Companies Act Section 337 — Penalty for frauds by officers
CHAPTER XX WINDING UP
Commercial / Corporate
Summary
This section applies to a person who was an officer of a company at the time of the alleged offence, where that company is later ordered to be wound up under the Companies Act.
Under clause (a), if that officer induced any person to give credit to the company by using false pretences or any other kind of fraud, the officer is liable for punishment.
Under clause (b), if that officer, with the intent to defraud the company's creditors or any other person, made or caused any gift or transfer of the company's property, or created a charge on that property, or caused or allowed an execution to be levied against the property, the officer is liable for punishment.
Under clause (c), if that officer, with the intent to defraud the company's creditors, concealed or removed any part of the company's property after the date of an unsatisfied judgment or order for payment of money obtained against the company, or within two months before that date, the officer is liable for punishment.
For any of these acts, the punishment is imprisonment for a term of not less than one year and up to three years, along with a fine of not less than one lakh rupees and up to three lakh rupees.
Official Text
If any person, being at the time of the commission of the alleged offence an officer of a company which is subsequently ordered to be wound up by the Tribunal 1[under this Act]—
(a) has, by false pretences or by means of any other fraud, induced any person to give credit to the company;
(b) 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 charge on, or has caused or connived at the levying of any execution against, the property of the company; or
(c) 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 judgment or order for 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.