Information as to pending liquidations.
551. (1) If
the winding up of a company is not concluded within one year after its
commencement, the liquidator shall, unless he is exempted from so doing either wholly
or in part by the Central Government, within two months of the expiry of such
year and thereafter until the winding up is concluded, at intervals of not more
than one year or at such shorter intervals, if any, as may be prescribed, file
a statement in the prescribed form and containing the prescribed
particulars duly audited, by a person qualified to act as auditor of the
company, with respect to the proceedings in, and position of, the liquidation,—
(a) in the case of a winding up by the Tribunal,
in Tribunal; and]
(b) in the case
of a voluntary winding up, with the Registrar :
Provided that no such audit as is referred to in this
sub-section shall be necessary where the provisions of section 462 apply.]
(2) When the statement is filed in [Tribunal] under clause (a) of sub-section (1), a copy shall simultaneously be filed with
the Registrar and shall be kept by him along with the other records of the
company.
(2A) Where a statement referred to in sub-section (2) relates to a
Government company in liquidation, the liquidator shall forward a copy
thereof,—
(a) to the Central Government, if that Government is a member of
the Government company; or
(b) to any State Government, if that Government is a member of
the Government company; or
(c) to the Central Government and any State Government, if both
the Governments are members of the Government company.]
(3) Any person stating himself in writing to be a creditor or
contributory of the company shall be entitled, by himself or by his agent, at
all reasonable times, on payment of the prescribed fee, to inspect the
statement, and to receive a copy thereof or an extract therefrom.
(4) Any person untruthfully stating himself to be a creditor or
contributory for the above purpose shall be deemed to be guilty of an offence
under section 182 of the Indian Penal Code (45 of 1860), and shall, on the
application of the liquidator, be punishable accordingly.
(5) If a liquidator fails to comply with any of requirements of
this section, he shall be punishable with fine which may extend to [five
thousand] rupees for every day during which the failure continues
:
[Provided that if the liquidator makes
wilful default in causing the statement referred to in sub-section (1) to be
audited by a person qualified to act as auditor of the company, the liquidator
shall be punishable with imprisonment for a term which may extend to six
months, or with fine which may extend to [ten] thousand rupees, or with both.]
Official Liquidator to make payments into the public
account of
552. Every
Official Liquidator shall, in such manner and at such times as may be
prescribed, pay the moneys received by him as liquidator of any company, into
the public account of
Voluntary liquidator to make
payments into Scheduled Bank.
553. (1) Every
liquidator of a company, not being an Official Liquidator, shall, in such
manner and at such times as may be prescribed, pay the moneys received by him
in his capacity as such into a Scheduled Bank to the credit of a special
banking account opened by him in that behalf, and called
“the Liquidation Account
of....................................…....... Company Private Limited” :
Company
Provided that if the [Tribunal] is
satisfied that for the purpose of carrying on the business of the company or of
obtaining advances or for any other reason, it is to the advantage of the
creditors or contributories that the liquidator should have an account with any
other bank, the [Tribunal] may authorise the liquidator to make his
payments into or out of such other bank as the [Tribunal] may select; and thereupon those payments
shall be made in the prescribed manner and at the prescribed times into or out
of such other bank.
(2) If any such liquidator at any time retains for more than ten
days a sum exceeding five hundred rupees or such other amount as the [Tribunal] may, on the application of the liquidator,
authorise him to retain, then, unless he explains the retention to the satisfaction
of the [Tribunal], he shall—
(a) pay
interest on the amount so retained in excess, at the rate of twelve per cent
per annum and also pay such penalty as may be determined by the Registrar;
(b) be
liable to pay any expenses occasioned by reason of his default; and
(c) also be liable to have all or such part of
his remuneration as the [Tribunal] may think just
disallowed, and to be removed from his office by the [Tribunal].
Liquidator not to pay moneys
into private banking account.
554. Neither
the Official Liquidator nor any other liquidator of a company shall pay any
moneys received by him in his capacity as such into any private banking
account.
Unpaid dividends and undistributed
assets to be paid into the Companies Liquidation Account
555.
(1) Where any company is being wound up, if the
liquidator has in his hands or under his control any money representing—
(a) dividends
payable to any creditor which had remained unpaid for six months after the date
on which they were declared, or
(b) assets
refundable to any contributory which have remained undistributed for six
months after the date on which they become refundable,
the liquidator shall forthwith pay the said
money into the public account of
(2) The liquidator shall, on the dissolution of the company,
similarly pay into the said account any money representing [unpaid] dividends
or undistributed assets in his hands at the date of dissolution.
(3) The liquidator shall, when making any payment referred to in
sub-sections (1) and (2), furnish to such officer as the Central Government may
appoint in this behalf, a statement in the prescribed form, setting forth, in
respect of all sums included in such payment, the nature of the sums, the names
and last known addresses of the persons entitled to participate therein, the
amount to which each is entitled and the nature of his claim thereto, and such
other particulars as may be prescribed.
(4) The liquidator shall be entitled to a receipt from the Reserve
Bank of
(5) Where the company is being wound up by the [Tribunal], the liquidator shall make the payments
referred to in sub-sections (1) and (2) by transfer from the account referred
to in section 552.
(6) Where the company is being wound up voluntarily [by] [the Tribunal], the liquidator shall, when filing a
statement in pursuance of sub-section (1) of section 551, indicate the sum of
money which is payable to the Reserve Bank of India under sub-sections (1) and
(2) of this section which he has had in his hands or under his control during
the six months preceding the date to which the said statement is brought down,
and shall, within fourteen days of the date of filing the said statement, pay
that sum into the Companies Liquidation Account.
