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CS Professional · Compliance Management, Audit and Due Diligence · Values, Ethics and Professional Conduct

Gupta & Associates, a firm of Company Secretaries, issued a misleading certificate for Lotus Textiles Ltd. An inquiry finds the firm's partner CS Vikram Rao in charge of the engagement. Vikram proves he had exercised all due diligence to prevent the offence. Applying the Act's provision on offences by companies, where 'company' includes a firm, what is the position regarding Vikram?

He is not liable to punishment if he proves the offence was committed without his knowledge or that he exercised all due diligence to prevent it. The Act treats a firm as a company and a partner as a director, but the proviso protects him.

  1. AHe is liable regardless of any proof of due diligence
  2. BHe is not liable to punishment under that provision if he proves the offence was committed without his knowledge or that he exercised all due diligenceCorrect
  3. CHe is liable only because he is a partner, whatever the facts
  4. DHe is exempt only if he resigns from the firm

Explanation

The offences-by-companies section deems persons in charge guilty, but the proviso protects one who proves the offence occurred without his knowledge or that he exercised all due diligence. 'Company' includes a firm and 'director' means a partner. Option A ignores the proviso.

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