offences under corporate laws prelims pages1

Preface

Offences are an area of concern, not only for the persons who commit it and the

persons who suffer from such offences; but also for the regulators who have to

identity the persons responsible for the commission of such offences and the possible

reasons therefor. Prosecution, punishment, penalties, inspection, investigation etc

are such matters that could cause serious damage to the reputation of the captains

of industries and business houses. Penal provisions under the Companies Act,

2013, Securities Laws comprising of Securities Contracts (Regulation) Act, 1956,

Securities and Exchange Board of India Act, 1992 [SEBI Act] and Depositories Act,

1996 and Foreign Exchange Management Act, 1999 [FEMA], similar to any other

economic legislations, seek to impute liability even upon the independent directors

and non-executive directors provided the offences have been committed with their

knowledge.

systems. Para.2.5 of the Report of the Cadbury Committee on the Financial Aspects

of Corporate Governance, 1992 said that “Corporate governance is the system by

which businesses are directed and controlled”. Identifying those who form part of

the corporate governance system, the defacto directors, the shadow directors etc

is be a challenge and such persons also face liability for offences involving fraud.

Professionals such as auditors may face penal consequences they fail to report a fraud.

Knowledge of independent directors and non-executive directors who are not

forming part of the day to day management of the affairs of the company could

the Board of Directors is to strengthen the board process and ensure that there are

adequate systems and procedures for ensuring compliance of all applicable laws. As

Benjamin Franklin had put it, a little neglect may breed great mischief. For want of

nail, the shoe was lost; for want of shoe the horse was lost; for want of horse the rider

and act diligently. Diligence implies ‘absence of negligence’ and such persons are

entitled to relief and remedies statutorily available.

Companies Act, 2013 has introduced the concept of ‘Secretarial Audit’ for big

companies. Secretarial audit scope includes some of the SEBI Regulations and some

of the FEMA Regulations as well. I have focused on such laws and regulations which

will serve as guidance to those who do the secretarial audit. With the introduction of

secretarial audit, professional responsibilities of company secretaries in practice have

increased. Much similar to auditors of books of account, secretarial auditors have the

innocuous and it might be considered as a technical offence only. However, behind

the delay, there could be suppression of material facts and motive. Such things cannot

be easily brushed aside.

The book has been divided into four major parts as given below:

Part-I of the Book contains detailed notes and analysis of the provisions of the

Companies Act, 2013, including the new concepts thereto. The key highlight

of this part lies in the detailed analysis of the penal clauses of the important

provisions of the Act, frauds, duties of auditors, compounding and adjudication

provisions and relief that courts can grant. This part also contains elaborate notes

on provisions of the Companies Act, 2013 relating to investigation into affairs of

companies; Chapters 1 to 6 come under this Part.

Part-II consisting of 4 chapters relates to Securities Laws, adjudication,

compounding, settlement, appeals before Securities Appellate Tribunal [SAT]

and appeals against the orders of SAT; Chapters 8 to 11 come under this Part.

Part-III of the book has three chapters dealing with offences, adjudication of

penalties, compounding of offences and prosecution under FEMA and regulations

thereto. Unlike appeals arising from orders of SAT which go to Supreme Court

directly, appeals against Appellate Tribunal for Foreign Exchange lie before High

Courts. In this part, there is an elaborate discussion on the provisions of FEMA

and various regulations under FEMA pertaining to foreign direct investment

(FDI), overseas direct investment (ODI), external commercial borrowings

(ECB), export of goods and services etc. This part contain several illuminating

illustrations and relevant case laws for the readers; Chapters 12 to 14 come under

this Part.

In Part-IV of the book, there are separate chapters for prosecution procedure

under the Code of Criminal Procedure [CrPC] and quashing of criminal

complaints under CrPC and the precautions that complainants have to take in

relation to criminal complaints under these legislations. Procedural aspects of

search and seizure contained in CrPC apply to Companies Act, Securities Laws

and FEMA as well. Substantial Part Chapter 4 and the whole of Chapter 7 come

under this part.

I have extensively focused on the provisions pertaining to relief and remedies. In

that has been contravened; the persons who are described by the statute as liable for

the offence concerned, the punishment prescribed for the offence, the person, if any,

to whom the company had entrusted the duty to comply with the particular provision

and the remedial action to be taken and the relief that is available. This work aims to

put the penal consequences arising from contraventions of statutory provisions in a

proper perspective.

As readers may have noticed, in recent times, SEBI has been very actively pursuing

the cases involving insider trading regulations and collective investment schemes and

unfair and fraudulent practices in the securities market. Similarly, the Enforcement

Directorate is seriously pursuing cases under the newly introduced provisions of

they are as important as the procedural aspects of the adjudicating and appeals in

respect of these regulations.

Thus, the book covers important topics which are currently very valid.

While writing, I have been fortunate to have the blessings of several eminent

personalities. I was patiently and ably assisted and encouraged by my wife, daughter

and son in addition to my parents, relatives, friends, partners, associates and clients.

research assistance in completing this work by getting the relevant case laws, updated

provisions of various acts, rules and regulations and in analyzing the same. I am

happy to dedicate this work to all of them.

I would be failing in my duty if I do not place on record the excellent support I

received from the publishers and in particular Mr. Toby Thomas, Ms. Komal Chadha

and Ms. Nikita Jain who took a lot of pains to make this work better.

I feel the method of presentation will assist even a person who is not a specialist in

exhaustive commentary on relevant provisions of the Companies Act, Securities Law

and FEMA and Regulations and I have attempted to give a clear, concise explanation

to the legal principles and nuances underlying each such provision besides giving an

account of the overall statutory setting of the law concerned.

I am open to receiving suggestions and comments from readers which could

be forwarded to special mail id created by the publishers for this book which is

[email protected].

Place: Coimbatore

Date: December 31, 2015 K.S. Ravichandran

xv

Contents

About the Author ...........................................................................................................v

Preface ....................................................................................................................vii

Foreword .....................................................................................................................xi

Case Table ..................................................................................................................... li

Ready Reckoner to the Penal Clauses under the | Companies Act, 2013 .......................................................................................................lxix

Companies Act, 2013 .................................................................................................... 1

Role of Directors ..................................................................................... 1

.................................................................................. 2

...................................................................................................... 4

............................................. 5

......................................... 6

................................................ 6

Relief ...................................................................................................... 6

.................................................................................... 7

......................................................... 8

....................................................................

....................................................................................................... 11

..................................................................................... 11

............................................................................................ 12

1-010 ............................................. 13

1-020 ...................................................... 16

1-030 ................................................................ 16

xvi

Contents

1-040

.............................................................. 17

................................................................ 17

........................................................................ 18

................................................................................

............................................................................... 21

1-050 ......................................... 21

1-060 .................................................................. 23

1-070 .......................................................................................... 23

1-080 .............................................. 25

............................................................................................... 28

..................................... 28

............................

...................... 30

1-100 ............................................... 31

......................... 32

........................ 34

........................................................ 34

......................................... 36

.......................................................... 37

1-110 ......................................................... 38

1-120 .............................................................................. 40

1-130 ......................................................................... 41

1-140 ............................................................................. 41

1-150 ................................................. 43

1-160

.................................................................................................... 48

1-170

Companies Act, 2013 ................................................................ 50

1-180 ................................ 50

................................................................................ 54

1-200 .............................................. 55

xvii

Contents

........................................................................ 63

1-210 ............................... 74

................................................. 76

............................................................. 76

1-220 .................................................................................. 77

the Companies Act ................................... 81

1-230 ................................................................. 84

................................................................................ 84

............................................................... 85

............................................................. 88

................

................................................................................................

......................

............

...................

......................................................

................................. 102

......... 104

than Cash ........................................................................................... 105

................................. 106

........................................................................................ 108

1-240 ..................................................... 110

1-250

........................... 112

1-260 ................................................................. 114

1-270

.................................................................................. 116

1-280 ......................................................

.................................................... 120

1-300 ............................................................................ 123

xviii

Contents

1-310 ...................................................... 135

1-320 .............................................................. 136

1-330 ..................................................................................... 137

1-340

.............................................................................................. 137

1-350 ............................................................. 138

1-360 ................................

1-370

.................................................................................

1-380 ................................ 140

.................... 140

1-400 ....................................................... 143

Act, 2013

............................................................................................. 145

........................................................................ 145

( ) ......................................... 146

...................................... 151

.................................... 156

.............................................................................................. 156

................................................................................... 156

............................... 161

.......................................................... 161

................................................................................... 162

................................................................................... 163

................................................................................... 164

................................................................................... 166

................................................................................... 166

................................................................................... 174

........................................................................... 174

................................ 176

.................... 177

xix

Contents

.................................................................. 178

3-010 .......................... 181

3-020 ............................... 182

3-030 ................................................... 182

............................................................................................. 184

............................................................................................. 184

......................................... 186

............................ 187

....................................................................... 187

3-040 ........................................... 188

.......................................................... 188

.............................................................

3-050

.........................................................................................

3-060 ...............................

.....................................

..........................................................

..............................

...............................................................

3-070 ............................................

.....................................................................

..........................................................................................

3-080 ............................................

Procedure under Criminal Procedure Code

4-010 .............................................................................................

4-020

xx

Contents

................................................................................................... 200

.......................................................................... 200

.............................................................. 200

............................................................................................. 200

Deterrence ......................................................................................... 201

............................................................................ 201

........................................ 201

..................................... 202

.................................... 202

....................................... 203

................ 203

................................................................. 203

................................................................................................. 203

.................................................. 203

................................................................................. 204

..................................................... 204

4-030 ........................................................... 204

4-040 .......................................................................................... 205

4-050 ........................................ 206

4-060 .............................................................. 208

4-070 ........................................

4-080 ............................................................ 210

................................................... 214

................ 220

.................................. 221

....................................................................... 221

4-100 ............................................... 221

4-110 ............................................... 221

4-120

............................................................................... 223

........................................................................ 224

xxi

Contents

4-130

................................... 225

4-140 ..................................................................................... 228

4-150 ........................... 228

4-160

4-170 ............................. 240

............... 242

............................... 242

4-180 .......................... 243

............................................................. 244

4-200 ....................................................... 244

............................... 244

........................................................................... 246

............................ 247

................................................. 251

........................................... 254

................. 256

.....................................................................................

................................................................. 260

......................... 260

.............................................. 260

4-210 ................................................................................... 261

....................................................................................... 266

............................................................................................. 267

4-220 ..............................

4-230

.............................................................................................. 271

4-240 .......................................................................... 272

4-250 ....................... 272

4-260 ............................................................ 273

xxii

Contents

............................ 273

4-270 .................................... 274

4-280 .......................................................... 274

........................................................................................... 274

..................................................... 275

.......................................................... 275

.................................................................................... 275

............................................................................ 275

............................... 276

.................... 276

not present ......................................................................................... 277

Complainant ....................................................................................... 277

........................................................................ 278

....................................................................... 278

...........................

....................................................................................

...........................

.............................................................................. 280

.................... 281

............................................................................... 281

.................................................................... 281

4-300 ................................................. 282

........................................................................ 282

................................................................. 283

................................................ 283

...................................................................... 283

......................................................... 284

........................ 284

............................. 284

....................................................................... 285

.................................................. 285

........................... 285

xxiii

Contents

............................................................................ 286

................................................................... 286

....................................... 287

....................................... 287

........ 287

................. 287

....................... 288

......................................

.........................................................................

4-310 .............................................................................

...............................................

4-320 .......................

4-330 ..................................................

4-340 .........................................................................

.................................

4-350 ....................

4-360 .........................................................

4-370

................................................................................................ 300

4-380 ..................................................................... 304

......................................................................................... 304

......................................................................................... 305

................................................................................. 310

4-400 ..................................... 311

4-410 ...................................................................... 314

4-420 ................................................................. 316

4-430 .................................................................. 323

4-440 ........................................................................ 324

4-450 ............................................. 324

4-460 ................................................................................ 324

4-470 ........................................................... 325

4-480 .......................................................................... 326

xxiv

Contents

.................................................................. 326

.............................. 326

....................................................... 326

...................................................................... 326

............................................................................................. 327

.................................................................................. 327

................................................................................ 328

...........................................................................

......................................................................

.......................

.......................................................................... 331

............................................................. 333

................................................................. 334

............................................................ 334

........................................................... 334

................................................................... 335

........... 335

.................................................... 335

..................................................................... 336

....................................................... 336

............................................................ 336

.....................................

....................... 340

...................... 340

...................................................................................... 340

...................... 340

Companies Act, 2013 .................................................................... 340

................... 341

................................. 342

.......................................................... 342

SCRA ............................................................................................. 342

xxv

Contents

......................................................................................... 342

............................................................................................ 343

Companies Act, 2013 .................................................................... 343

........................................................... 346

................................................................................. 347

........................................................ 350

SCRA ............................................................................................. 350

......................................................................................... 352

............................................................................................ 353

Companies Act, 2013 .................................................................... 355

........................................................................... 358

................................................................................... 358

............................................................................................. 361

.............................................................................. 361

.................................... 363

.............................................................................. 364

......................................................................................... 364

.......................................................................................... 365

................................................................................................ 365

.................................................................................... 366

....................................................................................... 366

................................................................................... 366

......................................................................... 368

..............................................

........................................

.............................................................. 370

....................................................................................... 373

............................................................................... 373

...................................................................... 374

......................................................... 375

.......................................... 376

xxvi

Contents

................................................ 377

....................................... 378

................................................................ 378

................... 380

.................................... 380

6-070 Scope of Relief ......................................................................................... 381

...................................................... 381

............................................................................ 381

............................................................ 382

........................................................................... 382

....................................................................................... 382

............................................. 383

............................................................................... 384

Companies Act, 1956 ........................................... 385

.......................................... 386

................................................................... 387

...................................................................................... 387

.................................................................................... 388

........................

......................................

..................................

........................................................................................

...................................................

..............................................

...........................

..................................................................................

...............................................................................................

...............................

.................................................................

xxvii

Contents

...........................................................................................

.............................................

............................

...........

...................

........................................... 401

............................................................................................. 403

........................................................... 404

................................................................ 406

................................................................ 408

..............................

........................................................ 411

.......................................... 411

.............................. 417

............................................................... 418

..................................... 422

......................... 424

............................................................................................. 427

..................................................................................... 427

.........................................................................................

....................................................................................

Companies Act, 2013 ................................

....................................................... 432

........................................................................ 433

....................................................................... 433

................................................................................................ 434

xxviii

Contents

.................................................................................. 435

......................................................................... 438

.....................................

........................................... 440

....................................................................... 440

......................................................... 442

Companies Act, 2013 .................................................................... 442

................................... 444

certain persons ............................................................................. 446

............................................ 447

................................................. 447

.............................................................. 448

.................................................................... 451

........................................ 453

.......................................................................................... 455

........................................... 456

.......................................................................... 457

............................................................................................. 457

.................................................. 458

.......................................................

....................................... 460

....................................................... 460

........................................................ 461

................................................................................. 462

.................................................. 465

............................................................... 465

..................................................................................... 466

...................................................................... 467

...............................................................

xxix

Contents

.......................................... 470

..................................... 472

........................................................... 473

................................................................................. 474

................................................... 474

.................................................................................... 475

........................... 476

............................................. 477

.......................................................................................

................................................. 481

..................... 482

................................................. 484

.................................. 487

.......... 487

......... 487

..................................................

..................................................

.......................

...................................................................................

..................................................

.....................................................................................

....................................................

.............

......................................................................

................................................

xxx

Contents

of certain Directors .......................................................................

............................................

...............................................................................

.........................................................................................

......................................................................................

..........................

.............................................................

...............................

.................................................

...........................................

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.............

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..............................

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..................

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.......................................... 500

................................................ 501

............................. 502

............................ 503

....................................................... 504

...................................................................... 506

......................................................................... 508

...................................................

xxxi

Contents

............................................................................... 510

...................................................... 511

.................................................................. 511

................................................................................. 512

.......................................... 512

........................................... 513

............................................................. 513

Defences ............................................................................................. 513

......................................... 514

....................... 517

............................................................... 518

............................................................................................. 521

................................................................................................. 521

.................................... 523

....................................... 523

............................................................................................ 523

............................................................................................. 523

.................................................................................. 526

............................................................................. 526

.................................................................................... 527

........................................................................ 527

...................................... 528

................................................... 531

h ie ................................................................ 532

.................................................................................... 532

.................................................................................... 532

.................................................................................... 532

.................................................................................... 532

........................................................... 533

............................................................. 533

xxxii

Contents

........................................................................................... 533

...................................................................... 533

................................................ 533

.............................. 534

.............................................................................. 534

.................................................................... 535

................................................................... 538

....................................

..........................................................................................

...........................................................................................

....................................

....................................................................... 541

.............................................................................. 542

............................................. 542

.......................................................................... 543

............................. 543

..................................................... 544

............................... 545

................................................................................ 545

................................................................................ 546

............................

............................................................ 550

................................................................................. 550

................................................................. 550

.................................................. 553

............................................... 554

................................................... 555

................................................................................. 557

.................................. 560

.............................. 560

xxxiii

Contents

Directors ............................................................................................. 561

....................................................................... 562

........................... 563

............................................................................... 564

.............................................................................. 565

.................................................. 565

........................................................................ 566

............................................................................. 567

...................................... 568

.......................................................................... 568

.................................... 568

..................................................

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.............................................................................................. 571

..................................................... 572

.............................................................................................. 572

............................................................................... 572

.............................................................................................. 572

............................................................. 573

.................................................... 574

................................................................... 574

.......................................................... 575

xxxiv

Contents

................................................................................ 576

............................................... 577

....................................................... 578

............................................... 580

............................. 580

........................................................................... 581

...................................... 582

................................................ 584

....................................................... 585

....................................... 586

....................................... 586

.......................................... 588

.....................................

...........................................................

.................................................................................

.......................................................

.....................................

.............................................................................................

..............................................

....................................................

................................ 603

.................................................. 605

............................................... 607

................

............................

......................................................................................... 613

.............................................. 614

xxxv

Contents

............... 614

.................................. 615

.......................................................... 617

....................... 617

.......................................................................

................................. 620

.................................................................... 621

............................................ 621

............... 622

................................................................................. 623

............................ 623

....................................................................... 624

................................................................... 624

......................... 627

.......................... 627

......................................................................................... 628

......................................................

.............................................................................. 631

............. 631

........................................................................... 632

......................................................... 634

.................................... 634

........................................................................... 634

Factors .......................................................................................... 635

xxxvi

Contents

...................... 635

................................... 635

........................................................................ 636

............................................................ 636

.............................................................. 637

............................................................................. 637

.......................................................................... 637

................................... 637

....................................................................................... 637

................................................................

................

.......................................................................... 641

......................................................... 643

............................................................. 643

..................... 644

........................................................................................ 646

.....................................

..................................................................................... 650

................................................................... 650

.............................. 650

............................................ 651

.................................. 651

.......................................................... 658

........................................................................ 658

xxxvii

Contents

Approach ......................................................................................

...................

..........................................................................

...................................... 660

............... 660

.................... 662

................

......................................................................................... 673

...................................... 680

.............................................. 684

.................

........................

............................................................................................. 701

Act ........................................................................................ 706

................................................... 707

............................................................................................ 707

........................................................... 707

........................................... 708

............................................................

.........................................

............. 710

......................................................................................... 710

............................................................................ 710

.................................................................................. 710

xxxviii

Contents

........................................... 712

.................................................. 712

......................................... 713

............................................................................. 713

.................................................................................................... 717

........................ 718

...................................................................

............................................................

........................

................................................................................ 721

............................................................................... 722

.......................... 723

.................................... 727

.................................................................................. 727

.................................................................................... 727

.................................................. 727

................................................................. 728

................................................................................. 734

.................................................................... 734

......................................... 735

................................................................................ 735

................................... 736

................. 736

................................................................ 737

xxxix

Contents

.......................................................

................................................................................ 740

................................................................................ 740

................ 740

....................... 740

............................ 746

.............................. 746

.............................. 746

............................ 746

........................................... 747

....................................... 747

.................................................................. 748

.............................................................. 748

................................................... 748

............................................................................................ 748

..................................................................................

........................... 750

.......................................................................................... 750

............................................................ 750

......................... 753

............................................................ 753

...................... 753

......................................................... 753

..................... 755

......................................... 755

.................................................... 755

.............................................. 756

......................... 756

xl

Contents

.......................................................................... 756

...................... 756

.......................................................................... 756

............................................. 756

............... 757

.......................................................... 757

......................................................... 758

12-010 ............................................................................................. 765

12-020

.......................................................................... 766

....................................................... 766

........................................................... 766

........................................................ 766

...................................................................... 766

.......................................................................... 766

.................................................. 767

....................................... 767

.......................................................... 767

12-030 .................................................. 768

12-040

................................................................................. 768

12-050 ...............................................

...................................................................

12-060 ................................................ 771

......................................................... 772

............................................................. 774

..................................................................... 775

xli

Contents

.............................................................. 775

.................... 778

.......................................................................................

......................................................... 780

..................................................................................... 780

.............................................. 780

.................................................... 781

capital ........................................................................................... 781

Capital ........................................................................................... 781

........................... 782

.............................................................. 782

............................................................................... 782

.................................................................................. 782

....................................................................... 783

............................................................. 784

.................................................................................. 787

form .............................................................................................. 787

............................................ 788

.................................... 788

.............................................................................. 788

....................................................................

................................................

xlii

Contents

..............................

.......................................

.................................................

.........................................

...............................................................

....................................................................................

.....................................................................................

................................

.....................................................................

...........................................................................

..................................................................

........................

............

...........................................

............

..........................................................

............

...............................................................................

......................................................

..........

................... 800

.................................................................................. 801

........................................................................................... 801

xliii

Contents

....................................................................................... 801

......................................................... 802

............................................................................... 802

............................................. 803

..................... 804

............................ 805

..................................... 805

............................................................................ 805

........................................................................................... 806

12-070 ............................................................................... 806

12-080

................................................................................................ 806

.................................... 807

12-100 .............................. 807

12-110 ................................... 807

12-120 .................................... 808

.......................................... 808

..................

..........................................................

.................... 810

......................... 810

.................................................. 810

............................................................ 810

............................. 810

................................. 810

12-130 ........................................................... 812

12-140 ................................................. 812

xliv

Contents

.......................................... 812

12-150

................................................. 812

12-160 .................................................. 813

12-170

................................................................................................ 813

12-180 .................................... 815

................................................................................................ 815

12-200 ............................................... 815

12-210 .................................... 816

12-220 ....................................................... 816

12-230 ........................................................ 816

12-240 ........................................................... 817

12-250 ................................................. 818

12-260

................................................................................................

12-270 ....................................................................

12-280 ......................................................... 821

13-010 ............................................................................................. 825

13-020 ......................................................................... 826

13-030 ................................................................................. 827

13-040 ....................................................... 827

13-050 .................. 828

13-060 ...................................................................

13-070 .................................................

13-080 ....................................................... 831

............................................................ 831

13-100 ..................................... 832

.......................................... 833

13-110 ................... 837

xlv

Contents

........................................................................................ 837

13-120

............................................................................. 838

13-130 ...................................... 838

13-140 ..................................................... 838

13-150 ............................................. 838

13-160

........................................................................................

13-170

.....................................................................................................

13-180

.....................................................................................................

..........................

13-200

..................................................... 840

13-210 ..................................... 841

13-220 .................................... 842

13-230 .................................. 842

.................... 847

13-240 ............................................................. 847

13-250 .......................................................................... 847

14-010 .............................................................................................

14-020 .............................................................................. 852

14-030 ..................................... 856

14-040

.................................................... 857

14-050 ................................................................................... 860

14-060 ..................................................................................... 862

14-070 .................................. 868

14-080 .............................................

.................................. 871

xlvi

Contents

14-100 ..................................................... 871

14-110 .............................................. 874

14-120

................................................................................................ 876

14-130 .............................. 880

.................................. 880

................................................ 880

.......................... 880

......................................................................................... 881

.......................................................................... 881

.......................... 881

14-140 ......................................... 881

14-150 ........................... 883

............. 883

............................................................................................ 883

........................................................... 883

................................................... 884

.................................................... 884

.......................................................................... 884

14-160

.................................................................................... 885

............................................................... 885

........................................ 885

................................... 885

............................................ 885

................................................................................................. 886

...................................................................................... 886

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xlvii

Contents

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14-180

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xlviii

Contents

14-210

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14-220

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14-230 ...........................................................

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................................

..............................................................................

...............................................................

14-240 .................................................

14-250 ...............................................

.........

14-260 ...........................................................................

14-270 ..............................................

List of Appendices pertaining to Companies Act

Appendix 1: Companies Act, 2013.......................................................................

Appendix 2 ........... 1266

Appendix 3

Companies Act, 2013..................................................................... 1268

Appendix 4

Companies Act , 2013 ....................................................................

Appendix 5 ...................................... 1272

Appendix 6

Companies Act, 2013..................................................................... 1277

xlix

Contents

Appendix 7

............................................. 1278

Appendix 8

............................................................ 1278

Appendix 9

............................................................................ 1283

Appendix 10

............................................................................................ 1286

Appendix 11

........................................................................

Appendix 12 ......................

Appendix 13

.................

Appendix 14

........................................

Appendix 15

.................................................................................

Appendix 16 .......................................... 1307

Appendix 17 ....................................... 1308

List of Appendices pertaining to SCRA

Annexure 18 .................................. 1315

Annexure 19: ........................ 1365

Annexure 20: .................................................................. 1412

Annexure 21: ................................ 1435

Annexure 22:

.............. 1454

Annexure 23:

....................................................................... 1457

Annexure 24:

....................................................................... 1460

Annexure 25: ................. 1463

Annexure 26:

l

Contents

.................. 1472

Annexure 27:

.....................................................................

Annexure 28:

..................................................

