The corporation’s role can be disclosed through averments concerning its own conduct, decisions, and dealings without naming the individual who carried them out.”
Synopsis
- Introduction
- Background of the Case
- Allegations Against Sanofi India
- Proceedings Before the Karnataka High Court
- Issue Before the Supreme Court
- Arguments on Behalf of Sanofi India
- CBI’s Stand Before the Supreme Court
- Corporate Criminal Liability: The Foundational Question
- Can a Corporation Possess Mens Rea?
- From the ‘Directing Mind’ Doctrine to the Rules of Attribution
- Position of Corporate Criminal Liability Under Indian Law
- Supreme Court Lays Down a Three-Stage Attribution Framework
- Important Clarifications on the Attribution Framework
- Is Identification of the Responsible Natural Person Necessary?
- Non-Identification Alone Cannot Justify Quashing
- Is Arraignment of the Natural Person Mandatory?
- Aneeta Hada Principle Distinguished
- When Can Proceedings Against a Company Still Be Quashed?
- Application of the Principles to Sanofi India
- Supreme Court’s Decision
- Conclusion
Introduction
A company has no physical body, mind or consciousness of its own. Yet modern criminal law recognises that corporations can commit crimes, including offences involving intention, knowledge, dishonesty and other forms of mens rea. The real difficulty is therefore not simply whether a company can commit a crime, but whose acts and whose state of mind should legally become those of the company.
This question lay at the heart of the Supreme Court’s decision in Sanofi India Ltd. v. Central Bureau of Investigation. The case arose from a prosecution in which Sanofi India was charged along with a public servant, even though no employee or officer of Sanofi India was arraigned as an accused. The company contended that an artificial legal entity could not independently possess the guilty mind necessary for offences such as criminal conspiracy unless the natural person constituting its “directing mind” was first identified and prosecuted.
The Supreme Court rejected the proposition as an absolute rule. It held that neither identification nor arraignment of a natural person can be treated as a threshold prerequisite whose absence, standing alone, requires the prosecution of a company to be quashed.
At the same time, the Court did not dispense with the requirement of corporate mens rea. Instead, it undertook an extensive examination of Indian and English law and formulated a three-stage framework governing attribution of human conduct and mental states to corporations.
Background of the Case
Sanofi India Ltd., a public limited company engaged primarily in manufacturing pharmaceutical products, had supplied pharmaceutical products for the Rare Materials Project of the Bhabha Atomic Research Centre (BARC) pursuant to tender processes during 2011-12, 2013-14 and 2015-16.
The company was arrayed as an accused in an FIR alleging that Dr. P. Anand, Scientific Officer (Medical) at BARC, had conspired with various pharmaceutical companies for procurement of medicines at inflated rates and in quantities exceeding requirements.
Following investigation, a chargesheet was filed in 2017 against Dr. Anand and Sanofi India alleging offences under Section 120B read with Section 420 IPC [Sections 61 and Section 318(4) of BNS], besides provisions of the Prevention of Corruption Act, 1988.
Significantly:
“No employee or official of the Appellant has been arraigned as an accused in the chargesheet.”
That fact ultimately generated the central legal controversy before the Supreme Court.
Allegations Against Sanofi India
According to the prosecution, Dr. Anand had entered into a criminal conspiracy with Sanofi India concerning procurement of medicines and drugs for BARC’s Rare Materials Project.
The chargesheet alleged different forms of manipulation of the procurement process: certain items were allegedly classified as proprietary so that they could be purchased from Sanofi despite lower bids from others; competing bidders were allegedly omitted from the tender process; and in some instances orders were allegedly not placed with the lowest bidder after quotations had been received.
The alleged conspiracy was stated to have caused a wrongful loss of ₹3,53,361 to BARC, with corresponding wrongful gain to the accused.
The prosecution further alleged that Dr. Anand received ₹42,750 as illegal gratification from Sanofi India, without consideration and under various pretexts, and that the company had abetted the commission of the offence.
The Trial Court took cognizance and issued process against both Dr. Anand and the company.
Proceedings Before the Karnataka High Court
Sanofi India approached the Karnataka High Court seeking quashing of the criminal proceedings and the order taking cognizance.
Its principal contention was conceptual: a corporate entity necessarily acts through human beings. Therefore, according to Sanofi, a company could not be prosecuted for criminal conspiracy independently of the natural persons who allegedly acted on its behalf.
Since none of Sanofi’s employees or officials had been arraigned, the company argued that the prosecution could not continue.
The Karnataka High Court rejected the contention. Relying upon Iridium India Telecom Ltd. v. Motorola Inc., it concluded that companies may be held criminally liable not merely for strict-liability offences but also for offences involving mens rea. It consequently held that prosecution of a corporate entity was maintainable even without its directors or persons in charge being arraigned.
