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Corporate Legal Framework

Notes the Central Government, State Government, Reserve Bank of India, not below the rank of
under-secretary to Government of India to investigate any such contravention. The offi cer so
appointed shall exercise the like powers which are conferred on the income-tax authorities under
the Income-tax Act, 1961, subject to such conditions and limitation as the Central Government
may impose. Similarly, Sec.38 provides for empowering other officers with the same powers as

are mentioned in Sec.37.

3.7 Miscellaneous Provisions

Sec.42 makes a provision in the case of contravention by companies 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 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.
However such a person would not be liable to punishment if he proves that the contravention took
place without his knowledge or that he exercised due diligence to prevent such contravention.
Further, 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 on and shall be
liable to the proceeded against and punished accordingly.

Task “Members of the Appellate Tribunal are public servant”. Justify

Case Study Intervention on Global Economy

n 2 and 3 December 2004, the BIS hosted a meeting of Deputy Governors of
rd
nd
central banks from major emerging market economies to discuss foreign exchange
Omarket intervention. While few developed countries have actively intervened
within the last decade, the outstanding exception being Japan, intervention has been
commonplace in the emerging market community.
There are several reasons why developed countries no longer actively intervene. One is
that research and experience suggest that the instrument is only effective (at least beyond
the very short term) if seen as foreshadowing interest rate or other policy adjustments.
Without a durable and independent impact on the nominal exchange rate, intervention is

seen as having no lasting power to influence the real exchange rate and thus competitive
conditions for the tradable sector. A second reason is that large-scale intervention can
undermine the stance of monetary policy. A third reason is that private fi nancial markets
have enough capacity to absorb and manage shocks - so that there is no need to “guide”
the exchange rate.

Yet emerging market countries do intervene - presumably because they believe the
instrument to be an effective tool in the circumstances and for the situations they face.
Contd...

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