Difference Between Fine & Penalty

There is always confusion between “Fine and Penalties”.  Through, this editorial author made an attempt to elaborate the difference and basic meaning of between “Fine & Penalties”. Let’s first see the meaning as per dictionary:

As per Oxford Dictionary:

Fine is “a sum of money exacted as a penalty by a court of law or other authority.”
As per Oxford Dictionary:

Penalty is “a punishment imposed for breaking a law, rule, or contract.”
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.
Quick Bites:

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”

S. No.
Section Description
Prohibition of Issue of shares at a discount
Notice to be given to Registrar for alteration of share capital
Annual Return
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 notice
Company to inform Director Identification Number to Registrar
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 of shares

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.

S. No.

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/ MCA.

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 NCLT.
 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 csdiveshgoyal@gmail.com). 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 WITH THE USE OF THE INFORMATION


  1. Great share!

    I love this bucket list and you know you're right. sand blasting machine manufacturer. We all have the same amount of hours in a day so put them to good use. We all have to start somewhere and your plan is perfect. I understand the way of the attractive to the customer with the products sand blasting machine.

    Sand blasting machines like shot blasting machine, sand blasting machine, and grit blasting machines, Wood Working Machinery Dust Extraction unit, Abrasive Blasting Media and various others. Keep it works and share with us your latest information. My time will come but I know I'm on the right path.

    They are similar to small communities that you own - check them out if you haven't already. It's all got a lot better than before!t. Value that list of thousands but I'll get there.

    Thanks for sharing. Have a nice week ahead.
    Visit at : www.gritblast.co.in

    Also check
    portable shot blasting machine
    portable sand blasting machine
    sand blasting cabinet
    grit blasting cabinet
    shot blasting cabinet

    Ankit Manawat.

  2. Hello Sir, I appreciate your blog. I wanted to have more understanding about how a fine is levied.
    For Eg- If fine is to be levied u/s 99, what would be the procedure followed ?

    I understand that ROC/RD cannot be adjudicating authority for levy of fine.

    Will the matter be forwarded to NCLT ?

    If yes, can you describe briefly the scenario ?

    Thanks in advance.


Post a Comment

Popular posts from this blog

Declaration of Commencement of Business - Series 487

Vacancy Updates (Through Google Form) | Dated: 20-August-2020

Draft Format of DIRECTOR’ REPORT - Series 482