Companies Can Be Prosecuted Even Without Naming Individual Officers: Supreme Court
The Supreme Court has delivered a significant ruling on corporate criminal liability, holding that a company can face criminal prosecution even when the investigating agency has not identified or arraigned the particular director, officer or employee through whom the alleged offence was committed. The judgment was delivered on September 7, 2026, by a Bench comprising Justice J.B. Pardiwala and Justice Manoj Misra in Sanofi India Ltd. v. Central Bureau of Investigation.
The Court made it clear that the absence of a specifically named individual accused cannot, by itself, become a ground for terminating criminal proceedings against a corporate entity at the preliminary stage. What is required is that the allegations and chargesheet should disclose, at least prima facie, that the corporation itself was involved in the alleged offence.
The ruling addresses an important question in corporate criminal law: how can a company be prosecuted for an offence involving mens rea, or a guilty state of mind, when the prosecution has not yet identified the particular human being whose conduct and mental state are alleged to represent the company?
The Supreme Court answered that the identity of the individual need not necessarily be established before criminal proceedings against the company can continue. According to the Court, identification of the natural person may emerge during the course of investigation or trial. Requiring such identification at the threshold could prevent legitimate corporate prosecutions merely because investigators initially cannot determine which employee or officer carried out the relevant act.
Supreme Court Rejects Automatic Requirement To Name Company Officer
The Court rejected the argument that a corporation cannot be prosecuted for an offence requiring mens rea unless an individual officer is simultaneously named as an accused. It held that the prosecution must instead demonstrate that the allegations concern conduct undertaken on behalf of the company and that the surrounding circumstances make the existence of the required guilty intent at least reasonably possible.
The Court, however, did not hold that every allegation against a company will automatically survive. At the threshold stage, the allegations must indicate that some natural person acted on behalf of the corporation, that the action is connected with the offence alleged, and that the surrounding circumstances do not make the existence of mens rea inherently improbable.
Thus, the judgment creates an important distinction between failure to identify an individual and failure to establish any corporate connection with the alleged offence. The former is not necessarily fatal to prosecution, whereas the latter can justify quashing of proceedings.
Three-Stage Framework For Corporate Criminal Liability
The Supreme Court has also laid down a three-stage framework to determine when the conduct and mental state of a natural person can legally be attributed to a corporation. The framework is particularly relevant where an offence requires proof of mens rea and the prosecution seeks to establish that an individual’s conduct should legally be treated as the conduct of the company.
At the first stage, courts are required to examine the company’s constitutional documents and applicable principles of company law. The central question is whether the company’s structure vested the relevant authority in the person whose conduct is sought to be attributed to the corporation.
If attribution cannot be established through the company’s constitutional structure, the second stage requires examination of whether the relevant authority was expressly or impliedly delegated to the individual. The Court stressed that the delegation must provide sufficient discretion and independence to undertake the relevant decision or transaction. Merely being an employee or participating in negotiations does not automatically make the person’s conduct the conduct of the company.
The third stage concerns the purpose of the particular criminal statute. Where neither the company’s constitutional structure nor delegated authority provides a sufficient basis for attribution, courts may examine whether the statutory scheme requires a special rule of attribution. This is ultimately an exercise in statutory interpretation and cannot be treated as an unrestricted power to impose criminal liability on corporations.
Case Involved Sanofi India And CBI Investigation
The judgment arose from allegations concerning the procurement of medicines for the Rare Materials Project of the Bhabha Atomic Research Centre (BARC). The CBI alleged that a BARC scientific officer, Dr. P. Anand, had conspired with pharmaceutical companies to procure medicines at inflated prices and in quantities exceeding requirements.
The prosecution alleged that Sanofi India was favoured in the procurement process despite lower bids from other companies. It further alleged that Dr. Anand received illegal gratification of ₹42,750 from Sanofi and that the alleged wrongful loss to BARC was approximately ₹3.53 lakh.
Significantly, no employee or officer of Sanofi was arraigned as an accused in the chargesheet. Sanofi therefore approached the Karnataka High Court seeking quashing of the criminal proceedings, arguing that the company could not independently face prosecution for offences involving conspiracy and mens rea without identifying the individual who had acted on its behalf.
The Karnataka High Court refused to quash the proceedings, following the established principle that a corporate entity can, in appropriate circumstances, be prosecuted even when its directors or persons in charge are not simultaneously prosecuted. Sanofi then challenged that decision before the Supreme Court.
Supreme Court Says Trial Should Not Be Stopped At Threshold
The Supreme Court concluded that the material in the chargesheet was sufficient at the preliminary stage to indicate that natural persons had acted on behalf of Sanofi in relation to the transactions and that the surrounding circumstances gave rise to a prima facie possibility of the required mens rea.
The Court therefore held that the absence of an identified Sanofi employee or officer was not sufficient to justify quashing the proceedings. Whether the company ultimately bears criminal responsibility remains a matter for determination during the trial on the basis of evidence.
The judgment therefore draws a careful line between allowing prosecution to proceed and finally establishing corporate guilt. The Supreme Court has not declared Sanofi guilty. It has held only that the prosecution cannot be terminated merely because the particular individual through whom the alleged conduct occurred has not yet been identified and arraigned.
Important Implications For Companies And Corporate Officers
The ruling is significant because it prevents companies from treating the absence of a named employee or officer as an automatic shield against criminal proceedings. Corporate criminal liability will instead depend upon whether the prosecution can establish the necessary connection between the company’s affairs, the relevant conduct and the required mental element.
At the same time, the judgment does not mean that directors, senior executives or ordinary employees will automatically make a company criminally liable for everything they do. The Supreme Court specifically emphasised that attribution is transaction-specific. The relevant question is whose conduct, in relation to the particular transaction or offence, can legally be treated as the conduct of the corporation.
The Court also clarified that its three-stage framework will not necessarily apply where the relevant statute itself establishes a different rule of attribution, where the offence creates vicarious liability, or where the offence imposes strict or absolute liability.
A Significant Development In Indian Corporate Criminal Law
The decision represents an important development in Indian corporate criminal jurisprudence because it moves the focus away from the rigid question of whether a particular “directing mind” has been identified and toward a broader examination of corporate authority, delegation and statutory purpose.
The Supreme Court’s approach recognises the practical reality that modern corporations operate through numerous employees, departments and decision-making structures. An allegation against a company may sometimes become apparent before investigators are able to identify the precise individual responsible for a particular decision. The Court has now made clear that this investigative difficulty does not, by itself, extinguish the company’s potential criminal liability.
The appeal filed by Sanofi India was consequently dismissed, leaving the criminal proceedings against the company to proceed. The ultimate question of whether the prosecution can prove the alleged offence and establish the necessary attribution will be decided in accordance with the evidence at trial.
