CAN A COMPANY BE HELD CRIMINALLY LIABLE FOR OFFENSES REQUIRING MENS REA (A GUILTY MIND), SUCH AS CHEATING AND CRIMINAL CONSPIRACY? THE DOCTRINE OF ATTRIBUTION: IRDIUM INDIA TELECOM LTD. V. MOTOROLA INC. (2011)

 CAN A COMPANY BE HELD CRIMINALLY LIABLE FOR OFFENSES REQUIRING MENS REA (A GUILTY MIND), SUCH AS CHEATING AND CRIMINAL CONSPIRACY?   THE DOCTRINE OF ATTRIBUTION:

IRDIUM INDIA TELECOM LTD. V.

 MOTOROLA INC. (2011)

In IRDIUM INDIA TELECOM LTD. V. MOTOROLA INC. (2011) case, the Supreme Court of India firmly established that companies can be held criminally liable in India, including for offences requiring mens rea (criminal intent).

FACTS OF THE CASE

Iridium India Telecom accused Motorola of criminal conspiracy and cheating under Section 420 read with Section 120-B of the Indian Penal Code (IPC). Iridium alleged Motorola made false representations and assurances in its Private Placement Memorandum to induce massive financial investments into the commercially disastrous "Iridium" satellite project.

THE INITIAL HURDLE:

The Bombay High Court quashed the criminal complaint. It ruled that a corporation is an artificial entity without a physical body or mind, making it legally incapable of possessing the mens rea (intent) to commit fraud.

THE SUPREME COURT RULING:

 The Supreme Court set aside the High Court's decision. It established that corporations can be prosecuted under the IPC.

THE DOCTRINE OF ATTRIBUTION:

 The Court ruled that the "intent" of the corporation's directors, managers, or high-level agents (who control its affairs) is legally attributed to the corporation itself.

PRACTICAL IMPLICATIONS

·       Companies in India can now face criminal prosecution for fraud, cheating, conspiracy, and other offences.

·       Directors’ and officers’ actions can implicate the corporation itself.

·       Corporate veil may be pierced when companies are used as instruments of fraud.

·       This ruling aligns Indian law with global trends recognizing corporate criminal responsibility.

IRIDIUM CASE INFLUENCE ON LATSER CORPORATE FRAUD CASES

SATYAM COMPUTER SERVICES SCANDAL (2009)	In Satyam, both individual directors and the company faced charges under IPC provisions for cheating and criminal breach of trust.
SAHARA GROUP CASE (2012–2014)	The Supreme Court held Sahara liable for misleading investors and violating SEBI regulations.
KINGFISHER AIRLINES & VIJAY MALLYA (2016 ONWARDS)	Allegations of financial mismanagement and fraud in securing loans. Banks and regulators pursued both Mallya personally and Kingfisher Airlines as a corporate entity.
NIRAV MODI & PUNJAB NATIONAL BANK FRAUD (2018)	Fraudulent Letters of Undertaking (LoUs) led to losses exceeding ₹11,000 crore. Enabled investigators to pursue corporate entities linked to Modi’s firms under IPC provisions.

 

LESSONS LEARNED

Iridium India Telecom Ltd. v. Motorola Inc. (2010) is a landmark Supreme Court judgment that firmly established corporate criminal liability in India, confirming that corporations can be prosecuted for offences requiring mens rea, thereby strengthening investor protection and corporate accountability.

#YOUR COMPLIANCE PARTNER R V SECKAR, FCS, LLB 79047 19295,

WHAT IS MISLEADING BRAND NAMES, TRADE NAMES AND PRODUCT CLAIMS, LABELLING VIOLATIONS UNDER FSSAI?

 WHAT IS MISLEADING BRAND NAMES, TRADE NAMES AND PRODUCT CLAIMS, LABELLING VIOLATIONS UNDER FSSAI?

