Supreme Court Rules Companies Can Be Victims Under Criminal Law: What It Means for India Inc

The Supreme Court of India on Monday provided relief to paint industry giant Asian Paints and reshaped the interpretation of Section 372 of the Criminal Procedure Code (CrPC) in an intellectual property rights infringement case. The case dates back to a 2016 survey in Rajasthan, where the company discovered that a vendor was selling paint products using its trademark.

The key takeaway from Monday’s ruling is the observation by the Bench comprising Justice Ahsanuddin Amanullah and Justice Prashant Kumar Mishra, who said, “A victim includes any person, natural or juristic, who suffers harm due to an offence. That includes companies.” The Court affirmed a broad interpretation of the term "victim" under the CrPC.

Previously, the Rajasthan High Court had dismissed the company’s appeal, ruling that only the original complainant (an agent of Asian Paints) had the right to file such an appeal.

What Was the Case About?

In 2016, Asian Paints appointed an IPR consultant after suspecting counterfeit products bearing its brand name were being sold by a trader in Jaipur. On 6 February 2016, the consultant found fake Asian Paints products at Ganpati Traders, owned by Ram Babu. A police raid led to the seizure of 12 buckets of paint marked similarly to Asian Paints, but lacking the company’s signature branding on the base of the containers. Ram Babu was arrested, and the fake products were confiscated.

An FIR (First Information Report No. 30/2016) was registered under Sections 420/120B of the Indian Penal Code, 1860 (IPC), and Sections 63/65 of the Copyright Act.

The trial court convicted Ram Babu, sentencing him to three years’ imprisonment and a fine. However, in 2022, the Additional Sessions Judge acquitted him on appeal. Asian Paints then challenged this acquittal under the proviso to Section 372 of the CrPC, which allows a "victim" to appeal against an acquittal.

The Rajasthan High Court dismissed the appeal, ruling that Asian Paints did not qualify as a "victim" since the original complaint was filed by an investigator and not directly by the company. The High Court stated: “The Appellant was neither considered a complainant nor a victim before the Trial Court.”

What the Supreme Court Ruled

Asian Paints challenged this ruling in the Supreme Court. Its legal team, led by Ajay Singh of Singh Law Chambers LLP, argued that a corporate entity qualifies as a "victim" under Section 2(wa) of the CrPC, which defines a victim as “a person who has suffered any loss or injury caused by reason of the act or omission for which the accused has been charged.” Referring to Section 11 of the IPC, Singh noted that the term “person” includes companies.

Singh, who had earlier represented the company before the trial court and the Rajasthan High Court, also cited the Supreme Court’s precedent in Jagjeet Singh v. Ashish Mishra, which held that a victim enjoys participatory rights from the stage of investigation through to appeal or revision.

Asian Paints argued that the reputational and financial harm caused by counterfeiting clearly established its victimhood and that the proviso to Section 372 is a standalone right not dependent on the state’s appeal or direct complaint.

The respondents, however, argued that Section 372 must be read with Section 374 (which governs appeals against convictions), and since no appeal had been filed by the state, and Asian Paints was not the original complainant, the company had no standing. The state government supported this view, suggesting that Asian Paints should have pursued a Special Leave to Appeal under Section 378(4) CrPC or filed a revision petition.

However, the Supreme Court ruled in favour of Asian Paints. It clarified that the terms "victim" and "complainant" are distinct under the law and that a victim need not be the original complainant to have appellate rights under Section 372.

The Bench stated: “We may also indicate that the right of a victim to prefer an appeal as granted under the proviso to Section 372 of the CrPC, which was inserted by Act V of 2009 with effect from 31.12.2009, is not restricted by any other provision of the CrPC.”

The Court further held that while Section 378 governs state appeals and requires leave, the proviso to Section 372 creates an independent, substantive right for victims. The High Court’s interpretation, which made this right dependent on Section 378, was deemed legally untenable.

“In the present case, there cannot be any two opinions that ultimately, it is the Appellant who has suffered due to the counterfeit/fake products being sold or attempted to be sold as those manufactured by the Appellant. The Appellant would suffer financial loss and reputational injury if such products were purchased by the public under the mistaken belief that they belonged to the Appellant’s brand,” the Supreme Court said.

Accordingly, the Apex Court allowed the appeal by Asian Paints and set aside the Rajasthan High Court’s judgment.

"The Supreme Court affirmed that the victims (including corporations) have an enforceable right to appeal acquittals without seeking leave under Section 378 CrPC," said Singh Law Chambers LLP in a statement. Adding that SC ruling cements the idea that enforcement of IPRs through the criminal process also carries the full participatory rights for the affected rights-holder.