valid as on 18/04/2024

Section 340. Power of Tribunal to assess damages against delinquent directors, etc
Effective from 09-09-2016 to the extent of their application for section 246 and for other cases, effective from 15-12-2016

(1) If in the course of winding up of a , it appears that any person who has taken part in the promotion or formation of the company, or any person, who is or has been a director, , Company Liquidator or of the company—

(a) has misapplied, or retained, or become liable or accountable for, any money or property of the company; or
(b) has been guilty of any misfeasance or breach of trust in relation to the company,

the may, on the application of the , or the , or of any creditor or , made within the period specified in that behalf in sub-section(2), inquire into the conduct of the person, director, manager, Company Liquidator or officer aforesaid, and order him to repay or restore the money or property or any part thereof respectively, with interest at such rate as the Tribunal considers just and proper, or to contribute such sum to the assets of the company by way of compensation in respect of the misapplication, retainer, misfeasance or breach of trust, as the Tribunal considers just and proper.

(2) An application under sub-section (1) shall be made within five years from the date of the winding up order, or of the first appointment of the Company Liquidator in the winding up, or of the misapplication, retainer, misfeasance or breach of trust, as the case may be, whichever is longer.

(3) This section shall apply, notwithstanding that the matter is one for which the person concerned may be criminally liable.

2(20) Company means a company incorporated under this Act or under any previous company law
2(53) Manager means an individual who, subject to the superintendence, control and direction of the Board of Directors, has the management of the whole, or substantially the whole, of the affairs of a company, and includes a director or any other person occupying the position of a manager, by whatever name called, whether under a contract of service or not.
2(59) Officer includes any director, manager or key managerial personnel or any person in accordance with whose directions or instructions the Board of Directors or any one or more of the directors is or are accustomed to act
2(90) Tribunal means the National Company Law Tribunal constituted under section 408
2(61) Official Liquidator means an Official Liquidator appointed under sub-section (1) of section 359
2(23) Company Liquidator  means a person appointed by the Tribunal as the Company Liquidator in accordance with the provisions of section 275 for the winding up of a company under this Act.
2(26) Contributory means a person liable to contribute towards the assets of the company in the event of its being wound up.

Explanation.—For the purposes of this clause, it is hereby clarified that a person holding fully paid-up shares in a company shall be considered as a contributory but shall have no liabilities of a contributory under the Act whilst retaining rights of such a contributory

Enforcement Notification [S.O 2192 (E)] dated 09/09/2016

Enforcement Notification S.O. 3677(E) dated 07/12/2016

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