Treating Companies as Victims under Criminal Law

Context

According to the Supreme Court, companies can also fall under the definition of ‘victim’ under the Code of Criminal Procedure (CrPC) and are entitled to compensation and legal remedies on the same level as individual (judicial) victims. This will give them the right to file criminal complaints that enable corporate entities to take criminal remedies for violation of intellectual property rights.

Recent Cases

• The case arose from a dispute in which a company was defrauded but its plea for victim status was challenged on the ground that only natural persons can be victims.
• The Supreme Court set aside the October 9, 2023 order of a single judge of the Jaipur Bench of the Rajasthan High Court, dismissing an appeal filed by Asian Paints Limited under Section 372 of the Code of Criminal Procedure (CrPC).
  • The appeal was filed over a dispute with a retailer selling counterfeit products of the company, which was dismissed as not maintainable.

Supreme Court Decision

Expansion of the definition of victim

The court held that the definition of 'victim' under Section 2(wa) of the Code of Criminal Procedure includes companies, firms and other judicial entities, if they have suffered loss or damage due to a criminal act.

Court's Observation

• Legal entities are capable of holding property and entering into contracts.
• If they have suffered loss due to criminal acts (such as fraud, breach of trust), they have the right to get justice and compensation.
• Excluding them would undermine victim rights and the spirit of justice delivery.

Criminal law is not just for individuals

• The judgment emphasised that criminal jurisprudence must evolve with the changing nature of society and commerce.
• The judgment empowers corporate entities to resort to criminal remedies for violation of intellectual property rights.

Implications for India

• Stronger corporate rights: Companies now have victim status that allows them to apply for compensation, restitution and participation in criminal proceedings.
• Corporate fraud: The judgment enhances the ability of firms to fight economic crimes, especially in sectors such as banking, financial technology and real estate.
• Legal precedent: The judgment sets a binding precedent for all jurisdictions that will impact criminal prosecutions involving economic and white-collar crimes.