Corporate Prosecution Without Naming an Officer: Supreme Court Lays Down a Three-Stage Attribution Test

Corporate Prosecution Without Naming an Officer: Supreme Court Lays Down a Three-Stage Attribution Test

Introduction

Can a company accused of an offence requiring a guilty mind secure quashing merely because the prosecution has neither identified nor arraigned the employee whose conduct is attributed to it? In Sanofi India Ltd. v. Central Bureau of Investigation, 2026 INSC 957, the Supreme Court answered that limited threshold question in the negative.

The judgment does not dispense with proof of human conduct or mens rea. A corporation can act and form intention only through natural persons, and the prosecution must ultimately prove a legally sufficient basis for treating a person's act and mental state as those of the corporation. The Court's central distinction is between what must be shown at the threshold quashing stage and what must ultimately be proved at trial.

The decision is important far beyond the facts of one corruption prosecution. It supplies a structured Indian test for corporate attribution, distinguishes direct corporate liability from statutory vicarious liability, and explains why a person's formal designation is neither always necessary nor by itself sufficient.

The prosecution and the appeal

The case arose from pharmaceutical supplies made by Sanofi India Ltd. to the Rare Materials Project of the Bhabha Atomic Research Centre during 2011-12, 2013-14 and 2015-16. The CBI alleged that a BARC scientific officer conspired with pharmaceutical companies to procure medicines at inflated prices or in quantities exceeding requirements.

The charge-sheet accused the public servant and Sanofi of criminal conspiracy and cheating under Sections 120B and 420 of the Indian Penal Code, 1860, together with offences under the Prevention of Corruption Act, 1988. It alleged a wrongful loss of Rs 3,53,361 to BARC and an illegal gratification of Rs 42,750. No employee or officer of Sanofi was arraigned as an accused.

These are historical charges governed by the law applicable to the alleged transactions. For present statutory orientation, criminal conspiracy is contained in Section 61 of the Bharatiya Nyaya Sanhita, 2023, while the aggravated form of cheating involving dishonest inducement to deliver property is addressed by Section 318(4). This correspondence does not retrospectively replace the IPC provisions applied to the alleged conduct.

Sanofi sought quashing before the Karnataka High Court. It argued that a corporate entity could not commit conspiracy or possess mens rea independently of a human actor and that prosecution of the company could not survive when no employee or official had been identified and arraigned. The High Court refused to quash. The Supreme Court granted leave but dismissed Sanofi's appeal.

The precise issue

The Supreme Court framed the issue as whether criminal proceedings against the company should have been quashed because no natural person had been identified and arraigned alongside it. The question was expressly decided in the setting of Section 482 of the Code of Criminal Procedure, 1973, which corresponds to Section 528 of the Bharatiya Nagarik Suraksha Sanhita, 2023.

This procedural setting is essential. At the quashing stage, the High Court ordinarily asks whether the allegations, accepted at face value and without conducting a mini-trial, disclose an offence. It does not decide whether the prosecution will eventually prove every allegation beyond reasonable doubt.

Corporations can be prosecuted for offences requiring mens rea

Indian law already recognised two important propositions. First, Standard Chartered Bank v. Directorate of Enforcement, (2005) 4 SCC 530, held that a company does not enjoy immunity merely because an offence carries mandatory imprisonment as well as fine. Imprisonment cannot be executed against a juristic person, but the company may still be prosecuted and fined. The Court preserved the qualification that an offence punishable only with imprisonment may stand differently.

Second, Iridium India Telecom Ltd. v. Motorola Inc., (2011) 1 SCC 74, confirmed that a corporation can possess the mens rea required for an offence by attributing to it the state of mind of persons acting for it. Sanofi observed, however, that earlier Supreme Court authority established that attribution was possible without supplying a comprehensive answer to the separate question: whose act and state of mind should count as those of the company, and in what circumstances?

The three-stage attribution framework

Drawing upon Indian decisions and the development of English law, the Supreme Court adopted a hierarchical and transaction-specific inquiry. Movement to the next stage occurs only if attribution cannot be established at the preceding stage.

