Offences by companies
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Summary
When a company breaks this Act, the person who was in charge and responsible for running the company at that time is also treated as guilty and can be prosecuted and punished along with the company. That person can avoid punishment by proving the offence happened without his knowledge or that he exercised all due diligence to prevent it. If the offence occurred with the consent, connivance or due to neglect of any director, manager, secretary or other officer, that officer is also deemed guilty.
Example
Ravi is the manager of a transport company and a company truck was driven without a valid permit. The company and Ravi are treated as guilty and can be prosecuted. Ravi can avoid punishment if he proves he did not know or had exercised all due diligence; but if the offence was due to his neglect or consent, he can be punished.
Bare Act
Enacted text(1) Where an offence under this Act has been committed by a company, every person who, at the time the offence was committed, was in charge of, and was responsible to, the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the contravention and shall be liable to be proceeded against and punished accordingly:
Provided that nothing in this sub-section shall render any such person liable to any punishment provided in this Act, if he proves that the offence was committed without his knowledge or that he exercised all due diligence to prevent the commission of such offence.
(2) Notwithstanding anything contained in sub-section (1), where an offence under this Act has been committed by a company, and it is proved that the offence was committed with the consent or connivance of, or is attributable to any neglect on the part of any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly.
Explanation
For the purposes of this section—
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(a) “company”, means any body corporate and includes a firm or other association of individuals; and
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(b) “director”, in relation to a firm, means a partner in the firm.
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