Sections 456, 457 and 458 of the Companies Act, 2013

Section 456 - Protection of action taken in good faith

Meaning: Section 456 provides statutory protection against a suit, prosecution or other legal proceeding for specified acts done, or intended to be done, in good faith under the Companies Act, 2013, the rules or orders made under it. The protection extends to the Government, Government officers and other persons covered by the provision. It also covers publication, by or under Government authority, of a report, paper or proceeding.

The expression good faith is important. Section 456 does not create a general exemption for every act of an authority or officer; the statutory protection is tied to conduct done or intended to be done in good faith in pursuance of the Act, rules or orders, or to an authorised publication of the kind specified in the section.

What Section 456 protects

• Acts done in good faith in pursuance of the Companies Act, 2013.
• Acts intended in good faith to be done in pursuance of the Act.
• Acts connected with rules or orders made under the Act.
• Specified publication of reports, papers or proceedings by or under Government authority.

Section 457 - Non-disclosure of information in certain cases

Meaning: Section 457 is a source-confidentiality provision. Despite anything contained in another law for the time being in force, the Registrar, a Government officer or another person cannot be compelled to disclose to a court, Tribunal or other authority the source from which information was obtained where that information falls within the circumstances specified in the section.

The protection applies where the information:

• has led the Central Government to order an investigation under Section 210 of the Companies Act, 2013; or
• is or has been material or relevant in connection with such investigation.

Section 210 in context: Section 210 concerns investigation into the affairs of a company in the circumstances stated in that provision. Section 457 therefore protects the identity or source of qualifying information connected with an investigation ordered under Section 210; it is not a general confidentiality clause for every document or item of information held by the Registrar or Government.

Section 458 - Delegation by Central Government of its powers and functions

Meaning: Section 458 authorises the Central Government, by notification and subject to specified conditions, limitations and restrictions, to delegate powers or functions under the Companies Act, 2013 to an authority or officer identified in the notification. The power to make rules is expressly excluded from delegation under this section.

Under sub-section (2), a copy of every notification issued under sub-section (1) is required to be laid before each House of Parliament as soon as may be after it is issued.

The earlier proviso to Section 458(1) was omitted by Section 93 of the Companies (Amendment) Act, 2017 with effect from 9 February 2018.

Delegation operates through notification

The scope of a delegated power depends on the relevant Central Government notification, including any conditions, limitations or restrictions stated in it. For example, the Ministry of Corporate Affairs issued S.O. 1353(E), dated 21 May 2014, delegating specified powers and functions to Registrars of Companies, subject to the terms of that notification.