that he has become a substantial security
holder. In the case of a corporate security holder, what rule should be
implied as to the person whose knowledge for this purpose is to count
as the knowledge of the company? Surely the person who, with the
authority of the company, acquired the relevant interest. Otherwise the
policy of the Act would be defeated. Companies would be able to allow
employees to acquire interests on their behalf which made them
substantial security holders but would not have to report them until the
board or someone else in senior management got to know about it. This
would put a premium on the board paying as little attention as possible
to what its investment managers were doing. Their Lordships would
Criminal Appeal No. 4250 of 2026 Page 34 of 98
therefore hold that upon the true construction of section 20(4)( e ), the
company knows that it has become a substantial security holder when
that is known to the person who had authority to do the deal. It is then
obliged to give notice under section 20(3). The fact that Koo did the deal
for a corrupt purpose and did not give such notice because he did not
want his employers to find out cannot in their Lordships' view affect
the attribution of knowledge and the consequent duty to notify.
It was therefore not necessary in this case to inquire into whether Koo
could have been described in some more general sense as the “directing
mind and will” of the company. But their Lordships would wish to
guard themselves against being understood to mean that whenever a
servant of a company has authority to do an act on its behalf, knowledge
of that act will for all purposes be attributed to the company. It is a
question of construction in each case as to whether the particular rule
requires that the knowledge that an act has been done, or the state of
mind with which it was done, should be attributed to the company.
Sometimes, as in In re Supply of Ready Mixed Concrete (No. 2) [1995]
1 A.C. 456 and this case, it will be appropriate. Likewise in a case in
which a company was required to make a return for revenue purposes
and the statute made it an offence to make a false return with intent to
deceive, the Divisional Court held that the mens rea of the servant
authorised to discharge the duty to make the return should be attributed
to the company: see Moore v. I. Bresler Ltd. [1944] 2 All E.R. 515. On
the other hand, the fact that a company's employee is authorised to drive
a lorry does not in itself lead to the conclusion that if he kills someone
by reckless driving, the company will be guilty of manslaughter. There
is no inconsistency. Each is an example of an attribution rule for a
particular purpose, tailored as it always must be to the terms and
policies of the substantive rule.”
[Emphasis Supplied]
63. Lord Hoffmann’s approach, as is evident from the extract above, was not
to determine whether K was, in some general sense, the “directing mind
and will” of the company. Instead, he sought to answer a specific question:
in the case of a corporate security holder, whose knowledge should count
as the knowledge of the company for section 20? His answer was that such
knowledge should be attributed to whoever, with the company’s
authority, had actually acquired the relevant interest, which in this case
was K. Any other answer, he reasoned, would defeat the very purpose of
the disclosure requirement, since a company could then avoid liability by
ensuring its board remained ignorant of what its own investment
managers were doing. It made no difference to this conclusion, in his view,
Criminal Appeal No. 4250 of 2026 Page 35 of 98
that K had acquired the relevant interest for a corrupt purpose, or that he
had withheld disclosure precisely because he did not want the company
to find out what he had done.
64. It is worth pausing, at this stage, to consider what the framework laid
down in Meridian Global (supra) achieved. First, the decision established
attribution as an exercise governed by rules, i.e., rules that determine
when the act of a natural person is to be treated as the act of the company,
thereby permitting the imputation of both act and state of mind to the
corporation. Second, it cautioned against locating the ‘directing mind and
will’ in the abstract, or by resorting to a kind of corporate metaphysics, as
though the company possessed a single, identifiable ‘brain’. Instead, it
held that it is the rules themselves which must point to the relevant person.
Third, it permitted the question of attribution to be answered by reference
to the context and purpose of the statutory rule in question. Taken
together, Meridian Global (supra) makes it clear that ‘directing mind and
will’ is not a fixed or exhaustive category of persons, but a conclusion
reached by applying the relevant rule to the facts at hand. As a
consequence, the framework allowed for a considerably more flexible
approach to attribution than that envisaged under Tesco Supermarkets
(supra).
65. One further question that might arise at this juncture is as to what is the
difference between the identification doctrine as envisaged in Tesco
Supermarkets (supra) and the rules of attribution conceived in Meridian
Global (supra). Though the two appear to proceed differently, they are, in
substance, directed at the same underlying question, i.e., whether the act
and state of mind of the concerned person should be considered as the act
and state of mind of the company. The identification doctrine asks whether
the person concerned is acting as an embodiment of the company. The rules of
attribution, by contrast, ask whether the act done by that person would
count as the act of the company. The difference is one of form and not of
substance.
Criminal Appeal No. 4250 of 2026 Page 36 of 98
66. What remained unclear was how the identification doctrine envisaged
under Tesco Supermarkets (supra) and the rules of the attribution
framework envisaged by Lord Hoffman in Meridian Global (supra) would
operate together. The Crown Court’s decision in The Queen v. Barclays
PLC & Barclays Bank PLC (Indictment No: T2017 7247-7251 & T2018
0055) and the High Court’s decision in The Serious Fraud Office v.
Barclays PLC & Anr, reported in [2018] EWHC 3055 (QB) (together
referred to as the “Barclays cases”) go some way toward answering this
question.
(c) The Barclays Cases
67. Barclays PLC and Barclays Bank PLC (together, “Barclays”) raised capital
on two occasions in 2008, amid the global financial crisis: a first raising in
June 2008 (“CR1”), and a second in October 2008 (“CR2”). Among the
investors was the State of Qatar, acting through various entities (“Qatar”).
As is standard in such transactions, Qatar was to be paid a commission for
subscribing, and this commission was publicly disclosed in the
Prospectuses and Subscription Agreements, which stated that Qatar was
receiving the same terms as other investors and no additional fees. In
reality, it was alleged, Barclays had secretly agreed to pay Qatar
substantially higher fees than disclosed, structured through two side
agreements described as “Advisory Services Agreements” (“ASA”) under
which the Qatar entities were purportedly to provide advisory services to
Barclays in exchange for payments. It was alleged that these advisory
services were fictitious, and that the payments were, in substance,
disguised additional commissions paid to secure the participation of
Qatar, concealed to avoid triggering an obligation to pay the same higher
rate to other investors.
68. Separately, and around the same time as CR2, Barclays Bank lent US$3
billion to Qatar. It was alleged that this loan was used by Qatar to help
fund its investment in CR2, which is prohibited by company law as a form
of unlawful financial assistance. The individuals said to have negotiated
Criminal Appeal No. 4250 of 2026 Page 37 of 98
and driven these arrangements on Barclays’ side were John Varley (Group
Chief Executive), Roger Jenkins (a senior investment banking executive),
and Christopher Lucas (Group Finance Director) and a few others. It was
on this factual basis that criminal proceedings were brought against
Barclays and these individuals.13
69. Barclays applied to have the charges against it dismissed, arguing that the
alleged wrongdoing of its officers could not, in law, be treated as the
wrongdoing of the company itself. Since the case was for dismissal of
charges, the court had to proceed on the basis that the prosecution’s case
was true. The Crown Court agreed, and dismissed all charges against
Barclays. The prosecution then sought to revive the case against Barclays
before the High Court. The High Court also ruled against the prosecution,
upholding the conclusion that the conduct of officers could not be
attributed to the company. Proceedings against Barclays accordingly came
to an end, though those against the individuals continued. The individuals
were subsequently acquitted.
70. The discussion below on the Barclays cases (supra) is organised in four
parts: first, the principles that the courts drew from their reading of
Meridian Global (supra); second, the test the courts arrived at for
determining whose knowledge is to be attributed to a company; third, the
application of that test to the facts before it; and fourth, the aspects in
which the reasoning in the cases diverged from the approach taken in
Tesco Supermarkets (supra) and Meridian Global (supra). Given the
complexity of the facts, precedents, and reasoning involved, what follows
is a necessarily general account of the approach and reasoning adopted by
the courts in the Barclays cases (supra).
(i) Meridian Principles
13 For a detailed account of the facts, see: ¶ 37-81 of the Crown Court Decision & ¶ 18-38 of the High
Court Decision.
Criminal Appeal No. 4250 of 2026 Page 38 of 98
71. Drawing on its reading of Meridian Global (supra), the courts in the
Barclays cases (supra) identified the following principles as guiding their
approach:
a. First, “directing mind and will” is not itself a test. It is, at most, a
suitable description of the person designated by the applicable rule
of attribution. Thus, the correct starting point is accordingly not
some generalised notion of the status, seniority, or authority of the
individual in question, but an examination of which rule, if any,
may apply to the facts in the particular statutory context.14
b. Secondly, although Meridian Global (supra) was not, in the strict
sense, a criminal case as the New Zealand statute in issue was
quasi-criminal, carrying penal consequences. However, that
wouldn’t bar its reasoning from being applicable to criminal
statutes as well.15
c. Thirdly, a company’s directing mind and will may be found in
different persons for different purposes of the company. There is
no requirement that a single person or body be identified as the
company’s directing mind for all purposes.16
d. Fourthly, Meridian Global (supra) requires a sequenced or layered
approach to attribution: the primary rules of attribution (found in
the company’s constitution) and the general rules (ordinary
principles of agency) are first to be considered, and it is only where
these prove insufficient that a special rule of attribution, derived
from the purpose of the relevant statute, need be fashioned.17
e. Lastly, “special” is not to be equated with “exceptional”. A special
rule of attribution is not the product of some residual or
14 ¶ 119 of the Crown Court Decision.
15 ¶ 128 of the Crown Court Decision.
16 ¶ 129 of the Crown Court Decision.
17 ¶ 130 of the Crown Court Decision.
Criminal Appeal No. 4250 of 2026 Page 39 of 98
extraordinary judicial function. It is simply a rule tailored to the
terms, policy, and purpose of the particular statute under
consideration, arrived at through ordinary principles of statutory
construction.18
(ii) Test for Determining Attribution
72. It seemed clear that both Tesco Supermarkets (supra) and Meridian Global
(supra) respectively laid down tests capable of attributing acts and states
of mind to corporations, and both had, by this stage, gained acceptance
and application in the criminal context. However, Tesco Supermarkets
(supra) did not envisage the sequenced approach that Meridian Global
(supra) later set out and thus it was unclear how the erstwhile
identification doctrine was meant to operate within the framework laid
down by Lord Hoffman.
73. Both courts in Barclays cases (supra) were unequivocal that Meridian
Global (supra) did not, and could not, displace the test laid down in Tesco
Supermarkets (supra).19 The prevailing test for attribution in criminal cases,
they held, remained the identification doctrine as established in Tesco
Supermarkets (supra).20 The courts relied on precedents of the Court of
Appeal to affirm this position. It was only where consideration of the
statute creating the offence in question pointed to a different, and perhaps
broader, approach that Meridian Global (supra) would come into play.21
74. This might appear to sit uneasily with the Crown Court’s further finding
that there is no “true identification” principle, just a hierarchy of primary,
general and special rules derived from Meridian Global (supra), which
govern attribution in criminal cases as well. However, the tension is
resolved when we understand that the courts did not treat the
identification doctrine envisaged in Tesco Supermarkets (supra) as being
18 ¶ 131 of the Crown Court Decision.
19 ¶ 83-85 of the High Court Decision.
20 ¶ 66 of the High Court Decision.
21 ¶ 76 of the High Court Decision.
Criminal Appeal No. 4250 of 2026 Page 40 of 98
outside the framework laid down in Meridian Global (supra). Instead, as
will be shown below, they seem to treat the identification doctrine as being
covered within the primary and general rules of attribution.22 The
consequence of such a reading is that Meridian Global's (supra) true
contribution is seen as confined to allowing for special rules to be
fashioned.23 How the courts in Barclays cases (supra) approached each of
these rules is considered below.
75. At the stage of inquiry dealing with primary rules of attribution, the courts
in Barclays cases (supra) envisaged that the inquiry would be confined to
the company’s constitutional documents, i.e., its articles of association and
related governing instruments. The question at this stage was narrow: in
whom did these documents vest the relevant power, and, where they
permitted delegation, to whom such power had in fact been delegated.24
Vesting power in a particular person meant that their acts and state of
mind would, in consequence, be treated as those of the company itself.
This approach bears a close resemblance to the one suggested, in part, by
Lord Diplock in Tesco Supermarkets (supra), where he indicated that it
would be those persons named or empowered under the company’s
constitution whose acts and state of mind would be treated as the acts and
state of mind of the company.
76. As discussed above, general rules of attribution are the ordinary principles
of agency, applicable equally to natural persons and to companies.
However, since vicarious liability has no place in offences requiring proof
of mens rea, as was the case in the Barclays cases (supra), the courts came
to rely instead on the general agency principle of implied delegation, i.e.,
whether the person had been impliedly delegated authority to act for the
company. In reaching this position, the Crown Court examined Lennard's
Carrying (supra) and Tesco Supermarkets (supra), and found that, although
each decision contained hints of reliance on a special rule of attribution as
22 ¶ 135 of the Crown Court Decision.
23 ¶ 136 - 138 of the Crown Court Decision.
24 ¶ 167 of the Crown Court Decision.
Criminal Appeal No. 4250 of 2026 Page 41 of 98
well, the decision in both cases appears, in substance, to have been reached
based on the principle of implied delegation.25
77. Proceeding on this understanding, the courts in the Barclays cases (supra)
framed the inquiry into implied delegation as one of ‘authority to do the
deal’, i.e., whether the person in question possessed full discretion to act
independently and conclude the transaction on behalf of the company.26
This emphasis on authority follows from the ordinary principles of agency
themselves, where a principal is bound only by the acts of its agent that
were authorised. The courts accordingly noted that the limits of implied
delegation must be carefully analysed and held that it involves a question
of examining whether what happened was within the scope of the
person’s delegation, so that he can be regarded as acting as the company.27
78. In testing for implied delegation, the courts in Barclays cases (supra)
discussed precedents in which de facto authority to do the deal was found
to vest in a person.28 Such a discussion may have been warranted by the
prosecution’s stance that notwithstanding the formal structures in place,
it was the individuals concerned who, in effect, had full control over
securing Qatar’s participation in the transactions. This potentially covered
scenarios where a person, without any explicit grant of authority,
nonetheless controlled the entirety of the transaction.
79. It thus appears that the courts in Barclays cases (supra) envisaged the
identification doctrine as laid down in Tesco Supermarkets (supra) as
recognising only the delegation mode of attribution, a mode which is itself
accommodated within the primary and general rules of attribution
discussed above. The evident consequence of this reading was that the
status based route stood discarded, an aspect considered more closely
below.29 Further, such an understanding also clarifies why the courts held
25 ¶ 119 – 124 of the Crown Court Decision.
26 ¶ 118 – 119 of the High Court Decision.
27 ¶ 123 of the Crown Court Decision.
