Companies Act Sections 342, 347, 348, 356 and 378A: Producer Companies and 2020 Amendments

The Companies (Amendment) Act, 2020 amended several winding-up provisions of the Companies Act, 2013 and inserted Chapter XXIA governing Producer Companies. This page explains the amendments concerning sections 342, 347, 348 and 356 and reproduces the key definitions in section 378A.

Current-law note: Chapter XXIA, including section 378A, now forms part of the Companies Act, 2013. The official consolidated Act records Chapter XXIA as inserted by section 52 of the Companies (Amendment) Act, 2020 with effect from 11 February 2021.

Amendment to Section 342

Section 342 of the Companies Act, 2013 deals with prosecution of delinquent officers and members of a company in the course of winding up. The Companies (Amendment) Act, 2020 omitted sub-section (6), removing the separate penalty provision that had applied to failure or neglect to provide assistance required under sub-section (5).

Amendment to Section 347

The 2020 amendment altered sub-section (4) of section 347 by removing the imprisonment component and the words providing for punishment "with both". The provision was therefore decriminalised to the extent specified by the amendment, leaving the monetary consequence stated in the amended provision.

Amendment to Section 348 - Information as to Pending Liquidations

Section 348 concerns information relating to pending liquidations. The Companies (Amendment) Act, 2020 substituted sub-section (6). Where a Company Liquidator who is an insolvency professional registered under the Insolvency and Bankruptcy Code, 2016 defaults in complying with section 348, the default is treated as a contravention of that Code and the rules and regulations made under it for proceedings under Chapter VI of Part IV of the Code.

The amendment also omitted sub-section (7). The change shifts the specified professional-default consequence into the insolvency professional regulatory framework rather than retaining the former Companies Act punishment.

Amendment to Section 356 - Power of Tribunal to Declare Dissolution Void

Section 356 permits the National Company Law Tribunal to declare a company's dissolution void in the circumstances prescribed by the Act. Under the substituted sub-section (2), the Tribunal must forward a copy of its order to the Registrar within thirty days for recording. It must also direct the Company Liquidator, or the person on whose application the order was made, to file a certified copy within thirty days or within such further period as the Tribunal allows.

Chapter XXIA - Producer Companies

The Companies (Amendment) Act, 2020 inserted Chapter XXIA after section 378 of the Companies Act, 2013. The Chapter creates the statutory framework for Producer Companies. Part I is preliminary and begins with section 378A, which defines expressions used throughout the Chapter.

Section 378A - Definitions

Section 378A applies the following definitions in Chapter XXIA unless the context otherwise requires:

  1. Active Member: a Member who fulfils the quantum and period of patronage of the Producer Company required by its articles.
  2. Chief Executive: an individual appointed as Chief Executive under section 378W(1).
  3. Inter-State co-operative society: a multi-State co-operative society within the statutory definition referred to in section 378A, including the further category described in that clause.
  4. Limited return: the maximum dividend specified by the articles.
  5. Member: a person or Producer Institution, whether incorporated or not, admitted as a Member of a Producer Company and retaining the qualifications required for continuance as a Member.
  6. Mutual assistance principles: the principles set out in section 378G(2).
  7. Officer: includes a director, Chief Executive, Secretary, or a person in accordance with whose directions or instructions part or the whole of the Producer Company's business is carried on.
  8. Patronage: use by Members of services offered by the Producer Company through participation in its business activities.
  9. Patronage bonus: payments from surplus income to Members in proportion to their respective patronage.
  10. Primary produce: broadly includes specified agricultural and allied produce, handloom and handicraft produce, resulting products and by-products, ancillary activities, and activities intended to increase production or improve quality, as detailed in section 378A.
  11. Producer: a person engaged in an activity connected with or relatable to primary produce.
  12. Producer Company: a body corporate having the objects or activities specified in section 378B and registered as a Producer Company under the Companies Act, 2013 or the Companies Act, 1956.
  13. Producer Institution: a Producer Company or another qualifying institution whose membership and objects satisfy section 378A and which agrees to use the services of the Producer Company or Companies as provided in its articles.
  14. Withheld price: the part of the price due for goods supplied by a Member that the Producer Company withholds for payment on a later date.
Practical reading: Section 378A is a definitions provision. Rights, objects, governance, voting, finance and other substantive requirements for Producer Companies are dealt with in the succeeding provisions of Chapter XXIA, including sections 378B onward.

Official legal resources

For the latest consolidated statutory text and regulatory updates, verify the provision on the official India Code portal and the Ministry of Corporate Affairs portal.