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Section 447

Punishment for fraud

Without prejudice to any liability including repayment of any debt under this Act or 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 percent. 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:

Proviso

Provided that where the fraud in question involves public interest, the term of imprisonment shall not be less than three years.

Proviso

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 fifty lakh rupees twenty 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.
Notes, amendments & references (5)

Refer circular 10/2014. To view the circular, Click Here

Inserted vide Companies (Amendment) Act, 2017 dated 03.01.2018 effective from 09.02.2018. To view the notification, Click Here

Provided further that Inserted vide Companies (Amendment) Act, 2017 dated 03.01.2018 effective from 09.02.2018. To view the notification, Click Here

Substituted vide the Companies (Amendment) Act, 2019 dated 31.07.2019 w.e.f., 02.11.2018. To view the Amendment Act, Click Here

(ii) any other body corporate (not being a company as defined in this Act), which the Central Government may, by notification, specify in this behalf