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1. GENERAL CRIMINAL LAW ENFORCEMENT
1.1 What authorities can prosecute business crimes, and
are there different enforcement authorities at the national and
regional levels?
India has a quasi-federal political structure comprising 29
states and seven centrally administered Union Territories. It has a
democratically elected Union Government (also called the Central
Government) and each state has its own democratically elected state
Government. The police are a state subject, and therefore both the
establishment and maintenance of a police force are in the hands of
the state Governments. Each state has a police force.
Investigations are normally handled by the police force of the
state where the crime has been committed.
However, there is unified (all India) legislation under the
Indian Penal Code, 1860 (IPC) and the Code of Criminal Procedure,
1973 (CrPC) for substantive and procedural laws relating to
crime.
The Central Government has established a central investigative
agency called the Central Bureau of Investigation (CBI). The CBI
has its own prosecution wing called the Directorate of
Prosecution.
It is also involved in serious crimes where it is necessary to
procure the services of an agency independent of local political
influence.
Where needed, the CBI can be assisted by specialised wings of
the Central Government, especially in economic or cross-border
crimes including the Serious Fraud Investigation Office, which is a
multidisciplinary organisation under the Ministry of Corporate
Affairs consisting of experts in the field of accountancy, forensic
auditing, law, information technology, investigation, company law,
capital market and taxation for detecting white-collar
crimes/fraud.
1.2 If there is more than one set of enforcement
agencies, how are decisions made regarding the body which will
investigate and prosecute a matter?
The CBI will not investigate a crime in a state without the
prior consent of that state. The Supreme Court or the High Court
can, however, direct the CBI to investigate the crime without the
consent of the state (or the Centre).
1.3 Is there any civil or administrative enforcement
against business crimes? If so, what agencies enforce the laws
civilly and which crimes do they combat?
The Government of India, under the Department of Revenue, has
set up various agencies to enforce the law and combat crime. Some
of the significant ones are:
- The Central Economic Intelligence Bureau (for various economic
offences, and the implementation of the Conservation of Foreign
Exchange and Prevention of Smuggling Activities Act, 1974). - The Directorate of Enforcement (DOE) (for foreign exchange and
money laundering offences, and implementation of the Federal
Emergency Management Agency and Prevention of Money Laundering Act,
2002 (PMLA)). - The Central Bureau of Narcotics (for drug-related
offences). - The Directorate General of Anti-Evasion (for central
excise-related offences). - The Directorate General of Revenue Intelligence (for customs,
excise and service tax-related offences). - The Securities and Exchange Board of India (SEBI) (to protect
the interests of investors in securities and to promote their
development, and to regulate the securities market and for matters
connected therewith). - The Directorate General of Income Tax (Investigation).
- The Financial Intelligence Unit, India (for the collection of
financial intelligence to combat money laundering and related
crimes). - The Directorate General of Foreign Trade under the Ministry of
Commerce and Industry (to monitor and curb illegal foreign
trade). - The Competition Commission of India (for anti-competitive trade
practices).
1.4 Have there been any major business crime cases in
your jurisdiction in the past year?
Yes, the country has witnessed a spate of business-related
crimes.
One such case relates to India’s largest cryptocurrency
exchange, WazirX. The Enforcement Directorate has questioned the
company in relation to transactions worth more than Rs. 2,790 crore
(approximately USD 376 million) for suspected violation of the
Foreign Exchange Management Act, 1999 (FEMA). Over the course of
investigation, it was discovered that the company was not compliant
with anti-money laundering and combatting financing of terrorism
norms, as well as FEMA Guidelines. In June 2021, the Enforcement
Directorate issued a show cause notice to WazirX for alleged
contravention of FEMA. The investigation is currently under
way.
Another case relates to ICICI Bank, a leading private sector
bank in the country where the former CEO of the Bank, Chanda
Kocchar, is under investigation. The Enforcement Directorate
alleges that Ms Kocchar misused her position to sanction bad loans
to the extent of USD 726 million with a quid pro quo
element. The bank did not hold any collateral proportionate to the
loan sanctioned. Based on an FIR filed by the CBI, the Enforcement
Directorate registered a criminal case under the PMLA against
Chanda Kochhar, her husband Deepak Kochhar, and others to probe
alleged irregularities and corrupt practices. Mr Kochhar was
arrested in September 2020. On November 4, 2020, the Enforcement
Directorate filed a chargesheet before a special court. All the
accused are currently on bail.
2. ORGANISATION OF THE COURTS
2.1 How are the criminal courts in your jurisdiction
structured? Are there specialised criminal courts for particular
crimes?
The specialised and exclusive criminal courts constituted in
each state are:
- courts of Judicial Magistrates, second class;
- courts of Judicial Magistrates, first class (in metropolitan
areas, these are called courts of Metropolitan Magistrates);
and - courts of Session.
Each state is divided into administrative divisions called
Districts. Each District consists of a Sessions Court and courts of
Judicial Magistrates. In metropolitan areas, Judicial Magistrates
are called Metropolitan Magistrates.
Special courts are set up to deal with cases investigated by the
CBI and to deal with offences under specialised statutes, for
instance, under the Companies Act, 2013 and under the Special Court
(Trial of Offences Relating to Transactions in Securities) Act,
1992.
2.2 Is there a right to a jury in business crime
trials?
No, there are no jury trials in India.
3. PARTICULAR STATUTES AND CRIMES
3.1 Please describe any statutes that are commonly used
in your jurisdiction to prosecute business crimes, including the
elements of the crimes and the requisite mental state of the
accused:
Securities fraud
The Securities and Exchange Board of India Act, 1992 (SEBI Act)
and Rules framed thereunder deal with fraud related to securities,
the issue, purchase or sale of securities, and the contravention of
the aforesaid statutes. Fraud includes any act, expression,
omission or concealment committed, whether in a deceitful manner or
not by a person with his connivance or by an agent to deal in
securities (whether or not there is any wrongful gain or avoidance
of any loss), and also includes a knowing misrepresentation of the
truth or concealment of material fact.
Under the SEBI Act, the Board set up thereunder has the power to
prohibit fraudulent or unfair trade practices relating to
securities markets. Penalties include a fine for failure to furnish
information, failure by any intermediary to enter into any
agreement with clients, failure to redress investors’
grievances, etc.
Accounting fraud
Accounting fraud includes forgery, falsification of accounts,
professional misconduct including failure to disclose a material
fact which is not disclosed in a financial statement, and failure
to report a material misstatement which is to appear in a financial
statement. Under the Companies Act, 2013 (last amended in September
2020), the Central Government is empowered to inspect the books of
accounts of a company, direct special audits, order investigations
and launch prosecutions. The IPC sets out the punishment for
forgery and falsification of accounts.
