Section 300 of Companies Act, 2013 – Power to order examination of promoters, directors, etc

SECTION 300. POWER TO ORDER EXAMINATION OF PROMOTERS,
DIRECTORS, ETC.

[Effective from 15th December, 2016]

(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.

(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.

(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.

(4) A person ordered to be examined under this section—

(a)   shall, before his examination, be furnished at his own cost with a copy of the report of the Company Liquidator; and

(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.

(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.

(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.

(8) The Tribunal may, if it thinks fit, adjourn the examination from time to time.

(9) An examination under this section may, if the Tribunal so directs, be held before any person or authority authorised by the Tribunal.

(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).

Applicable Rules

Companies (Winding Up) Rules, 2020

[Effective from 1st April, 2020]

Rule 144. Order for examination under section 300.—(1) Where an order is made for the examination of any person or persons under section 300, the examination shall be held before the Tribunal: Provided the Tribunal may direct that the whole or any part of the examination of any such person or persons be held before any person or authority as may be mentioned in the order and where the date of the examination has not been fixed by the order, the Company Liquidator shall take an appointment from the Tribunal, or the person or authority before whom the examination is to be held as to the date of the examination, and the order directing examination shall be in Form WIN 64.

(2) The Tribunal may, if it thinks fit, either in the order for examination or by any subsequent order, give directions as to the specific matters on which such person is to be examined.

Rule 145. Notice of examination.—Not less than seven clear days before the date fixed for the examination, the Company Liquidator shall give notice thereof to the creditors and contributories of the company by advertisement in Form WIN 65 in such newspapers as the Tribunal shall direct, and shall within the same period, serve, either personally or by registered post or by speed post, on the person or persons to be examined, a notice in Form WIN 66 of the date and hour fixed for the examination and the officer before whom it is to be held, together with a copy of the order directing the examination and where the examination is adjourned, it shall not be necessary to advertise the adjournment or serve notice thereof unless otherwise ordered by the Tribunal.

Rule 146. Adjournment of examination for orders of Tribunal.—Where on an examination held before the person or authority appointed by the Tribunal, such person or authority is of the opinion that the examination is being unduly or unnecessarily protracted or, for any other sufficient cause, he is of the opinion that the examination should be held before the Tribunal, such person or authority may adjourn the examination of any person, or any part of the examination, to be held before the Tribunal and submit his report to the Tribunal, and the Tribunal may thereupon hold the examination itself or pass such orders as it may think fit.

Rule 147. Procedure for contumacy.—(1) If a person examined before the person or authority appointed by the Tribunal refuses to answer to the satisfaction of such the person or authority any question which he may put or allow to be put, such the person or authority shall forthwith report such refusal to the Tribunal and upon such report being made, the person in default shall be in the same position and be dealt with in the same manner as if he had made default in answering before the Tribunal.

(2) The report shall be in writing and shall set forth the question or questions put and the answer or answers given, if any, by the person examined, and the person or authority shall notify the person examined of the date when he should attend before the Tribunal, and the report shall be in Form WIN 67 and upon receiving the report, the Tribunal may take such action thereon as it may think fit.

Rule 148. Notes of examination.—The notes of every examination shall, after being signed as required by sub-section (7) of section 300, form part of the records of winding up and the Company Liquidator, the person examined or contributory of the company, shall be entitled to obtain a copy thereof from the Tribunal on payment of five rupees per page.

Rule 149. Application under sub-section (5) of section 300.—An application under sub-section (5) of section 300 by any person ordered to be examined to be exculpated from any charges made or suggested against him, shall be made upon notice to the Company Liquidator and to such other persons as the Tribunal may direct.