Section 40 of The Airports Economic Regulatory Authority of India Act, 2008
- (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 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" means a whole-time director in the company and in relation to a firm, means a partner in the firm.
Summary
- When a company commits an offence under this Act, both the company and the person in charge of its business are considered guilty.
- A person in charge can avoid punishment if they prove they did not know about the offence or that they tried their best to stop it.
- If the offence was committed with the approval, involvement, or neglect of any director, manager, or secretary, that officer is also held guilty.
- A company includes a firm, and a director includes a partner in a firm.
Practical examples
FAQ
1. Is only the company punished, or can individuals be punished too?
Both the company and the individuals in charge of its business can be punished.
2. How can a manager protect themselves from being punished for the company's mistake?
They must prove that the offence happened without their knowledge or that they exercised all due diligence to prevent it.
3. Does this rule apply to partnerships as well as corporations?
Yes, the term company includes a firm, and director includes a partner.
Test yourself
Q1.Under Section 40 of The Airports Economic Regulatory Authority of India Act, 2008, what defence can a person in charge use to avoid liability for a company's offence?
Q2.According to the explanation in Section 40 of The Airports Economic Regulatory Authority of India Act, 2008, what does the term company include?
Q3.Under Section 40 of The Airports Economic Regulatory Authority of India Act, 2008, what happens if an offence is proved to be attributable to the neglect of a company secretary?
Q4.Based on Sections 38 and 40 of The Airports Economic Regulatory Authority of India Act, 2008, if a firm commits a first offence of non-compliance, who can be fined up to one lakh rupees?