IRIDIUM INDIA TELECOM LTD. versus MOTOROLA INCORPORATED & ORS.

Citation: [2010] 14 S.C.R. 591 · Decided: 20-10-2010 · Supreme Court of India · Bench: B. SUDERSHAN REDDY · Disposal: Appeal(s) allowed

Cited by 2 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

[201 0) 14 (ADDL.) S.C.R. 591. 
IRIDIUM INDIA TE~ECOM LTD. 
v. 
. 
. 
MOTOROLA INCORPORATED ~ . ORS. 
(Criminal Appeal No.688 of 2005) . 
OCTOBER 20, 2010 
[B. SUDERSHAN REDDY AND SURIND.ER SINGH 
NIJJAR, JJ.] 
A 
8 
Code of Criminal Procedure, 1973 - s.482 :- Corporate. 
liability for criminal offences - Criminal complaint against C 
company alleging offence of cheating - Magistrate issued 
process - Petition under s.482 CrPC rlw Article 227 of the 
Constitution allowed by High Court - Justification of - Held: 
Not justified - A company/corporation cannot escape liability 
for a criminal offence, merely because the punishment 
D 
prescribed is that of imprisonmen_t and fine .- The conclusion 
reached by the High Court that respondent no)-company 
could not have the necessary mens rea is cleariy erroneous 
- The complainants were entitled to an dpportunity to prove 
the averments made in the complaint - It was not appropriate 
E 
for the High Court to exercise its jurisdiction under s. 482 CrPC 
to quash the proceedings at the stage when the Magistrate 
had merely issued process against the respondents - The 
High Courl ought to have refrained from indulging in detailed 
analysis of very complicated commercial documents and F 
reaching any definite conclusions - The High Court clearly 
exceeded its jurisdiction in quashing the criminal proceedings 
in the peculiar facts and circumstances of the case - Penal 
Code, 1860- ss. 415, 420 r/w 1208 - Constitution of India, 
1950 - Arlicle 227. 
Criminal Law - Mens rea - Prosecution of corporations 
- Held: A corporation will be liable for crimes of intent. 
Penal Code, 1860 - s. 415, Explanation - Ingredients of 
G 
591 
H 
592 
SUPREME COURT REPORTS [2010) 14 (ADDL.) S.C.R. 
A 
cheating - Held: Misleading statements which withhold vital 
facts for intentionally inducing a person to do or to omit to do 
something would amount to deception - In case, such a 
misleading statement wrongfully causes damage to the person 
deceived, it would amount to cheating. 
B 
Respondent 
no.1 
conceived 
a 
wireless 
communication system through a constellation of 
satellites in low orbit to provide digital service to mobile . 
phones and other subscriber equipment globally. In 1992 · 
a private placement memorandum (PPM) was floated to 
C obtain funds/investment to finance the Project. 
Relying on the representations of respondent no.1., 
the appellant as well as banks and institutions collectively 
invested huge sums of money to purchase equity shares 
0 in the said project and in setting up a gateway. The 
project turned out to be commercially unviable, resulting 
in significant loss to the investors. 
Aggrieved, the appellant filed complaint against 
E respondent no.1 before the Judicial Magistrate, First 
Class inter alia on the allegations of cheating. The 
Magistrate issued process against respondent no.1 under 
Section 420 read with Section 1208 IPC. Respondent no.1 
challenged the same before the High Court by way of a 
petition under Article 227 of the Constitution and under 
F Section 482 of CrPC. The High Court allowed the petition 
and quashed the order issuing process passed by the 
Judicial Magistrate on the ground that a company or 
corporation does not have the mens rea tor committing 
G 
H 
an offence of cheating under Section 415 of IPC. 
Allowing the appeal, the Court 
HELD:1.1. There is much substance in the 
submission that virtually in all jurisdictions across the 
IRIDIUM INDIA TELECOM LTD. v. MOTOROLA 
593 
INCORPORATED 
world governed by the rule of law, the companies and 
A 
corporate houses can no longer claim immunity from 
criminal prosecution on the ground that they are 
incapable of possessing the necessary mens rea for the 
commission of criminal offences. The leyal position in 
England and the United St.ates has now crystallized to 
B 
leave no manner of doubt that a corporation would be 
liable for crimes of intent. [Para 35] [628-C-0] 
1.2. A corporation is virtually in the same position as 
any individual and may be convicted of common law as 
well as statutory offences including those requiring C 
mens rea. The criminal liability of a corporatio!l would 
arise when an offence is committed in relation to the 
business of the corporation by a person or body of 
persons in control of its affairs. In such circumstances, 
it would be necessary to ascertain that the degree and 
D 
control of the person or body of persons is so intense 
that a corporation may 

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