(7) (a)
Any person claiming to be entitled to any money paid into the Companies
Liquidation Account (whether paid in pursuance of this section or under the
provisions of any previous companies law) may apply to the [Tribunal] for an order for
payment thereof, and the [Tribunal],
if satisfied that the person claiming is entitled, may make an order for the
payment to that person of the sum due :
Provided that before making such an order, the [Tribunal] shall cause a notice to be served on such
officer as the Central Government may appoint in this behalf, calling on the
officer to show cause within one month from the date of the service of the
notice why the order should not be made.
(b) Any person claiming
as aforesaid may, instead of applying to the [Tribunal], apply to the Central Government for an order
for payment of the money claimed; and the Central Government may, if satisfied
whether on a certificate by the liquidator or the Official Liquidator or
otherwise, that such person is entitled to the whole or any part of the money
claimed and that no application made in pursuance of clause (a) is pending in the [Tribunal], make an order for
the payment to that person of the sum due to him, after taking such security
from him as it may think fit.
(8) Any money paid into the Companies Liquidation Account in
pursuance of this section, which remains unclaimed thereafter for a period of
fifteen years, shall be transferred to the general revenue account of the
Central Government; but a claim to any money so transferred may be preferred
under sub-section (7) and shall be dealt with as if such transfer had not been
made, the order, if any, for payment on the claim being treated as an order for
refund of revenue.
(9) Any liquidator retaining any money which should have been paid
by him into the Companies Liquidation Account under this section shall—
(a) pay
interest on the amount retained at the rate of twelve per cent per annum, and
also pay such penalty as may be determined by the Registrar :
Provided
that the Central Government may in any proper case remit either in part or in
whole the amount of interest which the liquidator is required to pay under this
clause;]
(b) be
liable to pay any expenses occasioned by reason of his default; and
(c) where
the winding up is by [the
Tribunal], also be liable to have all or such part of his remuneration
as the [Tribunal]
may think just to be disallowed, and to be removed from his office by the [Tribunal].
Enforcement of duty of
liquidator to make returns, etc.
556. (1) If any liquidator who has made any
default in filing, delivering or making any return, account or other document,
or in giving any notice which he is by law required to file, deliver, make or
give, fails to make good the default within fourteen days after the service on
him of a notice requiring him to do so, the [Tribunal] may, on an application made to the [Tribunal] by any contributory
or creditor of the company or by the Registrar, make an order directing the
liquidator to make good the default within such time as may be specified in the
order.
(2) Any such order may provide that all costs of and incidental
to the application shall be borne by the liquidator.
(3) Nothing in this section shall be taken to prejudice the
operation of any enactment imposing penalties on a liquidator in respect of any
such default as aforesaid.
Supplementary powers of [Tribunal]
Meetings to ascertain wishes of
creditors or contributories.
557. (1) In all matters relating to the winding
up of a company, the [Tribunal]
may—
(a) have
regard to the wishes of creditors or contributories of the company, as proved
to it by any sufficient evidence;
(b) if
it thinks fit for the purpose of ascertaining those wishes, direct meetings of
the creditors or contributories to be called, held and conducted in such manner
as the [Tribunal]
directs; and
(c) appoint
a person to act as chairman of any such meeting and to report the result
thereof to the [Tribunal].
(2) When ascertaining the wishes of creditors, regard shall be
had to the value of each creditor’s debt.
(3) When ascertaining the wishes of contributories, regard shall
be had to the number of votes which may be cast by each contributory.
Court or person before whom
affidavit may be sworn.
558. (1) Any affidavit required to be sworn under
the provisions, or for the purposes, of this Part may be sworn—
(a) in
(b) in
any other country, either before any Court, Judge or person lawfully authorised
to take and receive affidavits in that country or before an Indian Consul or
Vice-Consul.
Explanation : [Omitted
by the J & K (Extension of Laws) Act, 1956.]
(2) All Courts [,Tribunals],
Judges, Justices, Commissioners and persons acting judicially in India shall
take judicial notice of the seal, stamp or signature, as the case may be, of
any such Court [,Tribunal],
Judge, person, Consul or Vice-Consul, attached, appended or subscribed to any
such affidavit or to any other document to be used for the purposes of this
Part.
Power of [Tribunal] to declare dissolution of
company void.
559. (1) Where a company has been dissolved,
whether in pursuance of this Part or of section 394 or otherwise, the [Tribunal] may at any time
within two years of the date of the dissolution, on application by the
liquidator of the company or by any other person who appears to the [Tribunal] to be interested,
make an order, upon such terms as the [Tribunal] thinks fit, declaring the dissolution to have
been void; and thereupon such proceedings may be taken as might have been taken
if the company had not been dissolved.
(2) It shall be the duty of the person on whose application the
order was made, within [thirty] days after the making of the order or such
further time as the [Tribunal]
may allow, to file a certified copy of the order with the Registrar who shall
register the same; and if such person fails so to do, he shall be punishable
with fine which may extend to [five hundred] rupees for every day during which
the default continues.
Power of Registrar to strike
defunct company off register.
560. (1) Where the Registrar has reasonable cause to believe that a company
is not carrying on business or in operation, he shall send to the company by
post a letter inquiring whether the company is carrying on business or in
operation.
(2) If the Registrar does not within one month of sending the
letter receive any answer thereto, he shall, within fourteen days after the
expiry of the month, send to the company by post a registered letter referring
to the first letter, and stating that no answer thereto has been received and
that, if an answer is not received to the second letter within one month from
the date thereof, a notice will be published in the Official Gazette with a
view to striking the name of the company off the register.
