Company’s Liability where Imprisonment is Mandatory Part of sentence

Company being a juristic/artificial person and incapable of being sent to prison may still be prosecuted and punished for an offence where imprisonment is mandatory part of sentence. There is no controversy when fine is the only punishment prescribed under any statute. There is also no controversy when statute entrusts the court with discretion to inflict fine or imprisonment, as in this case court shall inflict only fine on Company. Judicial controversy arises in the situation when statute prescribes mandatory imprisonment as punishment for an offence.

Penal law basically aims at punishing persons found guilty of commission of offence. In the statutes defining crimes, the prohibition is frequently directed against any person who commits the prohibited act. Term “person” as defined in Section 11 of the Penal Code and Section 2(42) of the General Clauses Act, 1872 includes clearly within its fold a Company, which is juristic person. Various enactments like the Prevention of Food Adulteration Act, 1954 (Section 17), the Essential Commodities Act, 1955 (Section 10), the NDPS Act, 1985 (Section 38), the Trade Marks Act, 1999 (Section 114), the Income Tax Act, 1961 (Sections 276-C and 278-B) and the Cable Television Networks (Registration) Act, 1955 (Section 17) provide for penal liability of a Company in relation to the offences prescribed in these Acts.

One view has been that the Company being incapable of suffering corporal punishment cannot be prosecuted or punished in respect of offences, which are punishable with imprisonment as a mandatory sentence and in such a situation it will be lawful to impose the sentence of fine only. This view has been taken in P.V. Pai v. R.L. Rinawma , Kusum Products Ltd. v. S.K. Sinha and Modi Industries Ltd. v. B.C. Goel . In 2003 the Supreme Court in Asstt. Commr. v. Velliappa Textiles Ltd. , took the view that since an artificial person like a Company could not be physically punished to a term of imprisonment, such a section, which makes it mandatory to impose minimum term of imprisonment, cannot apply to the case of artificial person. The Supreme Court per majority (2:1) held that in such a situation the Company being incapable of suffering corporal punishment may not be prosecuted and held guilty. The Court opined that corporate criminal liability cannot be imposed without making corresponding legislative changes i.e. the imposition of fine in lieu of imprisonment.

The other view has been that, though, Company may not be made to suffer corporal punishment because of its physical incapability, nonetheless, it may not be allowed to go scot-free and, therefore, in such a situation after being held guilty it must be punished with fine. This view is found to have been expressed in Municipal Corpn. of Delhi v. J.B. Bottling Co. (P) Ltd. , Oswal Vanaspati & Allied Industries v. State of U.P. and Manian Transports v. S. Krishna Moorthy .

Take your stance on this, whether a company should be left free or should be made responsible for its deeds through the mode of fine. If you take my word, I would suggest that the company should not be prosecuted as you can can't punish them according to the provisions of the law and law can't be changed for anyone. 

I will be waiting for your replies.