One of the many reasons that the Courts have given, for not imposing criminal liability on corporations is that, even if a corporation is found guilty, who is to serve the punishment? As a result, the Courts only impose fines on companies, which merges criminal liability with that of the civil one. The recent amendment of the Companies Act2 also needs to be looked into which will create complex legal issues and further complicate the matter of corporate criminal liability. The 2013 Act introduces the concept of One Person Company3, thereby opening the possibility of companies serving punishment of imprisonment. Here, some might argue that, an individual who commits an offence , does so in his personal capacity and there is no express need to involve a company in it. Then again, the counter argument will be raised, what if the person committed the act with a motive to protect, preserve or advance his business interests? Both the schools of thought are right in their own place. Also even if OPCs are brought under the ambit of criminal law, they will plead the defence of equality –
why criminal law is invoked against OPCs only and not the other types of companies. Thus, to sum
up, it would not be wrong to say that
OPC has stirred the hornet’s nest as far as corporate criminal liability is concerned. Legal provisions do exist in the Indian Penal Code for punishing companies, where many offences use the word ‘person’4 but, for that to happen, the statute would have to be interpreted liberally, whereas Penal statutes are to be interpreted strictly.
Till 2014, millions of vehicles have been recalled5 be it for engine problems, faulty brake pads, faulty ignition switches, defective air bags etc. Every month we read in the newspapers that company has recalled thousands of cars, has paid millions in compensation to the victims or to settle a criminal probe against it. Recalls have become so common that, they are virtually meaningless to an automaker’s image. According to NHTSA6, in 2013, the auto-industry recalled close to a third more vehicles in the U.S. (22 million) than it sold (just over 15 million). Even exotic makes like Lamborghini, Lotus, Toyota, General Motors, Volkswagen, Ford, Audi, BMW and Mercedes-Benz aren’t immune to the occasional recall. Back home even Suzuki, Hyundai, Tata, Mahindra & Mahindra have recalled millions of cars in India. One joke that’s doing the rounds is, automakers conduct some recalls as a positive PR exercise, hoping to score some brown points and be in good books of the Government.
The recalls might also be done by the companies thinking that if they initiate it voluntarily and in a timely manner, it will create a positive impression in the minds of the people. People will think that the company is dead serious when it comes to safety of customer’s lives and their vehicles. Whatever the reason or situation be, it does not change the fact that every year lakhs of lives are lost in motor related highway accidents in India. To what extent the fault of the automakers is, in these accidents, cannot be determined accurately. The best example that every person will instantly associate with is that of Tata Nano, dubbed as the world’s cheapest car- costing approximately Rs.1 lakh. Initially the car received exceptional response by the public but, later on when incidents of the car catching fire due to engine over heating were reported, the vehicle’s fortunes changed overnight. Mr. Ratan Tata immediately ordered a detailed inquiry into the matter by appointing foreign automobile engineers.
The findings of the inquiry were never reported. Whatever the situation was; ultimately, the car underwent
a design change. Luckily, no deaths were reported, related to or tied with this problem. What would have been the liability of Tata Motors, had people lost their lives or for that matter, the injuries they suffered? In other words, what is the liability of auto-manufacturers for the deaths caused by their negligence? Whether they are to be tried under civil law or criminal law? What is the liability, if the auto- manufacturer, despite knowing the defect present in the car does not come forward? The company may be reluctant to do so fearing backlash, legal complexities, possible hefty fines that it will be required to pay and so on and so forth.