Annexure 29:

..............

Annexure 30: ........................................ 1528

Annexure 31: ........................................ 1534

List of Appendices pertaining to FEMA

Annexure 32 ............................. 1543

Annexure 33: ............... 1571

Annexure 34:

................................................................ 1576

Annexure 35:

..........1582

Appendix pertaining to Code of Criminal Procedure

Annexure 36 ...........

li

Case Table

A P Foods Samuel ......................................................................................... 644

Dilip Kumar Chakraborty and Ors.

............................................................................................................. 401

A.R. Antulay R.S. Nayak and Anor., ............................................................. 763

A.Sivasailam Registrar of Companies ............................................... 328

A.Stephen Samuel Union of India and Ors. ............................

A.V. Joglekar and Ors. Wamandeo Mahadeo Deosthale and Anor.

................................................................................................. 414, 418

A.V.Kasargod and Ors. Registrar of Companies .................................... 138

Abhinav Silicate Industry , ........................................................................................................... 186

Adi Pherozshah Gandhi H.M. Seervai, Advocate General of Maharashtra,

Bombay ..............................................................................

AI Chapdany Industries Limited and Ors. Registrar of Companies and Ors.

.............................................................................................. 371

Ajay Bagaria Union of India and Ors., ..............................................

Ajit Kumar Rath State of Orissa and Ors. ........................................................

Alim Ahuja and Anor. Registrar of Companies .......................

Union of India (UOI) and Ors.

SC 1752 ................................................................................................................................... 213

Amison Foods Limited and Ors. Registrar of Companies

......................................................................................................... 421

Anantha R.Hegde Capt.T.S.Gopalakrishna .......................

Anbalagan and Anor. State and Anor. .................................

Registrar

of Companies ........................................................................... 288, 418

Aneeta Hada Godfather Travels and Tours Private Limited, .................. 76, 470

Ankur Chaturvedi SEBI ................................................................... 664

Anvar P. P.K. Basheer & Ors ........................................................................ 866

Anya University of Oxford 2001 ........................................................................ 717

Arkwright Newbold 17 ChD 301 .................................................................................................

Arun Jain SEBI ...........................................................................

Ashok K. Parashramka Union of India (UOI) and Ors. .........................

Ashok Malhotra and Anor. Mansi Finance (Chennai) Limited

................................................................................................................. 72

Assistant Commissioner, Assessment-II, Bangalore and Ors

Limited and Anor., ....................................................................................... 42

lii

Case Table

Associated Cement Company Limited Keshvanand ........... 286, 333

Asst. Registrar of Companies

................................................................................................ 82

Asst. Registrar of Companies R.Narayanaswamy and Ors.

................................................................................................................................. 78

B.N.Chikarmane

................................................................................................ 334

Bagirath Kanoria State of M.P. ...................................................................... 78

Baldev Krishna Sahi

SC 2245.................................................................................................................................... 326

Balwant Singh and Ors State of Bihar .......................................................

Bank of Rajasthan Ltd. . Rajasthan Breweries Ltd. .................. 441

Bar Council of Maharashtra M.V Dabholkar .................................................................................

Barium Chemicals Limited Company Law Board .................................. 144, 251

Benara Valves Ltd. and Ors. Commissioner of Central Excise and Anor.,

...................................................................................................................

Bengal Tools Ltd Registrar of Companies ........................... 413, 418

Registrar of Companies, West Bengal

........................................................................................... 378

Bharat Overseas Bank .............................................. 268

Bharat Plywood and Timber Products Private Limited and Onr. Registrar of

Companies and Anor. ...................................................

Bhaskar Industries Ltd. Bhiwani Denim and Apparels Ltd. and Ors.,

.................................................................................................... 278, 282, 312

Bhimappa Laxman ......................................................................................

Bhoruka Financial Services Ltd. ......................................................................................................... 531

State of Bihar and Anor.

..................................................................................................... 240, 421

Binay Kishore Prasad and Anor. Union of ................... 83

Bithal D.Mundra and Others Registrar of Companies, West Bengal,

.................................................................................................. 371, 374

BOC India Ltd. Registrar of Companies ............................................... 375

Union of India ....................................

.................................... 365

Brij Trading Co. Enforcement Directorate ...............................

C.K.Ranganathan Registrar of Companies ......................................... 143

Caetano Colaco Joao Rodrigues .......................................................... 422

Caparo Industries Plc Dickman ..................................................................

liii

Case Table

Central Bank of India Shri Gokal Chand ....................................................... 755

Chairman, SEBI Shriram Mutual Fund and Anor. ........................................ 206

Chandra Kumar Dhanuka and Others Registrar of Companies, West Bengal,

......................................................................................

Chandra Spinning & Weaving Mills (P) Limited Registrar of Companies

............................................................................

Chandran Ratnasamy K.C. Palanisamy ......................................................... 407

Charan Lal Sahu Giani Zail Singh ............................................................ 63, 468

City Equitable Fire Insurance Co Limited In re : ................................................. 366

Coimbatore Flavours and Fragrances Ltd SEBI ........................... 623

Coimbatore Stock Exchange Limited ,

............................................................................................. 527

Cole and Ors. .................................................................................................. 43

Consolidated Engineering Enterprises

Department ...............................................................................................

Cook GS Deeks .............................................................................................. 37

.................... 452

CWT Suresh Seth ......................................................................................... 78

D.C.Kothari Asst. Registrar of Companies .............................. 387

Daewoo Motors India Limited Wg Cdr (Retd.,) H D Talwani,

................................................................................................................................... 76

Damodar S. Prabhu Sayed Babalal H. ........................................................ 145

Day Mead .................................................................................................. 367

Deb Paints Private Limited Universal Lime Industries

.......................................................................................................................................... 14

State of Gujarat,

.................................................................................................................... 424

Delhi Transco Ltd. and Anor. Hythro Engineers Pvt. Ltd.

.....................................................................................................................................

Derry Peek ............................................................................................

Devendra Kumar Kedavat Apple Ceremics Limited and Ors.

..........................................................................................................

........................ 124

Dhaval Mehta SEBI ............................................................................. 627

Dhirubhai H.Ambani. Sonia Sethi and Anor. .......................... 324

Dilip Kumar, Jaquelin Kapur and Akash Kapur The Registrar of Companies,

............................................. 372

Dintex Dyechem Ltd., In re ........................................................ 175

Dipak J Panchal SEBI ............................................................... 614, 626

liv

Case Table

Dipak Shubhashchandra Mehta CBI and Anor. ............................................. 232

Director of Enforcement

2 SCC 471 ................................................................................................................................ 624

Directorate of Enforcement Delco Precitone Jewellers Private Limited

....................................................................................................................

Directorate of Enforcement M.Shamba Shiva Rao ...............

Directorate of Enforcement Renu Vij, ..............................................

Directorate of Enforcement Subhash Mujlimal Gandhi ......................

Directorate of Enforcement The Appellate Tribunal for Foreign Exchange

and Ors. ..............................................................................

Dr. A. Lakshmanaswami Mudhaliar and Ors.

India and Anor. ......................................... 33

Dr. Francis Cleetus and Ors. Respondent: Rashtra Deepika Ltd. and Ors.

.............................................................................................. 254

Dr. Rajbir Singh Dalal Chaudhari Devi Lal University, Sirsa and Anor

................................................................................................................................

Dr.C.R.Bhansali K.Ramesh and Anor. ..................................... 347

Dr.J.S.Gambhir ,

................................................................................................ 73

DSE Financial Services Ltd. SEBI ........................................................ 635

E.Pedda Subba Reddy State ......................................................................... 332

....................................................................................... 634

East End Dwellings Company Ltd Finsbury Borough Council ........................ 77, 461

East Punjab Traders and Ors. Collector of Customs ................. 814

Edeyillon Kunhambu Nair State of Kerala ............................................ 405

E-Land Apparel Limited and Ors. In re : .................................................. 631

Enakshi Impex Pvt. Ltd. and Ors. In re : ................................................... 621

Enforcement Directorate Morgan Industries Limited, .........................

Ess Ess Intermediaries SEBI .............................................................. 634

Evans Brunner, Mond and Company Limited, Chancery Division

................................................................................................ 32

.........................................................................................................

Falcon Tyres Limited Mohan Rajan .................................. 286, 333

Farouk Irani and Anor.

.............................................................................................. 400

Farouk Irani and Anor. Registrar of Companies and Anor.

...............................................................................................

lv

Case Table

Federal Bank Limited and Anor. Smt.Sarala Devi Rathi

............................................................................................................ 331

First Leasing Co. of India Limited and Ors. Addl. Registrar of Companies

..................................................................................... 338, 421

Fodare Pty Ltd Shearn ............................................................................. 136

G. M. Mohan and Ors. . Registrar of Companies, Karnataka

...........................................................................................................

G. N. Sridharan Registrar of Companies ................................

G. Sagar Suri and Anor. State of U.P. and Ors ............................................... 406

Gautam Kanoria and Ors. Assistant Registrar of Companies and Anor.

....................................................................................................... 372

Dr. Subhash Chandra Yadav,

...................................................................................................................... 818

General Produce Company Limited, In Re. ........................ 165

GFL Financials India Limited In re : MANU/SB/0135/2015 .......................................................... 621

Ghasi Ram and Ors. Chait Ram Saini and Ors. ............................................ 185

GHCL Ltd SEBI ..................................................................................... 615

Gian Singh State of Punjab and Anor. ............................................... 148, 408

Gokak Patel Volkart Ltd. Dundayya Gurushiddaiah Hiremath and Ors.

................................................................................................................

Chairman, SEBI .....................................................

Gulab Impex Enterprises Ltd SEBI ................................................... 635

Gullapalli Nageswara Rao and Ors Andhra Pradesh State Road Transport

................................................................................. 647

Gunmala Sales (P) Ltd Anu Mehta ..................................... 353, 358

....................................................................................................................... 46

H.V. Jayaram ICICI Limited ....................................................... 346

Hafez Rustom Dalal Register of Companies .......................... 377

Haldiram Bhujiawala & Anor. M/s. Anand Kumar Deepak Kumar & Anor.,

........................................................................... 118

Hamilton Wright ................................................................................... 36

Hanuman Prasad Gupta Hiralal .............................................. 346

Harbans Singh U.P. State ................................................................................ 424

Hareshchandra Maganlal and Ors. Union Bank of India and others

........................................................................................................... 386

Hari Shankar Rao Girdhari Lal Chowdhury ...................................................

Harinagar Sugar Mills Ltd. Shyam Sundar Jhunjhunwala ............................ 385

Hemal a. Kanuga and Others Registrar of Companies,

............................................................................................................. 374

lvi

Case Table

Hemant Babubhai Desai and Anor. Jayant Vitamins Limited

........................................................................................................... 441

Hemant Babubhai Desai Jayant Vitamins Ltd. .............................. 252

Hemant Kothari .................................................. 665

Hindustan Wire & Metal Products, ............................

Hitendera Vishnu Thakur . State of Maharashtra ....................................... 471

In re the Company Law Board, Northern Region Bench

........................................................................................................... 170

Hrushikesh Panda State of Orissa and Ors. ..............................

Hukumdev Narain Yadav Lalit Narain Mishra ..............................................

Hyderabad Vanaspathi Limited and Ors. Registrar of Companies and Anor.

................................................................................................... 81

Hydrodam (Corby) Ltd In re : ............................................................................. 3

Hypine Carbons Limited ........................... 335

ICICI Limited H.V.Jayaram ........................................................ 345

II Addl. Judicial First Class Magistrate State of AP ........................................ 212

Inder Mohan Goswami and Anor. .................... 407

Indian Council of Investors . Union of India ............................... 445

State of Rajasthan

and Anor. .............................................................................. 342

SEBI ............................................................. 665

Graphco

Industries Ltd and Ors. ............................................................................... 648

L.K. Ratna ................................ 637

Iqbal Singh Marwah Meenakshi Marwah

................................................

Indo Burma Industries Ltd In re: ...................................................................... 366

Iridium India Telecom Ltd. Motorola Inc

................................................................................................................... 45, 53

. SEBI ............................................................................... 610

Ishwarlal Special Director ................................................................... 814

ITC Agro-Tech Limited and Ors. Registrar of Companies and Anor.

............................................................................................................ 337

J.I.K. Industries Ltd. and Ors. Amarlal V Jumani and Anor.

............................................................................................................ 157

J.K. Industries Ltd. and Ors. Chief Inspector of Factories and Boilers and Ors.

........................................................... 463, 603

J.K. Paliwal and Shri B.K. Paliwal Paliwal Steel Ltd. and Ors.,

.................................................................................................................. 135

lvii

Case Table

Jagjivan Hiralal Doshi and Ors. Registrar of Companies

......................................................................................................... 381

Jain Engineering Co. Enforcement Directorate ............................ 870

Janata Dal H.S. Chowdhary and Ors. ............................................................. 423

Jayes R. Mor State of Gujarat ................................................. 416

Jiyuan LI Registrar of Companies .......................................... 80

Registrar of Companies, Maharahstra

............................................................................................

K Subramony

............................................................................................................... 73

K.K. Ahuja V.K. Vora and Anor. ............................................................. 52

K.K.Mehra Registrar of Companies ............................................... 242

K.M.Mathew State of Kerala, .................................................... 287, 424

K.Seethalakshmi Registrar of Companies and Anor

............................................................................................

Kajol Impex SEBI, ............................................................................... 623

Kalpesh Dagli State of Gujarat ................................................. 74

Kalra Iron Stores Faridabad Fabricators (P) Ltd. .................... 118

Kannan Devan Hills Produce Company Limited T.N.Madhavan Pillai,

...................................................................................................................... 333

State of West Bengal ....................................................

Kanwar Natwar Singh Director of Enforcement

............................................................................................................ 861

Karnataka Bank Ltd. Secretary, Government of India and Ors. ...................

Karvy Stock Broking Ltd. SEBI ............................................................ 626

Kasturi and Sons Limited

................................................................................................................ 247

Commissioner of Income Tax (CIB) and

Ors. ...................................................................................................

Kaushalya Devi Massand Roopkishore Khore ............................................. 150

Kavi Arora and Ors. The Registrar of Companies and Ors., ................. 142

Kavita Dogra Director of Enforcement, Enforcement Directorate,

....................................................................................................................

Keki Hormusji Gharda Mehervan Rustom Irani

....................................................................................................................... 44

Ketan Parekh SEBI ............................................................................... 703

Ketan V Parekh Special Director, Directorate of Enforcement

.......................................................................................

Keynote Corporate Services Ltd SEBI .............................................. 617

lviii

Case Table

Income Tax Department, Assistant Commissioner

of Income Tax .......................................................................... 75

Kishore Kundan Sippy and Anor. Samrat Shipping and Transport Systems P. Ltd.,

.................................................................................................... 35

In re : ...................................................................... 122, 366

KK Mehra Registrar of Companies .......................................... 82

Director of Income Tax (Intelligence)

...........................................................................................................

Chakka Arjanadu

.................................................................................................................................. 118

Sh. Masood Ahmed Khan and Ors.,

................................................................................................................................ 716

KSL and Industries Ltd., Shri Pravin K. Tayal, Shri Navin K. Tayal and

Shri Sanjay K. Tayal Chairman, SEBI .................................................. 641

KTMS Mohammed Union of India

............................................................................................................... 873

Kuldip Singh State .................................................................

Kunj Behari Lal Butail and Ors. State of H.P. and Ors. ................................. 817

Kunjalal Bhuiya Haralal Bhuiya .................................................................... 872

Lapointe ............................................................................. 505

Law Society KPMG Peat Marwick .............................

Lazarus Estates Ltd Beasley ...................................................................... 132

Lennard’s Carrying Company Limited ........................... 47

Escorts Ltd ........................................... 23

Llewelyn Evans In re : .................................................................................... 405

Local Government Board Arlidge ........................................................... 647

M M Shah Deputy Director of Enforcement and Ors.

................................................................................................... 75, 357

M. Kishan Rao and Ors. Mrs P. Santha Reddy and Anor.

................................................................................................... 415, 417

M. Meyyappan . Registrar of Companies 2002 112 Comp Cas 450 (Mad) ..............................

M. Moorthy Drivers and Conductors Bus Service P. Ltd

................................................................................................................................. 33

M.Kishan Rao Mrs.P.Santha Reddy ................ 265, 270

M.O.H.Iqbal M.Uthaman and Anor. .........................................

M.O.Varghese Thomas Stephen and Co.Limited

..........................................................................................................

The State of Madras and Ors. .................................................... 207

M.V. Rajendran ..................................

lix

Case Table

Madan Gopal Dey and Anor. State and Anor. ..........................

Madan Mohan Upadhya and Ors. State of Bihar ..................................... 462

Madhavan Nambiar Registrar of Companies ..........................

Madhavrao Jiwaji Rao Scindia Sambhajirao Chandrojirao Angre,

...................................................................................................................... 411

Bezwada Municipality I.L.R.

Ap 113 .................................................................................................................................... 452

Maharashtra Power Development Corpn. Ltd. . Dabhol Power Company

........................................................................................................ 152

Mahmud Ali . State of Bihar .................................................................. 465

Maksud Saiyed State of Gujarat

5 SCC 668 .................................................................................................................................. 44

Mannalal Khetan and Ors. Kedar Nath Khetan and Ors. ................................. 453

Mau Cold Storage and Khandsari Sugar Factory (P) Limited and Ors.

Registrar of Companies and Ors. ............................................... 381

Maya Rani Punj CIT .............................................................................. 78

MCX Stock Exchange Limited and Ors. ................................ 524

Member Union of India ...............................................

Mishra Dhathu Nigam Ltd State ...............................................

Director of Enforcement ............................. 823

Modern Malleables Limited and Sri B.R. Sinku, .......................... 412

State of West Bengal .......................................................... 304

Mohd.Hadi Raja and Ors. State of Bihar and Anor. ................... 288

Mohinder Singh Gill and Anor.

and Ors., ........................................................................................................ 504

Morgan Stanley Mutual Fund ........................ 343, 345

Mr. Narayanan

of 2013 .................................................................................................................... 454, 457, 458

Mrs. Bacha F. Guzdar Commissioner of Income Tax ................................. 23

Mrs. Jaya Baby K.K. Vijayan and Anor. ........................................................... 212

Mrs. Komal Nahata SEBI ............................................................... 636

Ms. Sunitha Gupta SEBI ....................................................................... 635

Mukesh Kumar Gupta State and Anor .............................................. 860

Mukund Kanaiyalal Patel Swarup Shree Yarn Private Limited

.............................................................................................................. 277

N.Narayanan ......................................... 680

Nagindas Ramdas . Dalpatram Ichharam ..................................................... 862

Nagindas Ramdas Dalpatram Ichharam ...................................................... 448

Naresh K. Aggarwalla & Co. Canbank Financial Services Ltd. ...................... 522

lx

Case Table

Nathulal State of MP ......................................................................................... 42

.................................................................................................................................. 82

Union of India

.................................................................................................................. 631

Natvarlal A.Jani N.N.Jain, Chairman and Managing Director,

................................................... 208, 346

Nestle India Limited and Ors. State and Anor. ....................... 330

New India Assurance Company Ltd. .................................... 472

Special Director of Enforcement Directorate

........................................................................................................

Nimesh Suchde Union of India .....................................................

Nina Padma Singh Union of India ....................................................

Niranjan Singh and Anor. Prabhakar Rajaram Kharote and Ors .................... 238

Nirma Industries Ltd. and Anor SEBI ............................................................. 658

Noted Infotech P. Ltd. SEBI .......................................................................... 640

Nripendra Kumar Ghosh Registrar of Companies ...................... 82

Nutech Agros Limited and Ors. Ch.Mohan Rao and Anor.

.......................................................................................................... 284

Ramesh Khosla

and Ors., ............................................................................... 347

P.A.Tendolkar (dead) by

.......................................................................................................... 366

Ajay Kumar Aggarwal and Anor. ...................

Om Prakash Kapila State of Bihar and Ors., ................................................ 466

Om Prakash Khaitan Shree Kesharia Investment Limited

.............................................................................................................

Omiyo Ranjan Jaiswal and Ors. State of Bihar and Ors.

................................................................................................. 357

Oriental Power Cables Ltd and Ors. Registrar of Companies and Ors.

............................................................................................................

............................... 174

Special Director, Enforcement Directorate

....................................................................................................... 800

P. Sengupta and Anor. Registrar of Companies and Anor.

....................................................................................................

P. Vaman Roa Secretary to Government and Anor. .........................

P.G.F. Limited and Ors. Union of India (UOI) and Anor.

............................................................................................................

lxi

Case Table

P.K.Nedungadi Malayalee Bank Ltd.

..................................................................................................................................... 113

P.Venkatakrishna Reddy Registrar of Companies

........................................................................................................

Panther Fincap and Management Services Ltd Union of India (UOI)

.........................

Parag Dalmia Special Director of Enforcement, Enforcement Directorate

...........................................................................................................

Parvinderjit Singh and Anor. State (U.T. Chandigarh) and Anor. ............

Peirce Leslie and Co. Limited Miss. Violet Ouchterlony Wapshare and Ors.;

............................................................. 35, 368

Pepsico India Holdings Private Limited Food Inspector and Anor.

............................................................................................................. 75, 355

PGF Limited SEBI ........................................................................................ 672

Pooja Menghani SEBI ............................................................. 617, 703

Pradip Kumar Khaitan and Ors. Registrar of Companies, Orissa

....................................................................................................... 371

Pravin Jha and Ors. .......................................... 82

Premchand Shah and Others SEBI .................................................. 614

Prestolite of India Limited, In re: ............................................... 381

Progressive Aluminium Limited and Ors. Registrar of Companies and Anor.

.................................................................................................

Province of Bombay Kusaldas S. Advani and Ors. ......................................... 648

Puneet Enterprises Assistant Director, Enforcement Directorate, Ahmedabad,

.................................................................................... 805

Queri Resorts Private Limited Special Director of Enforcement Directorate

................................................................................................ 876

R. Goodman .............................................................................................. 515

R.C. Kohli

LAWS(DLH)-2014-4-112 .................................................................................................. 162, 175

R.P. Kapur State of Punjab ............................................................................

R.S.Nayak A.R.Antulay, ...............................................................................

Rabindra Chamaria and Ors. Registrar of Companies and Ors.

............................................................................................................. 364

Radhey Shyam Khemka and Anor. State of Bihar

...........................................40, 250, 335, 418

Radheyshyam Kejriwal State of West Bengal ................................... 857

Raj Kumar Damani Director of Enforcement, Enforcement Directorate

................................................................................................. 823

lxii

Case Table

Raj Solvex Pvt. Ltd. Special Director, Enforcement Directorate,

............................................................................................................

Raja Narayanlal Bansilal Maneck Phiroz Mistry .......................................... 246

Rajaram Khandige State of Karnataka and Anor., ...............

....................... 365

Rajkumar Shivhare Union of India,

.................................................

Rakesh Kumar and Anor. Registrar of Companies and Ors.

.................................................................................................... 82, 417

Ram Kaashyap Investment Ltd SEBI,

...................................................... 627, 644, 748

Ram Narain Sons Ltd. . Assistant Commissioner of Sales Tax

.............................................................................. 452

Ors. ............................................................................................................ 134

Rama Narang Ramesh Narang and Ors ......................... 318, 321, 322

Ramakrishna Flour and Besan Mills Private Limited Company Registrar,

........................................................................................... 411

Ranger Great Western Ry. Co. .................................................................... 647

Rao Saheb . Renganath Gopalrao Kawathekar ............................................. 868

Ganesh Property, ................................................ 118

Ratan Jasarasaria ,

............................................................................................................ 822

Gulliver And Others, ........................................... 26

Registrar of Companies Bharat Produce Co. Ltd. and Ors.

.............................................................................................................................. 41, 81

Registrar of Companies Rajshree Sugars and Chemicals Limited and Ors.

.................................................................................................... 153, 330

Registrar of Companies Rajshree Sugars and Chemicals Limited, ................. 587

Registrar of Companies, Orissa Orissa Paper Products Ltd and Ors.

.............................................................................................................. 66

Reliance Industries Limited SEBI ...............................................

Reliance Industries Ltd and Ors. In re

................................................................................................................. 154, 172

Rich Capital & Finance Serv. Ltd. & Anor.

........................................................... 702

Ritz Hotel Ltd Charles of the Ritz Ltd .....................................................

Rose Valley Hotels and Entertainments Ltd State of Assam

............................................................................................................ 612

lxiii

Case Table

Rustom Cavasjee Cooper Union of India ..................................... 22

S K Alagh State of UP ................................................................................... 47

S N Jain Registrar of Companies .............................................. 75

S R S Rafeek Addl.Director, Directorate of Enforcement ...............

S. Parthasarthi State of Andhra Pradesh, ....................................................

S. Satyanarayana

and Ors. ...................................................................................... 344

S. Thamizharasan The State of Tamil Nadu, ...............................................

S. Vasudeva . State of Karnataka and Ors. .....................................................

S.B.I. Home Finance Ltd. and Kidambi Srinivash Varda Krishnamachari Regional

Director, Department of Company Affairs .......................

S.B.Shankar .................................... 72

P.C.Wadhawa ...................................................... 341

S.K. Jain Union of India ..................................................................... 870

Neeta Bhalla and Anor ................ 354

S.P. Chengalvaraya Naidu v. Jagannath, AIR 1994 SC 853 ........................................................... 131

S.P. Gupta and Ors. The State (NCT of Delhi) and Anor.,

...................................................................................................... 250

S.P.Chopra & Co. (Muktsar Electric Supply Co.Ltd.), In re:

.......................................................................................................... 376

S.P.Punj and Ors. Registrar of Companies ................................ 332

S.Pandit, In re ........................................................................... 375

S.S.Dhanoa .................. 288

S.S.Rao Inspector of Police ...................................................

