{"id":26714,"date":"2019-11-18T18:39:11","date_gmt":"2019-11-18T13:09:11","guid":{"rendered":"https:\/\/enterslice.com\/learning\/?p=26714"},"modified":"2019-11-25T15:16:47","modified_gmt":"2019-11-25T09:46:47","slug":"fraud-and-offences-punishable-under-companies-act-2013","status":"publish","type":"post","link":"https:\/\/enterslice.com\/learning\/fraud-and-offences-punishable-under-companies-act-2013\/","title":{"rendered":"Fraud and Offences Punishable under Companies Act 2013"},"content":{"rendered":"<p>In India, <strong>Fraud and Offences<\/strong> have taken place in the form of financial, corporate frauds and scams which require the attention of the Lawmakers. Stringent provisions are taken to tackle the frauds and to evaluate the high standards in corporate governance. The increasing tendency of white-collar crimes now results in stiff penalties, impeccable punishments and effective enforcement of the law with the right spirit.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">What is fraud reporting\nunder the Companies Act 2013?<\/h2>\n\n\n\n<p><strong>Section 143(12) to 143(15) of the Companies Act<\/strong> deals with provisions relating to reporting of Fraud, where\nthe &ndash; <\/p>\n\n\n\n<ul><li>Statutory auditor,<\/li><li>Cost auditor and,<\/li><li>The Secretarial Auditor is responsible to detect Fraud. <\/li><\/ul>\n\n\n\n<p>In the case where the fraud is detected by the Auditor, they have to first inform the Board of Directors and then to the <strong>Central government<\/strong><sup><a href=\"https:\/\/en.wikipedia.org\/wiki\/Government_of_India\">[1]<\/a><\/sup>.<\/p>\n\n\n\n<p>As per <strong>Section 143 (12) of the Act<\/strong>, Fraud\nreporting is the reporting where the auditor has a reason to believe that an\noffence involving fraud is being or has been committed against the company by\nofficers or employees of the company, the auditor shall immediately report the\nmatter to the Central Government within such time and in such manner as\nprescribed under the <strong>Companies (Audit\n&amp; Auditors), Rules, 2014<\/strong>.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Sections dealing in the Companies Act, 2013<\/h2>\n\n\n\n<p><strong>Section 447 to Section\n453<\/strong> deals in Penalties and Punishment under the\nCompanies Act 2013-<\/p>\n\n\n\n<table class=\"wp-block-table\"><tbody><tr><td>  <strong>Section<\/strong>   <\/td><td>\n  <strong>Provision<\/strong>\n  <\/td><\/tr><tr><td>\n  <strong>447<\/strong>\n  <\/td><td>\n  <strong>Punishment for Fraud<\/strong>\n  <\/td><\/tr><tr><td>\n  <strong>448<\/strong>\n  <\/td><td>\n  <strong>Punishment for False\n  Statement<\/strong>\n  <\/td><\/tr><tr><td>\n  <strong>449<\/strong>\n  <\/td><td>\n  <strong>Punishment for false\n  evidence<\/strong>\n  <\/td><\/tr><tr><td>\n  <strong>450<\/strong>\n  <\/td><td>\n  <strong>Punishment where no\n  specific penalty is provided<\/strong>\n  <\/td><\/tr><tr><td>\n  <strong>451<\/strong>\n  <\/td><td>\n  <strong>Punishment in case of\n  repeated defaults<\/strong>\n  <\/td><\/tr><tr><td>\n  <strong>452<\/strong>\n  <\/td><td>\n  <strong>Punishment for wrongful\n  withholding of <a class=\"glossaryLink\"  aria-describedby=\"tt\"  data-cmtooltip=\"&lt;div class=glossaryItemTitle&gt;Property&lt;\/div&gt;&lt;div class=glossaryItemBody&gt;Property refers to the legal designation of ownership over valuable items or assets held by an individual or a business. This ownership grants the holder certain legal rights to use, consume,(...)&lt;\/div&gt;\"  href=\"https:\/\/enterslice.com\/learning\/terms\/property\/\"  data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]'>property<\/a><\/strong>\n  <\/td><\/tr><tr><td>\n  <strong>453<\/strong>\n  <\/td><td>\n  <strong>Punishment for inappropriate\n  use of Limited or Private limited.<\/strong>\n  <\/td><\/tr><\/tbody><\/table>\n\n\n\n<h3 class=\"wp-block-heading\">Section 447<\/h3>\n\n\n\n<p>Section 447 deals with the punishment for fraud i.e. if any\nperson who is found to be guilty of fraud involving an amount of at least-<\/p>\n\n\n\n<ul><li>10 lakh Rupees or,<\/li><li>1% of Turnover of a\nCompany, <strong>whichever is less<\/strong><\/li><\/ul>\n\n\n\n<p><strong>Penal Provision &ndash; <\/strong>Imprisonment\nfor a term which shall not be less than &ndash;<\/p>\n\n\n\n<ul><li><strong>Minimum-6 Months<\/strong>, However,\nthe imprisonment of <strong>3 years<\/strong> if the Fraud in question involves Public\nInterest.<\/li><li><strong>Maximum<\/strong>-The imprisonment may\nextend to <strong>10 years<\/strong>.