The High Court also considered that the allegations concerning Sanofi receiving favourable treatment despite not being the lowest bidder required trial and therefore declined to quash the proceedings.
Sanofi thereafter approached the Supreme Court.
Issue Before the Supreme Court
The Supreme Court framed the central question as:
“Whether the High Court ought to have quashed the criminal proceedings instituted against the Appellant company on the ground that no natural person had been identified and arraigned alongside it?”
Though apparently narrow, the Court observed that the issue required answering a much deeper question: how can criminal law attribute an act and a guilty mind to an artificial legal entity?
Arguments on Behalf of Sanofi India
Sanofi relied heavily upon the identification principle. Its argument was that where an offence requires mens rea, the conduct and mental state of the company’s key personnel, its “directing mind and will”, “alter ego” or governing mind, must first be identified before their state of mind can be attributed to the corporation.
Since the CBI had neither identified nor arraigned any person representing Sanofi’s governing mind, the company argued that there was no legal basis for attributing either the requisite mens rea or an overt act demonstrating conspiracy to Sanofi.
The company therefore maintained that the prosecution ought to have been quashed.
CBI’s Stand Before the Supreme Court
The CBI relied upon Iridium India and Standard Chartered Bank v. Directorate of Enforcement to contend that prosecution of the company was permissible even without separately identifying or arraigning its employees.
It further maintained that oral and documentary material prima facie indicated that Sanofi received undue benefits from the public servant and, reciprocally, paid him a bribe, thereby disclosing the alleged conspiracy.
Corporate Criminal Liability: The Foundational Question
The Court began its analysis by acknowledging the conceptual difficulty surrounding corporate criminal liability. A corporation is simultaneously regarded as an artificial person having an identity distinct from its members and as an abstraction having no physical existence of its own.
The Court referred to the famous description that a corporation has:
“no soul to damn and no body to kick”.
Ordinarily, a crime comprises two principal components: actus reus, the offending act or conduct, and mens rea, the guilty mental element.
A human being can physically act and possess intention or knowledge. A corporation cannot literally do either. Yet corporations wield enormous economic and institutional power and are capable of causing substantial harm. Criminal law has therefore developed the doctrine of attribution.
The Court explained:
“This process of attribution is the legal reasoning by which the conduct, or the state of mind, of a natural person is treated, in law, as the conduct or state of mind of the corporation itself.”
Thus, attribution converts the relevant human act and state of mind, for legal purposes, into the company’s own act and mind.
Can a Corporation Possess Mens Rea?
The Supreme Court reiterated that Indian law has already answered the basic question affirmatively. A corporation can possess mens rea and consequently can be prosecuted for offences requiring proof of a guilty mind.
Referring to Velliappa Textiles and Iridium India, the Court summarised the Indian position to the effect that a corporation can be prosecuted even where the offence requires mens rea or carries mandatory imprisonment, subject to limited situations such as an offence punishable with imprisonment alone or an offence whose nature requires personal malicious intent incapable of commission by a corporation.
The unresolved question, however, was not whether a corporation could possess mens rea, but how it does so. Neither the IPC nor the Bharatiya Nyaya Sanhita, 2023 provides a comprehensive answer to this attribution problem.
From the ‘Directing Mind’ Doctrine to the Rules of Attribution
The Court therefore examined the development of English law in considerable detail, particularly Lennard’s Carrying Co., Tesco Supermarkets Ltd. v. Nattrass, Meridian Global Funds Management Asia Ltd. v. Securities Commission and the Barclays cases.
The traditional identification doctrine regarded certain individuals as the corporation’s “directing mind and will”. Where such a person acted as the company rather than merely as its servant or agent, his or her state of mind could become the company’s state of mind.
In Tesco, Lord Reid famously explained:
“If it is a guilty mind then that guilt is the guilt of the company.”
But the Supreme Court cautioned against reducing corporate attribution to a mechanical search for the highest-ranking officer.
The inquiry must be transaction-specific. It is not concerned with discovering an abstract “brain” of the corporation. The question is whose act, in relation to the particular transaction or matter, should legally be treated as the corporation’s own.
Position of Corporate Criminal Liability Under Indian Law
The judgment makes an important distinction between direct corporate liability and vicarious criminal liability.
As a general rule, Indian criminal law does not recognise vicarious liability unless a statute expressly creates it. Attribution operates differently. Where attribution is successfully established, the natural person’s act and state of mind are treated as the corporation’s own act and state of mind. The company is therefore directly liable rather than merely being punished for somebody else’s crime.
