Difference Between Fine & Penalty
Companies Act, 2013 & Company Ordinance, 2018
There is always confusion between ï¿½Fine and Penaltiesï¿½. Through, this editorial
author made an attempt to elaborate the difference and basic meaning of between
ï¿½Fine & Penaltiesï¿½. Letï¿½s first see the meaning as per dictionary:
||As per Oxford Dictionary:
|As per Oxford Dictionary:
||As per Oxford Dictionary:
|Fine is ï¿½a sum of money exacted as a penalty
by a court of law or other authority.ï¿½
||Penalty is ï¿½a punishment imposed for
breaking a law, rule, or contract.ï¿½
In General words, Fine imposed when any application/ petition filed with any
court (like: NCLT, High Court) and penalty imposed when company made any non
compliance and authority directly can impose penalty on them.
i. Many people having doubt whether Additional Fees paid on filing of
form is penalty or fine?
As per Rule 12 of The Companies (The Registered offices and Fees) Rules, 2014.
Additional fees is only a fees paid by Company for filing of form it Is neither
Fine nor Penalty.
Example: Section 92- Annual Return
Sub section 4: States about filing of Annual Return and additional fees in case
of non filing with in prescribed period of 60 days from AGM.
Sub Section 5: States about fine in case of company fails to file annual return
within time prescribed under sub section 4.
Therefore, one can observe that for one form Annual Return MGT-7 Company is
paying additional fees and fine both in case company make any non compliance for
filing of same.
Therefore, Additional fees is neither fine nor penalty.
The Companies (Amendment) Ordinance, 2018
The main maxim of writing of this article is, The Companies (Amendment)
Ordinance, 2018 has re categorized certain offence from Fine to Penalty. Thus,
Registrar of Companies (ROC) and Regional Director (RD) can now impose penalties
directly after issuing SCN, instead of going to judiciary for imposing fines or
for following procedure for composition of offences.
There are as many as 16 sections amended via Ordinance, whereby the punishment
for non-compliance to be levied under the Companies Act, 2013 is re-categorized
from FINE to PENALTY.
||Prohibition of Issue of shares at a discount
||Notice to be given to Registrar for alteration of share
||Statement to be annexed to Notice
||Resolutions and Agreements to be filed
||Report on annual general meeting
||Copy of financial statement to be filed with Registrar
||Removal, resignation of auditor and giving of special
||Company to inform Director Identification Number to
||Punishment for Contravention in respect of DIN
||Number of Directorships
||Payment to Director for Loss of Office
||Overall maximum managerial remuneration and managerial
remuneration in case of absence or inadequacy of profits
||Appointment of Key Managerial Personnel
||Registration of the offer of scheme involving transfer
Example- Discussion on one of above section:
ii. Section 117(2) - Resolutions and Agreements to be Filed: As per this section
Companies are required to file e-form MGT-14 with ROC for passing of resolutions
mentioned u/s 117(3) within 30 days of passing of resolution.
||Company shall be punishable with FINE which shall not be
less than 5,00,000 rupees but which may extend to 25,00,000 rupees
||Liable to PENALTY of 1,00,000 rupees and incase of
continuing failure futher penalty of 500 rupees for each day upto
maximum 25,00,000 rupees
||punishable with FINE which shall not be less than
1,00,000 rupees but which may extend to 5,00,000.
||PENALTY of 50,000 and Incase of continuing failure with
further penalty of 500 rupees for each day up to 5,00,000
Thus, before ordinance section 117(2) states about Fine and after ordinance
section states about Penalty.
Therefore, before ordinance default can be make good by petition in NCLT by
filing compounding application Suo Moto or after receipt of notice form ROC/
And, After Ordinance ROC may start levying penalty by issuing Show Cause
Notice without any petition to NCLT or any other authorities.
This is a welcoming step from the government as it will reduce the burden of
NCLT as after this re-categorisation, 24 offenses will not be looked after by
The Ordinance has decriminalized certain offences and has given scope to
companies to settle such offences through in house mechanism, where a penalty
could be levied in instances of violations.
Author: CS Divesh Goyal, Goyal Divesh & Associates Company Secretary in Practice
from Delhi and can be contacted at [email protected]). Disclaimer: The
entire contents of this document have been prepared on the basis of relevant
provisions and as per the information existing at the time of the preparation.
Although care has been taken to ensure the accuracy, completeness and
reliability of the information provided, I assume no responsibility therefore.
Users of this information are expected to refer to the relevant existing
provisions of applicable Laws. The user of the information agrees that the
information is not a professional advice and is subject to change without
notice. I assume no responsibility for the consequences of use of such
information. In No Event Shall I Shall Be Liable For Any Direct, Indirect,
Special Or Incidental Damage Resulting From, Arising Out Of Or In Connection
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