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CASE NO.: Appeal (civil)  1748 of 1999

PETITIONER: ANZ Grindlays Bank Limited & Ors., etc.

RESPONDENT: Directorate of Enforcement & Ors., etc.

DATE OF JUDGMENT: 05/05/2005

BENCH: K.G. Balakrishnan

JUDGMENT: J U D G M E N T

WITH

Civil Appeal Nos. 1749/99, 1750/99, 1751 & 1944 of 1999,  Criminal Appeal Nos.685,684,688(@ of S.L.P.  [Crl.] Nos. 1940/04, 2599/03 4995/03; Writ Petition (Crl.)  No. 165/04, Criminal Appeal Nos. 847/04  and  848/04

K.G. BALAKRISHNAN, J.

       Leave granted.

       The appellant in Civil Appeal No. 1748 of 1999 filed a writ  petition before the High Court of Bombay challenging  various notices  issued to them under Section 50 read with Section 51 of the Foreign  Exchange Regulation Act, 1973  (for short, the FERA Act) and  contended that the appellant company was not liable to be prosecuted  for the offence under Section 56 of the FERA Act.   In this appeal filed  against the  judgment of the Division Bench of the Bombay High Court,  dated 7th November, 1998,  the appellant contends that  no criminal  proceedings can be  initiated against the  appellant-company for the  offence under Section 56(1) of the FERA Act as the minimum  punishment prescribed under Section 56(1)(i) is imprisonment for a  term which shall not be less than six months and with fine.    Section  56 of the FERA Act, 1973 reads  as  follows :

       "56.   Offences and prosecutions -  (1) Without prejudice  to any award of penalty by the adjudicating officer under this  Act, if any person contravenes any of the provisions of this Act  (other than Section 13, clause (a) of sub-section (1) of section  18, Section 18A, clause (a) of sub-section (1) of section 19, sub- section (2) of section 44 and sections 57 and 58, or of any rule,  direction or order made thereunder, he shall, upon conviction by   a court, be punishable, --

(i)   in the case of an offence the amount or value involved in  which exceeds one lakh of rupees, with imprisonment for a term  which shall not be less than six months, but which may extend  to seven years and with fine:

Provided that the court may, for any adequate and special  reasons to be mentioned in the judgment, impose a sentence of  imprisonment for a term  of less than six months.

(ii)\005\005. (2)\005\005

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(3)\005\005 (4)\005\005 (5)\005\005 (6)\005\005."          

       The contention  of the appellants  in   other connected matters  also is to the same effect that in a case where the offence is  punishable with a mandatory sentence of imprisonment, the company  cannot be prosecuted as the sentence of imprisonment  cannot be  enforced against the company.    When the matter came up before the  bench of three learned Judges of this Court,  the decision in   Assistant Commissioner, Assessment-II Bangalore & Ors vs.  Velliappa Textiles Ltd & Anr. (2003) 11 SCC 405 was cited in  support of that contention.    The bench doubted the correctness of the  above decision and by reference order  dated 16.7.2004 reported in  2004(6) SCC 531,  the matter  has thus been placed before this  Court by the learned Chief Justice of India  for our decision.

       The question that arises for consideration is whether a company  or a corporate body could be prosecuted  for offences for which the  sentence of imprisonment is  a mandatory punishment.    In Velliappa  Textiles’ case (supra), by a majority decision it was  held that the  company cannot be prosecuted for offences which require imposition  of a mandatory term of imprisonment coupled with fine.  It was further  held that where punishment provided is imprisonment and fine, the  court cannot impose only a fine.   In  Velliappa Textiles,  prosecution  was launched against the respondent, a  private limited company, for  the offences punishable under Sections 276-C, 277 and 278 read with  Section 278-B of the Income Tax Act.   Under Section 276-C and 277  of the Income Tax Act, the substantive sentence provided  is  the  sentence of imprisonment  and fine.   Speaking for the majority, one  of us, (Srikrishna, J.) held that the first respondent company cannot  be prosecuted for offences under Section 276-C, 277 and 278  read  with Section 278-B since each  of these  sections requires the  imposition of a mandatory term of imprisonment coupled with a  fine  and leaves no choice to the court to impose only a fine.    The majority  was of the view that the legislative mandate is to prohibit the courts  from deviating from the minimum mandatory punishment prescribed  by the Statute and that while interpreting a penal statute, if more than  one view is possible, the court is obliged to lean in favour of the  construction which exempts a citizen from penalty than the one which  imposes the penalty.   Following the decision in State of  Maharashtra vs. Jugamander Lal    AIR 1966 SC 940, it was held  that the expression used is "imprisonment and fine" and the court is  bound to award sentence of imprisonment as well as fine and that  there is no discretion on the part of the court to impose only a fine and   that  the court cannot interpret the statutory provisions in a way so as  to supply a lacuna in a statute.

