Corporate imperatives in India's business landscape: The necessity of legal risk management guided by jurisprudence
In recent years, both India and Canada have witnessed a significant expansion of corporate accountability, with courts and regulatory bodies playing increasingly influential roles. This shift has led to a focus on transparency, anti-corruption, and environmental responsibility.
In Canada, environmental mandates are now judicially enforceable, compelling companies to factor carbon pricing into their capital planning. This evolution is evident in the country's first major conviction under the Corruption of Foreign Public Officials Act (CFPOA) - R. v. Karigar (2013) - which signalled that Canadian courts will not tolerate foreign bribery and that third-party due diligence is a legal obligation.
Similarly, in India, key legal judgments and evolving regulatory frameworks have held companies and their management increasingly responsible for compliance, governance, and Environmental, Social, and Governance (ESG) obligations. The Vellore Citizens' Welfare Forum v. Union of India (1996) recognised enforceable environmental obligations for private actors, based on the precautionary and polluter-pays principles.
The Supreme Court of India constitutionalised privacy, urging corporates to overhaul their data governance, even before the Digital Personal Data Protection Act, 2023. Indian courts have also moved beyond traditional litigation roles to actively shape corporate governance standards, emphasising transparency, ethical conduct, and directors' duties.
The expansion of corporate accountability in India has been marked by several key legal judgments. For instance, the Gujarat High Court quashed a criminal complaint against a company for defaulting on Corporate Social Responsibility (CSR) responsibilities, reflecting the 2020 amendments to the Companies Act that decriminalized certain CSR compliance failures and replaced criminal penalties with fines.
Another significant development is the clarification that corporate directors in India are not automatically personally liable for corporate offences without specific evidence of their active involvement. For example, in Sunil Bharti Mittal v. CBI and Sanjay Dutt v. State of Haryana, the Court quashed summons and charges against directors for acts committed by companies or employees without proof of direct complicity.
Indian courts have also used judicial oversight to enforce compliance beyond punitive action. The Supreme Court’s decision in Vineet Narain v. Union of India underscored judicial supervision over independent investigations to combat systemic corruption, reinforcing accountability mechanisms at institutional and corporate levels.
In comparison, Canada’s legal framework and judiciary show parallels, particularly in advancing corporate accountability on global standards of transparency, anti-corruption, and environmental responsibility. Canadian laws like the CFPOA and judicial precedents have also held corporations and senior officers strictly liable under certain statutes, with courts supporting regulatory bodies in enforcing corporate governance that extends beyond shareholder interests to broader stakeholder concerns.
This alignment reflects the globalization of corporate legal risks, where Indian companies increasingly operate under multi-jurisdictional scrutiny similar to Canadian corporations, necessitating robust compliance frameworks supported by evolving jurisprudence.
In the logistics industry, a company learned from Canada's carbon tax jurisprudence and digitised its fuel efficiency data, publishing a verified green impact report to address an ESG backlash after National Green Tribunal (NGT) observations. Similarly, a Noida-based pharma company, facing insider trading allegations, pre-emptively implemented a legal hotline and compliance escalation protocol, leading to early self-disclosure, transparent engagement with SEBI, and resolution through cooperation without formal prosecution.
In summary, the expansion in both countries is marked by stronger judicial oversight, modernization of corporate liability principles, and integration of global governance standards into domestic law, fostering accountable corporate behaviour responsive to societal and regulatory expectations.
In light of the evolving corporate accountability landscape, legal education in both Canada and India is increasingly focusing on incorporating finance and business principles with environmental, social, and governance (ESG) obligations. For example, Canadian law schools are delving into carbon pricing and anti-corruption mechanisms, while Indian institutions are exploring data governance and environmental compliance in their curricula.
This shift towards integrated legal education mirrors the broader trend of corporates being held accountable for their actions beyond mere financial perfomance, emphasizing the importance of social responsibility and ethical conduct in business operations.