28 ¶ 140-143 & 147-152 of the Crown Court Decision.
29 ¶ 68 of the High Court Decision.
Criminal Appeal No. 4250 of 2026 Page 42 of 98
that the identification doctrine as established in Tesco Supermarkets
(supra) prevailed, and the only case where consideration of the statute
creating the offence in question pointed to a different, and perhaps
broader, approach would Meridian Global (supra) come into play.
80. Consistent with its recognition that the directing mind and will of a
company may lie with different persons for different purposes, the courts
in Barclays cases (supra) confined their inquiry into implied delegation to
the particular transaction in question.30 The relevant question was not
whether the person had been delegated authority over the affairs of the
company as a whole, but whether they had been delegated total,
unsupervised authority ( de jure or de facto) over the specific transaction
in question.
81. On the third stage of inquiry, the courts in Barclays cases (supra) observed
that generally there has been reluctance to fashion a special rule of
attribution in the context of criminal statutes.31 This reluctance, the courts
noted, stemmed from the emphasis on certainty that attends questions of
criminal culpability.32 Further, where courts had fashioned a special rule,
it was done so in the context of statutes whose purpose was narrow and
readily determinable.33 For statutes of a general nature where the purpose
was not so easily ascertained, courts have accordingly been slower to
derive a special rule of attribution.34
82. The Barclays cases (supra) concerned section 2 of the Fraud Act 2006, a
provision whose purpose could not readily be determined in the abstract.
The courts recognised the difficulty inherent in identifying the purpose of
so broad a provision, given that its purpose would necessarily vary across
the wide range of circumstances to which it could apply.35 For this reason,
30 ¶ 168 of the Crown Court Decision.
31 ¶ 81 of the High Court Decision.
32 ¶ 195 of the Crown Court Decision; ¶ 67 of the High Court Decision.
33 ¶ 176-177 of the Crown Court Decision.
34 Id.
35 ¶ 179-182 of the Crown Court Decision.
Criminal Appeal No. 4250 of 2026 Page 43 of 98
the courts declined to determine, in a broad, abstract, and acontextual
manner, whether section 2 of the Fraud Act 2006 could never permit the
derivation of a special rule of attribution.36 Instead, the inquiry was
confined to the particular circumstances of the case, and whether in that
context identification of the statutory purpose leads to the implication of a
special rule operating outside the envelope of primary rules of attribution
and implied delegation.37 This, the courts believed, was consonant with
the approach undertaken by lord Hoffmann in Meridian Global (supra).
(iii) Application to facts
83. Turning to the application of this test to the facts before it, the courts in
Barclays cases (supra) first considered the primary rules of attribution. On
this basis, it was clear that the concerned persons were not vested with the
power to undertake the concerned transaction. As the Crown Court noted:
“A consideration of the primary rules of attribution leads inevitably to
the conclusion that JV, RJ and CL were not the directing mind and will
of Barclays. The constitutional position is as clear as it is narrow: the
directing mind and will of Barclays was the Board, subject to express
delegation by the Board to a relevant committee. The committees in
question were the BFC and the GCC. The BFC delegated the formal
approval of the key documentation to Mr Agius and JV, on the basis
that the overall parameters had been set by the Board. It follows that the
SFO must proceed, as I think it accepts, to the second stage”.38
84. On the inquiry pertaining to implied delegation, the courts concluded
that the concerned persons did not possess the authority to do the deal.
The courts noted that the concerned persons had, at most, authority to
conduct negotiations within the framework set by the Board.39 This, the
courts held, could not be equated with authority to do the deal, which in
this case would mean the authority to commit Barclays to capital raisings
or to agree a secret commission which amounted to an additional fee.40
36 ¶ 183 of the Crown Court Decision.
37 ¶ 184 of the Crown Court Decision.
38 ¶ 167 of the Crown Court Decision.
39 ¶ 169-173 of the Crown Court Decision.
40 Id.
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Further, since the ASAs were never genuine advisory agreements, and
since the individuals concerned had authority only to enter into genuine
advisory agreements, they could not, on this footing either, be said to
have possessed authority to do the deal.41
85. The courts in Barclays cases (supra), in effect, held that the procedures
laid down, and the framework within which the concerned persons
operated, could not simply be wished away to proclaim on them an
authority to do the deal. The following extracts from the High Court’s
decision very aptly capture the approach that the courts in Barclays cases
(supra) had taken on this aspect:
“By virtue of what, it may be asked, did JV, CL or RJ have authority
not only to negotiate but also to complete and conclude and issue the
Subscription Agreements and Prospectuses for CR1 and CR2 as to be
finalised, signed and issued? The short answer is: they had no
authority. They were not, in the words of Lord Hoffmann, authorised
“to do the deal.” The relevant powers in that regard had been reserved,
if not to the main Board then to the BFC (or perhaps, for CR2, JV and
the Chairman jointly). It was they who were the ultimate decision
makers. The above-mentioned resolutions demonstrate that. It is also to
be noted that there was no evidence that JV, CL and RJ had assumed or
been entrusted with control of all the many other aspects of CR1 and
CR2 (it being recalled that the Qatari entities were by no means the
only subscribers and that there were very many other facets of the fundraising
requiring to be finalised). Furthermore, given the structures
specifically adopted, the (uncommunicated) knowledge of JV, as Chief
Executive Officer, or CL, as Group Finance Director, cannot for these
purposes be imputed to the Board or BFC as a whole.
On that basis, derived from the prosecution’s own case, those
individuals did not with regard to these transactions have "full
discretion" to act independently and they were "responsible to another
person [viz the BFC] for the manner in which they discharged their
duties" (reflecting the words of Lord Reid and Lord Pearson in Tesco v
Nattrass). It follows that, by reference to the pleaded particulars on the
indictment, they could not be regarded as the directing mind and will
for the purpose of performing the functions in question. That in essence,
in my view, is the long and the short of it.
Sir James protested that that was and is far too narrow an approach. He
relied on cases such as El Ajou for the proposition that one has to have
41 Id.
Criminal Appeal No. 4250 of 2026 Page 45 of 98
regard to the realities, to the de facto control. He said that the approach
of the judge had in effect focused solely on the "primary rules of
attribution" without the necessary wider approach needed to assess who
in reality was the directing mind and will.
But this case, as I have already indicated, is very different from El Ajou.
In El Ajou, F not only had entire control over the negotiations he also
had entire control over the completion of the relevant agreement and
payments and yet further, and critically, had been permitted (albeit
without a formal resolution) by the board of DLH to exercise such entire
control. That being so, it could not assist DLH that it had not known of
or authorised the dishonesty of F. It could not assist it because it had
delegated entire control of the entirety of the transaction so as to make
F the company's directing mind and will. That, however, simply is not
the case here. Here, neither the main Board nor, the BFC had conferred
such entire control on JV, CL and RJ. To the contrary, they had retained
ultimate authority for the finalising and approval of CR1 and CR2 to
the Board or BFC (or also, in the case of CR2, to the joint authority of
the Chairman and JV). Likewise the case of Bank of India v Morris is to
be distinguished: because there too S had been given complete authority
and control to permit, negotiate and conclude the transactions in
question. Thus in the circumstances of the present case the argument of
the SFO that it is irrelevant that neither the Board nor the BFC knew
of or authorised the alleged unlawful transactions itself becomes
irrelevant. It becomes irrelevant because the alleged individual
conspirators were not the directing mind and will of Barclays for the
purposes of performing the functions in question.
It simply is not acceptable, in my opinion, for the SFO to regard the
various resolutions of the Board and of the BFC as, in effect, mere pieces
of paper. They are not: they reflect the level of delegation sanctioned by
the appropriate organs of the company. Broad appeals to "the realities"
and to the "de facto" position cannot overcome that in this case. This is
not a matter of form over substance. Rather, in this case, the form is the
substance. That the individuals had some degree of autonomy is not
enough. It had to be shown, if criminal culpability was capable of being
attributed to Barclays, that they had entire autonomy to do the deal in
question; and that is not the case here. [...]”
[Emphasis Supplied]
86. Lastly, the courts rejected the prosecution’s submission that section 2 of
the Fraud Act 2006 provided for a special rule of attribution. It was the
prosecution’s submission that the statutory purposes would be thwarted
if Barclays could shelter behind the argument that other rules of
attribution cannot operate to fix them with criminal liability. Rejecting this
Criminal Appeal No. 4250 of 2026 Page 46 of 98
argument, the courts held that the furtherance of the statutory purpose,
i.e. prevention and deterrence of fraud in companies, including large
companies, does not require the fixing of criminal liability on Barclays in
the circumstances of the case before it.42 Consequently, there was no need
to fashion a special rule of attribution.
87. In coming to this decision, a few pertinent facts seemed to influence the
Crown Court.43 Concisely put, they are:
a. To equate authority to negotiate with authority to do the deal
would mean that liability could attach to the company even where
the deal was never concluded, and remained liable to unravel at
the stage of formal Board or committee approval. A negotiation,
without more, carries no binding legal consequence for the
company. Hence, logic, policy and principle do not require the
carving out of a special rule to inculpate Barclays on account of this
type of activity. The only situations in which a special rule has been
fashioned in the field of criminal law are cases where the
individuals in question have bound the company by their
autonomous actions or have taken legally relevant steps as part
and parcel of the transactions over which they had control;
b. There was no basis for saying that the Board or the BFC had failed
in their own duties or that the approval process was perfunctory.
Thus, the argument that a special rule was needed because, absent
one, companies might escape liability by pointing to formal
approval steps that could in principle be perfunctory could not be
sustained on the facts of the case. In other words, this was not a
case where the formal structures were merely rubber-stamping the
decisions taken by the concerned persons.
42 ¶ 187 of the Crown Court Decision; ¶ 131 of the High Court Decision.
43 ¶ 188 -194 of the Crown Court Decision.
Criminal Appeal No. 4250 of 2026 Page 47 of 98
c. The concerned persons deceived the relevant decision makers as
to the true nature of the transaction before the relevant decision
was taken, concealing that the fee for the alleged advisory services
was, in truth, a secret commission connected to the capital raising.
d. The prosecution has failed to prove that the statutory purpose
would be ‘thwarted ‘. Thwarted does not simply mean making the
case of the prosecution difficult or something along the lines of
“criminal liability ought to attach in these circumstances”.
88. What emerges from the foregoing is that the courts in Barclays cases
(supra) appear to have identified certain circumstances in the facts of the
case, which, taken together, demonstrated why attribution ought not to
extend to the persons concerned by fashioning of a special rule of
attribution.44 They did not lay down any general or portable rules as to
when a special rule of attribution would, or would not, be warranted
under section 2 of the Fraud Act 2006.
(iv) Aspects of Divergence
89. The courts in Barclays cases (supra) appear to have diverged from the
earlier case law in two respects. First, the courts seem to have read the
identification doctrine laid down in Tesco Supermarkets (supra) as only
envisaging the delegation mode of attribution, and not the status based
mode. Secondly, the courts also departed from the manner in which Lord
Hoffmann, in Meridian Global (supra), approached the question of
whether a special rule of attribution ought to be fashioned. Each of these
points is considered in turn below.
90. Turning first to the point of divergence from Tesco Supermarkets (supra),
the courts in the Barclays cases (supra), despite dealing with very senior
executives of Barclays, at no point sought to determine whether their
actions could be attributed to the company solely based on their position
44 ¶ 186 of the Crown Court Decision.
Criminal Appeal No. 4250 of 2026 Page 48 of 98
or status. Explicit confirmation of this refusal to invoke the status based
route may be found in the courts’ reliance on Meridian Global (supra),
from which they drew two conclusions: first, that the correct starting point
for attribution is not some generalised notion of seniority or status;45 and
second, that the application of the general rule of implied delegation
requires more than a merit-based consideration of whether the person
concerned occupied a sufficiently responsible position.46
91. This focus on authority, according to some commentators, has resulted in
the identification doctrine being narrowed further still, from an already
narrow conception under Tesco Supermarkets (supra). Whereas, in pre-
Barclays cases (supra), attribution was possible based on status alone, the
position thereafter was that even where status is present, as in the case of
senior management, authority must additionally be established.47
92. Turning now to the divergence from the approach conceived under
Meridian Global (supra) for determining whether a special rule of
attribution ought to be fashioned. The Crown Court held that its approach,
of confining the inquiry to the facts and circumstances before it, was
consonant with that undertaken by Lord Hoffmann.48 However, on a
closer reading of Lord Hoffmann’s own reasoning, the question he asked
was whether the statutory purpose of the provision in question,
considered as such, requires a special rule of attribution. The question
asked by the courts in the Barclays cases (supra), by contrast, was whether
the statutory purpose of the provision, in the facts and circumstances of
the case before them, requires a special rule of attribution to be fashioned.49
93. This departure, however, is perhaps best understood as a response to the
nature of the provision before the courts. As discussed above, while the
purpose of a narrow provision may be readily ascertained, the same
45 ¶ 119 & 174 of the Crown Court Decision.
46 ¶ 126 of the Crown Court Decision.
47 ¶ 3.86 Law Commission, Corporate Criminal Liability: An Options Paper 43 (2022).
48 ¶ 183 of the Crown Court Decision.
49 Id.
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exercise proves considerably more difficult in respect of a broad provision
such as section 2 of the Fraud Act 2006, which is capable of being applied
across a wide and varying range of circumstances. Viewed in this light, the
courts’ approach may be seen as devising a workable mechanism for
undertaking the special rule inquiry in precisely those cases where the
breadth of the statute renders the identification of a single purpose an
unworkable exercise.
94. This detailed examination of the Barclays cases (supra) has been
undertaken because of its considerable significance. It marks the first
occasion in which English courts grappled with corporate criminal liability
under a broad, general offence, rather than a narrow regulatory statute.
Understanding how the courts dealt with the issues accordingly offers
valuable guidance for the question before us, particularly given the limited
body of Indian jurisprudence on this aspect. The significance of Barclays
cases (supra) is further borne out by the fact that English law has since
undergone material change, albeit through legislative reform. This change,
to some extent, can be traced to the decisions in the Barclays cases (supra).
Let us very briefly look at the present position under English law.
(d) Developments in law post Barclays
95. In November 2020, the Law Commission of England and Wales was asked
to review the law on corporate criminal liability, and it published its
options paper on the subject in 2022. The options paper recorded a wide
variety of criticism directed at the identification doctrine, both in the form
in which it had traditionally applied and in the narrower form it had come
to assume in the wake of the Barclays cases (supra),50 and accordingly set
out to examine possible alternatives to it. Three alternative models were
considered.51
50 Supra note 47 at ¶ 3.63 - 3.85 (pages 39-43).
51 The scope of the Options Paper was considerably wider. It considered a range of other aspects of
corporate criminal liability, including “failure to prevent” offences, liability of directors and senior
managers, and sentencing of non-natural persons. Our focus here remains confined to the alternatives
discussed to the identification doctrine.
