Corporate fraud under the Companies Act and BNS is prosecuted on two separate tracks that start in different places and end in different courts. The Companies Act track runs on Section 447 of the Companies Act, 2013, and it can be opened only by the Serious Fraud Investigation Office or an officer of the Central Government authorised for the purpose. The BNS track runs on the ordinary property and document offences of the Bharatiya Nyaya Sanhita, 2023, namely Sections 316, 318, 336 and 344, and any person can set it in motion by filing a first information report. Both tracks can run on the same facts at the same time, because Section 212(2) bars other agencies only in respect of offences under the Companies Act.
This article sets out how corporate fraud under the Companies Act and BNS is investigated, charged, tried and defended on each of the two tracks.
The Bharatiya Nyaya Sanhita, 2023 replaced the Indian Penal Code with effect from 1 July 2024. Every corporate fraud note written before that date cites section numbers that have since been renumbered, so the first task in a new matter is often working out which provision an old citation now corresponds to.
Who you are decides which machinery you meet. In-house counsel and company secretaries deal with the Companies Act side: a Registrar’s inspection under Section 206, a Central Government investigation under Section 210, and an assignment to the Serious Fraud Investigation Office under Section 212. A shareholder, creditor or counterparty who has been defrauded has only the police route, because the Companies Act reserves the Section 447 complaint to the State.
Corporate fraud under the Companies Act and BNS runs on two separate prosecution tracks
Corporate fraud under the Companies Act and BNS runs on two prosecution tracks that begin in different places. The Companies Act track begins with a Central Government referral and ends in a prosecution under Section 447 of the Companies Act, 2013 before a Special Court. The BNS track begins with a police FIR under Sections 316, 318 or 336 and runs through the ordinary criminal courts.
Corporate fraud under the Companies Act and BNS has two prosecuting authorities, not one. Only the Serious Fraud Investigation Office or an authorised Central Government officer can start a Section 447 prosecution under the Companies Act, 2013. Any person can trigger the BNS track with an FIR under Sections 316, 318 or 336 of the Bharatiya Nyaya Sanhita, 2023.
The two tracks share three features:
- Both are criminal proceedings, not civil or regulatory ones.
- Both can attach to the same set of facts, in the same company, at the same time.
- Both reach individuals. Neither is limited to punishing the company as an entity.
Which statute applies to a corporate fraud, and who decides?
Which statute applies to a corporate fraud is not the complainant’s choice in every case. The Companies Act track can only be opened by the Central Government or the Serious Fraud Investigation Office. Any person with a grievance can set the BNS track in motion by filing a first information report.
A shareholder who has read Section 447 and concluded that the directors defrauded the company still cannot file a Section 447 complaint. The second proviso to Section 212(6) tells the Special Court not to take cognizance except on a written complaint by the Director of the Serious Fraud Investigation Office or an authorised Central Government officer.
The same shareholder can walk into a police station and lodge an FIR alleging criminal breach of trust or cheating, and a state Economic Offences Wing usually investigates it.
How do the two tracks compare on punishment, bail and who can complain?
The two tracks compare unevenly: the Companies Act track carries a statutory minimum sentence of six months, cognizability and a twin-condition bail bar, while the BNS track carries higher maximum sentences but no minimum term and no statutory bail bar.
| Attribute | Companies Act track | BNS track |
|---|---|---|
| Lead provision | Section 447, Companies Act, 2013 | Sections 316, 318, 336, 344, BNS 2023 |
| Minimum sentence | 6 months (3 years where public interest is involved) | None |
| Maximum sentence | 10 years and fine | Life imprisonment (Sections 316(5), 338) |
| Fine | Not less than the amount involved, up to 3 times that amount | Fine as specified per sub-section |
| Cognizable | Yes, by Section 212(6) | Depends on the offence charged |
| Bail | Section 212(6) twin conditions apply | No statutory bail bar |
| Who may complain | SFIO Director or an authorised Central Government officer only | Any person, by an FIR |
| Which court | Special Court | Ordinary criminal courts |
Three cells decide most real matters. The six-month floor means a Section 447 conviction on the main limb cannot end in a fine alone, which no BNS fraud offence replicates. The fine is calculated off the fraud amount rather than a fixed ceiling, so exposure scales with the alleged fraud. And the complaint monopoly means the State controls whether the Companies Act track opens at all.
The Companies Act definition of fraud is wider than any single BNS offence
The Companies Act definition of fraud is wider than any single BNS offence. Explanation (i) to Section 447 covers an act, an omission, a concealment of fact or an abuse of position, and it applies “whether or not there is any wrongful gain or wrongful loss”.
Explanation (i) defines fraud, in relation to the affairs of a company or any body corporate, as including any act, omission, concealment of any fact or abuse of position committed by any person, or by any other person with the connivance in any manner, with intent to deceive, to gain undue advantage from, or to injure the interests of, the company or its shareholders or its creditors or any other person. The two Explanations that follow define the terms it does not require. Wrongful gain means gain by unlawful means of property to which the person gaining is not legally entitled, and wrongful loss means loss by unlawful means of property to which the person losing is legally entitled.
Read the operative word: “or”. An act, an omission, a concealment of any fact, or an abuse of position. Each limb stands on its own, so the prosecution is not forced to elect between them on the same facts. That is not the position on the BNS track, where the Supreme Court has held that the two principal property offences cannot both be charged on a single set of facts.
When does a corporate fraud become a Section 447 offence under the Companies Act?
A corporate fraud becomes a Section 447 offence when it meets the Explanation (i) definition of fraud in relation to the affairs of a company. The tier of punishment then turns on the amount involved. At or above ten lakh rupees or one per cent of the company’s turnover, whichever is lower, the main limb applies; below that threshold the second proviso applies.
Section 447 opens with the words “without prejudice to any liability including repayment of any debt under this Act or any other law for the time being in force”. The punishment therefore sits on top of civil recovery rather than in place of it, so a director who repays what was taken has not answered the criminal charge. The section then reaches “any person who is found to be guilty of fraud”, which is wider than the officer-in-default machinery used elsewhere in the Act.
There is no separate ingredient list. If the conduct falls inside Explanation (i) and relates to the affairs of a company or body corporate, Section 447 is engaged, and the only question left is which tier applies.
What punishment does Section 447 carry at each tier?
Section 447 carries three different punishments depending on the tier. On the main limb the punishment is imprisonment of not less than six months extending to ten years. The fine on that limb is not less than the amount involved in the fraud and may extend to three times that amount.
Where the fraud involves public interest, the minimum rises to three years. Where the fraud is below the threshold and does not involve public interest, the punishment is imprisonment up to five years, or a fine up to fifty lakh rupees, or both.
| Tier | Trigger | Imprisonment | Fine |
|---|---|---|---|
| Main limb | Amount at least Rs 10 lakh or 1 per cent of turnover, whichever is lower | Not less than 6 months, up to 10 years | Not less than the amount involved, up to 3 times the amount involved |
| First proviso | Fraud involves public interest | Not less than 3 years (upper limit as above) | As above |
| Second proviso | Below the threshold and no public interest | Up to 5 years | Up to Rs 50 lakh; or imprisonment or fine or both |
There is no “one lakh rupees” figure anywhere in Section 447. At least one page ranking for this query states that the fine is up to one lakh rupees or three times the fraud amount, whichever is higher. The statutory text says something different: the fine shall not be less than the amount involved in the fraud, and may extend to three times that amount.
