Section 85 IT Act: Offences by companies

Information Technology Act, 2000

Section 85 IT Act at a Glance

Section 85 IT Act fixes liability when a company contravenes the IT Act or any rule, direction, or order under it. Both the company and persons in charge of its business, or officers acting with consent, connivance, or neglect, face proceedings.

Section 85 IT Act Bare Act Text

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 thereunder 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 thereunder 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.

Section 85 IT Act in Simple Words

Section 85 IT Act sets out who is legally responsible when a company commits a contravention of the Information Technology Act, 2000 or of any rule, direction, or order made under the IT Act. Under Section 85(1) IT Act, two parties are guilty of the contravention and liable to be proceeded against accordingly: the company itself, and every person who, at the time the contravention was committed, was both in charge of and responsible to the company for the conduct of the company's business.

The proviso to Section 85(1) IT Act gives that person in charge a statutory defence, which the person claiming the defence must prove rather than the complainant or prosecution. A person covered by Section 85(1) IT Act is relieved from liability if that person proves either that the contravention took place without that person's knowledge, or that the person exercised all due diligence to prevent the contravention.

Section 85(2) IT Act operates regardless of Section 85(1) IT Act and covers any director, manager, secretary, or other officer of the company, even if that officer was not in overall charge of the company's business. Under Section 85(2) IT Act, such an officer is also deemed guilty of the contravention and liable to be proceeded against accordingly if it is proved that the contravention took place with that officer's consent or connivance (secret cooperation in wrongdoing), or is attributable to any neglect on that officer's part.

The Explanation to Section 85 IT Act widens two key terms for Section 85 IT Act. Clause (i) defines 'company' as any body corporate (an incorporated legal entity) and includes a firm or other association of individuals; clause (ii) states that 'director', in relation to a firm, means a partner in the firm.

When Section 85 IT Act Applies

A company (meaning any body corporate, firm, or other association of individuals) commits a contravention of the IT Act or of any rule, direction, or order made under the IT Act.
For liability under Section 85(1) IT Act, an individual was in charge of, and responsible to, the company for the conduct of the company's business at the time the contravention was committed (subject to the defence in the proviso).
For liability under Section 85(2) IT Act, it is proved that the contravention took place with the consent or connivance of, or is attributable to any neglect on the part of, a director (including a partner in a firm), manager, secretary, or other officer.

Example of Section 85 IT Act

A software partnership firm in Cuttack dishonestly accesses a client's computer system without the client's permission, committing a contravention under Section 66 IT Act read with Section 43 IT Act. At the time of the contravention, Vivek is the managing partner in charge of and responsible to the firm for the conduct of the firm's business, while Rekha is a partner who handles only office rent and accounts and has no knowledge of the unauthorised computer access. Under the Explanation to Section 85 IT Act, the partnership firm counts as a company and each partner counts as a director. Under Section 85(1) IT Act, both the firm and Vivek are guilty of the contravention and can be proceeded against unless Vivek proves lack of knowledge or all due diligence. Rekha is not in charge of the firm's business conduct under Section 85(1) IT Act and is not liable under Section 85(2) IT Act unless consent, connivance, or neglect on Rekha's part is proved.

When Section 85 IT Act Does Not Apply

Under the proviso to Section 85(1) IT Act, a person in charge of and responsible to the company is not liable if that person proves that the contravention took place without that person's knowledge.
Under the proviso to Section 85(1) IT Act, a person in charge of and responsible to the company is not liable if that person proves that the person exercised all due diligence to prevent the contravention.
Under Section 85(2) IT Act, a director, manager, secretary, or other officer is not deemed guilty unless it is proved that the contravention took place with that officer's consent or connivance, or is attributable to any neglect on that officer's part.

FAQs on Section 85 IT Act

What is Section 85 IT Act?▼

Section 85 IT Act governs liability when a company contravenes any provision of the Information Technology Act, 2000 or any rule, direction, or order made under the Act. It makes both the company and individuals in charge of the company's business conduct liable, and also covers directors, managers, secretaries, or other officers whose consent, connivance, or neglect is proved.

Does Section 85 IT Act apply to partnership firms and partners?▼

Yes. Under the Explanation to Section 85 IT Act, 'company' includes a firm or other association of individuals, and 'director' in relation to a firm means a partner in the firm.

How can a person in charge of a company's business avoid liability under Section 85(1) IT Act?▼

By proving lack of knowledge or all due diligence. Under the proviso to Section 85(1) IT Act, a person in charge is not liable if that person proves either that the contravention took place without that person's knowledge or that the person exercised all due diligence to prevent the contravention.

Is every director of a company automatically liable under Section 85 IT Act?▼

No. Section 85(1) IT Act covers only a person who was in charge of and responsible to the company for the conduct of its business at the time of the contravention, while Section 85(2) IT Act covers another director or officer only when consent, connivance, or neglect by that officer is proved.

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Disclaimer: This is for informational purposes only. Always consult a qualified advocate for legal advice.

Sources: Bare Act Text, Information Technology Act, 2000 ·