Offences by companies
Full Text
Offences by companies.—(1) If the person committing an offence under section 138 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 punishment if he proves that the offence was committed without his knowledge, or that he had exercised all due diligence to prevent the commission of such offence:
Provided further that where a person is nominated as a Director of a company by virtue of his holding any office or employment in the Central Government or State Government or a financial corporation owned or controlled by the Central Government or the State Government, as the case may be, he shall not be liable for prosecution under this Chapter.
(2) Notwithstanding anything contained in sub-section (1), where any offence under this Act has been committed by a company and it is proved that the offence has been 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,—
(a) “company” means any body corporate and includes a firm or other association of individuals; and
(b) “director”, in relation to a firm, means a partner in the firm.
Plain English Summary
Imposes vicarious criminal liability on companies, partnership firms, managing directors, active partners, and officers in charge of daily business when a cheque issued by an entity is dishonoured.
Key Legal Elements
- Applies to body corporates, partnership firms, and LLPs
- Company/firm must be arrayed as a principal accused
- Vicarious liability on individuals in charge of and responsible for conduct of business
- Signatory and Managing Director are per se liable
- Statutory exemption for independent/nominee directors and those proving lack of knowledge
Punishment
Imprisonment up to 2 years, or fine up to twice the amount of the cheque, or both
Practical Note
1. MANDATORY ARRAIGNMENT OF COMPANY / FIRM: • Condition Precedent: The company or firm MUST be arrayed as an accused. A complaint filed against directors/partners without making the company an accused is fundamentally defective and quashable (Aneeta Hada v. Godfather Travels & Tours Pvt. Ltd., (2012) 5 SCC 661; Himanshu v. B. Shivamurthy, (2019) 3 SCC 797). 2. SPECIFIC AVERMENTS REQUIREMENT: • Pleading Mandate: The complaint must specifically aver that the arrayed director was "in charge of and responsible to the company for the conduct of its business at the time of the offence" (S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla, (2005) 8 SCC 89). • MD & Signatory: Managing Directors and the actual signatory of the cheque are per se in charge; detailed averments are not required against them. However, for non-executive/independent directors, vague generic statements lead to quashing under Section 482 CrPC / Section 528 BNSS (Sunita Palita, 2022). 3. PARTNERSHIP FIRMS VS PROPRIETORSHIPS: • Partnerships: Under Explanation (a) & (b), "company" includes partnership firms/LLPs and "director" includes partners. The firm must be arrayed as an accused. • Sole Proprietorship: A proprietorship concern is NOT a company or separate juristic person. Section 141 does NOT apply; only the proprietor is personally liable (Raghu Lakshminarayanan v. Fine Tubes, (2007) 5 SCC 103). 4. DIRECTORS' DEFENSES: • Prior Resignation (Form DIR-12): If a director resigned prior to cheque issuance/dishonour and Form DIR-12 was filed with the ROC, criminal proceedings against them are quashed (Pooja Ravinder Devidasani v. State of Maharashtra, (2014) 16 SCC 1). • Statutory Immunity: Government nominee directors and non-executive independent directors without operational control are exempt.
हिंदी पाठ
कंपनियों द्वारा अपराध।—(1) यदि धारा 138 के अधीन अपराध करने वाला व्यक्ति कोई कंपनी है, तो प्रत्येक व्यक्ति जो उस अपराध के किए जाने के समय उस कंपनी के कारबार के संचालन के लिए उस कंपनी का भारसाधक और उसके प्रति उत्तरदायी था, और साथ ही वह कंपनी भी, ऐसे अपराध के दोषी समझे जाएंगे तथा तदनुसार अपने विरुद्ध कार्यवाही किए जाने और दंडित किए जाने के भागी होंगे:
परंतु इस उपधारा की कोई भी बात किसी व्यक्ति को दंड का भागी नहीं बनाएगी यदि वह यह साबित कर देता है कि अपराध उसकी जानकारी के बिना किया गया था, या उसने ऐसे अपराध के किए जाने का निवारण करने के लिए सब सम्यक् तत्परता बरती थी:
परंतु यह और कि जहां कोई व्यक्ति केंद्र सरकार या राज्य सरकार में कोई पद या नियोजन धारण करने के आधार पर, या यथास्थिति केंद्र सरकार या राज्य सरकार के स्वामित्व या नियंत्रणाधीन किसी वित्तीय निगम द्वारा किसी कंपनी के निदेशक के रूप में नामित किया गया है, वहां वह इस अध्याय के अधीन अभियोजन का दायी नहीं होगा।
(2) उपधारा (1) में किसी बात के होते हुए भी, जहां इस अधिनियम के अधीन कोई अपराध किसी कंपनी द्वारा किया गया है और यह साबित हो जाता है कि वह अपराध कंपनी के किसी निदेशक, प्रबंधक, सचिव या अन्य अधिकारी की सहमति या मौनानुकूलता से किया गया है या उस अपराध का किया जाना उसकी किसी उपेक्षा के कारण माना जा सकता है, वहां ऐसा निदेशक, प्रबंधक, सचिव या अन्य अधिकारी भी उस अपराध का दोषी समझा जाएगा और तदनुसार अपने विरुद्ध कार्यवाही किए जाने और दंडित किए जाने का भागी होगा।
स्पष्टीकरण।—इस धारा के प्रयोजनों के लिए,—
(क) “कंपनी” से कोई निगमित निकाय अभिप्रेत है और इसके अंतर्गत कोई फर्म या व्यष्टियों का अन्य संगम भी है; तथा
(ख) किसी फर्म के संबंध में “निदेशक” से उस फर्म का कोई भागीदार अभिप्रेत है।