       The view expressed in Velliappa Textiles is seriously assailed  before us by the Additional Solicitor General, Mr. Malhotra, who  appeared for the respondents.    Senior Counsel Shri KK Venugopal,  Shri Andhiyarujina, Shri Ashok Desai and  other counsel supported the  contention that a company cannot be prosecuted for an offence, for  which the mandatory sentence is imprisonment.   Shri Ram Jethmalani  appearing  for the appellant in the appeal arising out of Special Leave  Petition  (Crl.) No. 4995  of 2003 supported the view that the company  is liable to be prosecuted even if  the offence is punishable  both with   a term of imprisonment and fine.   He submitted that in case the  company is found guilty, the sentence of imprisonment cannot be   imposed on the company and then the sentence of fine is to be  imposed and the court has got the  judicial discretion  to do so.   He  further submitted that this course is open  only  in the  case where the  company  is found  guilty  but  if a natural person is so found  guilty,

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both sentence of imprisonment and fine  are to be imposed on such  person.    

       There is no dispute that  a company is liable to be prosecuted  and punished for criminal offences.     Although there are earlier  authorities  to the effect that  corporations cannot commit a crime, the  generally accepted modern rule is that except for such crimes as a    corporation  is held incapable of committing by reason of the fact that  they involve personal malicious intent,  a corporation may be subject  to indictment or other criminal process, although the criminal act is  committed through  its agents.

       As in the case of torts, the general rule prevails that the  corporation may be criminally liable  for the acts of an officer or agent,  assumed to be done by  him  when exercising authorized powers, and  without proof that his act was expressly authorized or approved by the  corporation.   In the statutes defining crimes, the prohibition is  frequently directed against any "person" who commits the prohibited  act,  and in  many statutes the term "person" is defined.     Even if the  person is not specifically defined, it necessarily includes a corporation.   It is usually construed to include a corporation so as to bring it within  the prohibition of the statute and subject it to  punishment.   In most  of the statutes,  the word  "person" is defined to include a corporation.    In    Section  11   of   the   Indian  Penal Code, the  "person"  is  defined thus :  

"The word "person" includes any Company or Association  or  body of persons, whether incorporated or not."

       Therefore, as regards corporate criminal liability, there is no  doubt that a corporation or company could be prosecuted for any  offence punishable under law, whether it is coming under the strict  liability or under absolute liability.  

       Inasmuch as  all criminal and quasi-criminal offences are  creatures of  statute,  the amenability of the  corporation to  prosecution necessarily depends   upon the terminology employed in  the statute.   In the case of strict liability, the terminology employed  by the legislature is such as  to reveal an intent that guilt shall not be   predicated upon the automatic breach of the statute but on the  establishment of the actus reus. subject to the defence of due  diligence.   The law is primarily based on the terms of the statutes.   In  the case of absolute liability where the legislature by the clearest  intendment establishes an offence where liability arises instantly upon  the breach of the statutory prohibition,  no particular state of mind is a  prerequisite to guilt.   Corporations and individual persons stand on  the same footing in the face of such a statutory offence.       It is a  case of automatic primary responsibility.     It is only  in a case  requiring  mens rea,   a question arises whether a corporation could  be attributed with requisite mens rea to prove the guilt.  But  as we  are not concerned with this question in these proceedings, we  do not  express any opinion  on that issue.

