Section 451- Punishment in Case of Repeated Default
Updated: Oct 14, 2022
Section 451 of the Companies Act, 2013 talks about repeated defaults by the company or any officer of the company.
As per the said section, if any company or any of its officers commits any crime and is punishable with fine or imprisonment or both and where that company or officer, as the case may be, is again committed for a second or subsequent occasion within a time gap of 3 years, then that company or the officer shall be punishable with twice the amount of fine along with any imprisonment for such offense.
Illustration- Suppose a company named Abc Pvt. Ltd. Is created by way of the public offer. Now, later it is found that the prospects that were issued for the public offer were issued in contravention of Section 26 of the Companies Act, 2013. Because of such contravention, the company was liable for punishment with a fine of Rs. 1,00,000.
Later, in the next year, it was found that the company had purchased its shares without authorizing the buy-back of the shares. Thus, it was liable for punishment under section 68 of the Companies Act, 2013.
Normally, in case of violation of Section 68, a company will be liable for a fine of Rs. 1,00,000 which may further extend to a maximum of Rs. 3,00,000. But, since the contravention by the company is made within 3 years as mentioned in section 451, here the company (Abc Pvt. Ltd.) will be liable to a fine of twice the fine that they had to pay earlier.
Thus, it can be understood from the above illustration that if a company or any of its officers commits any crime and the same company or the same officer, as the case may be, commits any other crime within 3 years, then the company or the officer, as the case may be, shall be liable to a punishment of twice the amount of fine along with imprisonment, if any.