Section 452 of the Companies Act, 2013, deals with the wrongful possession or withholding of a company’s property by officers or employees. It provides the legal framework for penal action and recovery of such property. This section aims to safeguard company assets and hold individuals accountable for misuse or illegal retention.
If any officer or employee of a company—
(a) wrongfully obtains possession of any property, including cash, of the company; or
(b) having any such property in his possession, wrongfully withholds it or knowingly applies it for purposes other than those expressed or directed in the articles and authorised by the company,
he shall, on the complaint of the company or any member authorised by the company, be punishable with fine and imprisonment.
This section covers all types of property including physical property (vehicles, machinery), cash, or movable assets.
PURPOSE OF SECTION- 452 OF COMPANIES ACT,2013
- To prevent misappropriation, embezzlement, or personal use of company property.
- To enforce fiduciary responsibility of company officers.
- To Ensures that company property is used only for lawful and authorised business purposes.
Who Can File a Complaint Under Section 452?
- The Company itself, through a board resolution.
- A member (shareholder) of the company, authorised by the company.
- The Registrar of Companies (RoC) may also take cognizance in conjunction with related provisions.
Which Court Can Entertain Cases under Section 452?
Offences under Section 452 are triable by a Special Court established under Section 435 of the Companies Act, 2013.
Special Courts are designated Sessions Courts or Magistrate Court of first class notified by the Central Government to handle company law offences.
Relevant Judgements:
1. N. Narayanan v. Adjudicating Officer, SEBI (2013) 12 SCC 152
The Supreme Court emphasized the fiduciary duties of company officers and held them accountable for any misuse or misrepresentation involving company assets.
2. V.K. Agarwal v. Vasantrao Shrinivasrao Deshpande AIR 1983 SC 1224
Though predating the 2013 Act, this case laid down principles for holding company employees criminally liable for acts beyond their authority.
CONCLUSION
Section 452 plays a vital role in corporate governance by deterring wrongful possession or misuse of company property by insiders. It empowers the company to initiate criminal proceedings, ensuring integrity and lawful use of corporate assets. Proper implementation of this provision strengthens trust in corporate systems and accountability of its officers.
Contributed by: Ridhima Manchanda