Sections 452 and 453 of the Companies Act, 2013: Wrongful Withholding of Property and Improper Use of Limited or Private Limited
Sections 452 and 453 appear in Chapter XXIX of the Companies Act, 2013. Section 452 deals with an officer or employee who wrongfully obtains, withholds or knowingly misapplies company property or cash. Section 453 deals with persons carrying on business using the words "Limited" or "Private Limited", or an imitation or contraction of those expressions, without the required incorporation and limited liability.
Section 452 - Punishment for wrongful withholding of property
Section 452 applies where an officer or employee of a company wrongfully obtains possession of company property, including cash, or, while possessing such property or cash, wrongfully withholds it or knowingly applies it for a purpose other than one expressed or directed in the articles and authorised by the Companies Act, 2013.
Who may make the complaint?
The statutory complaint may be made by the company or by a member, creditor or contributory of the company.
Punishment under Section 452(1)
On conviction, the officer or employee is punishable with a fine of not less than Rs. 1,00,000 and up to Rs. 5,00,000.
Restitution under Section 452(2)
The court trying the offence may also direct the officer or employee, within the time fixed by the court, to deliver or refund the property or cash wrongfully obtained or withheld or knowingly misapplied, together with benefits derived from it. In default of compliance with that order, imprisonment may extend to two years.
Section 453 - Punishment for improper use of Limited or Private Limited
Section 453 applies where a person or persons trade or carry on business under a name or title ending with the word "Limited", the words "Private Limited", or a contraction or imitation of those expressions, without being duly incorporated with the corresponding limited liability status.
Daily fine
Each person responsible is punishable with a fine of not less than Rs. 500 and up to Rs. 2,000 for every day during which the unauthorised name or title is used.
Difference between Sections 452 and 453
| Provision | Conduct covered | Who is covered | Consequence |
|---|---|---|---|
| Section 452 | Wrongfully obtaining, withholding or knowingly misapplying company property or cash | Officer or employee of a company | Fine from Rs. 1 lakh to Rs. 5 lakh; court may order delivery or refund and benefits derived, with imprisonment up to two years on default of that order |
| Section 453 | Unauthorised business use of "Limited" or "Private Limited", including a contraction or imitation | Person or persons carrying on the business | Fine from Rs. 500 to Rs. 2,000 for every day the name or title is used |
Practical meaning of Section 452
The provision is not limited to cash. It refers broadly to company "property, including cash". The conduct covered includes wrongful acquisition of possession, wrongful withholding after possession has been obtained, and knowing application of the property for an unauthorised purpose. The court's power under sub-section (2) is important because it permits restoration or refund in addition to the punishment under sub-section (1).
Practical meaning of Section 453
The expressions "Limited" and "Private Limited" communicate a legally recognised corporate status. Section 453 discourages a business that lacks the required incorporation and limited-liability status from presenting itself under a name that ends with those expressions or their contraction or imitation. Because the fine applies for every day of use, continuing misuse can produce a continuing financial consequence.
Official legal resources
For the authoritative statutory text and subsequent updates, refer to the official India Code - Companies Act, 2013 and the Ministry of Corporate Affairs. Readers should verify the latest notifications and amendments before relying on the provision for a current proceeding.
Disclaimer: This article is for general legal information. Statutory provisions, notifications and judicial interpretation should be checked for the facts and date relevant to a particular matter.