S.Santosh and Anor. Asst. Registrar of Companies ................ 334

Sabero Organics Gujarat Limited In re : .................................................. 610

Sachida Nand Singh State of Bihar .............................................................

Sahara India Real Estate Corpn. Ltd SEBI ......................................................... 683

SEBI and Anor.

............................................................................ 684

Board of India and Anor., ........................................................................

Salauddin Abdulsamad Shaikh State of Maharashtra, ............................... 236

Sandeep Badriprasad Agarwal SEBI and Ors.

............................................................................................................. 520

Sangram Singh ...................................................................

Sanjay Dalmia Special Director of Enforcement, Enforcement Directorate, New Delhi

.........................................................................................

lxiv

Case Table

Sanjay Modi Registrar of Companies .......................................

Sanjay Somani and Ors. Registrar of Companies, West Bengal

...........................................................................................

Mackinnon Mackenzie & Co. Ltd ......................... 241

Say-Dee ........................................................ 136

Scope Vyapar (P) Ltd SEBI .................................................................

Meyer

......................................................................................................... 35

SEBI Ajay Agarwal .......................................

SEBI Akshya Infrastructure Pvt. Ltd. .........................................

SEBI ...................... 602

SEBI ........................................................................

SEBI Kunnamkulam Paper Mills Ltd. and Ors. ......................... 645

SEBI Pan Asia Advisors Ltd. and Ors. ........................................ 651

SEBI Saikala Associates Ltd .........................................................................

Selangor United Rubber Estates Ltd Cradock and Ors, ............................. 26

Sham Sunder State of Haryana .................................................. 13, 43

Sharad Kumar Singh and Ors. Registrar of Companies

.......................................................................................................... 402

SEBI ...................................................

Shashank Vyankatesh Manohar Union of India ............................

Swaraj Developers and Ors.

.................................................................................................................... 888

Shivalik Ice Factory & Cold Storage (P) Limited Registrar of Companies

..................................................................... 82

Shivkumar Dalmia and Ors. v. Mangalchand Hukmichand Industries

(M.P.) Pvt. Ltd. and Ors. .........................................................

Shree Dharma Sugar Industries (P) Limited and Ors. Registrar of Companies

.................................................................................................. 81

Shri VK. Modi The Director, Enforcement Directorate and Anor.

............................................................................................................

Siddhartha Sen and Anor. Registrar of Companies, Orissa

....................................................................................................... 82, 333

Simmon Box (Diamonds) Limited, In Re, .............................................................. 34

Simple infrastructures Limited and Banwarilal Bajoria and Ors.

Registrar of Companies, West Bengal .................................. 372

Sitaram Biyani and Anor. Registrar of Companies ...................

Sivandhi Adityan

......................................................................................................... 336

lxv

Case Table

Smt. Gerty Suvarna and Anor Union of India and Ors.

............................................................................................................ 751

Smt. Nagawwa Veeranna Shivalingappa Konjalgi .....................................

Smt.Krupa Sanjay Soni SEBI ............................................................. 636

State of MP and Ors. ..................................... 633

Spencer & Co CWT, .............................................................................. 23

Sri Krishna Parshad Registrar of Companies, Delhi

.................................................................................................................................

Standard Chartered Bank and Ors. Directorate of Enforcement and Ors

........................46, 48, 50, 51

Standard Chartered Bank Directorate of Enforcement ...........................

Standard Chartered Bank Directorate of Enforcement

...................................................................................................................

State Bank of India

.......................................................................................................... 651

S.K.Sharma ............................. 647

State of Bihar Deokaran Nenshi, ..................................................................... 78

State of Bihar Ramesh Singh ........................................................................

State of Gujarat Ramprakash P. Puri and Ors. ............................................. 763

State of Gujarat Satu Khayaldas and Ors .................................................... 763

State of Gujarat Shyamlal Mohanlal, .......................................................... 265

State of Haryana Bhajan Lal ........................................................................ 410

State of Haryana ....................................................... 47

State of Karnataka L. Muniswamy ............................................................. 408

State of Madras C.V. Parekh and Anor ........................................................... 76

State of Maharashtra Jugmander Lal ................................................................. 48

State of Mahashtra Tapas D Neogy ......................................... 267

State of NCT of Delhi Rajiv Khurana .......................................... 76

State of Punjab Sarwan Singh, ................................................................ 337

State Byrraju Ramalinga Raju and Ors. ........................................... 111, 123

Subhkam Capital and Ors. In re : ............................................................ 622

Suborno Bose and Zoom Enterprises Private Limited Appellate Tribunal

for Foreign Exchange and ors ...................................... 804, 853

Sudhir Rai The Registrar of Companies, ( ........................................... 372

Sukhbir Saran Bhatnagar Registrar of Companies ...................... 41

Sunday Exports Ltd. ............................... 635

.................. 44

lxvi

Case Table

Mr. R.K. Vohra,

......................................................................

Supreme Bank Limited P A Tendolkar ......................

Suresh Batra and Ors.

........................................................................................................... 357

Sushil Kumar Lahiri and Ors. Registrar of Companies

.............................................................................................................. 341

Swedish Match AB and Anor. SEBI and Anor. .............................. 620

T A Bhansali Inspector of Police, ............................................... 26

Tianjin Tianshi India Private Limited Registrar of Companies

.............................................................................................. 80

T.P.G. Nambiar Registrar of Companies ................................... 405

T.R.Bhagat Director General of Central Excise and Ors.

............................................................................................................. 357

T.Subramania Achari In re : ........................................................................... 303

T.V.Mathew Nadukkara Agro Processing Co. Limited and Ors.

........................................................................................................... 83

Telestar Travels Private Limited Special Director of Enforcement,

..........................................................................................................

Thakar Gobind Singh v. Merchant Mohani Flour Mills Limited

14 Comp Cas 184 ................................................................................................................... 365

Thakur Dan Singh Bist Registrar of Companies ..........................................

The Assistant Commissioner, Assessment-II, Bangalore and Ors. Velliappa

........................................................................................ 51

The Bank of Rajasthan Ltd. Rajasthan Breweries Ltd. and Ors.

........................................................................................................... 253

Uma Shankar Sharan

and Anor. .................................................................................................. 750

The Chairman, SEBI Shriram Mutual Fund and Anor. .................... 51, 584, 600

The Commissioner of Income Tax, Mysore, Travancore-cochin and Coorg,

Bangalore .......................................... 452

The SEBI Shriram Mutual Fund and Anor., .................................................. 370

The State of West Bengal and Ors. Kamal Sengupta and Anor. ...................

Thermis Agencies Union of India ................................................................. 804

Thiru.R.Gandhi Union of India ........................................................................ 385

Thirumalai Chemicals Limited . Respondent: Union of India (UOI) and Ors

..............

Thomas Gerrard & Son Ltd In re : ..............................................

Tolaram Relumal State of Bombay ................................................................ 631

Tristar Consultants . Customer Services India Private Limited ................... 367

lxvii

Case Table

Tri-sure India Limited, In re: ...................................................... 382

Trisurs Chemical Industry Rajesh Agarwal ................................................ 242

Tulip Star Hotels Limited Special Director of Enforcement ................... 802

Tulshidas Kanolkar State of Goa ............................................................. 63, 467

...................................................................................................................................

Mohan Meakins and Ors.

........................................................................................................... 324

Udai Shankar Awasthi State of U.P. and Anor. ............................................... 80

Uma Shankar Gopalika State of Bihar and Anor. .......................................... 407

Unimers Limited . Smt.Renu Jain ................................................. 81

Union of India ................................................... 637

Union of India (UOI) and Anor Shardindu, ................................................... 51

Union of India (UOI) and Ors

.......................................................................................................... 170, 602

Union of India Ashok J.Ramsinghani ..............................................

Union of India Canara Bank ..........................................................

Union of India Jagadish Prasad Jalan Nandalal .............................

Union of India ......................................................... 505

Union of India Reliance Industries Limited .....................................

Union of India Tech Mahindra Ltd. ...................................................... 177

United Western Bank Ltd. Khaitan Hostombe Spinels Ltd.

........................................................................................................... 247

Upendra Kumar Joshi ............................. 346

Usha (India) Ltd SEBI .................................................................... 643

V Bhaskaran Special Director of Enforcement

.....................................................................................................................

V. Sugandhalal St. Mary’s Finance Limited ............................ 178

V. Thangavel . Associated Business Credits Limited

............................................................................................. 411

V.L.S. Finance Ltd. Union of India (UOI) and Ors.,

............................................................................................................ 150, 173

V.M.Modi State of Gujarat and Anor. ...................................... 341

State of Punjab Shamlal Murari, .................................................................

V.R.S. Manikumar

...........................................................................................................

V.Sugandhalal St.Mary’s Finance Limited .................................

Vaishnav Shorilal Puri and Ors. Kishore Kundanlal Sippy and Ors.

................................................................................................... 35

lxviii

Case Table

Vesa Holdings P. Ltd. and Ors. State of Kerala and Ors.

................................................................................................... 344, 358

SEBI ............................................. 656

Vinod Solanki Union of India ............................................................. 870, 873

Vishnu Prakash Bajpai SEBI

..............................................................................................................................

O.P. Poddar and Ors. ........................................................................................ 241

Visram Financial Services (P) Limited Rajendran and Anor.,

........................................................................................................

Registrar of Companies ...................................................... 341

SEBI, Appeal No.118 of 2013 dated

2013 ............................................................................................................................................

VKC Credit and Forex Service Private Limited Director, Enforcement Directorate,

................................................................................... 805

Walchandragar Industries Ltd

............................................................................................................ 63, 468

William C. Leitch Bros. In re : .............................................................................. 137

Wipro Limited Joint Director of Enforcement, Bangalore,

....................................................................................................................

World Resorts Limited Deputy Director of Enforcement Directorate

........................................................................................

Wynston Alexander Cecil Chirnside and Anor Richard Elmore Fay .................. 37

Yogendra Singh Ranbir Sharma and Anor. ........................... 75, 357

Mohd. Sharaful Haque and Anor.

..................................................................................................................... 405

Zee Tele Films Limited and Ors. State of Andhra Pradesh and Anor.

.......................................................................................................... 346

lxix

Ready Reckoner to the Penal Clauses under the Companies Act, 2013

RE

AD

Y R

EC

KO

NE

R T

O T

HE

PE

NA

L C

LA

US

ES

UN

DE

R T

HE

CO

MP

AN

IES

AC

T, 2

01

3

Se

ctio

n w

ise

an

aly

sis

of

Pu

nis

hm

en

ts &

Pe

rso

ns

Lia

ble

Sr.

No

Sec

tion

Su

bje

ctP

un

ish

men

t fo

r

Com

pan

yin

Def

au

lt

Oth

ers

1.

4(5

)M

akin

g

app

lica

tion

for

and

ob

tain

ing

rese

rvat

ion

of

Com

pan

y nam

e af

ter

furn

ishin

g

wro

ng o

r in

corr

ect

par

ticu

lars

.

______

______

Wher

e a

com

pan

y

has

not

bee

n inco

rpora

ted o

n the

bas

is

of

the

rese

rved

nam

e,

any

per

son

who

has

m

ade

such

an ap

pli

cati

on is

li

able

to

a

pen

alty

whic

h m

ay e

xte

nd t

o

INR

1 l

akh.

In

case

th

e co

mp

any

has

alre

ady

bee

n

inco

rpora

ted,

afte

r gra

nti

ng a

n o

pp

ort

unit

y

of

bei

ng h

eard

, th

e co

mp

any

may

b

e dir

ecte

d

to

chan

ge

its

nam

e or

the

Reg

istr

ar

may

tak

e ac

tion t

o s

trik

e off

its

nam

e or

mak

e a

pet

itio

n

for

the

win

din

g u

p o

f su

ch a

com

pan

y.

lxx


Sr.

No

Sec

tion

Su

bje

ctP

un

ish

men

t fo

r

Com

pan

yin

Def

au

lt

Oth

ers

2.

7(5

)A

ny

per

son

who

know

ingly

furn

ishes

an

y

fals

e or

inco

rrec

t

par

ticu

lars

of

any

info

rmat

ion

or

supp

ress

es

any

mat

eria

l

docu

men

ts w

ith t

he

Reg

istr

ar i

n

rela

tion

to

the

regis

trat

ion

of

a

com

pan

y.

______

______

Ever

y

per

son

who

does

so

is

liab

le

for

the

punis

hm

ent

pre

scri

bed

under

s 4

47.

3.

7(6

)If

, af

ter

inco

rpora

tion

of

a

com

pan

y,

it

is

pro

ved

th

at

the

inco

rpora

tion

of

com

pan

y

was

ob

tain

ed

by

furn

ishin

g

any

fals

e or

inco

rrec

t in

form

atio

n o

r

rep

rese

nta

tion o

r b

y s

upp

ress

ing

any m

ater

ial

fact

or

info

rmat

ion

in

any

of

the

docu

men

ts

or

dec

lara

tion,

or

by a

ny f

raudule

nt

acti

on.

______

______

dir

ecto

rs

and

the

per

sons

mak

ing

dec

lara

tion

under

s 7(1

)(b

) ar

e li

able

fo

r th

e

punis

hm

ent

pre

scri

bed

under

s 447.

[This

li

abil

ity

is

wit

hout

pre

judic

e to

the

pro

vis

ions

of

s 7(5

)]

4.

8F

ailu

re

to

com

ply

w

ith

the

pro

vis

ions

of

s 8

rela

ting

to

form

atio

n

of

com

pan

ies

for

purs

uin

g

char

itab

le

obje

cts

or

Fai

lure

to

co

mp

ly

wit

h

the

pro

vis

ions

s 8 b

y s

uch

Com

pan

ies

Fin

e, o

f not

less

than

IN

R

10

lakhs

but

whic

h

may

exte

nd t

o I

NR

1 c

rore

Imp

riso

nm

ent

for

a te

rm

whic

h m

ay e

xte

nd t

o t

hre

e

less

than

IN

R 2

5,0

00/-

but

whic

h m

ay e

xte

nd t

o I

NR

25 l

akhs,

or

wit

h b

oth

.

If

it

is

pro

ved

th

at

the

affa

irs

of th

e co

mp

any w

ere

conduct

ed

frau

dule

ntl

y,

liab

le

for

the

punis

hm

ent

pre

scri

bed

under

s 4

47.

Dir

ecto

rs

who

may

not

be

punis

hab

le t

o t

he

sam

e ex

tent

lxxi


Sr.

No

Sec

tion

Su

bje

ctP

un

ish

men

t fo

r

Com

pan

yin

Def

au

lt

Oth

ers

5.

12

Def

ault

is

m

ade

in

com

ply

ing

wit

h

the

requir

emen

ts

of

this

sect

ion

rela

ting

to

regis

tere

d

Pen

alty

of

INR

1,0

00/-

for

ever

y d

ay d

uri

ng w

hic

h the

def

ault

co

nti

nues

b

ut

not

exce

edin

g I

NR

1 l

akh.

Pen

alty

of

INR

1,0

00/-

for

ever

y d

ay d

uri

ng w

hic

h the

def

ault

co

nti

nues

b

ut

not

exce

edin

g I

NR

1 l

akh.

______

6.

15

Fai

lure

to

note

al

tera

tion to

th

e

Mem

ora

ndum

an

d

Art

icle

s of

Ass

oci

atio

n

of

the

com

pan

y

in

ever

y c

op

y o

f M

emora

ndum

and

Art

icle

s of

Ass

oci

atio

n.

Pen

alty

of

INR

1,0

00/-

for

ever

y

cop

y

of

the

Mem

ora

ndum

or

arti

cles

issu

ed

wit

hout

such

alte

rati

on.

Pen

alty

of

INR

1,0

00/-

for

ever

y

cop

y

of

the

Mem

ora

ndum

or

arti

cles

issu

ed

wit

hout

such

alte

rati

on.

______

7.

16

Fai

lure

of

a co

mp

any t

o c

om

ply

wit

h

a dir

ecti

on

of

Cen

tral

Gover

nm

ent

to r

ecti

fy t

he

nam

e

of

com

pan

y

that

is

id

enti

cal

wit

h o

r to

o n

earl

y r

esem

bli

ng a

trad

emar

k.

Fin

e of

INR

1,0

00/-

fo

r

ever

y d

ay d

uri

ng w

hic

h the

def

ault

conti

nues

Fin

e, o

f not

less

than

IN

R

5,0

00/-

b

ut

whic

h

may

exte

nd t

o I

NR

1 l

akh.

______

8.

17

Fai

lure

to

giv

e to

an

y

mem

ber

cop

ies

of

Mem

ora

ndum

or

Art

icle

s of

Ass

oci

atio

n

of

the

com

pan

y

and

ever

y

agre

emen

t

refe

rred

to i

n s

117(1

) up

on s

uch

mem

ber

m

akin

g

a re

ques

t an

d

pay

ing th

e re

quis

ite

fee

for

the

sam

e

Pen

alty

of

INR

1,0

00/-

for

each

day

duri

ng

whic

h

such

def

ault

co

nti

nues

or

INR

1 l

akh,

whic

hev

er i

s

less

.

Pen

alty

of

INR

1,0

00/-

for

each

day

duri

ng

whic

h

such

def

ault

co

nti

nues

or

INR

1 l

akh,

whic

hev

er i

s

less

.

______

9.

26

Issu

ing

pro

spec

tus

in

contr

aven

tion

of

the

pro

vis

ions

of

this

sec

tion

Fin

e, o

f not

less

than

IN

R

50,0

00/-

but

whic

h

may

exte

nd t

o I

NR

3 l

akhs

______

Ever

y

per

son

who

is

know

ingly

a

par

ty

to

the

issu

e of

a p

rosp

ectu

s

in

contr

aven

tion

of

the

pro

vis

ions

of s

26 is

punis

hab

le

wit

h i

mp

riso

nm

ent

for

a te

rm

lxxii


Sr.

No

Sec

tion

Su

bje

ctP

un

ish

men

t fo

r

Com

pan

yin

Def

au

lt

Oth

ers

whic

h

may

ex

tend

to

thre

e

than

IN

R 50,0

00/-

but

whic

h

may

exte

nd t

o I

NR

3 l

akhs,

or

wit

h b

oth

.

10.

33

Giv

ing

a fo

rm

of

app

lica

tion

wit

hout

bei

ng

acco

mp

anie

d

by

abri

dged

pro

spec

tus

or

def

ault

in

giv

ing a

cop

y o

f th

e p

rosp

ectu

s

up

on

reques

t m

ade

by

any

per

son p

rior

to t

he

closi

ng o

f th

e

sub

scri

pti

on l

ist

and t

he

off

er.

Pen

alty

of

INR

50,0

00/-

for

each

def

ault

______

______

11.

34

Issu

ing, c

ircu

lati

ng o

r dis

trib

uti

ng

a p

rosp

ectu

s,

under

C

hap

ter

III,

wit

h a

ny s

tate

men

t w

hic

h i

s

untr

ue

or

mis

lead

ing i

n f

orm

or

conte

xt

in w

hic

h i

t is

incl

uded

or

wher

e an

y i

ncl

usi

on o

r om

issi

on

of

any m

atte

r is

lik

ely t

o m

isle

ad.

______

______

Ever

y p

erso

n w

ho a

uth

ori

ses

the

issu

e of

such

pro

spec

tus

shal

l b

e li

able

under

s 4

47.

12.

36

Eit

her

know

ingly

or

reck

less

ly,

mak

ing a

ny s

tate

men

t, p

rom

ise

or

fore

cast

whic

h i

s fa

lse,

dec

epti

ve

or

mis

lead

ing,

or

del

iber

atel

y

conce

als

any

mat

eria

l fa

cts,

to

induce

an

oth

er

per

son

to

ente

r

into

, or

to o

ffer

to e

nte

r in

to-

(a)

any a

gre

emen

t fo

r, o

r w

ith a

vie

w t

o,

acquir

ing,

dis

posi

ng o

f,

sub

scri

bin

g fo

r, or

under

wri

ting

secu

riti

es;

or

______

______

Ever

y

per

son

who

does

so

shal

l b

e li

able

under

s 4

47.

lxxiii


Sr.

No

Sec

tion

Su

bje

ctP

un

ish

men

t fo

r

Com

pan

yin

Def

au

lt

Oth

ers

(b)

any a

gre

emen

t, t

he

purp

ose

or

the

pre

tended

purp

ose

of

whic

h

par

ties

fro

m the

yie

ld o

f se

curi

ties

the

val

ue

of

secu

riti

es;

or

(c)

any a

gre

emen

t fo

r, o

r w

ith a

vie

w t

o o

bta

inin

g c

redit

fac

ilit

ies

inst

ituti

on.

______

______

______

13.

38

Mak

ing

or

abet

ting

the

mak

ing

nam

e to

a c

om

pan

y f

or

acquir

ing,

or

sub

scri

bin

g f

or,

its

sec

uri

ties

;

or

mak

ing o

r ab

etti

ng t

he

mak

ing

of

mult

iple

ap

pli

cati

ons

to

a

com

pan

y

in

dif

fere

nt

nam

es

or

in d

iffe

rent

com

bin

atio

ns

of

his

nam

e or

surn

ame

for

acquir

ing

or

sub

scri

bin

g f

or

its

secu

riti

es;

or

oth

erw

ise

induci

ng d

irec

tly o

r

indir

ectl

y a

com

pan

y t

o a

llot,

or

regis

ter

any t

ransf

er o

f, s

ecuri

ties

to h

im, or

to a

ny o

ther

per

son i

n a

______

______

Ever

y

per

son

who

does

so

shal

l b

e li

able

under

s 4

47.

14.

39

Def

ault

s re

lati

ng

to

allo

tmen

t

of

secu

riti

es i

ncl

udin

g f

ailu

re t

o

pre

scri

bed

man

ner

.

Pen

alty

, fo

r ea

ch

def

ault

,

of

INR

1,0

00/-

fo

r ea

ch

day

duri

ng

whic

h

such

def

ault

conti

nues

or

INR

1

lakh, w

hic

hev

er i

s le

ss.

Pen

alty

, fo

r ea

ch

def

ault

,

of

INR

1,0

00/-

fo

r ea

ch

day

duri

ng

whic

h

such

def

ault

conti

nues

or

INR

1

lakh, w

hic

hev

er i

s le

ss.

______

lxxiv


Sr.

No

Sec

tion

Su

bje

ctP

un

ish

men

t fo

r

Com

pan

yin

Def

au

lt

Oth

ers

15.

40

Uti

lizi

ng

monie

s re

ceiv

ed

from

p

ub

lic

on

app

lica

tion

for

sub

scri

pti

on

to

secu

riti

es

in

contr

aven

tion

of

the

pro

vis

ions

of

this

se

ctio

n

and

fail

ure

to

com

ply

w

ith

the

pro

vis

ions

of

this

sec

tion.

Fin

e, o

f not

less

than

IN

R

5

lakhs

but

whic

h

may

exte

nd t

o I

NR

50 l

akhs

Imp

riso

nm

ent

for

a te

rm

whic

h m

ay e

xte

nd t

o o

ne

less

than

IN

R 5

0,0

00/-

but

whic

h m

ay e

xte

nd t

o I

NR

3 l

akhs,

or

wit

h b

oth

.

______

16.

42

Mak

ing a

n o

ffer

or ac

cep

ts m

onie

s

in

contr

aven

tion

of

this

se

ctio

n

for

sub

scri

pti

on t

o s

ecuri

ties

on

pri

vat

e p

lace

men

t b

asis

.

Pen

alty

whic

h m

ay e

xte

nd

to t

he

amount

involv

ed i

n

the

off

er

or

invit

atio

n

or

INR

2

crore

s,

whic

hev

er

is

hig

her

. M

ore

over

, th

e

com

pan

y

must

re

fund

all

monie

s to

su

bsc

rib

ers

wit

hin

a

per

iod

of

thir

ty

day

s of

the

ord

er i

mp

osi

ng

the

pen

alty

.

______

The

pro

mote

rs an

d dir

ecto

rs

of

such

a c

om

pan

y w

ho h

ave

contr

aven

ed

the

pro

vis

ions

of

this

se

ctio

n is

li

able

to

a

pen

alty

whic

h m

ay e

xte

nd t

o

the

amount

involv

ed

in

the

off

er or

invit

atio

n or

INR

2

crore

s, w

hic

hev

er i

s hig

her

.

17.

46

shar

es w

ith i

nte

nt

to d

efra

ud.

tim

es

the

face

val

ue

of

the

shar

es

involv

ed

in

the

issu

e of

the

dup

lica

te

exte

nd to ten

tim

es the

face

val

ue

of

such

sh

ares

or

INR

10 c

rore

s, w

hic

hev

er

is h

igher

.

Lia

ble

for

the

punis

hm

ent

pre

scri

bed

under

s 4

47.

______

lxxv


Sr.

No

Sec

tion

Su

bje

ctP

un

ish

men

t fo

r

Com

pan

yin

Def

au

lt

Oth

ers

18.

48

Def

ault

in

co

mp

lyin

g

wit

h

the

pro

vis

ions

of

this

sec

tion r

elat

ing

to

var

iati

on

of

shar

ehold

ers’

rights

Fin

e, o

f not

less

than

IN

R

25,0

00/-

b

ut

whic

h

may

exte

nd t

o I

NR

5 l

akhs

Imp

riso

nm

ent

for

a te

rm

whic

h

may

ex

tend

to

six

less

than

IN

R 2

5,0

00/-

but

whic

h m

ay e

xte

nd t

o I

NR

5 l

akhs,

or

wit

h b

oth

.

______

19.

53

Issu

ing

shar

es

at

dis

count

in

contr

aven

tion of

the

pro

hib

itio

n

conta

ined

in t

his

sec

tion.

