jaykumtekar (Legal Advisor) 25 December 2012

Directors liability after retirement.

Dear All,

One of our Directors was prosecuted under the Payment of Bonus Act by filing a criminal case against him for non payment of Bonus to the employees for the year 2011.

The matter is pending in the court and the plea of our director has not been recorded. Our director is likely to retire by this month end.

I would like to know that whether criminal liability can still be fastened against the Director after retirement. If a new Director is appointed and he steps into the shoes of the old Director can the criminal case be transferred to the new Director.

Since company is a legal entitiry having perpetual succession I have been told that once the director retires and a new director is appointed in his place then on assuming the charge the new director steps into the shoes of the old director and criminal case pending against the old director gets automatically transferred in the name of the new Director.

Kindly advise or cite any citation on the same.

Regards

Jay Kumtekar

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2 Replies

darshana sawant (associate consultant) 25 December 2012

dear mr kumthekar,

As per section 29 of the Payment of Bonus act which is titled offences by companies, reads every person incharge or responsible to company at the time of commission of an offence and the company itself is liable to be proceeded and punished. Person having no knowledge is excluded. Director, manager, secrretary or other officer if guilty liable for prosecution.

So, since the directors plea is not yet recorded, you can file an application requesting to quash the issue process against him, in case he has no knowledge or if he is not guilty. Because the section is worded as ' every person incharge or responsible to the co.the process whether is issued in the name of the director or just as the director of the co., if so then any director in representative capacity can appear in the proceedings.

Sudhir Kumar, Advocate (Advocate) 25 December 2012

Criminal case is always against the company. SInce you stated that the company is not incorporated then there is no escape for him even from civil liability.

Further if the company is incoporate dstill he is personally liable in civil court if he has acted beyong delegated authrotiy as per MOU