India: Corporate Criminal Liability: Revisiting Iridium

Last Updated: 27 August 2015
Article by PSA


The complexity shrouding the issue of criminality of a corporation was settled by the Supreme Court ("SC") in Iridium India Telecom Ltd. v. Motorola Inc.1 case. In January 2015, it got an opportunity to decide criminal liability of corporate officers for the acts of a company and to examine the principle of alter ego. This recent ruling in Sunil Bharti Mittal v. Central Bureau of Investigation ("CBI") and Others2 once again chartered into the territory of the corporate criminal liability and relied on Iridium case to determine the issue at hand.

This newsletter discusses the principle of attribution, which talks about the identification of the person whose acts will be instrumental in imputing criminal liability to the company. It touches upon the evolution in the concept of attributing mens rea to a company by analyzing the case of Iridium and Sunil Bharti Mittal.

1. Background

Companies are juristic persons and, hence, the prevalent view was that a company could not be charged of offences because of procedural difficulties of arrest, etc. Due to absence of requisite intention to commit a crime no criminal liability could be attributed to them. In Assistant Commissioner, Assessment-II, Bangalore v. Messers Velliappa Textiles Ltd.3 the SC had endorsed alter ego theory. However, it had by majority held that a company cannot be prosecuted for offences requiring imposition of imprisonment only or of mandatory term of imprisonment coupled with fine. However, a year later in Standard Chartered Bank v. Directorate of Enforcement4, a five-judge constitution bench overruled Velliappa Textiles dictum. From thereon, the SC has inched forward in determining the issue of corporate criminal liability and has provided jurisprudential value through Iridium and Sunil Bharti Mittal rulings.

2. Jurisprudential Position

The issue of criminality of corporate acts has always been controversial in nature. Legal position of corporate criminal liability has been evolving over the years and with time courts in India have taken a stricter approach while determining liability of a corporate body for acts committed by its directors and other agents.

2.1 Iridium case & issue of mens rea

The significance of Iridium lies in the fact that it clarifies the law on the point as to whether a company can be punished for crimes requiring mens rea. In this case Iridium had filed a criminal complaint against Motorola under sections 120 (Conspiracy) and 420 (Cheating) of the Indian Penal Code based on which the magistrate in Pune started proceedings against Motorola. Motorola then moved to the Bombay High Court seeking to quash the proceedings started by the judicial magistrate. The High Court allowed the petition quashing the proceedings at the magistrate level giving several reasons, one of them being that a company is incapable of having a guilty mind therefore no offence of cheating can be committed by it. Iridium, by way of appeal approached the SC. The SC framed the following two issues for its consideration: firstly, can mens rea be attributed to the companies for the criminal liability and secondly, what is the criminal liability for misstatements in the context of securities offerings made to specific investors on a private basis.

Substantially, the SC was concerned about the corporate criminal liability of the company. This was done by way of principle of attribution. This principle is invoked when the question as to whose mental element shall be attributed to the company for foisting criminal liability, comes up. In this judgment the court ruled that the person who is in direct control and in-charge of the affairs of the company and the degree of the control is so intense and rigorous that the company is said to act through the person, is instrumental in attributing criminal liability to the company. The two main points on which the court gave its ruling were: first that a company is capable of possessing the requisite mens rea and secondly that the rigid test of identification of the directing mind of the company has to be followed in determining the requisite metal element.

The court had relied on the case of Tesco Ltd.5 wherein it was laid down that the people who are specifically entrusted with the powers and duties towards the company and are mentioned in the Memorandum of Association ("MOA"), Articles of Association ("AOA"), named by the directors or approved of such powers in the general meetings of the company will be held liable and their acts will be instrumental in attributing criminal liability of the company. Iridium goes one step ahead by holding any natural person accountable and attributing liability to the company on behalf of their actions. The only requirement is that the person should be in charge of the affairs of the company. The court further held that non-disclosure of proper information would be treated as mis-representation thereby constituting the criminal offence of cheating for which the company can be held liable. The court finally ruled that criminal liability can be attributed to the company since it is capable of possessing the requisite men rea for commission of the offence.

