Doctrine of Attribution’, which helps to simplify the problem of making companies criminally liable and then sentencing them to imprisonment.
Introduction
One of the thing that is gaining importance in the field of criminal law is the question of putting liability over the officers, managers, directors and other employees of the organisation whenever there is some wrong done in the organisation during the ordinary course of business. This question has become a subject of debate amongst many jurists. The major element of a crime is actus reus and mens rea. The second element of the mens rea cannot be put on the corporation as per the view of the traditional jurists. Further, a corporation cannot be put behind the bars.
Actus non facit reum, nisi mens sit rea is the basic Lattin maxim upon which the criminal liability finds its roots. It is implied by this maxim that for making someone liable for one’s criminal acts, two major things have to be demonstrated. These are as follows:
- Any act that is forbidden as per the law or omission is done
- One has done it deliberately
Henceforth, if one wants to make a company liable for its criminal acts, it is a mandate to prove that there was a commission of the physical act, which is termed as actus reus, as well as the said act, was committed with full intention, which is termed as mens rea.
Moreover, the courts have forward with the ‘Doctrine of Attribution’, which helps to simplify the problem of making companies criminally liable and then sentencing them to imprisonment.
According to the above mentioned doctrine, whenever there is an event of any kind of omission or act that might lead to the violation of any law, the element of mens rea i.e. the criminal intention of doing any act can be attributed to those people who are in the position to direct the mind as well as the will of the companies.
The seeds for Doctrine of Attribution were sowed in the United Kingdom but it is taken into use in India from many past years. The Supreme Court has taken the step to resolve the debate on the topic, whether one can make corporations liable for the offences that are inextricable in possession of the mens rea as one of the main essentials, with the help of its matter titled ‘Iridium India Telecom Limited v. Motorola Inc.’[1]
ORIGIN OF DOCTRINE OF ATTRIBUTION
There used to be a general application of the principle of vicarious liability in order to make corporations liable for the acts done by its agents. Companies have to come front in order to make good to the loss that was occasioned by the agents of the corporation during the ordinary course of their employment.
But on the other hand, the above said the principle of attribution is not to be extended to shift the liability of committing a criminal act to the corporations. Further, the companies are allowed to do all the acts with impunity in all the related cases.
In order to do away with the said loophole, the courts that are in England used to pierce the corporate veil and it was also held by these courts that the corporations can be made liable for the civil wrongs as well as the criminal acts when the offence that is committed by the help of the mind and will of those who are in the capacity to direct the corporation.
While an offence was committed under the Merchant Shipping Act in the matter of Lennard’s Carrying Co. Ltd. v Asiatic Petroleum Co. Ltd.,[2] The House of Lords had made the application of the above-mentioned doctrine of attribution for the identification of Mr Lennard. He was is in the possession of the ship and was in responsible for all the acts done on the ship as well as the management of the ship in the form as if he was the directing mind and will of the company.
Further, in the matter of HL Bolton Co. Ltd. v. T J Graham and Sons,[3] it was held by the Court of Appeals that the companies are similar to that of the human body as well as that of the brain to that of the directors of the company. The court had also cleared the position of the application of the doctrine of attribution with respect to that of the criminal cases by confirming the application.
STATUS OF THE DOCTRINE OF ATTRIBUTION IN INDIA
In a case law the Supreme Court in Iridium India Telecom Ltd. v. Motorola Inc.[4] considered the issue of a company being criminally responsible for the actions of its employees. In Iridium, Motorola sold a technology product to Iridium that was accompanied by assertions and promises by Motorola that allegedly turned out to be false. Iridium brought a case of cheating against Motorola.
The case was brought not against Motorola’s employees but against Motorola itself. Under the provisions of the Indian Penal Code, cheating requires an intention to deceive. Motorola argued that a corporate body, being an artificial person, is not capable of a mental state and therefore cannot be held criminally liable for offences such as cheating. Motorola’s arguments were rejected by the Supreme Court[5] after it considered the modern approach to the problem of corporate criminal liability in the English courts.
Another theory was given by the house of lords and it was held by them that when there is no exception in the common law or any specific statute, the principle of attributing criminal liability on any corporation does not find its roots on making the employer vicariously liable for all those acts that are done by its employees and agents. However, it finds its basis on the above-mentioned concept of attribution.