Insider trading
The SEBI Act prohibits insider trading. No “insider”
shall (directly or indirectly) deal in securities of a listed
company when in possession of unpublished price-sensitive
information (UPSI). Also, an insider cannot communicate, counsel or
procure UPSI. Prosecutions are launched by SEBI to prohibit insider
trading in securities. In continuation of its efforts against
insider trading, SEBI also notified the Prohibition of Insider
Trading Regulations, 2015 (amended from time to time, and recently
in April 2021). With the introduction of the Regulations, the scope
of who is an “insider” or a “connected person”
is significantly widened. Therefore, any person, whether or not
related to the company, may come within the purview of the
Regulations if he is expected to have access to, or possess, UPSI.
The Regulations specifically define trading and prescribe a more
structured disclosure regime. The Regulations prescribe for initial
and continuous disclosures to be made by certain categories of
persons in a company whose securities are listed on a stock
exchange, along with public disclosure requirements for the
company. Further, the Board of every listed company is required to
formulate and publish its policy and a code of practices and
procedures regarding disclosure of UPSI to determine what will
constitute a “legitimate purpose” for holding on to UPSI,
whistle-blower norms for reporting leaks of UPSI, and inquiry norms
for determining the source of leaks. Recent notable amendments
include the requirement to store contents of the structured digital
database for the preceding eight years at any point in time. The
structured digital database, which was mandated earlier in 2019,
must now contain details on the nature of the UPSI and the details
of the person sharing it. Further, by virtue of the amendment in
2020, maintenance of the database cannot be outsourced.
Additionally, all listed entities, intermediaries and fiduciaries
are required promptly and voluntarily to report any Code of Conduct
violation in the prescribed format, identifying the violation to
the stock exchange(s) where the concerned securities are
traded.
Embezzlement
Embezzlement under the IPC includes criminal breach of trust and
dishonest misappropriation of property. The person entrusted with
such property should have either dishonestly misappropriated or
converted to his own use the property concerned, or have used and
disposed of that property in violation of law. The offence carries
imprisonment for a term which may extend to two years or a fine, or
both.
Bribery of government officials
The law dealing with the bribery of Government officials is
contained in the Prevention of Corruption Act, 1988. The following
offences by public servants/other persons/commercial organisations
attract a penalty under the Act:
- Taking gratification other than legal remuneration in respect
of an official act. - Taking gratification by corrupt or illegal means to influence a
public servant. - Taking gratification for the exercise of personal influence
with a public servant. - A public servant obtaining valuable things without
consideration from the person concerned in proceedings, or business
transacted by such public servant. - Any person who gives or promises to give undue advantage to a
person with an intent to induce or reward a public servant to
perform their public duty “improperly”. - Any person associated with a commercial organisation who gives
or promises to give undue advantage to a public servant to obtain
or retain business or an advantage in the conduct of the business
for such commercial organisation.
The Act also provides for punishment for abetment by a public
servant, whether or not the offence has been committed. For all the
above offences, the acceptance, or agreement to accept or attempt
to obtain such gratification or give or promise to give an undue
advantage to a public servant, is enough to constitute an offence.
Further, a public servant may also be charged for criminal
misconduct, wherein the public servant abuses his position to gain
a pecuniary advantage for himself or any other.
Other acts, such as the IPC, the Benami Transactions
(Prohibition) Act and the PMLA, are also used for penalising acts
such as the bribery of Government officials.
Criminal anti-competition
The Indian anti-competition laws do not envisage any criminal
prosecution (see below).
Cartels and other competition
offences
Under Indian law, remedies for cartel and other competition
offences are civil in nature, i.e. in the form of a cease and
desist order or penalty, or both. However, wilful disobedience of
these orders or failure to pay the penalty may result in
imprisonment for a term which may extend to three years, or a fine
which may extend to Rs. 250,000,000. The Magistrate has the power
to take cognisance of the offence, provided that it is on the basis
of a complaint filed by the Competition Commission or a person
authorised by it.
Tax crimes
Under the Income Tax Act, 1961, the Customs Act, 1962, the
Central Sales Tax Act, 1956 & VAT, the Central Excise Act,
1944, and the Central Goods and Services Tax Act, 2017 various tax
crimes (such as tax evasion, smuggling, customs duty evasion,
value-added tax evasion, and tax fraud) are prosecuted. It should
be a deliberate act by a person and not an act of negligence,
viz. a “deliberate act or omission prohibited by
law”.
Government-contracting fraud
See “Bribery of government officials” above.
Environmental crimes
The significant statutes dealing with the subject are: (i) the
Water (Prevention and Control of Pollution) Act, 1974; (ii) the Air
(Prevention and Control of Pollution) Act, 1981; and (iii) the
Environment (Protection) Act, 1986.
(i) The Water (Prevention and Control of Pollution) Act,
1974
Any person who knowingly causes or permits any poisonous,
noxious or polluting matter into any stream, well, sewer, land or
otherwise contravenes the provisions of the Act, is liable to
imprisonment for a term no shorter than 18 months, but which may
extend to six years and a fine. A subsequent contravention shall
render the person liable for imprisonment for a term no shorter
than two years, but which may extend to seven years and a fine. The
functioning of the Act is entrusted to Pollution Control
Boards.
(ii) The Air (Prevention and Control of Pollution) Act, 1981
Once again, the functioning of the Act is entrusted to the
Pollution Control Boards, and they lay down the standards for
emission of air pollutants into the atmosphere.
(iii) The Environment (Protection) Act, 1986
This is an omnibus Act, under which the Central Government
is empowered to protect and improve the quality of the environment.
The Act works through delegated legislation. A significant
statutory Rule framed under this Act is called the “Hazardous
Waste (Management and Handling) Rules, 1989”. Violation of any
Rule framed under the provisions of the Act renders the offender
liable for imprisonment for a term which may extend to five years
(with a fine), and if the contravention continues beyond a period
of one year, the term of imprisonment may extend to seven
years.
Campaign-finance/election law
The law regulating elections and electoral campaigns in India is
the Representation of the People Act, 1951 (RPA) and the Conduct of
Elections Rules, 1961 framed thereunder. The RPA contains
provisions regulating the activities of both individual candidates
and political parties. The RPA provides for fixing a ceiling on the
expenditure that may be incurred by candidates. At present, a
candidate standing for election to the Lower House (Lok
Sabha) may incur an expenditure of up to USD 100,000
(approximately) for all states except for Arunachal Pradesh, Goa,
Sikkim, Andaman and Nicobar Islands, Chandigarh, Dadra and Nagar
Haveli, Daman and Diu, Lakshadweep and Puducherry, where it is USD
90,000 (approximately), and a candidate for election to the state
Assembly may incur an expenditure of up to approximately USD 47,000
in all states except Arunachal Pradesh, Goa, Manipur, Meghalaya,
Mizoram, Nagaland, Sikkim, Tripura and Puducherry, where it is USD
35,000 (approximately). However, it is provided that the following
expenditure incurred by a candidate shall be excluded: party and
supporter expenditures not authorised by the candidate; and
expenditure incurred by leaders of a political party on account of
travel by air or by any other means of transport for propagating
the programme of the political party.
