Upholding the criminal liability of corporations, the Supreme Court recently cleared the way for Motorola and its top officials to face criminal prosecution in India. Ruling in Iridium India Telecom Ltd v Motorola Incorporated & Ors, India’s apex court set aside an August 2003 judgment of Bombay High Court and restored a criminal complaint filed by a domestic consortium of lenders, Iridium India, against the US telecom giant and its five directors for alleged offences of cheating and conspiracy.
Iridium India invested ₹5 billion (US$180 million) in a satellite phone project initiated by Motorola in the early 1990s. When the project failed Iridium lodged a criminal complaint in a Pune court against Motorola and its five directors for cheating and conspiracy, which are punishable under section 420 read with section 120B of the Indian Penal Code. Iridium alleged that its investment appeared to “have been procured on fraud and misrepresentation” despite Motorola knowing that the project was commercially unviable.
Motorola then moved Bombay High Court against the complaint. Quashing criminal proceedings against Motorola the high court held that a company being a juridical person could not have the intention to deceive, “which is the necessary mens rea (guilty intention) for the offence of cheating”. This prompted an appeal to the Supreme Court by Iridium.
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The update of court judgments is compiled by Bhasin & Co, Advocates, a corporate law firm based in New Delhi. The authors can be contacted at lbhasin@vsnl.com. Readers should not act on the basis of this information without seeking professional legal advice.
