CORPORATE DEATH PENALTY IN INDIA: SHOULD FORCED DISSOLUTION BE RECOGNISED AS A SANCTION FOR EXTREME CORPORATE MISCONDUCT?

Recent corporate scandals in India have highlighted serious gaps in how company law responds to extreme corporate misconduct. Although the Companies Act, 2013 provides for penalties, prosecution, disqualification of directors, and striking off, these measures often fail to address situations where corporations repeatedly or gravely abuse the corporate form. Corporate dissolution, where it occurs, is generally treated as a procedural or insolvency-related outcome rather than as a deliberate sanction. This paper examines whether Indian company law should recognise forced dissolution, described as a "corporate death penalty," as a sanction for extreme corporate misconduct. The paper explores how the continued legal existence of corporations involved in serious wrongdoing raises concerns about deterrence and accountability. It questions whether the absence of punitive dissolution reflects a conscious legislative choice or an oversight that allows corporations to evade meaningful consequences through restructuring or reincorporation. The study also distinguishes between dissolution as a regulatory mechanism and dissolution as punishment, arguing that this distinction remains insufficiently addressed in Indian company law discourse. At the same time, the paper acknowledges the significant consequences of forced dissolution for employees, creditors, and shareholders. It therefore examines the conditions under which such a sanction could be justified and the need for clear limits to prevent misuse. By focusing on the concept of forced dissolution as a last-resort response to extreme corporate misconduct, this paper seeks to contribute to the ongoing debate on corporate accountability in India and the future development of Indian company law. Keywords: Corporate Dissolution, Corporate Sanctions, Misconduct, Accountability