Candidates who exceed these limits face the prospect of
disqualification and annulment of their elections by the Election
Commission. It is mandatory for political parties to declare their
income, assets and liabilities, electoral expenses and
contributions received, thereby bringing about greater transparency
in campaign finance.
The Companies Act, 2013 regulates corporate contributions to
individual candidates and political parties. It mandates that the
amount contributed must not exceed 7.5% of the average profits of
the past three years. Any contravention would result in a pecuniary
liability of up to five times the contributed amount and
imprisonment for a maximum period of six months.
Political parties are entitled to accept any amount of
contribution voluntarily offered by companies other than Government
companies under the RPA. It does, however, place an absolute
restriction on contributions from foreign sources.
The Income Tax Act, 1961 provides that corporations are allowed
a deduction from the total income to the extent of contributions
made to political parties. There is an absolute prohibition on
foreign contributions to any candidate for election or to a
political party or office bearer thereof. Both the RPA and the IPC
provide for sanctions on candidates and political parties for
violation of the provisions regulating campaign finance. Civil
penalties, inter alia, include disqualification for
bribery/violating rules relating to campaign finance for a period
of up to six years. The criminal penalties, inter alia,
include imprisonment for furnishing false information, violation of
foreign contribution rules, and failure to maintain election
accounts. In cases where the offences are punishable by
imprisonment, or a fine, or both, the Election Commission files
written complaints in the court of the jurisdictional Magistrate
for prosecuting the offenders.
Market manipulation in connection with the sale of
derivatives
The sale of derivatives is controlled by the provisions of the
Securities Contracts (Regulation) Act, 1956 (SCR Act) and the SEBI
Act, as well as the Rules, Regulations and Circulars issued
thereunder.
Section 12A of the SEBI Act prohibits the use of manipulative
and deceptive devices, insider trading and substantial acquisition
of securities. It provides that no person shall, inter
alia, use or employ in connection with the issue, purchase or
sale of any securities listed or proposed to be listed on a
recognised stock exchange, any manipulative or deceptive device or
contrivance in contravention of the provisions of the SEBI Act or
the Rules or Regulations made thereunder. Contravention of said
provisions is punishable under Section 24 of the SEBI Act, with
imprisonment for a term which may extend to 10 years (with a fine
which may extend to Rs. 250,000,000 or both).
Money laundering or wire fraud
Offences related to money laundering are dealt with under the
provisions of the Prevention of Money Laundering Act, 2002 (PMLA)
together with the rules framed thereunder and the rules and
regulations prescribed by the Reserve Bank of India and SEBI. The
offences are mentioned in the Schedule to the Act. The Act lays
down obligations on reporting entities (i.e. banking companies,
financial institutions and intermediaries), inter alia, in
relation to maintenance of records, confidentiality of information,
etc. The reporting entities are under an obligation to furnish
information to the Financial Intelligence Unit – India (a
central national agency responsible for processing, analysing and
disseminating information relating to suspect financial
transactions). An investigation can be initiated only by
authorities designated by the Central Government, including the
DOE. The Act provides that the Central Government may enter into an
agreement with the government of any country outside India for: (a)
enforcing the provisions of the Act; or (b) exchange of information
for the prevention of any offence under the Act or under the
corresponding law in force in that country or an investigation of
cases relating to any offence under this Act. The PMLA provides for
rigorous imprisonment for a maximum period of seven years in cases
of conviction for the offence of money laundering.
Cybersecurity and data protection
law
The Information Technology Act, 2000 (IT Act) and the Amendment
Act, 2008 deal with technology in the fields of e-commerce and
e-governance, as well as prescribe punishment for offences
committed under the IT Act. The IT Act extends to offences or
contravention committed outside India by any person if the act or
conduct constituting the offence or contravention involves a
computer, computer system or computer network located in India.
The IT Act prescribes punishment for various offences including
cyber-terrorism, identity theft, violation of privacy, sending
offensive messages, etc. The Amendment Act, 2008 also provides for
data protection by a body corporate and states that it shall be
liable to pay damages by way of compensation to a person if the
corporate is negligent in implementing reasonable security
practices, thereby causing wrongful gain or loss to any person.
During recent parliamentary proceedings in February 2021, it was
stated that the Ministry of Electronics and Information Technology
is taking steps to amend provisions of the IT Act to strengthen the
provisions for intermediaries in order to make them more responsive
and accountable to Indian users.
The IPC (as amended by the IT Act) penalises several crimes
which include forgery of electronic records, destroying electronic
evidence, etc.
Section 43 of the IT Act lists the offences related to the
introduction of viruses to a computer network, disruption of
computer network or denial of access to the computer system,
etc.
The CBI has notified a Cyber Crime Investigation Cell which has
been in force since March 3, 2000. It has a pan-India jurisdiction
and can look into the offences punishable under the IT Act as well
as into other high-technology crimes. A majority of states
including Delhi, Mumbai, Bangalore, Gujarat, etc. have their own
Cyber Crime Cell to handle offences within their jurisdiction.
The Ministry of Home Affairs, on October 5, 2018, approved a
scheme titled the Indian Cyber Crime Coordination Centre (I4C)
scheme. It is proposed that under the scheme, a national cybercrime
coordination centre will be set up for law enforcement agencies of
the states and the Union Territories to handle issues related to
cybercrime.
The Personal Data Protection Bill, 2019 is India’s first and
most comprehensive data protection legislation. It is currently
being examined by a Joint Committee set up by Parliament. The Bill,
once enacted, would govern the protection of personal data of
individuals, create a framework for processing such personal data
and establish a Data Protection Authority.
On February 25, 2021, the IT (Intermediary Guidelines and
Digital Media Ethics Code) Rules, 2021 were implemented by the
Ministry of Electronics and Information Technology and were met
with immediate resistance and apprehension from major players in
digital media such as WhatsApp/Facebook. The Government provided a
three-month deadline for social media platforms to comply with the
Rules, which ran out on May 25, 2021. According to the Rules, a
“significant social media intermediary”, i.e., a social
media intermediary which has more than 5 million registered users
in India, has to establish a three-tier system for observing due
diligence. Importantly, a social media intermediary which provides
the primary service of messaging would have to enable the
identification of the first originator of any information on its
computer resources as may be required by a competent court or
authority. In May 2021, a petition was filed by WhatsApp before the
Delhi High Court challenging the provision regarding traceability
of the first originator. It contended that the rules were in
violation of fundamental rights of privacy recognised under the
Indian Constitution, and that WhatsApp was being forced to breach
end-to-end encryption on its messaging service. The petition is
currently pending before the court. Most media platforms have
voluntarily complied with certain provisions of the Rules, while
disputing some. Reportedly, Twitter is not in full compliance with
the rules. Its contentions are currently sub judice.