Criminal Appeal No. 4250 of 2026 Page 50 of 98
96. One model considered by the options paper was respondeat superior, the
doctrine which forms the primary basis of corporate criminal liability in
the federal courts, and in most state courts, of the United States. Under this
doctrine, a company may be held criminally liable for the acts of its
employees and agents where the offence is committed within the scope of
their employment and is motivated, at least in part, by an intent to benefit
the corporation.52 The company need not have actually gained from the
act. It suffices that the act was intended to be favourable to the company’s
interests, even where the employee’s primary motivation was personal
gain.53 The doctrine draws no distinction on the basis of seniority, and
applies to employees of any level, provided they were acting broadly
within the scope of their role.54 Consequently, respondeat superior makes it
considerably easier to convict a company for the acts of its more junior
employees than the identification doctrine does.
97. Respondeat superior is often described as a species of vicarious liability,
though it may equally be argued that it is not vicarious liability at all, but
rather an independent mode of attribution, a distinction that, on closer
examination, comes close to collapsing.55 What is significant, however, is
that respondeat superior is not used in criminal law to attribute liability as
between natural persons, since it is difficult to see how the acts of one
natural person could simultaneously be regarded as the acts of another.56
98. Another model considered by the options paper drew on statutory
reforms undertaken in Australia and Canada. The federal criminal codes
of both countries have rules for attributing responsibility to corporations,
and these rules specifically cover attribution of acts of senior managers.
Under the Commonwealth Criminal Code of Australia, liability may
attach where a ‘high managerial agent’ of the corporation engaged in,
52 Supra note 47 at ¶ 5.1 – 5.12 (pages 62-64); Also see Supra note 3 at 79-100.
53 Id.
54 Id.
55 Id.
56 Id.
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authorised, or permitted the relevant conduct.57 Under the Canadian
Criminal Code, liability may similarly attach on the basis of the acts and
state of mind of a ‘senior officer’, defined as a representative who plays an
important role in establishing the organisation’s policies or in managing a
significant aspect of its activities, and, in the case of a body corporate,
expressly includes its directors, chief executive officer, and chief financial
officer.58
99. The last model considered by the options paper was the corporate culture
model, which departs altogether from the structure common to the other
models of attribution. Rather than asking whose mind and will is to stand
for the corporation’s, the corporate culture model looks instead for
corporate analogues to the fault elements, and asks whether the
corporation’s own culture, policies, and practices were such as to have
encouraged, permitted, or licensed the conduct in question.59 Such an
approach has been adopted in Australia.60
100. Having considered each of these models, the options paper rejected both
the doctrine of respondeat superior and the corporate culture model as a
basis for reform in England and Wales. For offences requiring a fault
element, it concluded that the choice lay between two options: retaining
the identification doctrine as it presently stands, or allowing conduct to be
attributed to a corporation where a member of its senior management
engaged in, consented to, or connived in the offence.61 Senior management
was defined as any person playing a significant role in managing or
organising the whole, or a substantial part, of the organisation’s
activities.62 It further considered a variant of this second option, under
57 Id at ¶ 4.7 – 4.11 (pages 46-47).
58 Id at ¶ 4.12 – 4.15 (pages 47-48).
59 Id at ¶ 6.1 – 6.2 (page 73).
60 Id at ¶ 6.3 – 6.9 (page 73-74).
61 Id at ¶ 7.4 -7.6 (pages 84-85).
62 Id.
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which the organisation’s chief executive officer and chief financial officer
would always be treated as members of senior management.63
101. The option allowing for attribution via senior management was first
implemented through the Economic Crime and Corporate Transparency
Act 2023. This Act introduced corporate liability where a senior manager
committed an offence within the scope of their actual or apparent
authority. The Act was limited in scope to economic crime offences only,
and it was acknowledged that wider reform was needed to extend such a
route of attribution to all crimes. This was achieved through Section 250 of
the Crime and Policing Act 2026, which introduces the same basis for
attribution across all offences. Under Section 250, a ‘senior manager’ is
identified not by job title, but by the extent of their managerial influence
within the organisation, that is, whether they play a significant role in
decisions concerning the whole, or a substantial part, of the body
corporate’s activities.
102. The changes effected by these two enactments have, on the whole, been
welcomed. Some criticism, however, persists.64 Chief among these is that
the identification doctrine, even in its extended form, remains rooted in a
strictly individualist conception of corporate fault. In other words, it
requires that a single natural person within the company be identified who
possessed the necessary mens rea before the company itself can be held
liable.65 In the case of larger companies, it may not be possible to locate any
single individual who possessed that mental state in full.66 The relevant
knowledge and intent may instead be dispersed across several employees,
none of whom individually satisfies the fault element.67
63 Id.
64 Jeremy Horder, Corporate Criminal Liability Under the Economic Crime and Corporate Transparency Act
2023, 45 Legal Stud. 133 (2025).
65 Alexander Sarch, Collective Knowledge and the Limits of the Expanded Identification Doctrine, 44 Oxford J.
Legal Stud. 920 (2024).
66 Id.
67 Id.
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103. One further aspect deserves recognition. As Davis LJ observed in the High
Court decision in Barclays, if the underlying policy objective is to make
corporations easier to prosecute, it falls to the legislature, and not the
courts, to bring about that change.68 As the discussion above shows, the
legislatures in the UK seem to be adhering to that advice.69
(e) Summary
A summary of our discussion on corporate criminal liability and
attribution under English law is as follows:
104. Corporate criminal liability under the English law developed slowly. The
first inroads came through liability for breach of duties imposed on
corporations by charter or statute, whether by omission or by positive act.
The rationale seemed that since a duty was owed by the corporation itself,
it alone could be held liable for breach of such duty. Alongside this direct
route, a second route developed through vicarious liability, principally to
address offences of strict or absolute liability. Vicarious liability, however,
had no application where an offence required mens rea, since English
criminal law did not permit a principal to be fixed with the state of mind
of its agent.
105. By the 1950s, it had come to be accepted that a corporation could be held
liable even for offences requiring mens rea. What remained unclear was the
basis on which this was possible. Clarity came only with the House of
Lords decision in Tesco Supermarkets (supra), which drew upon its own
earlier decision in Lennard's Carrying (supra). The basis established by
these two decisions is that certain persons within a company, when they
act, do not act merely as its agents, but as the company itself. Their acts are
accordingly the company’s own acts, and their state of mind is the
company’s own state of mind.
68 ¶ 103, Serious Fraud Office v. Barclays PLC & Anr, [2018] EWHC 3055 (QB).
69 See Mark Dsouza, The Corporate Agent in Criminal Law – An Argument for Comprehensive Identification,
79 Cambridge L.J. 91, 95 (2020).
Criminal Appeal No. 4250 of 2026 Page 54 of 98
106. The question of whose acts should be considered as the company’s own,
thereby rendering it liable for offences requiring mens rea, proved more
tricky. In Tesco Supermarkets (supra), the House of Lords envisaged two
kinds of persons whose acts should be treated as those of the company.
The first were those who, by virtue of their position within the company,
could be said to embody it. The second were those to whom power had
been delegated, regardless of their formal position, to act on the
company’s behalf with full discretion and independence. This process of
identifying those persons who, when they act, act as the company itself
has since come to be known as the identification doctrine
107. Lord Hoffmann, in Meridian Global (supra), offered a different framework
for answering this question. He cautioned against looking for a company's
‘directing mind and will’, or its metaphorical ‘brain’ in abstraction and
instead held that the answer was to be found by applying what he termed
the rules of attribution. These rules of attribution, discussed in greater
detail at paragraph 57 of this judgment, are three in number. Put simply,
the primary rules of attribution look to the company’s constitutional
documents, and ask whose acts those documents themselves treat as the
company’s own. The general rules of attribution are the ordinary rules of
agency that apply to natural persons, and ask whose acts should, on
account of such ordinary principles, count as the company’s. The special
rules of attribution, finally, look to the particular statutory provision in
question, and ask, having regard to its purpose, whose acts the provision
intends should count as the company’s. Lord Hoffman envisaged the
special rules of attribution, not as a default starting point, but as those rules
which come into play where the answer yielded by the primary or general
rules of attribution would defeat the purpose of the statute in question.
108. A related question is how the identification doctrine and the rules of
attribution frameworks differ from one another. Though the two appear
to proceed differently, they are, in substance, directed at the same
underlying question, i.e., whether the act and state of mind of the
Criminal Appeal No. 4250 of 2026 Page 55 of 98
concerned person should be considered as the act and state of mind of the
company. The identification doctrine asks whether the person concerned
is acting as an embodiment of the company. The rules of attribution, by
contrast, ask whether the act done by that person would count as the act of
the company. The difference is one of form and not of substance.
109. However, doubts persisted on how the identification doctrine envisaged
under Tesco Supermarkets (supra) and the rules of the attribution
framework envisaged by Lord Hoffman in Meridian Global (supra) would
operate together. The decisions in the Barclays cases (supra) bring some
clarity on this aspect. The courts in the Barclays cases (supra) held that the
prevailing test remains that laid down in Tesco Supermarkets (supra) and
only where consideration of the statute creating the offence in question
pointed to a different, and perhaps broader, approach that Meridian
Global (supra) would come into play. This might appear to sit uneasily
with the Crown Court’s further finding that there is no “true
identification” principle, just a hierarchy of primary, general and special
rules derived from Meridian Global (supra), which govern attribution in
criminal cases as well. However, the tension is resolved when we
understand that the courts did not treat the identification doctrine
envisaged in Tesco Supermarkets (supra) as being outside the framework
laid down in Meridian Global (supra). Instead, they seem to treat the
identification doctrine as envisaged in Tesco Supermarkets (supra) as being
covered within the primary and general rules of attribution. Thereby
treating Meridian Global’s (supra) true contribution as allowing for special
rules to be fashioned.
110. The court in Barclays cases (supra) recognised that the directing mind
and will of a company need not vest in the same person for every
transaction, and that the correct approach is to ask, for the transaction in
question, whose acts are to count as the company’s own. How this
question was to be answered, however, differed at each stage of the
Criminal Appeal No. 4250 of 2026 Page 56 of 98
inquiry. The Barclays cases (supra) envisaged each of the stages in the
following manner:
a. At the primary stage, the courts asked in whom the company’s
constitutional documents vested the relevant power, or, where
delegation was permitted, to whom such power had in fact been
delegated;
b. At the general stage, the courts asked whether implied delegation
had conferred on the person concerned the authority to act on the
company’s behalf in respect of the transaction in question; and
c. At the special stage, the courts considered whether the statutory
purpose, on the facts and circumstances of the case, permitted a
special rule of attribution to be fashioned.
Applying this sequential test to the facts, the courts in Barclays cases
(supra) held that the actions of the persons concerned could not be
attributed to the company.
111. Two aspects of the approach taken by the courts in Barclays cases (supra)
are worth noting, as they mark a departure from the position under Tesco
Supermarkets (supra) and Meridian Global (supra) respectively. First,
status alone could no longer allow for attribution, i.e., even the acts of
senior officials required proof of authority, thereby marking a departure
from the way the ruling in Tesco Supermarkets (supra) was applied in
practice. Second, in considering whether a special rule of attribution ought
to be fashioned, the courts asked whether the statutory purpose of the
provision demanded such a rule in the facts and circumstances of the case
before them, rather than, as Lord Hoffmann had asked in Meridian Global
(supra), whether the statutory purpose demanded it in the abstract.
112. To the extent that the Barclays cases (supra) further narrowed the scope of
attribution by discarding the status based route, the legislature responded
by creating statutory provisions extending attribution to senior managers,
Criminal Appeal No. 4250 of 2026 Page 57 of 98
without requiring proof of the kind of authority Barclays cases (supra) had
insisted upon. This route was first introduced for economic crime offences
alone. However, the Crime and Policing Act 2026 has extended the same
to all criminal offences.
113. Lest any confusion arise, it must be understood that the framework
discussed above, comprising the identification doctrine and the rules of
attribution, does not govern every criminal offence in which a corporation
may be implicated under English law. As we had alluded to, where an
offence requires proof of conduct alone, and no mens rea, simpler routes to
liability are generally available. In some cases, the company alone can
properly be said to have done the act in question, such that no attribution
is required at all. This may be so either because the offence imposes a duty
on the company directly, or because the conduct in question can be
conceived as having been done by the company itself.70 Where the act
admits of no such direct characterisation, but neither does the offence
require mens rea, English courts have generally been willing to read in a
presumption of vicarious liability, particularly for offences of strict or
absolute liability.71 It is only where an offence has been framed with
natural persons in mind, and requires proof of mens rea, that the
identification doctrine seems to come into play.
III. CORPORATE CRIMINAL LIABILITY AND THE ATTRIBUTION QUESTION:
POSITION IN INDIA
114. The core issues surrounding corporate criminal liability in India appear to
be twofold: first, whether a corporation could be prosecuted for an offence
where mandatory imprisonment has been prescribed; and secondly,
whether a corporation could be held liable for offences involving an
element of mens rea. The traditional view, as held by various High Courts
for a considerable period, answered both propositions in the negative.
70 Supra note 47 at ¶ 2.28 – 2.29 (pages 18-19).
71 Id.
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115. It appears that the reasoning underlying this traditional view was rooted
in the fact that a corporation is a juristic person and not a natural person.
Accordingly, it was held that since a corporation does not possess a
physical body, it cannot be imprisoned, and consequently, provisions
prescribing mandatory imprisonment were inapplicable.72 Similarly, since
a juristic person cannot possess a state of mind, it cannot possess mens rea
and thereby could not be held liable for offences requiring mens rea.73 It
may, however, be noted that on both these aspects, certain High Courts
had taken a contrary view.74
(a) Issue of Mandatory Imprisonment
116. Let us first briefly deal with the issue of mandatory imprisonment, as the
position on that aspect is now fairly settled. This court addressed the
question directly in M.V. Javali v. Mahajan Borewell & Co. & Anr,
reported in (1997) 8 SCC 72. The provision under consideration there was
from the Income Tax Act, which provided that a company could be held
liable for the offence in question, yet simultaneously prescribed a
mandatory punishment of both imprisonment and fine. This gave rise to
an anomalous situation as a juristic person, incapable of being imprisoned,
could nonetheless be found guilty of an offence for which imprisonment
was mandatory. The Court held that this anomaly could only be resolved
through a proper interpretation of the section, and that the only
harmonious construction available was one under which the company,
though liable to be prosecuted, would be made liable to a fine alone.75 The
72 See Kusum Products Ltd v. S.K Sinha, (1980) 126 ITR 804; Adding Machines India (Pvt) Ltd. v. The
State, (1987) 167 ITR 171; ¶ 100, 104-105, D.C. Goel & Ors v. B.L. Verma & Ors, (1974) 93 ITR 63; A.K
Khosla & Ors v. T.S.Venkatesan, 1991 SCC OnLine Cal 225; ¶ 64 Shree Singhvi Brothers & Ors v. Union
of India & Ors, (1991) 187 ITR 219; ¶ 11, S.M. Badsha v. Income Tax Officer, (1987) 16 ITR 332; P.V Pai
v. R.L Rinawma, (1993) 200 ITR 717.