(3) If the Registrar either receives an answer from the company to
the effect that it is not carrying on business or in operation, or does not
within one month after sending the second letter receive any answer, he may
publish in the Official Gazette, and send to the company by registered post, a
notice that, at the expiration of three months from the date of that notice,
the name of the company mentioned therein will, unless cause is shown to the
contrary, be struck off the register and the company will be dissolved.
(4) If, in any case where a company is being wound up, the Registrar
has reasonable cause to believe either that no liquidator is acting, or that
the affairs of the company have been completely wound up, and any returns
required to be made by the liquidator have not been made for a period of six
consecutive months, the Registrar shall publish in the Official Gazette and
send to the company or the liquidator, if any, a like notice as is provided in
sub-section (3).
(5) At the expiry of the time mentioned in the notice referred to
in sub-section (3) or (4), the Registrar may, unless cause to the contrary is
previously shown by the company, strike its name off the register, and shall
publish notice thereof in the Official Gazette; and on the publication in the
Official Gazette of this notice, the company shall stand dissolved :
Provided that—
(a) the
liability, if any, of every director, [***] manager or other officer who was
exercising any power of management, and of every member of the company, shall
continue and may be enforced as if the company had not been dissolved; and
(b) nothing
in this sub-section shall affect the power of the [Tribunal] to wind up a company
the name of which has been struck off the register.
(6) If a company, or any member or creditor thereof, feels aggrieved
by the company having been struck off the register, the [Tribunal], on an application
made by the company, member or creditor before the expiry of twenty years from
the publication in the Official Gazette of the notice aforesaid, may, if
satisfied that the company was, at the time of the striking off, carrying on
business or in operation or otherwise that it is just that the company be
restored to the register, order the name of the company to be restored to the
register; and the [Tribunal]
may, by the order, give such directions and make such provisions as seem just
for placing the company and all other persons in the same position as nearly
as may be as if the name of the company had not been struck off.
(7) Upon a certified copy of the order under sub-section (6)
being delivered to the Registrar for registration, the company shall be deemed
to have continued in existence as if its name had not been struck off.
(8) A letter or notice to be sent under this section to a company
may be addressed to the company at its registered office, or if no office has
been registered, to the care of some director, [***] manager or other officer
of the company, or if there is no director [***], manager or officer of the company whose
name and address are known to the Registrar, may be sent to each of the persons
who subscribed the memorandum, addressed to him at the address mentioned in
the memorandum.
(9) A notice to be sent under this section to a liquidator may be
addressed to the liquidator at his last known place of business.
Application of act to companies formed or registered under previous
companies laws
Application of Act to companies
formed and registered under previous companies laws.
561. This Act shall apply to
existing companies as follows :—
(a) in
the case of a limited company other than a company limited by guarantee, this
Act shall apply in the same manner as if the company had been formed and registered
under this Act as a company limited by shares;
(b) in
the case of a company limited by guarantee, this Act shall apply in the same
manner as if the company had been formed and registered under this Act as a
company limited by guarantee; and
(c) in
the case of a company other than a limited company, this Act shall apply in the
same manner as if the company had been formed and registered under this Act as
an unlimited company :
Provided that—
(i) nothing
in Table A in Schedule I shall apply to a company formed and registered under
Act 19 of 1857 and Act 7 of 1860, or either of them, or under the Indian
Companies Act, 1866 (10 of 1866), or the Indian Companies Act, 1882 (6 of
1882);
(ii) reference,
express or implied, to the date of registration shall be construed as a
reference to the date at which the company was registered under the previous
companies law concerned.
Application of Act to companies
registered but not formed under previous companies laws.
562. This
Act shall apply to every company registered but not formed under any previous
companies law in the same manner as it is in Part IX of this Act declared to
apply to companies registered but not formed under this Act :
Provided that reference, express or implied, to the date of registration shall
be construed as a reference to the date at which the company was registered
under the previous companies law concerned.
Application of Act to unlimited
companies registered under previous companies laws.
563. This
Act shall apply to every unlimited company registered as a limited company in
pursuance of any previous companies law, in the same manner as it applies to an
unlimited company registered in pursuance of this Act as a limited company :
Provided that reference, express or implied, to the date of registration shall
be construed as a reference to the date at which the company was registered as
a limited company under the previous companies law concerned.
Mode of transferring shares in
the case of companies registered under Acts 19 of 1857 and 7 of 1860.
564. A
company registered under Act 19 of 1857 and Act 7 of 1860 or either of them may
cause its shares to be transferred in the manner hitherto in use, or in such
other manner as the company may direct.
Companies authorised to register under this Act
Companies capable of being
registered.
