Penal Action against Company Directors and Management being Misinterpreted: MHA

The Ministry of Home Affairs has just clarified that the Disaster Management Act 2005 is being misinterpreted in various reports. Some reports, according to MHA, have claimed that company directors and management could be arrested or acted against if an employee was tested positive for COVID-19.

While the government has announced certain relaxations for IT and ITes companies, and few units that are not in the hot zone may even be allowed to operate with 50 percent workforce, this misinformation had become a cause of concern for several organizations.

What the Clause of the DMA 2005 Invoked by MHA Says

The clause 21, which is the rule under DMA 2005 in question, says that “All industrial and commercial establishments, work places, offices, etc. shall put in place arrangements for implementation of SOP as in Annexure II before starting their function.”

However, the clause that had become the cause of concern for companies is as follows:

“(1) Where an offence under this Act has been committed by a company or body corporate, every person who at the time the offence 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, 25 shall be deemed to be guilty of the contravention and shall be liable to be proceeded against and punished accordingly: Provided that nothing in this sub-section shall render any such person liable to any punishment provided in this Act, if he proves that the offence was committed without his knowledge or that he exercised due diligence to prevent the commission of such offence.

(2) Notwithstanding anything contained in sub-section (1), where an offence under this Act has been committed by a company, and it is proved that the offence was committed 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 that offence and shall be liable to be proceeded against and punished accordingly.”

Nevertheless, MHA has clarified that penalties under the DM Act 2005 would only be applicable if the offence occurs with consent, cognisance or negligence of employer. “The provisions, under Clause 21 are in the nature of precautions for management of COVID-19 in India,” adds PIB in a tweet.

Prime Minister Narendra Modi, while announcing an extension of the lockdown until 3 May in India, had stated that a few relaxations may be allowed for industrial units and companies outside the hot zones. IT and IT-enabled services may be allowed to function with up to 50 percent strength provided they strictly follow and implement the Standard Operating procedures (SOPs) of social distancing at workplaces, offices and factories.