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CASE NO.:

Appeal (civil) 1748 of 1999

PETITIONER:

ANZ Grindlays Bank Limited & Ors., etc.

RESPONDENT:

Directorate of Enforcement & Ors., etc.

DATE OF JUDGMENT: 04//7e

BENCH:

May 5, 2005

JUDGMENT:

J U D G M E N T

WITH

Civil Appeal Nos. 1749/99, 1750/99, 1751 & 1944 of 1999,

Criminal Appeal Nos.685,684,688(@ of S.L.P.

[Crl.] Nos. 1940/04, 2599/03 4995/03; Writ Petition (Crl.)

No. 165/04, Criminal Appeal Nos. 847/04 and 848/04

K.G. BALAKRISHNAN, J.

Leave granted.

The appellant in Civil Appeal No. 1748 of 1999 filed a writ

petition before the High Court of Bombay challenging various notices

issued to them under Section 50 read with Section 51 of the Foreign

Exchange Regulation Act, 1973 (for short, the FERA Act) and

contended that the appellant company was not liable to be prosecuted

for the offence under Section 56 of the FERA Act. In this appeal filed

against the judgment of the Division Bench of the Bombay High Court,

dated 7th November, 1998, the appellant contends that no criminal

proceedings can be initiated against the appellant-company for the

offence under Section 56(1) of the FERA Act as the minimum

punishment prescribed under Section 56(1)(i) is imprisonment for a

term which shall not be less than six months and with fine. Section

56 of the FERA Act, 1973 reads as follows :

"56. Offences and prosecutions - (1) Without prejudice

to any award of penalty by the adjudicating officer under this

Act, if any person contravenes any of the provisions of this Act

(other than Section 13, clause (a) of sub-section (1) of section

18, Section 18A, clause (a) of sub-section (1) of section 19, sub-

section (2) of section 44 and sections 57 and 58, or of any rule,

direction or order made thereunder, he shall, upon conviction by

a court, be punishable, --

(i) in the case of an offence the amount or value involved in

which exceeds one lakh of rupees, with imprisonment for a term

which shall not be less than six months, but which may extend

to seven years and with fine:

Provided that the court may, for any adequate and special

reasons to be mentioned in the judgment, impose a sentence of

imprisonment for a term of less than six months.

(ii)\005\005.

(2)\005\005

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(3)\005\005

(4)\005\005

(5)\005\005

(6)\005\005."

The contention of the appellants in other connected matters

also is to the same effect that in a case where the offence is

punishable with a mandatory sentence of imprisonment, the company

cannot be prosecuted as the sentence of imprisonment cannot be

enforced against the company. When the matter came up before the

bench of three learned Judges of this Court, the decision in

Assistant Commissioner, Assessment-II Bangalore & Ors vs.

Velliappa Textiles Ltd & Anr. (2003) 11 SCC 405 was cited in

support of that contention. The bench doubted the correctness of the

above decision and by reference order dated 16.7.2004 reported in

2004(6) SCC 531, the matter has thus been placed before this

Court by the learned Chief Justice of India for our decision.