Fin

e, o

f not le

ss than

IN

R 1

lakh b

ut

whic

h m

ay e

xte

nd

to I

NR

5 l

akhs

def

ault

shal

l b

e p

unis

hab

le

wit

h

imp

riso

nm

ent

for

a

term

whic

h m

ay e

xte

nd t

o

not

less

th

an IN

R 1 la

kh

but

whic

h m

ay ex

tend to

INR

5 l

akhs,

or

wit

h b

oth

.

______

20.

56(6

)D

efau

lt

in

com

ply

ing

wit

h

the

pro

vis

ions

of

sub

-sec

tions

(1)

to

(5),

of

this

se

ctio

n

rela

ting

to

tran

sfer

an

d

tran

smis

sion

of

secu

riti

es.

[For

inst

ance

, del

ay i

n d

eliv

erin

g

or

deb

entu

res]

Fin

e, o

f not

less

than

IN

R

25,0

00/-

b

ut

whic

h

may

exte

nd t

o I

NR

5 l

akhs.

Fin

e, o

f not

less

than

IN

R

10,0

00/-

b

ut

whic

h

may

exte

nd t

o I

NR

1 l

akh.

______

lxxvi


Sr.

No

Sec

tion

Su

bje

ctP

un

ish

men

t fo

r

Com

pan

yin

Def

au

lt

Oth

ers

21.

57

Punis

hm

ent

for

imp

erso

nat

ion o

f

Shar

ehold

ers.

Imp

erso

nat

ion

involv

es

any

per

son

oth

er

than

th

e tr

ue

ow

ner

of

a se

curi

ty

dec

eitf

ull

y

imp

erso

nat

ing a

s if

he

is t

he

true

ow

ner

of

any s

ecuri

ty o

r in

tere

st

in

a co

mp

any,

or

of

any

shar

e

war

rant

or

coup

on

issu

ed

and

ob

tain

s or

atte

mp

ts t

o o

bta

in a

ny

such

se

curi

ty or

inte

rest

or

any

such

shar

e w

arra

nt

or

coup

on,

or

rece

ives

or

atte

mp

ts

to

rece

ive

any

money

due

to

any

such

ow

ner

.

______

______

Ever

y

per

son

who

imp

erso

nat

e is

p

unis

hab

le

wit

h

imp

riso

nm

ent

for

a

term

whic

h s

hal

l not

be

less

than

one

yea

r b

ut

whic

h m

ay

exte

nd t

o t

hre

e yea

rs a

nd w

ith

lakh b

ut

whic

h m

ay e

xte

nd t

o

INR

5 l

akhs.

22.

58

Fai

lure

to c

om

ply

wit

h t

he

ord

er

of

the

Nat

ional

C

om

pan

y

Law

Tri

bunal

[N

CL

T]

rela

ting

to

refu

sal

of

regis

trat

ion o

f tr

ansf

er

or

tran

smis

sion o

f se

curi

ties

.

[NC

LT

has

not

yet

b

een

esta

bli

shed

; p

ow

ers

are

bei

ng

exer

cise

d f

or

the

tim

e b

eing b

y

Com

pan

y L

aw B

oar

d]

______

______

Ever

y p

erso

n w

ho c

ontr

aven

es

any s

uch

ord

er i

s p

unis

hab

le

wit

h

imp

riso

nm

ent

for

a

term

whic

h s

hal

l not

be

less

than

one

yea

r b

ut

whic

h m

ay

exte

nd t

o t

hre

e yea

rs a

nd w

ith

lakh b

ut

whic

h m

ay e

xte

nd t

o

INR

5 l

akhs.

lxxvii


Sr.

No

Sec

tion

Su

bje

ctP

un

ish

men

t fo

r

Com

pan

yin

Def

au

lt

Oth

ers

23.

59

Fai

lure

to c

om

ply

wit

h a

ny o

rder

of

regis

ter

of

mem

ber

s or

sett

ing

right

contr

aven

tion o

f S

ecuri

ties

Law

s

Fin

e, o

f not le

ss than

IN

R 1

lakh b

ut

whic

h m

ay e

xte

nd

to I

NR

5 l

akhs

Imp

riso

nm

ent

for

a te

rm

whic

h m

ay e

xte

nd t

o o

ne

less

th

an IN

R 1 la

kh b

ut

whic

h m

ay e

xte

nd t

o I

NR

3 l

akhs,

or

wit

h b

oth

.

______

24.

60

Fai

lure

to p

ub

lish

sub

scri

bed

and

pai

d u

p c

apit

al i

n l

ette

r or

oth

er

pub

lica

tions

of

the

com

pan

y

wher

e m

enti

on h

as b

een m

ade

of

auth

ori

sed c

apit

al

Pen

alty

of

INR

10,0

00/-

. P

enal

ty o

f IN

R 5

,000/-

, fo

r

each

def

ault

.

______

25.

64

Fai

lure

to g

ive

noti

ce o

f al

tera

tion

of

shar

e ca

pit

al o

r re

dem

pti

on o

f

pre

fere

nce

shar

es to the

Reg

istr

ar.

Fin

e, w

hic

h m

ay e

xte

nd t

o

INR

1,0

00/-

for

each

day

duri

ng w

hic

h s

uch

def

ault

conti

nues

, or

INR

5 l

akhs,

whic

hev

er i

s le

ss.

Fin

e, w

hic

h m

ay e

xte

nd t

o

INR

1,0

00/-

for

each

day

duri

ng w

hic

h s

uch

def

ault

conti

nues

, or

INR

5 l

akhs,

whic

hev

er i

s le

ss.

______

26.

66

(1

1)

r/w

(4)

Fai

lure

to

p

ub

lish

ord

er

of

reduct

ion o

f sh

are

cap

ital

Fin

e, o

f not

less

than

IN

R

5

lakhs

but

whic

h

may

exte

nd t

o I

NR

25 l

akhs.

______

______

27.

66(1

0)

in r

elat

ion t

o a

sch

eme

involv

ing

reduct

ion o

f sh

are

cap

ital

of

his

com

pan

y-

(a)

know

ingly

conce

als

the

nam

e

of

any c

redit

or

enti

tled

to o

bje

ct

to s

uch

red

uct

ion;

______

______

is

liab

le

for

the

punis

hm

ent

pre

scri

bed

under

s 4

47.

lxxviii


Sr.

No

Sec

tion

Su

bje

ctP

un

ish

men

t fo

r

Com

pan

yin

Def

au

lt

Oth

ers

(b)

know

ingly

mis

rep

rese

nts

the

nat

ure

or

amount

of

the

deb

t or

clai

m o

f an

y c

redit

or;

or

(c)

abet

s or

is

pri

vy

to

any

such

co

nce

alm

ent

or

mis

rep

rese

nta

tion.

______

______

______

28.

67

Fai

lure

to

co

mp

ly

wit

h

the

pro

vis

ions

of

this

se

ctio

n

rela

ting to

(b

uy b

ack)

purc

has

e

by

com

pan

y

of

its

ow

n

shar

es

wit

hout

effe

ctin

g

conse

quen

t

reduct

ion

of

shar

e ca

pit

al

and

fail

ure

to

co

mp

ly

wit

h

the

pro

vis

ions

of

this

sec

tion r

elat

ing

to g

ivin

g o

f lo

ans

for

purc

has

e of

its

shar

es.

Fin

e, o

f not le

ss than

IN

R 1

lakh b

ut

whic

h m

ay e

xte

nd

to I

NR

25 l

akhs

Imp

riso

nm

ent

for

a te

rm

whic

h m

ay e

xte

nd t

o t

hre

e

less

th

an IN

R 1 la

kh b

ut

whic

h m

ay e

xte

nd t

o I

NR

25 l

akhs

______

29.

68

Fai

lure

to

co

mp

ly

wit

h

the

pro

vis

ions

of

this

sec

tion r

elat

ing

to (b

uy b

ack)

purc

has

e it

s ow

n

secu

riti

es

Fin

e, o

f not le

ss than

IN

R 1

lakh b

ut

whic

h m

ay e

xte

nd

to I

NR

3 l

akhs

Imp

riso

nm

ent

for

a te

rm

whic

h m

ay e

xte

nd t

o t

hre

e

less

th

an IN

R 1 la

kh b

ut

whic

h m

ay e

xte

nd t

o I

NR

3 l

akhs,

or

wit

h b

oth

.

______

30.

71

Fai

lure

to c

om

ply

wit

h o

rder

of

NC

LT

in r

elat

ion t

o r

edem

pti

on

of

deb

entu

res

______

Imp

riso

nm

ent

for

a te

rm

whic

h m

ay e

xte

nd t

o t

hre

e

less

than

IN

R 2

lak

hs

but

whic

h m

ay e

xte

nd t

o I

NR

5 l

akhs,

or

wit

h b

oth

.

______

lxxix


Sr.

No

Sec

tion

Su

bje

ctP

un

ish

men

t fo

r

Com

pan

yin

Def

au

lt

Oth

ers

31.

74

Rep

aym

ent

of

dep

osi

ts,

acce

pte

d

bef

ore

th

e co

mm

ence

men

t of

the

Act

w

ithin

th

e ti

me

lim

it

pre

scri

bed

under

s 7

4(1

)

Fin

e, o

f not

less

than

IN

R

1

crore

b

ut

whic

h

may

exte

nd to

IN

R 10 cr

ore

s.

[This

p

unis

hm

ent

is

in

addit

ion to

th

e ob

ligat

ion

to

rep

ay

the

amount

of

dep

osi

t or

par

t th

ereo

f an

d

the

inte

rest

due.

]

Imp

riso

nm

ent

whic

h

may

exte

nd

to

seven

yea

rs

or

INR

25

lakhs

but

whic

h

may

ex

tend

to

INR

2

crore

s, o

r w

ith b

oth

.

______

32.

75

Fai

lure

to

re

pay

dep

osi

ts

wit

h

inte

rest

th

ereo

n w

ithin

th

e ti

me

lim

it

pre

scri

bed

under

s

74(1

),

pro

vid

ed

dep

osi

ts

had

b

een

acce

pte

d w

ith a

n inte

nt to

def

raud

dep

osi

tors

or

for

any f

raudule

nt

purp

ose

s

______

______

who

was

re

sponsi

ble

fo

r

acce

pta

nce

of

the

dep

osi

t in

such

a m

anner

is

liab

le f

or

the

punis

hm

ent

pre

scri

bed

under

s 447.

[This

is

w

ithout

pre

judic

e

to

the

pen

al

liab

ilit

y

as

pre

scri

bed

under

s 7

4(3

) an

d

furt

her

, w

ithout

pre

judic

e

to

the

unli

mit

ed

per

sonal

liab

ilit

y f

or

loss

es o

r dam

ages

incu

rred

by t

he

dep

osi

tors

.]

33.

76A

Acc

epti

ng d

eposi

ts fro

m m

emb

ers

of

a co

mp

any o

r fr

om

pub

lic

in

contr

aven

tion

of

the

pro

vis

ions

of

s 73 /

s 7

6 o

r fa

ilure

to r

epay

dep

osi

ts

wit

h

inte

rest

th

ereo

n

wit

hin

the

tim

e li

mit

pre

scri

bed

or

wit

hin

such

exte

nded

tim

e as

may

be

per

mit

ted b

y N

CL

T.

Fin

e, o

f not

less

than

IN

R

1

crore

b

ut

whic

h

may

exte

nd to

IN

R 10 cr

ore

s.

[This

p

unis

hm

ent

is

in

addit

ion to

th

e ob

ligat

ion

to

rep

ay

the

amount

of

dep

osi

t or

par

t th

ereo

f an

d

the

inte

rest

due.

]

Imp

riso

nm

ent

whic

h

may

exte

nd

to

seven

yea

rs

or

INR

25

lakhs

but

whic

h

may

ex

tend

to

INR

2

crore

s, o

r w

ith b

oth

.

______

lxxx


Sr.

No

Sec

tion

Su

bje

ctP

un

ish

men

t fo

r

Com

pan

yin

Def

au

lt

Oth

ers

______

______

If

it

pro

ved

th

at

the

contr

aven

tion

has

ta

ken

is

in

def

ault

p

erm

itti

ng

the

sam

e know

ingly

or

wil

lfull

y w

ith t

he

inte

nti

on

to

dec

eive

the

com

pan

y

or

its

shar

ehold

ers

or

dep

osi

tors

or

cred

itors

or

tax

auth

ori

ties

, ev

ery

the

punis

hm

ent

pre

scri

bed

under

s

______

34.

86

Punis

hm

ent

for

contr

aven

tion

of

pro

vis

ions

of

Chap

ter

VI

on

Char

ges

.

[Contr

aven

tion o

f an

y p

rovis

ions

of

Chap

ter

VI

rela

ting to C

har

ges

]

Fin

e, o

f not le

ss than

IN

R 1

lakh b

ut

whic

h m

ay e

xte

nd

to I

NR

10 l

akhs

Imp

riso

nm

ent

for

a te

rm

whic

h

may

ex

tend

to

six

less

than

IN

R 2

5,0

00/-

but

whic

h m

ay e

xte

nd t

o I

NR

1 l

akh, or

wit

h b

oth

______

35.

88

Fai

lure

to

m

ainta

in

Reg

iste

r of

Mem

ber

s or

Sec

uri

ty H

old

ers

or

Deb

entu

re h

old

ers

in a

ccord

ance

wit

h th

e p

rovis

ions

of

this

sec

tion.

Fin

e, o

f not

less

than

IN

R

50,0

00/-

but

whic

h

may

exte

nd

to

INR

3

lakhs

and

wher

e th

e fa

ilure

is

a co

nti

nuin

g

one,

w

ith

a

exte

nd t

o I

NR

1,0

00/-

for

duri

ng

whic

h

the

fail

ure

conti

nues

.

Fin

e, o

f not

less

than

IN

R

50,0

00/-

but

whic

h

may

exte

nd

to

INR

3

lakhs

and

wher

e th

e fa

ilure

is

a co

nti

nuin

g

one,

w

ith

a

exte

nd t

o I

NR

1,0

00/-

for

duri

ng

whic

h

the

fail

ure

conti

nues

.

______

lxxxi


Sr.

No

Sec

tion

Su

bje

ctP

un

ish

men

t fo

r

Com

pan

yin

Def

au

lt

Oth

ers

36.

89(5

)F

ailu

re t

o f

urn

ish d

ecla

rati

on i

n

any s

har

es.

______

______

If

any

per

son

com

mit

s

such

a

fail

ure

, w

ithout

any

reas

onab

le c

ause

, he

shal

l b

e

may

exte

nd t

o I

NR

50,0

00/-

and

wher

e th

e fa

ilure

is

a

conti

nuin

g o

ne,

wit

h a

furt

her

1,0

00/-

for

ever

y d

ay a

fter

the

conti

nues

.

37.

89(7

)

in

shar

es

wit

hin

th

e p

resc

rib

ed

tim

e under

s 8

9(6

)

Fin

e,

of

not

less

th

an

INR

500/-

but

whic

h m

ay

exte

nd

to

INR

1,0

00/-

and

wher

e th

e fa

ilure

is

a co

nti

nuin

g

one,

w

ith

a

exte

nd t

o I

NR

1,0

00/-

for

duri

ng

whic

h

the

fail

ure

conti

nues

.

Fin

e,

of

not

less

th

an

INR

500/-

but

whic

h m

ay

exte

nd

to

INR

1,0

00/-

and

wher

e th

e fa

ilure

is

a co

nti

nuin

g

one,

w

ith

a

exte

nd t

o I

NR

1,0

00/-

for

duri

ng

whic

h

the

fail

ure

conti

nues

.

______

38.

91

Clo

sing

Reg

iste

r of

Mem

ber

s

or

Deb

entu

re

hold

ers

or

oth

er

secu

rity

hold

ers

wit

hout

giv

ing

noti

ce o

r b

y g

ivin

g a

noti

ce that

is

short

er t

han

the

length

of

noti

ce

stip

ula

ted

under

th

is

sect

ion

or

closi

ng

the

regis

ters

fo

r a

longer

per

iod t

han

the

max

imum

stip

ula

ted u

nder

this

sec

tion

Pen

alty

of

INR

5,0

00/-

for

ever

y

day

duri

ng

whic

h

the

regis

ter

is k

ept

close

d

subje

ct to

a

max

imum

of

INR

1 l

akh.

Pen

alty

of

INR

5,0

00/-

for

ever

y

day

duri

ng

whic

h

the

regis

ter

is k

ept

close

d

subje

ct to

a

max

imum

of

INR

1 l

akh.

______

lxxxii


Sr.

No

Sec

tion

Su

bje

ctP

un

ish

men

t fo

r

Com

pan

yin

Def

au

lt

Oth

ers

39.

92(5

)

the

exp

iry o

f th

e ti

me

pre

scri

bed

under

s 4

03

Fin

e, o

f not

less

than

IN

R

50,0

00/-

but

whic

h

may

exte

nd t

o I

NR

5 l

akhs

Imp

riso

nm

ent

for

a te

rm

whic

h

may

ex

tend

to

six

less

than

IN

R 5

0,0

00/-

but

whic

h m

ay e

xte

nd t

o I

NR

5 l

akhs,

or

wit

h b

oth

.

______

40.

92(6

)

oth

erw

ise

than

in c

onfo

rmit

y w

ith

the

requir

emen

ts o

f th

is s

ecti

on

______

______

T

he

com

pan

y

secr

etar

y

in

pra

ctic

e w

ho

does

so

sh

all

not

less

than

IN

R 5

0,0

00/-

but

whic

h m

ay e

xte

nd t

o I

NR

5

lakhs

41.

94

Ref

usa

l to

p

erm

it

insp

ecti

on

or

pro

vid

e ex

trac

ts o

r giv

e co

pie

s of

the

regis

ters

req

uir

ed t

o b

e kep

t

and m

ainta

ined

by a

com

pan

y o

r

index

ther

eto o

r th

e an

nual

ret

urn

Pen

alty

of

INR

1,0

00/-

for

ever

y

day

duri

ng

whic

h

such

re

fusa

l or

def

ault

conti

nues

su

bje

ct

to

a

max

imum

of

INR

1 l

akh.

Pen

alty

of

INR

1,0

00/-

for

ever

y

day

duri

ng

whic

h

such

re

fusa

l or

def

ault

conti

nues

su

bje

ct

to

a

max

imum

of

INR

1 l

akh.

______

42.

99

Punis

hm

ent

for

def

ault

in

com

ply

ing

wit

h

pro

vis

ions

of

sect

ions

96 t

o 9

8 o

r in

com

ply

ing

wit

h o

rder

s of

NC

LT

Fin

e, w

hic

h m

ay e

xte

nd t

o

INR

1 l

akh a

nd i

n t

he

case

of

a co

nti

nuin

g

def

ault

,

may

exte

nd t

o I

NR

5,0

00/-

for

ever

y d

ay d

uri

ng w

hic

h

such

def

ault

conti

nues

.

Fin

e, w

hic

h m

ay e

xte

nd t

o

INR

1 l

akh a

nd i

n t

he

case

of

a co

nti

nuin

g

def

ault

,

may

exte

nd t

o I

NR

5,0

00/-

for

ever

y d

ay d

uri

ng w

hic

h

such

def

ault

conti

nues

.

______

lxxxiii


Sr.

No

Sec

tion

Su

bje

ctP

un

ish

men

t fo

r

Com

pan

yin

Def

au

lt

Oth

ers

43.

102

Fai

lure

to

co

mp

ly

wit

h

the

pro

vis

ions

of

this

se

ctio

n

in

rela

tion to

fu

rnis

hin

g S

tate

men

t

of

Mat

eria

l F

acts

al

ongw

ith

noti

ce o

f a

gen

eral

mee

ting a

nd

oth

er

stip

ula

tions

under

th

is

sect

ion

______

______

Ever

y

pro

mote

r,

dir

ecto

r,

man

ager

or

oth

er

key

man

ager

ial

per

sonnel

w

ho

is

in

def

ault

is

p

unis

hab

le

accr

uin

g

to

the

pro

mote

r,

dir

ecto

r, m

anag

er o

r oth

er k

ey

man

ager

ial

per

sonnel

or

any

of

his

rel

ativ

es,

whic

hev

er i

s

more

.

44.

105(3

)F

ailu

re to m

enti

on in e

ver

y n

oti

ce

call

ing a

gen

eral

mee

ting o

f th

e

com

pan

y

that

a

emb

er

enti

tled

to a

tten

d a

nd v

ote

is

enti

tled

to

app

oin

t P

roxie

s as

p

resc

rib

ed

under

s 1

05(2

)

______

Fin

e, w

hic

h m

ay e

xte

nd t

o

INR

5,0

00/-

.

______

45.

105(5

)

for

the

purp

ose

of

any

gen

eral

mee

ting of

a co

mp

any,

se

ndin

g

out

invit

atio

ns

to

mem

ber

s

reques

ting

them

to

ap

poin

t

as

pro

xy

a p

erso

n

or

one

of

a

the

invit

atio

ns

at t

he

com

pan

y’s

exp

ense

s so

th

at

such

p

roxie

s

wil

l b

e ab

le t

o a

tten

d a

nd v

ote

on

beh

alf

of

such

mem

ber

s.

______

______

who

know

ingly

is

sues

th

e

invit

atio

ns

as

afore

said

or

wil

full

y a

uth

ori

ses

or

per

mit

s

thei

r is

sue

is p

unis

hab

le w

ith

1 l

akh.

lxxxiv


Sr.

No

Sec

tion

Su

bje

ctP

un

ish

men

t fo

r

Com

pan

yin

Def

au

lt

Oth

ers

46.

111

Def

ault

in

co

mp

lyin

g

wit

h

the

pro

vis

ions

of

this

sec

tion r

elat

ing

to

circ

ula

tion

of

mem

ber

s’

reso

luti

ons

Pen

alty

of

INR

25,0

00/-

.P

enal

ty o

f IN

R 2

5,0

00/-

.______

47.

117

agre

emen

ts w

ith t

he

Reg

istr

ar.

Fin

e, o

f not

less

than

IN

R

5

lakhs

but

whic

h

may

exte

nd t

o I

NR

25 l

akhs.

Fin

e, o

f not le

ss than

IN

R 1

lakh b

ut

whic

h m

ay e

xte

nd

to I

NR

5 l

akhs.

Liq

uid

ator

of

the

Com

pan

y, i

f

of

not

less

than

IN

R 1

lak

h

but

whic

h m

ay e

xte

nd t

o I

NR

5 l

akhs.

48.

118(1

1)

Def

ault

in

co

mp

lyin

g

wit

h

the

pro

vis

ions

of

this

se

ctio

n

in

resp

ect

of

any m

eeti

ng,

whet

her

of

gen

eral

m

eeti

ng,

mee

ting

of

Boar

d

of

Dir

ecto

rs

and

oth

er

mee

ting.

Pen

alty

of

INR

25,0

00/-

.P

enal

ty o

f IN

R 5

,000/-

.______

49.

118(1

2)

Tam

per

ing

wit

h

min

ute

s of

pro

ceed

ings

of

gen

eral

mee

ting,

mee

ting

of

Boar

d

of

Dir

ecto

rs

and o

ther

mee

ting.

______

______

Any p

erso

n w

ho does

so

is

punis

hab

le w

ith im

pri

sonm

ent

for

a te

rm w

hic

h m

ay e

xte

nd

not

less

than

IN

R 2

5,0

00/-

but

whic

h m

ay e

xte

nd t

o I

NR

1

lakh.

50.

119

Ref

usa

l to

p

erm

it

insp

ecti

on

or

fail

ure

to g

ive

cop

ies

of

min

ute

s

of

gen

eral

m

eeti

ngs

to

any

mem

ber

.

Pen

alty

of

INR

25,0

00/-

for

each

su

ch

refu

sal

or

def

ault

.

Pen

alty

of

INR

5,0

00/-

for

each

su

ch

refu

sal

or

def

ault

.

.

______

lxxxv


Sr.

No

Sec

tion

Su

bje

ctP

un

ish

men

t fo

r

Com

pan

yin

Def

au

lt

Oth

ers

51.

121

Annual

Gen

eral

Mee

ting (

AG

M)

wit

h t

he

Reg

istr

ar.

Fin

e, o

f not le

ss than

IN

R 1

lakh b

ut

whic

h m

ay e

xte

nd

to I

NR

5 l

akhs

Fin

e, o

f not

less

than

IN

R

25,0

00/-

b

ut

whic

h

may

exte

nd t

o I

NR

1 l

akh.

______

52.

124

Fai

lure

to

co

mp

ly

wit

h

the

pro

vis

ions

of

this

sec

tion r

elat

ing

to U

np

aid D

ivid

end A

ccount

Fin

e, o

f not

less

than

IN

R

5

lakhs

but

whic

h

may

exte

nd t

o I

NR

25 l

akhs

Fin

e, o

f not le

ss than

IN

R 1

lakh b

ut

whic

h m

ay e

xte

nd

to I

NR

5 l

akhs

______

53.

127

Punis

hm

ent

for

fail

ure

to

dis

trib

ute

div

iden

ds

Sim

ple

inte

rest

at

the

rate

of

eighte

en

per

ce

nt

per

annum

duri

ng

the

per

iod

for

whic

h

such

def

ault

conti

nues

.

______

Ever

y d

irec

tor

of

the

com

pan

y

who i

s know

ingly

a p

arty

to

the

def

ault

, is

punis

hab

le w

ith

imp

riso

nm

ent

whic

h

may

exte

nd t

o t

wo y

ears

and w

ith

1,0

00/-

for

ever

y d

ay d

uri

ng

whic

h s

uch

def

ault

conti

nues

.

54.

128

Fai

lure

to

kee

p

and

mai

nta

in

pro

per

books

of

acco

unt,

etc

., t

o

be

kep

t b

y co

mp

any as

p

er th

e

pro

vis

ions

of

this

sec

tion.