Stage one: constitutional authority

The court first examines the company's memorandum and articles of association, together with rules implied by company law. The question is whether those sources vested the relevant person with authority to perform the particular act in question. The inquiry is not who generally controls the company, but who possessed authority over the specific transaction or decision.

If the constitutional structure treats that person's act as the corporation's act, the accompanying state of mind may also be attributed to the corporation.

Stage two: delegated authority

If the first stage does not answer the question, the court asks whether authority was expressly or impliedly delegated to the person. Delegation must carry sufficient discretion and independence in performing the relevant act. A person who merely signs a document or follows terms already fixed by the board does not necessarily possess the decision-making authority required for attribution.

Employment, participation in negotiations or senior designation is therefore not enough by itself. The inquiry concerns the substance and limits of the delegated power in the transaction under examination.

Stage three: statutory purpose

If attribution is not established through corporate structure or delegation, the court considers the statute creating the offence. Where its purpose is narrow and identifiable, ordinary statutory interpretation determines whose act or knowledge Parliament intended to count as the corporation's. Where the statutory purpose is broad, the court may examine that purpose in the context of the particular facts before deciding whether a special rule of attribution is required.

The third stage is not an unrestricted judicial power to enlarge criminal liability. The Court described it as an exercise in construing the language, content and policy of the relevant offence. A special attribution rule must remain anchored in the statute.

Important limitations on the framework

The Court attached several qualifications to the three stages.

First, satisfying a stage does not make attribution automatic. Context may show why an individual's wrongdoing should not be treated as the company's own. The judgment referred to the problem of fraud practised against the company as one possible example, while leaving the precise development of that exception in India open.

Second, attribution is transaction-specific. The task is not to find an abstract corporate brain or assume that every act of a managing director belongs to the company.

Third, the framework need not be used where the statute itself supplies the attribution rule, creates vicarious liability, or imposes strict or absolute liability. It principally assists with offences framed around natural persons that require mens rea.

Fourth, attribution operates from the natural person to the corporation. It does not work in reverse to make an officer guilty merely because the company may be liable. Individual criminal responsibility continues to depend upon ordinary principles or an express statutory provision. This is consistent with Sunil Bharti Mittal v. Central Bureau of Investigation, (2015) 4 SCC 609: corporate officers are not personally criminally liable merely because of their office; their active role and criminal intent, or a valid statutory route to vicarious liability, must be shown.

Fifth, corporate mens rea cannot be constructed by aggregating fragments of knowledge held by different people. The complete mental element required by the offence must be found in at least one natural person before it can ultimately be attributed to the corporation.

Why an unnamed employee is not necessarily fatal at the quashing stage

The Court separated identification from arraignment. Identification means pinpointing the person involved, the person's acts and the accompanying state of mind. Arraignment means making that person an accused.

At the threshold, a charge-sheet may disclose the company's role through its transactions, decisions and dealings even if it does not yet name the human actor. Similarly, surrounding conduct may disclose the possibility of the required mens rea without attaching it to a named employee. Identification would strengthen and particularise the case, but its absence does not invariably mean that no offence is disclosed.

The Court also recognised a practical concern: a complainant may know that someone within a corporation committed an act without knowing who it was. Even an investigation may sometimes be unable immediately to isolate the relevant individual although the surrounding material points prima facie to corporate conduct accompanied by mens rea. Making identification an inflexible threshold prerequisite could terminate a genuine prosecution before attribution can be examined at trial.

The minimum threshold that still protects companies

Sanofi does not authorise prosecution upon a bare assertion that a company acted dishonestly. Paragraphs 195-197 preserve the ordinary quashing test and add a corporate-specific minimum. The allegations must prima facie reveal:

1. that one or more natural persons acted on behalf of the corporation;

2. that their action is referable to the offence alleged; and

3. that the surrounding circumstances do not make the existence of the required mens rea patently absurd or inherently improbable.

If these matters are absent, or if the accusations are bald and unsupported by material, quashing remains available. The threshold inquiry is broad rather than microscopic, but it is not empty.

