Corporate Criminal Liability : An Overview

Corporate Criminal Liability :An Overview

In recent years, economic or white-collar, crime has attractedwidespread interest all over the world. Increasingly, we are exhorted to turnour attention from the problems of street crime to those of corporate crime.Corporate crime involves vast sums. It can prejudice not only the financialinterest of citizens, but also their lives and their property; it can thwartimportant state policies, such as controlling pollution, fostering competition,and protecting consumers. These pressures are felt throughout theindustrialised world. It is not surprising, therefore, that corporate criminalliability has been discussed extensively by scholars who have addressed theproblem of economic crime. Corporate criminal liability is one method bywhich states seek to control business activities.

Business corporations represent a distinct and powerful force at global,national and regional levels and they wield enormous economic power. Thelegal structure within which they operate largely serves their interests. Corporatepersonality protects their owners from the full consequences of failure and theregulation to which they are subjected to assumes their beneficence.

A corporation is a group of individuals deemed in law to be a singlelegal entity. It is legally distinct from all the individuals who compose it. It haslegal personality in itself and can accordingly sue and be sued, hold propertyand transact, and incur liability.' Here it is concerned with businesscorporations, and their reception by the criminal justice system. Strongresistance within the legal system to the notion of corporations as criminal hasresulted in an under-developed jurisprudence of corporate liability for crime.Although corporations can be "persons" in certain legal context, they cannotso easily be criminals. Recongnition of criminal liability for corporate entitieshas been slow in coming in the law.

1. Walker, The Oxford Companion to Law, Clarendon Press (1980), p.20.

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Rationale for Prosecuting Corporations

Many factors contribute to the reluctance to look beyond the contextof regulation in considering corporations and crimes. A significant underlyingconstituent is the pervasiveness of philosophical individualism. Problems arisein applying responsibility to corporations for the very reason that they are nothuman individuals. Contemporary preoccupation with the notion thatresponsibility derives from and attaches to the autonomous individual rendersus benefit of conceptual tools with which to confront corporate accountability.'

Why attempt to prosecute a corporation at all? Is it not sufficient toprosecute the individuals involved? A negative answer to this question stemsfrom the assumption that the corporate system itself sometimes helps to producecriminal behaviour.

This assumption has an empirical basis. A policy of solely prosecutingindividuals provides an incentive for the corporate management to viewparticular individuals as "expendable". 1 Corporate policies may encourageillegal behaviour, often implicity, 4 then simply allow the individuals who arecaught to be jettisoned.' In large corporations, for example, individualmanagers may be considered a "fungible commodity". 6 In fact, researchershave documented that some corporations have officers who are in essenceappointed fall guys—"vice presidents responsible for going to jail".'

See generally B.Fisse and J.Braithwaite, "The Allocation of Resposibility forCorporate Crime: Individualism, Collectivism and Accountability" 23 Sydney,L.Rev. 476 (1988).

Silets and Brennur, "The Demise of Rehabilitation: Sentencing Reform and theSanctioning of Organisational Criminality', 52 Am.J.Crim.L. 354 (1986).

Neeleman and Needleman, "Organisational Crime: Two Models of Criminogenesis",20 Soc.Q. 516 (1979).

J.C. Coffee, "No Soul to Damn; No Body to Kick: An Unscandalized Inquiry Intothe Problem of Corporate Punishment", 79 Mich.L.Rev. 386 at p.388 (1981).

Id., p.410.

J. Braithwaite, Corporate Crime in the Pharamaceutical Industry (1984), p.308.

C.U.L.R. Notes & Comments 251

A strategy of limiting prosecution to individuals ignores any pressuresimposed by the organisational structure.' Although an individual has beenprosecuted, the incentive system, which led to the criminal behaviour, remainsintact within the corporation. Not only does prosecution of individuals insuch situations fails to deter the corporation, but also indemnification ofemployees by the corporation may negate the deterrent effect on theindividuals.'