73 See Sunil Chandra Banerjee v. Krishna Chandra Nath, 1948 SCC OnLine Cal 149; Kusum Products
Ltd v. S.K Sinha, (1980) 126 ITR 804; A.K Khosla & Ors v. T.S.Venkatesan, 1991 SCC OnLine Cal 225.
74 On the issue of Mens rea, see State of Maharashtra v. Syndicate Transport Co. (P) Ltd., 1963 SCC
OnLine Bom 57; A.D. Jayaveerapandia Nadar & Co. v. Income-Tax Officer, (1975) 101 ITR 390; and
Esso Standard Inc v. Udharam Bhagwandas Japanwalla, 1973 SCC OnLine Bom 56. On the issue of
mandatory imprisonment, see ITO v. Jyothi Coconut Merchants, [1991] 187 ITR 246; MCD v. J.B
Bottling Co. (P) Ltd., 1975 SCC OnLine Del 47; Oswal Vanaspati & Allied Industries v. State of U.P.,
(1992) 75 Comp Cas 770.
75 See ¶ 7-8.
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upshot of the Court’s ruling was that where a statute prescribes both fine
and imprisonment for an offence, companies could be prosecuted for such
offences but only a fine would be imposed on them.
117. However, in Assistant Commissioner, Assessment-II, Bangalore & Ors v.
Velliappa Textiles Ltd. & Anr, reported in (2003) 11 SCC 405, a 3-Judge
Bench of this Court came to a different conclusion on the issue of whether
prosecution is sustainable against a company for offences where a
sentence of imprisonment is mandatory. Here too, the Court was dealing
with provisions of the Income Tax Act which prescribed a mandatory
punishment of both imprisonment and fine. Srikrishna J. and Rajendra
Babu J. (as he then was), in the majority on this issue, answered in the
negative. Pithily put, the reasoning adopted by the majority was as
follows:
a. First, criminal statutes have to be strictly construed and that, where
the legislature has not conferred any discretion in the matter of
sentencing and has prescribed a mandatory punishment, it is not
open to the Court to read down that punishment to a fine alone,
for that would amount to a virtual rewriting of the statute76;
b. Secondly, the situation was not one of interpretational exercise but
one that calls for rectification of an error in the drafting of the
statute concerned. Thus, if the legislature has left a lacuna, it was
not open to the Court to supply the omission based on some
presumed legislative intention77.
Mathur, J., however, dissented on this issue, holding that the mere fact
that a company cannot be sent to jail cannot lead to an inference that it
should not be prosecuted at all.78 An appropriate fine, itself one of the
76 See ¶ 39-49 & 57-58 .
77 Id.
78 See ¶ 14-22.
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punishments provided under the relevant sections, could be imposed
instead.
118. The issue was finally resolved by this Court’s ruling in Standard Chartered
Bank (supra), wherein, by a majority of 3:2, it was held that there is no
immunity to the companies from prosecution merely because the
prosecution is in respect of offences for which the punishment prescribed
is mandatory imprisonment (and fine). The decision in Velliappa Textiles
(supra) on this aspect was accordingly held to be overruled. It needs to be
noted that the Court recognised that where imprisonment alone is
prescribed, a company cannot be prosecuted for that offence and thus the
ruling was confined to provisions prescribing a mandatory punishment of
both imprisonment and fine.
119. The crux of the majority’s reasoning was: (i) all statutes, including penal
statutes, ought to be fairly construed according to the legislative intent as
expressed in the enactment; (ii) reading the provision as granting
companies blanket immunity wherever imprisonment is mandatory
would produce the anomalous result that companies remain liable for
lesser offences, while escaping liability altogether for graver ones- a result
Parliament could not have intended; and (iii) since imprisonment cannot
possibly be imposed on a company and the law does not compel the
impossible, a judicial discretion to impose fine alone has to be read into
such provisions, but only insofar as the offender is a juristic person. This
reasoning is reflected in the following paragraphs from Justice K.G.
Balakrishnan’s (as he then was) opinion:
“29. The contention of the appellants is that when an offence is
punishable with imprisonment and fine, the court is not left with any
discretion to impose any one of them and consequently the company
being a juristic person cannot be prosecuted for the offence for which
custodial sentence is the mandatory punishment. If the custodial
sentence is the only punishment prescribed for the offence, this plea is
acceptable, but when the custodial sentence and fine are the prescribed
mode of punishment, the court can impose the sentence of fine on a
company which is found guilty as the sentence of imprisonment is
impossible to be carried out. It is an acceptable legal maxim that law
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does not compel a man to do that which cannot possibly be performed
(impotentia excusat legem). This principle can be found in Bennion's
Statutory Interpretation, 4th Edn. at p. 969. “All civilized systems of
law import the principle that lex non cogit ad impossibilia….” As
Patterson, J. said “the law compels no impossibility”. Bennion
discussing about legal impossibility at p. 970 states that: “If an
enactment requires what is legally impossible it will be presumed that
Parliament intended it to be modified so as to remove the impossibility
element.” This Court applied the doctrine of impossibility of
performance (lex non cogit ad impossibilia) in numerous cases (State of
Rajasthan v. Shamsher Singh and Special Reference No. 1 of 2002, In
re)
30. As the company cannot be sentenced to imprisonment, the court has
to resort to punishment of imposition of fine which is also a prescribed
punishment. As per the scheme of various enactments and also the
Penal Code, 1860, mandatory custodial sentence is prescribed for
graver offences. If the appellants' plea is accepted, no company or
corporate bodies could be prosecuted for the graver offences whereas
they could be prosecuted for minor offences as the sentence prescribed
therein is custodial sentence or fine. We do not think that the intention
of the legislature is to give complete immunity from prosecution to the
corporate bodies for these grave offences. The offences mentioned under
Section 56(1) of the FERA Act, 1973, namely, those under Section 13;
clause (a) of sub-section (1) of Section 18; Section 18-A; clause (a) of
sub-section (1) of Section 19; sub-section (2) of Section 44, for which
the minimum sentence of six months' imprisonment is prescribed, are
serious offences and if committed would have serious financial
consequences affecting the economy of the country. All those offences
could be committed by company or corporate bodies. We do not think
that the legislative intent is not to prosecute the companies for these
serious offences, if these offences involve the amount or value of more
than Rs one lakh, and that they could be prosecuted only when the
offences involve an amount or value less than Rs one lakh.
31. As the company cannot be sentenced to imprisonment, the court
cannot impose that punishment, but when imprisonment and fine is the
prescribed punishment the court can impose the punishment of fine
which could be enforced against the company. Such a discretion is to be
read into the section so far as the juristic person is concerned. Of course,
the court cannot exercise the same discretion as regards a natural
person. Then the court would not be passing the sentence in accordance
with law. As regards company, the court can always impose a sentence
of fine and the sentence of imprisonment can be ignored as it is
impossible to be carried out in respect of a company. This appears to be
the intention of the legislature and we find no difficulty in construing
the statute in such a way. We do not think that there is a blanket
immunity for any company from any prosecution for serious offences
merely because the prosecution would ultimately entail a sentence of
Criminal Appeal No. 4250 of 2026 Page 62 of 98
mandatory imprisonment. The corporate bodies, such as a firm or
company undertake a series of activities that affect the life, liberty and
property of the citizens. Large-scale financial irregularities are done by
various corporations. The corporate vehicle now occupies such a large
portion of the industrial, commercial and sociological sectors that
amenability of the corporation to a criminal law is essential to have a
peaceful society with stable economy.”
[Emphasis Supplied]
On the other hand, Srikrishna J.’s dissent (for himself and Hegde J.) carried
forward the position the majority held in Velliappa Textiles (supra), i.e.,
the problem was one of legislative drafting error rather than genuine
ambiguity, and hence was curable only by Parliament and not by judicial
construction.79
120. Further, this Court in Standard Chartered Bank (supra) affirmed that: (i)
the generally accepted modern rule permits a corporation to be indicted
for criminal offences save those it is incapable of committing by reason
that such offences require personal malicious intent80, and (ii) the word
“person” in a penal statute is ordinarily construed to include a corporation
even where not expressly defined to do so.81 However, the Court expressly
declined to express any opinion on whether a corporation could be held
liable for offences requiring mens rea, holding that the question did not
arise for consideration in the reference before it.82
(b) Issue of Mens Rea
121. While the question of whether a corporation could be prosecuted for
offences carrying mandatory imprisonment reached a closure, the
question of whether a corporation could be held liable for offences
requiring mens rea remained open. This was despite the fact that this Court,
as far back as 1953, had in passing taken note of developments in English
79 See ¶ 58-79.
80 See ¶ 6.
81 See ¶ 7.
82 See ¶ 8.
Criminal Appeal No. 4250 of 2026 Page 63 of 98
law recognising that a company could be convicted even for an offence
requiring an act of will or a state of mind.83
122. As remarked above, most High Courts had followed the traditional view
that a corporation couldn’t be held liable for offences which required proof
of mens rea. However, there are some High Court decisions which held to
the contrary. It would be trite to briefly examine the approach that was
envisaged in these cases. In the State of Maharashtra v. Syndicate
Transport Co. (P) Ltd., reported in 1963 SCC OnLine Bom 57, the Bombay
High Court was directly concerned with the liability of a corporate body
for criminal offences involving mens rea. After examining the position
under English law, the Court made the following observations:
“23. In our country also, corporate bodies were initially indictable for
minor breaches of rules or bye-laws or for offences involving petty fines
only. In recent times, the ideas of corporate activities have taken root
and several legislations permitting the formation of corporate bodies
have been passed. Numerous corporate bodies have come into existence.
These corporate bodies include various public and private limited
companies also. These corporate bodies necessarily act through the
human agency of their directors or officers and authorised agents. They
reap all the advantages flowing from the acts of their directors, servants
or authorized agents and there seems to be no reason to exempt them
from liability for crimes committed by their agents or servants while
purporting to act for or on behalf of the corporate bodies. The ordinary
citizen, is now very much exposed to the activities of persons acting, in
the name of corporate bodies, to his detriment[...]
24. In my view, therefore, “the scope within which criminal proceedings
can be brought against institutions which has become so prominent a
feature of everyday affairs” ought to be widened so as to make corporate
bodies indictable for offences flowing from the acts or omissions of their
human agents. Ordinarily, a corporate body like a company acts
through its managing director or board of directors or authorized agents
or servants and the criminal act or omission of an agent including his
state of mind, intention, knowledge or belief ought to be treated as the
act or omission including the state of mind, intention, knowledge or
belief of the company. I do not mean or intend to suggest that in every
case where an agent of a limited company acting in its business commits
a crime, the company is automatically to be held criminally responsible.
As adumbrated, a company cannot be indictable for offences like
83 Motipur Zamindari Co. Ltd. v. State of Bihar, (1953) 1 SCC 756.
Criminal Appeal No. 4250 of 2026 Page 64 of 98
bigamy, perjury, rape etc. which can only be committed by a human
individual or for offences punishable with imprisonment or corporal
punishment. Barring these exceptions, a corporate body ought to be
indictable : for criminal acts or omissions of its directors, or authorized
agents or servants, whether they involve mens rea or not, provided they
have acted or have purported to act under authority of the corporate
body or in pursuance of the aims or objects of the corporate body. The
question whether a corporate body should or should not be liable for
criminal action resulting from the acts of some individual must depend
on the nature of the offence disclosed by the allegations in the complaint
or in the charge-sheet, the relative position of the officer or agent vis-avis
the corporate body and the other relevant facts and circumstances
which could show that the corporate body, as such, meant or intended
to commit that act, Each case will have necessarily to depend on its own
facts which will have to be considered by the Magistrate or Judge before
deciding whether to proceed against a corporate body or not.”
[Emphasis Supplied]
123. On facts, the Bombay High Court ultimately discharged the Company for
reasons which do not concern our discussion here. The above
observations, however, remain instructive for two reasons. First, the Court
accepted, as a matter of principle, that a corporate body can, and ought to,
be held liable for offences requiring mens rea. This conclusion was
supported by the Court’s recognition that there exist circumstances in
which the criminal act of an agent, including his state of mind, ought to be
treated as the act and the state of mind of the company itself. Second, and
more significantly, the Court went on to lay down the conditions
governing when such attribution of acts and state of mind of the agent to
the company would take place. As a threshold matter, the agent must have
acted, or purported to act, under the authority of the corporate body or in
pursuance of its aims and objects. Once this threshold is met, whether the
acts and states of mind are in fact attributable to the company is a further
question to be answered on a case-to-case basis, having regard to the
nature of the offence, the relative position of the officer or agent, and other
facts capable of showing that the corporate body itself meant or intended
the act.
Criminal Appeal No. 4250 of 2026 Page 65 of 98
124. In A.D. Jayaveerapandia Nadar & Co. v. Income-Tax Officer, reported in
(1975) 101 ITR 390, the Madras High Court was dealing with a case against
a partnership firm and individual partners of the said Firm for the offence
of making a false verification. They were accused of offences under Section
277 of the Income Tax Act, 1961 r/w Section 34 of the IPC. The Madras
High Court, after discussing certain important cases, both under English
and Indian Law, on the issue of corporate criminal liability, made the
following pertinent observations:
“75. The law on the subject can be summarised as follows:
A corporation could not be subjected to bodily punishment.
It could, however, be fined; and to this day fine remains the
only mode of punishment applicable to a corporation. Since
fine only is the type of punishment appropriate to a
corporation, if a crime is not punishable with fine, a
corporation cannot be convicted of it. The acts of the organs
of the corporation were attributed to the corporation and
treated for legal purposes as though they were acts of the
corporation itself. However, when will an act or mental
strain be imputed to a company as its own, is a question that
has to be considered by a court, depending upon the facts and
circumstances of each case. A company can commit crimes
only by its agents, who must themselves be responsible for
the crime, and it is a question in each case whether the act of
the agent, including his state of mind, intention, knowledge
or belief can be imputed to the corporation. It depends upon
the nature of the charge, the position of the officer or agent
relative to the corporation and the other relevant facts and
circumstances of the case.
