Sections 336 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Section 336 makes it an offence for a past or present officer of a company being wound up by the Tribunal to hide property, withhold books, falsify records or mislead creditors. Section 337 separately punishes officers who, before a winding up by the Tribunal, defrauded creditors by obtaining credit on false pretences, making gifts or transfers of the company's property, or concealing assets after an unsatisfied judgment.
Under section 336, an officer who commits any of the listed acts faces imprisonment of not less than three years and up to five years, and a fine of not less than one lakh and up to three lakh rupees. A person who knowingly takes property pledged in the offending way faces three to five years and a fine of three to five lakh rupees. Under section 337, the penalty is imprisonment of not less than one year and up to three years, and a fine of one to three lakh rupees. Section 336 has a good defence: absence of intent to defraud, to conceal the true state of affairs or to defeat the law.
The IBC context
Both sections, as amended by the Insolvency and Bankruptcy Code, 2016 with effect from 15 November 2016, now refer to a company being wound up, or ordered to be wound up, by the Tribunal under the Companies Act. The earlier words about voluntary winding up were removed. Offences around insolvent companies in the IBC process are dealt with under the Code's own provisions. These sections remain relevant to companies wound up by the Tribunal on the grounds left in section 271 (see grounds for winding up by the Tribunal).
Section 336(1): the acts that are offences
The person must be or have been an "officer" of a company which, at the time of the alleged offence, is being wound up by the Tribunal under the Act, or which is subsequently ordered to be wound up by the Tribunal under the Act. The Explanation says "officer" includes any person in accordance with whose directions or instructions the directors have been accustomed to act. That can bring in a shadow director or controlling person.
| Clause | Act or omission |
|---|---|
| (a) | Not fully and truly disclosing to the Company Liquidator, to the extent of his knowledge and belief, all the company's property, and how, to whom, for what consideration and when any part was disposed of (except disposals in the ordinary course of business) |
| (b) | Not delivering up to the Company Liquidator, or as he directs, movable and immovable property in his custody or control which he is required by law to deliver |
| (c) | Not delivering up books and papers of the company in his custody or control which he is required by law to deliver |
| (d) | Within twelve months before the commencement of the winding up or at any time afterwards: concealing property worth one thousand rupees or more, or any debt due to or from the company; fraudulently removing property worth one thousand rupees or more; concealing, destroying, mutilating or falsifying any book or paper (or being privy to it); making a false entry (or being privy); fraudulently parting with, altering or omitting anything in a book or paper; obtaining property on credit by false representation or other fraud, or on the false pretence that the company is carrying on business, where the company does not pay; pawning, pledging or disposing of property obtained on credit and not paid for, unless in the ordinary course of business |
| (e) | Making any material omission in any statement relating to the affairs of the company |
| (f) | Knowing or believing that a false debt has been proved, failing for one month to inform the Company Liquidator |
| (g) | After commencement, preventing production of any book or paper |
| (h) | After commencement, or at a creditors' meeting within twelve months before commencement, attempting to account for property by fictitious losses or expenses |
| (i) | False representation or fraud to obtain creditors' consent to an agreement about the company's affairs or the winding up |
If you are an officer who has received a liquidator's request for information or records, our legal dispute resolution team can help you understand what must be handed over and disclosed.
Penalty and defence under section 336
- Penalty (sub-section 1): imprisonment not less than three years but up to five years, and fine not less than one lakh rupees but up to three lakh rupees.
- Defence (proviso): it is a good defence if the accused proves he had no intent to defraud or to conceal the true state of affairs of the company or to defeat the law. The burden of proving it lies on the accused, as the proviso says "if the accused proves".
- Receivers of pledged property (sub-section 2): where someone pawns, pledges or disposes of property in circumstances amounting to the offence in clause (d)(viii), every person who takes it in pawn or pledge or otherwise receives it, knowing the circumstances, faces imprisonment of not less than three years and up to five years, and fine of not less than three lakh rupees and up to five lakh rupees.