       In series of offences  punishable under various statutes,  sentence of imprisonment and fine are prescribed as the punishment.    In some of these enactments,  for certain offences a minimum  period  of imprisonment  is prescribed as punishment.   Under Section 56(1)(i)  of the FERA Act,  in respect of certain offences, if  the amount or value   involved  therein  exceeds one lakh of rupees,  the punishment  prescribed is imprisonment for a term which shall not be less than six  months, but which may extend to seven years and with fine.     In any  other case,  the punishment prescribed is  imprisonment for a term  which may extend to three  years or with fine or with both.    

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       Going by the provisions in Section 56 of the FERA Act,  if the  view expressed in Velliappa Textiles is accepted as correct law, the  company could be  prosecuted for an offence involving rupees one lakh  or less and  be punished as the option is given to the court to  impose  a sentence of imprisonment or fine, whereas in the case of an offence  involving an amount or value exceeding rupees one lakh, the court is  not given a discretion to impose imprisonment or fine and therefore,  the company cannot be prosecuted as the custodial sentence cannot  be imposed on it.

       The legal difficulty arising out of the above situation was noticed  by the Law Commission and in its 41st  Report,   the Law Commission  suggested amendment to Section 62 of the Indian Penal Code by  adding the following lines :

       "In every case in which the offence is only  punishable with imprisonment or with imprisonment and  fine and the offender is a company or other body corporate  or an association of individuals, it shall be competent to  the court to sentence such offender to fine only."

       This recommendation got no response from the Parliament and  again in its 47th Report,  the Law Commission in paragraph 8(3) made  the following recommendation :

"In many of the Acts relating to economic offences,  imprisonment is mandatory.  Where the convicted person  is a corporation, this provision becomes unworkable, and it  is desirable to provide that in such cases, it shall be  competent to the court to impose a fine.  This difficulty can  arise under the Penal Code also, but it is likely to arise  more frequently in the case of economic laws.  We,  therefore, recommend that the following provision should  be inserted in the Penal Code as, say, Section 62:

(1)     In every case in which the offence is  punishable with imprisonment only or with imprisonment  and fine, and the offender is a corporation, it shall be  competent to the court to sentence such offender to fine  only.

(2)     In every case in which the offence is  punishable with imprisonment and any other punishment  not being fine, and the offender is a corporation, it shall be  competent to the court to sentence such offender to fine.

(3)     In this section, "corporation" means an  incorporated company or other body corporate, and  includes a firm and other association of individuals."

       But  the Bill  prepared on the basis of the recommendations of  the Law Commission lapsed and it did not become law.     However few  of these recommendations were accepted by the Parliament and by  suitable amendment some of the provisions in the taxation statutes  were amended.

       The question whether a company could be prosecuted for an  offence for which mandatory sentence of  imprisonment is provided   continued to agitate the minds of the courts and jurists and the law  continued to be the old law despite the recommendations of the Law  Commission and the difficulties were expressed by the superior courts in  

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many decisions.

       The question under consideration is that where an accused is  found guilty and the punishment to be imposed is  imprisonment and  fine,  whether the court has got the  discretion  to impose the sentence  of fine alone.    Senior counsel  Shri Jethmalani contended that  if a  corporate body is found guilty of the offence committed,  the court,  though bound to impose the sentence prescribed under law, has the  discretion to impose the sentence of imprisonment or fine as in the case  of a company or corporate body the sentence of imprisonment cannot  be imposed on it and as the law never compels to do anything which is  impossible, the court has to follow the alternative and impose the  sentence of fine.   The counsel also hastened to add that this discretion  could be exercised only in respect of juristic persons and not in respect  of  natural persons.    It was contended that by doing so, the court   does not alter the provisions of the law by  interpretation,  but only  carry out the mandate of the legislature.   Senior counsel appearing for  other appellants, on the other hand, contended that the Parliament   enacted  laws knowing fully well that the company cannot be subjected  to custodial sentence and therefore the legislative intention is not to  prosecute the companies or corporate bodies and when the sentence  prescribed cannot be imposed, the very prosecution itself is futile and   meaningless and thus the  majority decision in Velliappa Textiles  has  correctly laid down the law.    The counsel on either side drew our  attention to various decisions on the point.