Trade sanctions and export control
violations
The Foreign Trade (Development and Regulation) Act, 1992 is an
Act to provide for regulation of foreign trade and for matters
connected with or incidental thereto. Under the Act, the Central
Government has the power to make provisions for prohibiting,
restricting or otherwise regulating the import and export of goods.
The Act provides that persons are only permitted to engage in the
activities of import or export under an Importer-Exporter Code
Number granted by the Director General of Foreign Trade, Ministry
of Commerce and Industries. Such Code stands to be suspended or
cancelled if the Director General believes that a person has made
an export or import in a manner gravely prejudicial to the trade
relations of India, or to the interest of other persons engaged in
imports or exports, or has brought disrepute to the credit or the
goods of the country. The Central Government has the power to
impose quantitative restrictions (subject to a few exceptions) if
it is satisfied that the imports cause or threaten to cause serious
injury to the domestic industry.
Any other crime of particular interest in your
jurisdiction
- The Banning of Unregulated Deposit Schemes Act, 2019 was
enacted by Parliament on July 31, 2019. The Ministry of Finance, on
February 12, 2020, notified the Banning of Unregulated Deposit
Schemes Rules 2020 (Rules). The Act provides for a comprehensive
code to regulate deposit schemes in order to protect the interest
of depositors. Amongst other things, it bans solicitation and
receipt of unregulated deposits, creates a framework for reporting
and monitoring of deposit schemes, and sets out a prosecution and
penalty mechanism for its enforcement. It contemplates punishment
of up to 10 years and fines of up to Rs. 50 Crores for
violations. - The Fugitive Economic Offenders Act, 2018 deals with deterrence
measures against “fugitive economic offenders” who evade
criminal trials for economic offences by absconding even before a
formal criminal complaint is filed. A “fugitive economic
offender” is defined as an individual against whom an arrest
warrant in relation to a “Scheduled Offence” has been
issued by an Indian court, and who has left India, or being abroad
refuses to come to India in order to avoid criminal prosecution. A
“Scheduled Offence” in relation to which the arrest
warrant is issued, refers to an offence specified under the
Schedule of the Ordinance, where the total value involved in such
offence is Rs. 100 Crores or more. Scheduled Offences include money
laundering, customs evasion, insider trading, etc. The Act makes
provisions for special courts constituted under the PMLA to declare
a person as a fugitive economic offender. - The Parliament has passed the Black Money (Undisclosed Foreign
Income and Assets) Imposition of Tax Act, 2015 (on May 27, 2015)
and the Companies (Amendment) Act, 2015 (on May 26, 2015) to
improve transparency and combat business crime. - In February 2017, the Reserve Bank of India (India’s
central bank) constituted a Standing Committee on Cyber Security to
establish an ongoing system of security review and analysis of
emerging threats to protect the banking system in India and tackle
cyber crimes. In April 2021, the RBI ordered an Indian digital
payments firm, Mobikwik, to probe allegations that data of 110
million users was breached and leaked. This order came after
allegations surfaced in March 2021 that a hacker was selling
personally identifiable details (phone numbers, credit card
numbers, government identification details, etc.) that Mobikwik
users share during the Know Your Customer (KYC) procedure. The firm
may be fined in the event that lapses are found in its
operation.
3.2 Is there liability for inchoate crimes in your
jurisdiction? Can a person be liable for attempting to commit a
crime, whether or not the attempted crime is
completed?
Yes; however, not every inchoate crime is punishable under
Indian law. An attempt to commit a crime has not been defined under
the IPC. Various judicial decisions have laid down the elements
constituting the offence to include: (a) the intention to commit
that offence; (b) once the preparations are complete and with the
intention to commit any offence, performing an act towards its
commission; and (c) that such an act need not be the penultimate
act towards the commission of the offence but must be an act during
the course of committing that offence.
In some cases, the commission of an offence, as well as the
attempt to commit such offence, is dealt with under the same
section and the extent of punishment prescribed is the same for
both, e.g. bribery. In some cases, attempts are treated as separate
offences (e.g. an attempt to commit murder or robbery). In very few
cases, preparation to commit an offence is a crime.
4. CORPORATE CRIMINAL LIABILITY
4.1 Is there entity liability for criminal offences? If
so, under what circumstances will an employee’s conduct be
imputed to the entity?
An earlier view was that a company/legal entity does not have
the mens rea for the commission of an offence. However,
various judicial decisions have clarified the position that a
company/legal entity is virtually in the same position as any
individual, and may be convicted of a breach of statutory offences
including those requiring mens rea.
Most statutes have a clause covering criminal liability of a
corporate, which typically reads as follows:
“Offences by companies – (1) where any offence
under this Act has been committed by a company, every person who,
at the time the offence was committed, was directly in charge of,
and was responsible to, the company for the conduct of the business
of the company, as well as the company, shall be deemed to be
guilty of the offence and shall be liable to be proceeded against
and punished accordingly.
Provided that nothing contained in this sub-section shall
render any such person liable to any punishment provided in this
Act, if he proves that the offence was committed without his
knowledge or that he exercised all due diligence to prevent the
commission of such offence.”
The circumstances under which an employee’s conduct can be
imputed to the entity are:
- The employee must be acting within the scope and course of his
employment. - The employee must be acting, at least in part, for the benefit
of the corporation, regardless of the fact that it actually
receives any benefit or whether the activity might even have been
expressly prohibited.
4.2 Is there personal liability for managers, officers,
and directors if the entity becomes liable for a crime? Under what
circumstances?
Yes; in India, there is personal liability for managers,
officers and directors for aiding, abetting, counselling or
procuring the commission of any offence. (See also question
4.1.)
4.3 Where there is entity liability and personal
liability, do the authorities have a policy or preference as to
when to pursue an entity, when to pursue an individual, or
both?
See question 4.1. Usually, both are pursued. There have been
judicial pronouncements wherein it has been held that impleading
the company as an accused is sine qua non for prosecution
of the directors/individuals employed with the company.
4.4 In a merger or acquisition context, can successor
liability apply to the successor entity? When does successor
liability apply?
To a large extent this will depend on the mode of merger or
acquisition. In a court-approved merger, the court-sanctified
scheme will itself provide for successor liabilities. Generally, in
a simpliciter case of acquisition of assets (slump sale mode),
liability will not follow.