Imputing Intent to Corporations

A corporate criminal prosecution is more difficult to orchestrate thanthe prosecution of a crime perpetrated by an individual. In the latter case, thefact that a crime has occurred is usually obvious,' the difficulty lies inapprehending the responsible party. In cases of corporate crime, on the otherhand, it is often very difficulty to detect the crime because the effect is diffusedamong a number of workers, all or many of whom may be unaware of theharm." Once the crime is detected, however, proving guilt is very difficult'2even if the perpetrators' identity is readily apparent." This difficulty maystem from complexities in the law,' 4 the facts surronding the crime, 15 or the

organisational structure itself.'

Schrager and Short, " Toward a Sociology of Organisational Crime", 25 Soc.Probs.410 (1978).

Brickey, "Rethinking Corporate Liability under the Model Penal Code", 19 RutgersL.J. 621 (1988). Of course, indemnification does not have this effect if theindividuals are given significant jail terms.

Braithwaite and Geis, "On Theory and Action for Corporate Crime Control," 28Crime and Delinq. 294 (1982).

Ibid.

Id., pp.297-99.

Id., pp 296-97.

Id., p.298.

Id., p.299.

16. Id., pp 298-99.

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The idea of "intent", a troublesome concept at best, is even moreformidable when applied to corporate criminal prosecutions. A number ofcourts have concluded that the criminal conduct of officers and employeescould be imputed to the corporation because they were the "hands" of thecorporation. But courts have had a much harder time in deciding if there wasa "mind" in a corporation, and if so, who could possibly represent this mind inthe context of forming criminal intent.'

Assuming that in a number of cases the organisational incentive structurecauses or at least contributes, to the individual's misconduct, the law shouldattach blame to the corporation as well as to the individuals. In these situations,the deterrent value of the stigma that results form criminal conviction is asuseful against the corporation as it is against the individual. But if only theindividual is prosecuted, even with negative publicity, the corporate entityavoids anything more than circumstantial identification with the crime. Inaddition to the deterrent purpose, identifying the organisational system asresposible also serves to identify the need for reform at the corporate level.'8

History of Corporate Criminal Liability

The history of corporate liability is haphazard and incoherent. Theintroduction of a separate juristic personality for the corporate enterprise showsa legal sophistication unmatched in the later developments of corporate criminalliability. In the formative period for this liability, from about 1870 to 1930, thecourts were not particularly heedful of the later distinction between mens rea

and strict liability offence. Mens rea was not regarded as particularlyproblematic so long as the offence did not fit the (perceived) category of"real" crime.' 9 So when Cory Bros. was prosecuted for manslaughter in

K.Brickey; Corporate Criminal Liability: A Treatise on the Criminal Liabilityof Corporations, their Officers and Agents (1984), pp.39.

Supra n.9, pp. 301-305.

19. E.g., Mousell v. London and North Western Railway, [1917] 2 K.B. 836.


1927, the indictment was dismissed more on the ground that a corporationcould not be guilty of an offence agianst the person than on an objection tomanslaughter in particular.' That prosecution serves as a reminder that theidea of attributing a death to the recklessnes of a company has a long vintageand that legal hostility and resistance to such constructions and attributionsare deeply rooted.21

During this period, the combination of the industrial revolution andimproved transportation resulted in changes in corporation and in the functionthey played in society. The development of corporate executive structuresclearly challenged a legal response. The one person entrepreneur was beingovertaken by more complex business arrangements, and in terms of activity,the development of the railways transformed the landscape, the economy andthe specific statutory origin of the early railway companies all played an earlyrole in the development of liability, followed by particular judicial response tonew forms of statutory liability, dubbed "Public Welfare" offences. It wasonly in the early 1940's that the real beginnings of the modern law of corporateliability outside the so-called "public welfare" field emerged.'

Common Law Developments of Corporate Criminal Liability

English law established the corporation in the fourteenth century, but itdid not consider a corporation capable of criminal acts until three centurieslater.''-3 Although English courts originally rejected the very idea of corporate

R. v. Cory Bros, [1927] 1 K.B. 810, earlier procedural objections to corporateliability for felonies no longer obtained. There was no need for the company toappear in person and the offences were punishable witha fine so there was noproblem about how to imprison a company.

Celia wells, "Corporations: Culture; Risk and Criminal Liability", [1993] Crim.L.R. 550 at p. 558.