The difference isn’t academic. On an alleged fraud of Rs 12 crore, the floor for the fine under the main limb is Rs 12 crore and the ceiling is Rs 36 crore. Anyone advising on exposure from a page carrying the one lakh figure is wrong by orders of magnitude.
Does Section 448 create a separate offence for a false statement?
Section 448 does not create a separate punishment. It says that a person who makes a statement that is false in any material particular knowing it to be false, or who omits a material fact knowing it to be material, shall be liable under Section 447. The statement or the omission must be in a return, report, certificate, financial statement, prospectus, statement or other document required by or for the purposes of the Act or the rules made under it.
That routing gives Section 448 its bite. A false particular in an annual filing isn’t punished on a lesser scale of its own; it carries the Section 447 tiering, the Section 212(6) bail bar and the Special Court forum. Section 36, punishment for fraudulently inducing persons to invest money, is a sibling provision that also routes to Section 447 punishment.
But the routing carries a procedural consequence the drafting does not spell out. In Yerram Vijay Kumar v. State of Telangana, 2026 INSC 42, decided on 9 January 2026, the Supreme Court held that Section 448 cannot be read in isolation and must be read along with Section 447. Section 447 is the only provision that supplies a punishment for it, and the Court held the two to be inextricably linked.
Section 448 is therefore an offence covered under Section 447 for the purposes of Section 212(6), and a court cannot take cognizance of a Section 448 charge stripped of Section 447. What cannot be done directly, the Court held, cannot be done indirectly.
Is a Section 447 offence really non-compoundable in every case?
A Section 447 offence is not non-compoundable in every case on the plain text. Section 441(6) bars compounding only for an offence punishable with imprisonment only, or with imprisonment and also with fine. That captures the main limb of Section 447, but it does not obviously capture the second proviso, where the punishment is imprisonment or fine or both.
Set the two texts side by side. Section 441(6) says that any offence which is punishable under the Act “with imprisonment only or with imprisonment and also with fine shall not be compoundable”. The main limb of Section 447 imposes imprisonment and provides that the person “shall also be liable to fine”, so it falls squarely inside that exclusion. The second proviso punishes with imprisonment “which may extend to five years or with fine which may extend to fifty lakh rupees or with both”, which is a different formula from the one Section 441(6) excludes.
Section 441(1) uses the same formula from the other side. It opens the compounding power to “any offence punishable under this Act … not being an offence punishable with imprisonment only, or punishable with imprisonment and also with fine”, wording inserted by Act 1 of 2018 with effect from 9 February 2018. So the exclusion appears twice in the section, in the same words, and on both appearances the second proviso to Section 447 sits outside it.
Note also which forum would be involved: Section 441(1)(b) caps the Regional Director’s jurisdiction at offences where the maximum fine does not exceed twenty-five lakh rupees, so a second-proviso offence carrying a fifty lakh rupee ceiling could only reach the Tribunal.
A second bar closes the door in most real matters regardless. The third proviso to Section 441(1) says that an offence covered under that sub-section shall not be compounded if the investigation against the company has been initiated or is pending under the Act. By the time anyone is thinking about compounding a fraud allegation, an investigation is usually live.
There is a straw in the wind on the other side of the argument, and it comes from the Government. The Corporate Laws (Amendment) Bill, 2026 proposes to raise the Regional Director’s compounding limit under Section 441(1)(b) from twenty-five lakh rupees to one crore rupees. The same Bill would raise the second proviso’s fine ceiling from fifty lakh rupees to one crore rupees.
The Notes on Clauses explain the second change as “consequential to the change made in section 441 of the said Act”. Aligning the second proviso’s fine ceiling to the compounding threshold only has a purpose if the second-proviso offence is understood to be capable of being compounded.
This is a reading of the text, not a statement of settled law. No reported decision, no Ministry circular and no professional-body guidance found in this research closes the point either way, and every ranking page asserts the blanket rule without engaging with the second proviso at all.
Section 447 became a tiered offence in 2018, not in 2013
Section 447 became a tiered offence in 2018, not in 2013. Act 1 of 2018 inserted the ten lakh rupees or one per cent of turnover threshold into the main limb, and added the second proviso creating a lighter offence for small frauds that do not involve public interest. Both changes took effect on 9 February 2018.
The rest of the machinery arrived in pieces:
- 2 July 2003: the Serious Fraud Investigation Office is set up by executive decision, with no statutory backing.
- 2013: the Companies Act, 2013 introduces the first definition of fraud in Indian company law, in the Explanation to Section 447. The Companies Act, 1956 had no such definition, and corporate frauds were prosecuted under the Indian Penal Code.
- 29 May 2015 (Act 21 of 2015, s.17): Section 212(6) is narrowed so that the cognizable-and-twin-conditions regime attaches to an offence covered under Section 447 rather than to a longer list of sections.
- 21 July 2015: the SFIO is granted statutory status by notification S.O. 2005(E).
- 2 November 2018 (Act 22 of 2019, ss.39 and 41): the second-proviso fine rises from twenty lakh to fifty lakh rupees, Section 441(6) is substituted into its current form, and the Regional Director’s compounding limit moves to twenty-five lakh rupees.
- 15 August 2019 (Act 22 of 2019, s.31): the SFIO arrest power is re-tiered to an officer not below the rank of Assistant Director, and Section 212(14A), disgorgement with personal liability without any limitation of liability, is inserted.
- 1 July 2024: the Bharatiya Nyaya Sanhita, 2023 replaces the Indian Penal Code and renumbers the entire general criminal law track.
Three tiers of punishment under Section 447 of the Companies Act, 2013 There is no Rs 1 lakh cap in Section 447 Several ranking pages state that the fine is “up to Rs 1 lakh or 3 times the fraud amount, whichever is higher”. No figure of one lakh rupees appears anywhere in Section 447. The statutory fine shall not be less than the amount involved in the fraud and may extend to three times that amount.The Section 447 punishment ladder
Public interest fraud (first proviso)
Main limb (Section 447 opening words)
Small fraud (second proviso)
Who investigates corporate fraud under the Companies Act and BNS?
Corporate fraud under the Companies Act and BNS is investigated by different bodies depending on which statute is in play. On the Companies Act side, the Registrar of Companies calls for information and inspects books under Section 206 of the Companies Act, 2013. The Central Government appoints inspectors under Section 210, and the Serious Fraud Investigation Office takes an assigned case under Section 212. On the BNS side a state police unit, usually an Economic Offences Wing, investigates on an FIR.
