1963 (9) TMI 72 - HC - Indian Laws

Court quashes charge against corporate body under Section 420 IPC, directs trial magistrate for further proceedings

State of Maharashtra Versus Syndicate Transport Co. (P) Ltd. and Ors.

State of Maharashtra Versus Syndicate Transport Co. (P) Ltd. and Ors. - AIR 1964 Bom 195 Issues Involved:1. Liability of a corporate body for criminal charges involving mens rea.2. Applicability of Sections 420, 406, and 403 of the Indian Penal Code to a corporate body.3. Attribution of mens rea from agents or servants to the corporate body.4. Legal precedents and interpretations regarding corporate criminal liability.Detailed Analysis:1. Liability of a Corporate Body for Criminal Charges Involving Mens ReaThe primary issue in this case is whether a corporate body can be held liable for criminal charges that involve mens rea. The court noted that a corporate body acts through its agents or servants, and the mens rea of such agents or servants cannot be attributed to the company. The court emphasized that a corporate body cannot be subjected to corporal punishment or imprisonment, making it impractical to prosecute a company for offences mandatorily punishable with imprisonment.2. Applicability of Sections 420, 406, and 403 of the Indian Penal Code to a Corporate BodyThe court examined Sections 2 and 11 of the Indian Penal Code, which define 'person' to include any company or association. Despite this broad definition, the court held that a corporate body cannot be indicted for offences that can only be committed by a human individual or for offences mandatorily punishable with imprisonment. Specifically, the court accepted that a company cannot be prosecuted under Section 420 of the Indian Penal Code for cheating, as it involves mandatory imprisonment.3. Attribution of Mens Rea from Agents or Servants to the Corporate BodyThe court considered whether the mens rea of the authorized agents or servants could be attributed to the company for other offences like criminal breach of trust or dishonest misappropriation under Sections 406 and 403 of the Indian Penal Code. The court referred to various legal precedents, including English cases, to conclude that a company could be held liable for the acts of its agents or servants if they acted within the scope of their authority. However, the court noted that each case must be evaluated based on its specific facts and circumstances to determine whether the corporate body intended to commit the act.4. Legal Precedents and Interpretations Regarding Corporate Criminal LiabilityThe court reviewed several Indian and English legal precedents on corporate criminal liability. It discussed cases like Director of Public Prosecutions v. Kent and Sussex Contractors Ltd., which supported the view that a company could be convicted of offences involving mens rea if the guilty intention of the company's agents could be attributed to it. The court also referred to Rex v. I.C.R. Haulage Ltd., which held that a company could be indicted for offences involving mens rea, depending on the nature of the charge and the position of the agent relative to the company.The court concluded that the scope of criminal proceedings against corporate bodies should be widened to make them indictable for offences resulting from the acts or omissions of their agents or servants. However, the court clarified that this does not mean a company is automatically held criminally responsible for every act of its agents.ConclusionThe court accepted the reference and quashed the charge framed against the corporate body under Section 420 of the Indian Penal Code. The court directed that the record be sent back to the Magistrate for proceeding with the trial in accordance with the law, emphasizing that the trial Magistrate should independently evaluate the evidence to determine the company's liability under Sections 406 and 403 of the Indian Penal Code.Final OrderReference accepted. The charge framed against the accused No. 1, Messrs. Syndicate Transport Company (Private) Limited, is quashed. The record is to be sent back to the Magistrate for proceeding with the trial in accordance with the law.