(1) If any of the provisions of sections 139 to 146 (both inclusive) is contravened, the companyCompany means a company incorporated under this Act or under any previous company law shall be punishable with fine which shall not be less than twenty-five thousand rupees but which may extend to five lakh rupees and every officer2(59) Officer includes any director, manager or key managerial personnel or any person in accordance with whose directions or instructions the Board of Directors or any one or more of the directors is or are accustomed to act of the company who is in default shall be punishablewith imprisonment for a term which may extend to one yearOmitted vide Companies (Amendment) Act, 2020 dated 28.09.2020 with effect from 21.12.2020. To view the Act, Click Here. To view the commencement notification, Click Here. or with fine which shall not be less than ten thousand rupees but which may extend to one lakh rupees, or with both one lakh rupees.Substituted vide Companies (Amendment) Act, 2020 dated 28.09.2020 with effect from 21.12.2020. To view the Act, Click Here. To view the commencement notification, Click Here.
(2) If an auditor of a company contravenes any of the provisions of section 139, section 143,Omitted vide Companies (Amendment) Act, 2020 dated 28.09.2020 with effect from 21.12.2020. To view the Act, Click Here. To view the commencement notification, Click Here. section 144 or section 145, the auditor shall be punishable with fine which shall not be less than twenty-five thousand rupees but which may extend to five lakh rupees or four times the remuneration of the auditor, whichever is lessInserted vide Companies (Amendment) Act, 2017 dated 03.01.2018 effective from 09.02.2018. To view the notification,Click Here:
Provided that if an auditor has contravened such provisions knowingly or wilfully with the intention 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 fine which shall not be less than one lakh rupees but which may extend to twenty-five lakh rupees and with 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 lessSubstituted vide Companies (Amendment) Act, 2017 dated 03.01.2018 effective from 09.02.2018. To view the notification,Click Here.
(3) Where an auditor has been convicted under sub-section (2), he shall be liable to—
(i) refund the remuneration2(78) Remuneration means any money or its equivalent given or passed to any person for services rendered by him and includes perquisites as defined under the Income-tax Act, 1961 (43 of 1961) received by him to the company; and
(ii) pay for damages to the company, statutory bodies or authorities or to any other persons or to members or creditors of the companySubstituted vide Companies (Amendment) Act, 2017 dated 03.01.2018 effective from 09.02.2018. To view the notification,Click Here for loss arising out of incorrect or misleading statements of particulars made in his audit report.
(4) The Central Government shall, by notification2(58) Notification means a notification published in the Official Gazette and the expression “notify” shall be construed accordingly , 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 in a fraudulent manner or abetted or colluded in any fraud by, or in relation to or by, the company or its directors or officers, the liability, whether civil or criminal as provided in this Act or in any other law for the time being in force, for such act shall be of the partner or partners concerned of the audit firmRefer rule 9 of the Companies (Audit & Auditors) Rules,2014. To view the rule,Click Here and of the firm jointly and severally.
Provided thatInserted vide Companies (Amendment) Act, 2017 dated 03.01.2018 effective 09.02.2018. To view the notification,Click Here in case of criminal liability of an audit firm, in respect of liability other than fine, the concerned partner or partners, who acted in a fraudulent manner or abetted or, as the case may be, colluded in any fraud shall only be liable.
10.1.9-Companies (Audit & Auditors) Rules,2014
In case of criminal liability of any audit firm, the liability other than fine, shall devolve only on the concerned partner or partners, who acted in a fraudulent manner or abetted or, as the case may be, colluded in any fraud.
Commencement Notification dated 09.02.2018
Commencement Notification under Companies (Amendment) Act, 2020 dated 21.12.2020
Companies (Amendment) Act, 2020 dated 28.09.2020
Companies (Audit and Auditors) Amendment Rules, 2018 [GSR 432 (E)] dated 07/05/2018
Enforcement Notification S.O. 902(E) dated 26/03/2014
The Companies (Amendment) Act, 2017 (Effective from 03.01.2018)