A worked example of how far that machinery reaches. In a stock-exchange filing dated 16 July 2026, a listed power company disclosed that it had received an email from the SFIO on 14 July 2026 calling for information under Section 217(1). The underlying Ministry of Corporate Affairs order, dated 23 April 2026, had been made under Section 212(1)(c) and directed the SFIO to investigate the affairs of a different company and others.
Two points follow. Nearly three months separated the order from the notice, so the Companies Act track begins inside the government long before anyone outside hears about it. And the company on the receiving end of a Section 217(1) requisition need not be the company under investigation at all.
Which investigation power applies, Section 206, 210 or 212?
Section 206 applies first and is the lightest: it gives the Registrar power to call for information, inspect books and conduct inquiries. Section 210 lets the Central Government order an investigation into the affairs of a company, and Section 212 is the assignment of that investigation to the Serious Fraud Investigation Office.
| Provision | Who acts | What it authorises | What it does not do |
|---|---|---|---|
| Section 206 | Registrar of Companies | Call for information, inspect books, conduct inquiries | Does not create a criminal charge |
| Section 210 | Central Government (appointed inspectors) | Order an investigation into the affairs of a company | Does not bar a later Section 212 assignment |
| Section 212 | Central Government assigns to the SFIO | Full investigation, arrest, report deemed a police report | Section 212(2) excludes others only for offences under the Companies Act |
Does an earlier probe block the later one? No. In Exalogic Solutions Private Limited v. The Director, Serious Fraud Investigation Office, W.P. No. 4268 of 2024, decided on 16 February 2024, the Karnataka High Court held that a pending Section 210 investigation does not bar the Central Government from assigning the same matter to the SFIO under Section 212. Section 212(2) prevents duplication rather than creating a first-in-time bar.
A case reaches the SFIO on one of four triggers under Section 212(1), each of them requiring the Central Government to be of the opinion that an investigation is necessary:
- a report of the Registrar or an inspector under Section 208;
- intimation of a special resolution passed by the company that its affairs be investigated;
- the public interest;
- a request from any Department of the Central Government or a State Government.
What can the SFIO do once a case is assigned to it?
Once a case is assigned to it, the Serious Fraud Investigation Office can exercise an inspector’s powers under Section 217 through its designated Investigating Officer. It can compel the company and its present and former officers and employees to supply information, explanations and documents under Section 212(5), and it can arrest under Section 212(8). It also files an investigation report that Section 212(15) deems to be a report filed by a police officer under Section 173 of the Code of Criminal Procedure, 1973.
The duty to assist under Section 212(5) is the one that lands on the in-house team first, and it runs to former officers and employees as well as serving ones. Anyone on the receiving end of that notice should read how a company secretary handles an SFIO investigation before drafting a single response, because the order in which documents go out matters as much as their volume.
The reporting chain runs through Section 212(11) to (13): the SFIO submits an interim report if the Central Government directs one, submits its investigation report to the Central Government on completion, and a person concerned may obtain a copy on application to the court. Prosecution is a separate decision after that. Under Section 212(14) the Central Government may, after examining the report and after taking such legal advice as it thinks fit, direct the SFIO to initiate prosecution. That step doesn’t follow automatically from an adverse report.
Section 212(14A), inserted on 15 August 2019, adds the civil sting. Where the report states that fraud has taken place and a director, key managerial personnel, other officer or any other person or entity has taken undue advantage, the Central Government may apply to the Tribunal for disgorgement of the asset, property or cash. It may also apply for an order holding that person liable personally without any limitation of liability.
Section 212(15) deems the report filed with the Special Court for framing of charges to be a report filed by a police officer under Section 173 of the Code of Criminal Procedure, 1973. The SFIO’s findings therefore enter the criminal court through the same door a charge sheet does. iPleaders has a longer treatment of the evidentiary value of an SFIO investigation report.
How long can all this take? Longer than the specified period, without consequence. In Serious Fraud Investigation Office v. Rahul Modi, (2019) 5 SCC 266, decided on 27 March 2019, the Supreme Court held that the period specified for the SFIO to submit its report under Section 212(3) is directory and not mandatory. An overrun therefore neither vitiates the investigation nor entitles the accused to release.
The institution itself is worth knowing in outline: set up by a Government of India resolution dated 2 July 2003, notified under Section 211(1) of the Companies Act, 2013 by Gazette notification S.O. 2005(E) dated 21 July 2015, a multi-disciplinary body under the Ministry of Corporate Affairs headed by a Director of Joint Secretary rank, with headquarters in New Delhi and regional offices in Mumbai, Chennai, Hyderabad, Kolkata and New Delhi.
Its caseload is modest. In reply to Lok Sabha Starred Question No. 233, answered on 17 March 2025, the Ministry of Corporate Affairs stated that 72 cases were referred to the SFIO across FY 2019-20 to FY 2023-24. It stated that 69 complaints were filed, of which 43 included a complaint under Section 447, roughly 62 per cent.
The reply added that in the same period fine was imposed in 114 cases, 20 cases were compounded, and in 9 cases fine and imprisonment “till rising of courts” were ordered. It does not say how those outcome figures relate to the 72 referrals or the 69 complaints, so they cannot be read as a funnel.
One absence in that reply is worth noticing, because it decides what can honestly be said about the Companies Act track. The question expressly asked for the conviction rate achieved. The answer gave referrals, complaints and the figures above, and said nothing at all about convictions. Any page quoting a Section 447 conviction rate is not quoting this reply, and no other source discloses one.
Who can start a Section 447 prosecution, and can a shareholder file a complaint?
A Section 447 prosecution can be started only by the Director of the Serious Fraud Investigation Office or an officer of the Central Government authorised for the purpose. The second proviso to Section 212(6) bars a Special Court from taking cognizance on anyone else’s complaint.
That is a narrow exception to the Act’s own broader rule. Section 439(2) lets a court take cognizance of a Companies Act offence on the written complaint of the Registrar, a shareholder or member of the company, or a person authorised by the Central Government. A proviso adds a person authorised by the Securities and Exchange Board of India, on offences relating to the issue and transfer of securities and the non-payment of dividend. For everything outside the Section 447 family, a shareholder can complain.
Section 439(1) shows the same carve-out from the other direction: every offence under the Act is deemed non-cognizable except an offence referred to in Section 212(6). Section 447 is the exception to the Act’s own default twice over, on cognizability and on who may complain.
Yerram Vijay Kumar points the same way. A private complaint is not maintainable for offences covered under Section 447, and that includes Section 448.
So what can a shareholder, creditor or counterparty actually do? A complaint to the Registrar of Companies or the Ministry of Corporate Affairs can lead to a referral, which is how a Section 212 assignment starts in the first place.
The Supreme Court in the same judgment pointed to a second route. Section 213 lets the Tribunal order an investigation into a company’s affairs on an application by not less than one hundred members, or by members holding not less than one-tenth of the total voting power. The Tribunal may also order one on the application of any other person, where it is satisfied that the business is being conducted with intent to defraud. And an FIR under the BNS stays open to them, because nothing in the Companies Act restricts who may allege criminal breach of trust, cheating or forgery.
On evidence the principle is straightforward even though no official checklist exists: contemporaneous documents, board and audit records, and the specific filings alleged to be false do the work.
