Section 300 of the Companies Act, 2013: Power to Order Examination of Promoters, Directors and Others
Section 300 of the Companies Act, 2013 empowers the National Company Law Tribunal (Tribunal), in a winding-up proceeding, to order the examination of a person or officer where the Company Liquidator reports that fraud has been committed in the promotion, formation, business or conduct of the company's affairs.
Meaning and scope of Section 300
The provision forms part of Chapter XX dealing with winding up. Its purpose is to enable a formal examination where a Company Liquidator's report alleges fraud connected with the company. The examination can address the company's promotion or formation, the conduct of its business, and the conduct and dealings of the person concerned as an officer.
Current-law context: Section 300 continues in Part I of Chapter XX, which concerns winding up by the Tribunal. The Insolvency and Bankruptcy Code, 2016 amended the Companies Act's winding-up framework and omitted a number of other provisions, but Section 300 remains in the current text of the Companies Act, 2013.
Section 300 explained sub-section by sub-section
Sub-section (1): Tribunal may direct examination
After a winding-up order has been made and the Company Liquidator reports that, in the Liquidator's opinion, fraud has been committed by a person in the promotion, formation, business or conduct of the company's affairs since formation, the Tribunal may consider the report and direct that person or officer to attend for examination.
Sub-section (2): Participation of Company Liquidator
The Company Liquidator participates in the examination and, where specially authorised by the Tribunal, may employ legal assistance sanctioned by the Tribunal.
Sub-section (3): Examination on oath
The person is examined on oath and must answer questions put, or permitted to be put, by the Tribunal.
Sub-section (4): Copy of report and professional assistance
Before examination, the person is entitled, at his own cost, to a copy of the Company Liquidator's report. He may also engage, at his own cost, chartered accountants, company secretaries, cost accountants or legal practitioners entitled to appear before the Tribunal under Section 432 of the Companies Act, 2013. The Tribunal may permit such professional to ask questions that fairly enable the person to explain or qualify answers.
Sub-sections (5) and (6): Application for exculpation and costs
A person may apply to be exculpated from charges made or suggested against him. The Company Liquidator must appear and draw the Tribunal's attention to relevant matters. If the Tribunal allows the application after considering evidence or witnesses, it may award such costs to the applicant as it considers appropriate.
Sub-section (7): Written record and evidentiary use
Notes of the examination are recorded in writing, read over to or by the person examined, signed by that person and supplied to him. The record may thereafter be used in evidence against him and is open to inspection by creditors and contributories at reasonable times.
Sub-sections (8) to (10): Adjournment and delegated examination
The Tribunal may adjourn the examination. It may also direct that the examination be held before an authorised person or authority. The authorised examiner may exercise the Tribunal's powers concerning conduct of the examination, but not its power concerning costs.
Key legal terms
Tribunal: In this context, the adjudicatory forum under the Companies Act is the National Company Law Tribunal (NCLT). Company Liquidator: the liquidator appointed in accordance with the Companies Act for winding up by the Tribunal. Contributory: broadly, a person liable to contribute to the assets of a company in the event of winding up, as governed by the Act.
Practical effect of Section 300
Section 300 is an investigative and evidentiary mechanism within a Tribunal winding up. The statutory safeguards include advance access to the Liquidator's report at the examinee's cost, professional representation, an opportunity to seek exculpation, a written record of examination, and Tribunal control over the questions and procedure.
Official legal source
For the authoritative and updated statutory text, refer to the Companies Act, 2013 on India Code. Readers should check the latest amendments, notifications and applicable procedural rules before relying on the provision in a proceeding.