What Is Director Nomination Under Legal Metrology?
Section 49 of the Legal Metrology Act, 2009 allows the user to nominate any person as responsible for the conduct of the business under the Legal Metrological Laws. Such a person shall be officially registered under the records of the Legal Metrology authorities who can be held responsible in case of any violation by the Company.
Let us understand it following two situations:
- Situation No. 1: Where the company has done with Director Nomination – In this case if company has committed any offence under Legal Metrology, then persons so nominated with the Department of Legal Metrology shall only be the natural person who can be held responsible by the Legal Metrology Department in case of any violation.
- Situation No. 2: Where the company hasn’t done with any Director nomination – In this case if company has committed any offence under Legal Metrology, then all the officers of the company including the company as artificial person shall be held responsible by the Legal Metrology Department in case of any violation.
What is the benefit of Director nomination?
Director nomination is highly beneficial and a helping tool to reduce the penalties and the magnitude of the damage which may cause to company in case of any violation. Since the Legal Metrology Law is Consumer Law, applicable to a wide range of products and given its technical nature which makes it highly prone to being non-complied with by its users. In the event of committal of offence, the user doesn’t only land up with pecuniary penalty but at many places under the law there are provisions of imprisonment as well. Director nomination not only strategically reduces the number of penalties but also helps to save the non-nominated officers of the company persons from the trial of the court and imprisonments. The companies who have foreign investments in their business and has independent foreign Directors as well always make sure that their foreign Directors should not receive any notice from any Department of India as it may adversely affect their availment of foreign investments.
Can Partnership Firms or Association of Individuals avail nomination under Legal Metrology?
Since under the Section 49 which is dealing with the Director’s nomination, the word “Company” & “Director” which predominantly gives the impression that only companies are allowed to nominate Directors because of which often it has been doubted whether partnership firms, body corporations, association of individuals, trust, societies. The Government has given the provisions for nominating Directors by these kinds of business entities. Under Section 49, Legal Metrology Act, 2009 legislation has given the explanation wherein the definition of company and Director is explained as below:
- “Company” means anybody corporate and includes a firm or other association of individuals; and
- “Director” in relation to a firm, means a partner in the firm but excludes nominated directors, honorary directors, Government nominated directors.
Vide above explanation, it becomes clear that Partnership Firms, Association of Persons which includes Trust & Societies, can avail the benefit of Director Nomination.
Can Company Nominates any person other than Director?
Section 49(2) clearly states that – “any company may, by Order in writing, authorize any of its Director to exercise all such powers and take all steps as may be necessary or expedient to prevent the commission by the Company of any offence under this Act”. It is pertinent to note the words “any of its Director” in the above text of the Section, as it clearly says that Company can only nominate the Directors which means the Company shall not be able to nominate any other employee or its Company Secretary or its Chartered Accountant etc.
Special Case: Nomination of different persons in case of multiple branches
Where a company has different establishments or branches or different units in any establishment or branch, different persons may be nominated under this sub-section in relation to different establishments or branches or units and the person nominated in relation to any establishment, branch or unit shall be deemed to be the person responsible in respect of such establishment, branch or unit.
Cancellation of Director Nomination under Legal Metrology
Section 49(3) deals with the provisions of cancellation of nomination, following case s has been mentioned under Section 49(3) in which nomination can be cancelled:
- Further notice cancelling such nomination is received from the company by the Director or the concerned Controller or the authorized officer; or
- He ceases to be a director of the company; or
- He makes a request in writing to the Director or the concerned Controller or the legal metrology officer under intimation to the company, to cancel the nomination, which request shall be complied with by the Director or the concerned Controller or the legal metrology officer,
Whichever is the earliest, continue to be the person responsible.
In case when person nominated hasn’t committed any offence?
Section 49(4) clearly states that where an offence under this Act has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to the neglect on the part of, any director, manager, secretary or other officer, not being a person nominated under sub-section (2), 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.
Myths about Director Nomination under Legal Metrology:
Past many years of our experience, we learnt that the Board of Directors of the Company could not able to arrive on the successful consensus of nominating any Director since no single Director is willing to accept the responsibility for the compliances of any offence under Legal Metrology, because of which company is never able to arrive on a point wherein the company could able to successfully get the Director Nomination. We wish to make it clear that if any Director thinks that if he becomes the nominated Director under Legal Metrology done, he shall be the only person who will be held responsible by the Legal Metrology Authorities, then such Director need not to worry as he will be protected under the provisions Section 49(4) which clearly states that if any other officer is proved to be guilty of that offence, then such officer shall be punished instead of the nominated Director.
Click Here to see sample certificate of the Director Nomination Certificate