565. (1) With the exceptions and subject to the
provisions contained in this section,—
(a) any
company consisting of seven or more members, which was in existence on the
first day of May, 1882, including any company registered under Act No. 19 of
1857 and Act No. 7 of 1860 or either of them or under any laws or law in force
in a Part B State, corresponding to those Acts
or either of them; and
(b) any
company formed after the date aforesaid, whether before or after the
commencement of this Act, in pursuance of any Act of Parliament other than this
Act or of any other Indian law (including a law in force in a Part B State), or
of any Act of Parliament of the United Kingdom or Letters Patent in force in
India, or being otherwise duly constituted according to law, and consisting of
seven or more members;
may at any time register under this Act as an
unlimited company, or as a company limited by shares, or as a company limited
by guarantee; and the registration shall not be invalid by reason only that it
has taken place with a view to the company’s being wound up :
Provided that—
(i) a
company registered under the Indian Companies Act, 1882 (6 of 1882), or under
the Indian Companies Act, 1913 (7 of 1913), shall not register in pursuance of
this section;
(ii) a
company having the liability of its members limited by any Act of Parliament
other than this Act or by any other Indian law (including a law in force in a
Part B State), or by any Act of Parliament of the United Kingdom or Letters
Patent in force in India, and not being a joint-stock company as defined in
section 566, shall not register in pursuance of this section;
(iii) a
company having the liability of its members limited by any Act of Parliament
other than this Act or by any other Indian law (including a law in force in a
Part B State), or any Act of Parliament of the United Kingdom or Letters Patent
in force in India, shall not register in pursuance of this section as an
unlimited company or as a company limited by guarantee;
(iv) a
company that is not a joint-stock company as defined in section 566 shall not
register in pursuance of this section as a company limited by shares;
(v) a
company shall not register in pursuance of this section without the assent of a
majority of such of its members as are present in person, or where proxies are
allowed, by proxy, at a general meeting summoned for the purpose;
(vi) where
a company not having the liability of its members limited by any Act of
Parliament or any other Indian law (including a law in force in a Part B
State) or by any Act of Parliament of the United Kingdom or Letters Patent in
force in India, is about to register as a limited company, the majority
required to assent as aforesaid shall consist of not less than three-fourths of
the members present in person, or where proxies are allowed, by proxy, at the
meeting;
(vii) where
a company is about to register as a company limited by guarantee, the assent to
its being so registered shall be accompanied by a resolution declaring that
each member undertakes to contribute to the assets of the company, in the
event of its being wound up while he is a member, or within one year after he
ceases to be a member, for payment of the debts and liabilities of the company
or of such debts and liabilities as may have been contracted before he ceases
to be a member, and of the costs, charges and expenses of winding up, and for
the adjustment of the rights of the contributories among themselves, such
amount as may be required, not exceeding a specified amount.
(2) In computing any majority required for the purposes of
sub-section (1) when a poll is demanded, regard shall be had to the number of
votes to which each member is entitled according to the regulations of the
company.
(3) Nothing in this section shall be deemed to apply to any
company the registered office whereof at the commencement of this Act is in
Definition of “joint-stock
company”.
566. (1) For the purposes of this Part, so far as
it relates to the registration of companies as companies limited by shares, a
joint-stock company means a company having a permanent paid up or nominal share
capital of fixed amount divided into shares, also of fixed amount, or held and
transferable as stock, or divided and held partly in the one way and partly in
the other, and formed on the principle of having for its members the holders of
those shares or that stock, and no other persons.
(2) Such a company, when registered with limited liability under
this Act, shall be deemed to be a company limited by shares.
Requirements for registration of
joint-stock companies.
567. Before
the registration in pursuance of this Part of a joint-stock company, there shall
be delivered to the Registrar the following documents :—
(a) a
list showing the names, addresses, and occupations of all persons who on a day
named in the list, not being more than six clear days before the day of
registration, were members of the company, with the addition of the shares or
stock held by them respectively, distinguishing, in cases where the shares are
numbered, each share by its number;
(b) a
copy of any Act of Parliament or other Indian law, Act of Parliament of the
United Kingdom, Royal Charter, Letters Patent, deed of settlement, deed of
partnership or other instrument constituting or regulating the company; and
(c) if
the company is intended to be registered as a limited company, a statement
specifying the following particulars:—
(i) the nominal share capital of the company
and the number of shares into which it is divided or the amount of stock of
which it consists;
(ii) the number of shares taken and the amount
paid on each share;
(iii) the name of the company, with the addition
of the word “Limited” or “Private Limited” as the case may require, as the last
word or words thereof; and
(iv) in the case of a company intended to be
registered as a company limited by guarantee, a copy of the resolution
declaring the amount of the guarantee.
Requirements for registration of
companies not being joint-stock companies.
568. Before the registration in pursuance of this Part of any company not being a joint-stock company, there shall be delivered to the Registrar the following documents:—
(a) a
list showing the names, addresses and occupations of the directors, [***] and
the manager, if any, of the company;
(b) a
copy of any Act of Parliament or other Indian law, Act of Parliament of the
United Kingdom, Letters Patent, deed of settlement, deed of partnership or
other instrument constituting or regulating the company; and
(c) in
the case of a company intended to be registered as a company limited by
guarantee, a copy of the resolution declaring the amount of the guarantee.
Authentication of statements of
existing companies.
569. The
lists of members and directors and any other particulars relating to the
company required to be delivered to the Registrar shall be duly verified by the
declaration of any two or more directors or other principal officers of the
company.
Power of Registrar to require
evidence as to nature of company.
570. The
Registrar may require such evidence as he thinks necessary for the purpose of
satisfying himself whether any company proposing to be registered is or is not
a joint-stock company as defined in section 566.
Notice to customers on
registration of banking company with limited liability.
571. (1) Where a banking company which was in
existence on the first day of May, 1882, proposes to register as a limited
company under this Part, it shall, at least thirty days before so registering,
give notice of its intention so to register, to every person who has a banking
account with the company, either by delivery of the notice to him, or by
posting it to him at, or delivering it at, his last known address.
(2) If the banking company omits to give the notice required by
sub-section (1), then, as between the company and the person for the time being
interested in the account in respect of which the notice ought to have been
given, and so far as respects the account down to the time at which notice is
given, but not further or otherwise, the certificate of registration with
limited liability shall have no operation.
Change of name for purposes of
registration.
572. Where
the name of a company seeking registration under this Part is one which in the
opinion of the Central Government is undesirable, the company may, with the
approval of the Central Government signified in writing, change its name with
effect from the date of its registration under this Part:
Provided that the like assent of the members of the company shall be required to
the change of name as is required by section 565 to the registration of the
company under this Part.
