Section 337 of the Companies Act, 2013
Section 337 of the Companies Act, 2013 deals with punishment for fraud committed by officers of a company that is being wound up.
✅ Section 337 – Penalty for Fraud by Officers During Winding Up
Scope:
Applies when a company is being wound up (either voluntarily or by Tribunal) and its officers have committed fraud or dishonesty in relation to the company’s property or creditors.
🔍 Who is Covered?
Any officer of the company (like directors, managers, secretaries, etc.) who has:
Knowingly carried on business to defraud creditors.
Concealed or fraudulently removed company property.
Destroyed or falsified documents related to the company.
Made false entries in accounts or delivered false statements.
Obtained property or credit by fraud before or during winding up.
Parted with property or committed acts to defraud creditors.
🛑 Punishment under Section 337:
Imprisonment: Up to 5 years, and
Fine: Up to ₹5 lakh
Both penalties can be imposed together depending on the severity of the fraud.
⚖️ Example:
If a director sells off company assets secretly just before liquidation and keeps the money, he is guilty under Section 337 and can face imprisonment and fine.
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