The Supreme Court in McLeod Russel India Limited vs.
Regional Provident Fund Commissioner, Jalpaiguri and others,
2014(8) SCALE 272 held the successor entity liable to pay damages
for any default in remitting provident fund (social security)
contributions. The said default was committed by the transferor
entity prior to the date of transfer of employees. The Supreme
Court clarified that the transferee shall not stand absolved of the
liabilities even if such liabilities have been specifically
assigned to the transferor entity by way of an express
agreement.
In addition, the Courts have enumerated five circumstances under
which successor liability can be recognised:
- express or implied assumption of liability;
- transfer of asset by the purchaser for fraudulent purpose of
escaping liability for the seller’s debt; - mere continuation of the enterprise amounting to consolidation
or de facto merger; - the purchasing corporation is merely continuation of the seller
for continuity of the enterprise; and - charge on the property.
5. STATUTES OF LIMITATIONS
5.1 How are enforcement-limitations periods calculated,
and when does a limitations period begin running?
In India, the CrPC provides for the calculation of a limitations
period. As per Section 468 thereof, no court can take cognisance of
an offence after expiry of (a) six months, if the offence is
punishable only with a fine, (b) one year, if the offence is
punishable with imprisonment for a term not exceeding one year, or
(c) three years, if the offence is punishable with imprisonment for
a term not exceeding three years. The limitations period commences
on the date of the offence. However, with regard to certain
economic offences/business crimes, the Economic Offences
(Inapplicability of Limitation) Act, 1974 provides that provisions
of the CrPC relating to limitation shall not apply in relation to,
inter alia, the following statutes:
- The Income Tax Act, 1961.
- The Companies (Profits) Surtax Act, 1964.
- The Wealth Tax Act, 1957.
- The Gift Tax Act, 1958.
- The Central Sales Tax Act, 1956.
- The Central Excises and Salt Act, 1944.
- The Customs Act, 1962.
- The Emergency Risks (Goods) Insurance Act, 1971.
5.2 Can crimes occurring outside the limitations period
be prosecuted if they are part of a pattern or practice, or ongoing
conspiracy?
Yes, if it is a “continuing offence” (as opposed to an
offence committed once and for all), a fresh period of limitation
shall begin to run at every moment of time during which the offence
continues.
5.3 Can the limitations period be tolled? If so,
how?
The limitations period can be tolled in the following
circumstances, if the court is satisfied that the delay has been
properly explained or if it is necessary to do so in the interest
of justice:
- the time during which a person has, with due diligence, been
prosecuting another action against the offender in another court of
first instance, court of appeal or revision, if it relates to the
same facts and is prosecuted in good faith in another court which
could not entertain it or want of jurisdiction or another cause of
a similar nature; - where the institution of the prosecution has been stayed by an
injunction or order (the time excluded is the period during which
the injunction or stay operated); - where the previous sanction of the Government is required for
the institution of the offence (the time excluded is from the date
of the application for obtaining the sanction to the date it is
obtained); and - the time during which the offender has been absent from India
or has avoided arrest by absconding or concealing himself.
6. INITIATION OF INVESTIGATIONS
6.1 Do enforcement agencies have jurisdiction to enforce
their authority outside your jurisdiction’s territory for
certain business crimes? If so, which laws can be enforced
extraterritorially and what are the jurisdictional grounds that
allow such enforcement? How frequently do enforcement agencies rely
on extraterritorial jurisdiction to prosecute business
crimes?
Under the provisions of the PMLA, if an order is passed freezing
any property of a person in possession of proceeds of crime, and
such property is situated outside India, the concerned authority
may request the appropriate court in India to issue a Letter of
Request to a court or authority in the Contracting State to execute
the order. “Contracting State” means any country or place
outside India in respect of which arrangements have been made by
the Central Government with the Government of such country through
a treaty or otherwise. (Please also see question 6.3.)
6.2 How are investigations initiated? Are there any
rules or guidelines governing the government’s initiation of
any investigation? If so, please describe them.
Normally, investigations are initiated by the filing of a report
with the concerned police station, called a First Information
Report (FIR). Based on the FIR, the police then initiate an
investigation. The procedure for conducting an investigation is
prescribed in the CrPC.
6.3 Do the criminal authorities in your jurisdiction
have formal and/or informal mechanisms for cooperating with foreign
enforcement authorities? Do they cooperate with foreign enforcement
authorities?
Yes, under the provisions of the CrPC (Section 166A), there are
formal mechanisms for cooperating with foreign enforcement
authorities. One such mechanism is via a Letter Rogatory or a
Letter of Request.
During the course of an investigation into an offence, an
application can be made by an investigating officer stipulating
that evidence is available in a country or place outside India.
Subsequently, the court may issue a Letter of Request to such court
or authority outside India to examine any person acquainted with
the facts and circumstances of the case and to record his
statement. The court may also require that such person or any other
person produce any document or thing which may be in his possession
pertaining to the case, and forward all the evidence to the court
issuing such Letter.
In addition to the above, the Indian legal regime also provides
for other forms of cooperation with foreign enforcement
authorities, such as the CBI which serves as the National Central
Bureau for the purpose of correspondence with ICPO-INTERPOL to
cooperate and coordinate with each other in relation to the
collection of information, the location of fugitives, etc. The
Double Tax Avoidance Agreements and finalised Tax Information
Exchange Agreements strengthen the exchange of information relating
to tax evasion, money laundering, etc. Further, Mutual Legal
Assistance Treaties (MLATs) facilitate cooperation in matters
relating to service of notice, summons, attachment or forfeiture of
property or proceeds of crime, or execution of search warrants.
MLATs have been given legal sanction under Section 105 of the
CrPC.
India has also adopted the Convention on Mutual Legal Assistance
in Criminal Matters. It has operationalised agreements with 42
countries so far.
On March 10, 2016, the Central Government gave its approval for
signing and ratification of the Bay of Bengal Initiative on
Multi-sectoral Technical and Economic Cooperation (BIMSTEC)
Convention on Mutual Legal Assistance in Criminal Matters. The
BIMSTEC comprises seven countries – Bangladesh, Bhutan,
India, Myanmar, Nepal, Sri Lanka and Thailand. The Convention aims
to enhance the effectiveness of the Member States in the
investigation and prosecution of crimes, including crimes related
to terrorism, transnational organised crime, drug trafficking,
money laundering and cybercrimes.
India signed and ratified the United Nations Convention against
Corruption on May 9, 2011.
7. PROCEDURES FOR GATHERING INFORMATION FROM A COMPANY
7.1 What powers does the government have generally to
gather information when investigating business crimes?