Addition of “Limited” or
“Private Limited” to name.
573. When
a company registers in pursuance of this Part with limited liability, the word
“Limited” or the words “Private Limited”, as the case may be, shall form, and
be registered as, the last word or words of its name :
Provided that this section shall not be deemed to exclude the operation of
section 25.
Certificate of registration of
existing companies.
574. On
compliance with the requirements of this Part with respect to registration, and
on payment of such fees, if any, as are payable under Schedule X, the Registrar
shall certify under his hand that the company applying for registration is
incorporated as a company under this Act, and in the case of a limited company
that it is limited and thereupon the company shall be so incorporated.
Vesting of property on
registration.
575. All
property, movable and immovable (including actionable claims), belonging to or
vested in a company at the date of its registration in pursuance of this Part,
shall, on such registration, pass to and vest in the company as incorporated
under this Act for all the estate and interest of the company therein.
Saving for existing liabilities.
576. The
registration of a company in pursuance of this Part shall not affect its rights
or liabilities in respect of any debt or obligation incurred, or any contract
entered into, by, to, with, or on behalf of, the company before registration.
Continuation of pending legal
proceedings.
577. All
suits and other legal proceedings taken by or against the company, or any
public officer or member thereof, which are pending at the time of the
registration of a company in pursuance of this Part, may be continued in the
same manner as if the registration had not taken place :
Provided that execution shall not issue against the property or person of any
individual member of the company on any decree or order obtained in any such
suit or proceeding; but, in the event of the property of the company being
insufficient to satisfy the decree or order, an order may be obtained for
winding up the company.
Effect of registration under
Part.
578. (1) When a company is registered in
pursuance of this Part, sub-sections (2) to (7) shall apply.
(2) All provisions contained in any Act of Parliament or other
Indian law, or other instrument constituting or regulating the company,
including, in the case of a company registered as a company limited by
guarantee, the resolution declaring the amount of the guarantee, shall be
deemed to be conditions and regulations of the company, in the same manner and
with the same incidents as if so much thereof as would, if the company had
been formed under this Act, have been required to be inserted in the
memorandum, were contained in a registered memorandum, and the residue thereof
were contained in registered articles.
(3) All the provisions of this Act shall apply to the company and
the members, contributories and creditors thereof, in the same manner in all
respects as if it had been formed under this Act, subject as follows:—
(a) Table
A in Schedule I shall not apply unless and except in so far as it is adopted by
special resolution;
(b) the
provisions of this Act relating to the numbering of shares shall not apply to any
joint-stock company whose shares are not numbered;
(c) subject
to the provisions of this section, the company shall not have power to alter
any provision contained in any Act of Parliament or other Indian law relating
to the company;
(d) subject
to the provisions of this section, the company shall not have power, without
the sanction of the Central Government, to alter any provision contained in
any Act of Parliament of the United Kingdom, Royal Charter or Letters Patent,
relating to the company;
(e) the
company shall not have power to alter any provision contained in any Act of
Parliament or other Indian law or in any Act of Parliament of the
(f) in
the event of the company being wound up, every person shall be a contributory,
in respect of the debts and liabilities of the company contracted before
registration, who is liable to pay or contribute to the payment of any debt or
liability of the company contracted before registration, or to pay or
contribute to the payment of any sum for the adjustment of the rights of the
members among themselves in respect of any such debt or liability, or to pay or
contribute to the payment of the costs, charges and expenses of winding up the
company, so far as relates to such debts or liabilities as aforesaid;
(g) in
the event of the company being wound up, every contributory shall be liable to
contribute to the assets of the company, in the course of the winding up, all
sums due from him in respect of any such liability as aforesaid; and in the
event of the death or insolvency of any contributory, the provisions of this
Act with respect to the legal representatives of deceased contributories, or
with respect to the assignees of insolvent contributories, as the case may be,
shall apply.
(4) The provisions of this Act with respect to—
(a) the registration of an unlimited as
a limited company;
(b) the
powers of an unlimited company on registration as a limited company, to increase
the nominal amount of its share capital and to provide that a portion of its
share capital shall not be capable of being called up except in the event of
winding up;
(c) the
power of a limited company to determine that a portion of its share capital
shall not be capable of being called up except in the event of winding up;
shall apply, notwithstanding any provisions
contained in any Act of Parliament or other Indian Law, or other instrument
constituting or regulating the company.
(5) Nothing in this section shall authorise the company to alter
any such provisions contained in any instrument constituting or regulating the
company as would, if the company had originally been formed under this Act,
have been required to be contained in the memorandum and are not authorised to
be altered by this Act.
(6) None of the provisions of this Act (apart from those of
section 404) shall derogate from any power of altering its constitution or
regulations which may be vested in the company, by virtue of any Act of Parliament
or other Indian law, or other instrument constituting or regulating the
company.
(7) In this section, the expression “instrument” includes deed of
settlement, deed of partnership, Act of Parliament of the
Power to substitute memorandum
and articles for deed of settlement.
579. (1) Subject to the provisions of this
section, a company registered in pursuance of this Part may, by special
resolution, alter the form of its constitution by substituting a memorandum and
articles for a deed of settlement.
(2) The provisions of sections 17 to 19 with respect to an alteration
of the objects of a company shall, so far as applicable, apply to any
alteration under this section, with the following modifications:—
(a) there
shall be substituted for the printed copy of the altered memorandum required to
be filed with the Registrar a printed copy of the substituted memorandum and
articles; and
(b) on
the registration of the alteration being certified by the Registrar, the
substituted memorandum and articles shall apply to the company in the same
manner as if it were a company registered under this Act with that memorandum
and those articles, and the company’s deed of settlement shall cease to apply
to the company.