It is not possible for any corporation to act or think on its own in the form of any legal personality. There are always certain group of its employees who will be acting on behalf of the corporation. In other words, the company can be made liable for the actions as well as the mental states of the employees who are working for it. Such a concept is fiction in law but it is necessary in order to maintain the separate legal personality of any corporation so that it can sustain itself over a period of time. If this is not done, it will not be able for the company to negotiate with the parties, to become a party to any of the contracts, to become the owner of any of the property, to sue or to be sued or for making any public statement or disclosure.
The leading case of Rex v. Huggins decided that the principal is not answerable criminally for the act of his agent without the principal’s authorization, consent or knowledge. In C. I. T. Corp. v. The United States,[6] a corporation was convicted of conspiracy to defraud the United States by presenting documents known to be false for securing insurance of loans under the National Housing Act.[7] Corporations or body corporate commit crimes to further their business enterprises by increasing profits and enhancing their competitive position and power.
The corporations are not just limited to crimes related to finance rather also get indulged in price-fixing, stock-misrepresentation and fraud.[8] Fixing the responsibility for a dispersed corporation is a complicated task. Establishing mens rea[9] for a corporation is a difficult task. For establishing the guilty mind, the intention of the officeholders, agents etc. are considered to measure the attribution.
The imposition of Criminal Responsibility is done in two ways[10]: Imposition of Strict Liability eliminating the requirement of Mens rea AND Imposition of Vicarious Liability dispensing with the Actus reus Corporate Liability arises out of business relationship in circumstances like[11]:
- Involvement of strict liability statutes
- The difficulty arising for proving the involvement of an employer’s corporate official
- Difficulty on the prosecutors to gather evidence to convict
- Prohibited Conduct causing public harm.
CONCLUSION
Till the recent past, corporate governance wasn’t given much consideration but a new mindset has come forward regarding this uprising doctrine which focuses on organizational blameworthiness and accountability of superiors. Issues with connection to the working of corporations have a close linkage to their governance to avoid potentially triggering criminal liability.
As Lord Reid so rightly said, “A living person, who acts on behalf of the company, acts as the Company himself and his mind which directs his act is the mind of the company. There is no question of the company being vicariously liable.
“A living person has a mind which can have knowledge or intention or be negligent and he has hands to carry out his intentions. A corporation has none of these; it must act through a living person, though not always one or the same person. Then the person who acts is not speaking or acting for the company.”
Over time, the Supreme Court came forward with the ruling of Iridium India Telecom Ltd. v. Motorola Incorporated &Ors. where it was upheld that corporations too can have mens rea, which forms the most essential ingredient for the commission of a crime. and thereby making corporations a party to a conspiracy.
Indian social legislations like the Essential Food Commodities Act 1955, the Prevention of Food Adulteration Act 1954, the Negotiable Instruments Act 1881, the Environment (Protection) Act 1986 sentences the company, along with every person in its employment, not only with fine but also with imprisonment for the commission of the offence.
Henceforth, it is possible to hold a corporation criminally liable for acts committed through its agents and employees and attribute mens rea to them. This upholding has brought a revolution in corporate governance as corporations have a say in almost every aspect of life. Currently of economic advancement where such a principle has assumed paramount importance in.
[1] (2011) 1 SCC 74
[2] [1957] 1 Q B 159 C A
[3] [1915] A. C. 705 HL. See also, Rudd v Elder Dempster & Co. Ltd., [1933] 1 KB 566.
[4] (2010) 14 (ADDL) SCR 591
[5] Nigam Nugehalli, Vicarious Criminal Liability for Corporate Officers in India: Problems and Prospects(Aziz Premji Journal), p.4
[6] 150 F.(2d) 85 (C. C. A. 9th, 1945).
[7] Criminal Liability of Corporations for Acts of Their Agents; Harvard Law Review Vol. 60, No. 2 (Dec,1946), pp. 283-289
[8] Supra note 4
[9] Supra note 4
[10] Supra note 4
[11] K.N. Chandrasekharan Pillai; General Principles of Criminal Law; 2nd Edition; Page number 232