______

______

The

man

agin

g

dir

ecto

r,

whole

-tim

e dir

ecto

r in

oth

er

per

son

who

has

b

een

mad

e re

sponsi

ble

fo

r th

e

mai

nta

inin

g

pro

per

b

ooks

of

acco

unt

shal

l b

e li

able

for

imp

riso

nm

ent

for

a te

rm

whic

h m

ay e

xte

nd t

o o

ne

yea

r

INR

50,0

00/-

but

whic

h m

ay

exte

nd t

o I

NR

5 l

akhs

or

wit

h

both

.

lxxxvi


Sr.

No

Sec

tion

Su

bje

ctP

un

ish

men

t fo

r

Com

pan

yin

Def

au

lt

Oth

ers

55.

129

Contr

aven

tion

of

pro

vis

ions

of

this

se

ctio

n

per

tain

ing

to

Fin

anci

al S

tate

men

t su

ch a

s th

e

foll

ow

ing:

(a)

that

th

e F

inan

cial

stat

emen

t m

ust

giv

e a

true

and

fair

vie

w o

f th

e st

ate

of

affa

irs

of

the

com

pan

y;

(b)

that

th

e F

inan

cial

Sta

tem

ent

must

co

mp

ly

wit

h

acco

unti

ng s

tandar

ds;

if

ther

e is

any

dev

iati

on

from

ac

counti

ng

stan

dar

ds,

it

should

be

dis

close

d;

(c)

that

th

e F

inan

cial

Sta

tem

ent

must

b

e in

th

e

pre

scri

bed

form

;

(d)

the

Boar

d of

dir

ecto

rs

must

la

y

bef

ore

ev

ery

annual

gen

eral

m

eeti

ng

the

Fin

anci

al

Sta

tem

ent;

(e)

that

w

her

ever

stat

emen

t m

ust

be

pre

par

ed;

______

______

For

fail

ure

to

co

mp

ly

wit

h

the

pro

vis

ions

of

this

sec

tion,

the

Man

agin

g

Dir

ecto

r,

the

Whole

-tim

e D

irec

tor

in

per

son c

har

ged

by t

he

Boar

d

wit

h

the

duty

of

com

ply

ing

wit

h t

he

requir

emen

ts o

f th

is

sect

ion a

nd i

n t

he

abse

nce

of

above,

al

l th

e dir

ecto

rs

are

punis

hab

le w

ith im

pri

sonm

ent

for

a te

rm w

hic

h m

ay e

xte

nd

not

less

than

IN

R 5

0,0

00/-

but

whic

h m

ay e

xte

nd t

o I

NR

5

lakhs,

or

wit

h b

oth

.

lxxxvii


Sr.

No

Sec

tion

Su

bje

ctP

un

ish

men

t fo

r

Com

pan

yin

Def

au

lt

Oth

ers

56.

132

Pro

fess

ional

M

isco

nduct

–

Nat

ional

F

inan

cial

R

eport

ing

Auth

ori

ty

[NF

RA

] –

N

ot

yet

esta

bli

shed

.

An

exp

lanat

ion

under

s

132(4

)

stat

es

that

fo

r th

e p

urp

ose

s of

his

su

b-s

ecti

on,

the

exp

ress

ion

“pro

fess

ional

or

oth

er

mis

conduct

” sh

all

hav

e th

e sa

me

mea

nin

g

assi

gned

to

it

under

s

22 o

f th

e C

hart

ered

Acc

ounta

nts

Act

, 1949. [C

AA

, 1949]

______

______

NF

RA

has

pow

ers

to:

(A)

imp

osi

ng p

enal

ty o

f- (

i)

not

less

than

IN

R 1

lak

h,

but

tim

es o

f th

e fe

es r

ecei

ved

, in

case

of

indiv

idual

s;

and

(ii)

not

less

th

an IN

R 10 la

khs,

but

whic

h m

ay e

xte

nd t

o t

en

tim

es o

f th

e fe

es r

ecei

ved

, in

(B)

deb

arri

ng

the

mem

ber

him

self

or

itse

lf f

rom

pra

ctic

e

as

mem

ber

of

the

Inst

itute

of

Char

tere

d

Acc

ounta

nt

of

India

ref

erre

d t

o i

n s

2(1

)(e)

of

CA

A,

1949 f

or

a m

inim

um

per

iod

of

six

month

s or

for

such

hig

her

p

erio

d

not

exce

edin

g ten

yea

rs a

s m

ay b

e

dec

ided

by N

FR

A.

57.

134

Fai

lure

to

co

mp

ly

wit

h

the

pro

vis

ions

of

this

sec

tion r

elat

ing

to B

oar

d’s

rep

ort

, et

c.

Fin

e, o

f not

less

than

IN

R

50,0

00/-

but

whic

h

may

exte

nd t

o I

NR

25 l

akhs

Imp

riso

nm

ent

for

a te

rm

whic

h m

ay e

xte

nd t

o t

hre

e

less

than

IN

R 5

0,0

00/-

but

whic

h m

ay e

xte

nd t

o I

NR

5 l

akhs,

or

wit

h b

oth

.

______

lxxxviii


Sr.

No

Sec

tion

Su

bje

ctP

un

ish

men

t fo

r

Com

pan

yin

Def

au

lt

Oth

ers

58.

136

Fai

lure

to

co

mp

ly

wit

h

the

pro

vis

ions

of

this

sec

tion w

hic

h

inte

r al

ia

stip

ula

tes

that

ev

ery

mem

ber

of

the

com

pan

y

is

enti

tled

to

co

pie

s of

audit

ed

mem

ber

or

trust

ees

to d

eben

ture

hold

ers

hav

e ri

ght

to i

nsp

ect.

Pen

alty

of

INR

25,0

00/-

.P

enal

ty o

f IN

R 5

,000/-

.______

59.

137

Sta

tem

ent

wit

h

Reg

istr

ar

in

acco

rdan

ce

wit

h

s 137(1

) or

s

137(2

).

Fin

e of

INR

1,0

00/-

fo

r

ever

y d

ay d

uri

ng w

hic

h the

fail

ure

conti

nues

but w

hic

h

shal

l not

be

more

than

IN

R

10 l

akhs.

______

For

fail

ure

to

co

mp

ly

wit

h

the

pro

vis

ions

of

this

sec

tion,

the

man

agin

g

dir

ecto

r an

d

the

com

pan

y, i

f an

y, a

nd,

in

the

abse

nce

of

the

man

agin

g

who i

s ch

arged

by t

he

boar

d

wit

h

the

resp

onsi

bil

ity

of

com

ply

ing w

ith the

pro

vis

ions

of

this

se

ctio

n,

and,

in

the

abse

nce

of

any s

uch

dir

ecto

r,

all

the

dir

ecto

rs

of

the

com

pan

y, s

hal

l b

e p

unis

hab

le

wit

h

imp

riso

nm

ent

for

a

term

w

hic

h

may

ex

tend

to

not

less

than

IN

R 1

lak

h b

ut

whic

h m

ay e

xte

nd t

o I

NR

5

lakhs,

or

wit

h b

oth

.

lxxxix


Sr.

No

Sec

tion

Su

bje

ctP

un

ish

men

t fo

r

Com

pan

yin

Def

au

lt

Oth

ers

60.

140

Fai

lure

of

the

audit

or

of

a

com

pan

y

who

has

re

signed

to

and t

he

Reg

istr

ar i

n t

he

man

ner

pre

scri

bed

under

s 1

40(2

).

______

______

The

audit

or

who

fail

s so

is

less

th

an

INR

50,0

00/-

but

whic

h m

ay e

xte

nd t

o I

NR

5

lakhs.

Any

audit

or

agai

nst

w

hom

that

the

audit

or

of

a co

mp

any

has

, w

het

her

dir

ectl

y

or

indir

ectl

y,

acte

d

in

a

frau

dule

nt

man

ner

or

abet

ted

or

coll

uded

in a

ny f

raud b

y,

or

in r

elat

ion t

o,

the

com

pan

y

shal

l not

be

elig

ible

for

bei

ng

app

oin

ted a

s au

dit

ors

for

any

yea

rs f

rom

the

dat

e of

pas

sing

of

the

ord

er

and

shal

l al

so

be

liab

le f

or

punis

hm

ent

for

Fra

ud u

nder

s 4

47.

61.

143

Fai

lure

to

re

port

on

frau

ds

in

the

man

ner

p

resc

rib

ed

under

s 143(1

2)

as

amen

ded

b

y

the

Com

panie

s (A

men

dm

ent)

A

ct,

2015

read

w

ith

r 13

of

the

Com

pan

ies

(Audit

and A

udit

ors

)

Rule

s, 2

014 a

s am

ended

by t

he

Com

pan

ies

(Audit

and A

udit

ors

)

Am

endm

ent

Rule

s, 2

015

______

______

The

audit

or,

co

st ac

counta

nt

or

com

pan

y

secr

etar

y

in

pra

ctic

e w

ho c

om

mit

s su

ch a

of

not le

ss than

IN

R 1

lak

h b

ut

whic

h m

ay e

xte

nd t

o I

NR

25

lakhs.

xc


Sr.

No

Sec

tion

Su

bje

ctP

un

ish

men

t fo

r

Com

pan

yin

Def

au

lt

Oth

ers

62.

147

Punis

hm

ent

for

contr

aven

tion o

f

the

pro

vis

ions

of

sect

ions

139 t

o

146 (

both

incl

usi

ve)

.

Fin

e, o

f not

less

than

IN

R

25,0

00/-

b

ut

whic

h

may

exte

nd t

o I

NR

5 l

akhs.

Imp

riso

nm

ent

for

a te

rm

whic

h m

ay e

xte

nd t

o o

ne

less

than

IN

R 1

0,0

00/-

but

whic

h m

ay e

xte

nd t

o I

NR

1 l

akh, or

wit

h b

oth

.

The

audit

or

of

a co

mp

any

who co

ntr

aven

es an

y of

the

pro

vis

ions

of

s 139,

s 143,

s

144 o

r s

145,

he

is p

unis

hab

le

INR

25,0

00/-

but

whic

h m

ay

exte

nd t

o I

NR

5 l

akhs.

If t

he

audit

or

had

contr

aven

ed

those

p

rovis

ions

know

ingly

or

wil

lfull

y w

ith t

he

inte

nti

on

to d

ecei

ve

the

com

pan

y o

r it

s

shar

ehold

ers

or cr

edit

ors

or ta

x

auth

ori

ties

, he

is

punis

hab

le

wit

h i

mp

riso

nm

ent

for

a te

rm

whic

h m

ay e

xte

nd t

o o

ne

yea

r

INR

1

lakh

but

whic

h

may

exte

nd t

o I

NR

25 l

akhs.

63.

147(3

) C

ontr

aven

tion of

the

pro

vis

ions

convic

tion a

gai

nst

the

audit

or

of

a co

mp

any

______

______

Furt

her

, s

147(3

) st

ates

that

if

an a

udit

or

has

bee

n c

onvic

ted

of

any off

ence

af

ore

said

, he

shal

l b

e li

able

to

re

turn

th

e

rem

uner

atio

n h

e had

rec

eived

from

the

com

pan

y a

nd f

urt

her

he

is li

able

to

p

ay dam

ages

to

the

com

pan

y,

stat

uto

ry

bodie

s, o

r au

thori

ties

or

to a

ny

oth

er p

erso

ns

for

loss

ari

sing

out

of

inco

rrec

t or

mis

lead

ing

stat

emen

ts

or

par

ticu

lars

mad

e in

his

audit

rep

ort

.

xci


Sr.

No

Sec

tion

Su

bje

ctP

un

ish

men

t fo

r

Com

pan

yin

Def

au

lt

Oth

ers

64.

148

Fai

lure

to

co

mp

ly

wit

h

the

pro

vis

ions

of

this

sec

tion r

elat

ing

to

cost

ac

counti

ng

reco

rds

rela

ting

to

the

uti

lisa

tion

of

mat

eria

l or

lab

our

or

to

oth

er

item

s of

cost

as

p

art

of

books

of

acco

unt

and t

hose

pro

vis

ions

rela

ting t

o c

ost

audit

s in

res

pec

t

of

cert

ain c

om

pan

ies

Fin

e, o

f not

less

than

IN

R

25,0

00/-

b

ut

whic

h

may

exte

nd t

o I

NR

5 l

akhs.

Imp

riso

nm

ent

for

a te

rm

whic

h m

ay e

xte

nd t

o o

ne

less

than

IN

R 1

0,0

00/-

but

whic

h m

ay e

xte

nd t

o I

NR

1 l

akh, or

wit

h b

oth

.

The

cost

audit

or

of

a co

mp

any

who c

om

mit

s an

y s

uch

fai

lure

less

th

an

INR

25,0

00/-

b

ut

whic

h m

ay e

xte

nd t

o I

NR

5

lakhs.

If t

he

audit

or

had

contr

aven

ed

those

p

rovis

ions

know

ingly

or

wil

lfull

y w

ith t

he

inte

nti

on

to d

ecei

ve

the

com

pan

y o

r it

s

shar

ehold

ers

or cr

edit

ors

or ta

x

auth

ori

ties

, he

is

punis

hab

le

wit

h i

mp

riso

nm

ent

for

a te

rm

whic

h m

ay e

xte

nd t

o o

ne

yea

r

INR

1

lakh

but

whic

h

may

exte

nd t

o I

NR

25 l

akhs.

Furt

her

, s

148(3

) st

ates

th

at

if

an

cost

au

dit

or

has

b

een

convic

ted

of

any

off

ence

afore

said

, he

shal

l b

e li

able

to

retu

rn

the

rem

uner

atio

n

he

had

re

ceiv

ed

from

th

e

com

pan

y

and

furt

her

he

is

liab

le t

o p

ay d

amag

es t

o t

he

com

pan

y,

stat

uto

ry

bodie

s,

or

auth

ori

ties

or

to a

ny o

ther

per

sons

for

loss

ar

isin

g

out

of

inco

rrec

t or

mis

lead

ing

stat

emen

ts

or

par

ticu

lars

mad

e in

his

cost

audit

rep

ort

.

xcii


Sr.

No

Sec

tion

Su

bje

ctP

un

ish

men

t fo

r

Com

pan

yin

Def

au

lt

Oth

ers

65.

157

Fai

lure

of

the

com

pan

y

to

inti

mat

e th

e R

egis

trar

of

Dir

ecto

r

Fin

e, o

f not

less

than

IN

R

25,0

00/-

b

ut

whic

h

may

exte

nd t

o I

NR

1 l

akh

Fin

e, o

f not

less

than

IN

R

25,0

00/-

b

ut

whic

h

may

exte

nd t

o I

NR

1 l

akh.

______

66.

159

Contr

aven

tion of

the

pro

vis

ions

of

s 152, s

155 a

nd s

156.

______

______

The

indiv

idual

or

dir

ecto

r of

a

com

pan

y, w

ho c

om

mit

s su

ch

contr

aven

tion,

is

punis

hab

le

wit

h i

mp

riso

nm

ent

for

a te

rm

whic

h

may

ex

tend

to

six

may

exte

nd t

o I

NR

50,0

00/-

and w

her

e th

e co

ntr

aven

tion

is

a co

nti

nuin

g

one,

w

ith

a

to

INR

500/-

fo

r ev

ery

day

contr

aven

tion c

onti

nues

.

67.

165

Acc

epti

ng d

irec

tors

hip

s in

exce

ss

of

the

ceil

ing p

resc

rib

ed i

n s

ub

-

sect

ion (

1)

of

this

sec

tion.

______

______

The

per

son

who

acce

pts

so

not

less

than

IN

R 5

,000/-

but

whic

h

may

ex

tend

to

INR

25,0

00/-

fo

r ev

ery day

af

ter

contr

aven

tion c

onti

nues

68.

166

Fai

lure

to

ad

her

e to

duti

es

of

dir

ecto

rs

______

______

Any

dir

ecto

r w

ho

does

so

not

less

than

IN

R 1

lak

h b

ut

whic

h m

ay e

xte

nd t

o I

NR

5

lakhs.

xciii


Sr.

No

Sec

tion

Su

bje

ctP

un

ish

men

t fo

r

Com

pan

yin

Def

au

lt

Oth

ers

69.

167

Funct

ionin

g

as

a dir

ecto

r

even

af

ter

know

ing

that

th

e

vac

ant

on a

ccount

of

any o

f th

e

______

______

Any p

erso

n w

ho does

so

is

punis

hab

le w

ith im

pri

sonm

ent

for

a te

rm w

hic

h m

ay e

xte

nd

not

less

than

IN

R 1

lak

h b

ut

whic

h m

ay e

xte

nd t

o I

NR

5

lakhs,

or

wit

h b

oth

70.

172

Contr

aven

tion of

the

pro

vis

ions

of

Chap

ter

XI

com

pri

sing

of

s

punis

hm

ent

has

bee

n p

resc

rib

ed.

punis

hm

ents

hav

e b

een p

rovid

ed

under

sec

tions

157, 159, 165, 166

and 1

67]

Fin

e, o

f not

less

than

IN

R

50,0

00/-

b

ut

whic

h

may

exte

nd t

o I

NR

5 l

akhs.

Fin

e, o

f not

less

than

IN

R

50,0

00/-

b

ut

whic

h

may

exte

nd t

o I

NR

5 l

akhs.

______

71.

173

Fai

lure

to g

ive

noti

ce o

f m

eeti

ngs

of

boar

d o

f dir

ecto

rs

______

______

whose

duty

is

to g

ive

noti

ce

under

th

is

sect

ion

and

who

fail

s to

do s

o s

hal

l b

e li

able

to

a p

enal

ty o

f IN

R 2

5,0

00/-

.

72.

178

Contr

aven

ing t

he

pro

vis

ions

of

s

177 (

Audit

Com

mit

tee)

and s

178

(Nom

inat

ion a

nd R

emuner

atio

n

Com

mit

tee

and S

takeh

old

ers

Rel

atio

nsh

ip C

om

mit

tee)

Fin

e, o

f not le

ss than

IN

R 1

lakh b

ut

whic

h m

ay e

xte

nd

to I

NR

5 l

akhs

Imp

riso

nm

ent

for

a te

rm

whic

h m

ay e

xte

nd t

o o

ne

less

than

IN

R 2

5,0

00/-

but

whic

h m

ay e

xte

nd t

o I

NR

1 l

akh, or

wit

h b

oth

.

______

xciv


Sr.

No

Sec

tion

Su

bje

ctP

un

ish

men

t fo

r

Com

pan

yin

Def

au

lt

Oth

ers

73.

182

Mak

ing p

oli

tica

l co

ntr

ibuti

ons

in

exce

ss o

f th

e li

mit

s p

resc

rib

ed o

r

in c

ontr

aven

tion o

f th

e p

rovis

ions

of

this

se

ctio

n

in

any

oth

er

man

ner

Fin

e w

hic

h m

ay e

xte

nd t

o

contr

ibute

d

Imp

riso

nm

ent

for

a te

rm

whic

h

may

ex

tend

to

six

whic

h

may

ex

tend

to

contr

ibute

d.

______

74.

184

Def

ault

in

m

akin

g

requis

ite

dis

closu

re o

f in

tere

st b

y a

dir

ecto

r

as

stip

ula

ted

in

s 184(1

) or

s

184(2

)

______

______

The

dir

ecto

r w

ho

com

mit

s

such

a

def

ault

is

p

unis

hab

le

wit

h i

mp

riso

nm

ent

for

a te

rm

whic

h m

ay e

xte

nd t

o o

ne

yea

r

INR

50,0

00/-

but

whic

h m

ay

exte

nd t

o I

NR

1 l

akh,

or

wit

h

both

.

75.

185

Gra

nti

ng

Loan

s,

Guar

ante

es,

Sec

uri

ty t

o d

irec

tors

, an

d p

erso

ns

in w

hom

any d

irec

tor

is inte

rest

ed

in c

ontr

aven

tion o

f th

e p

rovis

ions

of

this

sec

tion.

Fin

e, o

f not

less

than

IN

R

5

lakhs

but

whic

h

may

exte

nd t

o I

NR

25 l

akhs.

______

The

dir

ecto

r or

the

oth

er

per

son

to

whom

an

y

loan

is ad

van

ced or

guar

ante

e or

secu

rity

is

giv

en o

r p

rovid

ed

in co

nnec

tion w

ith an

y lo

an

taken

b

y

him

or

the

oth

er

per

son,

shal

l b

e p

unis

hab

le

wit

h

imp

riso

nm

ent

whic

h

may

exte

nd t

o s

ix m

onth

s or

5 l

akhs

but

whic

h m

ay e

xte

nd

to I

NR

25 l

akhs,

or

wit

h b

oth

.

xcv


Sr.

No

Sec

tion

Su

bje

ctP

un

ish

men

t fo

r

Com

pan

yin

Def

au

lt

Oth

ers

76.

186

Gra

nti

ng

Loan

s,

Guar

ante

es,

Sec

uri

ty

or

mak

ing

inves

tmen

t

or

acquir

ing

secu

riti

es

in

contr

aven

tion

of

the

pro

vis

ions

of

this

sec

tion.

Fin

e, o

f not

less

than

IN

R

25,0

00/-

b

ut

whic

h

may

exte

nd t

o I

NR

5 l

akhs

Imp

riso

nm

ent

for

a te

rm

whic

h m

ay e

xte

nd t

o t

wo

less

than

IN

R 2

5,0

00/-

but

whic

h m

ay e

xte

nd t

o I

NR

1 l

akh.

______

77.

187

Contr

aven

tion of

the

pro

vis

ions

of

this

se

ctio

n

rela

ting

to

the

gen

eral

sti

pula

tion th

at a

com

pan

y

must

hold

all

its

inves

tmen

ts i

n

its

ow

n

nam

e,

subje

ct

only

to

sect

ion.

Fin

e, o

f not

less

than

IN

R

25,0

00/-

b

ut

whic

h

may

exte

nd t

o I

NR

25 l

akhs

Imp

riso

nm

ent

for

a te

rm

whic

h

may

ex

tend

to

six

less

than

IN

R 2

5,0

00/-

but

whic

h m

ay e

xte

nd t

o I

NR

1 l

akh, or

wit

h b

oth

.

______

78.

188

Ente

ring

into

or

auth

ori

sing

the

ente

ring

into

co

ntr

acts

an

d

arra

ngem

ents

wit

h r

elat

ed p

arti

es

in c

ontr

aven

tion o

f th

e p

rovis

ions

of

this

se

ctio

n

by

a li

sted

com

pan

y.

______

______

Any

dir

ecto

r or

any

oth

er

emp

loyee

of

such

a

com

pan

y w

ho en

ters

into

or

auth

ori

ses

the

ente

ring

into

of

rela

ted

par

ty

contr

acts

and

arra

ngem

ents

in

su

ch

man

ner

is

p

unis

hab

le

wit

h

imp

riso

nm

ent

for

a te

rm

whic

h m

ay e

xte

nd t

o o

ne

yea

r

INR

25,0

00/-

but

whic

h m

ay

exte

nd t

o I

NR

5 l

akhs,

or

wit

h

both

.

xcvi


Sr.

No

Sec

tion

Su

bje

ctP

un

ish

men

t fo

r

Com

pan

yin

Def

au

lt

Oth

ers

79.

188

Ente

ring in

to or

auth

ori

sing th

e

ente

ring

into

th

e co

ntr

acts

an

d

arra

ngem

ents

wit

h r

elat

ed p

arti

es

in c

ontr

aven

tion o

f th

e p

rovis

ions

of

this

se

ctio

n

by

a co

mp

any

whic

h i

s not

list

ed c

om

pan

y.

______

______

Any

dir

ecto

r or

any

oth

er

emp

loyee

of

such

com

pan

y

less

th

an

INR

25,0

00/-

b

ut

whic

h m

ay e

xte

nd t

o I

NR

5

lakhs.

80.

189

Fai

lure

to

co

mp

ly

wit

h

the

pro

vis

ions

of

this

sec

tion r

elat

ing

to R

egis

ter

of

Contr

acts

and r

ule

s

ther

eto

______

______

Ever

y

dir

ecto

r w

ho

fail

s so

is l

iab

le t

o a

pen

alty

of

INR

25,0

00/-

.

81.

190

Fai

lure

to k

eep

at

the

regis

tere

d

the

contr

act

of

emp

loym

ent

of

man

agin

g d

irec

tor

or

whole

-tim

e

dir

ecto

r or

refu

sing

to

per

mit

insp

ecti

on t

her

eof.

Pen

alty

of

INR

25,0

00/-

. P

enal

ty o

f IN

R 5

,000/-

for

each

def

ault

.

______

82.

191

Contr

aven

tion of

the

pro

vis

ions

of

this

sec

tion w

hic

h p

erta

ins

to

pay

men

t to

dir

ecto

r fo

r lo

ss

of

tran

sfer

of

under

takin

g,

pro

per

ty

or

shar

es.

______

______

Any d

irec

tor w

ho c

ontr

aven

es,

less

th

an

INR

25,0

00/-

b

ut

whic

h m

ay e

xte

nd t

o I

NR

1

lakh.

xcvii


Sr.

No

Sec

tion

Su

bje

ctP

un

ish

men

t fo

r

Com

pan

yin

Def

au

lt

Oth

ers

83.

194

Contr

aven

tion of

the

pro

vis

ions

of

this

se

ctio

n

pro

hib

itin

g

forw

ard

dea

lings

in

secu

riti

es

of

com

pan

y

by

dir

ecto

r or

key

Man

ager

ial

per

sonnel

.

______

______

Any

dir

ecto

r or

any

key

man

ager

ial

per

sonnel

w

ho

contr

aven

es

is

punis

hab

le

wit

h i

mp

riso

nm

ent

for

a te

rm

whic

h

may

ex

tend

to

two

than

IN

R

1

lakh

but

whic

h

may

exte

nd t

o I

NR

5 l

akhs,

or

wit

h b

oth

.