The question that arises for consideration is whether a company

or a corporate body could be prosecuted for offences for which the

sentence of imprisonment is a mandatory punishment. In Velliappa

Textiles' case (supra), by a majority decision it was held that the

company cannot be prosecuted for offences which require imposition

of a mandatory term of imprisonment coupled with fine. It was further

held that where punishment provided is imprisonment and fine, the

court cannot impose only a fine. In Velliappa Textiles, prosecution

was launched against the respondent, a private limited company, for

the offences punishable under Sections 276-C, 277 and 278 read with

Section 278-B of the Income Tax Act. Under Section 276-C and 277

of the Income Tax Act, the substantive sentence provided is the

sentence of imprisonment and fine. Speaking for the majority, one

of us, (Srikrishna, J.) held that the first respondent company cannot

be prosecuted for offences under Section 276-C, 277 and 278 read

with Section 278-B since each of these sections requires the

imposition of a mandatory term of imprisonment coupled with a fine

and leaves no choice to the court to impose only a fine. The majority

was of the view that the legislative mandate is to prohibit the courts

from deviating from the minimum mandatory punishment prescribed

by the Statute and that while interpreting a penal statute, if more than

one view is possible, the court is obliged to lean in favour of the

construction which exempts a citizen from penalty than the one which

imposes the penalty. Following the decision in State of

Maharashtra vs. Jugamander Lal AIR 1966 SC 940, it was held

that the expression used is "imprisonment and fine" and the court is

bound to award sentence of imprisonment as well as fine and that

there is no discretion on the part of the court to impose only a fine and

that the court cannot interpret the statutory provisions in a way so as

to supply a lacuna in a statute.

The view expressed in Velliappa Textiles is seriously assailed

before us by the Additional Solicitor General, Mr. Malhotra, who

appeared for the respondents. Senior Counsel Shri KK Venugopal,

Shri Andhiyarujina, Shri Ashok Desai and other counsel supported the

contention that a company cannot be prosecuted for an offence, for

which the mandatory sentence is imprisonment. Shri Ram Jethmalani

appearing for the appellant in the appeal arising out of Special Leave

Petition (Crl.) No. 4995 of 2003 supported the view that the company

is liable to be prosecuted even if the offence is punishable both with

a term of imprisonment and fine. He submitted that in case the

company is found guilty, the sentence of imprisonment cannot be

imposed on the company and then the sentence of fine is to be

imposed and the court has got the judicial discretion to do so. He

further submitted that this course is open only in the case where the

company is found guilty but if a natural person is so found guilty,

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both sentence of imprisonment and fine are to be imposed on such

person.

There is no dispute that a company is liable to be prosecuted

and punished for criminal offences. Although there are earlier

authorities to the effect that corporations cannot commit a crime, the

generally accepted modern rule is that except for such crimes as a

corporation is held incapable of committing by reason of the fact that

they involve personal malicious intent, a corporation may be subject

to indictment or other criminal process, although the criminal act is

committed through its agents.

As in the case of torts, the general rule prevails that the

corporation may be criminally liable for the acts of an officer or agent,

assumed to be done by him when exercising authorized powers, and

without proof that his act was expressly authorized or approved by the

corporation. In the statutes defining crimes, the prohibition is

frequently directed against any "person" who commits the prohibited

act, and in many statutes the term "person" is defined. Even if the

person is not specifically defined, it necessarily includes a corporation.

It is usually construed to include a corporation so as to bring it within

the prohibition of the statute and subject it to punishment. In most

of the statutes, the word "person" is defined to include a corporation.

In Section 11 of the Indian Penal Code, the "person" is

defined thus :

"The word "person" includes any Company or Association

or body of persons, whether incorporated or not."

Therefore, as regards corporate criminal liability, there is no

doubt that a corporation or company could be prosecuted for any

offence punishable under law, whether it is coming under the strict

liability or under absolute liability.

Inasmuch as all criminal and quasi-criminal offences are

creatures of statute, the amenability of the corporation to

prosecution necessarily depends upon the terminology employed in

the statute. In the case of strict liability, the terminology employed

by the legislature is such as to reveal an intent that guilt shall not be

predicated upon the automatic breach of the statute but on the

establishment of the actus reus. subject to the defence of due

diligence. The law is primarily based on the terms of the statutes. In

the case of absolute liability where the legislature by the clearest

intendment establishes an offence where liability arises instantly upon

the breach of the statutory prohibition, no particular state of mind is a

prerequisite to guilt. Corporations and individual persons stand on

the same footing in the face of such a statutory offence. It is a

case of automatic primary responsibility. It is only in a case

requiring mens rea, a question arises whether a corporation could

be attributed with requisite mens rea to prove the guilt. But as we

are not concerned with this question in these proceedings, we do not

express any opinion on that issue.