       Different High Courts have taken different views on this  question.    In State   of Maharasthra   vs. Syndicate Transport  1963 Bom. L.R. 197, it was held that the company cannot be prosecuted  for offences which necessarily entail consequences of a corporal  punishment or imprisonment and prosecuting a company for such  offences would only result in the court stultifying itself by embarking on  a  trial in which the verdict of guilty is returned and no effective order  by way of sentence can be made.

       In Kusum Products Limited vs. S.K. Sinha, ITO, Central  Circle-X, Calcutta 126 ITR 804 (1980),  the Calcutta High Court took  the view that even though the definition of  "person" under Section  232(3)(i)  is wide enough to include a company or a juristic  person, the  word "person" could not have been used by Parliament in Section 277  (Income Tax Act) in the sense given in the definition clause.   It was  further held that the intention of the Parliament is otherwise because  imprisonment has been made compulsory for an offence under Section  277 of the Act and a company being a juristic person cannot possibly be   sent to prison and it is not open to court to impose a sentence of fine or   allow to award any punishment if the court finds the company guilty  under the said Section, and if the court does it, it would be altering the  very scheme of the Act and usurping  the legislative function.

       In  Badsha vs. Income Tax Officer 1987 (1) K.L.T. 112       Justice Thomas, J., as he then was, following the decision of the  Allahabad High Court in Modi Industries Limited vs. B.C. Goel  144  ITR 496 (1983), held   that   "A company registered under the  Companies Act, 1956 is a juristic person and cannot be awarded the  punishment of imprisonment and  hence cannot be prosecuted for  breach of Sections 277 and 278 of the Act" and therefore the court held  that the first accused  being a firm was not liable to be prosecuted for  offences under Section 277 and 278.

       In P.V. Pai  vs.  R.L. Rinawma, Dy. Commissioner, Income  Tax, (1993) 2 Comp. L.J, 314 (Karn.),  it was held that imprisonment  alone  was the punishment that could be imposed on a person found  guilty and that the legislature intended that the offence under Section  277 should be met with punishment of compulsory imprisonment and  fine, and  courts have no jurisdiction to impose fine only and if that is

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done it would be altering the very scheme of the Act.

       It is also pertinent to make reference to the decision of this  Court in State of Maharashtra vs. Jugamander Lal  AIR 1966 SC  940.   That was a case  where the accused was found guilty under  Section  3(1) of Suppression of Immoral Traffic in Women & Girls Act,  1956.   Under  Section 3(1) of that Act, any person found guilty shall be  punishable on his first conviction with rigorous imprisonment for a term  of not less than one year and not more than three years and also with  fine which may extend to two thousand rupees.   The High Court took  the view that the word "punishable" used in the Section postulated a  discretion on the court to impose a sentence of imprisonment or a  sentence of fine or both.    But this Court held that  in the context in  which the word "punishable" has been used in Section 3(1), it is  impossible to construe it as giving any discretion to the court in the  matter of determining the nature of sentences to be passed in respect of  a contravention of the provision.  By using the expression "shall be  punishable" the legislature has made it clear that the offender shall not  escape the penal consequences.   What the consequences  are to be are  then specified in the provision and they are rigorous imprisonment for a  period not less than one year and not more than three years and also a  fine which  may extend to Rs.2,000/-.   These are the punishments with  respect to a first offence and higher punishments are prescribed in  respect of a subsequent offence.  By saying that a person convicted of  the offence shall be sentenced to imprisonment of not less than one  year, the Legislature has made it clear that the command is to award a  sentence of imprisonment in every case of conviction.   It is difficult to  conceive of clearer language for couching such command.

       The counsel for the appellant relying on the above decision  contended that when the Section commands the punishment for  imprisonment and fine, the court is not left with any discretionary power  to alter the sentence and that would  amount to  re-writing the  provisions of  the law.

       Contrary view has been taken in series of other decisions to  which our attention was drawn.