84.

195

Contr

aven

tion of

the

pro

vis

ions

of

this

sec

tion p

rohib

itin

g i

nsi

der

trad

ing o

f se

curi

ties

.

______

______

Any p

erso

n w

ho c

ontr

aven

es

is

punis

hab

le

wit

h

imp

riso

nm

ent

for

a te

rm

than

IN

R 5

lak

hs

but

whic

h

may

exte

nd t

o I

NR

25 c

rore

s

or

thre

e ti

mes

the

amount

of

trad

ing,

whic

hev

er i

s hig

her

,

or

wit

h b

oth

85.

197

Contr

aven

tion o

f th

e p

rovis

ions

of

this

sec

tion r

egar

din

g m

anag

eria

l

rem

uner

atio

n.

______

______

Any p

erso

n w

ho c

ontr

aven

es

not

less

than

IN

R 1

lak

h b

ut

whic

h m

ay e

xte

nd t

o I

NR

5

lakhs.

xcviii


Sr.

No

Sec

tion

Su

bje

ctP

un

ish

men

t fo

r

Com

pan

yin

Def

au

lt

Oth

ers

86.

203

Contr

aven

tion of

the

pro

vis

ions

of

this

se

ctio

n

regar

din

g

app

oin

tmen

t of

key

m

anag

eria

l

per

sonnel

.

Fin

e, o

f not le

ss than

IN

R 1

lakh b

ut

whic

h m

ay e

xte

nd

to I

NR

5 l

akhs

______

Ever

y

dir

ecto

r an

d

key

man

ager

ial

per

sonnel

who i

s

in d

efau

lt i

s p

unis

hab

le w

ith

INR

50,0

00/-

and

wher

e th

e

contr

aven

tion i

s a

conti

nuin

g

may

exte

nd to I

NR

1,0

00/-

for

whic

h

the

contr

aven

tion

conti

nues

.

87.

204

Def

ault

in

co

mp

lyin

g

wit

h

the

requir

emen

ts

and

ob

ligat

ions

rela

ting

to

secr

etar

ial

audit

as

stip

ula

ted i

n t

his

sec

tion

Fin

e, o

f not le

ss than

IN

R 1

lakh b

ut

whic

h m

ay e

xte

nd

to I

NR

5 l

akhs

Fin

e, o

f not le

ss than

IN

R 1

lakh b

ut

whic

h m

ay e

xte

nd

to I

NR

5 l

akhs

The

com

pan

y

secr

etar

y

in

pra

ctic

e,

who

is

in

def

ault

,

shal

l b

e p

unis

hab

le

wit

h

a

lakh b

ut

whic

h m

ay e

xte

nd t

o

INR

5 l

akhs.

88.

206(4

) –

Se

co

nd

Pro

vis

o

Car

ryin

g

on

the

busi

nes

s of

a

com

pan

y

for

a fr

audule

nt

or

unla

wfu

l p

urp

ose

.

______

Lia

ble

fo

r p

unis

hm

ent

pre

scri

bed

for

Fra

ud u

nder

s 447.

______

89.

206(7

)F

aili

ng to f

urn

ish a

ny info

rmat

ion

or

exp

lanat

ion

or

fail

ing

to

pro

duce

an

y

docu

men

t to

th

e

Reg

istr

ar

or

the

Insp

ecto

r or

any

oth

er

stat

uto

ry

auth

ori

ty

s

requir

ed u

nder

this

sec

tion.

Fin

e w

hic

h m

ay e

xte

nd t

o

INR

1 l

akh a

nd i

n t

he

case

of

a co

nti

nuin

g

fail

ure

,

whic

h m

ay e

xte

nd t

o I

NR

500/-

fo

r ev

ery

day

af

ter

fail

ure

conti

nues

.

Fin

e w

hic

h m

ay e

xte

nd t

o

INR

1 l

akh a

nd i

n t

he

case

of

a co

nti

nuin

g

fail

ure

,

whic

h m

ay e

xte

nd t

o I

NR

500/-

fo

r ev

ery

day

af

ter

fail

ure

conti

nues

.

______

xcix


Sr.

No

Sec

tion

Su

bje

ctP

un

ish

men

t fo

r

Com

pan

yin

Def

au

lt

Oth

ers

90.

207(4

)D

isob

eyin

g t

he

dir

ecti

ons

issu

ed

by t

he

Reg

istr

ar o

r th

e In

spec

tor

under

this

sec

tion.

______

______

the

com

pan

y

who

dis

ob

eys

the

dir

ecti

on

issu

ed

by

the

Reg

istr

ar

or

the

insp

ecto

r

under

th

is

sect

ion

is

punis

hab

le w

ith im

pri

sonm

ent

whic

h m

ay e

xte

nd t

o o

ne

yea

r

INR

25,0

00/-

but

whic

h m

ay

exte

nd t

o I

NR

1 l

akh.

has

bee

n

convic

ted

of

an

off

ence

under

th

is

sect

ion

is

upon s

uch

convic

tion.

91.

213

Fin

din

g

up

on

inves

tigat

ion

that

the

busi

nes

s of

the

com

pan

y h

as

bee

n c

arri

ed o

n f

or

frau

dule

nt

or

unla

wfu

l p

urp

ose

s et

c.

______

Lia

ble

for

the

punis

hm

ent

pre

scri

bed

under

s

447,

if

it

is

pro

ved

af

ter

an

inves

tigat

ion

into

com

pan

y’s

aff

airs

, th

at-

(i)

the

busi

nes

s of

the

com

pan

y

wit

h

inte

nt

to

def

raud

its

cred

itors

,

mem

ber

s or

any

oth

er

per

sons

or

oth

erw

ise

for

a fr

audule

nt

or

unla

wfu

l

purp

ose

, or

that

th

e

com

pan

y

was

fo

rmed

fo

r

any f

raudule

nt

or

unla

wfu

l

purp

ose

; or

Ever

y p

erso

n c

once

rned

in the

form

atio

n o

f th

e co

mp

any o

r

the

man

agem

ent

of

its

affa

irs

is

liab

le

for

the

punis

hm

ent

pre

scri

bed

under

s 4

47.

c


Sr.

No

Sec

tion

Su

bje

ctP

un

ish

men

t fo

r

Com

pan

yin

Def

au

lt

Oth

ers

______

______

(ii)

hav

ing b

een a

per

son

conce

rned

in t

he

form

atio

n

of

the

com

pan

y

or

the

man

agem

ent

of

its

affa

irs,

found t

o b

e guil

ty o

f fr

aud.

______

92.

217(6

)D

isob

eyin

g t

he

dir

ecti

ons

issu

ed

by t

he

Reg

istr

ar o

r th

e In

spec

tor

under

this

sec

tion.

______

______

the

com

pan

y

who

dis

ob

eys

the

dir

ecti

on

issu

ed

by

the

Reg

istr

ar

or

the

insp

ecto

r

under

th

is

sect

ion

is

punis

hab

le w

ith im

pri

sonm

ent

whic

h m

ay e

xte

nd t

o o

ne

yea

r

INR

25,0

00/-

but

whic

h m

ay

exte

nd t

o I

NR

1 l

akh.

has

b

een

convic

ted

of

an

off

ence

under

th

is

sect

ion

auto

mat

ical

ly

up

on

such

convic

tion.

ci


Sr.

No

Sec

tion

Su

bje

ctP

un

ish

men

t fo

r

Com

pan

yin

Def

au

lt

Oth

ers

93.

217(8

)A

ny p

erso

n w

ho f

ails

-

(a)

to p

roduce

to a

n i

nsp

ecto

r or

any

per

son

auth

ori

sed

by

him

in t

his

beh

alf

any b

ook o

r p

aper

whic

h

is

his

duty

under

su

b-

sect

ion (

1)

or

sub

-sec

tion (

2)

to

pro

duce

;

(b)

to

furn

ish

any

info

rmat

ion

whic

h

is

his

duty

under

su

b-

sect

ion (

2)

to f

urn

ish;

(c)

to a

pp

ear

bef

ore

the

insp

ecto

r

per

sonal

ly w

hen

req

uir

ed to d

o s

o

under

sub

sec

tion (

4)

or

to a

nsw

er

any q

ues

tion w

hic

h i

s p

ut

to h

im

by t

he

insp

ecto

r in

purs

uan

ce o

f

that

sub

-sec

tion;

or

(d)

to

sign

the

note

s of

any

exam

inat

ion

refe

rred

to

in

su

b-

sect

ion (

7).

______

______

Any

per

son

who

com

mit

s

such

a

fail

ure

w

ithout

reas

onab

le c

ause

is p

unis

hab

le

wit

h i

mp

riso

nm

ent

for

a te

rm

whic

h

may

ex

tend

to

six

less

th

an

INR

25,0

00/-

b

ut

whic

h m

ay e

xte

nd t

o I

NR

1

lakh,

and a

lso w

ith a

furt

her

2,0

00/-

for

ever

y d

ay a

fter

the

or

refu

sal

conti

nues

.

94.

221

Rem

ovin

g

or

tran

sfer

ring

or

dis

posi

ng

of

asse

ts

of

the

com

pan

y i

n c

ontr

aven

tion o

f an

ord

er

of

the

NC

LT

under

th

is

sect

ion.

Fin

e, o

f not le

ss than

IN

R 1

lakh b

ut

whic

h m

ay e

xte

nd

to I

NR

25 l

akhs

Imp

riso

nm

ent

for

a te

rm

whic

h m

ay e

xte

nd t

o t

hre

e

less

than

IN

R 5

0,0

00/-

but

whic

h m

ay e

xte

nd t

o I

NR

5 l

akhs,

or

wit

h b

oth

.

______

95.

222

Issu

ing o

r tr

ansf

erri

ng s

ecuri

ties

in co

ntr

aven

tion of

an ord

er of

the

NC

LT

under

this

sec

tion.

Fin

e, o

f not le

ss than

IN

R 1

lakh b

ut

whic

h m

ay e

xte

nd

to I

NR

25 l

akhs

Imp

riso

nm

ent

for

a te

rm

whic

h

may

ex

tend

to

six

less

than

IN

R 2

5,0

00/-

but

whic

h m

ay e

xte

nd t

o I

NR

5 l

akhs,

or

wit

h b

oth

.

______

cii


Sr.

No

Sec

tion

Su

bje

ctP

un

ish

men

t fo

r

Com

pan

yin

Def

au

lt

Oth

ers

96.

229

Com

mit

ting a

ny o

f th

e fo

llow

ing

acts

:

(a)

des

troys,

m

uti

late

s or

or

unau

thori

sedly

rem

oves

, or

is

a p

arty

to

th

e

des

truct

ion,

muti

lati

on

or

tam

per

ing

or

unau

thori

sed

rem

oval

of,

docu

men

ts

rela

ting

to t

he

pro

per

ty,

asse

ts o

r af

fair

s

of

the

com

pan

y

or

the

body

corp

ora

te;

(b)

mak

es,

or

is a

par

ty to

th

e

mak

ing

of,

a

fals

e en

try

in

any

docu

men

t co

nce

rnin

g

the

com

pan

y o

r b

ody c

orp

ora

te;

or

(c)

pro

vid

es a

n e

xp

lanat

ion w

hic

h

is f

alse

or

whic

h h

e know

s to

be

fals

e.

______

______

Any

per

son,

incl

udin

g

any

com

pan

y w

ho is

re

quir

ed t

o

pro

vid

e an

ex

pla

nat

ion

or

mak

e a

stat

emen

t duri

ng t

he

cours

e of

insp

ecti

on,

inquir

y

or

inves

tigat

ion, w

ho c

om

mit

s

any

such

ac

ts

is

liab

le

for

punis

hm

ent

under

s 4

47.

97.

232

Tra

nsf

eror

or

Tra

nsf

eree

Com

pan

y

contr

aven

ing

the

pro

vis

ions

of

this

sec

tion r

elat

ing

to m

erger

an

d am

algam

atio

n of

com

pan

ies.

Fin

e, o

f not le

ss than

IN

R 1

lakh b

ut

whic

h m

ay e

xte

nd

to I

NR

25 l

akhs.

[App

lica

ble

to

b

oth

tran

sfer

or

com

pan

y a

s w

ell

as t

he

tran

sfer

ee c

om

pan

y]

Imp

riso

nm

ent

for

a te

rm

whic

h m

ay e

xte

nd t

o o

ne

less

th

an IN

R 1 la

kh b

ut

whic

h m

ay e

xte

nd t

o I

NR

3 l

akhs,

or

wit

h b

oth

.

[App

lica

ble

to

ev

ery

the

tran

sfer

or

com

pan

y

as

wel

l as

th

e tr

ansf

eree

com

pan

y]

______

ciii


Sr.

No

Sec

tion

Su

bje

ctP

un

ish

men

t fo

r

Com

pan

yin

Def

au

lt

Oth

ers

98.

238

Issu

ing

any

circ

ula

r co

mp

risi

ng

of

any

off

er

of

schem

es

involv

ing

tran

sfer

of

shar

es

wit

hout

pre

senti

ng t

he

sam

e fo

r

regis

trat

ion

and

whic

h

has

not

bee

n r

egis

tere

d u

nder

s 2

38(1

)(c)

.

______

______

Ever

y

dir

ecto

r does

so

is

less

th

an

INR

25,0

00/-

b

ut

whic

h m

ay e

xte

nd t

o I

NR

5

lakhs.

99.

242(5

)

& (

8)

Mak

ing

any

alte

rati

on

to

the

Mem

ora

ndum

or

Art

icle

s of

Ass

oci

atio

n

that

is

in

consi

sten

t

wit

h

the

alte

rati

ons

to

the

Mem

ora

ndum

an

d

Art

icle

s of

Ass

oci

atio

n

whic

h

has

b

een

carr

ied

out

by

an

ord

er

of

the

NC

LT

under

s 2

42(1

)

Fin

e, o

f not le

ss than

IN

R 1

lakh b

ut

whic

h m

ay e

xte

nd

to I

NR

25 l

akhs

Imp

riso

nm

ent

for

a te

rm

whic

h

may

ex

tend

to

six

less

than

IN

R 2

5,0

00/-

but

whic

h m

ay e

xte

nd t

o I

NR

1 l

akh, or

wit

h b

oth

.

______

100.

243

Know

ingly

ac

ting

as

the

man

agin

g

dir

ecto

r or

oth

er

dir

ecto

r or

man

ager

w

hose

agre

emen

t has

b

een

term

inat

ed

or

set

asid

e b

y a

n o

rder

of

NC

LT

issu

ed u

nder

s 2

42 w

ithin

a p

erio

d

ord

er t

erm

inat

ing o

r se

ttin

g a

side

the

agre

emen

t, w

ithout

secu

ring

the

leav

e of

the

Tri

bunal

.

______

______

Any p

erso

n w

ho s

o a

nd e

ver

y

oth

er d

irec

tor

of

the

com

pan

y

who

is

know

ingly

a

par

ty

to

such

co

ntr

aven

tion,

is

punis

hab

le w

ith im

pri

sonm

ent

for

a te

rm w

hic

h m

ay e

xte

nd

whic

h m

ay e

xte

nd t

o I

NR

5

lakhs,

or

wit

h b

oth

.

101.

245(7

)F

ailu

re t

o c

om

ply

wit

h a

ny o

rder

pas

sed

by

NC

LT

in

re

lati

on

to

Cla

ss A

ctio

n S

uit

s

Fin

e, o

f not

less

than

IN

R

5

lakhs

but

whic

h

may

exte

nd t

o I

NR

25 l

akhs.

Imp

riso

nm

ent

for

a te

rm

whic

h m

ay e

xte

nd t

o t

hre

e

less

than

IN

R 2

5,0

00/-

but

whic

h m

ay e

xte

nd t

o I

NR

1 l

akh.

______

civ


Sr.

No

Sec

tion

Su

bje

ctP

un

ish

men

t fo

r

Com

pan

yin

Def

au

lt

Oth

ers

102.

245(8

)F

ilin

g

friv

olo

us

or

vex

atio

us

app

lica

tions

bef

ore

NC

LT

by w

ay

of

clas

s ac

tion s

uit

s

______

______

Ever

y

per

son

who

does

so

is li

able

to

p

ay co

sts

to th

e

opp

osi

te p

arty

not

exce

edin

g

INR

1

lakh,

as

NC

LT

m

ay

spec

ify i

n t

he

ord

er.

103.

247

Contr

aven

tion of

the

pro

vis

ions

of

this

se

ctio

n

by

a R

egis

tere

d

Val

uer

s su

ch

as

fail

ure

to

b

e

imp

arti

al a

nd d

o a

tru

e an

d f

air

val

uat

ion;

fail

ure

to

ex

erci

se

due

dil

igen

ce a

nd c

are;

fai

lure

to

adher

e to

th

e p

resc

rib

ed

Rule

s;

and

under

takin

g

val

uat

ion

in

rela

tion t

o a

n a

sset

in w

hic

h h

e is

dir

ectl

y o

r in

dir

ectl

y i

nte

rest

ed.

______

______

The

val

uer

w

ho

contr

aven

es

the

pro

vis

ions

of

this

se

ctio

n

or

the

rule

s m

ade

ther

eunder

, is

than

IN

R 25,0

00/-

but

whic

h

may

exte

nd to I

NR

1 lak

h.

If t

he

val

uer

has

contr

aven

ed

such

p

rovis

ions

wit

h

the

inte

nti

on

to

def

raud

the

com

pan

y

or

its

mem

ber

s,

he

shal

l b

e p

unis

hab

le

wit

h

imp

riso

nm

ent

for

a te

rm

whic

h m

ay e

xte

nd t

o o

ne

yea

r

than

IN

R

1

lakh

but

whic

h

may

exte

nd t

o I

NR

5 l

akhs.

Furt

her

, su

b-s

ecti

on (

4)

of

this

sect

ion s

tate

s th

at if

a v

aluer

has

bee

n c

onvic

ted o

f an

y o

ffen

ce

afore

said

, he

shal

l be

liab

le t

o

retu

rn t

he

rem

uner

atio

n h

e had

rece

ived

fr

om

th

e co

mpan

y

and f

urt

her

he

is l

iable

to p

ay

dam

ages

to t

he

com

pan

y o

r to

any o

ther

per

son for lo

ss a

risi

ng

out

of

inco

rrec

t or

mis

lead

ing

stat

emen

ts o

r par

ticu

lars

mad

e

in h

is r

eport

.

cv


Sr.

No

Sec

tion

Su

bje

ctP

un

ish

men

t fo

r

Com

pan

yin

Def

au

lt

Oth

ers

104.

249

Mak

ing

an

app

lica

tion

under

s

248 i

n v

iola

tion o

f s

249(1

).

Fin

e, w

hic

h m

ay e

xte

nd t

o

INR

1 l

akh

______

______

105.

251

Mak

ing

app

lica

tion

for

stri

kin

g

off

th

e nam

e of

a co

mp

any

wit

h

the

obje

ct

of

evad

ing

the

liab

ilit

ies

of

the

com

pan

y

or

wit

h t

he

inte

nti

on t

o d

ecei

ve

the

cred

itors

or

to d

efra

ud a

ny o

ther

per

sons.

.

______

______

The

per

sons

in c

har

ge

of

the

man

agem

ent

of

the

com

pan

y

shal

l, n

otw

ithst

andin

g t

hat

the

dis

solv

ed-

(a)

be

join

tly

and

sever

ally

liab

le

to

any

per

son

or

per

sons

who

had

in

curr

ed

loss

or

dam

age

as a

res

ult

of

dis

solv

ed;

and

(b)

be

punis

hab

le

for

frau

d

in t

he

man

ner

as

pro

vid

ed i

n

s 447.

106.

266

Punis

hm

ent

for

a p

erso

n

who

has

bee

n f

ound b

y N

CL

T t

o h

ave

mis

app

lied

or

div

erte

d fu

nds

or

pro

per

ties

of

a si

ck

com

pan

y

or

has

co

mm

itte

d

mis

feas

ance

,

mal

feas

ance

or

non-f

easa

nce

.

______

______

The

per

sons

who

hav

e

done

so

or

who

hav

e done

mis

feas

ance

, m

alfe

asan

ce

or

non-f

easa

nce

is

liab

le -

(a)

to r

esto

re t

he

pro

per

ty o

r

mak

e good t

he

loss

es t

o t

he

sick

com

pan

y o

r co

mp

ensa

te

as p

er d

irec

tions

of

NC

LT

;

(b)

for

any leg

al a

ctio

n a

gai

nst

him

incl

udin

g t

hat

for

frau

d;

cvi


Sr.

No

Sec

tion

Su

bje

ctP

un

ish

men

t fo

r

Com

pan

yin

Def

au

lt

Oth

ers

______

______

______

(c)

may

suff

er d

isen

titl

emen

t

from

b

eing

elig

ible

fo

r

acce

ssin

g

borr

ow

ed

funds

from

b

anks

and

pub

lic

level

inst

ituti

ons;

and

bei

ng e

ligib

le t

o b

e a

dir

ecto

r

of

any c

om

pan

y.

[A

pro

vis

o

stat

es

that

su

ch

dir

ecti

on b

y N

CL

T i

s w

ithout

pre

judic

e to

an

y

acti

on

for

Fra

ud u

nder

s 4

47]

107.

267

Vio

lati

ng

the

pro

vis

ions

of

Chap

ter

XIX

or

any

schem

e,

or

any

ord

er,

of

the

NC

LT

or

the

Nat

ional

C

om

pan

y

Law

App

ella

te T

rib

unal

[N

CL

AT

] or

mak

es a

fal

se s

tate

men

t or

giv

es

fals

e ev

iden

ce b

efore

the

NC

LT

or

NC

LA

T o

r at

tem

pts

to t

amp

er

wit

h t

he

reco

rds

of

refe

rence

or

______

______

The

per

son

who

vio

late

s

is

punis

hab

le

wit

h

an

imp

riso

nm

ent

for

a te

rm

whic

h

may

ex

tend

to

seven

may

exte

nd t

o I

NR

10 l

akhs.

cvii


Sr.

No

Sec

tion

Su

bje

ctP

un

ish

men

t fo

r

Com

pan

yin

Def

au

lt

Oth

ers

108.

274

Contr

aven

tion of

the

pro

vis

ions

of

this

sec

tion p

erta

inin

g t

o t

he

______

com

pan

y

who

I in

def

ault

w

ho

contr

aven

es

so

is

punis

hab

le

wit

h

imp

riso

nm

ent

for

a te

rm

whic

h

may

ex

tend

to

six

less

than

IN

R 2

5,0

00/-

but

whic

h m

ay e

xte

nd t

o I

NR

5 l

akhs,

or

wit

h b

oth

.

The

dir

ecto

r of

the

com

pan

y

who

contr

aven

es

so,

is

punis

hab

le w

ith im

pri

sonm

ent

for

a te

rm w

hic

h m

ay e

xte

nd

not

less

than

IN

R 2

5,0

00/-

but

whic

h m

ay e

xte

nd t

o I

NR

5

lakhs,

or

wit

h b

oth

.

109.

284

emp

loyee

s of

a co

mp

any

in

win

din

g

up

, fa

ilin

g

to

exte

nd

full

coop

erat

ion t

o t

he

Com

pan

y

Liq

uid

ator

in

dis

char

ge

of

his

funct

ions

and d

uti

es.

______

______

Any

per

son

who,

wit

hout

reas

onab

le

cause

, fa

ils

to

exte

nd

such

co

op

erat

ion

to

the

com

pan

y

liquid

ator

is

punis

hab

le w

ith im

pri

sonm

ent

whic

h

may

ex

tend

to

six

may

exte

nd t

o I

NR

50,0

00/-

or

wit

h b

oth

.

110.

302

Fai

lure

b

y

the

Com

pan

y

Liq

uid

ator

to f

orw

ard a

cop

y o

f

the

ord

er o

f N

CL

T o

n d

isso

luti

on

of

com

pan

y.

______

______

The

Com

pan

y

Liq

uid

ator

who

mak

es

the

def

ault

is

may

exte

nd to I

NR

5,0

00/-

for

ever

y

day

duri

ng

whic

h

the

def

ault

conti

nues

.

cviii


Sr.

No

Sec

tion

Su

bje

ctP

un

ish

men

t fo

r

Com

pan

yin

Def

au

lt

Oth

ers

111.

305

Mak

ing a

dec

lara

tion u

nder

this

sect

ion w

ithout h

avin

g r

easo

nab

le

gro

unds

for

the

op

inio

n t

hat

the

com

pan

y w

ill

be

able

to p

ay i

ts

deb

ts i

n f

ull

fro

m t

he

pro

ceed

s of

asse

ts s

old

in v

olu

nta

ry w

indin

g

up

.

______

______

Ever

y d

irec

tor

who d

oes

so i

s

punis

hab

le w

ith im

pri

sonm

ent

for

a te

rm

whic

h

shal

l not

be

less

th

an th

ree

yea

rs b

ut

than

IN

R 5

0,0

00/-

but

whic

h

may

exte

nd t

o I

NR

3 l

akhs,

or

wit

h b

oth

112.

306

Contr

aven

tion of

the

pro

vis

ions

of

this

se

ctio

n

rela

ting

to

Mee

tings

of

Cre

dit

ors

Fin

e, o

f not

less

than

IN

R

50,0

00/-

b

ut

whic

h

may

exte

nd t

o I

NR

2 l

akhs

______

Ever

y d

irec

tor

of

the

com

pan

y

who

is

in

def

ault

sh

all

be

punis

hab

le w

ith im

pri

sonm

ent

for

a te

rm w

hic

h m

ay e

xte

nd

not

less

than

IN

R 5

0,0

00/-

but

whic

h m

ay e

xte

nd t

o I

NR

2

lakhs,

or

wit

h b

oth

113.

