Those who do not reach the venue by 9 AM, will strictly be dealt with a penalty.
Is the above sentence grammatically correct? Specifically the positioning of 'strictly'
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The intended meaning is not completely clear. One possible meaning is that all latecomers will be penalised - no exceptions. That would be applying the rules strictly. Another possible, but less likely, meaning is that exceptions may be allowed: the sense of strictly being that "that is what the rules say, but we have discretion to be lenient". That sense is more often seen in the expression "strictly speaking...".
You do not say why you ask the question. The sentence does read slightly oddly to me, but there is no rule that prohibits placing an adverb as strictly is placed in that sentence. To see that, replace 'strictly' with 'generally' and you get an unexceptionable sentence.
So if there is a problem, apart from slight ambiguity, it is not grammatical, but a matter of style. The sentence might be improved stylistically by moving 'strictly' to follow with.