1. Business and Criminal LiabilityBy
Shri. V.Y. Dhupdale
B.Com., LL.B., LL.M., (NET)
Lecturer, Dept. Of Law, SUK

2. Introduction
Legislations defines certain actions as a criminal nature and provides punishment them.
The Indian Penal Code (IPC) one such legislation.
It lists criminal offences and lays down the punishment for each of them, which include-
Fine,
Forfeiture of property
Imprisonment and
Death sentence

3. The list of activities which have criminal implications is very long
Contd…
Ordinarily a wrongdoer is not a criminal but his business activities may cause harm to the society.
The law has prohibited or restricted several such activities and prescribed fines and imprisonment as punishment.
The list of activities which have criminal implications is very long
Such activities include the-
Manufacturing
Distributing and
Selling of adulterated food and inadequately or

4. Contd…
Falsely labelled packages;
Use of false weight and measures;
Violation of pollution and environmental standards; &
Evasion of taxes
Each business activity will have a set of specific laws applicable to a sector
This law would specify certain actions that would be liable for punishment.
For example,
The food industry specifies such actions in the Prevention of Food Adulteration Act and
The Essential Commodities Act.
The Pharmaceutical Industry does it in the Drugs and Cosmetics Act and Essential Commodities Act.

5. Some General Issues in relation to the Legislations
1. Mens Rea: Malafide Intentions:-
Under the IPC, the mens rea, ie., the intention to commit a crime is essential ingredient of the crime.
Example,
A person must intent to steal a thing,
And he must follow up that until the completion of the act of stealing.
a. A person intended to steal a TV set, but could not succeed because there were passersby. This is not a theft as there was no action.

6. Therefore, a bad intention of committing a crime is called mens rea.
Contd…
b. A passenger took away a wrong suitcase from the airport thinking that it is his own because the models were common.
This is not a theft because there was absence of intention to steal.
Therefore, a bad intention of committing a crime is called mens rea.
But the socio-economic offences have done way with the requirements of mens rea.
Here once an act has been committed, it is presumed by the Court that there is a mens rea.
Example, the Prevention of Food and Adulteration Act (Section 7) stipulates:

7. Contd…
No person shall himself or by any person on his behalf manufacture for sale, or store, sell or distribute-
Any adultered food;
Any misbranded food…’
Joint Liability:-
The Company or corporation has been given a separate legal entity status
The members can claim immunity
The Company is liable in some cases
But sometimes, the Court may go beyond this corporate veil and sees inside.
And fix the responsibility on specific individuals.

8. If an offence under this Act is
Section 74: Offences by Companies and Power of Court to Publish Name, Place of Business, etc., for Companies Convicted
If an offence under this Act is
committed by a company,
every person who,
at the time the offence committed,
was 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.

9. Contd…
If an offence has been committed with the consent of or due to the neglect of
Any director,
Manager,
Secretary and
Other officer
such person shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly.

10. Liability under Torts
One often hears liability under torts in business practices.
This liability can be understood from the following decided landmark case:
Donoghue v. Stevens, 1932
Facts:-
bottle of ginger beer- from stor
After drinking large portion a dead snail came out of it.
The lady started vomiting and was hospitalised.
They asked for compensation.

11. Contd…
The fault was of the manufacturer
However, no privity of contract between Manufacturer and the consumers
Thus could not claim any remedy
Court held – The Manufacturer is liable since there was a negligence on their part while bottling the beer and has caused injury to the consumers.
This decision was applied to various cases. The branch thus came to be known as torts.

12. Essential Elements of Tort
The action of one must cause injury or damage to another, intentionally/unintentionally.
Tort is another name for harm.
The person must owe a duty in law, towards a person who sustains the injury or damages, and
The duty must have been breached.
Here comes the question of negligence.
Tort is a civil claim.
The Court awards a monetary compensation.

13. Contd…
Torts can arise in a wide variety of situations, for example, incases of-
A defective product or service,
Motor vehicle accident,
Environmental pollution,
Business malpractices,
Libel or slander and
Fraud

14. Criminal Jusitice
The Criminal Procedure Code, 1973 (Cr.P.C.) is the procedural penal law.
It provides procedure for adjudicating the criminal laws provided under the Indian Penal Code (IPC).
The main functionaries are:-
Police
Prosecutors-
Criminal Case is contested between the State and the accused.
Prosecutors represent the State.

15. In case of the socio-economic offences the procedure is different
Contd…
Defence Council –
Defends the accused
Magistrates and Judges of High Courts – they make the judgment
In case of the socio-economic offences the procedure is different
For example,
In case of the Prevention of Food Adulterationn Act,
It is the Food Inspector who enforces the law and not Police
However, generally the Cr.P.C. is followed

16. Cr.P.C. has crated territorial divisions of the functionaries.
Contd…
Cr.P.C. has crated territorial divisions of the functionaries.
Generally there is one sessions division in each district.
The State also appoints an Assistant Sessions Judge
Next order in the hierarchy is of courts is that of magistrates
Nature of cases falling in each of these courts is specified in the Cr.P.C.

17. Contd…
One of the principal administration of criminal laws is the separation of the powers of the exrcutive,
That is, separation of the police from the judiciary
This can ensure the impartiality and fairness of the proceedings
Therefore, police must have limited powers to act on its own.

18. Thank You