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Section 136: Offences by companies

The Code on Social Security, 2020 (Act No. 36 of 2020) • Official Statutory Text & Plain English Practice Guide

Statutory Mandate
Chapter XII: Offences and Penalties
Competent Labour Forum
Act No. 36 of 2020
Section 135 All 163 Sections of Code on Social Security, 2020 Section 137

Legal Commentary & Landmark Judgments: Section 136

Section 136 of the Code governs offenses by companies under the social security framework, establishing vicarious criminal liability for managing directors, directors, and corporate officers who consented to or connived in the offense.

  • Corporate Attribution of Criminal Liability: Provides that where an offense under this Code is committed by a company, the corporate entity as well as every person in charge of its business shall be deemed guilty.
  • Directorial Liability for Consent, Connivance, or Neglect: Explicitly holds directors, managers, or company secretaries personally liable if the social security default is proved to have occurred with their consent, connivance, or neglect.
  • Statutory Due Diligence Defense: Permits a director to escape criminal conviction only by proving that the offense occurred without their knowledge or that they exercised all due diligence to prevent its commission.
Key Landmark Precedents:
  • Aneeta Hada v. Godfather Travels & Tours Pvt. Ltd. (2012) 5 SCC 661: Three-Judge Bench held that for vicarious criminal liability to attach to corporate directors, arraigning the company as a principal accused is a mandatory condition precedent.
  • Sunil Bharti Mittal v. CBI (2015) 4 SCC 609: Supreme Court reiterated that corporate directors cannot be prosecuted vicariously unless the statute expressly contains a vicarious liability clause or personal culpability is established.
  • J.K. Industries Ltd. v. Chief Inspector of Factories (1996) 6 SCC 665: Supreme Court affirmed that corporate boards bear an affirmative legal duty to establish internal oversight mechanisms to guarantee statutory labor compliance.
Courtroom Practice & Strategic Litigation Guidance:

When representing corporate directors in Section 136 prosecutions, verify whether the company itself was arraigned as an accused. Under Aneeta Hada, if the complaint names only the directors without prosecuting the company, file an immediate quashing petition under Section 482 CrPC / Section 528 BNSS.

Section 135 All 163 Sections of Code on Social Security, 2020 Section 137