Section 62 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
When a company contravenes the Act, section 62 reaches the company and the people running it. Every person in charge of, and responsible to, the company for the conduct of its business is deemed guilty, unless he proves the contravention took place without his knowledge. Directors, managers, secretaries and other officers are also reached where there was consent, connivance or neglect.
As per the consolidated text consulted, where the person contravening the Act or a rule, direction or order made under it is a company, the company and every person in charge of, and responsible to, the company for the conduct of its business are deemed guilty and can be proceeded against and punished (section 62(1)). A person can escape by proving the contravention took place without his knowledge (section 62(2)). A director, manager, secretary or other officer is also deemed guilty where the contravention occurred with his consent or connivance or is attributable to his neglect (section 62(3)).
How section 62 came in
Section 62 is in Chapter VIII (Miscellaneous), inserted by the Benami Transactions (Prohibition) Amendment Act, 2016 as part of sections 56 to 71. The text is checked against the Gazette of India copy of that Act (assent 10 August 2016). The 2016 changes were brought into force by notification; the date is not in the sources consulted. Printing point: sub-section (3) prints "shal1" with a numeral one in place of the second "l" of "shall", in both the copy and the gazette; it is read as "shall".
If your company has received a notice, or a company you manage is the holder of property on which the Act is engaged, early advice on who is "in charge" is important. A legal consultation on the roles and the records will help you see where each person stands under this section.
Sub-section (1): the company and the persons in charge
"Where a person committing 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 the business of the company as well as the company, shall be deemed to be guilty of the contravention and shall be liable to be proceeded against and punished accordingly."
Points to note:
- Scope. It covers contravention of "any of the provisions of this Act or of any rule, direction or order made thereunder", so it is not limited to the offence of benami transaction in section 53.
- Who is deemed guilty. The company, and every person who at the time of the contravention "was in charge of, and was responsible to, the company, for the conduct of the business of the company".
- Timing. The test is the position "at the time the contravention was committed".
- Consequence. Deemed guilty, liable to be proceeded against and punished accordingly.
Both limbs, in charge of and responsible to the company, are joined by "and". A person who is only a shareholder, or who has no role in the conduct of the business, is not described by those words, though the text does not list the positions that qualify.
Sub-section (2): the defence of no knowledge
"Nothing contained in sub-section (1), shall render any person liable to punishment if he proves that the contravention took place without his knowledge."
The words are "if he proves". The burden of showing absence of knowledge is placed on the person claiming it. The sub-section is limited to knowledge; the text here does not mention any other defence, such as having taken steps to prevent the contravention, and this article does not add one.
Sub-section (3): consent, connivance or neglect
"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, the 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."
| Feature | Sub-section (1) | Sub-section (3) |
|---|---|---|
| Persons reached | The company and every person in charge of and responsible to it for the conduct of its business | Any director, manager, secretary or other officer |
| What must be shown | Position at the time of the contravention | It is proved that the contravention took place with consent or connivance, or is attributable to neglect |
| Defence | No knowledge, if he proves it (sub-section (2)) | Not stated in sub-section (3) itself |
| Consequence | Deemed guilty; proceeded against and punished | "shall also be deemed to be guilty"; proceeded against and punished |
Sub-section (3) is "notwithstanding" sub-section (1). It adds officers who may not be "in charge" but whose consent, connivance or neglect is proved. Note the words "it is proved": the proof here is of the consent, connivance or neglect.
The Explanation
For the purposes of the section:
- (a) "company" means a body corporate, and includes (i) a firm; and (ii) an association of persons or a body of individuals whether incorporated or not.
- (b) "director", in relation to (i) a firm, means a partner in the firm; and (ii) any association of persons or a body of individuals, means any member controlling the affairs thereof.
This widens the section well beyond limited companies. A partnership firm is a "company" here, and its partners are "directors"; an unincorporated association of persons is a "company", and a member controlling its affairs is a "director". Note that section 2(14) defines "director" by reference to the Companies Act, 2013; the Explanation to section 62 gives its own meaning for the purposes of this section. Check the current text of the Companies Act, 2013 for the corresponding provisions.
Practical example
A private company, Hari Om Traders Pvt Ltd, holds a warehouse bought with money provided by an outside investor, and a contravention of the Act is alleged against the company. Under section 62(1), the company and the managing director, Mr Kishore Menon, who was in charge of the business at the time, are deemed guilty. Kishore can rely on sub-section (2) only if he proves the contravention took place without his knowledge. The company secretary, Ms Reema Sinha, was not in charge of the business, but if it is proved that the contravention occurred with her connivance or is attributable to her neglect, sub-section (3) deems her guilty also.
If the same facts arose in a partnership firm, the Explanation treats the firm as a "company" and a partner as a "director".
Who is affected
- Companies, firms and associations, which are all within the Explanation.
- Directors, managers, secretaries, other officers and partners, who may be personally reached.
- Persons who left or joined the business, for whom the time of the contravention is the test.
Similar provisions elsewhere
Offences-by-companies provisions of this kind appear in other laws. For the corresponding provisions of two other Acts, see our articles on offences by companies under the Prevention of Money-laundering Act, 2002 and offences by companies under the Black Money Act, 2015. Each Act has its own text, so read each on its own wording.
Other laws and later amendments
Section 62 names no other statute, though the definitions in section 2 do. Check the current law for the corresponding provisions. Later amendments to the Act are not in the sources consulted; check them.
Need help with company liability under the Act?
Who was "in charge", what each officer knew and whether the contravention can be tied to consent or neglect are questions of fact and documents. Our legal consultation service can review the roles and records with you.
Key takeaways
- A company that contravenes the Act, and every person in charge of and responsible to it for the conduct of its business at the time, is deemed guilty.
- A person escapes if he proves the contravention took place without his knowledge.
- Directors, managers, secretaries and other officers are also deemed guilty where the contravention is with their consent or connivance, or attributable to their neglect.
- "Company" includes a firm and an association of persons or body of individuals; "director" includes a partner and a controlling member.
- The section covers contravention of any provision, rule, direction or order, not only section 53.
Read next
- Section 53: penalty for a benami transaction
- Sections 54, 55 and 61: false information, previous sanction and non-cognizable offences
- Sections 64 to 66: good-faith protection, pending cases and legal representatives
- Offences by companies under the Prevention of Money-laundering Act, 2002
Disclaimer: Based on a third-party consolidated text of the Prohibition of Benami Property Transactions Act, 1988 as amended by the Benami Transactions (Prohibition) Amendment Act, 2016, checked against the Gazette of India copy of that amending Act (11 August 2016), as consulted on 2 October 2026. The commencement notification, the rules and later amendments should be checked. This article is general information, not legal advice; check the official text before acting.