2.2 Analysis of Iridium

Iridium went for the strict applicability of the directing mind and will of the company test. This approach is more suitable to the Indian scenario because of the fact that the relaxation in the requirement of mens rea in India is done by way of legislative interventions and not judicial pronouncements. This decision is still in line with the criminal jurisprudence because the requirement of having inherent certainty in the attribution of the criminal liability is being fulfilled by following the rigid approach. No liability is attributed to the people who might be responsible for handling the affairs of the company as against those who are actually named in the MOA/AOA or other relevant documents to do the same. The question of, under what circumstances would a company not be liable for the acts of the directors, etc. was left unanswered by the court.

The reliance on the case of Tesco Ltd. provides the scope of applying the rigid rule of attribution of criminal liability in synchronization with the principle that vicarious liability cannot be attributed in the criminal cases. This leads to non-application of the doctrine of attribution in a flexible manner. This would hence lead to the non-attainment of the true objective and purpose of the concept of the corporate criminal liability. It might filter out those situations where the actual people who are in charge of the affairs of the company might not have a corresponding designation and hence their acts might not get reflected upon the company and hence the company might run scot free in such cases.

2.3 Sunil Bharti Mittal case

A converse scenario as to the ruling laid down in the Iridium case is discussed in the Sunil Bharti case. This case discusses the proposition as to whether the directors (or any one representing the alter ego of the company) can be prosecuted on the account of criminal acts of the company. This case pertains to the alleged irregularities in relation to the grant of license and allocation of the spectrum in the 2G band wherein CBI had issued summons to the directors of the companies involved once the offences were laid down in the chargesheet.

The SC in the said case comprehensively scrutinizes whether and under what circumstances the principle of attribution (alter ego) be used to make the people in charge of the company liable for the acts (offences committed) of the company.

2.4 Analysis of Sunil Bharti Mittal

The court relied its decision on the previously discussed Iridium case. The judgment delivered by Justice AK Sikri (on behalf of the three judge bench) said that the Iridium case lays down the proposition that the corporations can no longer claim immunity from punishments under those offences, which require mens rea. The case however does not discuss the converse application of the alter ego principle as laid down in the Iridium judgement.

Next the court observed that the directors could be prosecuted for an offence committed by the company only in the following two circumstances. There should either be active involvement and sufficient evidence to adduce the criminal intent of that person, or the legislation should itself impose the liability on the director or person in charge of the affairs of the company. The court noted that there is no such evidence so as to draw an inference that the directors had a criminal intent. Also there is no statutory provision to the effect where the vicarious liability of the director is discussed in context of the offences committed by the company. Thus, it said that mens rea is attributed to the company on the principle of alter ego and it does not apply in reverse where vicarious liability is imputed on the persons dealing with the business of the company.

The principle borrowed from Iriduim is limited only to the extent that mens rea can be imputed to the companies and they cannot claim immunity on that ground. This case hence by way of analogy relies on Tesco Ltd. The SC has referred the decision of Tesco Ltd. in many cases and has very clearly laid down that the vicarious liability under strict liability statutes can be attributed to the person who is actually in charge of the company. Hence, clarifying the principle of attribution in cases of vicarious liability where they form part of specific offences in the statutes governing strict liability offences. But this case in general fails to talk about the vicarious liability aspect when it is not clubbed with strict liability offences.


Since the concept of corporate criminal liability has been evolving with time initially there were many difficulties as to how will the evidence be adduced and what will be the standard of proof required for culpability of the offender i.e., the corporate. Gradually, with time, the courts started filling up the voids by answering some of the pertinent questions. In the two cases analyzed above, the courts have further clarified the concept of corporate criminal liability and have widened its ambit. As of today, Iridium is the law as to the fact that mens rea can be attributed to the corporate entities and they cannot claim immunity on the ground of absence of legal personality. In the same case the court has refrained itself from laying down clear cut pointers as to the vicarious liability of the companies in case there are no specific offences vis-à-vis strict liability offences. Hence, further judicial interventions are required to add another feather in the chapter of evolution of the concept of corporate criminal liability.


1 (2011) 1 SCC 74

2 Criminal Appeal No. 35 of 2015 (arising out of Special Leave Petition (Cri.) No. 3161 of 2013 decided on January 9, 2015

3 AIR 2004 SC 86

4 AIR 2005 SC 2622

5 Tesco Supermarkets Ltd. .v. Nattrass (1971) 2 All E.R. 127

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions