# Officer's Liability — Concealment or Misrepresentation

Under Section 66, integrity of the creditor list is critical because the Tribunal relies on it to ensure all creditors are protected before confirming reduction.

## When is an officer liable?

An officer of the company shall be liable under Section 447 (fraud) if he:

1. Conceals the name of any creditor entitled to object to the reduction; OR

2. Misrepresents the nature or amount of the debt or claim of any creditor; OR

3. Is privy to (i.e., is aware of and party to) any such concealment or misrepresentation by another.

The key trigger word is 'aware' — the officer must have knowledge or be a participant in the concealment/misrepresentation.

## Consequence

The officer is liable to punishment for fraud under Section 447, which is one of the most stringent penalties under the Companies Act, 2013 (imprisonment 6 months to 10 years and fine).

Worked example

### Example 1

Example — Concealment of Creditor

The CFO of PQR Ltd., during the reduction proceedings, deliberately leaves out a trade creditor of ₹15 lakhs from the list of creditors filed with the Tribunal, knowing that creditor would have objected.

Answer: The CFO is an 'officer' of the company. By knowingly concealing the name of a creditor entitled to object, he is liable to punishment under Section 447 (fraud).

⚠️ Common exam mistakes

Thinking only the Managing Director can be held liable — any 'officer' (including KMP, company secretary, etc.) who is aware of or party to the concealment is liable.
Confusing the penalty section — it is Section 447 (fraud), not the general penalty section.

Bare-Act text Section 66(10) · Companies Act, 2013 · click to expand

Section 66(10): If any officer of the company— (a) knowingly conceals the name of any creditor entitled to object to the reduction; (b) knowingly misrepresents the nature or amount of the debt or claim of any creditor; or (c) abets or is privy to any such concealment or misrepresentation as aforesaid, he shall be liable under section 447.

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Penalty for Concealment/Misrepresentation by Officer in Reduction Proceedings

Worked example

⚠️ Common exam mistakes