Three tracks that can run on the same factsWho investigates a corporate fraud: the decision path
Companies Act track (regulator-initiated)
BNS track (complainant-initiated)
PMLA track (predicate-offence driven)
Which BNS offences catch a corporate fraud when the police investigate?
When the police investigate a corporate fraud, they charge it under the Bharatiya Nyaya Sanhita’s property and document offences. Those are criminal breach of trust under Section 316 of the Bharatiya Nyaya Sanhita, 2023, cheating under Section 318, forgery under Sections 336 to 340, falsification of accounts under Section 344, and criminal conspiracy under Section 61.
Those five families cover almost every corporate fact pattern that reaches a police station. Property entrusted to an officer and then diverted is criminal breach of trust. An investor induced to part with money on a false picture is cheating. A fabricated board resolution or share transfer form is forgery, cooked books are falsification of accounts, and an agreement between two or more people to do any of it is conspiracy.
Which IPC section became which BNS section?
The fraud offences map across almost one to one. Section 405 of the Indian Penal Code became Section 316(1) of the Bharatiya Nyaya Sanhita, Section 415 became Section 318(1), and Section 420 became Section 318(4). Section 463 became Section 336(1), Section 467 became Section 338 and Section 477A became Section 344.
| Old IPC section | Offence | BNS provision and verified maximum punishment |
|---|---|---|
| 405 | Criminal breach of trust (definition) | 316(1), definition only |
| 406 | Criminal breach of trust, plain | 316(2), up to 5 years, or fine, or both |
| 407 | Criminal breach of trust by a carrier or wharfinger | 316(3), up to 7 years and fine |
| 408 | Criminal breach of trust by a clerk or servant | 316(4), up to 7 years and fine |
| 409 | Criminal breach of trust by a public servant, banker, merchant or agent | 316(5), imprisonment for life, or up to 10 years, and fine |
| 415 | Cheating (definition) | 318(1), definition only |
| 417 | Cheating, plain | 318(2), up to 3 years, or fine, or both |
| 418 | Cheating with knowledge of likely wrongful loss to a protected interest | 318(3), up to 5 years, or fine, or both |
| 420 | Cheating and dishonestly inducing delivery of property | 318(4), up to 7 years and fine |
| 463 | Forgery (definition) | 336(1), definition only |
| 465 | Forgery, plain | 336(2), up to 2 years, or fine, or both |
| 468 | Forgery for the purpose of cheating | 336(3), up to 7 years and fine |
| 469 | Forgery to harm reputation | 336(4), up to 3 years and fine |
| 466 | Forgery of a court record or a public register | 337, up to 7 years and fine |
| 467 | Forgery of a valuable security or will | 338, imprisonment for life, or up to 10 years, and fine |
| 470 | Forged document (definition) | 340(1), definition only |
| 471 | Using a forged document as genuine | 340(2), punished as if the person had forged it |
| 477A | Falsification of accounts | 344, up to 7 years, or fine, or both |
| 120A and 120B | Criminal conspiracy | 61(1) and 61(2), as for the abetted offence, or up to 6 months |
Both columns are transcribed from India Code primary text, the Bharatiya Nyaya Sanhita from the Act in force and the Indian Penal Code correspondences from the repealed Code. One caution on reading the table: the punishment shown is the current BNS punishment, and it is not always what the old IPC section carried. Plain criminal breach of trust rose from three years under Section 406 to five years under Section 316(2), and plain cheating rose from one year under Section 417 to three years under Section 318(2).
One correction belongs here, because it is repeated on page after page. Section 318 is not a seven-year offence. Seven years is Section 318(4) alone, the limb punishing cheating plus dishonest inducement to deliver property or to make, alter or destroy a valuable security. Plain cheating under Section 318(2) carries up to three years, and Section 318(3), the limb that fits a fiduciary who knew the deception was likely to cause wrongful loss to a person whose interest he was bound to protect, carries up to five years.
Can criminal breach of trust and cheating be charged together on the same facts?
Criminal breach of trust and cheating cannot be charged together on the same facts. The Supreme Court held in Delhi Race Club (1940) Ltd. v. State of Uttar Pradesh, (2024) 10 SCC 690 on 23 August 2024 that the two offences are mutually exclusive. Without entrustment there is no criminal breach of trust, and where property was entrusted there is no inducement to deliver it. The judgment was delivered on the Indian Penal Code provisions, Sections 406 and 420, but Sections 316 and 318 of the Bharatiya Nyaya Sanhita reproduce their ingredients, so the reasoning carries across.
Criminal breach of trust under Section 316 begins with entrustment. The accused must have been entrusted with property, or with dominion over property, and must then have dishonestly misappropriated it, converted it to his own use, or used or disposed of it in violation of a direction of law or a legal contract. In a company that usually means funds or assets placed in an officer’s control and then diverted. Our detailed explainer on criminal breach of trust under Section 316 of the Bharatiya Nyaya Sanhita works through the ingredients and the sub-sections.
Cheating under Section 318 begins somewhere else entirely, with deception. The accused must deceive a person and thereby fraudulently or dishonestly induce that person to deliver property or consent to its retention, or intentionally induce an act or omission that causes or is likely to cause damage or harm. A dishonest concealment of facts counts as deception under the Explanation to the section. For the sub-section ladder and the bail position, see our guide to cheating under Section 318 of the Bharatiya Nyaya Sanhita.
The election that the Delhi Race Club ruling forces on the BNS track has no equivalent on the Companies Act track, and the reason is textual. Explanation (i) to Section 447 is drafted disjunctively: an act, an omission, a concealment of any fact, or an abuse of position. A charge framed on abuse of position does not have to disprove entrustment or deception, because the section does not make those the gateway. That is a comparison of two statutory texts, not a judicial holding; no court has said it.
Sections 344 and 338 reach the paperwork that Sections 316 and 318 miss
Sections 344 and 338 reach the paperwork. Section 344 punishes a clerk, officer or servant who wilfully and with intent to defraud destroys, alters, mutilates or falsifies a book, electronic record, paper, writing, valuable security or account belonging to the employer, or makes a false entry. That offence carries imprisonment up to seven years, or fine, or both. Section 338 punishes forgery of a valuable security, will or receipt with imprisonment for life, or up to ten years, and fine.
Section 344 is the provision to know for books-of-account fraud, and it is absent from every page currently ranking on this topic. Beyond destroying or altering a record, it covers making or abetting a false entry, and omitting or altering a material particular, in anything belonging to or in the possession of the employer. The inclusion of electronic records matters, because an entry passed in an ERP system falls inside the language as readily as a ledger did.
Its Explanation removes the pleading problem that usually kills these charges. A general intent to defraud is enough, and the charge need not name a particular person defrauded, a particular sum of money, or a particular date.
Section 338 is the heaviest offence on the BNS track. Forging a valuable security, a will, an authority to adopt, an authority to make or transfer a valuable security or to receive principal, interest or dividends, or an acquittance or receipt, carries imprisonment for life, or imprisonment of either description up to ten years, and fine. A forged share transfer form or a forged receipt sits inside that language, which is why the BNS ceiling is higher than anything Section 447 can impose.
