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Section 88: Penalty for illegal strikes and lock-outs

The Industrial Relations Code, 2020 (Act No. 35 of 2020) • Official Statutory Text & Plain English Practice Guide

Statutory Mandate
Chapter XIII: Offences and Penalties
Competent Labour Forum
Act No. 35 of 2020
Section 87 All 104 Sections of Industrial Relations Code, 2020 Section 89

Legal Commentary & Landmark Judgments: Section 88

Section 88 of the Industrial Relations Code, 2020 codifies the statutory doctrine of corporate criminal liability for offences under the Code, imposing vicarious penal liability on persons who were in charge of, and responsible to, the company for the conduct of its business, while providing a statutory due diligence and lack-of-knowledge defense.

  • Vicarious Corporate Penal Liability Architecture: Where an offence under this Code is committed by a company, the company itself as well as every person who, at the time the offence was committed, was in charge of, and was responsible to, the company for the conduct of its business, shall be deemed guilty of the offence and liable to be proceeded against.
  • Statutory Reverse Burden and Exculpatory Proviso: A director, manager, or corporate officer is not liable if they prove affirmatively: (a) that the offence was committed without their knowledge; or (b) that they exercised all due diligence to prevent the commission of such offence, placing a statutory burden of proof on the accused officer.
  • Specific Officer Culpability (Consent, Connivance, or Neglect): Where an offence is proved to have 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 individual shall independently be deemed guilty and punished accordingly.
Key Landmark Precedents:
  • Sunil Bharti Mittal v. CBI (2015) 4 SCC 609: The 3-Judge Bench held that a director cannot be held vicariously liable for an offence committed by a company unless there is a specific statutory provision or active evidence of personal culpability; omnibus, vague assertions in a complaint are insufficient to sustain prosecution.
  • SMS Pharmaceuticals Ltd. v. Neeta Bhalla (2005) 8 SCC 89: The 3-Judge Bench established that the criminal complaint must contain specific, clear averments explaining how the accused individual was in charge of and responsible for the company's daily business operations at the material time of the contravention.
  • K.K. Ahuja v. V.K. Vora (2009) 10 SCC 48: Clarified that non-executive independent directors who are not involved in day-to-day managerial operations cannot be prosecuted merely by virtue of holding the title of director under statutory corporate liability provisions.
Courtroom Practice & Strategic Litigation Guidance:

Companies must formalize corporate governance resolutions specifically designating an executive Director, Occupier, or Factory Manager as the person responsible for labor law compliance under the Code. In defending non-executive, nominee, or independent directors named in a Section 88 complaint, file MCA Form DIR-12, corporate board minutes, and HR delegation matrices demonstrating absence of day-to-day managerial control, seeking discharge at the threshold under *SMS Pharmaceuticals* and *Sunil Bharti Mittal*.

Section 87 All 104 Sections of Industrial Relations Code, 2020 Section 89