Ibid.

Elkins, "Corporations and the Criminal law: An Uneasy Alliance," 65 Ky.L.J. 73at pp.86-87 (1976) (tracing the historical development of imputing intent tocorporations).


liability, they would gradually move away from this position. The reasons forthe English courts' refusal to impose criminal sanctions on corporations arewell known. Three theortical grounds prevented them from doing so. As acorporation is a legal fiction, it can do only such acts as it is legally empoweredto do (ultravires rules). Further, a corporation could not possess the requiredmelts rea. Moreover, it was difficult to devise an adopted punishment forcorporations. Apart from these theoretical objections, practical difficultiesimpeded the imposition of criminal sanctions. Personal appearance wasrequired at the crown courts or assizes: this was impossible for a corporation.A second practical difficulty arose with regard to punishment; as all felonieswere at one time punished by death or deportation, it was simply not legallypossible to punish a company.'

The gradual developments of corporate sanctioning knew differentstages.' The first step taken by the courts was to accept corporate liability inthe case of a breach of a statutoy duty. In 1842, a corporation was convictedfor failing to fulfil a statutory duty.' Four years later,' the effect of thatdecision was expanded from nonfeasance to misfeasance. After that, thecourts seemed confident enough to impose vicarious liability on corporationsin those instances in which natural persons could be vicariously liable as well.'It was only in 1944, however in three land mark cases, that liability wasimposed on corporations, i.e. liability because corporations were deemed tohave acted themselves and not because their empolyees had acted (vicariousliability). The corporations were prosecuted and convicted for tax evasion,common law conspiracy and using false documents. Although the ratios forthese cases have been criticised for being vague and ambiguous, the three

J.C. Smith and B.Hogan, Criminal Law (1992), pp. 178-179.

Celia Wells, Corporations and Criminal Responsibility (1993), pp. 95-107.

Brimingham and Gloucester Railway Co., [1842] 3 Q.B. 223.

Gt. North of England Railway Co., [1846] 9 Q.B.315.

Supra n.24, p.171.

Moore v. Bresler, [1944] 2 All E.R. 515; R v. CR Haulage Ltd. [1944] K.B. 551;D.P.P. v. Kent and Sussex Contractors Ltd., [19441 1 All E.R. 119.


decisions managed to surmount the so-called "mens rea hurdle". Beforethese cases, the courts had succeeded in evading this conceptual problemsince neither in the case of breach of a statutory duty nor in the case of vicariousliability did mens rea need to be attributed to the company.'" In the abovethree cases, however, it was established that mens rea of certain employeesof the company was to be considered as that of the company itself.

In another common law jurisdiction, the United States, the evolution ofcorporate sanctioning started in a similar way but eventually developed itselfin a distinct manner. The same theoretical objections were being put forwardagainst the concept of corporate criminal liability as in England. The pressureof the changing economy removed the reluctance of the courts which, just asin England, began by accepting corporate liability in the case of breach of astatutory duty, later expanding it to vicarious liability:3 ' This evolution wasinspired by the civil tort doctrine of respondeat superior ie., the principle thatan individual is civilly liable for the acts of his agents. Whereas the courtsinitially confined the application of this doctrine to cases which did not makeit necessary to attribute mens rea, early in the twentieth century some Americancourts changed their attitude and began to expand the concept of corporatecriminal liability to mens rea offences, thus radically departing from the positionheld by their English counterparts.32

This radical move was confirmed in the leading case before the AmericanSupreme Court New York Central and Hudson River Rail Road Companyv. U.S.' Against the background of the economic boom in the United Statesin the early years of the twentieth century, Congress has specifically provided,in the Elkins Act, that the acts and omissions of an officer acting within the

D.Burles, "The Criminal Liability of Corporations" 141 N.L.J. 609 (1991).

People v. Corporation of Albany, XII Wendell 539 (1834) (non-feasance); Statev. Morris Essex RR 23 Zabrinskis N.J.R. 360 (1852) (misfeasance).

Guy Stessens, "Corporate Criminal Liability: A Comparative Perspective", 43I.C.L.Q. 493.