Two neighbouring provisions complete the set. Section 337 punishes forgery of a court record, a register kept by a public servant as such, or a certificate or document purporting to be made by a public servant in his official capacity. That carries up to seven years and fine, and statutory registers and filings sit close to that language. Section 340(2) punishes fraudulently or dishonestly using as genuine a document or electronic record known or believed to be forged in the same manner as if the person had forged it.
Forgery itself is defined in Section 336(1), and the sub-sections form a ladder. Plain forgery under Section 336(2) carries two years. Forgery for the purpose of cheating under Section 336(3) carries seven years and fine, and forgery with intent to harm reputation under Section 336(4) carries three years and fine. Our explainer on forgery under Section 336 of the Bharatiya Nyaya Sanhita covers the definition and the defences in detail.
Conspiracy is the last piece. Under Section 61(2), a conspiracy to commit an offence punishable with death, imprisonment for life or rigorous imprisonment of two years or upwards is punished in the same manner as if the person had abetted that offence, where no express provision exists. Any other criminal conspiracy carries up to six months, or fine, or both. A conspiracy charge alongside Section 318(4) is therefore not a bolt-on.
Can a director be charged under the BNS just for holding office?
A director cannot be charged under the BNS just for holding office. There is no general vicarious criminal liability for company officers unless a statute expressly creates it. Sunil Bharti Mittal v. Central Bureau of Investigation, (2015) 4 SCC 609 requires sufficient evidence of an active role coupled with criminal intent before a director is arraigned alongside the company. That is a real asymmetry between the two tracks, because the BNS contains no general vicarious-liability provision for company officers while Section 447 reaches “any person” through its Explanation and the Companies Act reaches officers in default through its own machinery.
Director and independent-director exposure is a large subject in its own right and LawSikho covers it separately; this article stays on the prosecution tracks.
Sorted by maximum punishment, heaviest first. Old Indian Penal Code number shown alongside. Imprisonment for life Up to 7 years Up to 5 years Up to 3 years and below Punishment set by reference to another offence Section 318 BNS is not “seven years” Seven years is Section 318(4) only. Plain cheating under Section 318(2) is up to 3 years. Cheating with knowledge of wrongful loss to a protected interest, under Section 318(3), is up to 5 years. Secondary pages that flatten Section 318 to a single seven-year figure are wrong for two of its three punishing sub-sections.BNS fraud offences at sub-section level
Can corporate fraud under the Companies Act and BNS be prosecuted at the same time?
Corporate fraud under the Companies Act and BNS can be prosecuted at the same time. Section 212(2) bars another agency only in respect of an offence “under this Act”, and Section 212(17)(b) requires the Serious Fraud Investigation Office to share material with any agency investigating a matter under any other law.
Read the two sub-sections together and the dual-track question answers itself. Section 212(2) says that where a case has been assigned to the SFIO for investigation under the Act, no other investigating agency of the Central Government or any State Government shall proceed with investigation in such case “in respect of any offence under this Act”. An agency already investigating shall stop and transfer its records “in respect of such offences under this Act”. The qualifying phrase appears twice, and it is doing all the work.
Section 212(17)(b) then points the other way. The SFIO shall share any information or documents available with it with any investigating agency, State Government, police authority or income-tax authority which may find them relevant or useful “in respect of any offence or matter being investigated or examined by it under any other law”. A provision that compels sharing with agencies working under other statutes presupposes that those agencies are still working.
Does an SFIO assignment kill an existing police FIR?
An SFIO assignment kills a police FIR only to the extent the FIR covers Companies Act offences. The Delhi High Court so held in Ashish Bhalla v. State, 2023 SCC OnLine Del 5818 on 15 September 2023. Once the Ministry of Corporate Affairs assigns an investigation to the SFIO, Section 212(2) bars another agency from investigating the same Companies Act offences. The court quashed the Economic Offences Wing first information report to the extent it covered the petitioner, and left the proceedings against the non-petitioning accused open.
The court also read Section 212(17)(a) as reinforcing the same architecture from the other direction. Any investigating agency, State Government, police authority or income-tax authority holding information or documents relating to an offence the SFIO is investigating must provide them to the SFIO.
Does a transfer to the SFIO stop the Enforcement Directorate?
A transfer to the SFIO does not stop the Enforcement Directorate. A Division Bench of the Delhi High Court held in Sanjay Aggarwal v. Union of India, 2025:DHC:10498-DB on 27 November 2025 that Section 212(2) is confined to offences under the Companies Act. It does not preclude parallel proceedings under the Prevention of Money Laundering Act, 2002.
The rule from these two judgments: same statute, one investigator; different statute, both can run.
Does prosecuting a corporate fraud on both tracks amount to double jeopardy under Article 20(2)?
Prosecuting a corporate fraud on both tracks has not so far been held to be double jeopardy. Article 20(2) of the Constitution of India bars a second prosecution and punishment for the same offence. The test the courts apply is whether the two offences have the same ingredients, not whether the prosecution relies on the same facts.
Section 447 and Sections 316, 318 and 336 do not share ingredients. Section 447 turns on fraud in relation to the affairs of a company as defined in its own Explanation; criminal breach of trust turns on entrustment; cheating turns on deception and inducement; forgery turns on the making of a false document. On the reported material, the Article 20(2) plea against running both tracks has not succeeded.
The statutory protection is wider than the constitutional one and is now differently numbered. Section 337 of the Bharatiya Nagarik Suraksha Sanhita, 2023, not Section 300, is the successor to Section 300 of the Code of Criminal Procedure, 1973: “A person who has once been tried by a Court of competent jurisdiction for an offence and convicted or acquitted of such offence shall, while such conviction or acquittal remains in force, not be liable to be tried again for the same offence”. Section 300 of the Sanhita is an unrelated provision in the plea bargaining chapter. The protection therefore extends to a previous acquittal as well as a previous conviction, and the same ingredients test governs there too.
Can a Special Court try the BNS offences alongside the Companies Act offences in one trial?
A Special Court can try BNS offences alongside Companies Act offences in a single trial, but only for as long as it is trying a Companies Act offence: Section 436(2) provides that “when trying an offence under this Act, a Special Court may also try an offence other than an offence under this Act with which the accused may, under the Code of Criminal Procedure, 1973 be charged at the same trial”.
The qualifier at the front of that sub-section is the whole point. The Supreme Court read it in Yerram Vijay Kumar and held that once the Companies Act offences are quashed, the Special Court no longer has jurisdiction over the offences under the general criminal law, which go instead to the court of ordinary territorial jurisdiction. In that matter the Companies Act charges were quashed and the remaining general-law offences were directed to be transferred out of the Special Court.
That matters practically. A defence that succeeds in knocking out the Section 447 family does not end the prosecution; it moves it, and the accused ends up before a different court on the surviving charges rather than out of the criminal system.
How hard is it to get bail in a Section 447 corporate fraud case?