In series of offences punishable under various statutes,

sentence of imprisonment and fine are prescribed as the punishment.

In some of these enactments, for certain offences a minimum period

of imprisonment is prescribed as punishment. Under Section 56(1)(i)

of the FERA Act, in respect of certain offences, if the amount or value

involved therein exceeds one lakh of rupees, the punishment

prescribed is imprisonment for a term which shall not be less than six

months, but which may extend to seven years and with fine. In any

other case, the punishment prescribed is imprisonment for a term

which may extend to three years or with fine or with both.

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Going by the provisions in Section 56 of the FERA Act, if the

view expressed in Velliappa Textiles is accepted as correct law, the

company could be prosecuted for an offence involving rupees one lakh

or less and be punished as the option is given to the court to impose

a sentence of imprisonment or fine, whereas in the case of an offence

involving an amount or value exceeding rupees one lakh, the court is

not given a discretion to impose imprisonment or fine and therefore,

the company cannot be prosecuted as the custodial sentence cannot

be imposed on it.

The legal difficulty arising out of the above situation was noticed

by the Law Commission and in its 41st Report, the Law Commission

suggested amendment to Section 62 of the Indian Penal Code by

adding the following lines :

"In every case in which the offence is only

punishable with imprisonment or with imprisonment and

fine and the offender is a company or other body corporate

or an association of individuals, it shall be competent to

the court to sentence such offender to fine only."

This recommendation got no response from the Parliament and

again in its 47th Report, the Law Commission in paragraph 8(3) made

the following recommendation :

"In many of the Acts relating to economic offences,

imprisonment is mandatory. Where the convicted person

is a corporation, this provision becomes unworkable, and it

is desirable to provide that in such cases, it shall be

competent to the court to impose a fine. This difficulty can

arise under the Penal Code also, but it is likely to arise

more frequently in the case of economic laws. We,

therefore, recommend that the following provision should

be inserted in the Penal Code as, say, Section 62:

(1) In every case in which the offence is

punishable with imprisonment only or with imprisonment

and fine, and the offender is a corporation, it shall be

competent to the court to sentence such offender to fine

only.

(2) In every case in which the offence is

punishable with imprisonment and any other punishment

not being fine, and the offender is a corporation, it shall be

competent to the court to sentence such offender to fine.

(3) In this section, "corporation" means an

incorporated company or other body corporate, and

includes a firm and other association of individuals."

But the Bill prepared on the basis of the recommendations of

the Law Commission lapsed and it did not become law. However few

of these recommendations were accepted by the Parliament and by

suitable amendment some of the provisions in the taxation statutes

were amended.

The question whether a company could be prosecuted for an

offence for which mandatory sentence of imprisonment is provided

continued to agitate the minds of the courts and jurists and the law

continued to be the old law despite the recommendations of the Law

Commission and the difficulties were expressed by the superior courts in

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many decisions.

The question under consideration is that where an accused is

found guilty and the punishment to be imposed is imprisonment and

fine, whether the court has got the discretion to impose the sentence

of fine alone. Senior counsel Shri Jethmalani contended that if a

corporate body is found guilty of the offence committed, the court,

though bound to impose the sentence prescribed under law, has the

discretion to impose the sentence of imprisonment or fine as in the case

of a company or corporate body the sentence of imprisonment cannot

be imposed on it and as the law never compels to do anything which is

impossible, the court has to follow the alternative and impose the

sentence of fine. The counsel also hastened to add that this discretion

could be exercised only in respect of juristic persons and not in respect

of natural persons. It was contended that by doing so, the court

does not alter the provisions of the law by interpretation, but only

carry out the mandate of the legislature. Senior counsel appearing for

other appellants, on the other hand, contended that the Parliament

enacted laws knowing fully well that the company cannot be subjected

to custodial sentence and therefore the legislative intention is not to

prosecute the companies or corporate bodies and when the sentence

prescribed cannot be imposed, the very prosecution itself is futile and

meaningless and thus the majority decision in Velliappa Textiles has

correctly laid down the law. The counsel on either side drew our

attention to various decisions on the point.

