Section 350 of Companies Act, 2013 – Company Liquidator to deposit monies into scheduled bank

  • Updated Till : December 03, 2022

SECTION 350. COMPANY LIQUIDATOR TO DEPOSIT MONIES INTO
SCHEDULED BANK

[Effective from 15th December, 2016]

(1) Every Company Liquidator of a company shall, in such manner and at such times as may be prescribed, deposit the monies received by him in his capacity as such in a scheduled bank to the credit of a special bank account opened by him in that behalf:

Provided that if the Tribunal considers that it is advantageous for the creditors or contributories or the company, it may permit the account to be opened in such other bank specified by it.

(2) If any Company Liquidator at any time retains for more than ten days a sum exceeding five thousand rupees or such other amount as the Tribunal may, on the application of the Company Liquidator, authorise him to retain, then, unless he explains the retention to the satisfaction of the Tribunal, he shall—

(a)   pay interest on the amount so retained in excess, at the rate of twelve per cent per annum and also pay such penalty as may be determined by the Tribunal;

(b)   be liable to pay any expenses occasioned by reason of his default; and

(c)   also be liable to have all or such part of his remuneration, as the Tribunal may consider just and proper, disallowed, or may also be removed from his office.

Applicable Rules

Companies (Winding Up) Rules, 2020

[Effective from 1st April, 2020]

BANKING ACCOUNT OF COMPANY LIQUIDATOR

Rule 81. All money to be paid into special bank account in a scheduled bank.—(1) The Company Liquidator shall deposit into a special bank account in his official name opened in any scheduled bank or any other bank as may be permitted by the Tribunal (hereinafter referred to as the bank) , all moneys including cheques and demand drafts received by him as the Company Liquidator of the company, and the realisations of each day shall be deposited in the bank without deduction, not later than the next working day of the bank and the Company Liquidator may maintain a petty cash of five thousand rupees or such higher amount as may be permitted by the Tribunal to meet day to day expenses, and all payments out of the aforesaid account by the Company Liquidator above two thousand rupees shall be made by cheque drawn against the said account.

(2) The Company Liquidator shall make quarterly reports to the Tribunal regarding the funds, including filing the bank statements of the special bank account.

Rule 82. Bills, cheques, etc. to be deposited with bank.—All bills, cheques, hundies, notes and other securities payable to the company or to the Company Liquidator thereof shall, as soon as they come into the hands of the Company Liquidator, be deposited by him with the bank for the purpose of being presented for acceptance and payment or for payment only, as the case may be and the proceeds when realised shall be credited by the bank to the special bank account.

Rule 83. Payments into Bank.—Where the Tribunal makes an order directing any person to pay any money due to the company into the special bank account maintained by the Company Liquidator, the person so directed shall, at the time of making the payment, produce to the bank a certified copy of the order or a payment in challan endorsed by the Company Liquidator under his signature and the person making the payment shall give notice thereof to the Company Liquidator and produce before him the bank receipt relating thereto.

Rule 84. Company Liquidator’s Dividend Account.—The Company Liquidator shall also open a separate dividend account for the company under liquidation with the sanction of the Tribunal, in any scheduled bank, under the name ‘the Dividend Account of………….. (name of the company) in liquidation’ into which account he shall, upon a declaration of dividend being made in the winding up of the company, deposit by transfer from special bank account, the total amount of the dividend payable upon such declaration and there shall be a separate such account in respect of each declaration of dividend and all payments of dividend shall be made from the said Company Liquidator’s dividend account and any unpaid balance in the said account shall be transferred to the Company Liquidation Dividend and Undistributed Assets Account referred to in sub-section (1) of section 352, and all payments of dividends shall be made by cheques or through Electronic Clearing System drawn against the said account.

Rule 85. Where the company has no available assets.—(1) Where a company against which a winding up order has been made has no available assets, the Company Liquidator may, with the leave of the Tribunal, incur any necessary expenses in connection with the winding up, out of any permanent advance or other fund provided by the Central Government, and the expenses so incurred shall be recouped out of the assets of the company in priority to the debts of the company:

Provided that where any money has been advanced to the Company Liquidator by the petitioner or other creditor or contributory for meeting any preliminary expenses in connection with the winding up, the Company Liquidator may incur any necessary expenses out of such amount, and the money so advanced shall be paid out of the assets of the company in priority to the debts of the company:

Provided further that if the Official Liquidator maintains any Common Pool Fund or Establishment Fund under order of the court prior to the date of the commencement of these rules, he shall continue to use such fund for the purpose for which the fund was originally created.

(2) The Official Liquidator shall reimburse the amount availed out of the said Common Pool Fund or Establishment Fund for the purpose of meeting the expenditure of the company in liquidation which does not have sufficient funds to its credit from the amounts of the company in liquidation on priority basis as and when any amount comes to its credit.

INVESTMENT OF SURPLUS FUNDS

Rule 86. Investment of surplus funds.—(1) All such money for the time being standing to the credit of the Company Liquidator at the bank as is not immediately required for the purposes of winding up, shall be invested in Government securities or in interest bearing deposits in any scheduled bank in the name of the company in liquidation or provisional liquidation represented by Company Liquidator of the company to which the funds belong and such funds so invested shall be monitored regularly by the Company Liquidator and the returns also containing the details of fixed deposit receipts shall be submitted to the Tribunal.

(2) Where the fixed deposit has matured, it shall not be automatically renewed but the Company Liquidator shall carry out the due diligence to assess whether a higher rate of interest is available in any other scheduled bank and the said Liquidator shall report the conclusion of such due diligence to the Tribunal, and in the event a higher rate of interest is available in any other scheduled bank, the said Liquidator shall apply for the leave of the Tribunal to invest the surplus funds in such other scheduled bank offering higher rate of interest.

Rule 87. Company Liquidator to examine accounts for purposes of investment.—The Company Liquidator shall, at the end of every month, examine account of liquidation to ascertain what moneys are available for investment, and shall make an entry at the end of every month in the record book relating to the company of his having examined the account for the purpose and of the decision taken by him regarding the investment, and in case he decides not to invest any surplus funds, the reasons for such decision.

Rule 88. Investments to be made by Bank.—All investments shall be made by the bank upon the written request of the Company Liquidator but the securities shall be retained in the bank in the name and on behalf of the Company Liquidator, and shall not be sold except by the bank and under the written instructions of the Company Liquidator, and when the securities are sold, the proceeds shall be credited by the bank to the account of the Company Liquidator.

Rule 89. Dividend and interest to be credited.—All dividends and interest accruing from any securities or investments shall from time to time be received by the bank and placed to the credit of the account of the Company Liquidator and intimation thereof shall be given to the Company Liquidator, who shall thereupon credit such dividend or interest in his account to the company to which the security or the investment relating thereto belongs.

Rule 90. Refunds of taxes.—The Company Liquidator shall claim such refunds of income-tax or other taxes as may be due.

 

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