Bail in a Section 447 corporate fraud case is hard to get because the offence is cognizable and Section 212 of the Companies Act, 2013 bars release on bail or on bond. The bar lifts only where the Public Prosecutor has been given an opportunity to oppose the application. And where he opposes it, the court must also be satisfied on two points: that there are reasonable grounds for believing the accused is not guilty, and that he is not likely to commit an offence while on bail.
Nothing equivalent exists on the BNS side. A cheating or forgery charge carries no statutory bail bar, so an application for anticipatory or regular bail on those offences is decided on ordinary principles. The same set of facts can therefore produce very different bail outcomes depending on which track moved first. Section 212(7) adds that the limitation in Section 212(6) operates in addition to the limitations under the Code of Criminal Procedure, 1973 or any other law, so the twin conditions sit on top of the ordinary test rather than replacing it.
What must an accused show to clear the Section 212(6) twin conditions?
An accused must satisfy the court on both conditions before bail can be granted: that there are reasonable grounds for believing he is not guilty of the offence, and that he is not likely to commit any offence while on bail. The Public Prosecutor must first have been given an opportunity to oppose the application.
In Serious Fraud Investigation Office v. Aditya Sarda, 2025 INSC 477, decided on 9 April 2025, the Supreme Court held that the twin conditions are binding and must be satisfied before bail is granted for a Section 447 offence. They apply to anticipatory bail as well as to regular bail. The earlier decision in Serious Fraud Investigation Office v. Nittin Johari, (2019) 9 SCC 165, decided on 12 September 2019, had already required strict application. It held that “reasonable grounds” under Section 212(6)(ii) means something more than a prima facie view, closer to substantial probable cause, and that a High Court granting bail on broad probabilities without applying its mind to both limbs has not done what the sub-section requires.
Practitioners will recognise the drafting immediately, because Section 212(6)(i) and (ii) track the twin conditions in Section 45 of the Prevention of Money Laundering Act, 2002 almost word for word. Anyone arguing a Section 447 bail application should read how the Section 45 twin conditions under the Prevention of Money Laundering Act are argued in practice, because the structure of the reply is the same one.
Who is exempt from the Section 212(6) twin conditions?
The first proviso to Section 212(6) exempts three categories from the twin conditions: a person under the age of sixteen, a woman, and a person who is sick or infirm, any of whom the Special Court may direct to be released on bail.
Read the qualifier carefully, because it is load-bearing. The proviso is permissive: such a person “may be released on bail, if the Special Court so directs”. It removes the mandatory twin-condition bar; it does not convert bail into an entitlement, and the Special Court still exercises its own discretion on the material before it.
Can the SFIO arrest a director, and what happens in the first 24 hours?
The SFIO can arrest, and Section 212(8) says who may do it. An officer not below the rank of Assistant Director, authorised by the Central Government, may arrest a person he has reason to believe is guilty of an offence covered under Section 212(6). That reason to believe must rest on material in his possession and must be recorded in writing, and the officer must inform the arrested person of the grounds. Under Section 212(10) the arrested person must then be produced before a Special Court or Judicial Magistrate or Metropolitan Magistrate within twenty-four hours, excluding journey time.
Both sub-sections were amended with effect from 15 August 2019, when the rank threshold and the production forum changed, so a commentary written earlier describes a power that no longer exists in that form.
The requirement that the reason to believe be recorded in writing is the only real check on the power, and it is the first thing to ask for. Material in the officer’s possession, a belief formed on that material, and a written record of the reason are three separate requirements, and each can be tested.
Why the Section 45 PMLA comparison does not help a Section 447 accused
The Section 45 PMLA comparison does not help a Section 447 accused, and the reason is that the PMLA twin conditions are alive rather than dead. In Nikesh Tarachand Shah v. Union of India, (2018) 11 SCC 1, decided on 23 November 2017, the Supreme Court struck down Section 45(1) as it then stood as manifestly arbitrary and violative of Articles 14 and 21, but the vice it identified was narrow. The bail bar was keyed to the punishment for the Part A scheduled offence rather than to money laundering itself, so two people accused of the same money laundering offence faced different bail tests depending on the predicate. Parliament cured that by the Finance Act, 2018, substituting “an offence under this Act” for the scheduled-offence trigger, and a three-judge bench upheld the revived provision in Vijay Madanlal Choudhary v. Union of India, 2022 SCC OnLine SC 929 on 27 July 2022.
Section 212(6), for its part, has never been struck down at all, and the Supreme Court in the Aditya Sarda judgment enforced it in 2025 including for anticipatory bail. A 2020 column in Bar and Bench has argued that Section 212(6) is an anomaly in bail jurisprudence. The argument is worth reading, and it is a critique rather than a holding, written before the 2022 judgment upholding the corrected Section 45 and before the 2025 enforcement of Section 212(6).
So a bail application built on the PMLA parallel is the predictable losing argument in a Section 447 matter. The defect the 2017 judgment found was in the trigger, not in the twin conditions themselves. The trigger it condemned has no counterpart in Section 212(6), which attaches to the Section 447 offence directly, exactly as the corrected Section 45 now attaches to money laundering. Better to spend the hearing on the two conditions themselves: what in the material supports a reasonable ground for believing the accused is not guilty, and what conditions answer the second limb.
Which is worse for an accused, the Companies Act track or the BNS track?
Neither track is uniformly worse for an accused. The Companies Act track carries a six-month minimum sentence, cognizability, a twin-condition bail bar and a Special Court. The BNS track carries higher maximum sentences, including imprisonment for life under Sections 316(5) and 338, but no statutory minimum term and no statutory bail bar.
The BNS track carries the higher maximum, the Companies Act track the higher floor
The BNS track carries the higher maximum and the Companies Act track carries the higher floor. Section 316(5) and Section 338 reach imprisonment for life, which Section 447 never does. Section 447 sets a minimum of six months, three years where public interest is involved, that no BNS fraud offence imposes.
Punishment is only one axis, and it is not the one that decides how a matter runs. Who initiates decides whether the accused faces a State agency with a statutory report or a complainant with a grievance. Who investigates decides whether the file is built by a multi-disciplinary body under the Ministry of Corporate Affairs or by a state Economic Offences Wing.
Which court decides the pace and the procedure. And whether compounding is available at all is a Companies Act question with no BNS counterpart.
Ranking the two tracks in the abstract isn’t useful. The fact pattern decides: a small, non-public-interest fraud below the threshold looks far worse on the BNS track, where Section 338 reaches life imprisonment, than under the second proviso to Section 447, which caps at five years.
What happens to the company while the corporate fraud prosecution runs?
The company faces parallel civil and regulatory consequences while the criminal case runs. The Central Government can apply to the Tribunal under Section 212(14A) for disgorgement and for a finding of personal liability without limitation. Separately, the National Financial Reporting Authority can penalise the auditors. And a Section 140(5) application against the statutory auditor proceeds before the National Company Law Tribunal independently of the prosecution.