       A full Bench of the Delhi High Court in  Delhi Municiaplity  vs.  J.B. Bottling Company 1975 Crl. L.J. 1148  considered a similar  question.   The respondent-company was found guilty under Section 7  read with Section 16 of the Prevention of Food Adulteration Act,  and  was fined  rupees five thousand.   The respondent-company filed  an  appeal and contended that   for the offence under Section 16 of the  Prevention of Food Adulteration Act, the minimum period of six months  imprisonment is prescribed and the company is immune from  prosecution as the sentence contemplated under law cannot be imposed  on it.    The Court held that:

       "The office of the judges is always to make construction  as shall suppress the mischief and advance the remedy  and therefore it will stay its hand in passing the sentence  which will be impossible to execute but pass only such  sentence which can be executed, namely, fine.   The  proviso to Section 16 applies only to the three classes of  offences mentioned therein and as compared to the rest of  the offences  contemplated by the Act are of less serious  nature and if indictment of the company is confined to only  those offences which are covered by the proviso, then not  only the intention of the legislature is defeated, but the  provisions of Section 16(1-D) and Section 18 are also to  that extent rendered nugatory, insofar as the offences are  committed by the companies".

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       In  Oswal Vanaspati & Allied Industries vs. State of Uttar  Pradesh (1993) 1 Comp. L.J. 172 (All.), the appellant-company sought  to quash the complaint filed against it by the Food Inspector under  various sections of the Act alleging that the company cannot be  prosecuted for an offence under Section  16 of the Act as the sentence  of imprisonment provided under that section after its amendment by the  Prevention of Food Adulteration (Amendment) Act No. 34 of 1976 which  is mandatory cannot be awarded to it.  In paragraph 7, the Full Bench of  the Allahabad High Court held  as follows :  

       "A company being a juristic person cannot obviously be  sentenced to imprisonment as it cannot suffer  imprisonment.  The question that requires determination is  whether a  sentence  of fine alone can be imposed on it  under Section 16 of the Act or whether such a sentence  would be illegal and hence cannot be awarded to it.   It is  settled law that sentence or punishment must follow  conviction; and if only corporal punishment is prescribed, a  company which is a juristic person  cannot be prosecuted  as it cannot be punished.  If, however, both sentence of  imprisonment and fine is prescribed for natural persons  and juristic persons jointly, then, though the sentence of  imprisonment cannot be awarded to a company, the  sentence of fine can be imposed on it.   Thus it cannot be  held that in such a case the entire sentence prescribed  cannot be awarded to a company as a part of the  sentence, namely, that of fine can be awarded to it.   Legal  sentence is the sentence prescribed by law.    A sentence  which is in excess of the sentence prescribed is always  illegal; but a sentence which is less than the sentence  prescribed   may not in all cases be illegal."

                It is also appropriate to make reference to a decision of the  United States Supreme Court.   The judgment was rendered in United  States vs. Union Supply Company 54 Law. Ed.  87 by Justice  Holmes.   There was an indictment of a corporation for willfully  violating the sixth section of the Act of Congress of 1902 and any  person who willfully violates any of the  provisions of this Section shall,   for each such offence, be liable to be punished with fine not less than  fifty dollars and not exceeding five hundred dollars,  and  imprisonment  for not less than 30 days, nor more than six months.   It is interesting  to note that   for the offence under Section 5, the Court had  discretionary power to punish by either fine or imprisonment, whereas  under Section 6, both punishments were to be imposed in all cases.      The plea of the company was rejected and it was held :

"It seems to us that a reasonable interpretation of the  words used does not lead to  such  a result.   If we  compare Section 5, the application of one of the penalties  rather than of both  is made to depend, not on the  character of the defendant, but on the discretion of the  Judge; yet, there, corporations are mentioned in terms\005\005.  And  if we free our minds from the notion that criminal  statutes must be construed by some artificial and  conventional rule, the natural inference,  when a statute  prescribes two independent penalties, is that it means to  inflict them so far as it can, and  that,  if one of them is  impossible, it does not mean,  on that account,  to let the  defendant escape."

