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  • Writer's pictureShubham Mishra

Section 447 of the Companies Act, 2013: Punishment for Fraud

Updated: Oct 14, 2022








This section is covered under Chapter XXIX of the Companies Act, 2013.


Under this article without prejudice to any liability under this Act or any other law currently in force, any person found guilty of fraud involving an amount of at least ten lakh rupees or one percent of the company's turnover, whichever is lower shall be punished by imprisonment for a term of not less than six months but not more than ten years, as well as a fine of not less than ten lakh rupees. However, it is possible that the fine will be three times the amount involved in the fraud.

The term of imprisonment shall not be less than three years if the fraud in question involves public interest.

Furthermore, where the fraud involves an amount less than ten lakh rupees or one percent of the company's turnover, whichever is lower and does not involve public interest, any person guilty of such fraud shall be punished with imprisonment for a term up to five years or a fine up to fifty lakh rupees, or both.

What is Fraud?

In relation to the affairs of a company or any other body corporate, "fraud" refers to any act, omission, concealment of any fact, or abuse of position committed by any person or other person with the intent to deceive, gain undue advantage from, or harm the interests of the company, its shareholders, creditors, or any other person, whether or not there is any wrongful gain or loss.

Define Wrongful Gain?

It means the acquisition of property by means of illegal means to which the person gaining is not legally entitled.

Define Wrongful Loss?

It means the unlawful taking of property from someone who is legally entitled to it.

Rules Applicable under this Section:

1. Part I of Companies (Adjudication of Penalties) Rules, 2014

2. Part II of Companies (Miscellaneous) Rules, 2014

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