212 U.S. 481 (1908)

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scope of his empoyment were considered to be those of the corporation.This clear imputation of mens rea of natural persons to the corporation was,almost enthusiastically, endorsed by the Supreme Court. The policy reasonsfor this were formulated by the Court as follows:

"many offences might go unpunished... We see no valid objection inlaw and every reason in public policy why the corporation... shall bepunishable by fine beacuse of the knowledge and intent of its agents"."

Even though, strictly speaking the impact of this decision could havebeen confined to statutory offences, the lower courts rapidly expanded itsscope to offences at common law." Thus, the U.S. courts, at the beginningof nineteenth Century, already applied the concept of corporate criminal liabilityin a very broad way.

Which Natural Persons can Make the Corporation Criminally Liable?

Corporations being legal fictions, they can, notwithstanding theirenormous impact in today's society, act only through individuals. Thus anessential element in every model of corporate liability is the question ofattribution, which acts and which wrongful states of mind of which naturalpersons can be attributed to the corporation in such a way as to make thecorporation criminally liable?

Overall, two models can be distinguished. According to the first, onlythe acts of certain senior officers of a corporation can be taken into account indetermining the corporate liability. Under the opposite model, a corporationis criminally liable for the acts of every individual acting on its behalf. Theseare the two theoretical models; in practice some "mixed models" exist bywhich the acts of every corporate officer who meets certain criteria may makethe corporation criminally liable.36

Ibid.

J.C. Coffee, "Corporate Criminal Responsibility", in S.H. Kadish (Ed.),Encyclopedia of Crime and Justice, Vol.IV, pp. 1854-1855.

36. Supra n.25, PP. 94-95.


The difference between these two models is rooted in two fundamentallydifferent approaches to corporate liability. 37 Liability under the first may becalled direct, where as under the second, it may be called derivative, as it isderived from the employees' acts. The first model starts with the concept ofthe corporation's direct liability, in contrast with the second, which relies onthe concept of vicarious liability, i.e., the corporation being liable not for itsown acts but for those of its employees. This difference explains why underthe first model only the acts of the most senior officers are taken into account;it is they who represent the "corporation"; when they have acted, the corporationis deemed to have acted. The second model, on the other hand, does notneed to limit itself in such a way as it is based on vicarious liability.'8

The English law of corporate criminal liability has developed from asystem of vicarious liability to a system of direct, primary liability of thecorporation. In 1944, the court departed from the vicarious liability approachby imposing corporate liability for mens rea offences. The courts were inspiredby the alter ego doctrine of the civil law of tort, by which acts of the mostsenior officers of the corporation were identified as being acts of the corporationitself.' The 1944 decision imported this theory into criminal law. It remainedrather unclear, however, which natural persons could make the corporationcriminally liable. 40 This was said to depend on "the nature of the charge, theposition of the officer or agent and other relevant facts and the circumstancesof the case."' Not until 30 years later, in Tesco Supermarkets Ltd. v.

Natrass, 4'- were the problems clarified. Tesco had been charged with an

S. Watt and W.S. Laufer, "Why personhood Doesn't Matter: Corporate CriminalLiability and Sanctions", 57 A.J. Crim.L. 263 (1991).

From a certain point of view, it may be said that both models are based on thenotion of vicarious liability as, under both, it is the shareholders who willultimately have to bear the financial consequences of a conviction of thecorporation.

C. Wells, "Manslaughter and Corporate Crime", 139 N.L.J. 931 (1989).

Welsh, "The Criminal Liability of Corporations", 62 L.Q.R; 345 (1946).

ICR Haulage Ltd., [1944] K.B. 559.

[1972] A.C. 153.


offence under the Trade Descriptions Act, 1968. It was clear from the factsthat the local manager was responsible for the alleged facts and that Tescohad done everything possible to train its local mangers. The House of Lordsheld that a local manager could not be equated with the Corporation so thatTesco avoided any criminal liability. Reference was made to a dictum of LordDennin in a civil case in which he compared a comporation to a human body.While some individuals working in the corporation represent the brains of thecorporation, others represent the hands." Only the brains represent thecompany.

