No specific penalty has been prescribed for violation of Section 138.
As such the penalties under Section 450 (punishment where no specific penalty or punishment is provided) will be applicable, wherein for every violation, the company and any officer of the company or any other person involved shall be:
• Punishable with fine which may extend to Rs 10,000; and
• Where the contravention is a continuing one, with a further fine which may extend to Rs 1000 for every day after the first during which the contravention continues.
Section 451 of the Act provides for “punishment in case of repeated default”:
If a company or an officer of the company commits an offence punishable either with fine or imprisonment and where the same offence is committed for the second or subsequent occasions, within a period of three years, then, that company and every officer thereof who is in default shall be punishable with twice the amount of fine for such offence in addition to
any imprisonment provided for that offence.
As such, it is imperative that the board of directors, audit committee and chief financial officer of every company are fully aware of the provisions of the Act and, considering their eligibility or otherwise, under these provisions, take appropriate actions to ensure compliance of the regulations.