Thursday, May 5 2005 17:45 Hrs (IST) - World Time -

New Delhi: In a major order affecting the corporate world, Supreme Court today (May 5, 2005) ruled that in cases pertaining to income tax and financial irregularity, companies can no more claim immunity from prosecution and courts can impose fine on them though they could not be sentenced.

The ruling given by a five-Judge Constitution Bench overturns an earlier judgement of the apex Court, which had held that companies could not be liable for prosecution in such cases, as at the end of the trial they could not be sentenced to imprisonment.

While Justice N Santosh Hegde and Justice B N Srikrishna gave a dissenting judgement, the majority ruling was given by Justice K G Balakrishnan, Justice D M Dharmadhikari and Justice Arun Kumar.

Justice Kumar held that companies do not enjoy any immunity from prosecution.

Justice Balakrishnana, writing the majority judgement, said, although companies, not being natural persons, could not be imprisoned, they could face fines.

This would open a plethora of cases against many corporations like ANZ Grindlays Bank, Standard Chartered Bank and other financial institutions, which were allegedly involved in the 1991 Securities scam.

Even AB Bofors, facing trial in the Rs 65 crore Bofors payoff case, could find itself to be coming within the purview of this judgement and, if found guilty in the trial, could face fine.