Whether an officer can be said to represent the corporation dependson the controlling officer test; does the person control the corporation as thebrain, controls the human body?' According to Lord Reid, this is a questionof law, once the facts have been proved." The category usually encompassesthe members of the board of directors, the managing director, and some otherpersons responsible for the general management of the corporation. If thesepersons delegate some parts of their management functions to some one elsein the corporation, that person would be a controlling officer as well, providedhe was acting independently of any instructions.' The determining factor inthe controlling officer test thus seems to be whether the senior officer couldact independently or not.47

In American Federal Criminal Law, since the concept of corporatecriminal liability is derived from the civil theory of repondent superior, itsroots clearly go back to vicarious liability. This implies that not only act of themanagement but also those of subordinate employees can impose criminalliability on the corporations.' The breadth of the American concept is

Bolton Engineering Co. Ltd. v. Graham, [1956] 1 Q.B. 159.

Supra n.30, pp. 609-610.

Tesco:s. Case [1972] A.C. 153, at 171 (per Lord Reid).

R.Card, Cross and James, Criminal Law [1992], p.167.

Supra n.45, 200 (per Lord Diplock).

U.S. v. Gold, 743 F.2d 800 (5th Cir.1984); U.S. v. Automobile Medical Laboratories,Inc., 770 F. 2d 399 (4th Circ. 1985).

C. U.L.R. Notes & Comments 259

expanded by other factors. It is not mandatory that the same individualsprovide the actus reus and mens rea. 49 It is not even required that themanagement knew about the illegal activities in the corporations.'

The American federal law concept of criminal liability thus contrasts thefirst model. One of the major explanations for this difference is the influenceof the Model Penal Code. On the question of corporate liability, the Codehas especially been inspired by the English alter ego doctrine. The Codestipulates that corporations are to be held criminally liable only if one of thetop managers of the corporations has acted. By way of exception though, thecode accepts the theory of respondent superior in those instances in whichthe legislation clearly intended to punish corporations.5'

The development in Indian law is similar to that in English law. Earlier,courts viewed that a judicial entity was incapable of having mens rea, andtherefore a corporation cannot be indicated for an offence involving mensrea. 52 However, in Gopal Khaitan v. State" courts have adopted a changedview and stated that a corporation can be held liable for mens rea offencereferring to a dictum of Lord Denning. Courts in India like in England, whiletrying to attribute criminal liability to corporations for mens rea offence, haveattempted to identify the mens rea, in a single individual, who is to be a highranking official. In Esso v. Udharam Bhagwandas, 54 the courts have heldthat the knowledge of the corporation could be manifest in a general bodymeeting or at the meeting of the board of directors or the memorandum orarticles of association of the company.

Supra n.35, p. 1856.

U.S. v. George F Fish Inc., 154 F.2d (798) 2nd.cir.(1946); Standard Oil Co. v. U.S.307 F.2d 120 (5th Circ.1962).

B.L. Ottley, " Criminal Liability for Defective Products: New Problems in CorporateResponsibility and Sanctioning", Rev.Int.de Dr.Penal (1982), pp. 156-157, as citedin supra n.35.

Sunil Chandra Banerjee v. Krishna Chandra Nah A.I.R. 1949 Ca1.689.

A.I.R. 1969 Ca1.132.

Esso v. Udharam Bhagwandas, (1975) 45 Comp. Cas. 16 at 32 (Born.).


Under Indian Law Section 11 of the India Penal Code ( I.P.C.) definesthe word 'person' as including a company, association or body or personswhether incorporated or not. Corporate criminal liability is thus recognisedunder I.P.C. However, the courts have read in certain limitations. In State ofMaharastra v. Syndicate Transport Co. (P.) Ltd,' the court identified somelimitation to corporate liability that, there are several offences under the Codewhich can be committed only by an individual human beings, e.g. murder,treason, rape, perjury, etc.

However, the relevance of these limitations today needs to be re-examined in the light of recent trends.in corporate law. These limitations wereborrowed from English law. 56 However, English courts have subsequentlyadopted a more liberal approach and brought in various other situations withinthe scope of corporate criminal liability. Unfortunately, the same cannot besaid of Indian law, which in the context of increasing corporate influence remainsarchaic.