76. A company cannot be guilty of any criminal offence which, by their
very nature, can only be committed by natural persons (such as
bigamy), nor of those which cannot be committed vicariously (such as
perjury, bigamy, rape, homicide, etc.). A company cannot be indicted
for a crime where the only punishment is death or imprisonment. A
company may be guilty both of statutory and common law offences (of
course in exceptional cases in respect of common law offences), even
though the latter involves mens rea. A corporation can be indicted for
contempt and libel.
77. Wherever a duty is imposed by statute in such a way that a breach
of the duty amounts to a disobedience of the law, then if there is nothing
in the statute either expressly or impliedly to the contrary, a breach of
Criminal Appeal No. 4250 of 2026 Page 66 of 98
the statute is an offence for which a corporation will be indicted,
whether or not the statute refers in terms to corporations.
78. A statute which creates a criminal offence may expressly or by
necessary implication define the particular state of mind which is an
element of offence or it may be silent on this point. It is of utmost
importance to the protection of the liberty of the subject and of the
corporation or company to which such state of mind is imputed by
fiction that a court shall always bear in mind that unless a statute either
clearly or by necessary implication rules out mens rea as a constituent
part of a crime, the court should not find a man guilty of an offence
against the criminal law unless that person has a guilty mind. This
principle will apply to the corporations also.
79. Applying those principles to the facts of this case and on the finding
that accused 2 had submitted a false return knowing or believing such
return to be false, accused 1-company will also be liable for the offence
as such knowledge or belief can be imputed to accused 1-company. In
the result, the conviction of accused 1 under charge No. 1 for an offence
under section 277 of the Income-tax Act and that of accused 2 under
charges Nos. 2 and 3 for offences punishable under section 277 of the
Income-tax Act read with section 34, Penal Code, 1860, are
confirmed,[...].”
[Emphasis Supplied]
125. The following principles emerge from the Court’s reasoning. First,
wherever a statute imposes a duty in such a manner that its breach
amounts to disobedience of the law, the breach is an offence for which a
corporation can be indicted. This holds true whether or not the statute
explicitly refers to corporations, provided there is nothing to the contrary
stated in the statute. Consequently, a corporation may be guilty of an
offence even where mens rea is an ingredient of that offence. Second, unless
a statute, expressly or by necessary implication, rules out mens rea as a
constituent of the offence, a corporation cannot be held guilty of that
offence without proof of a guilty mind. Third, where mens rea is an
ingredient of the offence, criminal liability will attach only where the act
and state of mind of an agent or employee can be imputed to the
corporation as its own. Whether this is so is a question to be determined
on the facts of each case, having regard to the nature of the charge, the
relative position of the officer or agent, and the other relevant facts and
Criminal Appeal No. 4250 of 2026 Page 67 of 98
circumstances. Applying these principles, the Court attributed the act of
the managing partner knowingly submitting a false return to the firm and
accordingly held the firm liable under Section 277 of the Income Tax Act,
1961 read with Section 34 of the IPC.
126. A common thread runs through the decisions in Syndicate Transport
(supra) and A.D. Jayaveerapandia (supra). Both Courts envisaged
scenarios in which the act and state of mind of an agent could be attributed
to the company, and in such scenarios, held that the company could be
made liable even for offences requiring mens rea. Neither Court, however,
laid down any fixed test for when such attribution would occur. Instead,
both left the question to be determined on a case-to-case basis, depending
on the facts and circumstances of the cases and a variety of other factors.
127. The decision of the Bombay High Court in Esso Standard Inc. v. Udharam
Bhagwandas Japanwalla, reported in 1973 SCC OnLine Bom 56, arose
out of an application to quash a complaint of cheating instituted against a
company and four of its officers. While dealing with the question of
quashing, the Court also addressed the issue of whether a corporation
could be held guilty of offences requiring proof of mens rea. It looked into
the decision in Tesco Supermarkets (supra) and concluded that a new
method had been developed to hold companies liable for offences
requiring mens rea, namely, one which attributes to the company the
mental state of those who could be termed its directing mind and will.
128. On the question of how such a directing mind and will was to be
identified, the Bombay High Court was explicitly against the flexible, caseto-
case approach suggested in Syndicate Transport (supra) and, later, in
A.D. Jayaveerapandia (supra). It regarded that such a formulation ignored
the constitution of corporate bodies under the memorandum of
association and articles of association. Instead, it appears to us that the
Court envisaged that attribution could occur either where the officer
concerned had acted within the limits of authority conferred by the
company, or where the company’s intention had been expressed in the
Criminal Appeal No. 4250 of 2026 Page 68 of 98
manner required under its constitutional documents. Applying this test to
the complaint before it, the Court found that the averments disclosed
neither such authority nor the company’s intention as traceable through
its memorandum or articles of association. Thus, no basis for attribution
could be made out, and accordingly the complaint was quashed against
the company.
129. While the High Courts were dealing with the issue, it appears that, until
very recently, this Court never got an opportunity to explicitly deal with
the question of whether corporations could possess mens rea. A peripheral
reference to the issue comes through this Court’s judgment in Kalpnath
Rai v. State, reported in (1997) 8 SCC 732, where one of the accused was
a company which had been convicted under Section 3(4) of the Terrorist
and Disruptive Activities (Prevention) Act, 1987, for harbouring a terrorist
in a hotel. Section 3(4) was an offence which the Court held required proof
of mens rea. The Court thereby set aside the conviction of the Company on
the ground that, being a juristic person, it could not itself have mens rea. It
noted that companies are, under several penal statutes, deemed offenders
on the strength of acts committed by persons responsible for their
management or affairs, but observed that no such provision existed in
TADA. It appears to us, however, that this Court in Kalpnath Rai (supra)
was not addressed on the developments surrounding the issue of
attributing mens rea to corporations dehors such statutory deeming
provisions. A more serious and detailed consideration of the question
appears in Velliappa Textiles (supra).
130. This Court in Velliappa Textiles (supra) considered whether a corporation
could possess mens rea. Although the decision was subsequently overruled
in Standard Chartered Bank (supra), the reversal was confined to the
question of mandatory imprisonment. Indeed, this Court in Standard
Chartered Bank (supra), as already noted, categorically stated that the mens
rea issue was beyond the scope of the reference before it. In Velliappa
Textiles (supra), two of the three learned Judges accepted that a company
Criminal Appeal No. 4250 of 2026 Page 69 of 98
could be made liable for offences which require proof of mens rea. Mathur
J. surveyed the position under English law and other jurisdictions, all of
which clearly indicated that companies could be held liable even for
offences which require mens rea.84 Srikrishna J., for his part, held that
judicial thinking across the world was that the mens rea of the person in
charge of the affairs of the corporation could be extrapolated to the
corporation, thereby enabling even an artificial person to be prosecuted
for such offences.85 He expressed his agreement with the view taken by
Mathur J. on this aspect. Rajendra Babu J., however, disagreed with both
Mathur J. and Srikrishna J. on this question, and held that companies could
not be made liable for offences requiring proof of mens rea.86 The issue once
again came up for consideration before this Court in Iridium India (supra).
131. In Iridium India (supra), the appellant had filed a criminal complaint
against Motorola alleging cheating under Section 420 read with Section
120B of the IPC. The Bombay High Court quashed the complaint. One of
the grounds on which it did so was that Motorola, being a juridical person,
could not possess the intention to deceive, i.e., mens rea necessary for the
offence of cheating. In the High Court’s view, only a natural person was
capable of possessing the requisite guilty mind. According to the High
Court, the same reasoning would also apply in respect of the offence of
conspiracy.
132. It was in this setting that this Court in Iridium India (supra) was called
upon to decide whether a company could be held liable at all for an offence
requiring mens rea. Had the answer been in the negative, the High Court’s
approach would have stood vindicated. This Court, however, held that
virtually across every jurisdiction governed by the rule of law, companies
and corporate houses could no longer claim immunity from criminal
prosecution on the ground that they were incapable of possessing the
84See ¶ 10-13.
85 See ¶ 28.
86 See ¶ 54-56.
Criminal Appeal No. 4250 of 2026 Page 70 of 98
necessary mens rea.87 Having examined the position in the United States
and in England, the Court concluded that the legal position in both
jurisdictions had crystallised to leave no doubt that a corporation would
be liable for crimes of intent. On this basis, this Court held that the High
Court’s conclusion that the respondent could not have the necessary mens
rea was clearly erroneous.88
133. The discussion thus far makes clear that a corporation could be prosecuted
for an offence, notwithstanding that the offence carried a mandatory
sentence of imprisonment or that it required proof of mens rea.
Consequently, it appears that a corporation cannot be prosecuted only
where the offence was punishable with imprisonment alone or where the
offence, by its nature, required personal malicious intent, such that it was
incapable of commission by a corporation at all.
134. However, it is apparent that the question before this Court in Iridium
India (supra) was confined to whether a company could, at all, possess
mens rea. The question of how, or through whom, such mens rea is to be
attributed to a company did not arise for consideration. In other words,
the second question, i.e., the basis on which mens rea could be attributed to
a corporation, did not arise for consideration and remained unaddressed.
135. In Syndicate Transport (supra), A.D. Jayaveerapandia (supra), and Esso
Standard (supra), the High Courts had not confined themselves to the
question of whether a corporation could possess mens rea, but had also
gone on to consider the basis on which such mens rea could be attributed
to a corporation. Certain other, more recent decisions of the High Courts
have likewise engaged extensively with this question.89 However, this
Court is yet to squarely address this issue. Further, it appears that this
Court, as well as certain High Courts, while engaging with corporate mens
rea in the course of proceedings that did not directly concern the issue,
87 See ¶ 55-63.
88 See ¶ 64-66.
89 See, R.S. Sodhi & Anr v. Partha Pratim Saikia, 2009 SCC OnLine Gau 548; Samsung India Electronics
Pvt ltd v. State of Assam, 2012 SCC OnLine Gau 270.
Criminal Appeal No. 4250 of 2026 Page 71 of 98
have proceeded on the assumption that Iridium India (supra) had also laid
down the basis for attributing mens rea to a corporation.90 This assumption
appears to rest on the following observations made by this Court in
Iridium India (supra) :
“63. From the above it becomes evident that a corporation is virtually
in the same position as any individual and may be convicted of 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. The position of law on
this issue in Canada is almost the same. Mens rea is attributed to
corporations on the principle of “alter ego” of the company.”
[Emphasis Supplied]
136. In our considered view, this passage is properly read as an extension of
the Court’s discussion of the position under English law, rather than as an
independent pronouncement on how mens rea is to be attributed to a
corporation under Indian law. In any event, and as already noted above,
this Court in Iridium India (supra) was never concerned with the “how”
question, i.e. the second question, but only with the “whether” question,
i.e., the first question. Therefore, on this issue we find ourselves looking at
an empty vessel, yet to be filled.
(c) How do corporates possess mens rea under Indian Law
137. The discussion above shows that this Court relied upon practical
considerations and prevailing trends in judicial thinking across the world
to hold that corporations could possess mens rea, and could accordingly be
held liable for offences requiring proof of such mens rea. What remains is
to explain how a corporation could be said to possess such mens rea in the
first place. It is the answer to this question that supplies the theoretical
90 See Religare Finvest Limited v. State of NCT of Delhi and Another, (2024) 1 SCC 797; ¶37-41 Sunil
Bharti Mittal v. Central Bureau of Investigation, (2015) 4 SCC 609; ¶16.3, Ashok kumaran & Ors v.
State of Kerala and Another, 2023 SCC OnLine Ker 5146.
Criminal Appeal No. 4250 of 2026 Page 72 of 98
foundation for corporate mens rea. Now, when discussing how a
corporation can possess mens rea, the inquiry is invariably one of how the
mens rea of a natural person is to be attributed to a corporation. In
answering this question, we also find the answers to further connected
questions such as: (i) what is the kind of liability that such attribution
imposes on the corporation, and (ii) whose state of mind is to be attributed
to the corporation and in what circumstances.
138. The next question that arises is what method has to be adopted to attribute
the mens rea of a natural person to a corporation. At the outset, it is to be
noted that in several jurisdictions, the penal codes guide on when and how
attribution is to occur. As already noted above, the penal codes of Canada
and Australia, amongst others, provide such answers.91 No comparable
guidance exists in the IPC nor the recently enacted Bharatiya Nyaya
Sanhita, 2023.
139. In this context, we may look to the English approach to guide us. The
American approach, developed through the doctrine of respondeat superior,
bears a close resemblance to the doctrine of vicarious liability. The position
under Indian law, however, is well settled that the ordinary rule in
criminal law runs against vicarious liability, i.e., no person is to be held
criminally liable for the act of another.92 This rule admits exception only
where a statute specifically creates a legal fiction imposing such liability.
No such difficulty attends the approach taken under English law, since it
proceeds on the footing that the act and state of mind in question are those
of the corporation itself. Further, the decision in Meridian Global (supra)
has attained the status of a locus classicus on this aspect and has been
91 See Guy Stessens, Corporate Criminal Liability: A Comparative Perspective, 43 Int'l & Comp. L.Q. 493
(1994).
92 ¶9 Sham Sunder & Ors v. State of Haryana, (1989) 4 SCC 630; ¶ 32 R Kalyani v. Janak C. Mehta,
(2009) 1 SCC 516; ¶44-45 Sunil Bharti Mittal v. Central Bureau of Investigation, (2015) 4 SCC 609; ¶18
Aparna A. Shah v. Sheth Developers Private Limited, (2013) 8 SCC 71; ¶16, 19-20 S.K Alagh v. State of
Uttar Pradesh & Ors, (2008) 5 SCC 662; ¶13 Maksud Saiyed v. State of Gujarat & Ors, (2008) 5 SCC
668.
Criminal Appeal No. 4250 of 2026 Page 73 of 98
followed across a range of common law jurisdictions as the basis for
attribution.
(i) Attribution Framework
140. Technically speaking, a corporation has no knowledge or intention of its
own, being no more than a legal abstraction. Yet the converse is equally
true, as it is difficult, if not impossible, to conceive of a corporation as
existing and functioning in the commercial world without any knowledge
or intention whatsoever. It is to balance these two seemingly incompatible
positions that a middle ground has been reached: that of attributing to the
corporation the knowledge and intention of its agents. However, how can
such attribution occur, i.e., how can the state of mind of a natural person
become the state of mind of the corporation?
141. The English law approach, with which we are in agreement with, answers
this question in a simple manner. It holds that there are certain situations
in which a natural person, in doing a particular act, is to be regarded as
acting as the corporation itself, or, put another way, there are certain
situations in which the act of the natural person is to be regarded as the
act of the corporation itself. Seen either way, what is involved is the same
exercise: equating the natural person, or the natural person’s act, with the
corporation, such that the act and state of mind of the natural person in
doing that act are attributed to the corporation. However, as our
discussion of English law shows, considerable difficulty arises in
developing a framework capable of answering when such attribution is to
be permitted. It is to develop such a framework in the Indian context that
we now turn.