This distinction ultimately became crucial in rejecting Sanofi’s reliance upon cases involving statutory vicarious liability.
Supreme Court Lays Down a Three-Stage Attribution Framework
One of the most significant features of Sanofi India is the formulation of a three-stage, hierarchical and sequential framework for determining corporate attribution.
Stage One: Constitutional Documents and Company Law
The first inquiry is whether the company’s constitutional documents, or a rule implied by company law, vest the natural person concerned with the power to perform the act in question.
The focus is therefore upon whether the individual possesses authority that can directly be traced to the corporation’s internal constitutional structure.
Stage Two: Delegated Authority
Where attribution cannot be established at Stage One, the Court must examine whether the relevant power was expressly or impliedly delegated to the person concerned.
Crucially, the delegation must carry sufficient discretion and independence in performing the relevant act. Thus, the mere fact that an employee performs a task for the corporation does not automatically make every act or mental state of that employee attributable to it.
Stage Three: Special Rule of Attribution
If attribution cannot be established through the first two stages, the Court proceeds to statutory purpose. For a provision having a narrow and readily identifiable statutory purpose, the Court asks whether that purpose requires creation of a special rule of attribution and, if so, whether the person concerned falls within it.
Where the statutory purpose is broader, the inquiry becomes more contextual: considering the particular facts and circumstances, does the statutory purpose require the person’s act and accompanying state of mind to be treated as those of the corporation?
The Court described these stages as hierarchical and sequential — movement to the next stage occurs only when attribution cannot be established at the preceding stage.
Important Clarifications on the Attribution Framework
The Court accompanied its framework with important qualifications.
First, attribution is transaction-specific. Courts should not simply search for the corporation’s overall “directing mind” and then automatically attribute everything done by that individual to the company.
Second, the framework primarily concerns offences framed with natural persons in mind which require proof of mens rea.
Third, attribution operates from the natural person to the corporation, not the other way around. Establishing attribution to the corporation does not, by itself, determine the personal criminal liability of the individual concerned.
Fourth, where a statute itself specifies whose conduct is attributable to the corporation, the statutory scheme governs. Likewise, where the statute expressly creates vicarious liability or imposes strict or absolute liability, resort to this general framework may not be necessary.
The Court also acknowledged that the framework is comparatively narrow and observed that if corporate prosecution for mens rea-based offences is to be made easier, that is principally a matter for legislative intervention rather than judicial expansion.
Is Identification of the Responsible Natural Person Necessary?
This was the decisive issue. The Court recognised two propositions. First, a corporation can possess mens rea only through attribution. Second, the requisite mens rea must exist fully in at least one natural person before being attributed to the corporation; corporate mens rea cannot ordinarily be constructed by combining fragments of knowledge or intention held by different people.
But this did not mean that the individual must necessarily be named at the threshold.
The Court drew an important distinction between the ultimate proof required at trial and the prima facie disclosure required when considering quashing.
It held:
“Non-identification of the natural person does not, by itself, render the allegations incapable of disclosing the corporation’s role in the offence.”
A chargesheet may disclose the company’s role through allegations concerning its decisions, conduct and dealings even without specifying which employee physically performed each act.
Non-Identification Alone Cannot Justify Quashing
The Court extended the same reasoning to mens rea. Although corporate mens rea ultimately originates in a natural person, it does not follow that the prosecution materials must necessarily name that individual at the quashing stage.
The Court observed:
“In most circumstances, mens rea can be averred through the surrounding facts and conduct themselves, without being tied to a specifically named individual.”
Where the surrounding circumstances, read collectively, disclose the possibility that the corporation acted with the required guilty mind, the prosecution does not fail merely because its human source has not yet been specifically identified.
Identifying the natural person and describing the precise acts undertaken would undoubtedly strengthen the prosecution’s case. But, according to the Court, that concerns the strength and eventual proof of the case, rather than whether an offence is disclosed at all.
Attribution is ultimately an intricate factual and legal exercise ordinarily requiring trial.
Is Arraignment of the Natural Person Mandatory?
Having held that identification was not invariably required at the threshold, the Court reasoned that arraignment could not automatically be required either, since arraignment is essentially the procedural consequence of identification.
This brought the Court to Aneeta Hada v. Godfather Travels and Tours Pvt. Ltd., where the Supreme Court had held that in a prosecution under Section 141 of the Negotiable Instruments Act, arraignment of the company was imperative for proceeding against persons made vicariously liable for the company’s offence.
Sanofi sought to apply that reasoning in reverse: if prosecution of an officer may depend upon arraigning the company, prosecution of the company should similarly depend upon arraigning the responsible officer.