(3) An alteration under this section may be made either with or
without any alteration of the objects of the company under this Act.
(4) In this section, the expression “deed of settlement” includes
any deed of partnership, Act of Parliament of the
Power of Court to stay or
restrain proceedings.
580. The
provisions of this Act with respect to staying and restraining suits and other
legal proceedings against a company at any time after the presentation of a
petition for winding up and before the making of a winding up order, shall, in
the case of a company registered in pursuance of this Part, where the
application to stay or restrain is by a creditor, extend to suits and other
legal proceedings against any contributory of the company.
Suits stayed on winding up
order.
581. Where
an order has been made for winding up, or a provisional liquidator has been
appointed for, a company registered in pursuance of this Part, no suit or
other legal proceeding shall be proceeded with or commenced against the company
or any contributory of the company in respect of any debt of the company,
except by leave of the [Tribunal]
and except on such terms as the [Tribunal]
may impose.
Producer Companies
581A. In this Part, unless the
context otherwise requires,—
(a) “active Member” means a member who fulfils
the quantum and period of patronage of the Producer Company as may be required
by the articles;
(b) “Chief Executive” means an individual
appointed as such under sub-section (1) of section 581W;
(c) “limited return” means the maximum dividend
as may be specified by the articles;
(d) “Member” means a person or Producer
institution (whether incorporated or not) admitted as a Member of a Producer
Company and who retains the qualifications necessary for continuance as such;
(e) “inter-State co-operative society” means a
multi-State co-operative society as defined in clause (k) of section 3 of the Multi-State
Co-operative Societies Act, 1984 (51 of 1984)*
and includes any co-operative society registered under any other law for the
time being in force, which has, subsequent to its formation, extended any of
its objects to more than one State by enlisting the participation of persons or
by extending any of its activities outside the State, whether directly or
indirectly or through an institution of which it is a constituent;
(f) “mutual assistance principles” means the
principles set out in sub-section (2) of section 581G;
(g) “officer” includes any director or Chief
Executive or Secretary or any person in accordance with whose directions or
instructions part or whole of the business of the Producer Company is carried
on;
(h) “patronage” means the use of services
offered by the Producer Company to its Members by participation in its business
activities;
(i) “patronage bonus” means payments made by a
Producer Company out of its surplus income to the Members in proportion to
their respective patronage;
(j) “primary produce” means—
(i) produce
of farmers, arising from agriculture (including animal husbandry, horticulture,
floriculture, pisciculture, viticulture, forestry, forest products,
re-vegetation, bee raising and farming plantation products), or from any other
primary activity or service which promotes the interest of the farmers or
consumers; or
(ii) produce
of persons engaged in handloom, handicraft and other cottage industries;
(iii) any
product resulting from any of the above activities, including by-products of
such products;
(iv) any
product resulting from an ancillary activity that would assist or promote any
of the aforesaid activities or anything ancillary thereto;
(v) any
activity which is intended to increase the production of anything referred to
in sub-clauses (i) to (iv) or improve the quality thereof;
(k) “producer”
means any person engaged in any activity connected with or relatable to any
primary produce;
(l) “Producer
Company” means a body corporate having objects or activities specified in
section 581B and registered as Producer Company under this Act;
(m) “Producer
institution” means a Producer Company or any other institution having only
producer or producers or Producer Company or Producer Companies as its member
whether incorporated or not having any of the objects referred to in section
581B and which agrees to make use of the services of the Producer Company or
Producer Companies as provided in its articles;
(n) “withheld
price” means part of the price due and payable for goods supplied by any Member
to the Producer Company; and as withheld by the Producer Company for payment on
a subsequent date.
Incorporation of Producer Companies and other matters
581B. (1) The
objects of the Producer Company shall relate to all or any of the following matters,
namely :—
(a) production, harvesting, procurement,
grading, pooling, handling, marketing, selling, export of primary produce of
the Members or import of goods or services for their benefit :
Provided
that the Producer Company may carry on
any of the activities specified in this clause either by itself or through
other institution;
(b) processing including preserving, drying,
distilling, brewing, vinting, canning and packaging of produce of its Members;
(c) manufacture, sale or supply of machinery,
equipment or consumables mainly to its Members;
(d) providing education on the mutual
assistance principles to its Members and others;
(e) rendering technical services, consultancy
services, training, research and development and all other activities for the
promotion of the interests of its Members;
(f) generation, transmission and distribution
of power, revitalisation of land and water resources, their use, conservation
and communications relatable to primary produce;
(g) insurance of producers or their primary
produce;
(h) promoting techniques of mutuality and
mutual assistance;
(i) welfare measures or facilities for the
benefit of Members as may be decided by the Board;
(j) any other activity, ancillary or
incidental to any of the activities referred to in clauses (a) to (i) or other activities which may promote the principles of mutuality and
mutual assistance amongst the Members in any other manner;
(k) financing of procurement, processing,
marketing or other activities specified in clauses (a) to (j) which include extending of credit facilities or any other financial
services to its Members.
(2) Every Producer Company shall deal
primarily with the produce of its active Members for carrying out any of its
objects specified in this section.
Formation of Producer Company
and its registration.
581C. (1) Any
ten or more individuals, each of them being a producer or any two or more
producer institutions, or a combination of ten or more individuals and
producer institutions, desirous of forming a Producer Company having its
objects specified in section 581B and otherwise complying with the requirements
of this Part and the provisions of this Act in respect of registration, may
form an incorporated Company as a Producer Company under this Act.