HOW MULTIPLE FOOD BUSINESS OPERATORS (FBOS) INCLUDING FERRERO, MARICO, PLUCKK, EMAMI, NEUHERBS, AND OTHERS EMPLOYING MISLEADING BRAND NAMES, DECEPTIVE HEALTH CLAIMS, AND LABELLING VIOLATIONS UNDER FSSAI.

FSSAI ISSUED NOTICES TO MULTIPLE FOOD BUSINESS OPERATORS (FBOS) FOR VIOLATING PROVISIONS OF THE FSS ACT, 2006 RELATED TO MISLEADING BRAND NAMES, TRADE NAMES AND PRODUCT CLAIMS, LABELLING VIOLATIONS AND OTHER CONSUMER COMPLAINTS.

The Food Safety and Standards Authority of India (FSSAI) has recently issued notices to multiple food business operators (FBOs) including Ferrero, Marico, Pluckk, Emami, Neuherbs, and others for misleading brand names, deceptive health claims, and labelling violations.

 These actions fall under the Food Safety and Standards Act, 2006 and the Advertising and Claims Regulations, 2018, with companies directed to take corrective measures immediately.

COMPANIES & PRODUCTS FLAGGED

COMPANY / BRAND	PRODUCT / CLAIM	ISSUE RAISED
Pluckk	Mango fruit juice – “No Added Sugar”	Ingredients included sugarcane juice, misleading consumers about sugar content
Ferrero India	Kinder Joy wafer – “Rich in Milk Solids”	Claim not substantiated by actual composition
Marico Ltd	Saffola Total Heart Pro cooking oil	Heart-health claims lacked scientific backing
Emami Healthy & Tasty	Cooking oil branding	Trade name implies health benefits without approval
Neuherbs	“True Vitamin” range	Term undefined under FSSAI rules, misleading
The Healthy Factory	“Zero Maida” bread & pizza base	Ingredients included atta & gluten, contradicting claim
Troovy	Veggie & Ragi chips	“Healthy” claims not justified by ingredients
Bikanervala	Hygiene complaint	Staff consuming food in kitchen during operations
Param Dairy Ltd	Dahi & rabri supplied via IRCTC	Alleged fungal contamination

RISKS & CONSUMER IMPACT

HEALTH MISREPRESENTATION:	Products marketed as “healthy,” “natural,” or “sugar-free” may mislead buyers into unsafe consumption choices.
REGULATORY PENALTIES:	FBOs face legal consequences, including fines and mandatory corrective actions.
CONSUMER TRUST:	Repeated violations erode confidence in food brands and highlight the need for stricter oversight.

CONCLUDING REMARKS

FSSAI is cracking down on deceptive food marketing in India, targeting both multinational and domestic brands. Consumers should stay vigilant, read labels thoroughly, and rely on verified certifications rather than marketing slogans.

#YOUR COMPLIANCE PARTNER R V SECKAR, FCS, LLB 79047 19295,

BAJRANGBALI SPONGE AND POWER LIMITED WAS PENALISED BY THE REGISTRAR OF COMPANIES (ROC), CUTTACK, FOR FAILING TO APPOINT A CHIEF FINANCIAL OFFICER (CFO) FOR OVER SIX YEARS (2014–2020) ROC CUTTACK vs BAJRANGBALI SPONGE AND POWER LIMITED

 BAJRANGBALI SPONGE AND POWER LIMITED WAS PENALISED BY THE REGISTRAR OF COMPANIES (ROC), CUTTACK, FOR FAILING TO APPOINT A CHIEF FINANCIAL OFFICER (CFO) FOR OVER SIX YEARS (2014–2020)

ROC CUTTACK vs BAJRANGBALI SPONGE AND POWER LIMITED

FACTS OF THE CASE

Bajrangbali Sponge and Power Limited was penalised by the Registrar of Companies (RoC), Cuttack, for failing to appoint a Chief Financial Officer (CFO) for over six years (2014–2020), despite being legally required under Section 203 of the Companies Act, 2013. The company and its directors were fined ₹5 lakh each for prolonged non-compliance.

