Chapter XXIX - Miscellaneous
Section 452
Section 452: punishment for wrongful withholding of property
Section 452 applies when an officer or employee wrongfully obtains possession of company property, including cash. It also applies when they wrongfully withhold such property or knowingly apply it for purposes not authorised by the articles and the Act. On a complaint, the court may impose a fine and order the property returned.
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This article is for general information. Refer to the Companies Act, 2013 official text for the official provisions. If you need professional advice for your situation, contact Bizeneed.
Statutory text
Bare law
(1) 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 including cash in his possession, wrongfully withholds it or knowingly applies it for the purposes other than those expressed or directed in the articles and authorised by this Act, he shall, on the complaint of the company or of any member or creditor or contributory thereof, be punishable with fine which shall not be less than one lakh rupees but which may extend to five lakh rupees. (2) The Court trying an offence under sub-section (1) may also order such officer or employee to deliver up or refund, within a time to be fixed by it, any such property or cash wrongfully obtained or wrongfully withheld or knowingly misapplied, the benefits that have been derived from such property or cash or in default, to undergo imprisonment for a term which may extend to two years. Provided that the imprisonment of such officer or employee, as the case may be, shall not be ordered for wrongful possession or withholding of a dwelling unit, if the court is satisfied that the company has not paid to that officer or employee, as the case may be, any amount relating to—(a) provident fund, pension fund, gratuity fund or any other fund for the welfare of its officers or employees, maintained by the company; (b) compensation or liability for compensation under the Workmen’s Compensation Act, 1923 in respect of death or disablement.
Introduction
The fine is not less than one lakh rupees and may extend to five lakh rupees. The court may also order delivery or refund of the property and the benefits derived from it, with imprisonment of up to two years in default.
Section 452 commenced on 12 September 2013 under S.O. 2754(E). The Companies (Amendment) Act, 2020, section 64, inserted a proviso protecting certain employees who hold on to a company dwelling unit, with effect from 22 January 2021 (S.O. 325(E)).
Key takeaways
Complaint required
Prosecution is on the complaint of the company or any member, creditor or contributory.
Fine and return
Fine of one lakh to five lakh rupees, and an order to deliver up or refund the property and benefits derived from it.
Dwelling-unit proviso
No imprisonment for holding on to a dwelling unit if the company has not paid the person’s specified fund or compensation dues.
The offence
Sub-section (1) applies where an officer or employee wrongfully obtains possession of any property of the company, including cash. It also applies where they have such property in their possession and wrongfully withhold it, or knowingly apply it for purposes other than those expressed or directed in the articles and authorised by the Act. On the complaint of the company or any member, creditor or contributory, the person is punishable with fine of not less than one lakh rupees, which may extend to five lakh rupees.
- India Code — consolidated Companies Act, 2013, section 452
- Companies Act, 2013 as published in the Gazette of India, 30 August 2013 (NCLT copy)
- eGazette — Companies (Amendment) Act, 2020 (No. 29 of 2020)
- eGazette — MCA notification S.O. 325(E) (2020 Amendment Act provisions in force 22 January 2021)
- eGazette — MCA notification S.O. 2754(E), 12 September 2013 (commencement)
Order to return the property
Under sub-section (2), the court may also order the officer or employee to deliver up or refund the property or cash within a time it fixes, together with the benefits derived from it. In default, the person may be imprisoned for up to two years.
The 2020 proviso on dwelling units
The proviso, in force from 22 January 2021, bars an order of imprisonment for wrongful possession or withholding of a dwelling unit if the court is satisfied that the company has not paid the officer or employee amounts relating to (a) provident fund, pension fund, gratuity fund or any other welfare fund maintained by the company, or (b) compensation or liability for compensation under the Workmen’s Compensation Act, 1923 for death or disablement. The proviso limits only imprisonment; the rest of the section is unchanged.
Practical preparation
Document company property issued to each officer or employee; demand return in writing on exit; check whether the company owes any fund or compensation dues before seeking imprisonment over a dwelling unit; decide who will file the complaint; keep proof of the property’s value and any benefits derived.
Practical checklist
Do
- Keep signed acknowledgements for company property, including accommodation, vehicles and devices.
- Settle provident fund, gratuity and similar dues promptly on exit.
Avoid
- Do not use company property for purposes outside the articles and the Act.
- Do not expect imprisonment for a withheld dwelling unit while the company still owes the dues listed in the proviso.
Illustrative example
Hypothetical: a company flat after resignation
A manager resigns but stays on in the company flat. He says his gratuity has not been paid. The company files a complaint under section 452.
Offence
Withholding company property after the right to it ends may fall under sub-section (1)(b).
Return order
The court may order the flat to be delivered up within a time it fixes.
Proviso
If the court is satisfied that the gratuity has not been paid, it cannot order imprisonment for withholding the flat.
Outcome
- Had the gratuity been paid, the proviso would not apply and imprisonment in default of the return order would remain available to the court.
Glossary
- Contributory
- A person liable to contribute towards the assets of the company in the event of its being wound up, as defined in section 2(26).
- Dwelling unit
- Residential accommodation; the 2020 proviso refers to wrongful possession or withholding of a dwelling unit.
Frequently asked questions
Who can file a complaint under section 452?
The company, or any member, creditor or contributory of it.
What is the fine?
Not less than one lakh rupees, which may extend to five lakh rupees.
Can a former employee be jailed for not vacating a company flat?
The court may order return of the property and impose imprisonment of up to two years in default. Under the 2020 proviso, however, imprisonment cannot be ordered for a dwelling unit if the company has not paid the person the provident fund, pension, gratuity, welfare-fund or workmen’s compensation amounts it describes.
Need help applying this provision to your situation?
Contact BizeneedLast updated 11 October 2026