In Union of India v. Deloitte Haskins and Sells LLP, 2023 SCC OnLine SC 557, decided on 3 May 2023, the Supreme Court held that Section 140(5) is constitutionally valid. An auditor’s resignation after a Section 140(5) application has been filed does not terminate the proceedings before the Tribunal. The five-year ineligibility under the second proviso operates only on a final order of the Tribunal finding fraudulent conduct, so resignation buys time rather than an exit.
The audit regulator runs its own track. The National Financial Reporting Authority imposed Rs 3 crore on an audit firm, Rs 1 crore on the engagement partner and Rs 50 lakh on the engagement quality control review partner. That was by an order of 12 April 2024 under Section 132(4), for lapses in the FY 2018-19 audit of a listed financial services company.
It also debarred the two individuals for ten years and five years respectively. The debarment is the part that ends careers, and none of it depends on a criminal court convicting anyone.
Auditor reporting under Section 143(12) is often the feeder into the whole sequence. That is roughly the shape of the IndusInd Bank matter. The statutory auditors filed under the Section 143(12) route, the Ministry of Corporate Affairs referred the matter to the SFIO, and the investigation was initiated in late December 2025.
The Mumbai Police Economic Offences Wing separately ran a preliminary enquiry and concluded that no criminality warranting an FIR was made out. One track proceeded; the other was considered and declined.
Would the Corporate Laws (Amendment) Bill, 2026 soften the fraud offence?
The Corporate Laws (Amendment) Bill, 2026 would leave the fraud offence criminal but would move its thresholds. Clause 99 proposes to substitute “twenty-five lakh rupees” for “ten lakh rupees” in the main limb of Section 447, and “one crore rupees” for “fifty lakh rupees” in the second proviso. A band of frauds that today falls on the main limb would fall on the lighter proviso instead.
Take the mechanics of that seriously, because it is the only proposal in the Bill that touches the fraud offence itself. Today a fraud of Rs 15 lakh, on a company whose one per cent of turnover is higher, sits on the main limb: a six-month minimum sentence, a ten-year maximum, and a fine that cannot be less than the amount involved. If the Bill passes in the form introduced, the same fraud sits under the second proviso: no minimum sentence, a five-year maximum, and a fine capped at Rs 1 crore with no floor. That is a real softening for mid-sized frauds, and no commentary on the Bill engages with Clause 99 at all.
Everything else in the Bill leaves the imprisonment-backed fraud provisions alone. It decriminalises a range of procedural defaults across the Companies Act, 2013 and the Limited Liability Partnership Act, 2008, replacing criminal provisions with civil penalties, and its Statement of Objects and Reasons describes the aim as “decriminalising more provisions”. But it does not amend Section 448, Section 34, Section 35 or Section 76A, so the false-statement, prospectus-misstatement and public-deposit offences stay where they are. Retention here is by silence rather than by any express saving clause.
The proposed settlement track works the same way. New Section 454C would let a person against whom proceedings have been initiated apply to a Specified Authority for settlement, but sub-section (1) confines eligibility to “the contraventions which shall be liable for penalty under this Act”. A Section 447 fraud is punishable, not penalised, so it falls outside that language.
The exclusion is structural. There is no clause in Section 454C that names Section 447 and shuts it out, whatever the commentary says.
Two further proposals matter here. Clause 97 would raise the Regional Director’s compounding jurisdiction under Section 441(1)(b) from twenty-five lakh rupees to one crore rupees. And the Bill would expand the National Financial Reporting Authority, inserting Sections 132A to 132I, making it a body corporate and giving it its own fund, fee-making power and penalty powers.
None of this is law. The Bill was introduced in the Lok Sabha on 23 March 2026 and referred the same day to a Joint Committee of both Houses, which had presented no report as at 28 July 2026. It has not been passed by either House. Every proposition above is what the Bill proposes, not what any statute now says.
Does the private-complaint bar push complainants onto the BNS track?
The private-complaint bar does push complainants toward the BNS track, at least as a matter of what routes remain open. A shareholder, creditor or counterparty cannot start a Section 447 prosecution at all. But nothing prevents that same person from filing a first information report under Section 316, 318 or 336. That is an inference drawn from the two rules sitting side by side, not an observed trend, and no filing-volume data exists either way.
The second consequence follows from the Bill, if it is enacted in the form introduced. Convert routine filing and disclosure defaults into adjudicated civil penalties and the only criminal exposure left under the Companies Act is Section 447 and its satellites. A compliance failure would then either fall below the criminal line entirely or land inside the fraud offence.
But the middle rung that survives is a narrow one. The second proviso softens the sentence, but Section 212(6) attaches to any “offence covered under section 447”, so cognizability and the twin-condition bail bar reach the small fraud exactly as they reach the large one.
Third, the scarce professional competence shifts. Knowing what Section 447 says is no longer the differentiator; mapping jurisdiction on day one of an internal investigation is, including what Section 212(17)(b) forces the SFIO to share onward and whether cooperation in one forum creates exposure in another.
Companies Act, 2013 against the Bharatiya Nyaya Sanhita, 2023, at sub-section level Lead provisions Minimum sentence Maximum sentence Fine Cognizable Bail Compoundable Who may set it in motion Which court Neither track is uniformly harsher. The BNS carries the higher maximum; the Companies Act carries the higher floor, the bail bar and the complaint monopoly.Companies Act track vs BNS track: nine points of comparison
Frequently asked questions on corporate fraud prosecutions in India
What is the punishment for fraud under Section 447 of the Companies Act?
Imprisonment of not less than six months and up to ten years, plus a fine of not less than the amount involved in the fraud and up to three times that amount. Where public interest is involved, the minimum rises to three years. Below the threshold and without public interest, the punishment is up to five years, or a fine up to Rs 50 lakh, or both.
Is an offence under Section 447 bailable or non-bailable?
It is treated as non-bailable in effect. Section 212(6) of the Companies Act, 2013 bars release on bail or on bond unless the Public Prosecutor has been given an opportunity to oppose the application and, where he opposes it, the court records its satisfaction on both twin conditions.
Is Section 447 cognizable or non-cognizable?
Cognizable. Section 439(1) deems every offence under the Companies Act, 2013 to be non-cognizable except an offence referred to in Section 212(6), and Section 212(6) covers an offence under Section 447. So the Act’s default is non-cognizable and Section 447 is the carve-out from it.
Is the offence of fraud under Section 447 compoundable?
The main limb is not compoundable, because Section 441(6) excludes offences punishable with imprisonment and also with fine. The second proviso does not fit that exclusion on the plain text, so the position there is unsettled. In practice the third proviso to Section 441(1) bars compounding once an investigation has been initiated or is pending.
Who can file a complaint for fraud under Section 447?
Only the Director of the Serious Fraud Investigation Office, or an officer of the Central Government authorised for the purpose. The second proviso to Section 212(6) bars a Special Court from taking cognizance of a Section 447 offence on any other complaint, which excludes shareholders, creditors and counterparties.
Can a private complaint trigger fraud proceedings under the Companies Act?
