Section 300: Power to order examination of promoters, directors, etc
This section is for allowing the Tribunal to order an examination of people involved in a company's promotion or management if fraud is suspected after the company is wound up.
The section, clause by clause
What the section says
In plain terms
(1)Where an order has been made for the winding up of a company by the Tribunal, and the Company Liquidator has made a report to the Tribunal under this Act, stating that in his opinion a fraud has been committed by any person in the promotion, formation, business or conduct of affairs of the company since its formation, the Tribunal may, after considering the report, direct that such person or officer shall attend before the Tribunal on a day appointed by it for that purpose, and be examined as to the promotion or formation or the conduct of the business of the company or as to his conduct and dealings as an officer thereof.
If a company is being wound up by the Tribunal and the Company Liquidator reports that they think a fraud has been committed, the Tribunal can order the person involved to attend and be examined on a specified day.
(2)The Company Liquidator shall take part in the examination, and for that purpose he or it may, if specially authorised by the Tribunal in that behalf, employ such legal assistance as may be sanctioned by the Tribunal.
The Company Liquidator will take part in the examination and can employ legal help if the Tribunal allows it.
(3)The person shall be examined on oath and shall answer all such questions as the Tribunal may put, or allow to be put, to him.
The person being examined will be under oath and must answer all the Tribunal's questions.
(4)A person ordered to be examined under this section—
Before being examined, the person will be given a copy of the Company Liquidator's report at their own cost, and they can hire professionals to help them at their own cost.
(4)(a)shall, before his examination, be furnished at his own cost with a copy of the report of the Company Liquidator; and
(4)(b)may at his own cost employ chartered accountants or company secretaries or cost accountants or legal practitioners entitled to appear before the Tribunal under section 432, who shall be at liberty to put to him such questions as the Tribunal may consider just for the purpose of enabling him to explain or qualify any answers given by him.
(5)If any such person applies to the Tribunal to be exculpated from any charges made or suggested against him, it shall be the duty of the Company Liquidator to appear on the hearing of such application and call the attention of the Tribunal to any matters which appear to the Company Liquidator to be relevant.
If the person wants to clear their name, the Company Liquidator must attend the hearing and point out any relevant information.
(6)If the Tribunal, after considering any evidence given or hearing witnesses called by the Company Liquidator, allows the application made under sub-section (5), the Tribunal may order payment to the applicant of such costs as it may think fit.
If the Tribunal clears the person's name, it can order payment of costs to the person.
(7)Notes of the examination shall be taken down in writing, and shall be read over to or by, and signed by, the person examined, a copy be supplied to him and may thereafter be used in evidence against him, and shall be open to inspection by any creditor or contributory at all reasonable times.
A record of the examination will be taken, signed by the person, and can be used as evidence against them, and creditors or contributors can inspect it at reasonable times.
(8)The Tribunal may, if it thinks fit, adjourn the examination from time to time.
The Tribunal can adjourn the examination as needed.
(9)An examination under this section may, if the Tribunal so directs, be held before any person or authority authorised by the Tribunal.
The Tribunal can direct that the examination be held in front of someone or some authority it authorises.
(10)The powers of the Tribunal under this section as to the conduct of the examination, but not as to costs, may be exercised by the person or authority before whom the examination is held in pursuance of sub-section (9).
The person or authority holding the examination can exercise the Tribunal's powers regarding the examination, except for deciding on costs.
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.
Amendment notes
- 1. Subs. by Act 29 of 2020, s. 47, for sub-section (3) (w.e.f. 21-212020).
- 2. Sub-section (4) omitted by s. 47, ibid. (w.e.f. 21-12-2020).
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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.