The Supreme Court declined to accept the analogy.
Aneeta Hada Principle Distinguished
The Court explained that Aneeta Hada was fundamentally tied to the specific statutory structure of Section 141 of the Negotiable Instruments Act.
Section 141 expressly creates vicarious liability. The liability of the natural person under that provision is derivative of the company’s commission of the offence. Therefore, the company itself must ordinarily be before the court.
That does not create a universal reverse principle requiring a natural person to be prosecuted whenever a corporation is prosecuted.
The Court held that Aneeta Hada and Hindustan Unilever Ltd. v. State of M.P.:
“cannot be read as establishing a general rule that arraignment of a natural person is a prerequisite for a corporation’s prosecution to be maintainable.”
In Sanofi’s case, the prosecution did not rest upon such a statutory provision imposing vicarious liability. The attribution framework instead contemplated direct liability of the corporation.
Consequently, the failure to arraign a natural person did not furnish an independent ground for quashing.
When Can Proceedings Against a Company Still Be Quashed?
Importantly, the Supreme Court did not hold that proceedings against companies should automatically proceed to trial whenever an FIR or chargesheet names the corporation.
The ordinary principles governing Section 482 CrPC (Section 528 BNSS) continue to apply. The Court expressly clarified that where allegations do not disclose the commission of an offence, or amount merely to bald allegations unsupported by material, quashing remains available.
At the prima facie stage, the allegations should reveal that:
- some natural person or persons acted on behalf of the corporation;
- those acts are referable to the alleged offence; and
- the surrounding circumstances do not make the existence of the requisite mens rea patently absurd or inherently improbable.
The inquiry at this stage is not microscopic. The High Court is not expected to conduct a mini-trial or finally determine whether attribution will ultimately be proved.
This safeguards both sides: genuine corporate prosecutions are not prematurely terminated merely because the individual wrongdoer has not been named, while corporations remain protected from vague, unsupported or inherently improbable accusations.
Application of the Principles to Sanofi India
Applying the above test, the Supreme Court found that the material disclosed, prima facie, that natural persons had acted on behalf of Sanofi India in relation to the alleged offences. The surrounding circumstances were also sufficient at that preliminary stage to raise the possibility that those acts were undertaken with the requisite mens rea.
The Court stated:
“This is sufficient at this stage, and nothing further needs to be examined.”
Accordingly, the Karnataka High Court could not be faulted for refusing to quash the prosecution. The Supreme Court nevertheless carefully confined its pronouncement. It clarified that it was considering identification and arraignment specifically in the context of the High Court’s power under Section 482 CrPC (Section 528 BNSS). It did not purport to finally decide whether identification or arraignment might become necessary at some later stage of the criminal proceeding.
That qualification is important: the judgment should not be read as saying that the identity of the responsible human actor is legally irrelevant throughout the prosecution.
Supreme Court’s Decision
The Supreme Court ultimately dismissed Sanofi India’s appeal. It held, in substance, that the prosecution could not be quashed merely because no employee, director or other natural person acting for the company had been identified and arraigned alongside the corporation.
On the material before it, the chargesheet prima facie disclosed acts performed on behalf of Sanofi and circumstances capable of supporting the requisite mens rea. Whether those acts and mental states could ultimately be attributed to the company under the newly articulated framework was a matter appropriately examined at trial.
The Court concluded:
“For the foregoing reasons, the appeal fails and is hereby dismissed.”
The Registry was also directed to forward a copy of the judgment to all High Courts.
Conclusion
The Supreme Court’s decision in Sanofi India Ltd. v. CBI substantially clarifies the law governing prosecution of corporations in India. A company cannot escape criminal proceedings at the threshold simply by pointing out that investigators have failed to name or prosecute the particular officer through whom it allegedly acted.
The principle, however, is not that corporations possess an independent human-like mind. The Court remains clear that corporate mens rea ultimately rests upon the mens rea of a natural person and operates through legal attribution. What the judgment rejects is the proposition that the individual must invariably be identified and arraigned before the company’s prosecution can even proceed.
The distinction between the threshold and the trial is therefore central. At the quashing stage, the question is whether the allegations, read at face value, disclose acts performed on behalf of the corporation and circumstances capable of indicating the requisite guilty mind. At trial, attribution must withstand the more rigorous framework formulated by the Court.
The judgment thus avoids two extremes: it does not permit an artificial legal personality to become a shield against genuine criminal prosecution, but neither does it impose automatic liability upon companies for every act of every employee. Instead, Sanofi India places authority, delegation, statutory purpose, transaction-specific attribution and the ordinary safeguards of criminal law at the centre of corporate criminal responsibility in India.