Criminal of mens rea, the proponents have
Criminal Liability of directors incompaniesAbstractThepast decades have brought forth a plethora of companies dominating theworldwide markets. In the normal course of business, these enterprises runbusiness transactions with multiple clients spread across the entire globe. Itis quite commonplace that the business dealings end up violating the laws ofthe host country. The wrongs committed by a corporation when brought before thecourt, raises questions of legal importance. Legal experts have for longdebated the imputation of punishment on the company citing the universalprinciple of a corporation being an artificial person. Arguing that anartificial person is devoid of mens rea, the proponents have tried to evade thecorporation’s responsibility from paying damages.
The courts over the yearshave changed their stance to hold the companies liable for the harm done to theaggrieved, pursuant to their act. Thisarticle traces the transition in the ideology of judges over the years to thelegal propositions as of date. It also draws a parallel between the legalframeworks in India and the prevalent laws in the overseas. At last, theresearcher tries to address the recurring issues with the present legal outlookand suggest appropriate alternatives for them.KeywordsIntroductionThe identity of acorporation has been dealt with meticulously in the late nineteenth and early twentiethcentury.
Philosophers have expended significant amount of time in imputing apersonality to an enterprise. Theories of varied nature had been scrutinized overthe time in an attempt to give a firm shape to the vague definition of acorporation. The Fiction Theory described a company as a fictional person withthe sole existence of juridical purposes. This view was aptly refuted byRealistic Theory which advocated that a company had a real psychic personalitywhich wasn’t a fruit of law. Organism theory, on the other hand propagated acompany to be a living organism with its members acting as hands and limbswhile the manger being the head. Every theory added a part of its owninterpretation to the workings of a company but was plagued with fallacies,hence couldn’t be implemented to its entirety.
The courts and legal fraternityhave over the years inclined towards the notion claiming a corporation to be afictional person or rather a legal person with no mind of its own.1With the recognition ofa company as legal person, the rights of an individual were granted to acorporation in general. Despite the fact that the rights of an individual aresimilar to that of a corporation, there lies an important variation betweenthem.
The sole difference between a corporation and an individual is the existenceof corporate veil.2It is a legal provision that safeguards a company being personally liable forthe debts incurred. Except theaforementioned difference, a company just like an individual is provided withright to sue an individual for harm caused.
The inverse is also true. Hence, anindividual aggrieved by the acts of a corporation was invested with the rightto sue for compensation. The latter right was challenged in legal diaspora asbeing illogical citing the absence of mind. Moreover, the rule of Ultra Viresand absence of physical entity further barred criminal proceedings againstcorporations.The courts, in the mideighteenth century held the corporations liable on the grounds of misfeasance ratherthan malfeasance.
Public inconvenience due to the inaction of the corporationwas held as a standard for assessing the claim for damages. Criminal charges ona company were not maintainable on the ground of lack of intent. 3 1 Theories of CorporatePersonality, 03.03.
2016, https://legalpoint-india.blogspot.in/2016/03/theories-of-corporate-personality.html2 http://www.businessdictionary.com/definition/corporate-veil.html3 CorporateCriminal Liability: What Purpose Does it Serve?, V.S Khanna, Harvard Law Review,Vol.
109, No. 7 (May, 1996)