VIOLATION:

Failure to appoint a whole-time CFO despite having paid-up share capital exceeding ₹10 crore (making CFO appointment mandatory).

LAW INVOKED:

Section 203(1)(iii) of the Companies Act, 2013, read with Rule 8 of the Companies (Appointment and Remuneration) Rules, 2014.

PENALTY:

·       ₹5,00,000 on the company.

·       ₹5,00,000 each on several directors/officers.

LEGAL BACKGROUND

Under Section 203 of the Companies Act, 2013:

·       Certain classes of companies must appoint Key Managerial Personnel (KMP), including a Managing Director/CEO, a Company Secretary (CS), and a Chief Financial Officer (CFO).

·       Non-compliance attracts penalties under Section 203(5):

·       Company: Fine up to ₹5 lakh.

·       Officers in default: Fine up to ₹50,000 plus ₹1,000 per day of continuing default.

COMPARISON OF PENALTIES

COMPANY	PERIOD OF DEFAULT	POSITIONS VACANT	PENALTY AMOUNT
Bajrangbali Sponge & Power Ltd	2014–2020 (6 yrs)	CFO	₹5 lakh (company) + ₹5 lakh each director
Virupaksha Organics Ltd	2018–2021 (3 yrs)	CS & CFO	₹79.40 lakh total
Mahatamil Mining & Thermal Ltd	2014–2023 (9 yrs)	CS, CFO, MD	₹75.18 lakh total

KEY LESSONS LEARNED

·       Mandatory CFO appointment applies to companies with paid-up capital ≥ ₹10 crore.

·       Non-compliance is costly: penalties can reach tens of lakhs depending on duration and positions vacant.

·       Regulators are strict: pleas for leniency (e.g., citing administrative oversight or pandemic delays) are often rejected.

·       Best practice: Companies should proactively appoint KMPs to avoid financial and reputational damage.

#YOUR COMPLIANCE PARTNER R V SECKAR, FCS, LLB 79047 19295,

DISCLOSURE OF CSR SPENDING IN PLAIN FORMAT INSTEAD OF TABULAR FORMAT IS A VIOLATION AS HELD BY ROC CHENNAI AND M/S SIVARAJ SPINNING MILLS PRIVATE LIMITED WAS FINED RS 10000 FOR NON-COMPLAINCE UNDER U/S 135(4)(A) OF THE COMPANIES ACT, 2013, R/W RULE 8 OF THE COMPANIES (CSR) RULES.

 DISCLOSURE OF CSR SPENDING IN PLAIN FORMAT INSTEAD OF TABULAR FORMAT IS A VIOLATION AS HELD BY ROC CHENNAI AND M/S SIVARAJ SPINNING MILLS PRIVATE LIMITED WAS FINED RS 10000 FOR NON-COMPLAINCE UNDER U/S 135(4)(A) OF THE COMPANIES ACT, 2013, R/W RULE 8 OF THE COMPANIES (CSR) RULES.

ROC,CHENNAI VS M/S SIVARAJ SPINNING MILLS PRIVATE LIMITED

WHY THIS CONCEERNS?

Section 135(4)(a) requires companies to include details of CSR activities in their Board’s Report in the manner prescribed.

Rule 8 of the CSR Rules mandates that CSR disclosures must follow the format provided in the annexure, which is tabular.

A plain-text disclosure, even if it contains the same information, is treated as a violation because it doesn’t comply with the statutory format.

ANNEXURE FORMAT FOR CSR DISCLOSURE (RULE 8)

S. No.

CSR Project or Activity Identified

Sector in which the project is covered

Projects or Programs (Local area/others)

Amount Outlay (Budget) Project or Program-wise

Amount Spent on the Projects or Programs (Direct or through implementing agencies)

Cumulative Expenditure up to the reporting period

Amount spent: Direct or through implementing agency

·       The table must include all CSR projects undertaken during the financial year.