Different High Courts have taken different views on this

question. In State of Maharasthra vs. Syndicate Transport

1963 Bom. L.R. 197, it was held that the company cannot be prosecuted

for offences which necessarily entail consequences of a corporal

punishment or imprisonment and prosecuting a company for such

offences would only result in the court stultifying itself by embarking on

a trial in which the verdict of guilty is returned and no effective order

by way of sentence can be made.

In Kusum Products Limited vs. S.K. Sinha, ITO, Central

Circle-X, Calcutta 126 ITR 804 (1980), the Calcutta High Court took

the view that even though the definition of "person" under Section

232(3)(i) is wide enough to include a company or a juristic person, the

word "person" could not have been used by Parliament in Section 277

(Income Tax Act) in the sense given in the definition clause. It was

further held that the intention of the Parliament is otherwise because

imprisonment has been made compulsory for an offence under Section

277 of the Act and a company being a juristic person cannot possibly be

sent to prison and it is not open to court to impose a sentence of fine or

allow to award any punishment if the court finds the company guilty

under the said Section, and if the court does it, it would be altering the

very scheme of the Act and usurping the legislative function.

In Badsha vs. Income Tax Officer 1987 (1) K.L.T. 112

Justice Thomas, J., as he then was, following the decision of the

Allahabad High Court in Modi Industries Limited vs. B.C. Goel 144

ITR 496 (1983), held that "A company registered under the

Companies Act, 1956 is a juristic person and cannot be awarded the

punishment of imprisonment and hence cannot be prosecuted for

breach of Sections 277 and 278 of the Act" and therefore the court held

that the first accused being a firm was not liable to be prosecuted for

offences under Section 277 and 278.

In P.V. Pai vs. R.L. Rinawma, Dy. Commissioner, Income

Tax, (1993) 2 Comp. L.J, 314 (Karn.), it was held that imprisonment

alone was the punishment that could be imposed on a person found

guilty and that the legislature intended that the offence under Section

277 should be met with punishment of compulsory imprisonment and

fine, and courts have no jurisdiction to impose fine only and if that is

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done it would be altering the very scheme of the Act.

It is also pertinent to make reference to the decision of this

Court in State of Maharashtra vs. Jugamander Lal AIR 1966 SC

940. That was a case where the accused was found guilty under

Section 3(1) of Suppression of Immoral Traffic in Women & Girls Act,

1956. Under Section 3(1) of that Act, any person found guilty shall be

punishable on his first conviction with rigorous imprisonment for a term

of not less than one year and not more than three years and also with

fine which may extend to two thousand rupees. The High Court took

the view that the word "punishable" used in the Section postulated a

discretion on the court to impose a sentence of imprisonment or a

sentence of fine or both. But this Court held that in the context in

which the word "punishable" has been used in Section 3(1), it is

impossible to construe it as giving any discretion to the court in the

matter of determining the nature of sentences to be passed in respect of

a contravention of the provision. By using the expression "shall be

punishable" the legislature has made it clear that the offender shall not

escape the penal consequences. What the consequences are to be are

then specified in the provision and they are rigorous imprisonment for a

period not less than one year and not more than three years and also a

fine which may extend to Rs.2,000/-. These are the punishments with

respect to a first offence and higher punishments are prescribed in

respect of a subsequent offence. By saying that a person convicted of

the offence shall be sentenced to imprisonment of not less than one

year, the Legislature has made it clear that the command is to award a

sentence of imprisonment in every case of conviction. It is difficult to

conceive of clearer language for couching such command.

The counsel for the appellant relying on the above decision

contended that when the Section commands the punishment for

imprisonment and fine, the court is not left with any discretionary power

to alter the sentence and that would amount to re-writing the

provisions of the law.

Contrary view has been taken in series of other decisions to

which our attention was drawn.

