Amended and updated notes on section 447 of Companies Act 2013. Detail discussion on provisions and rules related to punishment for fraud.
Chapter XXIX (Sections 447–470) of the Companies Act, 2013 (CA 2013) deals with the provisions related to miscellaneous. Section 447 of CA 2013 provides for punishment for fraud.
Recently, we have discussed in detail section 446B (Lesser penalties for One Person Companies or small companies) of CA 2013. Today, we learn the provisions of section 447 of the Companies Act 2013.
The provisions of section 447 are effective from 12th September, 2013. You may refer Notification No. S.O. 2754(E) dated 12.09.2013. In this article, you will learn detail of the provisions of section 447 the Companies Act 2013.
| Name of Act | The Companies Act 2013 |
|---|---|
| Enacted by | Parliament of India |
| Administered by | Ministry of Corporate Affairs (MCA) |
| Number of Chapters | 29 |
| Number of Sections | 484 (470-43+57) |
| Number of Schedules | 7 |
| You are reading: | |
| Chapter No. | XXIX |
| Chapter Name | Miscellaneous |
| Section No. | 447 |
| Section Name | Punishment for fraud |
| Monthly Updated Edition | Company Law PDF |
Section 447 of Companies Act 2013: Punishment for fraud
Section 447 shall come into force on 12th September, 2013 vide Notification No. S.O. 2754(E) dated 12.09.2013
Without prejudice to any liability including repayment of any debt under this Act or any other law for the time being in force, any person who is found to be guilty of fraud involving an amount of at least ten lakh rupees or one per cent. of the turnover of the company, whichever is lower, shall be punishable with imprisonment for a term which shall not be less than six months but which may extend to ten years and shall also be liable to fine which shall not be less than the amount involved in the fraud, but which may extend to three times the amount involved in the fraud:
Provided that where the fraud in question involves public interest, the term of imprisonment shall not be less than three years.
Provided further that where the fraud involves an amount less than ten lakh rupees or one per cent. of the turnover of the company, whichever is lower, and does not involve public interest, any person guilty of such fraud shall be punishable with imprisonment for a term which may extend to five years or with fine which may extend to fifty lakh rupees or with both.
Explanation: For the purposes of this section—
- (i) “fraud” in relation to affairs of a company or any body corporate, includes any act, omission, concealment of any fact or abuse of position committed by any person or any other person with the connivance in any manner, with intent to deceive, to gain undue advantage from, or to injure the interests of, the company or its shareholders or its creditors or any other person, whether or not there is any wrongful gain or wrongful loss;
- (ii) “wrongful gain” means the gain by unlawful means of property to which the person gaining is not legally entitled;
- (iii) “wrongful loss” means the loss by unlawful means of property to which the person losing is legally entitled.