सुप्रीम कोर्ट ने कंपनियों के ‘गिल्ट’ के मानदंड तय किये

India’s Supreme Court has, for the first time, laid down the test for attributing a guilty mind to a company. The recent judgment in Sanofi India Ltd v Central Bureau of Investigation (2026) will shape how companies in India are investigated and charged with offences.

In the judgment, a government scientist was accused of favouring a pharmaceutical supplier by steering medicine tenders. The supplier was charged with conspiracy and abetment under the Prevention of Corruption Act, but the company’s personnel were not charged.

Relying on the House of Lords judgment, in Tesco Supermarkets Ltd v Nattrass, the company argued that it could only act through its directing mind. If no employee was charged, nothing could be attributed.

Indian law has settled that a company can possess criminal intent (Iridium India Telecom Ltd v Motorola Inc (2010)) and can be tried even where the offence carries mandatory jail.

However, the Bharatiya Nyaya Sanhita, 2023, (India’s penal code) does not provide any clear provisions on a company’s criminal intent. The court called the question an empty vessel and derived its jurisprudence from English case law, chiefly the Crown Court’s Barclays judgment.

New three-stage arbitration test

The Supreme Court’s “new test” has three stages. First, does the company’s constitution confer on the person concerned the authority to do the act? Second, if not, was that authority delegated with sufficient discretion and independence? Third, if neither applies, does the purpose of the statute creating the offence justify a “special rule of attribution”?

The court clarified that the inquiry must be specific to the transaction. The intent must also be fully formed and must reside in one person. It cannot be pieced together from the partial knowledge of several persons.

Two aspects of this judgment deserve closer examination. First, liability under this test is direct, not vicarious.

The court chose not to overturn the decision in Aneeta Hada v Godfather Travels & Tours Pvt Ltd (2012), which holds that a company must be charged before its officers face charges for cheque dishonour, because that rule is rooted in a statute that imposes vicarious liability.

Direct liability does not have a compliance defence. A compliance programme now serves only as evidence at stages one and two, showing where authority existed and how much was delegated.

Second, the court established a third stage that overrides the first two. The relevant English cases illustrate how extensively a purpose-driven statute can extend. The court determined that the knowledge of the individual who engaged in a transaction or signed an agreement is to be regarded as the company’s knowledge.

This applies even if the board was unaware or had forbidden such conduct. For laws with a clear protective purpose, such as those related to money laundering, securities disclosure and market conduct, the third stage may effectively replace the first two.

Entity prosecuted without naming individuals

In the Sunil Bharti Mittal v Central Bureau of Investigation (2015) judgment, the Supreme Court held that an individual cannot be prosecuted for running a company. However, after this judgment, the entity can be prosecuted without naming anyone. The company becomes the default defendant, with quashing limited to bald or unsupported allegations and attribution is left to a criminal trial.

Against this backdrop, the court has now set a threshold that appears very generous for prosecutors. A charge sheet survives if the agencies can demonstrate that someone acted for the company, and that intent is not plainly improbable. While the prosecution must ultimately prove a guilty mind, it need not pin it to a particular person at the threshold, i.e. at the prosecution stage.

The court added that making companies easier to prosecute is a job for the legislature and called for a systematic study of the UK model.

Narrow doctrine, wide prosecution threshold

In conclusion, India has adopted a doctrine that is narrow in substance but wide at the threshold, leaving ample scope for false prosecution. The judgment’s ramifications will be felt far beyond the courtroom.

Agencies such as the Central Bureau of Investigation, the Enforcement Directorate and the Serious Fraud Investigation Office no longer need to identify a culprit before charging the entity. The path of least resistance for the agencies will be to charge the company first and determine who acted later.

Shankey Agrawal is a partner and Harsh Shukla is a counsel at BMR Legal

BMR Legal

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