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Section 27: Penalty for contravention of section 8 or 22

Micro, Small and Medium Enterprises Development Act, 2006 • Official Statutory Text & Practice Guide

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MSEFC Facilitation Council
Act 27 of 2006
Section 26 All 32 Sections of MSMED Act Section 28
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Legal Commentary & Landmark Judgments: Section 27

Section 27 prescribes penal sanctions and financial fines for failure to file the statutory memorandum under Section 8 or willful non-compliance with the mandatory financial disclosure requirements under Section 22.

  • Penalty for Section 8 Default: Under Section 27(1), whoever intentionally fails to furnish information or willfully furnishes false information under Section 8(1) or 8(2) is punishable with fine up to Rs 1,000 for the first offence, and Rs 1,000 to Rs 10,000 for second or subsequent offences.
  • Severe Penalty for Section 22 Disclosure Default: Under Section 27(2), any buyer who fails to furnish information or disclosures mandated by Section 22 in its annual balance sheet and profit & loss accounts is punishable with fine not less than Rs 10,000.
  • Strict Criminal Liability: Imposes statutory financial sanctions on buyers and enterprise promoters to ensure transparency in corporate reporting and statistical integrity.
Key Landmark Precedents:
  • Radheshyam Kejriwal v. State of W.B. (2011) 3 SCC 581: The Supreme Court held that statutory penal provisions in economic and regulatory enactments require strict construction and proof of statutory non-compliance.
  • Dayle De'Souza v. Union of India (2021 SCC OnLine SC 1002): Reaffirmed that penal sanctions against corporations and their officers cannot be levied without specific statutory findings and proper invocation of vicarious liability provisions.
Courtroom Practice & Strategic Litigation Guidance:

When defending a corporate buyer accused of non-disclosure under Section 22, examine whether the supplier had formally provided its Udyam Registration number in its invoices or communications. A buyer cannot be penalized under Section 27(2) if the supplier suppressed its MSME status, preventing the buyer from accounting for the liability.

Section 26 All 32 Sections of MSMED Act Section 28