Section 39 FCRA 2010 - Offences by Companies
Section 39 of the Foreign Contribution (Regulation) Act, 2010 deals with criminal liability where an offence under the Act, or under a rule or order made under it, is committed by a company. The provision can extend liability beyond the entity itself to persons responsible for its business and, in specified circumstances, to directors, managers, secretaries and other officers.
Statutory text of Section 39
(1) Where an offence under this Act or any rule or order made thereunder has been committed by a company, every person who, at the time the offence was committed, was in charge of, and was responsible to, the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly:
Provided that nothing contained in this sub-section shall render such person liable to any punishment if he proves that the offence was committed without his knowledge or that he had exercised all due diligence to prevent the commission of such offence.
(2) Notwithstanding anything contained in sub-section (1), where an offence under this Act or any rule or order made thereunder has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to any neglect on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly.
Explanation. For the purposes of this section:
(a) "company" means any body corporate and includes a firm, society, trade union or other association of individuals; and
(b) "director", in relation to a firm, society, trade union or other association of individuals, means a partner in the firm or a member of the governing body of such society, trade union or other association of individuals.
How Section 39 works
1. Liability of the company and persons in charge
Section 39(1) applies when an offence under the FCRA, a rule, or an order made under the Act has been committed by a company. Along with the company, it covers 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 focuses on the person's responsibility at the time of the alleged offence.
2. Defence of lack of knowledge or due diligence
The proviso to Section 39(1) allows the person concerned to avoid punishment by proving either that the offence was committed without that person's knowledge or that all due diligence was exercised to prevent the offence. Records showing internal controls, approvals, compliance checks and corrective action may therefore be relevant to the statutory defence, depending on the facts of the case.
3. Consent, connivance or neglect of officers
Section 39(2) operates notwithstanding sub-section (1). Where the company's offence is proved to have occurred with the consent or connivance of, or to be attributable to neglect by, a director, manager, secretary or other officer, that officer is also deemed guilty and may be proceeded against and punished.
Meaning of company and director under Section 39
The provision uses an extended definition. For Section 39, a "company" is not limited to a company incorporated under company law. It includes a body corporate, firm, society, trade union or other association of individuals. In the case of a firm, society, trade union or other association of individuals, "director" includes a partner of the firm or a member of the governing body of the relevant organisation.
Related FCRA provisions
Section 39 should be read with the offence and prosecution provisions surrounding it. These include Section 35 on punishment for contravention, Section 37 on offences for which no separate punishment is provided, Section 38 on prohibition of acceptance of foreign contribution, Section 40 concerning prosecution, and Section 41 on composition of certain offences.
Current-law note: The FCRA framework continues to include the Foreign Contribution (Regulation) Act, 2010 and the Foreign Contribution (Regulation) Rules, 2011 as amended. Compliance forms and procedures have been amended from time to time; users should check the current official FCRA portal and India Code before acting on a compliance or prosecution issue.