142. Before setting out the framework itself, it is necessary to say a brief word
on terminology. Our discussion of English law above reveals a certain
multiplicity of terms on this subject, whether described as the “directing
mind and will”, the “alter ego”, the “identification doctrine”, or the “rules
of attribution”. In our considered view, this multiplicity of terms causes
Criminal Appeal No. 4250 of 2026 Page 74 of 98
needless confusion. In substance, each of these expressions either
describes the person whose act and state of mind may be treated as that of
the corporation, or constitutes a doctrine directed at identifying such a
person. We therefore consider it preferable, rather than encumber the
framework with such terminology, to develop it around a single, simple
question: If X, a natural person, does an act while acting for a corporation,
in what circumstances is X’s act, and the state of mind accompanying it, to
be treated as the corporation’s own?
143. To answer this question, the sequential, hierarchical approach adopted in
Barclays cases (supra) finds favour with us. Thus, the inquiry under Indian
law will also proceed through three stages, movement to the next stage
occurring only where the preceding stage fails to establish that X’s act, and
the state of mind accompanying it, can be treated as that of the corporation.
The scope of each stage of this inquiry, broadly speaking, mirrors that of
each rule of attribution identified in Meridian Global (supra).
144. The first stage of this inquiry is the narrowest of the three in scope. This is
because it primarily involves examining the constitutional documents of
the corporation, i.e., the memorandum and articles of association, to
determine in whom they vest the power to do or undertake the act in
question. This stage is not, however, confined to what the constitutional
documents expressly provide. It also extends to certain rules which,
though not found in the constitutional documents, are implied by
company law itself, and which likewise identify whose doing of an act is
to be treated as the act of the corporation. Applied to the case of X, the
inquiry at this stage is thus: whether the constitutional documents vest X
with the power to do the act in question, or whether there exists a rule
implied by company law under which X’s doing of the act is to be treated
as the corporation acting itself. Where either is answered in the
affirmative, X’s state of mind in doing the act is treated as that of the
corporation.
Criminal Appeal No. 4250 of 2026 Page 75 of 98
145. This stage, however, will rarely furnish an answer on its own. As Lord
Hoffmann himself remarked in Meridian Global (supra), it is not always
possible for every decision and action of a company to be traced to what
is stated in its constitutional documents. Consider, for instance, a situation
where every act of the company required a board resolution before it could
be undertaken. Where the constitutional documents and the rules implied
by company law are silent as to X, it becomes necessary to ask whether the
power to do the act was nonetheless delegated to X. It is here that the
general rules of agency step in to supplement the first stage, and the
second stage of the inquiry requires an examination on these lines.
146. The second stage of inquiry proceeds on the footing that the question
posed at the first stage, namely, in whom the corporation vests the power
to do the act in question, is not necessarily confined to what the
constitutional documents provide. In most cases, we envisage this stage of
the inquiry as proceeding along the lines illustrated in Tesco Supermarkets
(supra) and Barclays cases (supra) i.e., examining whether the power to do
the act in question has been delegated, whether expressly or impliedly, to
X. Whether the delegation is express or implied, the same questions arise
for consideration at this stage: whether such delegation to X was
permissible; and what was the scope of such delegation.
147. Answering these questions becomes important for two reasons. First, if the
delegation was itself impermissible, it could not be said that the power to
do the act in question had validly vested in X. Second, even where
delegation to do an act was permissible, if X was left with no discretion or
independence in deciding how the act was to be done, it cannot again be
said that the power to do that act had vested in X. To illustrate, if the board
had delegated to X the power to sign the documents in a transaction, but
had already itself decided all the material terms of that transaction, it
cannot plausibly be argued that the power to conclude the transaction
vested in X. What we seek to convey is that, to vest the power to do an act
in X, delegation must be along the lines indicated in the speeches in Tesco
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Supermarkets (supra) i.e., delegation accompanied by discretion and
independence in the doing of that act. Absent such discretion and
independence, the delegation will not be regarded as vesting the power to
do the act in X, and X’s act, and the state of mind accompanying it, will not
be treated as that of the corporation.
148. On a close examination, it will be seen that the primary focus at both stages
is to identify in whom the power to do the act in question vested. At the
first stage, this is done through the lens of the constitutional documents;
at the second, through the lens of delegation. To put it in the terms
employed in Barclays cases (supra), what we are seeking to identify is in
whom the corporation vested the authority to do the act. The logic
underlying this exercise is straightforward: where it can be said that a
person has been vested with the authority to do the act by the corporation,
it is only natural that the act, and the state of mind accompanying it, be
treated as that of the corporation itself.
149. However, the narrowness inherent in both stages of inquiry is evident.
Whether the inquiry proceeds through the route of the constitutional
documents or through delegation, the net it draws around whose acts may
be considered the acts of the corporation is a limited one. This is because:
(i) the constitutional documents vest power in only a limited set of
persons, and (ii) the requirement that delegated authority be coupled with
discretion and independence is one that very few natural persons would
be able to satisfy, as for various practical reasons, corporations have come
to adopt increasingly layered and hierarchical structures of management
in the modern world. This narrowness is further exacerbated by two
related difficulties. First, it is not always easy to determine whether a
person, in doing a particular act, was acting within the authority conferred
upon them. The role that apparent authority would play in the criminal
context also remains unclear. Second, even where such authority can be
identified, doubts arise as to whether the commission of a criminal offence
could ever be said to fall within such scope of authority.
Criminal Appeal No. 4250 of 2026 Page 77 of 98
150. It is precisely to address the narrowness and rigidity of the first two stages
that a third stage of inquiry becomes necessary, one which introduces a
degree of flexibility by looking not merely inward, at where the
corporation itself has vested authority, but also outward, at the purpose of
the statute in question and the surrounding circumstances of the case.
Where X’s act cannot be brought within the first two stages, the third stage
requires the court to ask whether, for the purpose of the statutory
provision under which liability is sought to be imposed, a special rule of
attribution ought to be fashioned, treating X’s act, and the state of mind
accompanying it, as that of the corporation. This stage may play out in one
of the following two ways, depending on the nature of the statutory
provision in question:
a. First, where the statutory purpose is narrow and readily
identifiable, the court is to ask the question posed by Lord
Hoffmann: whose act (or knowledge, or state of mind) was for this
purpose intended to count as the act etc. of the corporation? As
Lord Hoffmann himself observed, the answer to this question is to
be found by applying the ordinary canons of interpretation, having
regard to the language of the provision, as well as its content and
policy. Applied to the case of X, the court would first ask whether
the purpose of the provision in question requires the fashioning of
a special rule of attribution at all. If it does not, X’s act, and the state
of mind accompanying it, cannot be attributed to the corporation.
If it does, the court would then ask whose act, for the purpose of
that provision, was intended to count as the act of the corporation,
and examine whether X falls within that class of persons.
b. Secondly, however, and as was rightly recognised in Barclays cases
(supra), there will be cases where the statutory purpose is broad. A
broad statutory purpose is capable of being applied across a wide
variety of circumstances. For this reason, its content is not easily
identifiable in the abstract, without reference to the facts of a given
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case. In such cases, the court ought not to ask, in the abstract,
whether the statutory purpose requires the fashioning of a special
rule of attribution. This is because the statutory purpose may not
require such a rule on one set of facts, while requiring it on another.
The appropriate inquiry, in such cases, is accordingly whether the
statutory purpose, applied to the facts and circumstances before
the court, calls for the fashioning of such a rule. Applied to the case
of X, the court would ask whether the statutory purpose, on those
facts and circumstances, requires a special rule of attribution
treating X’s act, and the state of mind accompanying it, as that of
the corporation.
151. It bears emphasis that fashioning a special rule of attribution at the third
stage does not involve invoking an exceptional or extraordinary judicial
function. It is simply the product of ordinary statutory construction,
applied to determine whose act, and the state of mind accompanying it, a
provision intends to treat as the corporation’s own.
(ii) Necessary clarifications
152. Some clarifications are necessary to read the framework laid down above
in its proper sense. First, even where the test prescribed at a given stage of
the inquiry is satisfied, it does not follow that attribution must, for that
reason alone, take place. It remains open to contend, at any stage of the
inquiry, that attribution ought not to follow having regard to the
circumstances in which the question arises. Even where the constitutional
documents vest the relevant power in X, or X has been validly delegated
authority, the corporation may still contend, having regard to the
circumstances in which attribution is sought, that X’s act should not be
treated as its own. English law illustrates this through what has come to
be called the fraud exception, under which a director’s fraud practised on
the company is not attributed to it.93 However, precisely what context
93 Stone & Rolls Ltd v Moore Stephens, [2009] UKHL 39; Jetivia SA v Bilta (UK) Ltd (in liquidation)
[2015] UKSC 23. However, such an approach to attribution has not been devoid of criticism – see Rachel
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should prevent attribution remains a difficult question, and it remains to
be seen how the law on this develops in India.
153. Secondly, a point emphasised by Lord Hoffmann in Meridian Global
(supra) bears repetition here. The inquiry into attribution is not concerned
with corporate metaphysics, i.e., with locating some abstract ‘directing
mind and will’ or ‘brain’ of the corporation. Consequently, the inquiry, at
every stage, does not ask who may generally be said to run, control, or
embody the corporation. It asks only whose act, in relation to the particular
transaction or matter in question, is to be treated as the corporation’s own.
The Barclays cases (supra) are illustrative. The relevant transaction there
was the capital raising, and it was authority over that specific transaction,
and not authority over Barclays’ affairs generally, that the courts
examined. Further, once a person is identified as the corporation’s
directing mind in general terms, every act of that person risks being
attributed to the corporation, regardless of its subject matter. 94 Confining
the inquiry to a particular transaction avoids such difficulties from arising.
154. Thirdly, and perhaps the most important of these clarifications, is the
question of when this framework need not be invoked at all. The manner
in which corporate criminal liability is imposed depends on the statute
creating the offence in question. It follows that whether the framework set
out above must be invoked at all is also a question that can be answered
by reference to the statute itself. Three situations may be noted where,
generally speaking, the framework will not be required:
a. First, where a statute itself supplies the answer, whether by
naming the class of persons whose acts and state of mind are to be
treated as those of the corporation, or otherwise, there is no
Leow, Attribution and Agency: Back to Basics Again, in Sinéad Agnew & Marcus Smith (eds.), Law at the
Cutting Edge: Essays in Honour of Sarah Worthington (Hart Publishing 2024).
94 On the dangers of adopting an approach based on anthropomorphism, see Eilís Ferran, Corporate
Attribution and the Directing Mind and Will, 127 L.Q.R. 239 (2011) & Stefan H.C. Lo, Context and Purpose
in Corporate Attribution: Can the "Directing Mind" Be Laid to Rest?, 4 J. Int'l & Comp. L. 349 (2017).
Criminal Appeal No. 4250 of 2026 Page 80 of 98
occasion to resort to the framework at all. It is the statute itself
which furnishes the basis for attribution.
b. Secondly, certain statutes contain provisions creating a legal fiction
by which a corporation may be held vicariously liable for the
offences of its officers. Where such a provision exists, the
framework has, once again, no application.
c. Thirdly, regulatory offences imposing strict or absolute liability
stand on a different footing. As with the position under English
law discussed above, no question of attribution arises where the
offence imposes liability on the corporation directly.95 Nor does
such a question arise where, even absent such an express
provision, courts have construed the provision broadly enough
that the act in question can be conceived as having been done by
the corporation itself. In either case, the acts of the corporation’s
employees are already, whether by the statute itself or by such
construction, treated as the acts of the corporationc, and attribution
is unnecessary.
Thus, for the sake of generalisation, it may be said that the framework will
come into play principally in relation to offences which were framed with
natural persons in mind and require proof of mens rea.
155. Fourthly, the framework discussed above, and the attribution it entails,
operates in one direction only (from the natural person to the corporation)
and not in the reverse direction (from the corporation to the natural
person). It follows that the framework has no bearing on the liability of the
natural person concerned. That liability continues to be governed by the
ordinary principles of criminal law, and remains unaffected by whether or
not attribution to the corporation is established.
95 See Bijoy Kumar Moni v. Paresh Manna & Anr, (2026) 5 SCC 380; State (Delhi Administration) vs I.
K. Nangia And Anr (1980) 1 SCC 258; Madhumilan Syntex Ltd. v. Union of India, (2007) 11 SCC 297;
Employees' State Insurance Corpn. v. Harrison Malayalam (P) Ltd., (1993) 4 SCC 361.
Criminal Appeal No. 4250 of 2026 Page 81 of 98
156. Lastly, the framework set out above has been laid down only in broad and
general terms, as that is what is required within the scope of the matter
before us. The framework is accordingly helpful only in a limited way. It
assists in understanding, in principle, when attribution may apply. It does
not purport to answer the host of other questions that may arise in relation
to corporate criminal liability.
(iii) Observations on the framework
157. The framework set out above may be described as being balanced in two
ways. First, it is narrow in its first two stages, which lends it certainty, and
flexible in its third, which allows statutory purpose to be given effect
where the first two stages fail to do so. Second, the first two stages look
inward, at the corporation’s internal structure, while the third looks
outward, at the external circumstances in which the statute operates. To
this limited extent, the framework echoes the narrow approach sought to
be adopted in Esso Standard (supra), and the flexible approach sought to
be adopted in Syndicate Transport (supra) and A.D. Jayaveerapandia
(supra). However, it adopts neither approach in full.
158. As can be observed, the framework set out above is, by and large, reflective
of the discussion on English law traced earlier in this judgment. It draws
upon the identification doctrine as articulated in Tesco Supermarkets
(supra), adopts the rules of attribution as developed in Meridian Global
(supra), and incorporates the sequential, hierarchical approach to their
application as developed in Barclays cases (supra), and those cases’
understanding of what each stage of the inquiry entails.
159. True to this reflection, the criticism directed at the English position also
carries over to the framework laid down above. Despite the flexibility
introduced at its third stage, the framework remains, at its core, a narrow
one. It may not be easy to convict a corporation for the acts of natural
persons acting for it, even where those agents wielded considerable
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control over the corporation’s affairs. Barclays cases (supra) are illustrative
of this.
160. Indeed, the framework set out above does not recognise a standalone,
status based rule of attribution, one under which status within the
corporation, by itself, suffices to attribute an act and state of mind to it. We
do not believe any such implied rule exists under company law. Nor do
we doubt the rationale underlying the second stage’s requirement of
authority. A corporation can only be held liable for acts it has authorised,
and not otherwise. This does not mean that status plays no role under the
framework. At the third stage, status may still weigh heavily in favour of
fashioning a special rule of attribution. This is because status vests in a
person the ability to influence the corporation’s affairs, and since it is the
corporation itself that confers this ability, it is only rational that the
corporation bear responsibility for how that ability is exercised.