Generally, the investigation agencies have statutory powers to
obtain documents, records and other information from any person,
including employees, and to record statements as required. The
authorities can conduct search and seizure operations at the
premises of the companies, including directors. Under the PMLA, the
DOE has the power to require banks to produce records and documents
relating to suspect transactions and to provisionally attach any
property derived, directly or indirectly, by any person as a result
of criminal activity relating to a scheduled offence. Electronic
evidence may also be procured under the IT Act.
Please also see question 3.1, “Any other crime of
particular interest in your jurisdiction”.
Document Gathering:
7.2 Under what circumstances can the government demand
that a company under investigation produce documents to the
government, and under what circumstances can the government raid a
company under investigation and seize documents?
Please see question 7.1 above.
In addition, various authorities under special statutes,
including fiscal statutes are empowered to compel production of
documents if considered necessary for any inquiry or
investigation.
For instance, under the Companies Act, 2013, the Central
Government may assign investigation of the affairs of a company to
the Serious Fraud Investigation Offices (SFIO). Such investigation
may be initiated upon receipt of a report of the Registrar or
inspector under the Act or issuance of a special resolution by the
Company stating that an investigation is required, in public
interest, or upon request of the Central Government or the State
Government. Under Section 212 (5) of the Companies Act, a company
under investigation is required to provide all information,
explanation, documents and assistance to the SFIO.
Income tax authorities appointed by the Central Government under
the Income Tax Act 1961 have the power to compel production of
documents for the purpose of investigation. A raid may be carried
out where it is believed that a taxpayer has failed to comply with
any summons or notices sent to him, or has in his possession money
which represents income or property which has not been
disclosed.
Under the Information Technology Act, 2000, an agency of the
Government may be directed to intercept information transmitted
through any computer resource in the interest of sovereignty of the
state, public order, etc. (Section 69).
The Enforcement Directorate, which is under the administrative
control of the Department of Economic Affairs, investigates
offences under PMLA and FEMA, among others. It is empowered to
demand production of documents, and can also conduct raids when
there are suspected violations or involvements in any transactions
which are prohibited under the Act.
7.3 Are there any protections against production or
seizure that the company can assert for any types of documents? For
example, does your jurisdiction recognise any privileges protecting
documents prepared by in-house attorneys or external counsel, or
corporate communications with in-house attorneys or external
counsel?
Indian law recognises privilege or non-disclosure of documents
in limited circumstances. Insofar as Government documents are
concerned, privilege can be claimed only on the grounds that
disclosure will be injurious to public interest (including national
security or diplomatic relations).
Communication between husband and wife during marriage is
generally privileged.
Lawyer/client communication is privileged if it is made in the
course of, or for the purposes of, professional employment.
Mere confidentiality or protection of business secrets is not a
ground to resist production of documents. In some cases, the court
may examine the document concerned confidentially to judge its
relevance/admissibility before ordering its production.
As an exception, the labour laws of India do not protect
personal documents of employees even if they are located in company
files.
7.4 Are there any labour or privacy laws in your
jurisdiction (such as the General Data Protection Regulation in the
European Union) that may impact the collection, processing, or
transfer of employees’ personal data, even if located in
company files? Does your jurisdiction have blocking statutes or
other domestic laws that may impede cross-border
disclosure?
The IT Act contains specific provisions intended to protect
electronic data (including non-electronic records or information
that has been or is currently or is intended to be processed
electronically). Section 43A of the Information Technology
(Amendment) Act, 2008 provides for protection of “sensitive
personal data or information” (SPDI) and deals with
compensation for negligence in implementing and maintaining
reasonable security practices and procedures in relation to
SPDI.
The Information Technology (Reasonable Security Practices and
Procedures and Sensitive Personal Data or Information) Rules, 2011
lay down the manner in which collection and processing of data is
regulated.
Rule 5 of the same states that SPDI shall not be collected
unless it is necessary for a person or body corporate to collect
such information to carry out its lawful purpose. Additionally, the
provider of such information must consent to the collection of
information in writing, which he may also withdraw at any
point.
Further, Rule 6 lays down that any disclosure of SPDI requires
prior permission of the provider of this information.
The Rules require every company to have in place such
information security practices, standards, programmes and policies
that protect the collected information appropriately.
India does not presently have any blocking statutes or domestic
laws that may impede cross-border disclosure. A Bill, titled the
Personal Data Protection Bill, 2019, is currently under examination
before a Joint Parliamentary Committee (Standing Committee). The
Bill seeks to create provisions, inter alia, to protect
the autonomy of individuals in relation to their personal data, to
specify where the flow and usage of personal data is appropriate,
and to lay down norms for cross-border transfer of personal
data.
7.5 Under what circumstances can the government demand
that a company employee produce documents to the government, or
raid the home or office of an employee and seize
documents?
Please see question 7.2.
7.6 Under what circumstances can the government demand
that a third person or entity produce documents to the government,
or raid the home or office of a third person or entity and seize
documents?
Please see question 7.2.
Questioning of Individuals:
7.7 Under what circumstances can the government demand
that an employee, officer, or director of a company under
investigation submit to questioning? In what forum can the
questioning take place?
The CrPC empowers the investigating authority to examine any
person who appears to be acquainted with the facts and
circumstances of the case being investigated. Normally, the
questioning takes place at the office of the investigation agency.
Similar powers have been given to investigation agencies under
other special statutes.
7.8 Under what circumstances can the government demand
that a third person submit to questioning? In what forum can the
questioning take place?
Please see question 7.7.
7.9 What protections can a person assert upon being
questioned by the government? Is there a right to be represented by
an attorney during questioning? Is there a right or privilege
against self-incrimination that may be asserted? If a right to
assert the privilege against self-incrimination exists, can the
assertion of the right result in an inference of guilt at
trial?
In India, the right of silence is available only for an accused
individual. This does not apply to a person under investigation. At
the same time, any confession made to a police officer is
inadmissible in evidence, and a person cannot be compelled to sign
any statement given by him to a police officer in the course of an
investigation. Such a person does not have a right to be
represented during questioning. He is, however, entitled to an
advocate of his choice during interrogation, though not to be
present throughout interrogation. The assertion of the right of
silence will not result in an inference of guilt at trial. The
accused is presumed innocent until he is proved guilty.
8. INITIATION OF PROSECUTIONS / DEFERRED PROSECUTION / CIVIL
DISPOSITIONS
8.1 How are criminal cases initiated?
- A Magistrate may take cognisance of an offence in the following
manner (Chapter XIV of the CrPC):
- upon receiving a complaint constituting an offence;
- upon a police report;
- upon information received from any person other than a police
officer; or - upon his own knowledge that such offence has been
committed.
