Section 26 of The Bird and Company Limited (Acquisition and Transfer of Undertakings and Other Properties) Act, 1980 — Offences by companies
Bare section text
Official Legislative Text
- (1)Where an offence punishable 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 offence and shall be liable to be proceeded against and punished accordingly: Provided that nothing contained in this sub-section shall render any such person liable to any 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.
- (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 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;
- (b)"director", in relation to a firm, means a partner in the firm
Educational Study Layer
Summary
- The person in charge of running the business at the time of the offence, along with the company itself, will be considered guilty.
- A person in charge can avoid punishment if they can prove they did not know about the offence or that they tried their best to stop it from happening.
- If an offence happens with the approval, secret agreement, or neglect of any director, manager, secretary, or officer, that specific individual is also guilty.
- In this context, a company includes a firm or an association of people, and a director of a firm simply means a partner in that firm.
Practical examples
FAQ
1. Can an entire company be punished for an offence?
Yes, both the individuals responsible for the business and the company itself are deemed guilty and can be proceeded against.
2. How can a manager protect themselves if their company breaks the law?
They must prove that the offence happened without their knowledge, or that they exercised all due diligence to prevent the crime.
3. Does this rule apply to partnerships as well as corporations?
Yes, for the purposes of this section, a company includes a firm, and a director includes a partner in a firm.
Practice Quiz
Q1.Under Section 26 of The Bird and Company Limited (Acquisition and Transfer of Undertakings and Other Properties) Act, 1980, what is a valid legal defence for a person in charge of a company when the company commits an offence?
Q2.Under Section 26 of The Bird and Company Limited (Acquisition and Transfer of Undertakings and Other Properties) Act, 1980, if an offence by a company is shown to be caused by the neglect of the company secretary, what happens to the secretary?
Q3.Under Section 26 of The Bird and Company Limited (Acquisition and Transfer of Undertakings and Other Properties) Act, 1980, how is the term "director" defined when the offending "company" is actually a firm?
Q4.Under Section 26 of The Bird and Company Limited (Acquisition and Transfer of Undertakings and Other Properties) Act, 1980, what must be proven to hold a manager liable even if they were not the primary person in charge of the business?