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3. I did not commit any act towards the child. I only passively allowed a child to keep doing the indecent act in question. Am I liable?

If you invite or encourage the child to commit a grossly indecent act upon you, you will be liable even if you remain passive during the act. The question is whether in the circumstances of the particular case your conduct amounted to an invitation to the child to do or to continue the activity in question.