Penalties On Company, Officer, Auditor, etc. Under Companies Act 2013

Penalties for Violation of Section 139 to 146

If any of the provisions of Sec 139 to Sec 146 is contravened then the company shall be punishable with a fine which shall not be less than Rs. 25,000.00 but which may extend to Rs. 5,00,000.00 as provided in section 147 of the Companies Act, 2013. Every officer of the company who is in default shall be punishable with imprisonment for a term which may extend to 1 year or a fine which shall not be less than Rs. 10,000.00 but which may extend to Rs. 1,00,000.00 or with both.

Section 147 of CA,2013 deals with the penalty provisions for non-compliance with sections 139-146 of the CA,2013

1) Penalty on Company [Section 147(1)]:

By subsection (1) of this section, if any of the provisions of sections 139-146 is contravened, the company shall be punishable with a minimum fine of Rs.25,000 which may extend to five lakh rupees.

2) Penalty on Officer [Section 147(1)]:

As per section 147(1) of the CA,2013, if any of the provisions of section 139-146 is contravened, every officer of the company who is in default shall be punishable with:

a) Imprisonment for a term up to 1 year

b) Fine which shall not be less than Rs.10,000 but which may extend to Rs,1,00,000

c) Both with imprisonment and fine.

3) Penalty on Auditor [Section 147(2)]:

If the auditor contravenes any of the provisions of Sec 139, 143, 144, and 145 then he shall be punishable with a fine which shall not be less than Rs. 25000.00 but which may extend to Rs. 5,00,000.00. However, if the auditor has contravened such provisions willfully to deceive the company or its shareholders or creditors or tax authorities, he shall be punishable with imprisonment for a term which may extend to one year and with a fine which shall not be less than Rs. 100000.00 but which may extend to Rs. 25,00,000.00. In the case of the criminal liability of an audit firm, the liability other than the fine shall devolve only on the concerned partner who acted fraudulently.

4) Refund of Remuneration of Auditors [Section 147(3)]:

When an auditor has been convicted under section 147(2) of the CA,2013, the convicted auditor shall be liable to some mentioned penalty under sub-section (2) of section 147 of CA,2013:

a) Refund the remuneration received by him to the company

b) Pay for damages to the company, statutory bodies or authorities, or any other provisions for loss arising out of incorrect or misleading statements of particulars made in his audit report.

5) Ensuring prompt payment of Damages [section 147(4)]:

By the provisions of section 147(4) of the CA 2013, the Central Government (CG) shall, by notification, specify any statutory body or authority or an officer for ensuring prompt payment of damages to the company or the persons under clause (ii) of sub-section (3) of section 147 of the CA 2013.

Such body, authority, or officer shall after payment of damages to such company or persons file a report with the CG in respect of making such damages in such manner as may be specified in the said notification.

6) Liability of Audit Firm of a Company [Section 147(5)]:

If an audit of a company is conducted by an audit firm and it is proved that the partner or partners of the audit firm has or have:

· acted fraudulently; or

· abetted or colluded in any fraud by, or related to or by, the company or its directors or officers,

the liability, whether civil or criminal as provided in CA 2013 or any other law for the time being in force, for such action shall be of the partner or partners concerned of the audit firm and the firm jointly and severally.

Section 147 of the Companies Act 2013

[Punishment for contravention]

Section 147. (1) If any of the provisions of sections 139 to 146 (both inclusive) is contravened, the company shall be punishable with a fine which shall not be less than twenty-five thousand rupees but which may extend to five lakh rupees and every officer of the company who is in default shall be punishable with fine which shall not be less than ten thousand rupees but which may extend to [one lakh rupees].

(2) If an auditor of a company contravenes any of the provisions of section 139, section 144, or section 145, the auditor shall be punishable with a fine which shall not be less than twenty-five thousand rupees but which may extend to [or four times the remuneration of the auditor, whichever is less]:

Provided that if an auditor has contravened such provisions knowingly or wilfully intending to deceive the company or its shareholders or creditors or tax authorities, he shall be punishable with imprisonment for a term which may extend to one year [and with a fine which shall not be less than fifty thousand rupees but which may extend to twenty-five lakh rupees or eight times the remuneration of the auditor, whichever is less].

(3) Where an auditor has been convicted under sub-section (2), he shall be liable to—

(i) refund the remuneration received by him to the company; and

(ii) pay for damages to the company, statutory bodies, or authorities [or to members or creditors of the company] for loss arising out of incorrect or misleading statements of particulars made in his audit report.

(4) The Central Government shall, by notification, specify any statutory body or authority or an officer for ensuring prompt payment of damages to the company or the persons under clause (ii) of sub-section (3), and such body, authority, or officer shall after payment of damages to such company or persons file a report with the Central Government in respect of making such damages in such manner as may be specified in the said notification.

(5) Where, in case of audit of a company being conducted by an audit firm, it is proved that the partner or partners of the audit firm has or have acted fraudulently or abetted or colluded in any fraud by, or concerning or by, the company or its directors or officers, the liability, whether civil or criminal as provided in this Act or any other law for the time being in force, for such action shall be of the partner or partners concerned of the audit firm and the firm jointly and severally.

[Provided that in case of criminal liability of an audit firm, in respect of liability other than fine, the concerned partner or partners, who acted fraudulently or abetted or, as the case may be, colluded in any fraud shall only be liable.]