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CS Professional · Compliance Management, Audit and Due Diligence · Due Diligence

A valuer, Mr. Iyer, deliberately overstates the value of assets in his report with the intention to defraud the company's members, and is convicted under section 247(3). Which consequence follows under the Companies Act, 2013?

The valuer faces imprisonment up to one year and a fine of one lakh to five lakh rupees, because he acted with intent to defraud. On conviction he must also refund his remuneration and pay damages for loss caused by incorrect or misleading statements, under section 247(3) and (4).

  1. AFine only, between twenty-five thousand and one lakh rupees, with no further liability
  2. BImprisonment up to one year and fine of one lakh to five lakh rupees, and liability to refund remuneration and pay damagesCorrect
  3. CImprisonment up to three years and fine of five lakh rupees, with no refund
  4. DDisqualification only, with no fine or imprisonment

Explanation

Under the proviso to section 247(3), intent to defraud attracts imprisonment up to one year and fine of not less than one lakh but up to five lakh rupees. Section 247(4) then makes a convicted valuer liable to refund remuneration and pay damages for loss from incorrect or misleading statements. Option A applies only to ordinary contravention and omits section 247(4).

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