If a company allegedly indulges in wrongful deeds then not only its officials but the company itself can also be prosecuted on charges of criminal conspiracy, the Delhi high court has said.
Dismissing the petition of a company M Tectronics’ challenging a special CBI court order, which had allowed criminal proceedings against it in a forgery case, the high court rejected the company’s plea that being a non-living body it cannot have mens rea, or criminal intent, the basic requirement for criminal prosecution.
Justice Shiv Narayan Dhingra said, “Board of Directors of a company is considered company’s mind and acting arms. Where for the benefit of the company, the Board of Directors decides to create false documents, falsify the balance sheet, it is an act of the company as well, as a legal person, apart from the act of individuals involved in the act.”
The company acts through its officials and it can have criminal intent through its board of directors, the court said.
In order to obtain credit and other facilities, M Tectronics, allegedly presented certain forged accounts before the Punjab & Sind Bank.
It concealed facts and showed lesser liabilities and by doing so it cheated the bank of more than `6 crores.
“Where a company produced falsified accounts to the bank and obtained benefit from the bank on the basis of falsified accounts and induced it to part with huge amount of funds, I consider that a company can be prosecuted for the offences committed by it and mens rea can be fastened on the company on the ground that mens rea was present in the officers of the company who were acting as mind of the company,” the court said.