Punishment for fraud
Section 447 of the Companies Act, 2013 deals with punishment for fraud. Without prejudice to any liability including repayment of any debt under this Actor any other law for the time being in force, any person who is found to be guilty of fraud, [involving an amount of at least ten lakh rupees or one per cent. The Act came into force on 01 Apr 2014.
Without prejudice to any liability including repayment of any debt under this Actor any other law for the time being in force, any person who is found to be guilty of fraud, 1[involving an amount of at least ten lakh rupees or one per cent. of the turnover of the company, whichever is lower] shall be punishable with imprisonment for a term which shall not be less than six months but which may extend to ten years and shall also be liable to fine which shall not be less than the amount involved in the fraud, but which may extend to three times the amount involved in the fraud:
Provided that where the fraud in question involves public interest, the term of imprisonment shall not be less than three years.
2[Provided further that where the fraud involves an amount less than ten lakh rupees or one per cent. of the turnover of the company, whichever is lower, and does not involve public interest, any person guilty of such fraud shall be punishable with imprisonment for a term which may extend to five years or with fine which may extend to 3[fifty lakh rupees] or with both.]
Explanation.-- For the purposes of this section--
(i) "fraud", in relation to affairs of a company or any body corporate, includes any act, omission, concealment of any fact or abuse of position committed by any person or any other person with the connivance in any manner, with intent to deceive, to gain undue advantage from, or to injure the interests of, the company or its shareholders or its creditors or any other person, whether or not there is any wrongful gain or wrongful loss;
(ii) "wrongful gain" means the gain by unlawful means of property to which the person gaining is not legally entitled;
(iii) "wrongful loss" means the loss by unlawful means of property to which the person losing is legally entitled.
Section 447, 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.
Referred to by 20
- s. 7 Incorporation of company
- s. 8 Formation of companies with charitable objects, etc
- s. 34 Criminal liability for mis-statements in prospectus
- s. 36 Punishment for fraudulently inducing persons to invest money
- s. 38 Punishment for personation for acquisition, etc., of securities
- s. 46 Certificate of shares
- s. 56 Transfer and transmission of securities
- s. 66 Reduction of share capital
- s. 75 Damages for fraud
- s. 76A Punishment for contravention of section 73 or section 76
- s. 86 Punishment for contravention
- s. 90 Register of significant beneficial owners in a Company
and 8 more
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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Serious Fraud Investigation Office vs Vivek Harivyasi
Court's Decision & Legal Precedent
The time period stipulated in Section 212(3) of the Companies Act, 2013 for submission of investigation report by SFIO to the Central Government is purely directory and not mandatory. Therefore, expiry of such stipulated period does not terminate SFIO's mandate or its power to arrest. The mandate continues until completion of investigation and submission of final investigation report under Section 212(12). SFIO's arrest authority under Section 212(8) is not circumscribed by any time limit. In habeas corpus proceedings, the legality of detention is to be examined on the date of return/hearing, and if valid orders directing detention exist on that date, habeas corpus cannot be granted. Remand orders passed by competent judicial authorities are judicial functions and cannot be challenged through habeas corpus petitions.
On this section: Offence of fraud - cognizable and non-bailable offence in relation to company affairs
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Beena Radhakrishnan v. State Police Chief
Court's Decision & Legal Precedent
Final Order order-1.pdf 2023-10-28 DATE VERIFIED. WP(C) 2676/2020 + Crl.MC 5052/2020 common order. Ziyad Rahman A.A. J. Isolates companies 447 as a substantive penal provision that is not retrospective: pre-2013 company-affair forgeries stay IPC; 212(6) special cognizance does not oust police investigation of distinct IPC offences (Sayyed Subhan / Sanjay). Quash of IPC investigation refused. Map companies-act 447 cited only. Do not pad 212 or ipc 468/467/406/465.
On this section: Companies 447 is a substantive penal provision and is not retrospective; pre-2013 company forgeries remain IPC and 212(6) does not oust police investigation of distinct IPC offences (Beena Radhakrishnan).
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Vikas Agarwal v. Serious Fraud Investigation Office
Court's Decision & Legal Precedent
Final Order order-1.pdf 2019-02-06. CRL.M.C. 647/2019. Sunil Gaur J. DATE-CHECK false positive (complaint/investigation dates); body: Date of Order February 06, 2019. Isolates Companies 447 Explanation: fraud includes any person who connives to deceive or gain undue advantage from a company — private individuals, not only companies, can be summoned. No limitation bar in 212/447. Summoning-stage scrutiny is limited. Map companies-act 447 cited only. Do not pad 212 (already filled by SFIO v Rahul Modi).
