Skip to content

CS Professional · Compliance Management, Audit and Due Diligence · Legal Framework Governing Company Secretaries

A firm of chartered accountants and a body corporate both commit an offence under the Company Secretaries Act, 1980. Under Section 28, the term 'company' is defined for that section. Mehul, a partner of the firm, was in charge of its business but proves he exercised all due diligence to prevent the offence. What is his position under Section 28(1)?

Mehul escapes liability under Section 28(1) because the proviso protects a person in charge who proves due diligence or lack of knowledge. A firm counts as a company and a partner as a director. Sub-section (2) would apply only if consent, connivance or neglect is proved.

  1. AHe is liable because a partner is deemed a director and due diligence is no defence
  2. BHe is not liable to punishment under sub-section (1), since he proves due diligence, though sub-section (2) could still apply if consent, connivance or neglect is provedCorrect
  3. CHe is liable only if the firm is convicted first
  4. DHe is automatically liable under sub-section (2) irrespective of proof

Explanation

Section 28 treats company as including a firm, and director in relation to a firm as a partner. Under the proviso to sub-section (1), a person in charge is not punished if he proves the offence was without his knowledge or he exercised all due diligence. Sub-section (2) separately requires proof of consent, connivance or neglect, so liability is not automatic.

Did you get it right without looking?

One question tells you little. A timed set on Legal Framework Governing Company Secretaries shows your real accuracy, how long you take and where you lose marks.

Practise Legal Framework Governing Company SecretariesFree diagnostic mock

More Legal Framework Governing Company Secretaries questions