86A. OFFENCES BY COMPANIES. –
1 (1) If the person committing an offence under this Act is 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 offence and shall be liable to be proceeded against and punished accordingly : Provided that nothing contained in this sub-section shall render any person liable to any punishment, 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 with the consent or connivance of, or is attributable to, any neglect on the part of, any director or manager, secretary or other officer of the company, such director, manager, secretary or other officer shall 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, – (i) “company” means any body corporate and includes a firm and other associations of individuals; and (ii) “director” in relation to –
(a) a company, other than a firm, means the managing director or a whole-time director;
(b) a firm means a partner in the firm.
When an offence has been committed by a company and to make a director liable, the averments in the complaint or the documents produced along with the complaint must prima facie indicate that such director was in charge of and responsible for the conduct of the business of the company; Siddharth Kejriwal v. Employees’ State Insurance Corporation, (1998) 92 FJR 89 (Karn).
1. Ins. by Act 29 of 1989, sec. 38 (w.e.f. 20-10-1989).