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Report No. 258

8. Liability of commercial organisations for offences under this Act. -

(1) When an offence under this Act has been committed by a commercial organisation, such commercial organisation shall be punishable with fine.

(2) Where an offence under this Act is committed by a commercial organisation, and such offence is proved to have been committed with the consent or connivance of any director, manager, secretary or other officer of the commercial organisation, such director, manager, secretary or other officer shall be guilty of the offence and shall be liable to be proceeded against and punishable with imprisonment which shall not be less than the punishment prescribed for such offence under this Act.

(3) When an offence under this Act is committed by any person associated with the commercial organisation, the commercial organisation shall be guilty of an offence and shall be punishable with fine:

Provided that it shall be a defence for the commercial organisation to prove that it had in place adequate procedures designed to prevent persons associated with it from undertaking such conduct.

(4) The Central Government may, with a view to enhancing compliance with this section by commercial organisations, prescribe such guidelines about adequate procedures as may be necessary, following a consultation process in which the views of all the interested stakeholders are obtained through public notice.

(5) For the purposes of this section:

(a) "commercial organisation" means:

(i) a body which is incorporated in India and which carries on a business, whether in India or outside India;

(ii) any other body which is incorporated outside India and which carries on a business, or a part of a business, in any part of India;

(iii) a partnership firm or any association of persons formed in India and which carries on a business, whether in India or outside India; or

(iv) any other partnership or association of persons which is formed outside India and which carries on a business, or part of a business, in any part of India;

(b) "business" includes a trade or profession or providing service including charitable service;

(c) a person is said to be associated with the commercial organisation if, disregarding any conduct constituting an offence under this Act, such person is a person who performs services for or on behalf of the commercial organisation.

Explanation 1: The capacity in which the person performs services for or on behalf of the commercial organisation shall not matter irrespective of whether such person is an employee or agent or subsidiary of such commercial organisation.

Explanation 2: For the purpose of this section, the term "agent" shall have the same meaning as assigned to it under section 182 of the Indian Contract Act, 1872 (9 of 1872).

Explanation 3: Whether or not the person is a person who performs services for or on behalf of the commercial organisation is to be determined by reference to all the relevant circumstances and not merely by reference to the nature of the relationship between such person and the commercial organisation.

Explanation 4: If the person is an employee of the commercial organisation, it shall be presumed unless the contrary is proved that such person is a person who performs services for or on behalf of the commercial organisation.



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