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Punishment u/s 172 to Company and its Officers upto ₹500000

Fine under Section 172 to Company and every Officers (₹50,000 – ₹5,00,000) for not complying provisions of Sections 149-171 under Companies Act 2013.

Chapter-XI (Section 149-172) of the Companies Act, 2013 (CA 2013) deals with the provisions related to appointment and qualifications of directors of company. The Section 172 come into force on 1st April, 2014 vide Notification No. S.O. 902(E) issued dated 27.03.2014.

Section 172 of CA 2013 specifically provides for fine where no specific punishment is provided for contraventions of any provisions of Chapter-XI as per section 172 of the Companies Act 2013.

Fine where No Specific Punishment Provided for Chapter-XI

Section 172 provides that if a company contravenes any of the provisions of Chapter XI i.e. from Section 149 to Section 171 of the Companies Act, 2013 and for which no specific punishment is provided therein, the company and every officer of the company who is in default shall be punishable with fine which shall not be less than ₹50,000 but which may extend to ₹5,00,000.

According to Clause (59) of Section 2 of the Companies Act, 2013, “officer” includes any Director, Manager or Key Managerial Personnel (KMP) or any person in accordance with whose directions or instructions the Board of Directors or any one or more of the directors is or are accustomed to act.

Thus, you should remember the following facts to understand the provisions of section 172 of the Companies Act, 2013:

  1. Section 172 provides for Punishment if company contravenes Sections 149-171;
  2. Section 172 applies where no specific Punishment is provided under section 149-171;
  3. The Company and every Officers who is in default shall be punishable under Section 172;
  4. Minimum fine under Section 172 is ₹50,000; and
  5. Maximum fine under Section 172 is ₹5,00,000.

Therefore, in case of a default which is not specifically dealt with for determining punishment, the Company and every office of the Company who is in default shall be punishable with fine which shall not be less than fifty thousand rupees, but which may extend to five lakh rupees.

However, there was no such specific provision for punishment in case of contravention of the provisions of Chapter XI for which no specific punishment was specified, in the Companies Act, 1956. If you have any query regarding the provisions of Section 172 of the Companies Act, 2013, please feel free to ask below through comments.

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