Section 79 of the Chit Funds Act, 1982 - Offences by Companies

Section 79 of the Chit Funds Act, 1982 deals with criminal liability when an offence under the Act is committed by a company. It provides for liability of the company itself and, subject to the statutory conditions, persons responsible for the conduct of its business and specified officers whose consent, connivance or neglect is connected with the offence.

Text of Section 79 - Offences by Companies

Meaning and Scope of Section 79

Section 79 creates a statutory framework for offences committed through a company or similar organisation. The provision should be read with the particular substantive provision of the Chit Funds Act alleged to have been contravened, because Section 79 addresses who may be liable when an offence under the Act has been committed.

1. Liability under Section 79(1)

Sub-section (1) applies to the company and to a person who, at the relevant time, was both in charge of and responsible to the company for the conduct of its business. The statutory language therefore connects liability with the person's responsibility for the company's business when the offence was committed.

2. Defence of absence of knowledge or due diligence

The proviso to Section 79(1) protects a person who proves either that the offence was committed without his knowledge or that he exercised all due diligence to prevent its commission. This defence is expressly built into the provision.

3. Consent, connivance or neglect under Section 79(2)

Sub-section (2) separately covers a director, manager, secretary or other officer where it is proved that the company's offence was committed with that person's consent or connivance, or was attributable to neglect on that person's part. On proof of the statutory connection, the officer is also deemed guilty of the offence.

4. Meaning of "company" and "director"

For Section 79, "company" is wider than an incorporated company: it includes a body corporate, a firm and another association of individuals. In relation to a firm, "director" means a partner.

Key Requirements at a Glance

• There must first be an offence under the Chit Funds Act committed by a company.
• The company itself may be proceeded against under Section 79(1).
• For the deemed liability in Section 79(1), the relevant person must have been in charge of and responsible for the conduct of the company's business at the time of the offence.
• The proviso permits the statutory defence of lack of knowledge or exercise of all due diligence.
• Section 79(2) addresses consent, connivance or neglect of a director, manager, secretary or other officer.
• The statutory definition extends "company" to firms and other associations of individuals.

Related Penal and Procedure Provisions

Section 79 operates in the enforcement chapter of the Act. Depending on the alleged contravention, the substantive penalty provisions should also be checked. In particular, Section 76 deals with penalties, Section 77 deals with second and subsequent convictions, Section 78 deals with application of fine, and Section 80 deals with cognizance and the court competent to try offences under the Act.

Official Source

For the authoritative text, amendments, notifications and subordinate legislation, refer to the Government of India's India Code portal.

Practical Note

Section 79 should not be read as creating an independent substantive offence. It attributes liability in specified circumstances where an offence under another provision of the Chit Funds Act has been committed by a company. The precise allegation, the role of the person concerned, the relevant period and the applicable penal provision should therefore be examined together.

This page is intended for general legal information. For a particular prosecution, complaint or defence, the applicable statutory text, State rules, notifications and case-specific facts should be verified.