The Supreme Court of India on Friday issued its judgment in Sunil Bharti Mittal v. Central Bureau of Investigation on whether senior corporate officers are to be held criminally liable for acts of their companies. After an analysis of the law on the issue and its application to the facts of the case, the Court answered the question in the negative. Conceptual Background Corporate criminal...
Companies Act, 2013: Directors’ Duties and Liabilities
The NSE Centre for Excellence in Corporate Governance (CECG) has issued its most recent quarterly briefing titled “Directors’ Duties and Liabilities in the New Era”. The executive summary is as follows: – Since directors and the board play a pivotal role in corporate governance, the law foists duties and liabilities on them; – The Companies Act, 2013 has brought about a paradigm shift...
The Criminalization of Commercial Disputes
News reports indicate that the Supreme Court of India has ordered the chairman of Samsung Electronics to appear before a Ghaziabad court in relation to charges filed by a party in a contractual dispute. This is pursuant to an earlier judgment of the Supreme Court rendered on February 1, 2012 that delves into the various substantive issues involved in the dispute, including the jurisdiction of the...
Guest Post: Directorship in a Company: Cap of Thorns
[The following post is contributed by Nidhi Bothra and Abhirup Ghosh at Vinod Kothari & Co. They can be contacted at [email protected] and [email protected] respectively] The Companies Act, 2013 (CA, 2013) brings about a sea change in the way the charter guiding corporate India will look like. The existing Act of 1956 has been the guiding force for nearly 60 years now but the...
Court of Appeal: Clarification of ‘Meridian’ attribution
The theory of attribution in common law turns significantly on the application of the two main cases: Tesco Supermarkets v. Nattrass [1972] AC 153 (which provides for a strict reading of who the ‘directing mind and will’ of a company is), and Meridian Global Funds v. Securities Commission [1995] 2 AC 500 (which, in certain instances, allows for a more flexible understanding). In the...
The Bhopal Case: Supreme Court’s order on CBI’s Curative Petition
We had previously highlighted discussions on the Law and Other Things blog pertaining to the decision of the Chief Judicial Magistrate in the Bhopal gas leak case. The CJM had purported to follow a 1996 judgment of the Supreme Court; in which, the Supreme Court had quashed charges under Section 304 (Part II) of the Indian Penal Code. Last week, a Constitution Bench of the Supreme...
Corporate Criminal Liability for Securities Offerings
Mihir and I had previously discussed (here and here) the Supreme Court’s judgment in the Iridium Motorola case rendered in October 2010. We have now posted a more detailed analysis in a case note titled “Corporate Criminal Liability and Securities Offerings: Rationalizing the Iridium-Motorola Case” that is scheduled to be published in the National Law School of India Review. The abstract is as...
MCA Circular on Prosecution of Directors
One of the disincentives that operate against directors, particularly non-executive directors, is that they are often susceptible to prosecution for offences committed by the company that it not within their knowledge. Occasionally, innocent directors have been subject to victimization by requiring to answer allegations that are often frivolous in nature. This concern has now been addressed, at...
Procedural leniency under the Negotiable Instruments Act
Over the past few years, the Supreme Court has gone a long way towards reducing the use of section 138 of the Negotiable Instruments Act (“Act”) as the basis for the vicarious liability of directors. In February last year, National Small Industries v. Harmeet Singh Pantial, the Supreme Court emphasised the high standards required in order to invoke vicarious liability of creditors under section...
The Court of Appeals on Dishonest Assistance
The United Kingdom Court of Appeals recently considered an interesting case concerning the standard of dishonesty required to hold a person guilty of assisting in the breach of trust. The factual background in Starglade Properties v. Roland Nash is complex, but for the purposes of this discussion, it is sufficient to note that as a result of certain contractual obligations, Larkstore Ltd., the...
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