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CS Executive · Setting Up of Business, Industrial and Labour Laws · The Code on Wages, 2019

Verma Pharma Pvt Ltd, a company, committed an offence under the Code on Wages, 2019. Its production head, Mr Iyer, was not in charge of the conduct of company business, but it is proved that the offence was committed with his connivance, as he is a director. What is the position on his liability?

Mr Iyer is deemed guilty and can be proceeded against. The Code provides that where a company's offence is proved to have been committed with the consent or connivance of, or through neglect by, any director, manager, secretary or other officer, that officer is also liable, even if not in charge of the business.

  1. AHe is not liable because only the company can be prosecuted
  2. BHe is not liable because he was not in charge of the business
  3. CHe is liable only if he is also a shareholder
  4. DHe is deemed guilty and may be proceeded against, because the offence was committed with his connivanceCorrect

Explanation

Apart from persons in charge and responsible for the conduct of business, any director, manager, secretary or other officer is also deemed guilty where the offence is proved to be with their consent or connivance, or attributable to their neglect. So being not in charge does not protect him.

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