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Section 33: Offences by companies

Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002 • Official Statutory Text & Practice Guide

Statutory Regulation
Legal Standard
Competent Court / Tribunal
Act 2002
Section 32 All 42 Sections of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002 Section 34

Legal Commentary & Landmark Judgments: Section 33

Section 33 of the SARFAESI Act, 2002 establishes vicarious criminal liability for corporate entities and their key managerial personnel for offences committed under the Act, delineating statutory defenses and personal liability thresholds.

  • Corporate Vicarious Liability: Where an offence is committed by a company, every person in charge of, and responsible to, the company for the conduct of its business, as well as the company itself, is deemed guilty.
  • Statutory Due Diligence Defense: Proviso to Section 33(1) shields an officer if they prove the offence was committed without their knowledge or that they exercised all due diligence to prevent it.
  • Personal Liability for Neglect or Connivance: Section 33(2) fastens individual guilt on any director, manager, or secretary where the offence is attributable to consent, connivance, or neglect.
Key Landmark Precedents:
  • SMS Pharmaceuticals Ltd. v. Neeta Bhalla (2005) 8 SCC 89: A Constitution Bench laid down foundational tests for vicarious liability under corporate offence clauses, holding that specific averments must be made showing that the accused director was in charge of and responsible for the company's business.
  • Sunil Bharti Mittal v. CBI (2015) 4 SCC 609: The Supreme Court held that a director cannot be held vicariously liable for an offence committed by the company unless there is specific statutory provision (like Section 33) and clear, specific factual allegations demonstrating personal complicity.
Courtroom Practice & Strategic Litigation Guidance:

When drafting a statutory complaint under Section 33, specifically plead the precise managerial role, executive function, and day-to-day operational control exercised by each named director; avoid broad generic naming of non-executive or independent directors.

Section 32 All 42 Sections of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002 Section 34