<\/li><\/ul>\n\n\n\n<p><strong>Fine &ndash; <\/strong>The fine shall not be\nless than the amount of fraud involved, which may extend to <strong>3 times<\/strong> of\nthe amount involved in the fraud.<\/p>\n\n\n\n<p><strong>As per the Proviso Inserted by the Companies\n<a class=\"glossaryLink\"  aria-describedby=\"tt\"  data-cmtooltip=\"&lt;div class=glossaryItemTitle&gt;Amendment&lt;\/div&gt;&lt;div class=glossaryItemBody&gt;An &amp;quot;amendment&amp;quot; refers to the formal change or correction of a legal document, often involving additions, variations, or deletions to address irregularities or clarify points in an agreement.(...)&lt;\/div&gt;\"  href=\"https:\/\/enterslice.com\/learning\/terms\/amendment\/\"  data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]'>Amendment<\/a> Act 2017<\/strong><\/p>\n\n\n\n<p><strong>Note &ndash; <\/strong>Provided where the fraud involves an amount less than the amount\nmentioned above-i.e.<\/p>\n\n\n\n<ul><li>10\nlakhs or 1% of the turnover whichever is lower,<\/li><li>Does not involve Public interest<\/li><\/ul>\n\n\n\n<p>Any person guilty of the above-mentioned fraud shall be\npunishable with imprisonment for a tenure which may extend to-<\/p>\n\n\n\n<ul><li>Imprisonment-5 years<\/li><li>Fine-May extend to 25 lakh rupees or both<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">Section 448<\/h3>\n\n\n\n<p>Section 448 deals with punishment for false statement i.e. if a person makes or gives a false statement or false material particulars (<strong>Knowing it to be false<\/strong>) or discard any material facts in any manner (<strong>Knowing it to be material<\/strong>) of the below-mentioned documents with its full knowledge-<\/p>\n\n\n\n<ul><li>Return or\ncertificate under the Companies Act,2013<\/li><li>Prospectus under\nthe Companies Act 2013<\/li><li>Statement\/Documents\nprescribed to be made under the Companies Act 2013.<\/li><\/ul>\n\n\n\n<p><strong>Punishment &ndash; liable for punishment as per Section 447 of the Companies Act 2013<\/strong><\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Section 449 <\/h3>\n\n\n\n<p>It deals in punishment for False Evidence<strong> i.e. <\/strong>if the person intentionally gives false evidence &ndash; <\/p>\n\n\n\n<ul><li>Upon any examination\non oath,<\/li><li>Any\naffidavit\/document submitted about the winding up of the company OR<\/li><li>Any matter related to\nthe Companies Act.<\/li><\/ul>\n\n\n\n<p><strong>Penal Provision &ndash; <\/strong><\/p>\n\n\n\n<ul><li><strong>Minimum &ndash; <\/strong>Imprisonment for a period of not less than 3\nyears.<\/li><li><strong>Maximum <\/strong><strong>&ndash;<\/strong> 7 years<\/li><\/ul>\n\n\n\n<p><strong>&nbsp; Fine &ndash; <\/strong>Fine up to Rs 10 lakh. <\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Section 450<\/h3>\n\n\n\n<p>It deals with the punishment where no specific\npenalty is provided. i.e. if the employee or the officer commits any offence or\ncontravenes the provision of the companies Act, where no specific penalty or\npunishment is provided.<\/p>\n\n\n\n<p><strong>Fine &ndash; <\/strong>Up to Rs.10,000 plus\na fine up to Rs 1000 per day (if an offence is a Continuing one)<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Section 451<\/h3>\n\n\n\n<p>It deals in case of repeated default i.e.If a company or an officer commits an offence punishable-<\/p>\n\n\n\n<ul><li>either with fine\nor <\/li><li>with\nimprisonment and <\/li><li>where the same\noffence is committed for the 2<sup>nd<\/sup>or ensuing occasions within a period\nof 3 years then-<\/li><li>The company and every officer who is in default\nshall be punishable with fine-Twice the amount of fine for such offence in\naddition to any imprisonment provided for that offence.<\/li><\/ul>\n\n\n\n<p>Applicability of the section is not to the\noffence repeated after a period of three (03) years from the commitment of the first\noffence.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Section 452<\/h3>\n\n\n\n<p>It deals with punishment for wrongful withholding of property i.e. if any officer, employee or ex-employee of the company has wrongfully obtained the possession of the property or wrongful withholding of the property.<\/p>\n\n\n\n<p><strong>It includes cash of the company.<\/strong><\/p>\n\n\n\n<p><strong>Fine &ndash; <\/strong>A employee or officer\nwill be punishable with fine which shall not be less than Rs 1 lakh which may\nextend to Rs 5 lakh<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Section 453 <\/h3>\n\n\n\n<p>It deals with the punishment for inappropriate\nuse of the limited or private limited word without the registration\/or removes\nthe word limited or private limited while entering into a contract or acting on\nthe behalf of the company.