Section 337: frauds by officers
Section 337 applies to a person who, at the time of the alleged offence, was an officer of a company "which is subsequently ordered to be wound up by the Tribunal under this Act". The 2016 amendment replaced the words on voluntary winding up. Three kinds of conduct are covered.
| Clause | Conduct |
|---|---|
| (a) | By false pretences or other fraud, inducing a person to give credit to the company |
| (b) | With intent to defraud creditors or any other person, making or causing a gift, transfer or charge on the company's property, or causing or conniving at execution against it |
| (c) | With intent to defraud creditors, concealing or removing any part of the company's property since the date of an unsatisfied judgment or order for payment of money against the company, or within two months before that date |
The penalty is imprisonment of not less than one year but up to three years, and fine of not less than one lakh rupees but up to three lakh rupees. Unlike section 336, section 337 has no express proviso of good defence, but clauses (b) and (c) are built around intent to defraud.
How these sections differ
Section 336 centres on the duty to cooperate with the Company Liquidator and on conduct close to the winding up. Section 337 centres on frauds before the winding-up order that harm creditors. The same facts can fall under both, and also under the general fraud provision in section 447. Section 447 applies to "any person who is found to be guilty of fraud", and its consolidated text carries the amounts and penalties.
Practical examples
Example 1: hidden stock. After a winding-up order, a director does not tell the Company Liquidator about stock held at a godown he controls. He has failed to disclose property under clause (a), and risks three to five years and a fine, subject to his defence.
Example 2: falsified ledgers. Within the twelve months before winding up, an accountant at the director's direction alters purchase entries to cover a diversion of funds. Clause (d)(iii) to (v) may apply to those involved. The person who directed the accountant may be an "officer" under the Explanation.
Example 3: gift of assets. Knowing a creditor's decree is pending, a director transfers a company vehicle to a relative for nothing. If the company is later ordered to be wound up by the Tribunal, section 337(b) is in play.
Example 4: no intent. An officer cannot find old books after an office fire and discloses this promptly. The proviso lets him try to prove that he had no intent to defraud, to conceal the true state of affairs or to defeat the law.
Proposed change (Corporate Laws (Amendment) Bill, 2026)
No clause of the Bill amends section 336 or 337. Clause 99 of the Bill, which is pending, would amend section 447 (punishment for fraud) by raising the fraud amount threshold from ten lakh rupees to twenty-five lakh rupees and the ceiling of fine in the second proviso from fifty lakh rupees to one crore rupees. That would matter only for facts charged under section 447. The Bill is not law as on 30 September 2026.
Need help with a liquidator's inquiry?
Officers often face questions from a liquidator long after the events, and what they say and hand over matters. We can help you review the records, understand which provisions may be engaged and prepare a careful response. Contact our legal dispute resolution team.
Key takeaways
- Section 336 lists nine groups of offences by current and past officers of a company being, or later ordered to be, wound up by the Tribunal.
- Penalty under section 336(1) is three to five years' imprisonment and a fine of one to three lakh rupees.
- Section 336 has a good defence if the accused proves no intent to defraud, conceal the true state of affairs or defeat the law.
- Persons knowingly receiving pledged property face three to five years and a fine of three to five lakh rupees.
- Section 337 covers fraud on creditors, with one to three years' imprisonment and a fine of one to three lakh rupees.
- "Officer" includes a person whose directions the directors are accustomed to follow.
- The Bill, 2026 does not amend these sections; its clause 99 proposes changes to section 447 only.
Read next
- Section 335: Attachments void in winding up
- Section 338: Liability where proper accounts not kept
- Section 339: Fraudulent conduct of business
- Section 447: Punishment for fraud
Disclaimer: Based on the Companies Act, 2013 as amended up to 1 April 2021 (official consolidated text), read with later developments noted in the article; proposals in the Corporate Laws (Amendment) Bill, 2026 are pending and not law as on 30 September 2026. Verify current notifications and rules before acting.