Section 452: Punishment for wrongful withholding of property

Companies Act, 2013 · Chapter XXIX: Miscellaneous · In force

This section punishes company officers or employees who wrongfully withhold or misuse company property, including cash, with fines and potential imprisonment.

Penalty

(1)(a) wrongfully obtains possession of any property, including cash of the company; or (b) having any such property including cash in his possession, wrongfully withholds it or knowingly applies it for the purposes other than those expressed or directed in the articles and authorised by this Act,3 he shall, on the complaint of the company or of any member or creditor or contributory thereof, be punishable with fine which shall not be less than one lakh rupees but which may extend to five lakh rupees.

(2) The Court trying an offence under sub-section (1) may also order such officer or employee to deliver up or refund, within a time to be fixed by it, any such property or cash wrongfully obtained or wrongfully withheld or knowingly misapplied, the benefits that have been derived from such property or cash or in default, to undergo imprisonment for a term which may extend to two years.

The section, clause by clause

What the section says

In plain terms

(1)If any officer or employee of a company—

If a company officer or employee wrongfully obtains or withholds company property, including cash, or uses it for unauthorised purposes, they can be fined between one lakh rupees and five lakh rupees on complaint from the company or its members, creditors, or contributories.

(1)(a)wrongfully obtains possession of any property, including cash of the company; or (b) having any such property including cash in his possession, wrongfully withholds it or knowingly applies it for the purposes other than those expressed or directed in the articles and authorised by this Act,3 he shall, on the complaint of the company or of any member or creditor or contributory thereof, be punishable with fine which shall not be less than one lakh rupees but which may extend to five lakh rupees.

(2)The Court trying an offence under sub-section (1) may also order such officer or employee to deliver up or refund, within a time to be fixed by it, any such property or cash wrongfully obtained or wrongfully withheld or knowingly misapplied, the benefits that have been derived from such property or cash or in default, to undergo imprisonment for a term which may extend to two years.

The court can also order the officer or employee to return wrongfully obtained or withheld property or cash, or face imprisonment for up to two years, unless the company owes them certain payments like provident fund or compensation.

proviso2[Provided that the imprisonment of such officer or employee, as the case may be, shall not be ordered for wrongful possession or withholding of a dwelling unit, if the court is satisfied that the company has not paid to that officer or employee, as the case may be, any amount relating to--

(2)(a)provident fund, pension fund, gratuity fund or any other fund for the welfare of its officers or employees, maintained by the company;

(2)(b)compensation or liability for compensation under the Workmen's Compensation Act, 1923 (19 of 1923) in respect of death or disablement.]

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

4. Subs. by Act 29 of 2020, s. 63, for certain words (w.e.f. 21-12-2020).
1. Ins. by Act 29 of 2020, s. 64 (w.e.f. 22-1-2021).
2. Subs. by Act 22 of 2019, s. 42, for sub-section (3) (w.e.f. 2-11-2018).

Referred to by

s. 435 Establishment of Special Courts

Search the whole Act, or ask it a question, in the interactive browser.

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.