Section 85: Offences by companies

Information Technology Act • Official Statutory Text & Practice Guide

Statutory Regulation
Legal Standard
Competent Court / Tribunal
Act 2000

Legal Commentary & Landmark Judgments: Section 85

Section 85 establishes the statutory framework for corporate criminal and civil liability under the Information Technology Act, enacting that where a contravention is committed by a company, the company as well as every person in charge of and responsible for the conduct of its business shall be deemed guilty, subject to a due diligence defense.

  • Dual Corporate and Personal Liability: Holds the corporate entity as well as its managing director, directors, and officers in charge of business jointly and severally liable.
  • Requirement of Specific Pleadings: Demands that the complainant plead specific, factual allegations demonstrating how the individual director was actively in charge of and responsible for the company's business.
  • Statutory Due Diligence Defense: Exempts a director from liability if they prove that the contravention occurred without their knowledge or that they exercised all due diligence to prevent its commission.
Key Landmark Precedents:
  • SMS Pharmaceuticals Ltd. v. Neeta Bhalla (2005) 8 SCC 89: Three-Judge Bench established that vicarious corporate liability requires specific averments in the complaint demonstrating that the accused director was in charge of day-to-day business.
  • Sunil Bharti Mittal v. CBI (2015) 4 SCC 609: Supreme Court held that a director cannot be made an accused vicariously for an offence committed by a company unless the statute expressly provides or there is direct active complicity.
  • Sharad Kumar Sanghi v. Sangita Rane (2015) 12 SCC 781: Supreme Court reiterated that when a company is accused of an offence, impleading the company as an accused is a mandatory condition precedent before vicarious liability can attach to its officers.
Courtroom Practice & Strategic Litigation Guidance:

In cyber prosecutions against corporate management for corporate data breaches or intermediary defaults, verify whether the company itself has been arraigned as an accused; failure to implead the corporate entity is a fatal defect warranting quashing under Section 482 CrPC.