CMA Final · Corporate and Economic Laws · Inspection, Inquiry and Investigation
The Tribunal freezes the assets of a company under section 221 and an officer in default later transfers assets in contravention of the order. Which statement is correct?
A Tribunal freezing order can last for a period not exceeding three years. For contravention, the company is fined one lakh to twenty-five lakh rupees, and an officer in default is liable to imprisonment up to three years or fine of fifty thousand to five lakh rupees, or both.
- AThe order can operate for a period not exceeding five years, and the officer faces fine only
- BThe order can operate for a period not exceeding three years, and the officer may face imprisonment up to three years or fine of Rs 50,000 to Rs 5 lakh, or bothCorrect
- CThe order can operate for a period not exceeding one year, and the company is not liable to any fine
- DThe order can operate indefinitely, and the officer faces imprisonment of at least three years
Explanation
Section 221(1) limits the freeze to a period not exceeding three years. Under section 221(2) the officer in default faces imprisonment up to three years or fine of Rs 50,000 to Rs 5 lakh, or both; the company also faces a fine of Rs 1 lakh to Rs 25 lakh.
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