·       Companies must specify whether the project is in the local area or elsewhere.

·       The disclosure must clearly show budgeted vs. actual expenditure.

·       Details of implementing agencies (if any) must be mentioned.

·       This format is mandatory — any deviation (like using plain text instead of the table) is treated as non-compliance, as seen in the Sivaraj Spinning Mills case.

KEY TAKEAWAY FOR COMPANIES:

·       CSR reporting is not just about substance but also form.

·       Even minor deviations (like not using the tabular format) can attract penalties.

·       Boards should ensure their CSR disclosures strictly follow the prescribed annexure to avoid fines and reputational risks.

·       This case is a reminder that compliance in corporate law often hinges on both content and format.

## YOUR COMPLIANCE PARTNER R V SECKAR, FCS, LLB 79047 19295,

WHETHER SUPREME COURT OF INDIA IS AGAINST THE CORPORATE CLASS ACTION SUIT AS THE JINDAL POLY FILMS LTD MINORITY SHAREHOLDERS ALLEGE THAT THEY WERE SIDELINED BECAUSE SC REFERRED THE DISPUTE TO PRIVATE ARBITRATION?

WHETHER SUPREME COURT OF INDIA IS AGAINST THE CORPORATE CLASS ACTION SUIT AS THE JINDAL POLY FILMS LTD MINORITY SHAREHOLDERS ALLEGE THAT THEY WERE SIDELINED BECAUSE SC REFERRED THE DISPUTE TO PRIVATE ARBITRATION? 

REFERRING THE DISPUTE TO PRIVATE ARBITRATION

The Supreme Court has ended India’s first-ever corporate class action suit against Jindal Poly Films Ltd., referring the dispute to private arbitration after both sides consented. This move has sparked controversy, as minority shareholders allege they were sidelined, with nearly 40,000 investors losing a statutory remedy.

KEY FACTS ABOUT THE CASE

CASE ORIGIN:

Filed in March 2024 by minority shareholder Ankit Jain, alleging siphoning of ₹2,500 crore through undervalued related-party transactions.

NCLT & NCLAT ORDERS:

 Both tribunals admitted and upheld the class action under Section 245 of the Companies Act, 2013, marking India’s first admitted shareholder class action.

SUPREME COURT DECISION (JUNE 2026):

 Set aside NCLT/NCLAT orders and appointed Justice Manindra Mohan Shrivastava (Retd. Chief Justice) as sole arbitrator, with Delhi as the arbitration seat.

LEAD PETITIONER EXIT:

 Ankit Jain sold his stake in March 2026; Monet Securities substituted as petitioner in May and then consented to arbitration.

SHAREHOLDER CONCERNS

LACK OF CONSULTATION:

Minority investors claim 40,000 shareholders were not consulted before the case was diverted to arbitration.

ALLEGED STRATEGY:

 Critics argue Monet Securities’ substitution and immediate consent to arbitration may have been a pre-arranged strategy with Jindal Poly to defeat the class action.

INVESTOR PROTECTION DEBATE:

 Legal experts warn this sets a precedent where class actions can be privately settled, undermining statutory safeguards for retail investors

ROLE OF SEBI

INTERVENTION:

 SEBI filed an investigative report confirming ₹760 crore losses to public shareholders due to opaque related-party transactions and disclosure violations.

PENDING ACTION:

 Despite arbitration, SEBI continues pursuing regulatory proceedings, meaning the company may still face penalties or compliance directives.

RISKS & TRADE-OFFS

TRANSPARENCY LOSS:

Arbitration is private, reducing visibility for retail investors.

PRECEDENT RISK:

May discourage future shareholder activism under Section 245.

INVESTOR REMEDIES:

Shareholders may need to pursue individual claims or rely on SEBI’s enforcement.

