S.No.

Nature of Activity Law Involved Compliance Issue Penalty for non compliance Remarks
1 Importer / Dealer sell a motor vehicle
in such condition that its use in public
place would be in contravention of
Chapter VII & Rules made
thereunder.
Sec. 191 read with Chapter
VII (Secs.109 ~111) and
Sec. 199 under the Motor
Vehicles Act, 1988
Homologation Certification
under Rule 126 of Motor
Vehicles Rules,1989
Fine upto Rs.500/-
2 Construction of vehicle complying
Motor Vehicle Rules
Sec. 182A read with
Sec.109(3) and Sec.199
under Motor Vehicles
Act,1988
Homologation Certification
under Rule 126 of Motor
Vehicles Rules,1989
fine upto Rs.1000/- first offence
subsequently Rs.5000/- for each
offence
Compoundable offence
3 Failure to comply Consumer Forum
Order (u/s.14) of -removal of defect/
replace the good /return the price /
pay compensation
Sec. 27 of the Consumer
Protection Act
Comply with Consumer Forum
order within 30 days or file an
appeal with higher authority
Imprisonment between one month ~
3yrs or fine between Rs.2,000/- ~
Rs.10,000/- or both
4 Dealing in foreign exchange
(receiving / paying/drawing /
repatriating)
Sec. 13 read with Sec. 42 of
the Foreign Exchange
Management Act, 1999
Ensure Compliance of Act, or
contravenes any rule,
regulation, notification,
direction issued by Reserve
Bank of India
penalty up to thrice the sum involved
in such contravention where such
amount is quantifiable, or up to Rs. 2
lakh where the amount is not
quantifiable, and where such
contravention is a continuing one,
further penalty which may extend to
Rs. 5000 for every day after the first
day during which the contravention
continues.
5 Remittance of Employer & Employee
contribution of Provident Fund or
filing of periodical returns
Sec. 14 (1A) read with Sec. 6
/ Sec. 17(3)(a) , Sec. 14A of
the Employees Provident
Funds & Miscellaneous
Provisions Act, 1952
Ensure timely remittance of
Employer & Employee
contribution and filing of
periodical returns
Imprisonment upto 3 yrs- A) which
shall not be less than 1 yr & fine
Rs.10,000/- failure of deposit of
employees contribution which has
been deducted from employees B) not
less than 6 months and fine
Rs. 5,000/- in other cases
Action also can be taken under
Sec.406 of the Indian Penal Code,
1860, imprisonment upto 3 yrs or with
fine or with both.
Liable to be arrested
without arrest warrant
('Cognizable offence').
Repeated offence, then
imprisonment shall not
be less than 2 yrs and
upto 5 yrs and fine of
Rs.25,000/- under
Sec.14AA
6 Payment of minimum wages Sec.22 & 22A read with Sec.
22C of the Minimum Wages
Act,1948
Ensure payment of minimum
wages prescribed under the
Act
Imprisonment 6 months or fine upto
Rs.500/- or both. Failure to Comply
the Act then fine upto Rs.500/-
7 Remittance of Employer, reducing
wages or filing of periodical returns
Sec.85 read with Sec. 86A of
the Employees' State
Insurance Act, 1948
Ensure timely remittance of
Employer contribution and
filing of periodical returns
Imprisonment upto 3 yrs- A) which
shall not be less than 1 yr & fine
Rs.10,000/- failure of deposit of
employees contribution which has
been deducted from employees B) not
less than 6 months and fine
Rs. 5,000/- in other cases.
Action also can be taken under
Sec.406 of the Indian Penal Code,
1860, imprisonment upto 3 yrs or with
fine or with both.
Repeated offence, then
imprisonment shall not
be less than 2 yrs and
upto 5 yrs and fine of
Rs.25,000/- under
Sec.85A.
8 Pays unequal remuneration to men &
women workers, discrimination of
men & women workmen, does not
maintain registers
Sec. 10 read with Sec.11 of
the Equal remuneration
Act,1976
Ensure equal remuneration to
men and women workmen,
maintain registers, no
discrimination of men &
women workers
Fine between Rs.10,000 to Rs.20,000
or with imprisonment for 3 months to
one yr.
Repeated offence,
imprisonment shall
extended to two years
9 Non compliance of provisions of
Factories Act regarding health,
safety, welfare, working hours,
annual leave with wages, occupation
of factory premises without notice
Sec.92 of the Factories Act,
1948
Ensure compliance of all the
provisions of the Act
The Director who had been appointed
as Occupier and manager of factory ,
imprisonment upto 2 yrs or with fine
which extend to Rs. 1 Lakh or both
Continuance of contravention,
Rs.1000/- per day
Repeated offence,
imprisonment shall be
extended upto 3 yrs or
with fine Rs.10,000/-
which may extend to
Rs. 2 Lakh or both
10 Lay off, retrenchment, closure, lock-
out
Sec.25Q, 25R, 26, read with
Sec. 32 of the Industrial
Disputes Act,1947
Ensure compliance of
provisions of the Act
Imprisonment from one month to 6
months or with fine from Rs.100 to
Rs.1000/- or with both
11 Evasion of customs duty, false
declaration of value, imports
prohibited goods, violating rules of
storing, movement, un-loading of
import goods, exports prohibited
goods, export under false of claim of
duty draw back, violating rules of
storing, movement, loading of export
goods
Sec. 135 read with Sec.104,
111, 112, 113, 140 of the
Customs Act, 1962
Ensure compliance of
provisions of the Act
Imprisonment from one year to three
years or with fine from duty evaded /
value of goods / Rs. 5000/- which
ever higher or both
Power to arrest with
warrant. Repeated
offence, imprisonment
may extend to seven
years and with fine
Directors Liabilities under various Laws
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S.No. Nature of Activity Law Involved Compliance Issue Penalty for non compliance Remarks
Directors Liabilities under various Laws
12 Removing excisable goods in
contravention of excise rules, not
accounting for excisable goods,
engaging in manufacturing of
excisable goods without registration,
contravening provisions of excise
rules/act, excise duty not paid, short
paid
Sec.9, 13 , 11AC read with
Sec. 9AA the Central Excise
Act, 1944 Rule 25,
26 & 27 of the Central Excise
Rules,2002
Ensure compliance of
provisions of the Act
Imprisonment from 6 months or fine or
both
Power to arrest with
warrant. Repeated
offence imprisonment
may extend to 7 years
and with fine
13 Dishonour of cheque issued due to
insufficiency of funds
Sec. 138 read with Sec. 141
of the Negotiable Instruments
Act, 1881 Sec. 357 of
the Criminal Procedure Code,
1973
Ensure honour of all cheques Imprisonment upto 2 yrs or fine twice
the amount of cheque or both
14 Failure to obtain permission under
the Act and install equipments to
control air pollution, allow emission of
air pollutants in excess of the
standards,
Sec. 37 read with Sec. 40 of
the Air (Prevention and
control of Pollution) Act,1981
Ensure compliance of
provisions of the Act
Imprisonment from 1.5 years to 6
years and with fine. Continuance of
offence Rs.5000/- per day
Repeated offence,
imprisonment of 2 yrs
to 7 yrs and with fine.
