Sections 449, 450 and 451 of the Companies Act, 2013
Sections 449, 450 and 451 deal respectively with false evidence, contraventions for which the Companies Act, 2013 provides no specific penalty or punishment, and repeated default. These provisions form part of Chapter XXIX of the Act.
Section 449 - Punishment for false evidence
Section 449 applies, unless the Act otherwise provides, where a person intentionally gives false evidence during an examination on oath or solemn affirmation authorised under the Companies Act, 2013, or in an affidavit, deposition or solemn affirmation connected with the winding up of a company or another matter arising under the Act.
The prescribed punishment is imprisonment for a term of not less than three years, which may extend to seven years, together with a fine which may extend to Rs. 10 lakh.
Meaning and scope
The provision targets intentional false evidence. Accordingly, the statutory language makes intention an important element. It covers specified oral evidence as well as affidavits, depositions and solemn affirmations connected with matters arising under the Act.
Section 450 - Penalty where no specific penalty or punishment is provided
Section 450 is the general or residual penalty provision of the Companies Act, 2013. It applies where a company, an officer of a company or another person contravenes the Act, the rules made under it, or a condition, limitation or restriction attached to an approval, sanction, consent, confirmation, recognition, direction or exemption, and no penalty or punishment is provided elsewhere in the Act for that contravention.
The present provision makes the company, every officer in default or the other person liable to a penalty of Rs. 10,000. For a continuing contravention, a further penalty of Rs. 1,000 applies for each day after the first during which the contravention continues, subject to a maximum of Rs. 2 lakh for a company and Rs. 50,000 for an officer in default or any other person.
Effect of the 2020 amendment
The Companies (Amendment) Act, 2020 substituted the penalty language in Section 450 with effect from 21 December 2020. The section therefore operates as a monetary penalty provision where the Act does not provide a specific consequence elsewhere.
Section 451 - Punishment in case of repeated default
Section 451 addresses repetition of the same offence. Where a company or an officer commits an offence punishable with fine or imprisonment and the same offence is committed for the second or a subsequent occasion within three years, the company and every officer in default are punishable with twice the amount of fine prescribed for that offence, in addition to any imprisonment provided for the offence.
When Section 451 becomes relevant
- There must be a second or subsequent commission of the same offence.
- The repeated offence must occur within three years.
- The consequence is twice the amount of fine for that offence.
- Any imprisonment otherwise provided for the underlying offence continues to apply.
Difference between Sections 449, 450 and 451
Section 449 deals specifically with intentional false evidence and carries imprisonment and fine. Section 450 fills a gap by imposing a monetary penalty where a contravention has no penalty or punishment elsewhere in the Act. Section 451 is an enhanced-punishment provision for repetition of the same offence within three years.
Related provisions
These sections should be read with the provision creating the underlying obligation or offence. In particular, Section 448 separately deals with false statements in returns, reports, certificates, financial statements, prospectuses, statements or other documents required by or for the purposes of the Act and links such conduct to Section 447.