A full Bench of the Delhi High Court in Delhi Municiaplity vs.

J.B. Bottling Company 1975 Crl. L.J. 1148 considered a similar

question. The respondent-company was found guilty under Section 7

read with Section 16 of the Prevention of Food Adulteration Act, and

was fined rupees five thousand. The respondent-company filed an

appeal and contended that for the offence under Section 16 of the

Prevention of Food Adulteration Act, the minimum period of six months

imprisonment is prescribed and the company is immune from

prosecution as the sentence contemplated under law cannot be imposed

on it. The Court held that:

"The office of the judges is always to make construction

as shall suppress the mischief and advance the remedy

and therefore it will stay its hand in passing the sentence

which will be impossible to execute but pass only such

sentence which can be executed, namely, fine. The

proviso to Section 16 applies only to the three classes of

offences mentioned therein and as compared to the rest of

the offences contemplated by the Act are of less serious

nature and if indictment of the company is confined to only

those offences which are covered by the proviso, then not

only the intention of the legislature is defeated, but the

provisions of Section 16(1-D) and Section 18 are also to

that extent rendered nugatory, insofar as the offences are

committed by the companies".

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In Oswal Vanaspati & Allied Industries vs. State of Uttar

Pradesh (1993) 1 Comp. L.J. 172 (All.), the appellant-company sought

to quash the complaint filed against it by the Food Inspector under

various sections of the Act alleging that the company cannot be

prosecuted for an offence under Section 16 of the Act as the sentence

of imprisonment provided under that section after its amendment by the

Prevention of Food Adulteration (Amendment) Act No. 34 of 1976 which

is mandatory cannot be awarded to it. In paragraph 7, the Full Bench of

the Allahabad High Court held as follows :

"A company being a juristic person cannot obviously be

sentenced to imprisonment as it cannot suffer

imprisonment. The question that requires determination is

whether a sentence of fine alone can be imposed on it

under Section 16 of the Act or whether such a sentence

would be illegal and hence cannot be awarded to it. It is

settled law that sentence or punishment must follow

conviction; and if only corporal punishment is prescribed, a

company which is a juristic person cannot be prosecuted

as it cannot be punished. If, however, both sentence of

imprisonment and fine is prescribed for natural persons

and juristic persons jointly, then, though the sentence of

imprisonment cannot be awarded to a company, the

sentence of fine can be imposed on it. Thus it cannot be

held that in such a case the entire sentence prescribed

cannot be awarded to a company as a part of the

sentence, namely, that of fine can be awarded to it. Legal

sentence is the sentence prescribed by law. A sentence

which is in excess of the sentence prescribed is always

illegal; but a sentence which is less than the sentence

prescribed may not in all cases be illegal."

It is also appropriate to make reference to a decision of the

United States Supreme Court. The judgment was rendered in United

States vs. Union Supply Company 54 Law. Ed. 87 by Justice

Holmes. There was an indictment of a corporation for willfully

violating the sixth section of the Act of Congress of 1902 and any

person who willfully violates any of the provisions of this Section shall,

for each such offence, be liable to be punished with fine not less than

fifty dollars and not exceeding five hundred dollars, and imprisonment

for not less than 30 days, nor more than six months. It is interesting

to note that for the offence under Section 5, the Court had

discretionary power to punish by either fine or imprisonment, whereas

under Section 6, both punishments were to be imposed in all cases.

The plea of the company was rejected and it was held :

"It seems to us that a reasonable interpretation of the

words used does not lead to such a result. If we

compare Section 5, the application of one of the penalties

rather than of both is made to depend, not on the

character of the defendant, but on the discretion of the

Judge; yet, there, corporations are mentioned in terms\005\005.

And if we free our minds from the notion that criminal

statutes must be construed by some artificial and

conventional rule, the natural inference, when a statute

prescribes two independent penalties, is that it means to

inflict them so far as it can, and that, if one of them is

impossible, it does not mean, on that account, to let the

defendant escape."

