The Supreme Court has held that a company can be prosecuted for an offence involving mens rea even when no natural person has been identified or arraigned as an accused alongside the company, rejecting the argument that prosecution of a corporate entity must necessarily be accompanied by prosecution of its directors, employees or other individuals.
A Bench of Justice J.B. Pardiwala and Justice Manoj Misra delivered the ruling in Sanofi India Ltd. v. Central Bureau of Investigation, 2026 INSC 957, while dismissing Sanofi India Ltd.’s appeal against the Karnataka High Court's refusal to quash the criminal proceedings.
The case arose from an FIR concerning procurement of medicines for the Rare Materials Project of the Bhabha Atomic Research Centre (BARC).
The CBI alleged that Dr. P. Anand, a Scientific Officer at BARC, conspired with pharmaceutical companies to procure medicines at inflated rates and in quantities exceeding requirements. Sanofi India was arraigned as an accused, but none of its employees or officials was made an accused in the chargesheet. The allegations included criminal conspiracy and cheating under the IPC as well as offences under the Prevention of Corruption Act.
Sanofi argued that since a corporation can act only through natural persons, the prosecution could not proceed unless the individual who constituted its “directing mind” or alter ego was identified and arraigned.
The Karnataka High Court rejected the argument and declined to quash the proceedings.
The Supreme Court rejected the proposition that identification and arraignment of a natural person is invariably necessary before a corporation can be prosecuted.
The Court held that while a corporation can possess mens rea only through attribution of the acts and state of mind of natural persons, there is no general rule requiring such person to be separately identified and arraigned as an accused.
However, the allegations must at least prima facie disclose that:
some natural person or persons acted on behalf of the corporation;
their actions were referable to the offence alleged; and
the surrounding circumstances do not make the existence of the requisite mens rea patently absurd or inherently improbable.
The Court emphasised that this examination at the stage of a quashing petition is not a detailed or microscopic inquiry and does not permit the High Court to conduct a mini-trial.
An important aspect of the judgment is the Court's formulation of a three-stage framework for attribution of mens rea to a corporation.
The first stage examines whether the company's constitutional documents or company law vest the concerned person with the power to undertake the relevant act.
The second examines whether that power was delegated to the person, expressly or impliedly, with sufficient discretion and independence.
The third stage considers whether the statutory purpose requires a special rule of attribution and whether the concerned person falls within that rule.
The Court clarified that the framework is transaction-specific and does not require identification of a corporation's “directing mind” in the abstract.
The Bench also held that, under Indian law, a corporation can be prosecuted even for an offence requiring mens rea, and even where the offence carries a mandatory sentence of imprisonment, subject to the nature of the offence.
The Court noted that a corporation cannot be prosecuted where an offence is punishable with imprisonment alone, or where the offence by its very nature requires a personal malicious intent incapable of being possessed or exercised by a corporation.
At the same time, the Bench observed that the IPC and the Bharatiya Nyaya Sanhita do not provide a comprehensive statutory framework explaining how the mens rea of a natural person is to be attributed to a corporation.
The Court said that if corporate criminal liability is to be expanded or made easier to establish, that is primarily a matter for the legislature, which may expressly specify whose acts and state of mind are to be attributed to the corporation or create failure-to-prevent offences.
Applying its principles to the case, the Court found that the chargesheet and material on record prima facie indicated that natural persons had acted on behalf of Sanofi in relation to the alleged offences, and that the surrounding circumstances disclosed the possibility of the requisite mens rea.
Therefore, the Court held that there was no basis to quash the proceedings merely because no employee or official of Sanofi had been separately arraigned.
The Court further clarified that the person whose conduct is sought to be attributed to a corporation need not necessarily be a director or a person formally occupying a position of authority. Whether that person's acts and state of mind can be attributed to the corporation is a matter to be determined by applying the attribution framework, ordinarily at trial.
The appeal was accordingly dismissed. The Court also directed the Registry to forward a copy of the judgment to all High Courts.
The judgment establishes that non-identification or non-arraignment of an individual is not, by itself, a ground to terminate a criminal prosecution against a company. What matters at the quashing stage is whether the allegations prima facie disclose conduct by natural persons on behalf of the corporation and circumstances capable of supporting the requisite corporate mens rea.
The ruling is significant for prosecutions involving corporate fraud, conspiracy, corruption and other mens rea-based offences, as it clarifies the relationship between the criminal liability of a company and that of the individuals acting for it.
Representation:-
For Petitioner(s):- Mr. Sidharth Luthra, Sr. Adv. Mr. Aditya Vikram Bhat, Adv. Mr. Anind Thomas, Adv. Mr. Priyank Ladoia, Adv. Mr. Mayank Pandey, AOR Mr. Raghav Seth, Adv. Ms. Nivedita Mukhija, Adv. Mr. Ayush Agarwal, Adv. Mr. Karl P Rustomkhan, Adv. Mr. Suhail Ahmed, Adv.
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