       The Counsel for the appellant contended that the penal provision  in the statute is to be strictly construed.  Reference was made to

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Tolaram Relumal and another Vs. The State of Bombay 1955(1)  SCR 158 at 164 and Girdhari Lal Gupta Vs. D.H. Mehta and another  1971(3) SCC 189.  It is true that all penal statutes are to be strictly  construed in the sense that the Court must see that the thing charged  as an offence is within the plain meaning of the words used and must  not strain the words on any notion that there has been a slip that the  thing is so clearly within the mischief that it must have been intended to  be included and would have included if thought of.  All penal provisions  like all other statutes are to be fairly construed according to the  legislative intent as expressed in the enactment.  Here, the legislative  intent to prosecute corporate bodies for the offence committed by them  is clear and explicit and the statute never intended to exonerate them  from being prosecuted.  It is sheer violence to commonsense that the  legislature intended to punish the corporate bodies for minor and silly  offences and  extended immunity of prosecution to major and grave  economic crimes.

       The distinction between  a strict construction and a more free  one has disappeared in modern times and now  mostly the question is  "what is true construction of the statute?"   A passage in  Craies on  Statue Law  7th Edn. reads to the following effect :

"The distinction between a strict and a liberal construction  has almost disappeared with regard to all classes of  statutes, so that all statutes, whether penal or not, are   now construed by  substantially the same rules.  ’All  modern Acts are framed with regard to equitable as well as  legal principles.’    "A hundred years ago",  said the court  in Lyons’ case, "statutes were required to  be perfectly  precise and resort was not had to a reasonable  construction of the Act,  and thereby criminals were often  allowed to escape.   This is not  the present mode of  construing Acts of Parliament.    They are construed now  with reference to the true meaning and real intention of  the legislature."   

               At page-532 of the same book, observations of   Sedgwick  are quoted as under:            "The more correct version of the doctrine  appears to be that statutes of this class are  to  be fairly construed and faithfully applied  according to the  intent of the legislature without  unwarrantable severity on the one hand or  unjustifiable  lenity on the other, in cases of  doubt the courts inclining to mercy."

       The  question, therefore, is what is the intention of the  legislature.  It is an undisputed fact that for all the statutory offences,  company also could be  prosecuted as  the "person" defined   in these  Acts includes "company, or corporation or other incorporated body."

Even for offences under Section 56(1)(ii) FERA Act, the company  could be prosecuted as  the amount involved is less than rupees one  lakh and there is no mandatory sentence of imprisonment and the   prescribed punishment is imprisonment for a term which may extend  to three years  or with fine or with both.    It is also pertinent to note  that the object of the  amendment was to  have  more stringent  provisions where the amount involved in the offence is more than  rupees one lakh.   It is not reasonably possible to assume that     amendment to the Section was carried out to give immunity to  corporate bodies from prosecution for serious offences.    The scheme  of the Indian Penal Code also would show that for serious and graver  

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offences,  mandatory sentence of imprisonment is prescribed and for  less serious offences the court is given a discretionary power of  imprisonment or fine.     

In the case of penal code offences,  for example under Section  420 of the Indian Penal Code,  for cheating and dishonestly inducing  delivery of property, the punishment prescribed is imprisonment of  either description for a term which may extend to seven years and  shall also be liable to fine;  and for the offence under Section 417,   that is, simple cheating, the punishment prescribed is imprisonment of  either description for a   term  which may extend to one year or with  fine or with both.    If the appellants’ plea is accepted  that for the  offence under Section 417 IPC,  which is an offence of minor nature,  a  company could be prosecuted and punished with fine  whereas  for the  offence under Section 420,  which is an  aggravated form of cheating  by which the victim is dishonestly induced to deliver property, the  company cannot be prosecuted as there is a mandatory   sentence of  imprisonment.

       So also there are several other offences  in the Indian Penal  Code which describe offences of serious nature  whereunder a  corporate body  also may be found guilty,   and the punishment   prescribed is  mandatory custodial sentence.    There are series of  other offences under various statutes  where accused are also liable to  punished with custodial sentence and fine.

