Criminal liability for mis-statements in prospectus
Section 34 of the Companies Act, 2013 deals with criminal liability for mis-statements in prospectus. Where a prospectus, issued, circulated or distributed under this Chapter, includes any statement which is untrue or misleading in form or context in which it is included or where any inclusion or omission of any matter is likely to mislead, every person who authorises the issue of such prospectus sh The Act came into force on 01 Apr 2014.
Where a prospectus, issued, circulated or distributed under this Chapter, includes any statement which is untrue or misleading in form or context in which it is included or where any inclusion or omission of any matter is likely to mislead, every person who authorises the issue of such prospectus shall be liable under section 447:
Provided that nothing in this section shall apply to a person if he proves that such statement or omission was immaterial or that he had reasonable grounds to believe, and did up to the time of issue of the prospectus believe, that the statement was true or the inclusion or omission was necessary.
Section 34, The Companies Act, 2013 (Act 18 of 2013).
Cross-references
Extracted from the operative text of the enactments themselves. Every destination below exists in our corpus.
This section refers to
Related judgements & precedents
These are some judgments that construed this section, and hold precedence value. They hold authority on how to read, interpret and use this section.
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Krishna Kumar vs Roc
Court's Decision & Legal Precedent
Declining to quash a Registrar of Companies complaint against directors over a fraudulent public issue prospectus, the Court held that a prospectus signed by the directors and deposited with the stock exchange is itself material from which authorisation of its issue may prima facie be inferred, so an offence of criminal liability for prospectus misstatements was disclosed and the inherent power under Section 482 CrPC should be exercised with restraint.
On this section: Shows what it takes to fix a person as one 'who authorises the issue' of a misleading prospectus, the gateway to liability now carried by Section 34.
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Dharmendra Kr.lila vs Roc
Court's Decision & Legal Precedent
Following the earlier Delhi line, the Court quashed the Registrar's complaint arising out of a public issue prospectus containing false statements, holding that the provision creating civil liability for misstatement affords investors compensation and cannot be converted into a charge, and that a prosecution under the penal prospectus provision requires the prior sanction contemplated by the Act.
On this section: Confirms the civil/criminal divide and the sanction precondition for prosecuting a misleading prospectus, the scheme now reproduced in Sections 34 and 35.
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Rajeev Shukla vs Registrar of Companies Nct
Court's Decision & Legal Precedent
Quashing a complaint filed by the Registrar of Companies over a misleading public issue prospectus, the Court held that the section imposing civil liability for misstatements in a prospectus cannot found a criminal complaint: criminal liability for an untrue statement in a prospectus lies under the separate penal provision, and prosecution could not be launched without the prior sanction of the competent authority, a general departmental permission being insufficient.
On this section: Separates criminal liability for an untrue or misleading prospectus statement, the office now filled by Section 34, from the civil compensation remedy, and insists that the prosecution be laid under the correct penal section with proper sanction.
The holding above is the ratio decidendi as extracted from the judgment by eCourts India, reproduced unaltered — it is a rendering of the court's reasoning, not a substitute for its words. Read the order itself before relying on it.
Judgments citing this section
These may be obiter dicta or a precedent, for you to study. These are the judgments where this section is quoted.
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… Clause Tenth is a domestic agreement. Domestic is applicable while nondomestic has no application to this case. xxxx xxxx xxxx xxxx 65. CMDs come and CMDs go. But NBCC goes on forever. It is a body corporate. It has a perpetual succession and a common seal. [See Section 34 of the Companies Act, 1956]. CMD acts in the name of NBCC. The referring order dated 11.1.2001 says: ―Therefore, I A.K. Sarkar, Chairman-cum-Managing Director, National Building Construction Corporation Ltd. New Delhi in pursuance of the same, do hereby nominate Shri V.K. Anand, Director of NBCC, as the …
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… Clause Tenth is a domestic agreement. Domestic is applicable while nondomestic has no application to this case. xxxx xxxx xxxx xxxx 65. CMDs come and CMDs go. But NBCC goes on forever. It is a body corporate. It has a perpetual succession and a common seal. [See Section 34 of the Companies Act, 1956]. CMD acts in the name of NBCC. The referring order dated 11.1.2001 says: ―Therefore, I A.K. Sarkar, Chairman-cum-Managing Director, National Building Construction Corporation Ltd. New Delhi in pursuance of the same, do hereby nominate Shri V.K. Anand, Director of NBCC, as the …
Made under this section, and citing it
3 instruments state that it was made under this provision — the power to make it comes from here, so a change to any of them changes what this section requires in practice. Newest first.
Another 1 instrument names this provision in its title or its text without being made under it.
Questions about Section 34
What have the courts held on Section 34 of the Companies Act?
Krishna Kumar vs Roc (15 Mar 2013) is the leading judgment on this section among those set out below: Shows what it takes to fix a person as one 'who authorises the issue' of a misleading prospectus, the gateway to liability now carried by Section 34. Another 2 judgments on this section are set out below. They run from 2006 to 2013.
How do I find court cases under Section 34 of the Companies Act?
In judgments and charge sheets this section is written several ways, and each form finds a different set of orders. These search the full text of every order eCourtsIndia holds, best matches first: Companies Act 34, section 34 Companies Act, section 34 of the Companies Act. People searching for it also type companies act 34 2. Each opens the full list of orders on eCourtsIndia, where it can be narrowed by court, year and outcome. 3 reported judgments on this section are set out on this page, beginning with Krishna Kumar vs Roc (15 Mar 2013).
What should I read with Section 34 of the Companies Act, and has it changed?
Its own text turns on section 447 (Punishment for fraud), so none of them can safely be read on its own. 2 other provisions in this corpus refer back to it. The rules and notifications made under it are where it actually bites, and there are 3: most recently Amendment of Schedule VII of the Companies Act,2013 (2019), then commencment notification dt 14.08.2019 -CA (Amendment) Act 2019 (2019), and 1 more.
When did Section 34 of the Companies Act come into force?
Section 34 of the Companies Act, cited as Companies Act 34, came into force on 01 Apr 2014, having been enacted on 29 Aug 2013. It is in force as at the date shown on this page.
Other sections of this Act
- 2. Definitions5089 words
- 143. Powers and duties of auditors and auditing standards1867 words
- 230. Power to compromise or make arrangements with creditors and members1432 words
- 232. Merger and amalgamation of companies1416 words
- 149. Company to have Board of Directors1403 words
- 217. Procedure, powers, etc., of inspectors1390 words
Source and method. Compiled from the enactments of Parliament and of the State legislatures as published on India Code, and republished together with commentary and other original matter under section 52(1)(q)(ii) of the Copyright Act, 1957. Structured, cross-referenced and maintained by eCourtsIndia. Text as in force on 15 Oct 2026. This page is not a substitute for legal advice.