Section 62 of the Benami Act: Offences by Companies
Section 62 of the Prohibition of Benami Property Transactions Act, 1988 deals with contraventions committed by companies and identifies when the company, persons responsible for its business, and certain directors or officers may be proceeded against and punished.
Current statutory name: The law is presently titled the Prohibition of Benami Property Transactions Act, 1988. The 2016 amendment substantially amended and renamed the earlier Benami Transactions (Prohibition) Act, 1988. Section 62 should therefore be read as a provision of the current 1988 Act, as amended.
What does Section 62 provide?
In simple terms: if a company commits a contravention of the Act, a person who was in charge of and responsible to the company for the conduct of its business at the relevant time may also be treated as guilty, subject to the statutory defence relating to absence of knowledge. Separate liability can also arise where consent, connivance or neglect of a director, manager, secretary or other officer is proved.
Text and explanation of Section 62
Where a person committing a contravention of any provision of the Act, or of any rule, direction or order made under it, is a company, every person who at the time of the contravention was in charge of, and responsible to, the company for the conduct of its business, as well as the company itself, is deemed guilty and may be proceeded against and punished accordingly.
This sub-section creates a form of vicarious statutory liability. Liability does not arise merely from holding a designation; the provision refers to a person who was both in charge of and responsible to the company for the conduct of its business at the time of the contravention.
A person covered by sub-section (1) is not liable to punishment if that person proves that the contravention took place without his knowledge.
Sub-section (2) expressly preserves a statutory defence. Its application depends on the facts and evidence of the particular case.
Where a contravention by a company is proved to have taken place with the consent or connivance of, or to be attributable to neglect on the part of, any director, manager, secretary or other officer of the company, that person is also deemed guilty and may be proceeded against and punished accordingly.
Meaning of "company" and "director" for Section 62
The Explanation to Section 62 gives these expressions a wider meaning for the purpose of this provision:
- Company: includes a body corporate, a firm, and an association of persons or body of individuals, whether incorporated or not.
- Director in relation to a firm: means a partner in the firm.
- Director in relation to an association of persons or body of individuals: means a member controlling its affairs.
Practical effect of Section 62
- The company itself may be proceeded against for a contravention.
- Persons responsible for the conduct of the business at the relevant time may also face proceedings under sub-section (1).
- A person covered by sub-section (1) can rely on the statutory defence that the contravention occurred without his knowledge.
- Directors and other officers may incur separate liability under sub-section (3) where consent, connivance or neglect is proved.
- The statutory definitions extend beyond incorporated companies to firms, associations of persons and bodies of individuals.
Official legal source
The current central bare Act can be verified on India Code - Prohibition of Benami Property Transactions Act, 1988.
This page is intended for general legal information. The application of Section 62 depends on the facts, the nature of the alleged contravention and the evidence relating to the role of the company and the persons concerned.