Offences by Companies - Sec.85 - Information Technology Act

The Information Technology Act (IT Act) of 2000 is a law in India that governs electronic transactions and information security. Section 85 of this act deals with situations where a company commits an offense under the IT Act.

85. Offences by Companies.-

(1) Where a person committing a contravention of any of the provisions of this Act or of any rule, direction or order made there under is a Company, every person who, at the time the contravention was committed, was in charge of, and was responsible to, the company for the conduct of business of the company as well as the company, shall be guilty of the contravention and shall be liable to be proceeded against and punished accordingly: Provided that nothing contained in this sub-section shall render any such person liable to punishment if he proves that the contravention took place without his knowledge or that he exercised all due diligence to prevent such contravention.

(2) Notwithstanding anything contained in sub-section (1), where a contravention of any of the provisions of this Act or of any rule, direction or order made there under has been committed by a company and it is proved that the contravention has taken place 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 director, manager, secretary or other officer shall also be deemed to be guilty of the contravention and shall be liable to be proceeded against and punished accordingly.

Explanation - For the purposes of this section (i) Company  means any Body Corporate and includes a Firm or other Association of individuals; and (ii) Director , in relation to a firm, means a partner in the firm

Here's a breakdown of Section 85 with an example:

Section 85(1): This subsection states that if a company commits a violation of any provision of the IT Act or any rules made under it, then the people responsible within the company can be held accountable.

Example: Let's say a company website is not compliant with data security regulations outlined in the IT Act. This could be a security flaw that allows hackers to steal customer information. In this case, the company has committed an offense.

Section 85(2): This subsection goes a step further. It says that if the offense by the company happened due to the consent, connivance (secret cooperation), or neglect of any director, manager, secretary, or other officer of the company, then those individuals can also be held liable.

Continuing the example: If it's found that the company's management was aware of the security flaw but neglected to fix it, then the directors or responsible officers involved could be personally charged under the IT Act, along with the company itself.

Key takeaway: Section 85 ensures that not only the company but also the people within the company who are responsible for its actions can be held accountable for violations of the IT Act. This encourages companies to have proper compliance procedures in place and ensures that individuals within the company cannot hide behind the corporate shield.