161. Further, if it is to be made easier for companies to be held liable for offences
requiring mens rea, that is a task for the legislature, and not the courts. The
legislature may do so in more than one way, though two possibilities may
be noted here. First, it may act within the framework laid down above, by
clearly identifying, whether in a special statute or through a general
provision in the penal code, the class of persons whose acts and state of
mind are to be attributed to the corporation. The statutory provisions in
the United Kingdom, Canada, and Australia, discussed above, adopt this
method. Second, the legislature may act outside the framework altogether,
by enacting provisions that hold a corporation liable for failing to prevent
an offence committed by persons associated with it. Section 9 of the PC Act
illustrates such an approach.96 Such provisions hold the corporation liable
96 Section 9(1) of the PC Act reads as follows: 9. Offence relating to bribing a public servant by a commercial
organisation.—(1) Where an offence under this Act has been committed by a commercial organisation, such
organisation shall be punishable with fine, if any person associated with such commercial organisation gives or
promises to give any undue advantage to a public servant intending— (a) to obtain or retain business for such
commercial organisation; or (b) to obtain or retain an advantage in the conduct of business for such commercial
organisation: Provided that it shall be a defence for the commercial organisation to prove that it had in place
adequate procedures in compliance of such guidelines as may be prescribed to prevent persons associated with it
from undertaking such conduct.
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where a person associated with it commits the underlying offence, subject
to a defence that the corporation had adequate procedures in place to
prevent it.
162. Whether such measures ought to be undertaken is the prerogative of the
legislature, and it is not for us to comment on it. What is needed, however,
is a systematic study of corporate liability, along the lines of the options
paper prepared in the United Kingdom. Such a study would bring
structure to the discussion, clarify the present framework, and chart the
best way forward. Surprisingly little has been written on this subject in
India.97 It is time greater attention was devoted to it. Corporate liability
deserves to be taken more seriously than it presently is.
163. Prosecuting agencies, for their part, must accept that corporations can, and
should, be held liable for offences requiring mens rea. They must develop
the skills necessary to investigate and prosecute such offences where a
corporation is involved. Courts, too, must play a part by accurately tracing
the corporate structure and hierarchy, understanding the manner in which
delegation operates within it, and assessing the extent of the role played
by the persons concerned in the matter before them, both in terms of
actions and omissions.98
(d) Summary
A summary of our discussion on corporate criminal liability and
attribution under Indian law is as follows:
164. Indian courts confronted two questions on corporate criminal liability: (i)
whether a corporation could be prosecuted for an offence carrying
mandatory imprisonment; and (ii) whether a corporation could be
prosecuted for offences requiring mens rea. For a considerable period,
several High Courts answered both in the negative. The reasoning was
97 See – 41st Law Commission Report, 1969.
98 For a brilliant example of this, see Dr. Mani Kumar Chhetri v. State of West Bengal, 2017 SCC
OnLine Cal 8423.
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rooted in the understanding that a corporation having no physical body
could not be imprisoned and, having no mind, could not possess mens rea.
165. Clarity on the issue of mandatory imprisonment was reached only with
this Court’s decision in Standard Chartered Bank (supra). By a majority of
3:2, this Court held that a company is not rendered immune from
prosecution merely because the offence carries a mandatory sentence of
imprisonment, so long as the provision also prescribes a fine. The
reasoning adopted by the majority was that since imprisonment cannot
possibly be imposed on a company, and the law does not compel the
impossible, a judicial discretion to impose a fine alone must be read into
such provisions when dealing with juristic persons.
166. On the issue of mens rea, some High Court decisions took a position
contrary to the traditional view, holding that a corporation could be held
liable for offences requiring mens rea. According to such rulings, this was
achieved by attributing to the corporation the act and the state of mind of
an agent acting on its behalf. These rulings went a step further and also
considered the basis on which such attribution was to occur, though they
did not speak with one voice on this aspect. In Syndicate Transport (supra)
and A.D. Jayaveerapandia (supra), the Bombay and Madras High Courts,
respectively, adopted a flexible, case-to-case approach, leaving the
question of attribution to be determined on the facts and circumstances of
each case. In Esso Standard (supra), however, the Bombay High Court took
a more stringent view, rejecting a case-to- case approach in favour of
attribution traceable either to the officer’s authority or to the company’s
intention as expressed under its constitutional documents.
167. While the High Courts were grappling with the issue of mens rea, it was
only in Velliappa Textiles (supra) and Iridium India (supra) that this Court
came to express its view explicitly. In both decisions, this Court held that
a corporation is capable of possessing mens rea, and can accordingly be
held liable for offences requiring proof of such mens rea.
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168. The position under Indian Law is thus clear that a corporation can be
prosecuted for an offence notwithstanding that it carries a mandatory
sentence of imprisonment, or requires proof of mens rea. It appears that a
corporation cannot be prosecuted only where the offence is punishable
with imprisonment alone, or where the offence, by its nature, requires
personal malicious intent, such that it is incapable of commission by a
corporation at all.
169. It bears noting that, unlike the High Court decisions, which went on to
consider the basis on which mens rea could be attributed to a corporation,
this Court in Velliappa Textiles (supra) and Iridium India (supra) did not
address the question of attribution at all. The discussion in both decisions
was confined to whether a corporation could possess mens rea, not to how,
or through whom, such mens rea was to be attributed to it. On this aspect,
therefore, no ready answer exists. The gap remains to be filled.
170. The inquiry into how a corporation possesses mens rea is, in substance, an
inquiry into how the mens rea of a natural person is to be attributed to a
corporation. Answering this question also answers two connected
questions: first, the kind of liability such attribution imposes on the
corporation; and second, whose state of mind is to be attributed to the
corporation, and in what circumstances. Neither the IPC nor the recently
enacted Bharatiya Nyaya Sanhita, 2023, provide answers to these
questions, unlike the penal codes of certain other jurisdictions.
171. In this context, by taking guidance from the approach adopted under
English law, we have established a framework which proceeds through
three stages. The framework is hierarchical and sequential in nature
wherein movement from one stage to the next occurs only where
attribution cannot be established at the stage preceding it. Crudely put,
each stage proceeds in the following manner:
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a. The first stage asks whether the corporation’s constitutional
documents, or a rule implied by company law, vest the person
concerned with the power to do the act in question.
b. The second stage asks whether that power was delegated to the
person concerned, whether expressly or impliedly, with sufficient
discretion and independence in the doing of the act.
c. The third stage, in turn, asks one of two questions, depending on
the nature of the statutory purpose involved. Where the statutory
purpose is narrow, it asks whether that purpose, considered in the
abstract, requires the fashioning of a special rule of attribution.
Where the statutory purpose is broad, it asks instead whether the
statutory purpose, having regard to the facts and circumstances of
the case, requires the fashioning of such a rule. In either case,
where the answer is in the affirmative, the court must further ask
whether the person concerned falls within the net of the special
rule so fashioned.
172. However, in understanding the framework laid down above, and its
application, certain points need to be kept in mind. First, it remains open
to contend that attribution ought not to follow, having regard to the
circumstances in which the question arises. English law illustrates this
through what has come to be called the fraud exception, under which a
director’s fraud practised on the company is not attributed to it. Second,
the inquiry at each stage is transaction specific, and does not seek to
identify a corporation’s directing mind in the abstract. Third, the
framework is not invoked in every case involving corporate criminal
liability. Generally speaking, it comes into play only in relation to offences
which were framed with natural persons in mind, and which require proof
of mens rea. Fourth, the framework operates to allow attribution to occur
only in one direction, i.e., from the natural person to the corporation, and
has no bearing on the liability of the natural person concerned. Fifth, and
finally, the framework has been laid down only in broad terms to answer
Criminal Appeal No. 4250 of 2026 Page 87 of 98
the general question of attribution, and does not purport to resolve every
issue that may arise in relation to corporate criminal liability.
173. It is evident, from the discussion above, that the framework mirrors certain
aspects of the English law approach. Consequently, it also mirrors the
criticism directed at that approach, namely, that it is narrow, and it will
not ordinarily be easy to convict a corporation for the acts of persons acting
for it, even where those persons wielded considerable control over its
affairs. That said, status, while not a standalone basis for attribution, will
often weigh heavily as a factor at the third stage.
174. Nonetheless, if the goal is to make it easier for companies to be held liable
for offences requiring mens rea, that is a task for the legislature, and not the
courts. Whether, and how, the legislature does so is a matter entirely
within its prerogative. It may do so by (i) clearly laying down, whether
generally or within a specific statute, whose acts and state of mind are to
count as those of the corporation, or (ii) enacting failure-to-prevent
offences. These options are merely illustrative and not exhaustive.
However, what is definitely needed is a systematic study of corporate
liability in India, along the lines of the options paper prepared in the
United Kingdom. Such a study would bring structure to the discussion,
clarify the present framework, and chart the best way forward on this
issue, which has, thus far, received surprisingly little attention.
IV. WHETHER PROCEEDINGS CAN BE QUASHED ON THE SOLE GROUND
OF NON-IDENTIFICATION AND NON-ARRAIGNMENT
175. Having laid down the basis on which a corporation may be said to possess
mens rea, we must now focus our attention on the question arising before
us in the facts of the present matter. In essence, the Appellant’s argument,
as noted above, is that a prosecution against a corporation, for an offence
requiring mens rea, is maintainable only where a natural person has been
identified and arraigned alongside it. Since the same has not been done,
Criminal Appeal No. 4250 of 2026 Page 88 of 98
the High Court ought to have exercised its power under Section 482 of the
Code of Criminal Procedure, 1973 (“CrPC”) to quash the proceedings.
176. The question before us, then, is whether the High Courts ought to exercise
their power under Section 482 CrPC to quash proceedings against a
corporation, alleged to have committed an offence requiring mens rea, on
the sole ground that no natural person had been identified or arraigned
alongside it. This question arises, and must be answered, strictly in terms
of the inherent powers vested with the courts under Section 482 CrPC, and
not otherwise. It is therefore necessary to take note of the principles that
govern the exercise of this power.
177. We do not consider it necessary to burden this judgment with an extensive
discussion of the principles governing the exercise of the High Court’s
power under Section 482 of the CrPC.99 The position is well settled, and it
is sufficient, for present purposes, to note the following. First, this power
may be exercised only in exceptional circumstances, and its exercise is the
exception, and not the rule.100 Secondly, though the power is wide, it must
be exercised with great caution.101 Thirdly, at its core, the enquiry is
confined to examining whether the allegations, taken at face value,
without addition or subtraction, disclose the commission of an offence.102
Fourthly, this power cannot be exercised on an assessment of whether the
allegations are likely to be established at trial, or whether sufficient
evidence exists to sustain them, i.e., the High Court at this stage cannot
delve into appreciating evidence or conducting a mini trial.103
178. From the framework we have laid down above, two propositions follow.
First, a corporation can possess mens rea only through attribution. Secondly,
since the framework adopted seeks to fit corporate criminal liability within
99 For a detailed discussion of precedents on this aspect, see ¶10, Neeharika Infrastructure Private
Limited v. State of Maharashtra, (2021) 19 SCC 401.
100 Medchl Chemicals & Pharma (P) Ltd. v. Biological E. Ltd., (2000) 3 SCC 269.
101 Satish Mehta v. State (NCT of Delhi) & Another, (2012) 13 SCC 614.
102 State of Haryana v. Bhajan Lal, 1992 Supp (1) SCC 335; Chunduru Siva Ram Krishna v. Peddi
Ravindra Babu, (2009) 11 SCC 203; Indian Oil Corpn v. NEPC India Ltd. & Ors, (2006) 6 SCC 736.
103 Abhishek Singh v. Ajay Kumar & Ors., 2025 INSC 807.
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the existing, individualistic conception of criminal law, the requisite mens
rea must be found, in full, within at least one natural person before it can
be attributed to the corporation. There may, of course, be more than one
such person. Corporate mens rea cannot, therefore, be assembled by
combining the partial states of mind of different individuals. Natural
persons are, in this sense, the foundation on which corporate mens rea rests.
(a) The Identification aspect
179. Do these two propositions, by themselves, answer the question before us?
Two elements arise for consideration: identification and arraignment. Let
us consider ‘identification’ first. Identification here refers to the exercise of
pinpointing the actual person or persons involved, the specific acts
undertaken by them, and their state of mind, whether averred directly or
inferred from the surrounding circumstances.
180. Non-identification would lead to the exercise of the power under Section
482 CrPC if it does not, prima facie, disclose the commission of an offence.
Whether the allegations disclose the commission of an offence may itself
be examined in two ways: by asking whether the role of the concerned
person has been clearly charted out, or by asking whether the averments
make out the essential ingredients of the offence. There is, of course,
overlap between the two. But for the convenience of our discussion here,
let us treat them as two different standalone elements.
181. First, take the role angle. This is best understood by looking at how courts
have approached a related scenario: where a natural person has been
arraigned alongside a corporation and seeks quashing of the proceedings.
In such situations, the courts examine whether the allegations disclose the
specific role that the concerned person had played in the commission of
the crime. Where a person has been arraigned simpliciter, based on
position or status alone, without any role being attributed to them, courts
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have ordinarily quashed the proceedings against such persons.104 This is
because, in the absence of such averments, the allegations would not
disclose the commission of an offence by that person, and criminal law,
unless the statute explicitly provides for it, does not recognise vicarious
liability. Indeed, even under provisions that create vicarious liability based
on a person being ‘in charge of’ or “responsible for” the conduct of a
corporation’s affairs, courts have held that a specific averment to that
effect is necessary, absent which the proceedings against such a person are
liable to be quashed.105 Viewed from this angle, the question is whether
non-identification of the natural person who acted for the corporation
renders the allegations incapable of disclosing the corporation’s own role
in the offence, such that the proceedings are liable to be quashed on that
ground.
182. Secondly, consider the question from the standpoint of the essential
ingredients of the offence. Where mens rea is one such ingredient, it too
must be disclosed, at least prima facie, by the allegations. As discussed
above, a corporation can possess mens rea only through attribution from a
natural person. It may accordingly be argued that, absent identification of
that person, the allegations disclose no such attribution, and the
ingredients are not made out. Viewed from this angle, the question is
whether non-identification renders the allegations incapable of disclosing
the essential ingredients of the offence, such that the proceedings are liable
to be quashed on that ground.
