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CS Professional · Corporate Restructuring, Valuation and Insolvency · Cross Border Mergers

Surya Logistics Ltd, an Indian company, merged into a foreign company. A valuer engaged for the scheme knowingly gave a misleading valuation report intending to defraud the company's members and was convicted under Section 247(3). Which consequence follows under Section 247?

The valuer faces imprisonment up to one year and a fine between one lakh and five lakh rupees because fraud was intended. After conviction he must also refund his remuneration and pay damages for losses from misleading statements, under Section 247(3) and (4).

  1. AImprisonment up to one year and fine of at least one lakh but up to five lakh rupees, plus refund of remuneration and payment of damagesCorrect
  2. BFine only, of at least twenty-five thousand and up to one lakh rupees, with no liability for damages
  3. CImprisonment up to three years and fine up to ten lakh rupees
  4. DDisqualification for life with no fine or refund

Explanation

Under the proviso to Section 247(3), where the contravention is with intention to defraud, imprisonment up to one year and fine of one lakh to five lakh rupees apply. Section 247(4) then makes the convicted valuer liable to refund remuneration and pay damages for loss from incorrect or misleading statements. The fine-only option applies to ordinary contravention without fraud intent and omits sub-section (4).

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