The Counsel for the appellant contended that the penal provision

in the statute is to be strictly construed. Reference was made to

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Tolaram Relumal and another Vs. The State of Bombay 1955(1)

SCR 158 at 164 and Girdhari Lal Gupta Vs. D.H. Mehta and another

1971(3) SCC 189. It is true that all penal statutes are to be strictly

construed in the sense that the Court must see that the thing charged

as an offence is within the plain meaning of the words used and must

not strain the words on any notion that there has been a slip that the

thing is so clearly within the mischief that it must have been intended to

be included and would have included if thought of. All penal provisions

like all other statutes are to be fairly construed according to the

legislative intent as expressed in the enactment. Here, the legislative

intent to prosecute corporate bodies for the offence committed by them

is clear and explicit and the statute never intended to exonerate them

from being prosecuted. It is sheer violence to commonsense that the

legislature intended to punish the corporate bodies for minor and silly

offences and extended immunity of prosecution to major and grave

economic crimes.

The distinction between a strict construction and a more free

one has disappeared in modern times and now mostly the question is

"what is true construction of the statute?" A passage in Craies on

Statue Law 7th Edn. reads to the following effect :

"The distinction between a strict and a liberal construction

has almost disappeared with regard to all classes of

statutes, so that all statutes, whether penal or not, are

now construed by substantially the same rules. 'All

modern Acts are framed with regard to equitable as well as

legal principles.' "A hundred years ago", said the court

in Lyons' case, "statutes were required to be perfectly

precise and resort was not had to a reasonable

construction of the Act, and thereby criminals were often

allowed to escape. This is not the present mode of

construing Acts of Parliament. They are construed now

with reference to the true meaning and real intention of

the legislature."

At page-532 of the same book, observations of

Sedgwick are quoted as under:

"The more correct version of the doctrine

appears to be that statutes of this class are to

be fairly construed and faithfully applied

according to the intent of the legislature without

unwarrantable severity on the one hand or

unjustifiable lenity on the other, in cases of

doubt the courts inclining to mercy."

The question, therefore, is what is the intention of the

legislature. It is an undisputed fact that for all the statutory offences,

company also could be prosecuted as the "person" defined in these

Acts includes "company, or corporation or other incorporated body."

Even for offences under Section 56(1)(ii) FERA Act, the company

could be prosecuted as the amount involved is less than rupees one

lakh and there is no mandatory sentence of imprisonment and the

prescribed punishment is imprisonment for a term which may extend

to three years or with fine or with both. It is also pertinent to note

that the object of the amendment was to have more stringent

provisions where the amount involved in the offence is more than

rupees one lakh. It is not reasonably possible to assume that

amendment to the Section was carried out to give immunity to

corporate bodies from prosecution for serious offences. The scheme

of the Indian Penal Code also would show that for serious and graver

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offences, mandatory sentence of imprisonment is prescribed and for

less serious offences the court is given a discretionary power of

imprisonment or fine.

In the case of penal code offences, for example under Section

420 of the Indian Penal Code, for cheating and dishonestly inducing

delivery of property, the punishment prescribed is imprisonment of

either description for a term which may extend to seven years and

shall also be liable to fine; and for the offence under Section 417,

that is, simple cheating, the punishment prescribed is imprisonment of

either description for a term which may extend to one year or with

fine or with both. If the appellants' plea is accepted that for the

offence under Section 417 IPC, which is an offence of minor nature, a

company could be prosecuted and punished with fine whereas for the

offence under Section 420, which is an aggravated form of cheating

by which the victim is dishonestly induced to deliver property, the

company cannot be prosecuted as there is a mandatory sentence of

imprisonment.

So also there are several other offences in the Indian Penal

Code which describe offences of serious nature whereunder a

corporate body also may be found guilty, and the punishment

prescribed is mandatory custodial sentence. There are series of

other offences under various statutes where accused are also liable to

punished with custodial sentence and fine.

