Section 28 of The Swadeshi Cotton Mills Company Limited (Acquisition and Transfer of Undertakings) Act, 1986
Offences by companies.
- (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 offence and shall be liable to be preceded 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 office 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 anybody 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
- This provision ensures that when a company commits a crime under the Act, the individuals running the company are also held legally responsible.
- The person in charge of the business at the time of the offense is automatically considered guilty alongside the company itself.
- A leader can escape punishment if they can prove the crime happened without their knowledge or that they tried their best to stop it.
- If an offense is proven to be caused by the consent, active help, or neglect of a specific director, manager, or officer, that individual is also guilty.
- For the purposes of this rule, a company includes partnerships and other groups of individuals, and a director in a firm means a partner.
Practical examples
FAQ
1. Who is blamed if a business commits a crime under Section 28 of the Swadeshi Cotton Mills Act?
Under Section 28 of the Swadeshi Cotton Mills Act, the people in charge of the business are blamed. Anyone responsible for running the company when the crime happened is considered guilty. The company itself is also held guilty.
2. Can a manager avoid punishment under Section 28 of the 1986 textile takeover legislation?
A manager can avoid punishment under Section 28 of the 1986 textile takeover legislation if they prove they did not know about the crime. They can also avoid it by showing they tried their best to stop the crime from happening. If they prove either of these things, they will not be punished.
3. What happens if a director helps commit an offence under Section 28 of the Swadeshi Cotton Mills law?
If a director helps commit an offence under Section 28 of the Swadeshi Cotton Mills law, they are guilty. If the crime happened because they agreed to it, ignored it, or were careless, they will be punished. This rule also applies to managers and secretaries.
4. Does Section 28 of the Swadeshi Cotton Mills Company Limited Act apply to partnerships?
Yes, Section 28 of the Swadeshi Cotton Mills Company Limited Act applies to partnerships. In this section, a company includes a firm or an association of individuals. A director in a firm simply means a partner in that firm.
Test yourself
Q1.Under Section 28 of The Swadeshi Cotton Mills Company Limited (Acquisition and Transfer of Undertakings) Act, 1986, what defines a company?
Q2.According to Section 28 of The Swadeshi Cotton Mills Company Limited (Acquisition and Transfer of Undertakings) Act, 1986, what defense can a person in charge of a company use to avoid punishment?
Q3.Under Section 28 of The Swadeshi Cotton Mills Company Limited (Acquisition and Transfer of Undertakings) Act, 1986, what happens if an offense is proven to be attributable to the neglect of a company secretary?
Q4.When Section 28 of The Swadeshi Cotton Mills Company Limited (Acquisition and Transfer of Undertakings) Act, 1986 refers to a director in relation to a firm, what does it mean?