<\/p>\n\n\n\n<p><strong>Fine <\/strong>&ndash; He shall be punishable with fine which shall not\nbe less than Rs 500 and may extend to Rs.2000 for every day for the time that\nname has been used.<\/p>\n\n\n\n<div class=\"read\"><p><b>Also, Read:<\/b> <mark><a href=\"https:\/\/enterslice.com\/learning\/compounding-offences-under-companies-act-2013\/\" target=\"_blank\" rel=\"noopener noreferrer\">Compounding Offenses Under Companies Act 2013<\/a><\/mark>.<\/p><\/div>\n","protected":false},"excerpt":{"rendered":"<p>In India, Fraud and Offences have taken place in the form of financial, corporate frauds and scams which require the attention of the Lawmakers. Stringent provisions are taken to tackle the frauds and to evaluate the high standards in corporate governance. The increasing tendency of white-collar crimes now results in stiff penalties, impeccable punishments and [&hellip;]<\/p>\n","protected":false},"author":25,"featured_media":26731,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[1322,2611],"tags":[2819,2820],"acf":{"service_id":"1"},"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v14.6.1 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Fraud and Offences Punishable under Companies Act 2013 - Enterslice<\/title>\n<meta name=\"description\" content=\"Fraud and Offences have taken place in the form of financial, corporate frauds and scams which require the attention of the Lawmakers.\" \/>\n<meta name=\"robots\" content=\"index, follow\" \/>\n<meta name=\"googlebot\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<meta name=\"bingbot\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/enterslice.com\/learning\/fraud-and-offences-punishable-under-companies-act-2013\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Fraud and Offences Punishable under Companies Act 2013 - Enterslice\" \/>\n<meta property=\"og:description\" content=\"Fraud and Offences have taken place in the form of financial, corporate frauds and scams which require the attention of the Lawmakers.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/enterslice.com\/learning\/fraud-and-offences-punishable-under-companies-act-2013\/\" \/>\n<meta property=\"og:site_name\" content=\"Enterslice\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/enterslice\" \/>\n<meta property=\"article:published_time\" content=\"2019-11-18T13:09:11+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2019-11-25T09:46:47+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2019\/11\/Fraud-and-Offences-under-Companies-Act-2013.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1200\" \/>\n\t<meta property=\"og:image:height\" content=\"630\" \/>\n<meta name=\"twitter:card\" content=\"summary\" \/>\n<meta name=\"twitter:creator\" content=\"@enterslice\" \/>\n<meta name=\"twitter:site\" content=\"@enterslice\" \/>\n<!-- \/ Yoast SEO plugin. -->","authorName":"Priyanka Bajpayee","authorImageUrl":"https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2019\/09\/81216.jpg","authorDescription":"Priyanka Bajpayee has done Masters in International Business Law and well versed in content writing covering the area of legal and finance. Also, she has practical experience of almost 1.5 years in Legal compliance and secretarial work.","postViews":535,"readingTime":3,"nextPost":{"id":26736,"slug":"statutory-audit-checklist-for-nbfcs-complete-overview"},"prevPost":{"id":26718,"slug":"types-of-committee-as-per-the-companies-act-2013"},"featuredMediaUrl":"https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2019\/11\/Fraud-and-Offences-under-Companies-Act-2013.jpg","postTerms":"Company Registration","_links":{"self":[{"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/posts\/26714"}],"collection":[{"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/users\/25"}],"replies":[{"embeddable":true,"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/comments?post=26714"}],"version-history":[{"count":0,"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/posts\/26714\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/media\/26731"}],"wp:attachment":[{"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/media?parent=26714"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/categories?post=26714"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/tags?post=26714"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}