Section 463 of the Companies Act, 2013
Section 463 of the Companies Act, 2013
– Power of Court to Grant Relief in Certain Cases
⚖️ Bare Act Provision:
Section 463(1):
If in any proceeding against a person for negligence, default, breach of duty, misfeasance, or breach of trust in relation to a company, it appears to the Court or the Tribunal that the person:
Acted honestly and reasonably, and
Ought fairly to be excused,
then the Court or Tribunal may relieve him (wholly or partly) from liability on such terms as it may think fit.
Section 463(2):
A person anticipating legal action may apply to the High Court for relief in advance. The Court may grant relief if it thinks the person would be entitled to it under sub-section (1).
✅ Explanation:
This section gives discretionary power to courts/tribunals to excuse company officers (like directors) from liability if:
The person did not act fraudulently.
The act was done in good faith, with reasonable care and honesty.
💡 Key Points:
Relief can be full or partial.
Applies in cases like breach of duty, mismanagement, or default.
Encourages honest conduct while ensuring protection against harsh penalties for genuine mistakes.
The burden of proof is on the person seeking relief.
🧾 Example:
A director failed to file a return on time but shows:
It was due to a genuine IT system failure,
Steps were taken immediately after discovering the issue,
There was no loss to the company or stakeholders.
➡️ The Tribunal may grant relief under Section 463.
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