There was a time when companies in India, no matter how large or how visibly at fault, would walk away from white-collar crimes simply by blaming a faceless system or shifting responsibility to one of their employees. Not anymore.

In the last decade, corporate criminal liability has emerged as a powerful tool for regulators, courts, and enforcement agencies. It’s no longer enough to say, “The company made an error.” Today, the question is: “Who in the company allowed it to happen and why weren’t they stopped?” 

In this blog, I break down how corporate criminal liability works in India, how the law has evolved, and what young legal professionals must understand when dealing with high-stakes white-collar matters. 

The core principle: can a company commit a crime? 

At first glance, this sounds strange. A company is a juristic person it doesn’t have a mind or a body. So how can it possess the intention (mens rea) needed for committing a crime? But the law in India has answered this with clarity. Courts have repeatedly held that a company can be held criminally liable, and its mind is the mind of those who control it. 

One of the first landmark rulings that shaped this understanding was: 

Iridium India Telecom Ltd v. Motorola Inc. (2011) The Supreme Court held that a company can be prosecuted for criminal offences, even those requiring mens rea, and punishment may be imposed in accordance with law. This settled a long-standing debate. Today, companies can be prosecuted just like individuals and in many white-collar cases, they are. 

Real world impact: who gets prosecuted? 

Here’s where things get serious. It’s not just the company name in the charge sheet. It’s also the directors, managers, compliance officers, CFOs, and even internal auditors, depending on the facts of the case. Section 141 of the Negotiable Instruments Act, for example, clearly states that if a company commits an offence under Section 138 (cheque bounce), every person in charge of and responsible for the conduct of the business is also liable. 

That means if you're a director who signed off on financial transactions without adequate checks, you could find yourself personally liable. 

Common corporate offences that lead to criminal liability 

Let’s talk reality. These are the areas where companies are routinely being dragged into criminal courtrooms: 

1. Cheque Bounce (Sec 138 of NI Act) 

Even a single bounced cheque can trigger prosecution not just against the company, but the 

signatory and senior officials. 

2. Corporate Fraud (Sec 447 of Companies Act, 2013) 

This includes false financial statements, diversion of funds, or siphoning of money directors and 

KMPs can be jailed if found guilty. 

3. Breach of Trust (Sec 405 & 409 IPC) 

Applicable when company money or property is misused by those in fiduciary roles. 

4. Tax Offences & GST Evasion 

Companies and responsible officers can face prosecution under Income Tax Act and CGST Act. 

5. Environmental Violations 

Many large firms are prosecuted under the Environment Protection Act for non-compliance with 

waste norms or emissions standards. 

The legal grey zone: mens rea in corporate prosecutions 

One of the biggest legal hurdles used to be proving intention (mens rea) in company cases. After all, how do you prove a non-living entity had criminal intent? 

That changed after the Standard Chartered Bank v. Directorate of Enforcement (2005), where the Supreme Court held: 

“The company is liable to be prosecuted and punished even if the punishment is mandatory 

imprisonment.” 

Courts began to apply the doctrine of attribution, meaning: the state of mind of those in control (directors, decision-makers) is the mind of the company. 

So, if a CFO knowingly cooked the books, the company is liable. If a CEO was aware of fraudulent tenders and did nothing, the company and the CEO are both liable. 

Young lawyers, watch this: compliance is now defence 

One of the most important shifts in the last few years is this: having a robust compliance system can now be your client’s strongest defense. 

If you're advising a company, remember: 

∙Have documented SOPs (Standard Operating Procedures) 

∙Appoint an internal compliance officer 

∙Maintain proof of due diligence and regular legal audits 

∙Establish reporting and whistleblower mechanisms 

If your client is prosecuted despite these, you may have strong grounds to argue that the offence occurred without the knowledge or consent of those in charge a key defense under Section 70 of the IT Act and other similar provisions. 

key doctrines you must know 

Here are the legal doctrines that courts apply when deciding corporate criminal liability:

1. Vicarious Liability 

Holding one person liable for the acts of another. Often applied to directors for offences by the 

company especially under laws like the NI Act, Food Safety Act, and Factories Act. 

2. Identification Doctrine 

The minds of senior officers are considered the “mind of the company.” Applied heavily in fraud 

and economic offences. 

3. Attribution Doctrine 

Intent and knowledge of key persons are attributed to the corporate entity. This has formed the 

backbone of many prosecutions post-Iridium and Standard Chartered cases. 

Recent trends: ed, cbi, and sfio are getting aggressive 

The role of regulatory bodies has intensified. Enforcement Directorate (ED), Serious Fraud Investigation Office (SFIO), and even local Economic Offences Wings are no longer stopping at the surface. 

They are: 

∙Attaching properties of companies and directors 

∙Summoning compliance officers for failure to report suspicious transactions 

∙Prosecuting even under shell or subsidiary company structures 

In 2022–23 alone, several fintech startups were investigated under FEMA and PMLA. In most cases, personal devices of CEOs and COOs were seized highlighting how corporate veil is no longer an armor. 

The corporate veil: not so thick anymore 

The doctrine of lifting the corporate veil is now being used more liberally by Indian courts. The Companies Act, SEBI regulations, and even criminal courts allow lifting the veil when:

∙The corporate form is used for fraud 

∙Personal funds are mingled with company accounts 

∙Directors knowingly conceal material facts from shareholders or regulators 

Example:​

In the NSEL case, several directors of associated companies were personally prosecuted and their assets frozen because the structure was used to route fraudulent transactions. 

As a lawyer, you must prepare your clients for this reality. The safest approach is: Disclose. Document. Defend. 

Challenges in prosecution 

Despite the growing number of cases, securing convictions in corporate crime remains difficult. 

Why? 

∙Evidence is often technical and financial in nature 

∙Corporate records can be manipulated or destroyed 

∙Burden of proof is high in criminal trials 

But the intent of the courts is clear if guilt is proven, punishment will follow. 

Penalties and consequences 

Don’t underestimate what’s at stake. 

∙Imprisonment of up to 10 years under Company Law or IPC for fraud 

∙Hefty fines under SEBI, FEMA, and Environmental laws 

∙Director disqualification for 5+ years 

∙Loss of reputation and long-term business disruption 

The legal system is slowly building precedent where corporate crime = real crime—not just regulatory breach. 

FINAL THOUGHTS 

If you're a young lawyer starting out in corporate or white-collar defense, remember this:​

Corporate criminal law is not about flashy boardrooms or media soundbites. It's about paper trails, compliance logs, and courtroom rigor. 

Don't get distracted by titles. A CEO and a junior accountant may both be in the dock if intent and roles aren’t clear. The key is documentation, legal review, and regular compliance audits. And when you draft or review contracts, ensure the risk is clearly allocated. “Responsibility” should never be left vague. It might be the difference between a clean acquittal and five years in 

judicial custody.