The Residuary Penalties

In one line

Section 44 penalises three failures to file or keep records, section 45 penalises everything else the Act does not separately penalise, and both were rewritten by the Amendment Act of 2008 in ways that are usually misreported.

Section 44: failure to furnish

The section applies to a person "required under this Act or any rules or regulations made thereunder" to do one of three things.

(a) Furnish any document, return or report to the Controller or the Certifying Authority. Failure attracts a penalty not exceeding fifteen lakh rupees for each such failure.

(b) File any return or furnish any information, books or other documents within the time specified in the regulations. Failure attracts a penalty not exceeding fifty thousand rupees for every day during which the failure continues.

(c) Maintain books of account or records. Failure attracts a penalty not exceeding one lakh rupees for every day during which the failure continues.

Three things to notice.

The figures were raised in 2008. As enacted in 2000 they were one lakh and fifty thousand rupees for clause (a), five thousand rupees a day for clause (b), and ten thousand rupees a day for clause (c). The present figures of fifteen lakh, fifty thousand a day and one lakh a day are the amended ones, and older textbooks print the old figures.

Clause (a) is per failure; clauses (b) and (c) are per day. A continuing failure to maintain books at one lakh rupees a day is the heaviest civil exposure in the Act after section 43A, and there is no cap.

And the section is addressed to the licensing scheme. The Controller and the Certifying Authorities are the subject matter, so section 44 in practice binds a licensed Certifying Authority and not the public. Chapters 400, 450 and 460.

Section 45: the residuary penalty

As it now stands:

Whoever contravenes any rules, regulations, directions or orders made under this Act, for the contravention of which no penalty has been separately provided, shall be liable to pay a penalty not exceeding one lakh rupees, in addition to compensation to the person affected by such contravention not exceeding--

(a) ten lakh rupees, by an intermediary, company or body corporate; or

(b) one lakh rupees, by any other person.

What the 2008 amendment did, and this is the part usually missed.

As enacted in 2000 section 45 read: "Whoever contravenes any rules or regulations made under this Act, for the contravention of which no penalty has been separately provided, shall be liable to pay a compensation not exceeding twenty-five thousand rupees to the person affected by such contravention or a penalty not exceeding twenty-five thousand rupees."