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  • Writer's pictureMayank Upadhyay

Section 337 Of The Companies Act 2013

Updated: Oct 17, 2022


The financial/ corporate frauds and scams which have taken place in India, requires the attention of the Law Makers. It was high time to evaluate the high standards in corporate governance and implement stringent provisions to tackle corporate Fraud.

The Companies Act, 2013 focuses on the issues related to corporate Fraud, as is visible, it may continue in the future too.

As per section 337, Fraud in relation to affairs of a company or a body corporate, includes:

(a) any act

(b) any omission

(c) concealment of any fact

(d) abuse of position committed by a person

These actions omissions, concealment of the facts, should be done to deceive or to gain undue advantage which shall result in loss to the company or its shareholders or its creditors or any other person associated with the company and it may result in Wrongful Gain (means the gain by unlawful means of property to which the person gaining is not legally entitled) or Wrongful Loss (means the loss by unlawful means of property to which the person losing is not legally entitled).

Provisions under Section 337 of Companies Act, 2013

[Penalty For Frauds By Officers]

If any person, being at the time of the commission of the alleged offence an officer to a company which is subsequently ordered to be wound up by the Tribunal under this Act:-

  1. Has, by false pretences or by means of any other fraud, included any person to give credit to the company;

  2. With intent to defraud creditors of the company or any other person, has made or caused to be made any gift or transfer of, or change on, or has caused or connived at the levying of any execution against, the property of the company; or

  3. With intent to defraud creditors of the company, has concealed or removed any part of the property of the company since the date of any unsatisfied judgement or order of payment of money obtained against the company or within two months before that date,

He shall be punishable with imprisonment for a term which shall not be less than one year but which may extend to three years and with fine which shall not be less than one lakh rupees but which may extend to three lakh rupees.

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