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CS Professional · Corporate Restructuring, Valuation and Insolvency · Process of M&A Transactions

A registered valuer, with intent to defraud the members of Kaveri Textiles Ltd, deliberately overstated the value of its goodwill in a report. Under Section 247, which consequence applies on conviction for this contravention?

Where a valuer contravenes with intention to defraud the company or its members, Section 247(3) proviso provides imprisonment up to one year and a fine of not less than Rs 1 lakh and up to Rs 5 lakh. The lower fine applies without fraudulent intent.

  1. AFine of at least Rs 25,000 up to Rs 1 lakh only, with no imprisonment
  2. BImprisonment up to one year and fine of at least Rs 1 lakh up to Rs 5 lakhCorrect
  3. CImprisonment up to three years and fine up to Rs 10 lakh
  4. DOnly disqualification from registration with no fine

Explanation

Section 247(3) gives a fine of Rs 25,000 to Rs 1 lakh for ordinary contravention. The proviso for intent to defraud adds imprisonment up to one year and a fine of Rs 1 lakh to Rs 5 lakh. The first option ignores the fraud proviso.

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