- In cases described under (i) (a) above:
- An individual (of any nationality) or a corporate entity may
file a complaint in the court of the jurisdictional Magistrate in
respect of a crime. - Complaints may also be filed by statutory authorities under
various enactments; for instance, for evasion of income tax, a
complaint is filed by the competent authority under the Income Tax
Act in the court of the jurisdictional Magistrate.
- An individual (of any nationality) or a corporate entity may
- In cases described under (i) (b) above: On completion of an
investigation, the police force is required to file a report
(whether an offence appears to have been committed or not). This is
referred to as a charge sheet, and is filed in the court of the
jurisdictional Magistrate. On receipt of such police report, the
Magistrate takes cognisance of the offence and issues summons to
the accused persons named therein. - In cases described under (i) (c) above: The Magistrate may also
take cognisance of an offence on the basis of information received
by him, other than from a police officer. This may be information
received from an unnamed source or an informer.
8.2 What rules or guidelines govern the government’s
decision to charge an entity or individual with a
crime?
Please see question 4.3 above.
8.3 Can a defendant and the government agree to resolve
a criminal investigation through pretrial diversion or an agreement
to defer prosecution? If so, please describe any rules or
guidelines governing whether pretrial diversion or deferred
prosecution agreements are available to dispose of criminal
investigations.
There is no such procedure.
8.4 If deferred prosecution or non-prosecution
agreements are available to dispose of criminal investigations in
your jurisdiction, must any aspects of these agreements be
judicially approved? If so, please describe the factors which
courts consider when reviewing deferred prosecution or
non-prosecution agreements.
Please see question 8.3 above.
8.5 In addition to, or instead of, any criminal
disposition to an investigation, can a defendant be subject to any
civil penalties or remedies? If so, please describe the
circumstances under which civil penalties or remedies may
apply.
In India, a defendant can additionally be subjected to civil
penalties or remedies. However, civil penalties or remedies cannot
be used as a substitute for the criminal disposition. Under
criminal remedies, the CrPC provides for compensation to any person
for any loss or injury caused by the offence if the court is of the
opinion that it would be recoverable by such person in a civil
suit.
8.6 Can an individual or corporate commence a private
prosecution? If so, can they privately prosecute business crime
offences?
Yes, the CrPC permits private prosecution including relating to
business crime offences by an individual or a corporate.
A private prosecution can commence in the court of the
Jurisdictional Magistrate after the complainant obtains permission
from the Magistrate.
Further, in the case of a State action, the complainant can
assist the public prosecutor via a pleader/counsel. The
complainant, upon seeking permission from the court, can submit
written or oral arguments as may be permitted by Court.
Please also see question 8.1 (i) and (ii).
9. BURDEN OF PROOF
9.1 For each element of the business crimes identified
above in section 3, which party has the burden of proof? Which
party has the burden of proof with respect to any affirmative
defences?
The burden of proof in criminal cases lies on the prosecution,
and does not shift during the trial. Under Sections 101 and 102 of
the Evidence Act, 1872, it may shift from party to party. With
respect to affirmative defence, generally, the party taking such
defence bears the burden of proof.
9.2 What is the standard of proof that the party with
the burden must satisfy?
The prosecution is required to prove its case “beyond all
reasonable doubt”. Criminal cases are governed by a higher
standard of proof as compared with civil cases (where only
“preponderance of probabilities” is required to be
proved). Where the accused pleads an exception in law, it has the
same burden as in a civil case (i.e. preponderance of
probabilities).
9.3 In a criminal trial, who is the arbiter of fact? Who
determines whether the party has satisfied its burden of
proof?
The Judge is the arbiter of fact and determines whether the
prosecution has satisfied its burden of proof. There are no jury
trials.
10. CONSPIRACY / AIDING AND ABETTING
10.1 Can a person who conspires with or assists another
to commit a business crime be liable? If so, what is the nature of
the liability and what are the elements of the
offence?
Yes, a person who conspires or assists another to commit a crime
can be held liable. These acts include abetment, conspiracy and
acts done in furtherance of a common intention. An offence of
“abetment” arises when a person voluntarily causes or
procures, or attempts to cause or procure, a thing to be done, and
is said to instigate the doing of that thing by wilful
misrepresentation or wilful concealment of a material fact which
one is bound to disclose (Section 107, IPC). A person will also be
liable for abetment if he abets the commission of any act beyond
India which would constitute an offence if committed in India
(Section 108A, IPC). Criminal conspiracy (Section 120A, IPC) arises
when two or more persons agree to commit or cause an illegal act to
be done or an act which is not illegal, by illegal means. For acts
done “in furtherance of a common intention” (Section 34,
IPC), the two elements required to be established are common
intention and participation of the accused in the commission of the
offence.
11. COMMON DEFENCES
11.1 Is it a defence to a criminal charge that the
defendant did not have the requisite intent to commit the crime? If
so, who has the burden of proof with respect to
intent?
Yes, lack of requisite intent/mens rea to commit a
crime is a defence to a criminal charge. Virtually every offence
under the IPC requires criminal intent or mens rea in some
form or another. The burden of proof lies on the prosecution and it
must be proved “beyond all reasonable doubt”. However, in
some cases, the law has omitted to prescribe a particular mental
condition, and in these cases, the doctrine of mens rea is
not applicable, e.g. negligence.
11.2 Is it a defence to a criminal charge that the
defendant was ignorant of the law, i.e., that he did not know that
his conduct was unlawful? If so, what are the elements of this
defence, and who has the burden of proof with respect to the
defendant’s knowledge of the law?
The maxim “ignorantia juris non excusat“
(i.e. ignorance of law is not an excuse) applies.
11.3 Is it a defence to a criminal charge that the
defendant was ignorant of the facts, i.e., that he did not know
that he had engaged in conduct that was unlawful? If so, what are
the elements of this defence, and who has the burden of proof with
respect to the defendant’s knowledge of the facts?
Sections 76 and 79 of the IPC provide for a mistake of fact as
an exception and a complete defence to a criminal charge. The
necessary prerequisites here are: that the act must be due to
ignorance of fact; and that there must be good faith, i.e.
reasonable care and caution in doing the act. The burden of proof
to prove the exception will lie on the accused/defendant. (See
question 9.2 above.)
12. VOLUNTARY DISCLOSURE OBLIGATIONS
12.1 If a person or entity becomes aware that a crime
has been committed, must the person or entity report the crime to
the government? Can the person or entity be liable for failing to
report the crime to the government? Can the person or entity
receive leniency or “credit” for voluntary
disclosure?
If a person knows or has reason to believe that an offence has
been committed and intentionally omits to give such information,
where he is legally bound to disclose such information, he will be
held liable for failure to report (Section 202, IPC). The
punishment would include a term which may extend to six months or a
fine, or both. Please see question 13.1 for leniency/credit for
voluntary disclosure.