No. In Yerram Vijay Kumar v. State of Telangana, 2026 INSC 42, decided on 9 January 2026, the Supreme Court held that a private complaint is not maintainable for offences covered under Section 447, including Section 448. A shareholder can still complain to the Registrar of Companies or the Ministry of Corporate Affairs, and can separately file an FIR under the Bharatiya Nyaya Sanhita, 2023.
Can bail be granted under Section 447 without satisfying the twin conditions?
No. In Serious Fraud Investigation Office v. Aditya Sarda, 2025 INSC 477, decided on 9 April 2025, the Supreme Court held that the Section 212(6) twin conditions are binding and must be satisfied before bail is granted for a Section 447 offence. A court that grants bail without recording satisfaction on both limbs is acting outside the provision.
Do the Section 212(6) twin conditions apply to anticipatory bail?
Yes. In Serious Fraud Investigation Office v. Aditya Sarda, 2025 INSC 477, decided on 9 April 2025, the Supreme Court held that the Section 212(6) twin conditions apply to anticipatory bail as well as to regular bail, so an accused cannot avoid them by applying before arrest. Section 212(7) adds that this limitation operates in addition to the limitations under the Code of Criminal Procedure, 1973 or any other law.
Does a transfer of investigation to the SFIO bar parallel proceedings under the PMLA?
No. Section 212(2) is confined to offences under the Companies Act, 2013, so the Enforcement Directorate can proceed under the Prevention of Money Laundering Act, 2002 on the same facts. That was the holding of a Division Bench of the Delhi High Court in Sanjay Aggarwal v. Union of India, 2025:DHC:10498-DB, on 27 November 2025.
Does an investigation under Section 210 bar an SFIO probe under Section 212?
No. Section 212(2) prevents duplication rather than creating a first-in-time bar, so a pending Section 210 investigation does not stop the Central Government assigning the same matter to the Serious Fraud Investigation Office. The Karnataka High Court so held in Exalogic Solutions Private Limited v. The Director, Serious Fraud Investigation Office on 16 February 2024.
What is the difference between fraud and cheating?
Fraud under Section 447 covers an act, omission, concealment of any fact or abuse of position committed with intent to deceive, to gain undue advantage or to injure interests, and it applies whether or not there is any wrongful gain or wrongful loss. Cheating under Section 318(1) requires deception plus inducement to deliver property or to act.
Within how long must an SFIO investigation be completed?
The Central Government specifies a period when it assigns the case. In Serious Fraud Investigation Office v. Rahul Modi, (2019) 5 SCC 266, decided on 27 March 2019, the Supreme Court held that the period specified under Section 212(3) is directory and not mandatory, so an overrun neither vitiates the investigation nor entitles the accused to be released.
Does the SFIO have the power to arrest?
Yes, under Section 212(8). The power belongs to an officer not below the rank of Assistant Director, authorised by the Central Government, who has reason to believe on material in his possession, recorded in writing, that the person is guilty of an offence covered under Section 212(6). Production before a court follows within 24 hours under Section 212(10).
Is an SFIO investigation report admissible as evidence?
Section 212(15) deems the investigation report filed with the Special Court for framing of charges to be a report filed by a police officer under Section 173 of the Code of Criminal Procedure, 1973. It therefore enters the criminal court through the same door a charge sheet does, and is tested the same way.
What is the difference between Section 447 of the Companies Act and Section 318 of the BNS?
Section 447 has a six-month minimum, is cognizable, carries the Section 212(6) bail bar, and can be started only by the SFIO or an authorised Central Government officer. Section 318 has no statutory minimum, is charged on an FIR that any person can lodge, and runs from three years under Section 318(2) to seven years under Section 318(4).
Is the Section 447 fine capped at one lakh rupees?
No. There is no one lakh rupees figure anywhere in Section 447. The fine shall not be less than the amount involved in the fraud and may extend to three times that amount. Only the second proviso carries a fine ceiling, and that ceiling is Rs 50 lakh, not one lakh.
References
Case Law
- Ashish Bhalla v. State, 2023 SCC OnLine Del 5818. CRL.M.C. 298/2023; Delhi High Court, 15 September 2023
- Delhi Race Club (1940) Ltd. v. State of Uttar Pradesh, (2024) 10 SCC 690. 2024 INSC 626; [2024] 8 SCR 670; Supreme Court of India, 23 August 2024
- Exalogic Solutions Private Limited v. The Director, Serious Fraud Investigation Office. W.P. No. 4268 of 2024 (GM-RES); Karnataka High Court, 16 February 2024
- Nikesh Tarachand Shah v. Union of India, (2018) 11 SCC 1. AIR 2017 SC 5500; Supreme Court of India, 23 November 2017
- Sanjay Aggarwal v. Union of India, 2025:DHC:10498-DB. W.P.(C) 2819/2016 and connected matters; Delhi High Court (Division Bench), 27 November 2025. Not yet on Indian Kanoon; reported by Bar and Bench
- Serious Fraud Investigation Office v. Aditya Sarda, 2025 INSC 477. Supreme Court of India, 9 April 2025
- Serious Fraud Investigation Office v. Nittin Johari, (2019) 9 SCC 165. AIR 2019 SC 4380; Supreme Court of India, 12 September 2019
- Serious Fraud Investigation Office v. Rahul Modi, (2019) 5 SCC 266. Supreme Court of India, 27 March 2019
- Sunil Bharti Mittal v. Central Bureau of Investigation, (2015) 4 SCC 609. AIR 2015 SC 923; Supreme Court of India, 9 January 2015
- Union of India v. Deloitte Haskins and Sells LLP, 2023 SCC OnLine SC 557. Criminal Appeal Nos. 2305-2307 of 2022; Supreme Court of India, 3 May 2023
- Vijay Madanlal Choudhary v. Union of India, 2022 SCC OnLine SC 929. (2023) 12 SCC 1; Supreme Court of India, 27 July 2022
- Yerram Vijay Kumar v. State of Telangana, 2026 INSC 42. Supreme Court of India, 9 January 2026; official judgment
Statutes
- Indian Penal Code, 1860 (repealed with effect from 1 July 2024). Sections cited: 120A, 120B, 405, 406, 407, 408, 409, 415, 417, 418, 420, 463, 465, 466, 467, 468, 469, 470, 471, 477A
- Constitution of India, Article 20(2)
- Code of Criminal Procedure, 1973. Sections cited: 173
- Prevention of Money Laundering Act, 2002. Sections cited: 45
- Companies Act, 2013. Sections cited: 36, 140, 143, 206, 208, 210, 211, 212, 213, 217, 435, 436, 439, 441, 447, 448
- Bharatiya Nyaya Sanhita, 2023. Sections cited: 61, 316, 318, 336, 337, 338, 340, 344
- Bharatiya Nagarik Suraksha Sanhita, 2023. Sections cited: 337
- The Corporate Laws (Amendment) Bill, 2026 (Bill, not enacted). Introduced in the Lok Sabha on 23 March 2026 and referred the same day to a Joint Committee. Clauses cited: 97, 99, 103
This article is for informational purposes only and does not constitute legal advice. For specific legal guidance, consult a qualified legal professional.
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