Section 10 of Payment of Gratuity Act 1972 - Exemption of Employer from Liability
Section 10 of the former Payment of Gratuity Act, 1972 provided a special criminal-law defence where an employer charged with an offence could establish that another person was the actual offender and that the employer had exercised due diligence.
Text of former Section 10 - Exemption of employer from liability in certain cases
10. Where an employer is charged with an offence punishable under this Act, he shall be entitled, upon complaint duly made by him and on giving to the complainant not less than three clear days' notice in writing of his intention to do so, to have any other person whom he charges as the actual offender brought before the court at the time appointed for hearing the charge; and if, after the commission of the offence has been proved, the employer proves to the satisfaction of the court -
(a) that he has used due diligence to enforce the execution of this Act, and
(b) that the said other person committed the offence in question without his knowledge, consent or connivance, that other person shall be convicted of the offence and shall be liable to the like punishment as if he were the employer and the employer shall be discharged from any liability under this Act in respect of such offence:
Provided that in seeking to prove as aforesaid, the employer may be examined on oath and his evidence and that of any witness whom he calls in his support shall be subject to cross-examination on behalf of the person he charges as the actual offender and by the prosecutor:
Provided further that, if the person charged as the actual offender by the employer cannot be brought before the court at the time appointed for hearing the charge, the court shall adjourn the hearing from time to time for a period not exceeding three months and if by the end of the said period the person charged as the actual offender cannot still be brought before the court, the court shall proceed to hear the charge against the employer and shall, if the offence be proved, convict the employer.
How former Section 10 operated
Current law - Section 135 of Code on Social Security 2020
Section 135 - Offences by companies provides the present framework where an offence under Chapter XII is committed by a company. The company and every person who, at the time of the offence, was directly in charge of and responsible to the company for conduct of its business are deemed guilty and may be proceeded against and punished.
The statutory defence is different from the former Section 10 procedure. A responsible person is not liable to punishment if that person proves that the offence was committed without his knowledge or that he exercised all due diligence to prevent the commission of the offence.
Section 135(2) further provides that where an offence by a company is proved to have been committed with the consent or connivance of, or is attributable to neglect on the part of, a director, secretary or other officer, that person is also deemed guilty and may be proceeded against and punished.
Meaning of company and director under Section 135
- Company: for Section 135, the expression includes a body corporate, a firm and another association of individuals.
- Director in relation to a firm: the expression means a partner in the firm.
- Responsible person: liability under Section 135(1) concerns a person who was directly in charge of and responsible to the company for conduct of its business at the relevant time.
Related current provisions
The liability rule in Section 135 must be read with the offence actually alleged under Section 133, the enhanced-punishment provision in Section 134 where applicable, and the cognizance requirements in Section 136. Sections 137 and 138 also contain provisions concerning compounding and prior opportunity in specified cases.