The contention of the appellants is that when an offence is

punishable with imprisonment and fine, the court is not left with any

discretion to impose any one of them and consequently the company

being a juristic person cannot be prosecuted for the offence for which

custodial sentence is the mandatory punishment. If the custodial

sentence is the only punishment prescribed for the offence, this plea is

acceptable, but when the custodial sentence and fine are the prescribed

mode of punishment, the court can impose the sentence of fine on a

company which is found guilty as the sentence of imprisonment is

impossible to be carried out. It is an acceptable legal maxim that law

does not compel a man to do that which cannot possibly be performed

[impotentia excusat legem] . This principle can be found in

Bennion's Statutory Interpretation 4th Edn. At page 969. "All civilized

systems of law import the principle that lex non cogit ad impossibilia\005."

As Patternson, J. said "the law compels no impossibility". Bennion

discussing about legal impossibility at page 970 states that, "If an

enactment requires what is legally impossible it will be presumed that

Parliament intended it to be modified so as to remove the impossibility

element. This Court applied the doctrine of impossibility of

performance [Lex non cogit ad impossibilia] in numerous cases

[State of Rajasthan vs. Shamsher Singh, 1985(Supp.) SCC 416;

Special Reference No. 1 of 2002 reported in 2002(8) SCC 237].

As the company cannot be sentenced to imprisonment, the court

has to resort to punishment of imposition of fine which is also a

prescribed punishment. As per the scheme of various enactments and

also the Indian Penal Code, mandatory custodial sentence is prescribed

for graver offences. If the appellants' plea is accepted, no company or

corporate bodies could be prosecuted for the graver offences whereas

they could be prosecuted for minor offences as the sentence prescribed

therein is custodial sentence or fine. We do not think that the intention

of the Legislature is to give complete immunity from prosecution to the

corporate bodies for these grave offences. The offences mentioned

under Section 56(1) of the FERA Act, 1973, namely those under Section

13, clause (a) of sub-section (1) of Section 18; Section 18A; clause (a)

of sub-section (1) of Section 19; sub-section (2) of Section 44, for

which the minimum sentence of six months' imprisonment is

prescribed, are serious offences and if committed would have serious

financial consequences affecting the economy of the country. All those

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offences could be committed by company or corporate bodies. We do

not think that the legislative intent is not to prosecute the companies

for these serious offences, if these offences involve the amount or

value of more than one lakh, and that they could be prosecuted only

when the offences involve an amount or value less than one lakh.

As the company cannot be sentenced to imprisonment, the court

cannot impose that punishment, but when imprisonment and fine is the

prescribed punishment the court can impose the punishment of fine

which could be enforced against the company. Such a discretion is to

be read into the Section so far as the juristic person is concerned. Of

course, the court cannot exercise the same discretion as regards a

natural person. Then the court would not be passing the sentence in

accordance with law. As regards company, the court can always

impose a sentence of fine and the sentence of imprisonment can be

ignored as it is impossible to be carried out in respect of a company.

This appears to be the intention of the legislature and we find no

difficulty in construing the statute in such a way. We do not think that

there is a blanket immunity for any company from any prosecution for

serious offences merely because the prosecution would ultimately entail

a sentence of mandatory imprisonment. The corporate bodies, such as

a firm or company undertake series of activities that affect the life,

liberty and property of the citizens. Large scale financial irregularities

are done by various corporations. The corporate vehicle now occupies

such a large portion of the industrial, commercial and sociological

sectors that amenability of the corporation to a criminal law is essential

to have a peaceful society with stable economy .

We hold that there is no immunity to the companies from

prosecution merely because the prosecution is in respect of offences for

which the punishment prescribed is mandatory imprisonment. We

overrule the views expressed by the majority in Velliappa Textiles on

this point and answer the reference accordingly. Various other

contentions have been urged in all appeals, including this appeal, they

be posted for hearing before appropriate bench.