Sanctioning Corporations

Certain traditional criminal sanctions (e.g. imprisonment) are by theirnature not applicable to corporations, while others (e.g. winding up) arespecifically targeted at corporate criminality. Special attention should be paidto sanctions that result in the deprivation of the process of crime, the ill-gottengains. As corporate criminality often involves crimes without a victim, it ismaterial that criminal law itself provides sufficient means to deprive the offendersof the fruits of their crimes. Civil compensatory suits which at least in somelegal systems, are available to victims of crime, are of no avail here; in mostcases of corporate criminality these are no identifiable victims.57

A.I.R. 1964 Born. 195, Supra n.54.

R. v. I.C.R. Haulage, [1944] 2 K.B.554; 10 Halsbury's Laws of England 281 (3rdedn.)

57. Supra n.32 pp. 515-516.


In England fines are the most common sanctions. It should be noted,however, that the amount of the fine is often not high enough to a have a realdeterrent effect om corporations." Confiscation of the proceeds of crimeand withdrawal of licences are also possible.'

In the United States as well, the criticism is often heard that fines are fartoo low to have any deterrent effect on corporations. It may be, however,that the stigma that accompanies a criminal conviction is an impotant deterrentfactor to corporations, regardless of the amount they can be fined.'

Apart from fines, an alternative sentencing system has been developedin the case law of U.S. courts aimed not so much at punishing (i.e. inflictingharm on) corporation as at restructuring them. The retribution and deterrentaspects of a fine are thus repalced by a more positive, rehabilitative sanctioningsystem. This alternative approach is especially warranted in, that corporatecrime is often a structured crime, i.e. crime which finds its origin in a structuralmalfunctioning of the corporation. 61 This "corporate probation" can takedifferent forms." Certain control procedures or reporting systems can beordered or the company may be required to establish safety committees (orappoint safety officers). The court may also appoint a consultant to investigatethe situation that gave rise to the offence and recommend appropriate

C.Wells, "The Decline & Rise of English Murder: Corporate Crime and IndividualResponsibility", (1988) Crim.L.R. 159 at p.160.

G. Williams, Text Book of Criminal Law (1978), pp.159-160

E.g. in the much publicised Pinto case (State v. Ford Motor Co. 47 USLW 2178),Ford could be fined a maximum of 30,000/- for reckless corporate homicide becauseof the dangerous construction of the Pinto automobile. This did not preventFord from spending 3 million on their defence, trying to prevent any damagetheir corporate image. (Supra n. 51,p.158).

Note, "Structural Crime and Institutional Rehabilitation : A New Approach toCorporate Sentencing", 89 Yale L.J. 353 at p. 368 (1999).

62. Ibid., pp 353-371. The term "Probation" means for a certain period of time thecorporate offender is required to comply with certain conditions laid down bythe court.


(restructuring) measures. In U.S. v. Atlantic Richfield Co., for example, thecourt ordered the company to set up a programme to stop the oil pollutionwithin 45 days."

The sentencing policy under Indian legislations is directed towardsindividual offenders. The same framework has been used to sentencecorporations as well. As a result, the court is left with only two sentencingoptions viz, imprisonment and fine. A company cannot be subject to anybodily punishment such as imprisonment and, therefore fine remains the onlyeffective option. In this regard, the Indian courts have been confronted withproblems in convicting a company for offences for which there is a mandatorypunishment of both imprisonment and fine.'

In several cases, the courts have held that a company cannot be convictedfor an offence where both imprisonment and fine ought to be imposed, on theground that the legislature could not have contemplated a company beingimprisoned on being found guilty of the offences.' The courts in these casesrelied on the decision of the Supreme Court in State of Maharastra v.Jugmantar Lal, 66 where the Court stated that, where it has been mademandatory to impose both punishment, the Court is bound to award thesentence of imprisonment. The courts have denied themselves the power toimpose a sentence of fine alone in these cases as 'this would amount tousurpation of legislative function'.'

U.S. v. Atlantic Richfield Co., 465 F.2d 58.