On this section: Companies 447 Explanation covers any person who connives in fraud on a company; private individuals can be summoned and 212/447 carry no limitation bar at summoning (Vikas Agarwal).
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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… had lodged the private complaint before the Special Court against the accused including the respondents, alleging various serious offences under the Companies Act including Section 447 thereof and the offences under the IPC. It is pertinent to note that as per sub-section (6) of Section 212 the offence covered under Section 447 of the Companies Act has been made cognizable and the person accused of the said offence is not entitled to be released on bail or on his bond, unless twin conditions mentioned therein are satisfied. The twin conditions are: - (i) that a Public Prosecutor should be given an opportunity to oppose the application …
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… had lodged the private complaint before the Special Court against the accused including the respondents, alleging various serious offences under the Companies Act including Section 447 thereof and the offences under the IPC. It is pertinent to note that as per sub-section (6) of Section 212 the offence covered under Section 447 of the Companies Act has been made cognizable and the person accused of the said offence is not entitled to be released on bail or on his bond, unless twin conditions mentioned therein are satisfied. The twin conditions are: - (i) that a Public Prosecutor should be given an opportunity to oppose the application …
Made under this section, and citing it
22 instruments name this provision in its title or its text without being made under it.
- G.S.R No. 38(E) Companies Appointment and Qualification of Directors Amendment Rules 2023 dated 20.01.2023Rule 2023
- G.S.R. NO. 46(E) companies Miscellaneous rules 2023 dated 20.01.2023Rule 2023
- G.S.R. NO. 662(E) The Companies (Appointment and Qualification of Directors) Third Amendment Rules, 2022 dated 29.08.2022Rule 2022
- G.S.R. NO. 664(E) The Companies (Registration of Charges) Second Amendment Rules, 2022 dated 29.08.2022Rule 2022
- G.S.R. 159(E)-Companies (Management and Administration) Amendment Rules, 2021Rule 2021
- Companies (Incorporation) 6th Amendment Rules, 2019Rule 2019
- Companies (Incorporation) Amendment Rules, 2019.Rule 2019
- Companies (Registration of Charges) Amendment Rules, 2019Rule 2019
- Nidhi (Amendment) Rules, 2019Rule 2019
- the Investor Education and Protection FundAuthority (Accounting, Audit, Transfer and Refund)Second Amendment Rules, 2019Rule 2019
- Companies (Appointment and Qualification of Directors) 3rd Amendment Rules, 2018.Rule 2018
- Companies (Incorporation) Amendment Rules, 2018Rule 2018
- Companies (Registration of Charges) 2nd Amendment Rules,2018Rule 2018
- Companies(Appointment and Qualification of Directors) Amendment Rules 2018.Rule 2018
- Companies (Registration of Charges) Amendment Rules, 2017Rule 2017
- Companies (Incorporation) 5th amendment rules 2016 dated 29.12.2016Rule 2016
- Companies (Incorporation) Amendment Rules, 2016. (443 KB)Rule 2016
- Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016Rule 2016
- Companies (Management and Administration) Amendment RulesRule 2015
- The Companies (Management and Administration) Third Amendment Rules, 2015Rule 2015
- Chapter VI - The Companies (Registration of Charges) Rules, 2014.Rule 2014
- The Companies (Appointment and Qualification of Directors) Amendment Rules, 2014Rule 2014
Questions about Section 447
What have the courts held on Section 447 of the Companies Act?
Serious Fraud Investigation Office vs Vivek Harivyasi (27 Mar 2019) is the leading judgment on this section among those set out below: Offence of fraud - cognizable and non-bailable offence in relation to company affairs. Another 2 judgments on this section are set out below, 1 of them from the Supreme Court. They run from 2019 to 2023.
How do I find court cases under Section 447 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 447, section 447 Companies Act, section 447 of the Companies Act. People searching for it also type company law 447. 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 Serious Fraud Investigation Office vs Vivek Harivyasi (27 Mar 2019).
What should I read with Section 447 of the Companies Act, and has it changed?
20 other provisions in this corpus refer back to it. 22 instruments name it without being made under it, most recently G.S.R No. 38(E) Companies Appointment and Qualification of Directors Amendment Rules 2023 dated 20.01.2023 (2023), then G.S.R. NO. 46(E) companies Miscellaneous rules 2023 dated 20.01.2023 (2023).
When did Section 447 of the Companies Act come into force?
Section 447 of the Companies Act, cited as Companies Act 447, 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 14 Oct 2026. This page is not a substitute for legal advice.