Penalty - Definition - Law Dictionary Home Dictionary Definition penalty

Definition :

Penalty, is a liability under the taxing statute, Khemka & Co. v. State of Maharashtra, AIR 1975 SC 1549.

Penalty, is legal or official punishment such as a term of imprisonment, N.K. Jain v. C.K. Shah, AIR 1991 SC 1289. [Employees' Provident Fund Act, 1952, s. 14]

Means recovery of an amount as a penal measure in civil proceedings, or an exaction which is not compensatory in character, Jagjit Cotton Textile Mills v. Chief Commercial Superintendent, N.R., (1998) 5 SCC 126.

1. A sum agreed to be paid on non-performance of the condition of a bond. See BOND.

2. A sum agreed to be paid on breach of an agreement or any stipulation of it. See LIQUIDATED DAMAGES, and NOMINE PEN'. The fact that the parties state expressly in their contract that the sum named is 'liquidated damages' will not prevent the Court from deciding that it is a penalty. 'The cases upon the subject of penalty or liquidated damages are very numerous. The result of them seems to be this, that what the Courts look at is the real intention of the parties as it is to be gathered from the language they have used', Lea v. Whitaker, (1872) LR 8 CP p. 73, per Keating, J. The words are not conclusive; the essence of penalty is a payment stipulated as in terrorem of the offending party: the essence of liquidated damages is a genuine covenanted pre-estimate of loss, Dunlop Co. v. New Garage Co., 1915 AC 79; approved in Widnes Foundry (1925) Ltd. v. Cellulose Acetate Co. Ltd., (1931) 2 KB 393, and 1933 AC 20.

3. A sum recoverable by action from a person infringing a statute. See PENAL STATUTES.

4. A sum, also called a fine, recoverable in a Court of Summary Jurisdiction from a person infringing a statute.

The words 'where any penalty is imposed' in Rule 14(i) should actually be read as 'where any penalty is imposable', because so far as the disciplinary authority is concerned it cannot impose a sentence. The word 'penalty' used in Rule 14(i) of the Rules of 1968 is relatable to the penalties to be imposed under the Rules rather than a penalty given by a criminal court, Divisional Personnel Officer v. T.R. Challappan, AIR 1975 SC 2216 (2220): (1976) 3 SCC 190: (1976) 1 SCR 783. [Railway Servants (D&A) Rules, 1969, R. 14(1)]

The word 'penalty' is a word of wide significance. Sometimes it means recovery of an amount as a penal measure even in a civil proceeding. An exaction which is not of compensatory character is also termed as a penalty even though it is not being recovered pursuant to an order finding the person concerned guilty of a crime. In Article 20(1) the expression 'penalty' is used in the narrow sense as meaning a payment which has to be made or a deprivation of liberty which has to be suffered as a consequence of a finding that the person accused of a crime is guilty of the charge, Shiv Dutt Rai Fateh Chand v. Union of India, (1983) 3 SCC 529: (1983) 3 SCR 198.

The expression 'penalty' involves an idea of punishment, Sova Ray v. Gostha Gopal Dey, AIR 1988 SC 981: (1988) 2 SCC 134: (1988) 3 SCR 287.

The expression 'penalty' is a word of wide signifi-cance. Sometimes, it means recovery of an amount as a penal measure even in civil proceedings. An exaction which is not compensatory in character is also termed as a 'penalty'. When penalty is imposed by an adjudicating officer, it is done so in 'adjudicatory proceedings' and not by way of fine as a result of 'prosecution' of an 'accused' for commission of an 'offence' in a criminal Court, Director of Enforcement v. M.C.T.M. Corporation (P) Ltd., AIR 1996 SC 1100 (1104): (1996) 2 SCC 471. [FERA, 1947, s. 23 (i) (a)]

In the common parlance the word 'penalty' is understood to mean; a legal or official punishment such as a term of imprisonment. In some contexts it is also understood to mean some other form of punishment such as fine or forfeiture for not fulfilling a contract. But in gathering the meaning of this word, the context in which this is used is significant, N.K. Jain v. C.K. Shah, AIR 1991 SC 1289: (1991) 2 SCC 495.

Penalty is ordinarily levied on an assessee for some contumacious conduct or for a deliberate violation of the provisions of the particular statute, Pratibha Processors v. Union of India, AIR 1997 SC 138 (143).