183. We do not think either question framed above should be answered in the
affirmative. Take the role angle first. What the chargesheet must disclose,
on its face, is that the corporation itself has committed the offence, not that
it has also identified the particular individual through whom it did so. The
104 ¶19-22, Shiv Kumar Jatia v. State of NCT of Delhi, (2019) 17 SCC 193; ¶ 31, K. Sitaram v. CFL Capital
Financial Service Ltd., (2017) 5 SCC 725; ¶13-14, Maksud Saiyed v. State of Gujarat, (2008) 5 SCC 668;
¶46 & 55 Sunil Bharti Mittal v. Central Bureau of Investigation, (2015) 4 SCC 609.
105 ¶16-22, N. Rangachari v. BSNL, (2007) 5 SCC 108; ¶24-25 & 31, Pawan Kumar Goel v. State of U.P.
& Anr, 2022 SCC OnLine SC 1598; ¶16-18, K.K Ahuja v. V.K. Vora, (2009) 10 SCC 48; ¶18, SMS
Pharmaceuticals Ltd v. Neeta Bhalla, (2005) 8 SCC 89.
Criminal Appeal No. 4250 of 2026 Page 91 of 98
corporation’s role can be disclosed through averments concerning its own
conduct, decisions, and dealings without naming the individual who
carried them out. Non-identification of the natural person does not, by
itself, render the allegations incapable of disclosing the corporation’s role
in the offence.
184. The same holds for the ingredient angle. Corporate mens rea, as discussed,
exists only because some natural person holds it. However, it does not
follow that the materials before the court dealing with quashing must
identify particular persons for the allegations to disclose the ingredient of
mens rea. In most circumstances, mens rea can be averred through the
surrounding facts and conduct themselves, without being tied to a
specifically named individual.106 Thus, where the surrounding facts and
circumstances, taken as a whole, disclose the possibility that the
corporation acted with the requisite mens rea, that disclosure is not
defeated merely because no particular individual has been identified as its
source.107 Therefore, the ingredient of mens rea can still be disclosed even
where no individual has been identified.108
185. It would, no doubt, assist matters if the natural persons concerned, and
their specific acts, are identified and averred. But this goes to the strength
of the case, not to whether the allegations disclose an offence at all. The
role of attribution, properly understood, is to establish mens rea
conclusively, and that is a task to be undertaken during the trial.109 The
framework laid down above also makes clear that attribution is not a
simple question with a fixed set of answers. It is an intricate inquiry,
involving the consideration of several factors. Consequently, whether
attribution ought to occur in a given case is ultimately a matter for trial.
106 Somjeet Mallick v. State of Jharkhand, (2024) 10 SCC 527.
107 ¶17-18, Rupan Deol Bajaj v. Kanwar Pal Singh Gill, (1995) 6 SCC 194; Umashankar Yadav v. State
of U.P., 2025 SCC OnLine SC 1066.
108 See Teamsters Local 445 Freight Division Pension Fund v. Dynex Capital, Inc., 531 F.3d 190 (2d
Cir. 2008).
109 ¶18-20, Rajat Prasad v. CBI, (2014) 6 SCC 49.
Criminal Appeal No. 4250 of 2026 Page 92 of 98
Identification, in this sense, is accordingly a question that does not assume
primary importance at the threshold.
186. Viewed from another angle, insisting on identification at this threshold
risks something further: it would permit the power under Section 482
CrPC to be exercised in a manner that stifles prosecution at the outset, even
where the allegations make out an offence against the corporation in clear
terms. This may play out in more than one way. A complainant filing an
FIR against a corporation often only knows that someone within the
corporation committed the act in question, without any means of knowing
who.110 To an extent, this may hold even once the investigation is
complete. The investigating agency may not always be able to identify the
individual actually responsible, yet may still, based on other
circumstances, arrive at the conclusion that the corporation committed the
offence with the requisite mens rea. Were identification pressed as a general
rule in dealing with companies, prosecution in such instances would be
stifled at the very threshold.
187. It is thus clear that declining to require identification as a general rule
ensures that the power under Section 482 CrPC is exercised within the
scope of the principles laid down above. All that is required, at this stage,
is that an offence be made out, and this is made out irrespective of
identification. Attribution, as a process, requires going into the niceties of
a given case, and since the Court at this stage cannot undertake that
exercise, identification is not a question that ought to be of importance at
the threshold. Consequently, the Appellant’s contention that the
proceedings against it be quashed solely on the ground of nonidentification
of a natural person cannot be sustained.
(b) The Arraignment aspect
188. If identification is not required at this stage, it would ordinarily follow that
arraignment is not required either, since arraignment is, in substance, the
110 See ¶27, United Spirits Limited v. Neel Rajsh Shah, 2024 SCC OnLine Kar 31856.
Criminal Appeal No. 4250 of 2026 Page 93 of 98
procedural corollary of identification. One aspect, however, merits closer
attention. This Court has, in the reverse scenario, held that where a
corporation has not been arraigned as an accused, proceedings against the
natural person alone cannot be sustained. The question that arises is
whether the same logic applies here, i.e., whether the non-arraignment of
a natural person must, correspondingly, be fatal to proceedings against the
corporation. It is in this context that this Court’s decision in Aneeta Hada
v. Godfather Travels and Tours Pvt. Ltd., reported in (2012) 5 SCC 661,
merits consideration.
189. In Aneeta Hada (supra), a three judge bench of this Court considered
whether a person falling within Section 141(1) and 141(2) of the Negotiable
Instruments Act, 1881, or a pari materia provision, could be prosecuted
without the company itself being impleaded as an accused. This Court,
after considering the relevant authorities, held that for maintaining a
prosecution under Section 141, arraigning the company as an accused is
imperative. The relevant extracts are as follows:
“21. At this juncture, we may refer to Section 141 which deals with
offences by companies. As the spine of the controversy rests on the said
provision, it is reproduced below:
“141.Offences by companies.—(1) If the person committing
an offence under Section 138 is a company, every person
who, at the time the offence was committed, was in charge
of, and was responsible to the company for the conduct of the
business of the company, as well as the company, shall be
deemed to be guilty of the offence and shall be liable to be
proceeded against and punished accordingly:
Provided that nothing contained in this sub-section shall
render any person liable to punishment if he proves that the
offence was committed without his knowledge, or that he had
exercised all due diligence to prevent the commission of such
offence:
Provided further that where a person is nominated as a
Director of a company by virtue of his holding any office or
employment in the Central Government or State
Government or a financial corporation owned or controlled
by the Central Government or the State Government, as the
Criminal Appeal No. 4250 of 2026 Page 94 of 98
case may be, he shall not be liable for prosecution under this
chapter.
(2) Notwithstanding anything contained in sub-section (1),
where any offence under this Act has been committed by a
company and it is proved that the offence has been committed
with the consent or connivance of, or is attributable to, any
neglect on the part of, any Director, Manager, Secretary or
other officer of the company, such Director, Manager,
Secretary or other officer shall also be deemed to be guilty of
that offence and shall be liable to be proceeded against and
punished accordingly.”
22. On a reading of the said provision, it is plain as day that if a person
who commits the offence under Section 138 of the Act is a company, the
company as well as every person in charge of and responsible to the
company for the conduct of business of the company at the time of
commission of offence is deemed to be guilty of the offence. The first
proviso carves out under what circumstances the criminal liability
would not be fastened. Sub-section (2) enlarges the criminal liability by
incorporating the concepts of connivance, negligence and consent that
engulfs many categories of officers. It is worth noting that in both the
provisions, there is a “deemed” concept of criminal liability.
xxx
53. It is to be borne in mind that Section 141 of the Act is concerned
with the offences by the company. It makes the other persons vicariously
liable for commission of an offence on the part of the company. As has
been stated by us earlier, the vicarious liability gets attracted when the
condition precedent laid down in Section 141 of the Act stands satisfied.
There can be no dispute that as the liability is penal in nature, a strict
construction of the provision would be necessitous and, in a way, the
warrant.
xxx
58. Applying the doctrine of strict construction, we are of the
considered opinion that commission of offence by the company is an
express condition precedent to attract the vicarious liability of others.
Thus, the words “as well as the company” appearing in the section make
it absolutely unmistakably clear that when the company can be
prosecuted, then only the persons mentioned in the other categories
could be vicariously liable for the offence subject to the averments in the
petition and proof thereof. One cannot be oblivious of the fact that the
company is a juristic person and it has its own respectability. If a
finding is recorded against it, it would create a concavity in its
reputation. There can be situations when the corporate reputation is
affected when a Director is indicted.
Criminal Appeal No. 4250 of 2026 Page 95 of 98
59. In view of our aforesaid analysis, we arrive at the irresistible
conclusion that for maintaining the prosecution under Section 141 of
the Act, arraigning of a company as an accused is imperative. The other
categories of offenders can only be brought in the drag-net on the
touchstone of vicarious liability as the same has been stipulated in the
provision itself. We say so on the basis of the ratio laid down in C.V.
Parekh which is a three-Judge Bench decision. Thus, the view expressed
in Sheoratan Agarwal does not correctly lay down the law and,
accordingly, is hereby overruled. The decision in Anil Hada is overruled
with the qualifier as stated in para 51. The decision in Modi
Distillery has to be treated to be restricted to its own facts as has been
explained by us hereinabove.”
[Emphasis Supplied]
190. It follows from the above that the ruling in Aneeta Hada (supra) is tied to
the specific statutory scheme of Section 141. That provision creates
vicarious liability, attracted only where its statutory condition precedent,
i.e., the commission of the offence by the company, stands satisfied. Since
the liability of the individual under Section 141 is thus entirely derivative
of the company’s own commission of the offence, that condition cannot be
adjudicated unless the company itself is made a party to the proceeding.
It was for this reason that this Court held that arraigning the company as
an accused is imperative for maintaining a prosecution against a natural
person under Section 141.
191. The Appellant has also placed reliance on this Court’s decision in
Hindustan Unilever Ltd. v. State of M.P., reported in (2020) 10 SCC 751.
In that case too, this Court was dealing with a provision similar to Section
141, i.e., Section 17 of the Prevention of Food Adulteration Act, 1954.
Following Aneeta Hada (supra), this Court held that, for the prosecution
against a person to be maintainable, the company had to be arraigned as
an accused.
192. The rulings in Aneeta Hada (supra) and Hindustan Unilever (supra),
respectively, cannot be read as establishing a general rule that arraignment
of a natural person is a prerequisite for a corporation’s prosecution to be
maintainable. Such principle can be imported only where the statute in
Criminal Appeal No. 4250 of 2026 Page 96 of 98
question is of the same character as those considered in the said cases, i.e.,
where the liability imposed on the corporation is vicarious, and the statute
itself lays down a condition precedent.
193. The facts of the present case do not involve any such provision. This is not
a case of vicarious liability, nor does any condition precedent of that kind
exist. Indeed, it is the very absence of vicarious liability that requires
recourse to the framework laid down above to determine attributability.
As discussed above, the framework fixes the corporation with direct
liability, i.e., once its requirements are satisfied, the act and the state of
mind in question are treated as the corporation’s own. Consequently, the
contention that the High Court ought to have quashed the proceedings
against the Appellant for non-arraignment of a natural person cannot be
accepted.
194. We reiterate that we have considered the questions of identification and
arraignment of a natural person specifically in the context of the exercise
of power under Section 482 CrPC, and not otherwise. Since we were
concerned only with whether non-identification and non-arraignment
justify the exercise of that power, we have not generally examined whether
such identification and arraignment are necessary at all, and if so, at what
stage. That question is beyond the scope of the matter before us.
(c) Whether the allegations make out an offence?
195. Our discussion above should not be read and understood to suggest that
the power under Section 482 CrPC can never be exercised at the threshold
stage where the accused is a corporation. All that is being said is that
neither identification nor arraignment of a natural person can be read in
as a prerequisite, such that their absence alone would justify quashing in
every case. For corporations, as for natural persons, the ordinary test is
retained, i.e., the allegations must disclose the commission of the offence.
Where they do not, or where they amount to bald allegations unsupported
by any material, quashing would remain warranted. It is only by adopting
Criminal Appeal No. 4250 of 2026 Page 97 of 98
such an approach that the two undesirable outcomes can be avoided:
genuine prosecutions against corporations are not stifled at the threshold,
and, at the same time, vexatious or baseless prosecutions are not permitted
to continue merely because the accused is a corporation.
196. The considerations that should ordinarily weigh while determining
whether the allegations disclose commission of any offence, or whether
they amount to mere bald allegations, would remain the same where the
accused is a corporation. However, as a corporation is a juristic person, it
is not just sufficient to state or allege that the corporation committed the
act or possessed the requisite mens rea. While identification and
arraignment of a natural person is not necessary, the allegations must, at
least prima facie, reveal that: (i) some natural person or persons acted on
behalf of the corporation, (ii) such action is referable to the offence in
question, and (iii) the surrounding circumstances of such actions do not
render the existence of mens rea patently absurd or inherently improbable.
Where the allegations do not reveal these things, the proceedings would
remain liable to be quashed. It bears emphasising that the inquiry at this
stage is not detailed or microscopic. It is broad, and confined to examining
whether the allegations disclose actions undertaken on behalf of the
corporation, and whether the context in which such actions were
undertaken discloses the possibility that the requisite mens rea was present.
197. On a prima facie reading of the chargesheet and the material on record, it is
evident that natural persons acted on behalf of the Appellant in relation to
the offences in question, and that the surrounding circumstances give rise,
at least prima facie, to the possibility that these acts were undertaken with
the requisite mens rea. This is sufficient at this stage, and nothing further
needs to be examined. Consequently, on this basis too, it cannot be said
that the High Court ought to have quashed the proceedings against the
Appellant.
198. Before closing, we deem it necessary to highlight one another aspect. The
question framed by the High Court was directed at a limited set of persons,
namely, the directors and persons in charge of the corporation’s affairs.
The question we have answered above, and the discussion preceding it,
was not so confined. It extended to natural persons in general, not merely
to those occupying such formal positions of authority. This wider framing
was necessary, since the attribution framework developed above confirms
that it is not only persons holding such positions who may attribute their
acts to the corporation. The necessary consequence is that, save in the
rarest and most exceptional of circumstances, a quashing petition would
not succeed merely on the ground that the person identified cannot
attribute his acts to the corporation because he does not hold a particular
status or position. Whether a concerned person’s act and state of mind
ought to be attributed to the corporation requires the systematic
application of the framework set out above, and that, in turn, requires
answers to questions that can legitimately be considered only at the trial.
E. CONCLUSION
199. For the foregoing reasons, the appeal fails and is hereby dismissed.
200. Pending applications, if any, shall stand disposed of.
201. Registry shall forward one copy of this judgment to all the High Courts.
….………………………….…. J.
(J.B. PARDIWALA)
….………………………….…. J.
(MANOJ MISRA)
New Delhi.
7th September, 2026.
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