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CMA Final · Corporate and Economic Laws · Inspection, Inquiry and Investigation

Under section 221 of the Companies Act, 2013, the Tribunal passes an order freezing the disposal of the assets of Meghna Steels Ltd. During the freeze, the company sells a property in breach of the order. Which statement is correct?

On contravention of a Tribunal freezing order, the company is punishable with fine from one lakh to twenty-five lakh rupees. Each officer in default faces imprisonment up to three years or fine from fifty thousand to five lakh rupees, or both.

  1. AThe company faces a fine of Rs 1 lakh to Rs 25 lakh, and each officer in default faces imprisonment up to three years or fine of Rs 50,000 to Rs 5 lakh, or bothCorrect
  2. BOnly the company is liable, with a fine of up to Rs 1 lakh, and officers are not liable
  3. CThe company is liable to fine of Rs 25,000 to Rs 1 lakh, and officers face imprisonment up to one year with fine
  4. DOnly the officers in default are liable, to imprisonment up to seven years under the fraud provisions

Explanation

Section 221(2) provides a fine on the company of at least Rs 1 lakh up to Rs 25 lakh. Every officer in default is punishable with imprisonment up to three years or fine of Rs 50,000 to Rs 5 lakh, or both. The one-year and Rs 25,000 figures belong to section 207(4), so they are wrong here.

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