Section 295: Payment of debts by contributory and extent of set-off
This section is for outlining the rules for payment of debts by contributories and the extent to which they can set off money due to them from the company.
The section, clause by clause
What the section says
In plain terms
(1)The Tribunal may, at any time after passing of a winding up order, pass an order requiring any contributory for the time being on the list of contributories to pay, in the manner directed by the order, any money due to the company, from him or from the estate of the person whom he represents, exclusive of any money payable by him or the estate by virtue of any call in pursuance of this Act.
The Tribunal can order a contributory to pay any money due to the company from them or the estate they represent at any time after a winding up order has been passed, excluding any money payable due to a call.
(2)The Tribunal, in making an order, under sub-section (1), may,—
When making such an order, the Tribunal may allow a contributory to set off money due to them from the company on independent dealings or contracts, but not on dividends or profits, with specific rules for unlimited and limited companies.
(2)(a)in the case of an unlimited company, allow to the contributory, by way of set-off, any money due to him or to the estate which he represents, from the company, on any independent dealing or contract with the company, but not any money due to him as a member of the company in respect of any dividend or profit; and
(2)(b)in the case of a limited company, allow to any director or manager whose liability is unlimited, or to his estate, such set-off.
(3)In the case of any company, whether limited or unlimited, when all the creditors have been paid in full, any money due on any account whatever to a contributory from the company may be allowed to him by way of set-off against any subsequent call.
If all creditors have been paid in full, a contributory may be allowed to set off any money due to them from the company against a subsequent call.
The right-hand column is written from the section text, not quoted from it, and it has no legal force. Where the two differ, the left-hand column is the law.
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Reproduced from the official India Code print for reference. Check the current text on India Code before you rely on it, and read the section alongside its Rules. Nothing here is legal advice.