CONCLUDING REMARKS

In short, while the Supreme Court’s referral to arbitration resolves the dispute procedurally, it raises serious questions about minority shareholder rights, transparency, and the future of class actions in India.

Investors should closely monitor SEBI’s ongoing proceedings, as that remains the only avenue for broader accountability.

# YOUR COMPLIANCE PARTNER R V SECKAR, FCS, LLB 79047 19295,

DESPITE SEBI’S EXPLOSIVE FRAUD ALLEGATIONS, INDEPENDENT DIRECTORS OF RAJESH EXPORTS HAVE NOT RESIGNED. ARE THEY “SUPPORT” THE PROMOTER’S STAND?

 DESPITE SEBI’S EXPLOSIVE FRAUD ALLEGATIONS, INDEPENDENT DIRECTORS OF RAJESH EXPORTS HAVE NOT RESIGNED. ARE THEY “SUPPORT” THE PROMOTER’S STAND?

IT MORE LIKELY REFLECTS THE COMPLEX DYNAMICS OF CORPORATE GOVERNANCE, REGULATORY UNCERTAINTY, AND THE DIRECTORS’ OWN LEGAL OBLIGATIONS.

RAJESH MEHTA OF RAJESH EXPORTS IS FACING ALLEGATIONS OF ₹15.15 LAKH CRORE REVENUE FRAUD, MISUSE OF FUNDS, AND MISREPRESENTATION OF ACCOUNTS.

LIC (WITH 10.8% STAKE) WILL HAVE TO PLAY A CRUCIAL ROLE IN PUSHING FOR GOVERNANCE REFORMS IN RAJESH EXPORTS?

PRESENT SCENARIO

SEBI Order (June 2026): Rajesh Exports and promoter Rajesh Mehta face allegations of ₹15.15 lakh crore revenue fraud, misuse of funds, and misrepresentation of accounts. SEBI has barred the promoter from accessing the securities market pending further investigation.

INDEPENDENT DIRECTORS:

As of now, none of the independent directors have resigned en masse. However, there have been individual cessations in past years (e.g., Vijayalakshmi in 2024).

SHAREHOLDER PUSHBACK:

 In 2025, shareholders rejected the reappointment of Asha Mehta as an independent director, showing that investors are already skeptical of governance practices.

WHY INDEPENDENT DIRECTORS OF RAJESH EXPORTS  HAVN’T RESIGNED?

LEGAL DUTY VS. OPTICS:

Independent directors are bound by fiduciary duties. Resigning immediately could be seen as shirking responsibility when regulators expect them to cooperate in investigations.

REGULATORY PRESSURE:

 SEBI often requires independent directors to remain in place to ensure continuity and accountability during probes.

REPUTATION RISK:

 Resignation could be interpreted as an admission of complicity or failure to oversee, which may expose them to liability.

PROMOTER INFLUENCE:

 In promoter-driven companies like Rajesh Exports, independent directors may have limited autonomy, making resignation politically or professionally difficult.

DOES NON-RESIGNATION MEAN TO SUPPORT TO RAJESH EXPORTS ?

Not necessarily.

·       Staying on the board does not automatically mean they endorse the promoter’s position. It may simply reflect:

·       A wait-and-watch approach until SEBI’s final order.

·       Desire to protect themselves legally by showing they are cooperating.

·       Pressure from promoters or institutional investors to maintain stability.

INVESTOR TAKEAWAY

·       Do not assume silence = support. Independent directors may be constrained by law, optics, or promoter influence.

·       Watch SEBI’s next steps. If the regulator strengthens charges, directors may be forced to resign or face liability.

·       Institutional investors (like LIC with 10.8% stake) will play a crucial role in pushing for governance reforms.

FINAL THOUGHT

The lack of resignations   by Independent Director of Rajesh Exports is less about endorsement of the promoter’s stand and more about the legal, regulatory, and reputational complexities of corporate governance in India.

# YOUR COMPLIANCE PARTNER R V SECKAR, FCS, LLB 79047 19295,