The Annual General Meeting of Promax Limited held on 30th May, 2025, declared a dividend at the rate of 30% payable on its paid-up equity share…

Section 127 of the Companies Act, 2013 lays down the penalty for non-payment of dividend within the prescribed time period of 30 days. According to this section where a dividend has been declared by a company but has not been paid or the warrant in respect thereof has not been posted within 30 days from the date of declaration of dividend to any shareholder entitled to the payment of dividend: (1) every director of the company shall, if he is knowingly a party to the default, be punishable with imprisonment maximum up to two years and with minimum fine of rupees one thousand for every day during which such default continues; and (2) the company shall be liable to pay simple interest at the rate of 18% per annum during the period for which such default continues. In the given question, the company was unable to post dividend warrant within 30 days from the date of declaration of dividend. Thus, the directors will be liable as per the above provisions and the company is liable to pay simple interest. However, Mr. Trishul will not succeed if he claims interest at 20% per annum interest as the limit prescribed under section 127 is 18% per annum.