Section 33 of The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002
- (1)Where an offence under this Act has been committed by a company, every person who at the time the offence was committed was incharge 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 provided in this Act, 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 an 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 the 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.
Summary
- When a company commits an offence under this law, both the company itself and the person in charge of its business are held responsible and can be punished.
- A person in charge can avoid punishment if they can prove the offence happened without their knowledge, or if they tried their best to prevent it (exercised due diligence).
- If a director, manager, secretary, or other officer of the company knew about the offence, consented to it, or allowed it to happen through neglect, they will also be held guilty.
- The term company in this context includes regular corporations, partnerships, and other groups of individuals. For partnerships, a director means a partner.
Practical examples
FAQ
1. If my company breaks this law, will I go to jail?
You might, if you were the person in charge of the business at the time. However, you can defend yourself by proving you did not know about the crime or that you actively tried to stop it.
2. Can a silent partner in a firm be punished for what the active partners do?
A partner could be liable, but if they had absolutely no knowledge of the offence and no active role, they can use the lack of knowledge defense to avoid punishment.
3. Can a company secretary be held responsible?
Yes. If the offence happened because the secretary consented to it or neglected their duties, they can be prosecuted alongside the company.
Test yourself
Q1.Under Section 33 of The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, who is deemed guilty when a company commits an offence?
Q2.Under Section 33 of The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, how can a person in charge of a company avoid punishment for an offence committed by the company?
Q3.Under Section 33 of The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, what specific behavior makes a director or manager additionally liable for a company's offence?
Q4.Under Section 33 of The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, how does the law apply to a partnership firm?