(2) If the Registrar is satisfied that all
the requirements of this Act have been complied with in respect of registration
and matters precedent and incidental thereto, he shall, within thirty days of
the receipt of the documents required for registration, register the
memorandum, the articles and other documents, if any, and issue a certificate
of incorporation under this Act.
(3) A Producer Company so formed shall have
the liability of its Members limited by the memorandum to the amount, if any, unpaid
on the shares respectively held by them and be termed a company limited by
shares.
(4) The Producer Company may reimburse to its
promoters all other direct costs associated with the promotion and registration
of the company including registration, legal fees, printing of a memorandum and
articles and the payment thereof shall be subject to the approval at its first
general meeting of the Members.
(5) On registration under sub-section (1),
the Producer Company shall become a body corporate as if it is a private
limited company to which the provisions contained in this Part apply, without,
however, any limit to the number of Members thereof, and the Producer Company
shall not, under any circumstance,
whatsoever, become or be deemed to become a public limited company
under this Act.
Membership and voting rights of
Members of Producer Company.
581D. (1)(a) In a case where the membership consists solely of individual members,
the voting rights shall be based on a single vote for every Member, irrespective
of his shareholding or patronage of the Producer Company.
(b) In a case where the membership consists
of Producer institutions only, the voting rights of such Producer institutions
shall be determined on the basis of their participation in the business of the
Producer Company in the previous year, as may be specified by articles :
Provided that during the first year of
registration of a Producer Company, the voting rights shall be determined on
the basis of the shareholding by such Producer institutions.
(c) In a case where the membership consists
of individuals and Producer institutions, the voting rights shall be computed
on the basis of a single vote for every Member.
(2) The articles of any Producer Company may
provide for the conditions, subject to which a Member may continue to retain
his membership, and the manner in which voting rights shall be exercised by
the Members.
(3) Notwithstanding anything contained in
sub-section (1) or sub-section (2), any Producer Company may, if so authorised
by its articles, restrict the voting rights to active Members, in any special
or general meeting.
(4) No person, who has any business interest
which is in conflict with business of the Producer Company, shall become a
Member of that Company.
(5) A Member, who acquires any business
interest which is in conflict with the business of the Producer Company, shall
cease to be a Member of that Company and be removed as a Member in accordance
with articles.
581E. (1) Subject
to provisions made in articles, every Member shall initially receive only such
value for the produce or products pooled and supplied as the Board of Producer
Company may determine, and the withheld price may be disbursed later in cash or
in kind or by allotment of equity shares, in proportion to the produce supplied
to the Producer Company during the financial year to such extent and in such
manner and subject to such conditions as may be decided by the Board.
(2) Every Member shall, on the share capital
contributed, receive only a limited return:
Provided that every such Member may be
allotted bonus shares in accordance with the provisions contained in section
581ZJ.
(3) The surplus if any, remaining after
making provision for payment of limited return and reserves referred to in
section 581ZI, may be disbursed as patronage bonus, amongst the Members, in
proportion to their participation in the business of the Producer Company,
either in cash or by way of allotment of equity shares, or both, as may be
decided by the Members at the general meeting.
Memorandum of Producer Company.
581F. The
memorandum of association of every Producer Company shall state—
(a) the name of the company with “Producer
Company Limited” as the last words of the name of such Company;
(b) the State in which the registered office of
the Producer Company is to situate;
(c) the main objects of the Producer Company
shall be one or more of the objects specified in section 581B;
(d) the names and addresses of the persons who
have subscribed to the memorandum;
(e) the amount of share capital with which the
Producer Company is to be registered and division thereof into shares of a
fixed amount;
(f) the names, addresses and occupations of
the subscribers being producers, who shall act as the first directors in accordance
with sub-section (2) of section 581J;
(g) that the liability of its members is
limited;
(h) opposite to the subscriber’s name the
number of shares each subscriber takes :
Provided that no subscriber shall take
less than one share;
(i) in case the objects of the Producer
Company are not confined to one State, the States to whose territories the objects
extend.
581G. (1) There
shall be presented, for registration to the Registrar of the State to which the
registered office of the Producer Company is, stated by the memorandum of
association, to be situate—
(a) memorandum of the Producer Company;
(b) its articles duly signed by the subscribers
to the Memorandum.
(2) The articles shall contain the following
mutual assistance principles, namely:—
(a) the membership shall be voluntary and
available, to all eligible persons who, can participate or avail of the
facilities or services of the Producer Company, and are willing to accept the
duties of membership;
(b) each Member shall, save as otherwise
provided in this Part, have only a single vote irrespective of the share
holding;
(c) the Producer Company shall be administered
by a Board consisting of persons elected or appointed as directors in the manner
consistent with the provisions of this Part and the Board shall be accountable
to the Members;
(d) save as provided in this Part, there shall
be limited return on share capital;
(e) the surplus arising out of the operations
of the Producer Company shall be distributed in an equitable manner by—
(i) providing
for the development of the business of the Producer Company;
(ii) providing
for common facilities; and
(iii) distributing
amongst the Members, as may be admissible in proportion to their respective
participation in the business;
(f) provision shall be made for the education
of Members, employees and others, on the principles of mutuality and techniques
of mutual assistance;
(g) the Producer Company shall actively
co-operate with other Producer Companies (and other organisations following
similar principles) at local, national or international level so as to best
serve the interest of their Members and the communities it purports to serve.