13. COOPERATION PROVISIONS / LENIENCY
13.1 If a person or entity voluntarily discloses
criminal conduct to the government or cooperates in a government
criminal investigation of the person or entity, can the person or
entity request leniency or “credit” from the government?
If so, what rules or guidelines govern the government’s ability
to offer leniency or “credit” in exchange for voluntary
disclosures or cooperation?
The power to grant a pardon can be exercised by the Magistrate
during the investigation into an offence. The provision for pardon
applies only to cases triable by the Sessions Court, i.e. where the
offence would attract a punishment of imprisonment of seven years
or more. (For other cases, see the provisions relating to plea
bargaining in section 14 below.) A pardon is granted with a view to
obtaining evidence from any person supposed to have been directly
or indirectly concerned with or privy to an offence. A condition
for the grant of pardon is that the person makes a full and true
disclosure of all facts within his knowledge. Any person who
accepts a tender for pardon shall be examined as a witness in the
trial.
13.2 Describe the extent of cooperation, including the
steps that an entity would take, that is generally required of
entities seeking leniency in your jurisdiction, and describe the
favourable treatment generally received.
Where a person has accepted a tender of pardon (as described in
question 13.1 above) and it is alleged by the public prosecutor
that such person has wrongfully concealed an essential fact or
given false evidence, or has not complied with the conditions on
which the tender was made, he may be tried for the offence in
respect of which the pardon was tendered or for any other offence
which he appears to have been guilty of, and also for the offence
of giving false evidence.
14. PLEA BARGAINING
14.1 Can a defendant voluntarily decline to contest
criminal charges in exchange for a conviction on reduced charges,
or in exchange for an agreed-upon sentence?
(Sections 265A to 265L, CrPC.) Plea bargaining is available only
for offences that are penalised by imprisonment for fewer than
seven years. However, if the accused has previously been convicted
of a similar offence, then he will not to be entitled to plea
bargaining. It is not available for offences which might affect the
socio-economic conditions of the country or for offences against a
woman or a child below 14 years of age. A charge sheet must be
filed with respect to the offence in question, or a Magistrate must
take cognisance of a complaint before plea bargaining can
proceed.
14.2 Please describe any rules or guidelines governing
the government’s ability to plea bargain with a defendant. Must
any aspects of the plea bargain be approved by the
court?
The accused is required to file an application for plea
bargaining in the court where the trial is pending. On receiving
the application, the court must examine the accused in
camera to ascertain whether the application has been filed
voluntarily. The court must then issue notice to the public
prosecutor and the investigating officer (if the case is instituted
on a police report) or the complainant (if the case is instituted
otherwise) to work out a mutually satisfactory disposition of the
case. The negotiation of such a mutually acceptable settlement is
left to the free will of the prosecution (including the victim) and
the accused. If a settlement is reached, the court can award
compensation based on the outcome to the victim, and then hear the
parties on the issue of punishment. The court may release the
accused on probation if the law allows for it. If a minimum
sentence is provided for the offence committed, the accused may be
sentenced to half of such punishment; in other cases, the accused
may be sentenced to a quarter of the punishment provided or
extendable for such offence. The accused may also avail of the
benefit under Section 428 of the CrPC, which allows for setting off
the period of detention undergone by the accused against the
sentence of imprisonment in plea bargained settlements. The court
must deliver the judgment in an open court. This judgment is final,
and no appeal can be made.
15. ELEMENTS OF A CORPORATE SENTENCE
15.1 After the court determines that a defendant is
guilty of a crime, are there any rules or guidelines governing the
court’s imposition of a sentence on the defendant? Please
describe the sentencing process.
When the court determines that a defendant is guilty of a crime,
it may order either a fine or imprisonment or both, depending on
the statutory provisions and the severity of the crime. The court
may, while passing judgment, order the whole or any part of the
fine or imprisonment period to operate. The court’s imposition
of a sentence is largely discretionary in nature. An order to pay
compensation may include expenses incurred in the prosecution. With
regard to criminal misappropriation, criminal breach of trust or
cheating, it would include compensating the bona fide
purchaser or victim. If the Magistrate finds the accused not
guilty, he shall record an order of acquittal (Section 248, CrPC).
If the accused is convicted, the Judge shall hear him on the
question of sentence and then pass the sentence according to law,
unless there is an order to release the person on probation of good
conduct or after admonition (Section 235, CrPC). It should be
mentioned that in India, imposition of a sentence for a business
crime is generally not perceived to be harsh.
15.2 Before imposing a sentence on a corporation, must
the court determine whether the sentence satisfies any elements? If
so, please describe those elements.
The court must look into the facts and circumstances in each
case, the nature of the crime, the manner in which it was planned
and committed, the motive for commission of the crime, the conduct
of the accused, and all other attendant circumstances which would
enter into the area of consideration.
16. APPEALS
16.1 Is a guilty or a non-guilty verdict appealable by
either the defendant or the government?
Yes, there is at least one statutory right of appeal.
Thereafter, a discretionary appeal may lie to the High Court and
thereafter to the Supreme Court of India, depending on the
facts.
16.2 Is a criminal sentence following a guilty verdict
appealable? If so, which party may appeal?
Both parties are entitled to appeal if they are dissatisfied
with the verdict in whole or in part.
16.3 What is the appellate court’s standard of
review?
If an appeal is from a Magistrates’ Court to a Sessions
Court, then there is a full review of facts, appreciation of
evidence as well as law. If the appeal is to the High Court or the
Supreme Court, the review would be confined to issues of law alone,
unless there is a gross miscarriage of justice or error apparent on
the face of the record. However, if the appeal is from a
Magistrates’ Court or a Sessions Court on a sentence of more
than seven years to a High Court, then there is a full review of
facts, appreciation of evidence as well as law. The review by the
Supreme Court would be the same as stated above.
16.4 If the appellate court upholds the appeal, what
powers does it have to remedy any injustice by the trial
court?
If the appellate court upholds the appeal (Section 386, CrPC),
it may:
- From an order of acquittal, reverse such order and direct that
further inquiry be made or the accused be re-tried or committed for
trial, as the case may be, or find him guilty and pass
sentence. - In an appeal from a conviction or for enhancement of sentence,
it may:
- reverse the finding and sentence and acquit or discharge the
accused or order him to be re-tried by a court of competent
jurisdiction subordinate to the appellate court or committed for
trial; - maintain the sentence; or
- with or without altering the finding, alter the nature or the
extent or the nature and extent of the sentence but not enhance the
same.
- reverse the finding and sentence and acquit or discharge the
- In an appeal from any other order, alter or reverse such
order. - Make any amendment or any consequential or incidental order
that may be just and proper.
Originally published by Global Legal Group; 11th Edn. [Pages
101-111].
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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