Supreme Court lets a company stand trial even when no officer is named

The Supreme Court held on Monday, 7 September, that a criminal case against a company cannot be quashed only because investigators have not identified or charged the director or employee through whom the firm allegedly acted. Justices J.B. Pardiwala and Manoj Misra dismissed Sanofi India’s appeal against a Karnataka High Court order that had refused to kill a CBI case of cheating and conspiracy. The chargesheet says the company received undue favours from a scientific officer at the Bhabha Atomic Research Centre in the supply of pharmaceutical products.

Justice Pardiwala wrote the 98-page judgment. “Non-identification of the natural person does not, by itself, render the allegations incapable of disclosing the corporation’s role in the offence,” the bench said. Where the surrounding facts, taken as a whole, show that the corporation may have acted with the required mental state, that showing is not defeated merely because no particular individual has been named as its source. Identification and arraignment of a natural person are not prerequisites at the Section 482 stage.

The court was explicit about the limits. A company can be prosecuted for an offence that requires mens rea and even for an offence that carries a mandatory prison term. It cannot be prosecuted where the statute allows only imprisonment with no fine, or where the offence by its nature demands a personal malicious intent that a corporation cannot form. “What the chargesheet must disclose, on its face, is that the corporation itself has committed the offence,” the bench wrote, “not that it has also identified the particular individual through whom it did so.”

Corporate mens rea, the judges said, cannot be assembled by combining partial states of mind from different people. Natural persons remain the foundation. Attribution is an inquiry for trial. It is not a reason to abort a case at the threshold. The bench set out a three-stage framework for tying an individual’s conduct and mental state to the company. Every crime by an employee does not automatically become the company’s crime. The chargesheet still has to show the firm’s own conduct, decisions and dealings.

Sanofi had argued, through senior counsel, that without an identified alter ego there was nothing to attribute. The Karnataka High Court had rejected that plea on 15 February 2019. The Supreme Court agreed that the chargesheet and the accompanying material met the threshold for the case to continue. Whether the CBI can prove the favours and the intent is a question for evidence, not for a quash petition.

The ruling matters beyond one pharmaceutical file. Companies facing cheating, conspiracy or corruption charges have often used the missing-name problem as an exit at the High Court. After Monday, that exit is narrower. Prosecutors still need a chargesheet that describes the company’s role. They do not need to have locked a particular vice-president into the dock before the case can proceed. Defence desks will shift their fire to the three-stage test at trial rather than to Section 482.

CBI cases on public procurement are full of firms and thin on named officers, especially where the officer who signed has retired or died. The Sanofi-BARC file is one of those. The court has told trial judges to hear them. It has also told prosecutors that a company name on a chargesheet is not a shortcut around proof. Both instructions can be true at once. The next visible effect will be how many pending quash petitions in company-only prosecutions survive the first listing after this judgment.