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CS Professional · Labour Laws and Practice · Industrial and Labour Laws Audit

Bharat Cables Pvt Ltd, a company, committed an offence under the Code on Social Security, 2020. The Managing Director, Mr Anil Mehta, was not directly in charge of the relevant unit, and the offence occurred without his knowledge despite his having set up a compliance system. The company secretary, Mr Rohit Nair, is shown to have connived in the offence. Which statement correctly applies Section 135?

Mr Mehta can escape by proving lack of knowledge or due diligence under the Section 135(1) proviso, while Mr Nair can be held guilty because Section 135(2) makes a secretary liable for proven connivance, and that sub-section has no due diligence proviso.

  1. AMr Mehta can escape liability by proving lack of knowledge or due diligence, while Mr Nair can be held guilty because of his proven connivance as an officerCorrect
  2. BBoth are automatically guilty because they hold office in the company
  3. CNeither is liable because only the company can be punished
  4. DMr Nair is protected by the due diligence proviso, since it applies to all officers equally

Explanation

Section 135(1) makes persons directly in charge liable but its proviso allows them to escape by proving lack of knowledge or due diligence. Section 135(2) separately makes a director, secretary or other officer guilty where consent, connivance or neglect is proved, and that provision carries no such proviso. Hence Mr Nair is exposed.

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