Section 378ZM Companies Act 2013 - Penalty for Contravention
Section 378ZM of the Companies Act, 2013 forms part of the statutory framework governing Producer Companies. It specifies penalties for unauthorised use of the expression "Producer Company Limited" and for specified defaults committed by directors or officers of a Producer Company.
Act: Companies Act, 2013
Subject: Penalty for contravention
Applicable to: Producer Companies and specified directors, officers or other persons, depending upon the contravention
Meaning and Scope of Section 378ZM
Section 378ZM provides specific consequences for certain contraventions connected with Producer Companies. The provision covers three principal situations: unauthorised use of the designation "Producer Company Limited", wilful failure by a director or officer to furnish required information, and specified failures concerning company records, property and general meetings.
Section 378ZM - Penalty for Contravention
(1) If any person, other than a Producer Company registered under this Chapter, carries on business under any name which contains the words "Producer Company Limited", he shall be punishable with fine which may extend to ten thousand rupees for every day during which such name has been used by him.
(2) If a director or an officer of a Producer Company, who wilfully fails to furnish any information relating to the affairs of the Producer Company required by a Member or a person duly authorised in this behalf, he shall be liable to imprisonment for a term which may extend to six months and with fine equivalent to five per cent. of the turnover of that Company during the preceding financial year.
(3) If a director or officer of a Producer Company--
(a) fails to hand over the custody of books of account and other documents or property in his custody to the Producer Company of which he is a director or officer; or
(b) fails to convene annual general meeting or other general meetings,
he shall be punishable with fine which may extend to one lakh rupees, and in the case of a continuing default or failure, with an additional fine which may extend to ten thousand rupees for every day during which such default or failure continues.
Explanation of Section 378ZM
1. Unauthorised use of "Producer Company Limited"
Sub-section (1) protects the statutory designation "Producer Company Limited". A person who is not a Producer Company registered under the relevant Chapter cannot carry on business using a name containing those words. The provision permits a fine extending to Rs. 10,000 for every day for which the unauthorised name is used.
2. Wilful failure to furnish information
Sub-section (2) applies to a director or officer who wilfully fails to provide information relating to the affairs of the Producer Company when that information is required by a Member or by a person duly authorised for that purpose.
The prescribed consequence may include imprisonment extending to six months together with a fine equivalent to five per cent of the turnover of the Producer Company during the preceding financial year.
3. Failure to hand over books, documents or property
Under sub-section (3)(a), a director or officer may attract the statutory penalty if he or she fails to hand over books of account, other documents or property held in custody to the Producer Company of which that person is a director or officer.
4. Failure to convene general meetings
Sub-section (3)(b) covers failure by a director or officer to convene an annual general meeting or other general meeting. The provision permits a fine extending to Rs. 1 lakh and, where the default continues, an additional fine extending to Rs. 10,000 for every day during which the failure continues.
Penalty Summary under Section 378ZM
- Unauthorised use of the words "Producer Company Limited": fine up to Rs. 10,000 for every day of such use.
- Wilful failure by a director or officer to furnish required information: imprisonment up to six months and fine equivalent to five per cent of the preceding financial year's turnover.
- Failure to hand over books, documents or property, or failure to convene required general meetings: fine up to Rs. 1 lakh.
- Continuing default under sub-section (3): additional fine up to Rs. 10,000 for every day during which the default continues.