Insights
Does a company have a guilty mind?
October 26, 2026There is an old English saying about corporations — they have no soul to damn and no body to kick. The enforcement of criminal punishments against corporations has raised significant questions relating to implementation.
Two such questions which have invited debate is whether corporations can be held liable for criminal offences requiring mens rea, i.e., a guilty state of mind, and if so, how. The former has generated significant judicial debate over the last three decades and the dust appears to have settled, with courts across the country largely agreeing that corporations can be held liable for criminal offences, even those requiring mens rea.
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The second question however, has remained one that vexes courts and companies alike, with the Supreme Court finally seeking to bring a quietus to the issue in its recent decision in Sanofi India Ltd. v. CBI. While discussing how corporations can be held criminally liable for their actions (given that companies are juristic persons, as opposed to natural persons), Indian courts have consistently held that the actions of persons who can be said to be ‘the directing mind and will’ or ‘alter-ego’ of such corporations may be attributed to such corporations, as being the actions of such corporations themselves. This unfortunately, still left open the question as to ‘who could be said to be such directing mind and will’ of the corporation.
The Supreme Court has in Sanofi, sought to answer this question, and has laid down a three-fold test to determine ‘who could be said to be such directing mind and will’ of the corporation. These are — First, do the company’s constitutional documents vest the relevant power in the person concerned? Second, if not, whether the power delegated to such person could be exercised with enough discretion and independence? Third, if the first two tests fail, does the purpose of the relevant statute require a special rule of attribution, whereby the company becomes bound by the actions of the concerned individual?
As is evident, the framework laid down by the Supreme Court is not confined to directors or persons formally in charge, and instead extends to anyone acting on behalf of such a corporation. Now, corporations would be required to be more mindful in preparing their constitutional documents and delegations of authority matrices for specific matters, given that such documents would be the first point of inquiry to determine whether an officer’s wrongdoing can be attributed to the company. This decision may also serve as a nudge for legislative clarity on the issue of corporate criminal liability.
This article was originally published in The Hindu Business Line on 26 October 2026 Co-written by: Aditya Mukherjee, Partner; Krishna Tangirala, Principal Associate; Naman Kumar, Associate. Click here for original article
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Contributed by: Aditya Mukherjee, Partner; Krishna Tangirala, Principal Associate; Naman Kumar, Associate
Disclaimer
This is intended for general information purposes only. The views and opinions expressed in this article are those of the author/authors and does not necessarily reflect the views of the firm.