307

Fai

lure

to

giv

e noti

ce

of

the

reso

luti

on to

win

d u

p th

e co

mp

any

volu

nta

rily

b

y

adver

tise

men

t in

new

spap

er w

hic

h i

s in

cir

cula

tion

in the

dis

tric

t w

her

e th

e re

gis

tere

d

the

com

pan

y

is

situ

ate,

w

ithin

14

day

s of

the

pas

sing

of

the

reso

luti

on.

Fin

e, w

hic

h m

ay e

xte

nd t

o

INR

5,0

00/-

for

ever

y d

ay

duri

ng w

hic

h s

uch

def

ault

conti

nues

.

Fin

e, w

hic

h m

ay e

xte

nd t

o

INR

5,0

00/-

for

ever

y d

ay

duri

ng w

hic

h s

uch

def

ault

conti

nues

______

cix


Sr.

No

Sec

tion

Su

bje

ctP

un

ish

men

t fo

r

Com

pan

yin

Def

au

lt

Oth

ers

114.

312

Fai

lure

to

giv

e noti

ce

of

app

oin

tmen

t of

Com

pan

y

Liq

uid

ator

or

vac

ancy

ther

eof

to

the

Reg

istr

ar.

Fin

e, w

hic

h m

ay e

xte

nd t

o

INR

500/-

fo

r ev

ery

day

duri

ng w

hic

h s

uch

def

ault

conti

nues

Fin

e, w

hic

h m

ay e

xte

nd t

o

INR

500/-

fo

r ev

ery

day

duri

ng w

hic

h s

uch

def

ault

conti

nues

______

115.

314(5

)

stat

emen

t of

acco

unts

w

ith

the

Reg

istr

ar w

ithin

thir

ty d

ays

from

the

close

of

each

quar

ter.

______

______

The

Com

pan

y L

iquid

ator

who

fail

s to

do

so

is

punis

hab

le

to

INR

5,0

00/-

fo

r ev

ery

day

duri

ng w

hic

h t

he

fail

ure

conti

nues

.

116.

314(8

) F

ailu

re

of

the

Com

pan

y

Liq

uid

ator

to

com

ply

w

ith

the

pro

vis

ions

of

this

se

ctio

n

oth

er

than

sub

-sec

tion (

5).

______

______

The

Com

pan

y L

iquid

ator

who

fail

s to

do

so

is

punis

hab

le

INR

10 l

akhs.

117.

316

Fai

lure

on

the

par

t of

the

Com

pan

y L

iquid

ator

to c

onven

e

and

hold

quar

terl

y

mee

tings

of

mem

ber

s an

d

cred

itors

an

d

to

sub

mit

re

port

on

pro

gre

ss

of

win

din

g u

p.

______

______

The

Com

pan

y L

iquid

ator

who

fail

s to

do s

o i

s p

unis

hab

le,

in

resp

ect

of

each

such

fai

lure

,

INR

10 l

akhs.

118.

318

Fai

lure

on

the

par

t of

the

Com

pan

y L

iquid

ator

–

and d

isso

luti

on o

f co

mp

any;

win

din

g u

p a

ccounts

;

______

______

The

Com

pan

y L

iquid

ator

who

fail

s to

do

so

is

punis

hab

le

INR

1 l

akh

cx


Sr.

No

Sec

tion

Su

bje

ctP

un

ish

men

t fo

r

Com

pan

yin

Def

au

lt

Oth

ers

acco

unts

and c

op

ies

of

reso

luti

ons

pas

sed a

t th

at m

eeti

ng;

and

for

an o

rder

of

dis

solu

tion; an

d (

e)

the

com

pan

y.

______

______

______

119.

336(1

)

in

liquid

atio

n.

[An

exp

lanat

ion

under

th

is se

ctio

n sa

ys

that

th

e

per

son i

n a

ccord

ance

wit

h w

hose

dir

ecti

ons

or

inst

ruct

ions

the

dir

ecto

rs

of

the

com

pan

y

hav

e

bee

n a

ccust

om

ed t

o a

ct].

______

______

If an

y per

son,

who is

or

has

whic

h,

at

the

tim

e of

the

com

mis

sion

of

the

alle

ged

off

ence

, is

bei

ng

wound

up,

he

shal

l be

punis

hab

le

wit

h

impri

sonm

ent

for

a te

rm w

hic

h

shal

l not

be

less

th

an

thre

e

yea

rs b

ut

whic

h m

ay e

xte

nd t

o

less

than

IN

R 1

lak

h b

ut

whic

h

may

exte

nd to I

NR

3 lak

hs.

120.

336(2

)P

awnin

g,

ple

dgin

g or

dis

posi

ng

of

any p

rop

erty

in c

ircu

mst

ance

s

whic

h a

mount to

an o

ffen

ce u

nder

s 336(1

)(d)(

vii

i).

______

______

Ever

y

per

son

who

takes

in

paw

n o

r p

ledge

or

oth

erw

ise

rece

ives

th

e p

rop

erty

,

know

ing

it

to

be

paw

ned

,

ple

dged

, or dis

pose

d o

f in

such

circ

um

stan

ces

amounti

ng

to

be

an o

ffen

ce u

nder

s 3

36(1

)

(d)(

vii

i)

is

punis

hab

le

wit

h

imp

riso

nm

ent

for

a te

rm

whic

h s

hal

l not

be

less

than

cxi


Sr.

No

Sec

tion

Su

bje

ctP

un

ish

men

t fo

r

Com

pan

yin

Def

au

lt

Oth

ers

______

______

______

thre

e yea

rs

but

whic

h

may

lakhs

but

whic

h m

ay e

xte

nd

to I

NR

5 l

akhs.

121.

337

the

com

pan

y in w

indin

g u

p w

ho –

(a)

has

, b

y

fals

e p

rete

nce

s or

by

mea

ns

of

any

oth

er

frau

d,

induce

d a

ny p

erso

n t

o g

ive

cred

it

to t

he

com

pan

y;

(b)

wit

h

inte

nt

to

def

raud

cred

itors

of

the

com

pan

y o

r an

y

oth

er p

erso

n,

has

mad

e or

cause

d

to b

e m

ade

any gif

t or

tran

sfer

of,

or

char

ge

on,

or

has

cau

sed

or

conniv

ed a

t th

e le

vyin

g o

f an

y

exec

uti

on a

gai

nst

, th

e p

rop

erty

of

the

com

pan

y;

or

(c)

wit

h inte

nt to

def

raud c

redit

ors

of

the

com

pan

y, h

as c

once

aled

or

rem

oved

any p

art

of

the

pro

per

ty

of

the

com

pan

y s

ince

the

dat

e of

for

pay

men

t of

money

ob

tain

ed

agai

nst

th

e co

mp

any

or

wit

hin

two m

onth

s b

efore

that

dat

e.

______

______

Any s

uch

per

son,

bei

ng a

t th

e

tim

e of

the

com

mis

sion

of

of

a co

mp

any

whic

h

has

sub

sequen

tly

bee

n

ord

ered

to b

e w

ound u

p b

y N

CL

T o

r

whic

h

sub

sequen

tly

pas

ses

a re

solu

tion

for

volu

nta

ry

win

din

g

up

is

p

unis

hab

le

wit

h

imp

riso

nm

ent

for

a

term

whic

h s

hal

l not

be

less

than

one

yea

r b

ut

whic

h m

ay

exte

nd t

o t

hre

e yea

rs a

nd w

ith

lakh b

ut

whic

h m

ay e

xte

nd t

o

INR

3 l

akhs

cxii


Sr.

No

Sec

tion

Su

bje

ctP

un

ish

men

t fo

r

Com

pan

yin

Def

au

lt

Oth

ers

122.

338

Lia

bil

ity w

her

e p

rop

er ac

counts

not

kep

t

______

Imp

riso

nm

ent

for

a te

rm

whic

h s

hal

l not b

e le

ss than

one

yea

r b

ut

whic

h

may

exte

nd t

o t

hre

e yea

rs a

nd

INR

1 l

akh b

ut

whic

h m

ay

exte

nd t

o I

NR

3 l

akhs.

enti

tled

to

re

lief

if

he

is

able

to

sh

ow

th

at he

had

acte

d

hones

tly

and

that

in

the

circ

um

stan

ces

in

whic

h t

he

busi

nes

s of

the

com

pan

y

was

ca

rrie

d

on,

the

def

ault

was

excu

sab

le.

______

123.

339

Car

ryin

g

on

the

busi

nes

s of

the

com

pan

y

wit

h

an

inte

nt

to

def

raud c

redit

ors

of

the

com

pan

y

or

any o

ther

per

sons

or

for

any

frau

dule

nt

purp

ose

.

[This

se

ctio

n

shal

l ap

ply

notw

ithst

andin

g

that

th

e p

erso

n

conce

rned

m

ay

be

punis

hab

le

under

any o

ther

law

for

the

tim

e

bei

ng i

n f

orc

e in

res

pec

t of

the

mat

ters

on t

he

gro

und o

f w

hic

h

the

dec

lara

tion i

s to

be

mad

e]

______

______

Ever

y

per

son

who

is

know

ingly

a

par

ty

to

the

frau

dule

nt c

onduct

of b

usi

nes

s

of

the

com

pan

y i

s li

able

for

punis

hm

ent

as

pre

scri

bed

under

s 4

47 o

f th

e A

ct.

The

NC

LT

m

ay dec

lare

an

y

per

son t

o b

e p

erso

nal

ly l

iab

le

wit

hout

any

lim

itat

ion

of

liab

ilit

y f

or

all

or

any o

f th

e

deb

ts o

f th

e co

mp

any.

cxiii


Sr.

No

Sec

tion

Su

bje

ctP

un

ish

men

t fo

r

Com

pan

yin

Def

au

lt

Oth

ers

124.

342

Fai

lure

of

Com

pan

y

Liq

uid

ator

and

of

ever

y

per

son

who

is

or

the

com

pan

y t

o g

ive

assi

stan

ce i

n

and m

emb

ers

of

the

com

pan

y. A

n

exp

lanat

ion u

nder

s 3

42(5

) sa

ys

that

th

e w

ord

“a

gen

t”

incl

udes

any

ban

ker

or

legal

ad

vis

or

of

the

com

pan

y

and

any

per

son

emp

loyed

b

y

the

com

pan

y

as

audit

or.

______

______

Fin

e,

of

not

less

th

an

INR

25,0

00/-

b

ut

whic

h

may

exte

nd t

o I

NR

1 l

akh.

125.

344

Fai

lure

of

a co

mp

any i

n w

indin

g

up

, w

het

her

by a

n o

rder

of

NC

LT

or

on volu

nta

ry w

indin

g up

, to

ensu

re t

hat

ever

y i

nvoic

e, o

rder

for

goods

or

busi

nes

s le

tter

iss

ued

on i

ts b

ehal

f ca

rrie

s a

stat

emen

t

that

com

pan

y i

s b

eing w

ould

up

.

Fin

e, o

f not

less

than

IN

R

50,0

00/-

b

ut

whic

h

may

exte

nd t

o I

NR

3 l

akhs

com

pan

y,

who

wil

lfull

y

auth

ori

ses

or

per

mit

s th

e

non-c

om

pli

ance

, sh

all

be

less

than

IN

R 5

0,0

00/-

but

whic

h m

ay e

xte

nd t

o I

NR

3 l

akhs

The

Com

pan

y L

iquid

ator

and

any r

ecei

ver

or

man

ager

, w

ho

wil

lfull

y a

uth

ori

ses

or

per

mit

s

the

non-c

om

pli

ance

, sh

all

be

less

th

an

INR

50,0

00/-

b

ut

whic

h m

ay e

xte

nd t

o I

NR

3

lakhs

126.

347

Contr

aven

tion

of

Rule

s fr

amed

by

Cen

tral

G

over

nm

ent

for

pre

ven

ting des

truct

ion of

books

and

pap

ers

of

a co

mp

any

that

has

bee

n w

ound u

p a

nd m

atte

rs

inci

den

tal

ther

eto.

______

______

Any

per

son

who

acts

in

contr

aven

tion o

f an

y s

uch

is

punis

hab

le w

ith im

pri

sonm

ent

for

a te

rm w

hic

h m

ay e

xte

nd

whic

h

may

ex

tend

to

INR

50,0

00/-

or

wit

h b

oth

.

cxiv


Sr.

No

Sec

tion

Su

bje

ctP

un

ish

men

t fo

r

Com

pan

yin

Def

au

lt

Oth

ers

127.

348

Fra

udule

ntl

y p

osi

ng a

s a

cred

itor

or

contr

ibuto

ry w

hil

e fu

rnis

hin

g

info

rmat

ion

(in

rela

tion

to

liquid

atio

ns

under

way

) under

s

348(4

) fo

r in

spec

ting

stat

emen

t

refe

rred

to i

n s

348(1

).

______

______

Any

per

son

who

does

so

shal

l b

e dee

med

to b

e guil

ty

of

an o

ffen

ce u

nder

s 1

82 o

f

the

India

n

Pen

al

Code,

an

d

shal

l,

on

the

app

lica

tion

of

the

Com

pan

y L

iquid

ator,

b

e

punis

hab

le a

ccord

ingly

.

128.

348(6

)If

a

Com

pan

y

Liq

uid

ator

contr

aven

es t

he

pro

vis

ions

of

this

sect

ion.

______

______

The

Com

pan

y L

iquid

ator

who

contr

aven

es

is

punis

hab

le

to

INR

5,0

00/-

fo

r ev

ery

day

duri

ng w

hic

h t

he

fail

ure

conti

nues

.

129.

348(7

)C

om

pan

y

Liq

uid

ator

get

ting

the

stat

emen

t re

ferr

ed t

o i

n s

ub

-

sect

ion (1

) au

dit

ed b

y a

per

son

audit

or

______

______

The

Com

pan

y

Liq

uid

ator

shal

l b

e p

unis

hab

le

wit

h

imp

riso

nm

ent

for

a te

rm

whic

h

may

ex

tend

to

six

may

exte

nd t

o I

NR

1 l

akh,

or

wit

h b

oth

.

130.

350

Com

pan

y

Liq

uid

ator

reta

inin

g

monie

s re

ceiv

ed

by

him

in

his

cap

acit

y a

s co

mp

any L

iquid

ator

bey

ond

the

per

iod

pre

scri

bed

in t

his

sec

tion o

r as

all

ow

ed b

y

NC

LT

.

______

______

The

Com

pan

y L

iquid

ator

who

is i

n s

uch

a d

efau

lt i

s li

able

,

inte

r al

ia,

to p

ay in

tere

st on

the

amount

of

so

reta

ined

in e

xce

ss a

t th

e ra

te o

f 12%

per

annum

and a

lso p

ay s

uch

pen

alty

as

may

be

det

erm

ined

by N

CL

T.

cxv


Sr.

No

Sec

tion

Su

bje

ctP

un

ish

men

t fo

r

Com

pan

yin

Def

au

lt

Oth

ers

131.

352

Any L

iquid

ator

reta

inin

g m

oney

whic

h h

e ought

to h

ave

rem

itte

d

to

Com

pan

y

Liq

uid

atio

n

Div

iden

d

and

Undis

trib

ute

d

Ass

ets

Acc

ount

______

______

The

Liq

uid

ator

who i

s in

such

a def

ault

is

liab

le, in

ter

alia

, to

pay

inte

rest

on t

he

amount

of

so r

etai

ned

at

the

rate

of

12%

per

annum

and a

lso p

ay s

uch

pen

alty

as

may

be

det

erm

ined

by t

he

Reg

istr

ar.

132.

356

wit

hin

thir

ty d

ays

afte

r th

e m

akin

g

of

the

ord

er,

or

such

furt

her

tim

e

as

the

Tri

bunal

m

ay

allo

w,

a

NC

LT

(p

asse

d b

y t

he

Tri

bunal

in

exer

cise

of

its

pow

ers

to d

ecla

re

dis

solu

tion o

f a

com

pan

y v

oid

).

______

______

The

Com

pan

y

Liq

uid

ator

or

the

per

son

on

whose

app

lica

tion

the

ord

er

was

mad

e,

who

fail

s so

, is

may

exte

nd t

o I

NR

10,0

00/-

for

ever

y

day

duri

ng

whic

h

the

def

ault

conti

nues

.

133.

392

Punis

hm

ent

for

contr

aven

tion

if

pro

vis

ions

of

Chap

ter

XX

II

per

tain

ing to s

tatu

tory

ob

ligat

ions

of

Fore

ign C

om

pan

ies

The

Fore

ign

Com

pan

y

is

INR

1 l

akh b

ut

whic

h m

ay

exte

nd t

o I

NR

3 l

akhs

and

in t

he

case

of

a co

nti

nuin

g

off

ence

, w

ith a

n a

ddit

ional

INR

50,0

00/-

fo

r ev

ery

whic

h

the

contr

aven

tion

conti

nues

.

Com

pan

y w

ho i

s in

def

ault

shal

l b

e p

unis

hab

le

wit

h

imp

riso

nm

ent

for

a te

rm

whic

h

may

ex

tend

to

six

less

than

IN

R 2

5,0

00/-

but

whic

h m

ay e

xte

nd t

o I

NR

5 l

akhs,

or

wit

h b

oth

______

cxvi


Sr.

No

Sec

tion

Su

bje

ctP

un

ish

men

t fo

r

Com

pan

yin

Def

au

lt

Oth

ers

134.

403

docu

men

ts o

r fa

ils

to r

ecord

any

docu

men

t,

fact

or

info

rmat

ion,

wit

hin

th

e ex

tended

p

erio

d

of

tim

e p

resc

rib

ed u

nder

this

sec

tion

Pen

alty

or

punis

hm

ent

pro

vid

ed u

nder

this

Act

for

such

fai

lure

or

def

ault

.

[The

above

liab

ilit

y

is

wit

hout

pre

judic

e to

th

e

liab

ilit

y f

or

pay

men

t of

fee

and a

ddit

ional

fee

]

Pen

alty

or

punis

hm

ent

pro

vid

ed u

nder

this

Act

for

such

fai

lure

or

def

ault

.

[The

above

liab

ilit

y

is

wit

hout

pre

judic

e to

th

e

liab

ilit

y f

or

pay

men

t of

fee

and a

ddit

ional

fee

]

______

135.

405

Fai

lure

to c

om

ply

wit

h a

n o

rder

mad

e under

su

b-s

ecti

on

(1)

or

sub

sect

ion

(3),

or

know

ingly

furn

ishes

an

y

info

rmat

ion

or

stat

isti

cs

whic

h

is

inco

rrec

t

or

inco

mp

lete

in

an

y

mat

eria

l

resp

ect

as

requir

ed

by

Cen

tral

Gover

nm

ent

in

exer

cise

of

its

pow

ers

under

this

sec

tion.

Fin

e w

hic

h m

ay e

xte

nd t

o

INR

25,0

00/-

Imp

riso

nm

ent

for

a te

rm

whic

h

may

ex

tend

to

six

less

than

IN

R 2

5,0

00/-

but

whic

h m

ay e

xte

nd t

o I

NR

3 l

akhs,

or

wit

h b

oth

.

______

136.

447

Punis

hm

ent

for

Fra

ud

______

______

Any p

erso

n w

ho i

s fo

und t

o

be

guil

ty

of

frau

d,

shal

l b

e

punis

hab

le w

ith im

pri

sonm

ent

for

a te

rm

whic

h

shal

l not

be

less

th

an si

x m

onth

s b

ut

whic

h

may

ex

tend

to

ten

yea

rs a

nd s

hal

l al

so b

e li

able

amount

involv

ed i

n t

he

frau

d,

but w

hic

h m

ay e

xte

nd to thre

e

tim

es t

he

amount

involv

ed i

n

the

frau

d.

cxvii


Sr.

No

Sec

tion

Su

bje

ctP

un

ish

men

t fo

r

Com

pan

yin

Def

au

lt

Oth

ers

______

______

______

[The

above

punis

hm

ent

is

wit

hout

pre

judic

e to

an

y

liab

ilit

y i

ncl

udin

g r

epay

men

t

of

any

deb

t under

th

is

Act

or

any o

ther

law

for

the

tim

e

bei

ng i

n f

orc

e]

137.

448

Mak

ing,

in

any

retu

rn,

rep

ort

,

pro

spec

tus,

st

atem

ent

or

oth

er

docu

men

t re

quir

ed b

y, o

r fo

r, t

he

purp

ose

s of

any o

f th

e p

rovis

ions

of

this

A

ct

or

the

rule

s m

ade

ther

eunder

-

(a)

whic

h i

s fa

lse

in a

ny m

ater

ial

par

ticu

lars

, know

ing

it

to

be

fals

e; o

r

(b)

whic

h o

mit

s an

y m

ater

ial fa

ct,

know

ing i

t to

be

mat

eria

l.

______

______

Any

per

son

who

mak

es

such

a

stat

emen

t is

li

able

for

punis

hm

ent

for

Fra

ud a

s

pre

scri

bed

under

s 4

47.

138.

449

Any

per

son

who

inte

nti

onal

ly

giv

es f

alse

evid

ence

–

(a)

up

on a

ny e

xam

inat

ion o

n o

ath

under

this

Act

; or

(b the

win

din

g u

p o

f an

y c

om

pan

y

under

this

Act

, or

oth

erw

ise

in o

r

about

any

mat

ter

aris

ing

under

this

Act

.

______

______

Such

per

son p

unis

hab

le w

ith

imp

riso

nm

ent

for

a te

rm

whic

h s

hal

l not

be

less

than

thre

e yea

rs

but

whic

h

may

exte

nd

to

seven

yea

rs

and

INR

10 l

akhs.

cxviii


Sr.

No

Sec

tion

Su

bje

ctP

un

ish

men

t fo

r

Com

pan

yin

Def

au

lt

Oth

ers

139.

450

Punis

hm

ent

for

contr

aven

ing

any o

f th

e p

rovis

ions

of

this

Act

or

the

rule

s m

ade

ther

eunder

,

or

any

condit

ion,

lim

itat

ion

or

rest

rict

ion su

bje

ct to

w

hic

h an

y

app

roval

, sa

nct

ion,

conse

nt,

dir

ecti

on o

r ex

emp

tion i

n r

elat

ion

to a

ny m

atte

r has

bee

n a

ccord

ed,

giv

en o

r gra

nte

d,

and f

or

whic

h

no

pen

alty

or

punis

hm

ent

is

pro

vid

ed e

lsew

her

e in

this

Act

.

Fin

e w

hic

h

may

ex

tend

to

INR

10,0

00/-

, an

d

wher

e th

e co

ntr

aven

tion

is

conti

nuin

g

one,

w

ith

exte

nd

to

INR

1,0

00/-

for

ever

y

day

af

ter

the

contr

aven

tion c

onti

nues

.

Fin

e w

hic

h

may

ex

tend

to

INR

10,0

00/-

, an

d

wher

e th

e co

ntr

aven

tion

is

conti

nuin

g

one,

w

ith

exte

nd

to

INR

1,0

00/-

for

ever

y

day

af

ter

the

contr

aven

tion c

onti

nues

.

______

140.

451

Punis

hm

ent

wher

e th

e sa

me

off

ence

p

unis

hab

le

eith

er

wit

h

if s

uch

an o

ffen

ce i

s co

mm

itte

d

for

the

seco

nd

or

sub

sequen

t

occ

asio

ns

(rep

eate

d d

efau

lts)

for

such

off

ence

in a

ddit

ion

to

any

imp

riso

nm

ent

pro

vid

ed f

or

that

off

ence

.

for

such

off

ence

in a

ddit

ion

to

any

imp

riso

nm

ent

pro

vid

ed f

or

that

off

ence

.

______

141.

452

Wro

ngfu

l w

ithhold

ing

of

any

pro

per

ty

of

a co

mp

any

by

any

com

pan

y

______

______

not

less

than

IN

R 1

lak

h b

ut

whic

h m

ay e

xte

nd t

o I

NR

5

lakhs.

142.

453

Punis

hm

ent

for

imp

rop

er u

se o

f

“Lim

ited

” or

“Pri

vat

e L

imit

ed”.

______

______

Any p

erso

n w

ho does

so

is

less

than

IN

R 5

00/-

but

may

exte

nd

to

INR

2,0

00/-

for

ever

y d

ay f

or

whic

h that

nam

e

or

titl

e has

bee

n u

sed.

cxix


Sr.

No

Sec

tion

Su

bje

ctP

un

ish

men

t fo

r

Com

pan

yin

Def

au

lt

Oth

ers

143.

454

who i

s in

def

ault

to p

ay p

enal

ties

or

Reg

ional

D

irec

tor

(App

ella

te

Auth

ori

ty

agai

nst

ord

ers

of

per

iod

of

nin

ety

day

s fr

om

th

e

dat

e of

the

rece

ipt

of

the

cop

y o

f

the

ord

er.

Fin

e, o

f not

less

than

IN

R

25,0

00/-

b

ut

whic

h

may

exte

nd t

o I

NR

5 l

akhs

Imp

riso

nm

ent

whic

h

may

exte

nd

to

six

month

s or

INR

25,0

00/-

b

ut

whic

h

may

exte

nd t

o I

NR

1 l

akh,

or

wit

h b

oth

.

______

144.

464

Wit

hout

bei

ng

regis

tere

d

under

the

Com

panie

s A

ct o

r an

y o

ther

law

for

the

tim

e b

eing i

n f

orc

e,

an

asso

ciat

ion

or

par

tner

ship

is

pro

hib

ited

fr

om

hav

ing

as

its

mem

ber

s or

par

tner

s in

exce

ss o

f

the

pre

scri

bed

num

ber

.

______

______

Ever

y

mem

ber

of

an

asso

ciat

ion

or

par

tner

ship

carr

yin

g

on

busi

nes

s in

contr

aven

tion

of

sub

-sec

tion

(1)

shal

l b

e p

unis

hab

le w

ith

INR

1

lakh

and

shal

l al

so

be

per

sonal

ly

liab

le

for

all

liab

ilit

ies

incu

rred

in

su

ch

busi

nes

s.