Why Aneeta Hada did not control the result

Sanofi relied on the rule in Aneeta Hada v. Godfather Travels and Tours Pvt. Ltd., (2012) 5 SCC 661, that prosecution of officers under Section 141 of the Negotiable Instruments Act ordinarily requires arraignment of the company. The Supreme Court held that this did not create a mirror-image rule requiring arraignment of a natural person whenever the company is prosecuted.

Aneeta Hada concerns a specific statutory scheme under which individual liability is vicarious and derivative of the company's offence. The company is therefore a necessary accused when the statutory condition for fastening liability upon its officers is adjudicated. Sanofi concerned direct attribution of human conduct and mens rea to the company, not a statutory attempt to impose the company's liability upon an individual. Hindustan Unilever Ltd. v. State of Madhya Pradesh, (2020) 10 SCC 751, dealing with a comparable statutory structure under the Prevention of Food Adulteration Act, was distinguished on the same basis.

Application to Sanofi

The Supreme Court found that the charge-sheet and material prima facie indicated that natural persons had acted for Sanofi in relation to the alleged transactions. The surrounding circumstances permitted, at that preliminary stage, the possibility that the acts were accompanied by the requisite mens rea. That was sufficient to refuse quashing; it was not a finding of guilt.

The appeal was dismissed, and the Registry was directed to circulate the judgment to all High Courts. The prosecution must still prove at trial the charged offences and a legally valid attribution of conduct and mens rea.

Practical implications for investigations, companies and courts

Investigators should not treat Sanofi as permission to leave corporate allegations vague. The judgment itself encourages careful tracing of decision rights, reporting lines, board authority, delegation, communications and the persons exercising discretion over the disputed transaction. Better identification produces a fairer and more trial-ready case.

Companies facing prosecution should test the charge-sheet against both the three minimum threshold allegations and the full attribution framework. Relevant materials may include the memorandum and articles, board and committee resolutions, delegations of authority, approval matrices, contracts, internal communications, compliance escalation records and evidence that an individual acted outside authority or against the company's interests.

For boards and compliance teams, the decision makes governance evidence legally significant. Clear delegation, recorded approvals, defined responsibilities and effective anti-bribery controls help identify where authority actually lay. Following the 2018 amendments to the Prevention of Corruption Act, Section 9 separately creates an offence concerning bribery by a commercial organisation and provides an adequate-procedures defence. As Sanofi explains, an express statutory model of that kind must be applied on its own terms rather than displaced by the general attribution framework. C&C's related analysis of corporate and managerial liability under Section 70 PMLA may also assist readers in seeing how statute-specific provisions alter the inquiry: https://candclawchambers.com/articles/65

Conclusion

Sanofi establishes neither corporate guilt by association nor immunity through anonymity. Its rule is more disciplined: absence of a named or arraigned officer, standing alone, does not extinguish a prima facie case against a company. At the same time, the prosecution must allege real human action on the company's behalf, connect that action to the offence and disclose circumstances in which the required mens rea is reasonably possible. Ultimate liability depends on proving the human mental state and a valid legal basis for attributing it to the corporation through the Court's sequential, transaction-specific framework.

This article is intended for general information and legal discussion. It is not legal advice and does not create an advocate-client relationship. Application of the principles depends on the governing statute, the alleged offence, the corporate structure and the evidence in each case.

Sources

Sanofi India Ltd. v. Central Bureau of Investigation, 2026 INSC 957, Criminal Appeal No. 4250 of 2026, Supreme Court judgment dated 7 September 2026, especially paragraphs 14, 117-120, 130-139, 140-163 and 176-201: https://www.sci.gov.in/sci-get-pdf/?diary_no=133492019&from=latest_judgements_order&order_date=2026-09-07&type=j

Bharatiya Nyaya Sanhita, 2023, Sections 61 and 318: https://www.indiacode.nic.in/bitstream/123456789/20062/1/a2023-45.pdf

Bharatiya Nagarik Suraksha Sanhita, 2023, Sections 528 and 531: https://www.indiacode.nic.in/bitstream/123456789/21544/1/the_bharatiya_nagarik_suraksha_sanhita%2C_2023.pdf

Prevention of Corruption Act, 1988, including Sections 9 and 10 as substituted in 2018: https://indiacode.nic.in/bitstream/123456789/9317/1/corruptiona1988-49.pdf

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