       The contention of the appellants is that when an offence is  punishable with imprisonment and fine, the court  is not left with any  discretion to impose any one of them and consequently the company  being a juristic person cannot be prosecuted for the offence for which  custodial sentence is the mandatory punishment.    If the custodial  sentence is the only punishment prescribed for the offence, this plea is  acceptable, but when the custodial sentence and fine are  the prescribed  mode of punishment, the court can impose the sentence of fine on  a  company which is found guilty as the sentence of imprisonment is  impossible to be carried out.   It is an acceptable legal maxim that law  does not  compel a man to do that which cannot possibly be performed  [impotentia excusat legem]      .  This principle  can be found in  Bennion’s Statutory Interpretation 4th Edn. At page 969.     "All civilized  systems of law import the principle that lex non cogit ad impossibilia\005."    As Patternson, J. said "the law compels no impossibility".   Bennion  discussing about legal impossibility at page 970 states that, "If an  enactment requires what is legally impossible it will be presumed that  Parliament intended it to be modified so as to remove the impossibility  element.   This Court applied the  doctrine of  impossibility of  performance [Lex non cogit ad impossibilia]  in numerous cases  [State of Rajasthan vs. Shamsher Singh, 1985(Supp.) SCC 416;   Special Reference No. 1 of 2002   reported in 2002(8) SCC 237].

       As the company cannot be sentenced to imprisonment, the court  has to  resort to punishment of imposition of  fine which is also a  prescribed punishment.   As per the scheme of  various enactments and  also the Indian Penal Code, mandatory custodial sentence is prescribed  for graver offences.  If  the  appellants’ plea is accepted, no company or  corporate bodies could be prosecuted for  the graver offences whereas  they could be prosecuted for minor offences  as the sentence prescribed  therein is custodial sentence or fine.   We do not think that the intention  of the Legislature is to give complete immunity from prosecution to the  corporate bodies for these grave offences.   The offences mentioned  under Section 56(1) of the FERA Act, 1973, namely those under Section  13, clause (a) of sub-section (1) of Section 18;  Section 18A; clause (a)  of sub-section (1) of Section 19; sub-section (2) of Section 44, for   which  the minimum sentence of six months’ imprisonment is  prescribed, are serious offences and if committed would have serious  financial consequences  affecting the economy of the country.  All those

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offences could be committed by company or corporate bodies.   We do  not think that the legislative intent  is not to prosecute the companies  for these serious offences, if  these offences involve the amount or  value of more than one lakh,   and that they could be prosecuted only  when the offences involve an amount or value less than  one lakh.

       As the company cannot be sentenced to imprisonment, the court   cannot impose that punishment, but when imprisonment and fine is the  prescribed punishment the  court can impose the  punishment  of fine  which could be enforced against the company.   Such a discretion is to  be read into the Section so  far as the  juristic person is concerned.   Of  course, the court cannot exercise the same discretion as regards a  natural person.    Then  the court would not be passing the sentence in  accordance with law.   As regards company, the court can always  impose a sentence of fine and the sentence of imprisonment can be  ignored as it is impossible to be carried out in respect of a company.    This appears to be  the intention of the legislature and we find no  difficulty in construing the statute in such a way.   We do not think that  there is a blanket immunity for any company from any prosecution for  serious offences merely because the prosecution would ultimately entail  a sentence of mandatory imprisonment.  The corporate bodies, such as  a firm or company undertake series of activities that affect the life,  liberty and property of the citizens.   Large scale financial irregularities  are done by various corporations.   The  corporate vehicle now occupies  such a large portion of the industrial, commercial and  sociological  sectors that amenability of the corporation to a criminal law is  essential   to  have a peaceful society with stable economy .

       We hold that there is no immunity to the companies from  prosecution merely because the prosecution is in respect of offences for  which the punishment prescribed is mandatory imprisonment.  We  overrule the views expressed by the majority in Velliappa Textiles on  this point and answer the reference accordingly.  Various other  contentions have been urged in all appeals, including this appeal, they  be posted for hearing before appropriate bench.