## Action by Affected Persons [Section 37]

Section 37 creates a collective remedy for misleading-prospectus victims. A suit may be filed or any other action taken under Sections 34, 35 or 36 by:

A person, or
A group of persons, or
An association of persons

— who has been affected by a misleading prospectus.

### Practical illustration

Where Z Ltd. issues a prospectus falsely claiming a ₹500 cr. government contract and Mr. Aman invests ₹10 lakhs in reliance:

Section	Application
Section 34	Persons who authorised issue are criminally liable for publishing the false statement (action u/s 447).
Section 35	Mr. Aman can sue those persons for compensation of ₹10 lakhs lost on relying on the false prospectus.
Section 36	If proved that the company/directors intentionally made the false claim to fraudulently induce investment, Section 36 (fraud charges) also applies.

> If both Section 34 and Section 36 are invoked against the same person, punishment under Section 447 is not multiplied (both provisions impose Section 447 liability), but the court can fix the punishment at the higher end within the Section 447 range.

Worked example

### Example 1

Q. A group of 50 investors who subscribed to D Ltd.'s IPO based on falsified contracts in the prospectus want to take collective action. Can they?

A. Yes. Section 37 expressly permits a group of persons or an association of persons affected by a misleading prospectus to file a suit or take other action under Sections 34, 35 or 36. Each remedy retains its own ingredients — criminal liability under Section 34, compensation under Section 35, and fraudulent-inducement liability under Section 36.

⚠️ Common exam mistakes

Treating Section 37 as a separate cause of action — it is a standing provision; the substantive liability is still under Sections 34/35/36.
Adding Section 447 punishments under Sections 34 and 36 cumulatively — punishment is not multiplied; only its severity may rise within the prescribed range.

Bare-Act text Section 37 · Companies Act, 2013 · click to expand

Without prejudice to the provisions of section 338, a suit may be filed or any other action may be taken under section 34 or section 35 or section 36 by any person, group of persons or any association of persons affected by any misleading statement or the inclusion or omission of any matter in the prospectus.

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