Section 452 of CA 2013 : Section 452: Punishment For Wrongful Withholding Of Property

Explanation using Example

Imagine a situation where Mr. John, the Chief Financial Officer (CFO) of XYZ Pvt. Ltd., has access to the company's funds. He decides to use some of the company's money to invest in a friend's business venture without any authorization from the company's board or any provision in the company's articles allowing such an investment. This action is discovered by an internal audit.

The company, upon finding out about the unauthorized investment, files a complaint against Mr. John. Under Section 452 of the Companies Act, 2013, Mr. John may face a fine ranging from one lakh rupees to five lakh rupees for wrongfully withholding company cash and applying it for purposes not permitted by the Act or the company's articles. Additionally, the court may order Mr. John to return the misapplied funds or face a prison term of up to two years if he fails to do so within the time set by the court.