Section 299 of Companies Act, 2013 – Power to summon persons suspected of having property of company, etc.

SECTION 299. POWER TO SUMMON PERSONS SUSPECTED OF
HAVING PROPERTY OF COMPANY, ETC.

[Effective from 15th December, 2016]

(1) The Tribunal may, at any time after the appointment of a provisional liquidator or the passing of a winding up order, summon before it any officer of the company or person known or suspected to have in his possession any property or books or papers, of the company, or known or suspected to be indebted to the company, or any person whom the Tribunal thinks to be capable of giving information concerning the promotion, formation, trade, dealings, property, books or papers, or affairs of the company.

(2) The Tribunal may examine any officer or person so summoned on oath concerning the matters aforesaid, either by word of mouth or on written interrogatories or on affidavit and may, in the first case, reduce his answers to writing and require him to sign them.

(3) The Tribunal may require any officer or person so summoned to produce any books and papers relating to the company in his custody or power, but, where he claims any lien on books or papers produced by him, the production shall be without prejudice to such lien, and the Tribunal shall have power to determine all questions relating to that lien.

(4) The Tribunal may direct the liquidator to file before it a report in respect of debt or property of the company in possession of other persons.

(5) If the Tribunal finds that—

(a)   a person is indebted to the company, the Tribunal may order him to pay to the provisional liquidator or, as the case may be, the liquidator at such time and in such manner as the Tribunal may consider just, the amount in which he is indebted, or any part thereof, either in full discharge of the whole amount or not, as the Tribunal thinks fit, with or without costs of the examination;

(b)   a person is in possession of any property belonging to the company, the Tribunal may order him to deliver to the provisional liquidator or, as the case may be, the liquidator, that property or any part thereof, at such time, in such manner and on such terms as the Tribunal may consider just.

(6) If any officer or person so summoned fails to appear before the Tribunal at the time appointed without a reasonable cause, the Tribunal may impose an appropriate cost.

(7) Every order made under sub-section (5) shall be executed in the same manner as decrees for the payment of money or for the delivery of property under the Code of Civil Procedure, 1908 (5 of 1908).

(8) Any person making any payment or delivery in pursuance of an order made under sub-section (5) shall by such payment or delivery be, unless otherwise directed by such order, discharged from all liability whatsoever in respect of such debt or property.

Applicable Rules

Companies (Winding Up) Rules, 2020

[Effective from 1st April, 2020]

EXAMINATION UNDER SECTIONS 299 AND 300

Rule 139. Application for examination under section 299.—(1) An application for the examination of a person under section 299 may be made ex-parte, provided that where the application is made by any person other than the Company Liquidator, notice of the application shall be given to the Company Liquidator.

(2) The application referred to in sub-rule (1) shall be in Form WIN 61 and where the application is by the Company Liquidator, it shall be accompanied by a statement signed by him setting forth the facts on which the application is based, and where the application is made by a person other than the Company Liquidator, the application shall be supported by an affidavit of the applicant setting forth the matters in respect of which the examination is sought and the grounds, relied on in support of the application.

Rule 140. Directions at hearing of application.—Upon the hearing of the application referred to in rule 139, the Tribunal may, if satisfied that there are grounds for making the order, make an order directing the issue of summons against the person named in the order for his examination or for the production of documents or both, and unless the Tribunal otherwise directs, the examination of such person shall be held in Chambers and the order shall be in Form WIN 62.

Rule 141. Service of summons.—The summons issued in pursuance of the order of the Tribunal shall be in Form WIN 63 and shall be served, in the mode as referred to in section 20, on the person to be examined not less than seven days before the date fixed for the examination, and when the summons are served in person, there shall be paid or tendered to the person summoned along with the summons a reasonable sum for his expenses to be fixed by the Tribunal or Registry with due regard to the scale of fees in force in the Tribunal and when the summons are served by registered post, such sum shall be sent to such person by postal money order.

Rule 142. Conduct of examination.—(1) The Company Liquidator shall have the conduct of an examination under section 299, provided that the Tribunal may, if for any reasons it thinks fit so to do, entrust the conduct of the examination to any contributory or creditors and where the conduct of the examination is entrusted to any person other than the Company Liquidator, the Company Liquidator shall nevertheless be entitled to be present at the examination in person or by authorised representative, and may take notes of the examination for his own use and put such questions to the person examined as the Tribunal may allow.

(2) Save as provided in sub-rule (1), no person shall be entitled to take part in an examination under section 299 except the Company Liquidator and his authorised representative, but any person examined shall be entitled to have the assistance of his authorised representative, who may re-examine the witness : Provided that the Tribunal may permit, if it thinks fit, any creditor or contributory to attend the examination subject to such conditions as it may impose.

(3) Notes of the examination may be permitted to be taken by the witness or any person on his behalf on his giving an undertaking to the Tribunal that such notes shall be used only for the purpose of the re-examination of the witness and on the conclusion of the examination, the notes shall, unless otherwise directed by the Tribunal, be handed over to the Tribunal for destruction.

Rule 143. Notes of deposition.—(1) The notes of the deposition of a person examined under section 299 shall be signed by such person and shall be lodged in the office of the Registry, but the notes shall not be open to the inspection of any creditor, contributory or other person, except the Company Liquidator, nor shall a copy thereof or extract therefrom be supplied to any person other than the Company Liquidator, save upon orders of the Tribunal. (2) The Tribunal may from time to time give such general or special directions as it shall think expedient as to the custody and inspection of such notes and the furnishing of copies thereof or extracts therefrom.