Introduction

Stringent provisions without strong enforcement machinery would be akin to sprinkling fertilizers in a desert. Man, after all is a human being with a temptation to make money and for that he may invent ingenious ways of surmounting the letter of law, unmindful of the consequences. He would always feel safe unless some adverse thing happens. Money drives a man mad, proving every time what Economist Adam Smith had reportedly said “Money is what Money does”. It is not an exaggeration if we say “less number of offences happens by accident; more happens deliberately”.

In the above context, let us now take a dive into various Corporate and Securities Laws and the related contraventions.

COMPANIES ACT, 2013

Role of Directors

The Companies Act, 2013 [the Act] is conceptually a new law that has different dimensions requiring in-depth deliberations. For the first time, it prescribes duties of directors. This provision provides that people who are or who aspire to be thedirectors of companies, whether they aspire so for the purpose of managing the business of their companies or for managing the business of showing off, to adhere to certain prescribed statutory duties. While there is no point in trying to figure out the reason for the great confidence with which the legislature has introduced this provision, it is enough if every person who becomes a director is aware of the duties prescribed by law for them to fulfil. Otherwise this provision will see the same fate as that of the fundamental duties enshrined in the Constitution of India which even the class that runs the Government seldom follows, whether it is because of the fact that people do not follow the foreign language in which it is written or otherwise.The thought with which this provision has been introduced is clear from the fact that any violation of this provision does not result in automatic vacation of office of the director concerned, though these provisions carry a penal clause. If the statute had prescribed automatic vacation of office of a director who violates his duties, would there be ever directors continuing in office?

1

Offences under Corporate Laws

For instance, s 166(7) of the Act states that if a director of the company contravenes the provisions of the section, such director shall be punishable with fine which shall not be less than INR 1 lakh and which may extend to INR 5 lakh. In addition, in respect of certain duties there is “built in” penal clause. For instance, if director of a company is found guilty of making any undue gain, he shall be liable to pay an amount equal to that gain to the company. Similarly, if a director of a company assigns his office, it would be void. These liabilities and consequences are in addition to the prescribed penal provision.

Thus, a close look at the penal clause contained in s 166 of the Act that prescribes duties of directors will show that a director failing in his duties would suffer –

a maximum penalty of INR 5 lakh; and

if he has made any undue gain, he is liable to pay an amount equal to the gain he had made.

The said provision does not require the director making undue gain to make good the losses occasioned to the company. These provisions do not take care of the tendency of directors to make such undue gains through devices set up by themselves. These provisions do not require the director concerned to make good the losses caused to the company due to omissions and commissions on his part or the undue gains he had made directly or indirectly, not to speak about requiring the director to indemnify the company for the costs incurred by the company in recovering such amounts.

Leaving aside such inadequacies, it is clear from the above provisions that certain individual duties have been specifically imposed by the statute upon the directors in addition to the collective responsibility conferred upon the Board of Directors for the proper management of the affairs of the company.

Officers in Default

Another, key provision of the Companies Act 2013 relates to “Officers in Default”. Directors and officers who are “Key Managerial Personnel” fall within the ambit of “Officers in Default” and are liable for most of the offences against the Act.

In relation to a company, the expression “Key Managerial Personnel” means –

i. the Chief Executive Officer or the managing director or the manager;

ii. the company secretary;

iii. the whole-time director;

iv. the Chief Financial Officer; and

v. such other officer as may be prescribed.

Section 2(60)(v) of the Act introduces liability on every person under whose instructions or directions, the Board of Directors of the company is accustomed to act, other than a person who gives advice to the Board in a professional capacity. In

2

Introduction

other words, the Act recognizes the concept of “shadow directors”. That is, it includes within the meaning of the expression “Officer who is in default” even those persons who do not come in the front and proclaim to be directors of the company but according to whose advice, directions and instructions, the Board of Directors of the company is accustomed to act. In effect, they are not appointed as directors, though such persons certainly form part of the Corporate Governance System that direct the policies and carries out an oversight of the management of the affairs of the company.

Under s 2(34) of the Act, “director” means a director appointed to the Board of a company. This definition deviates slightly from the definition under the Companies

Act, 1956 where the word “director”, as defined in s 2(13) of that Act, includes any person occupying the position of a director, by whatever name called. Section 250 of the Companies Act, 2006, in United Kingdom also defines the word “Director” in a similar manner. Under that Act the word “director” includes any person occupying the position of director, by whatever name called. Section 251 of theCompanies Act, 2006 in United Kingdom goes further and defines the expression “Shadow director”. The expression, as defined in s 251(1) means a person in accordance with whose directions or instructions the directors of the company are accustomed to act. As per s 251(2), a person is not to be regarded as a shadow director by reason only that the directors act on advice given by him in a professional capacity.

Shadow directors are also liable for punishments prescribed under the Act for all offences where an ‘officer in default’ is liable. Distinguishing between “shadow directors” and “de facto directors”, Millet J, In re: Hydrodam (Corby) Ltd [1994] 2BCLC 180, held that a “de facto director” is a person who assumes to act as a director. He is held out as a director by the company, and claims and purports to be a director, although never actually or validly appointed as such. To establish that a person was a de facto director of a company, it is necessary to plead and prove that he undertook functions in relation to the company which could properly be discharged only by a director. It is not sufficient to show that he was concerned in the management of the company's affairs or undertook tasks in relation to its business which can properly be performed by a manager below board level.

A de facto director is one who claims to act and purports to act as director, although not validly appointed as such. A shadow director, by contrast, does not claim or purport to act as director. On the contrary, he claims not to be a director. He lurks in the shadows, sheltering behind others who, he claims, are the only directors of the company to the exclusion of himself. He is not held out as a director by the company."

Section 2(60)(vi) of the Act provides that “Officer who is in default” includes every director, in respect of a contravention of any of the provisions of this Act, who is aware of such contravention by virtue of the receipt by him of any proceedings of the Board or participation in such proceedings without objecting to the same, or

3


where such contravention had taken place with his consent or connivance. Neither consent nor connivance could be ascertained without the person concerned having knowledge about something in respect of which it is alleged that that person had consented or connived.

Creating a carve out to the general scheme of the Act, with respect to penalty and punishment for offences by (a) independent directors and (b) non-executive director not being promoter or key managerial personnel, s 149(12) of the Act states that such directors shall be held liable, only in respect of such acts of omission or commission by a company which had occurred with his knowledge, attributable through Board processes, and with his consent or connivance or where he had not acted diligently. It may be necessary to note carefully that this section speaks about offences by a company and liability of such directors in relation to such offences. It has nothing to do with offences or frauds and other misdeeds by them.

Directors and officers who come within the description of “officers in default” may invite the wrath of the penal provisions that the Companies Act contains across its length and breadth standing as sentries posted at every exit point. In addition to the specific penal clauses at the end of every material provision, under s 450 there is a general penal clause which the Act has added by way of abundant caution to take care of offences for which no specific penalty or punishment exists.

As directors and officers who are “Officers in Default” are liable to penalty and punishments as per specific or general penal clauses and independent and non-executive directors are liable for offences by a company, if the offence had happened with their consent or connivance. Nominee directors, directors who are nominees of institutions, joint venture partners would also come under this category. Neither consent nor connivance can be attributed without the presence of “knowledge” as a crucial factor. A person cannot be said to have granted consent without being aware of what is being consented and there can be no “connivance” also without being aware of the matter in respect of which it is alleged that he had connived. An insurance policy styled as Director’s Liability Insurance may help in getting indemnification only in case of penalties. Such policies will not come to the rescue of a person who has been convicted by a court of law. Therefore,categorization of offences, punishments, relief(s) and categorization of directors is essential to deal with offences whether for prosecution or for relief and remedies.

Fraud

Fraud is now a defined term under the Companies Act, 2013 and it must be construed accordingly. The definition of the expression “Fraud” under the Act is certainly and substantially different from how the expression is construed under s17 of the Indian Contract Act, 1872. While the expressions “Fraudulently”, “Wrongful loss” and “Wrongful gain” have been defined under the Indian Penal Code, 1860 and quite distinct from those definitions, s 447 of the Companies Act,

2013 brings in a definition that is sweeping and states that it is immaterial as to

4

Introduction

whether a person has made “Wrongful loss” and “Wrongful gain” while committing a fraud. The definition of this expression justifies the comment that “all acts of directors are frauds” if such acts are perpetrated with an intention to deceive or to gain undue advantage or to injure the interests of the company or its shareholders or creditors or any other person.

In view of this sweeping definition, it can be said that always directors act under a Damocles’ Sword. If a related party transaction is undertaken by the company without the consent of the board of directors of the company on the ground that the same is in the ordinary course of business and on arm’s length basis and on scrutiny with a fine tooth comb, if shareholders (who may or may not be another related party) prove that the transaction was not on arm’s length basis, it could be construed to be an act of fraud. Intention matters in certain cases, distinguishing an act from fraudulent act.

This book aims to provide an insight into the various provisions and circumstances in which a director or officer or any other person who is statutorily liable for any offence committed by the company or who is liable for any offence as a result of his aiding and abetting or who knowingly commits an offence or when an offence has been found to have happened with the consent and connivance of a director or other officer and when he is found guilty of fraud, he is going to be punished for such offence.

Huge Fines, Penalties and Imprisonments

The Act is similar to Companies Act, 1956 only in its name. It would not be an exaggeration if it would be compared to a gigantic crocodile that swallows a selfie loving girl who takes the risk of using her phone with gesture shot and gesture view, little realizing the animal behind her would not show any gentle gesture. The Act not only targets companies, its directors and officers but also professionals such chartered accountants and company secretaries and agencies such as merchant bankers, registrars and transfer agents, registered valuers, company liquidators are also liable for offences.

There are several offences under the Companies Act, 2013 that invite imprisonment for a period of three years while there are certain serious offences that could land a person in jail for even 7 years. Imprisonment for a period of 6 months, 1 year, two years, three years, five years, and seven years are the available choices. While it is a mystery as to how such a huge fine can be stipulated for certain offences irrespective of the size of the company or nature of default or length of delay or prejudice caused, it is important to note that the term of imprisonment prescribed across various provisions of the Act is mostly in odd numbers only. On a lighter side, it could be said that for those who would want an imprisonment term of 4 years or 6 years, to suit a number numerologically good for them might be a challenge.

5


Adjudication and Compounding of Offences

Companies Act, 2013 offers three distinct ways by way of relief and remedies apart from the usual method of pleading guilty and prostrating before the court praying for leniency. Adjudication of penalties is now a statutory possibility under the Companies Act, 2013 besides the facility for compounding of the offences. Compounding of an offence removes the possibility of commencing or continuing a prosecution for the same offence.

All these methods have been discussed elaborately in this book with a lucid account of the provisions together with relevant case law and procedural aspects. Apart from technical offences which invite strict liability, there are offences that require a degree of proof in the same manner in which an offence under the Indian Penal Code would require.

Intelligent amongst the businessmen would opt for compounding or getting a penalty adjudicated leaving the professionals high and dry as they cannot draw funds of the company to pay up penalties unless they are entitled to be indemnified by an insurance policy. The policy makers at the Insurance Regulatory and Development Authority must take a note of these stringent provisions and bring in new products that offer sufficient cover to meet the huge penalties that might be levied.

Other Consequences of Contraventions

A director, besides being liable for the punishment prescribed under the Act, might be earning a couple of disqualifications alongside. In a proceeding against directorsagainst oppression and mismanagement or class action suits, a director who is responsible for any such oppressive or fraudulent conduct might be declared unfit to be a director of a company. In certain cases when a director is convicted of an offence may lose his directorship due to operation of law contained in s 167 of the Companies Act, 2013.

Relief

Incurring a disqualification specified in s 164 will automatically lead to vacation of office without any further act, deed or thing to be done by the company or the director concerned. Under Part I of Schedule V, sentencing to imprisonment for any period or to a fine of an amount not less than INR 1000/- would render the person unfit to be appointed to any managerial position such as manager or managing director or whole-time director. Getting disqualified and losing eligibility to become a managerial person is obviously very easy as there are several offences under the Companies Act, 2013 that make it mandatory for the Magistrate to award imprisonment and there are a host of other laws that are prescribed under Part I. In relation to offences under any of those laws, which includes Companies Act as well,if the person concerned is sentenced to imprisonment of any period or to a fine of any amount exceeding INR 1000 (say, just INR 1001/-), disqualification comes as a

6

Introduction

bonus without any further act or deed or thing. It would be fine if the accused is able to do a bargain with the Court to ensure that fine does not exceed INR 1000/-.In respect of certain offences, imprisonment is mandatory and as such adjudication of penalty or compounding of the offence is ruled out and therefore, there is no doubt that even if the Magistrate or the Judge of the Special Court is the father in law, he cannot help avoid a disqualification even though he might pronounce a sentence that directs the accused to undergo imprisonment until the raising of the Court and immediately the Magistrate or the Judge of the Special Court gets up calling it a day.

Disqualification catches the convicted person instantaneously and only by invoking powers under s 463 of the Companies Act, 2013, there is a ray of hope for some relief. With respect to disqualifications relating to non-executive directors, the position of law is slightly better. Whether they are convicted of an offence involving moral turpitude or not, and sentenced in respect thereof to imprisonment for not less than six months and a period of five years has not elapsed from the date of expiry of the sentence, there is a disqualification. In contradistinction with the disqualification that might cost a person his directorship, in the case of managerial persons, the norms are more stringent as it speaks about imprisonment for any period or fine of INR 1001/- or more, such disqualification would arise only if the imprisonment or fine as aforesaid arises in relation to any offence under any of the laws specified in Schedule V. During the period when a person is occupying the office of a director, if a person incurs a disqualification, he would vacate the office immediately. The same is not the case relating to managerial persons incurring the disqualification falling under Schedule V. All these aspects have been discussed in detail and it shows the need for doing a lot of planning in dealing with the approach to seek appropriate relief when facing a prosecution which would certainly be more than the planning that would have gone into the case prior to committing the offence. This book dwells at length intricate aspects relating to choice of a proper forum and choosing a proper course of action (defence) and helps in understanding appropriate legal remedies.

Circulars, Clarifications, Case Laws, Illustrations, Principles and Propositions

The Companies Act, 2013 and the Foreign Exchange Regulations apply to most of the companies that do business in India. If they raise funds through the capital market or float any collective investment schemes, capital market regulations would also apply. This books aims to give a broad perspective of the statutory setting and the manner in which these statutes and statutory instruments seek to deal with violators of the applicable law. The book helps the stakeholders understand the major compliance requirements under these laws, any contravention of which might expose the companies and its officers to face prosecution in criminal courts. With the amendment of the Companies Act, 2013 by the Companies (Amendment) Act, 2015, the Special Courts contemplated by s 435 of the Companies Act, 2013 have

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powers to try only those offences that are punishable with imprisonment of two years or more and it is the ordinary criminal courts that would have powers to try other offences under the Companies Act, 2013.

Besides these intricacies, under the Companies Act, 2013, regulators such as RBI and SEBI have powers to prosecute companies and their officers under the regulations that come within their powers. Rules and Regulations, amendments thereto under the provisions of the respective acts, circulars, guidelines and clarifications issued by the Ministry of Corporate Affairs, RBI, SEBI have also been explained and practical illustrations have been added in order to enhance of utility of the book and to make its coverage complete and comprehensive. Extracts of the relevant sections and rules and their numbers have also been mentioned so as to enable the readers to have a quick reference instantly. Reference to select case law on the subject adds value.

As a whole the book will be very useful not only for Corporate Directors, Managers and Practicing professionals but also to Regulators, Courts, Academicians, Research Scholars and Students.

SECURITIES LAW – THE CAPITAL MARKET REGULATIONS

The Securities and Exchange Board of India [SEBI] is being described as “capital market regulator” or sometimes as a “market watchdog”, while it is actually similar to a “man eater” frightening all time. A person who had been closely reading the newspapers and law journals that report about SEBI orders would have certainly felt that penalties adjudicated by SEBI would have prompted a couple of heart attacks to the officers who have suffered such penalties and the companies would have gone into a winding up mode.

Listed entities have to bear the additional burden of complying with a lot of regulations which are commonly known as capital market regulations or securities laws issued and regulated by the Securities and Exchange Board of India. Unless the size of the public funds accessed by the company is substantial, it is not advisable for a company to get listed as compliance costs are very high for listed companies. Advantages of being a listed company must far outweigh the disadvantages, so as to readily accept the additional statutory obligations that are imposed upon a listed entity. Most prominent and frequently applied regulations and compliance requirements are contained in the SEBI (LODR) Regulations 2015, [LODR]. With the introduction of LODR, Listing Agreement is no longer relevant, though there is an agreement styled as Listing Agreement executed between the Listed Company and the Stock Exchange. The new Listing Agreement contains covenants that, inter alia, stipulate that the listed entity must comply with applicable provisions of the prescribed regulations including the LODR.

The penalties that SEBI might levy for violations of its regulations, such as the regulations for prohibition of insider trading or the regulations governing the

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Introduction

acquisition of securities and takeovers make it necessary for a cautious approach in dealing with contraventions of these regulations. There are enabling provisions under the capital market regulations for consent orders, adjudication of penalties, the procedures thereof and provisions for appeal against decisions of adjudication authority under those regulations, the powers of SEBI to prosecute offences under the capital market laws have been explained in this book with case laws and illustrations.

A failure to attend an investors’ grievance through the SCORES mechanism of SEBI had cost the company INR 1,50,000 as per order of the Adjudicating Officer of SEBI dated 31 December 2015 in the matter of Arihant Chemical Industries

Limited which has been posted on the SEBI’s website. It will show the level which significant regulations accord to redress investor grievances. Slackness in attending to grievances of investors is perceived as and deemed to be a risk to the securities market,

No one would have wound up the year 2015 like Mr. Vipul Shah, on whom SEBI’s Adjudicating Officer has kindly imposed a penalty of INR 4 cores by an order dated 30 December 2015. The order is based on the ruling of the Securities Appellate Tribunal [SAT] in the matter of Vitro Commodities Pvt. Ltd. v. SEBI (Appeal No.118 of 2013) dated 04 September 2013 in which SAT held that reg 29(2) of the SAST Regulation, 2011 is a corollary of reg 13(3) of the PIT Regulations, 1992 and both of them are identical. Hence, the order says penalty needs to be imposed for the violation of one provision only. As if it is a coincidence, India is introducing a bankruptcy code. Such high penalties are assured for contraventions of Securities Laws. Therefore, it becomes essential to make money in the right way as the thrill of making money on the sly will be lost and much more will be lost when penalty gets slapped in this manner. There is no cost benefit analysis, one can say!

FOREIGN EXCHANGE MANAGEMRNT ACT, 1999

Apart from the need for being careful about compliances under the provisions of the Companies Act, an office including a director, whether a managerial person or not, must be careful to ensure that while dealing with foreign exchange, the applicable provisions of the Foreign Exchange Management Act, 1999 and the rules and regulations thereunder are properly complied with. Committing even technical offences, such as default or delay in filing returns with Reserve Bank of India [RBI], could cause a hole of a considerably bigger size in view of huge penalties prescribed under these laws. In certain cases, even money that comes into the country towards consideration for subscription to shares / securities of an Indian company would require to be repatriated if there is a delay in issuing the securities. In the meantime, the issuer company would have consumed the money, partly or fully and there could be losses arising from exchange rate fluctuations too.

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Issue of securities could be a subject that requires much care as the transaction could involve not only the provisions of the Companies Act, 2013 and the applicable regulations issued by the Securities and Exchange Board of India but also the regulations issued under the Foreign Exchange Management Act, 1999. Inaddition, in some cases, the foreign direct investment might require the approval of the Foreign Investment Promotion Board of the Government of India and in cases of companies engaged in certain regulated sectors such as the banking or insurance sector, there might be a need for securing prior permission of the regulator concerned. Thus, a single subject in respect of a single company for a single transaction could invite trouble under various laws and regulations simultaneously. When it comes, it would come like a tsunami and directors must be prepared to swim in that tsunami. It is not that the foreign exchange regulations apply only in relation to inbound investment from abroad. Even when a company proposes to borrow from a foreign source, provisions of external commercial borrowings will apply. When a company is engaged in exports or imports, regulations issued under the Foreign Exchange Management Act in that respect would apply. When a company or an Indian Party proposes to make out-bound investment in joint ventures or wholly owned subsidiaries abroad, regulations issued under the Foreign

Exchange Management Act would apply.

The Foreign Exchange Management Act states that the penalty for contraventions could go upto three times the value of the amount involved in the transaction. There are provisions for compounding of the offences under the Foreign Exchange Management Act. There are provisions for adjudication of penalties. There are provisions for appeal before appellate authority under the Foreign Exchange

Management Act. This book discusses elaborately the most essential regulations relating to foreign direct investment, external commercial borrowings, overseas direct investment and regulations relating to export of goods and services and nuances thereto. Practical illustrations have been given in order to add value so that contraventions are dealt with in an appropriate manner.

Sometimes, the transaction in foreign exchange would have been undertaken only with the guidance provided by the authorised dealer which will invariably be a commercial bank. However, even in such cases, contraventions have happened or happening and for all the sins of the authorised dealer, companies and directors might be penalized. In such cases, the aggrieved director can only say that for his (authorised dealer’s) sins, he is hanging. Being in the position of a guard, the authorised dealer sees the truth, realizes the faux pas and regrets. Such situations makes it clear that primarily the obligation rests with the company and directors and officers who are in the management of companies might be exposed to risks arising from contraventions even though they might have availed assistance from authorised dealers. During such transactions they might be focusing on the prevailing exchange rate or on other risks relating to the transaction per se without being aware of the risks arising from non-compliances or inadequate compliances. Though from time immemorial, foreign exchange transactions have been

10

Introduction

happening, inbound and outbound investment / borrowing / lending transactions have increased manifold after the liberalization and globalization.

There appears to be a return of the era of Foreign Exchange Regulation Act, 1973 in a limited manner within FEMA when it comes to foreign currency, foreign securities and foreign assets kept aboard in contravention of law. It has become absolutely necessary to be aware of serious consequences of contraventions under FEMA and regulations thereunder.

SECRETARIAL AUDITS

Companies Act, 2013 has introduced a mandatory need for secretarial audits. The scope of these audits include auditing of compliance levels of not only the Companies Act, 2013 but also the Board Process, LODR Compliances, SEBI Act, Securities Contract (Regulation) Act, 1956, Depositories Act, 1996 and a select list of regulations issued by SEBI such as the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009, SEBI (Substantial Acquisition of Shares and Takeovers) Regulations 2011 and SEBI (Prohibition of Insider Trading) Regulations, 2015 etc. Further, FEMA and regulations issued under FEMA such as the regulations concerning Foreign Direct Investment, External Commercial Borrowings, and Overseas Direct Investment are also covered within the scope of Secretarial Audit. As auditors including secretarial auditors are statutorily liable to report about frauds, when such suspicious items come to their knowledge, they are duty bound to make a thorough enquiry and report if necessary. A delay in filing a return or statement may not be a matter of simple inadvertent default. It might have been with an intention to suppress material facts and developments. Therefore,auditors have to look at everything in broader perspective, and not merely as an exercise involving ticking the boxes.

CATEGORIES OF CONTRAVENTIONS

Most of the offences under the Companies Act, 2013, Securities Laws and the

Foreign Exchange Management Act, 1999 [FEMA] are arising from failure to comply with statutory obligations and are technical in nature. Merely by being an officer in default, directors are liable for certain offences under the Companies Act, 2013. Such offences are different from operating an industrial undertaking itself without say, a factory licence or without the requisite consent of the pollution control board or clearing excisable goods from a factory without paying up duty thereon or importing into country, goods in illegal manner. For instance, failure to comply with a reporting requirement under FEMA about receipt of contribution by way of investment in the share capital of a company from a person resident outside India is a technical contravention. Merely on the ground of such defaults, penalty upto three times the amount involved cannot be imposed. However, the case where foreign investment had been received in a sector where foreign direct investment is

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not at all permitted would be altogether different. Such finer aspects have been elaborately discussed in this book adding value to the readers and guidance to practitioners.

CONSENT AND CONNIVANCE

In case of offences which are not merely technical defaults, the liability they have to bear arises on an entirely different footing. Companies Act, 2013, Securities Laws and FEMA and Regulations thereunder and other economic legislations stipulate punishment for even on independent directors and non-executive directors if they are liable, due to their consent or connivance. Consent signifies an active involvement in the act of commission or omission that constitutes an offence, while connivance implies he does nothing to stop the same though he has knowledge of the commission or omission of the offence. Supreme Court in Supreme Bank

Limited v. P A Tendolkar, [1973] 43 CompCas 382 (SC), held that “a director cannot shut his eyes to what is happening and if he keep quiet, he is liable to face the consequences thereof”.

Another important factor in economic legislation is the role of the expression “Person responsible for the management of the affairs of the company”. The Corporate Governance System should be capable enough to identify as to who are the persons responsible for the management of the affairs of the company and records must bear proof of the same.

Forms, statements, returns, documents filed with Regulators, books of account, books and papers, minutes books, notices, agenda, notes on agenda, e mail and other correspondence and statutory registers and records constitute the basic evidence and enquiry, inspection, investigation, adjudication and prosecution would bring on record and show who were persons responsible for the management of the affairs of the company and who have consented or connived in the commission of an offence.

Paradigm shift in legislative approach

There is certainly a paradigm shift in the regulatory environment and as a whole it appears to be a situation where legislature has aimed to introduce deterrent penal provisions to achieve proper governance and compliances. This book highlights the impact of contraventions, remedies available, avenues for relief, mitigating factors, adjudication and compounding provisions, appeal provisions so that there is a complete perspective for working with these statutes and regulations.

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offences under corporate laws prelims pages1

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