Section 393: Company’s failure to comply with provisions of this Chapter not to affect validity of contracts, etc
This section ensures that a company's failure to follow certain rules does not invalidate its contracts or transactions, but it does limit the company's ability to take legal action until it complies with the rules.
The section, clause by clause
What the section says
In plain terms
Any failure by a company to comply with the provisions of this Chapter shall not affect the validity of any contract, dealing or transaction entered into by the company or its liability to be sued in respect thereof, but the company shall not be entitled to bring any suit, claim any set-off, make any counter- claim or institute any legal proceeding in respect of any such contract, dealing or transaction, until the company has complied with the provisions of this Act applicable to it.
The right-hand column is written from the section text, not quoted from it, and it has no legal force. Where the two differ, the left-hand column is the law.
Amendment notes
- 1. Subs. by Act 1 of 2018, s. 79, for sub-section (2) (w.e.f. 9-2-2018).
- 2. The words “with imprisonment for a term which may extend to six months or” omitted by Act 29 of 2020, s. 54 (w.e.f. 21-12- 2020).
- 3. Subs. by s. 54, ibid., for “fifty thousand rupees, or with both” (w.e.f. 21-12-2020).
- 4. Ins. by s. 55, ibid. (w.e.f. 22-1-2021).
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Reproduced from the official India Code print for reference. Check the current text on India Code before you rely on it, and read the section alongside its Rules. Nothing here is legal advice.