See for e.g. Ss 193 and 420 of the Indian Penal Code 1860; Ss.276 (1) & 277 ofIncome Tax Act 1961; S.16, Prevention of Food Adulteration Act 1954; S. I 0 ofthe Employees' State Insurance Act 1948.

A.K. Khosla v. T.S. Venkatesam, 1992 Cri.L.J. 1448 (Cal.); Adding MachinesIndia (P) Ltd v. The State, (1988)

Comp. Cas. 568 (cal.); P V Pai v. R.L. Rainwma, 77 Comp. Cas. 1798 (Kar.) (1993);D.C. Goel v. B.L. Verma, (1974)93 I.T.R 63 (Del).

67. Kusum Products Ltd, v. S.K.Sinha (1980) 126 I.T.R. 804 (Cal); Modi IndustriesLtd v. B.C. Goel, 54 Comp. Cas.835 (All.) (1983).


On the other hand, some courts have held that where the sentence isone of both imprisonment and fine, it does not mean that the company isgranted exemption from liability, as it can be sentenced to a punishment of fineon ly.6'

If the prescribed sentence is both imprisonment and fine, it would beillegal to award only part of the punishment to natural person. In the case ofa company however, awarding only part of the prescribed punishment, namelyfine, cannot be held to be illegal, as the company cannot suffer imprisonment.This appears to be the correct view. At the same time, the legisalture shouldalso look towards new modes of sentencing designed to deter corporateoffenders specifically."

Cumualtive Prosecution of Corporate and Individual Offenders

One of the arguments most frequently put forward against corporatecriminal liability is that it provides a free ride to individuals acting within thecapacity of a corporation as it will always be the corporation that would bepunished. This assertion does not hold water, however, as most systems thatrecognise corporate criminal liability, provide for both the corporation andthe relevant individuals to be prosecuted. 7° In England the possible sanctioningof company directors acknowledged by the courts is often confirmed byprovisions to be found in statutes that create offence likely to be committedby corporations. 71 Here the criticism is heard that too often prosectutorsindict only natural persons and leave the corporation untouched. 72 Also in the

Muncipal Corporation of Delhi v. J.B. Bottling Co., 1975 Cri.L.J. 1148 (Del.).See also. Manian Transports v. S. Krishna Murthy, I.T.O. 72 Comp. Cas. 745(Mad.) (1991).

See Monopolies and Restrictive Trade Practices Act 1969 S.48. This providesfor a sentence of fine alone on the corporation and sentence of imprisonment orfine or both on the individual officers of the company.

Supra n.32 p.517-518.

Supra n.24 p.175.

7 2 . Supra n.36 pp. 932-934.

264 Cochin University Law Review [20031

United States the possibility of sanctioning company directors is generallyaccepted."

Conclusion

In India through the penal law had recognised the concept of corporateliability long before, the conceptual confusion still exists. As it is rightly analysed :

"The non-clarity of the concept of corporate liability, in India, may bedue to the fact that there has not been much demand made to thelegislative or the judiciary to deal with corporate crimes and soopportunities to debate and develop an effective mode of controllingcorporate crimes were not provided to them. But, the advent of freemarket economic policy and the consequential changes in the role ofcorporations in the Indian society is certainly going to provide freshopportunities to test the sufficiency of the law in this area."'

The fact that an important part of crime nowadays takes throughcorporations, comples every legal order to take action. The only effectiveway to combat corporate crime is to direct punitive sanctions againstcorporations. To prosecute individuals only is not simply unfair, it is inefficienttoo. Even if the prosecution of a corporate officer results in a conviction, itwill seldom affect the way the corporation will behave itself in the future;structural flaws in the functioning of an organisation will not cease to existbecause one of its members has been brought to trial. it follows from this thatthe best way to impose punitive sanction on corporations is through a modelof corporate criminal liability.

Ratna R. Bharamgoudar*

M.C. Bassiouni, Substantive Criminal Law (1986)p.151.

K.Balakrishnan, "Corporate Criminal Liability: A Comparative View", [1998]C.U.L.R. 421 at p. 436.

B.A., LL.M; Lecturer, University College of Law, Karnatak University, Dharwad,Karnataka.

Corporate Criminal Liability : An Overview

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