Can a Company Be Criminally Prosecuted Without Any Director Being an Accused?
Can a Company Be Criminally Prosecuted Without Any Director Being an Accused?
Supreme Court Clarifies the Scope of Corporate Criminal Liability
Can a company be prosecuted for a criminal offence when no director, employee, officer or other natural person has been arraigned as an accused?
The answer is yes, in appropriate cases.
The Supreme Court of India has recently provided important clarity on this question in Sanofi India Ltd. v. Central Bureau of Investigation, 2026 INSC 957, decided on 7 September 2026. The judgment examines corporate criminal liability, attribution of acts and mens rea to companies, and the circumstances in which the absence of an individually arraigned director or employee does—or does not—make a prosecution against the company unsustainable.
The decision is particularly significant because it explains why the principle in Aneeta Hada v. Godfather Travels & Tours (P) Ltd., (2012) 5 SCC 661 cannot automatically be applied to every prosecution involving a corporate entity.
The Central Question
A company is a separate juristic person. It does not physically act or possess a mind in the same manner as a natural person. Corporate decisions and actions necessarily occur through human beings.
This creates an important legal question:
If no natural person is made an accused, can the company itself still be prosecuted?
In Sanofi India, the company was prosecuted in connection with allegations arising from procurement of pharmaceutical products for the Rare Materials Project of Bhabha Atomic Research Centre. The chargesheet alleged offences including criminal conspiracy and cheating, along with offences under the Prevention of Corruption Act.
Significantly, no employee or official of Sanofi India had been arraigned as an accused. The company therefore argued that the criminal proceedings against it could not be sustained independently of the prosecution of a natural person associated with it.
The Supreme Court rejected that argument.
The Supreme Court’s Answer: No General Requirement to Arraign a Director
The Supreme Court held that identification or arraignment of a natural person is not, by itself, a universal prerequisite for maintaining criminal proceedings against a corporation.
The Court expressly cautioned against treating Aneeta Hada as laying down a general rule applicable to every corporate prosecution.
According to the Court, the principle requiring the company to be arraigned first arises in a particular statutory context—namely, where the statute creates vicarious liability against individuals for an offence committed by the company and makes the company’s commission of the offence a statutory condition precedent.
Therefore, the legal analysis depends upon the nature of the offence and the statutory scheme creating liability.
Direct Corporate Liability vs. Vicarious Liability
This distinction is at the heart of the judgment.
1. Vicarious Liability
Under certain statutes, an individual such as a director, manager or person in charge of a company is made liable because of an offence committed by the company.
The classic example is Section 141 of the Negotiable Instruments Act, 1881.
In such cases, the individual’s liability is derivative or vicarious. The statute itself establishes the relationship between the company’s offence and the liability of persons responsible for its business.
This is where Aneeta Hada becomes relevant.
The Supreme Court reiterated that under Section 141, arraigning the company as an accused is imperative before persons can be prosecuted on the basis of the statutory vicarious liability contemplated by that provision.
2. Direct Corporate Liability
The position is different where the law treats the corporation itself as capable of committing the offence.
In such circumstances, the company may incur direct criminal liability.
The fact that a natural person acted on behalf of the company does not necessarily mean that such person must independently be arraigned as an accused before the company’s prosecution can proceed.
The Supreme Court therefore rejected the proposition that the prosecution of a corporation must invariably fail merely because no director or employee has been made an accused.
Corporate Mens Rea: Can a Company Have a Guilty Mind?
One of the important aspects of the judgment concerns mens rea.
Historically, one argument against corporate criminal liability was that a company, being an artificial legal entity, could not possess a human mind and therefore could not possess the guilty intention required for certain offences.
The Supreme Court has already addressed this issue in Iridium India Telecom Ltd. v. Motorola Inc., (2011) 1 SCC 74, holding that corporations cannot claim immunity from criminal prosecution merely because an offence requires mens rea.
The Sanofi India judgment builds upon this jurisprudence.
The Court explained that corporate criminal liability involves attribution—the legal process by which the acts and mental state of natural persons acting on behalf of a corporation may, in appropriate circumstances, be treated as acts and mental states of the corporation itself.
What Must the Prosecution Still Show?
The judgment does not mean that a company can be prosecuted merely by making a vague allegation against it.
The Supreme Court specifically emphasised that a prosecution against a corporation can still be quashed where the allegations fail to disclose the commission of an offence or are merely bald and unsupported.
At the threshold stage, the allegations should, at least prima facie, indicate:
- That some natural person or persons acted on behalf of the corporation;
- That the relevant action is connected with the offence alleged; and
- That the surrounding circumstances do not make the existence of the requisite mens rea inherently improbable.
The Court clarified that this inquiry is not intended to become a detailed mini-trial at the stage of considering a petition for quashing.
What About the Directors?
The judgment is equally important from the perspective of directors.
A director does not automatically become criminally liable merely because he or she occupies the position of director.
Criminal liability of an individual must have an appropriate legal foundation. Depending upon the statutory provision, the prosecution may have to establish personal participation, statutory responsibility, consent, connivance, negligence, control, or another legally recognised basis of liability.
This principle is consistent with the Supreme Court’s earlier jurisprudence, including Sunil Bharti Mittal v. Central Bureau of Investigation, (2015) 4 SCC 609, where the Court emphasised that a corporate officer cannot ordinarily be made criminally liable merely because of his position in the company.
Thus, corporate liability and individual liability are separate questions.
Why Aneeta Hada Does Not Contradict Sanofi India
At first glance, the two decisions may appear inconsistent.
They are not.
Aneeta Hada dealt specifically with Section 141 of the Negotiable Instruments Act, under which individual liability is statutorily linked to an offence committed by the company.
The Sanofi India judgment expressly explained that Aneeta Hada cannot be transformed into a universal rule that every prosecution of a corporation necessarily requires a director or other natural person to be arraigned as an accused.
The decisive question is therefore:
What is the statutory basis of the company’s criminal liability?
If liability is directly imposed upon the corporation, prosecution may proceed against the corporation without a director necessarily being arraigned.
If the statute creates vicarious liability of individuals based upon the company’s offence, the statutory conditions governing that vicarious liability must be strictly satisfied.
Key Takeaway for Companies and Directors
The Supreme Court’s decision in Sanofi India Ltd. v. CBI marks an important clarification of corporate criminal jurisprudence.
A company is not immune from criminal prosecution merely because no director or employee has been made an accused.
At the same time, a company cannot be prosecuted on the basis of bare or unsupported allegations.
The Court has therefore adopted a nuanced approach:
Corporate criminal liability can exist independently of individual prosecution where the law recognises direct corporate liability. However, the prosecution must still establish a prima facie factual and legal basis for attributing the relevant conduct to the corporation.
The decision reinforces an important principle of modern criminal law: a corporation, though an artificial legal person, is capable of bearing criminal responsibility in appropriate circumstances.
For businesses, directors and compliance teams, the judgment highlights the importance of maintaining effective internal controls, documented decision-making processes, compliance systems and clear allocation of responsibility.
For litigants, the judgment provides an important framework for determining whether a criminal proceeding against a corporate entity is legally sustainable—or whether the absence of a natural person as an accused is actually relevant under the particular statute involved.
The ultimate test is not simply whether a director has been arraigned. The real question is: what kind of corporate criminal liability does the applicable law create?
Lexel Law – Legal Services & Litigation Chambers
Chandigarh
Contact: 9814004850
Legal Note: This article is intended for general legal information and does not constitute legal advice. The applicability of the principles discussed above depends upon the facts of each case and the specific statutory provision under which prosecution is initiated.