The Supreme Court of India has ruled that a company can be subject to criminal prosecution even if the specific employee or official responsible for the alleged offense is not identified by the investigating agency. This landmark decision came in the case of Sanofi India Ltd. v. CBI, where a bench comprising Justices JB Pardiwala and Manoj Misra dismissed an appeal by Sanofi India Ltd. The appeal sought to overturn the Karnataka High Court’s decision to allow criminal proceedings against the company to proceed.
In their judgment, the Justices emphasized that when considering a petition to quash criminal proceedings under Section 482 of the Code of Criminal Procedure, it is not mandatory for the prosecution to pinpoint the exact individual within the company through whom the illegal act was conducted. The Court clarified that the chargesheet should demonstrate that the corporation, as an entity, has committed the offense, irrespective of identifying a specific person acting on its behalf.
The case originated from allegations involving the supply of medicines by Sanofi to the Rare Materials Project of the Bhabha Atomic Research Centre (BARC). The Central Bureau of Investigation (CBI) contended that BARC’s Scientific Officer, Dr. P Anand, colluded with pharmaceutical firms, including Sanofi, to purchase medicines at inflated prices and in unnecessary quantities. It was alleged that this resulted in a wrongful loss of ₹3.53 lakh to BARC and that Dr. Anand received illegal gratification amounting to ₹42,750 from Sanofi.
Sanofi argued against prosecution, claiming that proving the mens rea, or guilty intent, of a company necessitates identifying an individual who represents the company’s “directing mind”. Senior Advocate Siddharth Luthra, representing Sanofi, argued that without such identification, attributing the alleged criminal conduct to the corporation was baseless.
However, the Supreme Court rejected this line of reasoning, stating that while identifying specific natural persons could strengthen the case, it is not indispensable for establishing the existence of an offense. The Court further observed that requiring such identification at the initial stage of proceedings could hinder legitimate prosecutions.
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The ruling introduced a three-stage framework for attributing an individual’s actions and mens rea to a corporation. The first stage involves examining whether the company’s constitutional documents or legal rules vest the power to perform the act in question. If not, the second stage considers whether this power was delegated to the individual with adequate autonomy. The final stage involves evaluating the purpose of the criminal statute. Depending on whether the statute has a narrow or broad purpose, the Court might need to establish a specific rule of attribution and assess if the individual fits within it.
This framework is intended to be transaction-specific and does not aim to permanently identify a “directing mind” for a company. Nonetheless, companies retain the right to seek dismissal of cases where allegations lack substance or are not supported by evidence.
Siddharth Luthra was supported by advocates Aditya Vikram Bhat, Anind Thomas, Priyank Ladoia, Raghav Seth, Nivedita Mukhija, Ayush Agarwal, Karl P Rustomkhan, and Suhail Ahmed, alongside Mayank Pandey. The CBI was represented by Additional Solicitor General SV Raju, with advocates Mukesh Kumar Maroria, Sachin Sharma, Ritwiz Rishabh, and Harish Pandey.
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[Read Judgment]