15 Allows emission or discharge of
environmental pollutants in excess of
the standards, handling hazardous
substances without complying
procedural safe guards
Sec. 15 read with Sec.16 of
the Environment (Protection)
Act, 1986
Ensure compliance of
provisions of the Act
Imprisonment upto 5 yrs or with fine
upto Rs. 1 Lakh or both. Continuance
of offence, then fine of Rs.5000/- per
day during such failure. If offence
continued more than 1 yr then
imprisonment may extended upto 7
yrs
16 Disposes polluting matter into well /
stream, establishes treatment
/disposal system without approval,
Sec. 25, 26 read with Sec.
43,44, & 47 of the Water
(Prevention and Control of
Pollution) Act,1974
Ensure compliance of
provisions of the Act
Imprisonment from 1.5 years to 6 yrs
and with fine
Repeated offence,
imprisonment from 2
yrs to 7 yrs and with
fine
17 Employment of contract labour
without complying the provisions
Sec. 23 read with Sec. 25 of
the Contract Labour
(Regulation and Abolition)
Act, 1970
Ensure compliance of
provisions of the Act
imprisonment upto 3 months or fine
Rs.1000/- or both
18 Non payment of minimum bonus to
eligible employees after making
profits
Sec. 28 read with Sec.29 of
the Payment of Bonus Act,
1965
Pay minimum bonus after
making profits
Imprisonment upto 6 months or fine
Rs. 1000/- or both
19 Non payment of gratuity to
employees
Sec. 9 of the Payment of
Gratuity Act, 1972
Ensure compliance of the
provisions of the Act
Imprisonment from 6 months to 2 yrs
or fine
20 Fails to pay wages within the due
date, wrong deductions made from
wages,
Sec. 20 of the Payment of
Wages Act, 1936
Ensure compliance of the
provisions of the Act
Fine from Rs.1500/- to Rs.7500/- and
Rs. 750 /- per day for each day of
default
Repeated offence will
attract imprisonment
from one month to six
months and fine from
Rs.3750/- to
Rs.22,500/-
21 Fails to register, using goods for
other than the purpose for which they
were bought,
Sec. 10, 10A of the Central
Sales Act, 1956
Ensure compliance of the
provisions of the Act
Imprisonment upto 6 months or fine or
with both
Arrested without
warrant & bailable.
22 Failure to maintain books of
accounts, place accounts & Directors
Report before shareholders, pay
declared dividend, pays political
contribution more than specified limit
Sec. 207, 209, 210,211, 217,
293A read with Sec. 5 of the
Companies Act,1956
Ensure compliance of the
provisions of the Act
Imprisonment from 6 months to 3 yrs
or fine upto Rs.50,000/- or with both
23 Fails to file returns with Registrar of
Companies , display/name name
without registered office address,
maintain registers & minutes,
Sec. 75, 95,142,143, 146
,147,150 ,162,192,193 read
with Sec. 5 of the Companies
Act,1956
Ensure compliance of the
provisions of the Act
Fine upto Rs.5000/-
24 Use of unstamped weights or
measures
Sec. 21, 50 read with Sec. 74
of the Standards of Weights
and Measures Act, 1976
Ensure compliance of the
provisions of the Act
Imprisonment upto 6 months or fine
Rs. 1000/- or with both
Repeated offence,
imprisonment of two
year and fine
25 Fails to comply packing
specifications
Rule 39 of the Standards of
Weights and Measures
(Packaged Commodities)
Rules, 1977
Ensure compliance of the
provisions of the Rules
Fine upto Rs.2000/-
26 Defaults payment of value added tax Sec. 71of the Tamil Nadu
Value Added Tax Act, 2006
Ensure compliance of the
provisions of the Act
Imprisonment upto 6 months or fine
Rs. 2000 or both
27 Fails to register, file returns Sec. 71of the Tamil Nadu
Value Added Tax Act, 2006
Ensure compliance of the
provisions of the Act
Fine from Rs. 500 to Rs.1000/-
28 Fails to deduct income tax at source Sec. 271C read with Sec.
278B of the Income Tax
Act,1961
Ensure compliance of the
provisions of the Act
Fine equal to the amount failed to
deduct income tax at source
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