(3) Without prejudice to the generality of
the foregoing provisions of sub-sections (1) and (2), the articles shall
contain the following provisions, namely:—
(a) the qualifications for membership, the
conditions for continuance or cancellation of membership and the terms, conditions
and procedure for transfer of shares;
(b) the manner of ascertaining the patronage
and voting right based on patronage;
(c) subject to the provisions contained in
sub-section (1) of section 581N, the manner of constitution of the Board, its
powers and duties, the minimum and maximum number of directors, manner of
election and appointment of directors and retirement by rotation,
qualifications for being elected or continuance as such and the terms of office
of the said directors, their powers and duties, conditions for election or co-option
of directors, method of removal of directors and the filling up of vacancies on
the Board, and the manner and the terms of appointment of the Chief Executive;
(d) the election of the Chairman, term of
office of directors and the Chairman, manner of voting at the general or
special meetings of Members, procedure for voting, by directors at meetings of
the Board, powers of the Chairman and the circumstances under which the
Chairman may exercise a casting vote;
(e) the circumstances under which, and the
manner in which, the withheld price is to be determined and distributed;
(f) the manner of disbursement of patronage
bonus in cash or by issue of equity shares, or both;
(g) the contribution to be shared and related
matters referred to in sub-section (2) of section 581ZI;
(h) the matters relating to issue of bonus
shares out of general reserves as set out in section 581ZJ;
(i) the basis and manner of allotment of
equity shares of the Producer Company in lieu of the whole or part of the sale
proceeds of produce or products supplied by the Members;
(j) the amount of reserves, sources from which
funds may be raised, limitation on raising of funds, restriction on the use of
such funds and the extent of debt that may be contracted and the conditions
thereof;
(k) the credit, loans or advances which may be
granted to a Member and the conditions for the grant of the same;
(l) the right of any Member to obtain
information relating to general business of the company;
(m) the basis and manner of distribution and disposal
of funds available after meeting liabilities in the event of dissolution or
liquidation of the Producer Company;
(n) the authorisation for division,
amalgamation, merger, creation of subsidiaries and the entering into joint ventures
and other matters connected therewith;
(o) laying of the memorandum and articles of
the Producer Company before a special general meeting to be held within ninety
days of its registration;
(p) any other provision, which the Members may,
by special resolution recommend to be included in articles.
581H. (1) A
Producer Company shall not alter the conditions contained in its memorandum
except in the cases, by the mode and to the extent for which express provision
is made in this Act.
(2) A Producer Company may, by special
resolution, not inconsistent with section 581B, alter its objects specified in
its memorandum.
(3) A copy of the amended memorandum,
together with a copy of the special resolution duly certified by two directors,
shall be filed with the Registrar within thirty days from the date of adoption
of any resolution referred to in sub-section (2) :
Provided that in the case of transfer
of the registered office of a Producer Company from the jurisdiction of one Registrar
to another, certified copies of the special resolution certified by two
directors shall be filed with both the Registrars within thirty days, and each
Registrar shall record the same, and thereupon the Registrar from whose
jurisdiction the office is transferred, shall forthwith forward to the other
Registrar all documents relating to the Producer Company.
(4) The alteration of the provisions of
memorandum relating to the change of the place of its registered office from
one State to another shall not take effect unless it is confirmed by the
Company Law Board on petition.
581-I. (1) Any
amendment of the articles shall be proposed by not less than two-third of the
elected directors or by not less than one-third of the Members of the Producer
Company, and adopted by the Members by a special resolution.
(2) A copy of the amended articles together
with the copy of the special resolution, both duly certified by two directors,
shall be filed with the Registrar within thirty days from the date of its
adoption.
Option to inter-State
co-operative societies to become Producer Companies.
581J. (1) Notwithstanding
anything contained in sub-section (1) of section 581C, any inter-State
co-operative society with objects not confined to one State may make an
application to the Registrar for registration as Producer Company under this
Part.
(2) Every application under sub-section (1)
shall be accompanied by—
(a) a copy of the special resolution, of not
less than two-third of total members of inter-State co-operative society, for
its incorporation as a Producer Company under this Act;
(b) a statement showing—
(i) names
and addresses or the occupation of the directors and Chief Executive, if any,
by whatever name called, of such co-operative; and
(ii) list
of members of such inter-State co-operative society;
(c) a statement indicating that the inter-State
co-operative society is engaged in any one or more of the objects specified
in section 581B;
(d) a declaration by two or more directors of
the inter-State co-operative society certifying that particulars given in
clauses (a) to (c) are correct.
(3) When an inter-State co-operative society is
registered as a Producer Company, the words “Producer Company Limited” shall
form part of its name with any word or expression to show its identity
preceding it.
(4) On compliance with the requirements of
sub-sections (1) to (3), the Registrar shall, within a period of thirty days of
the receipt of application, certify under his hand that the inter-State
co-operative society applying for registration is registered and thereby
incorporated as a Producer Company under this Part.
(5) A co-operative society formed by
producers, by Federation or Union of co-operative societies of producers or
co-operatives of producers, registered under any law for the time being in
force which has extended its objects outside the State, either directly or through a union or
federation of co-operatives of which it is a constituent, as the case may be,
and any Federation or Unions of such co-operatives,which has so extended any of
its objects or activities outside the State, shall be eligible to make an application
under sub-section (1) and to obtain registration as a Producer Company under
this Part.
(6) The inter-State co-operative society
shall, upon registration under sub-section (1), stand transformed into a
Producer Company, and thereafter shall be governed by the provisions of this
Part to the exclusion of the law by which it was earlier governed, save insofar
as anything done or omitted to be done before its registration as a Producer
Company, and notwithstanding anything contained in any other law for the time
being in force, no person shall have any claim against the co-operative
institution or the company by reason of such conversion or transformation.
(7) Upon registration as a Producer Company, the Registrar of Companies who registers the company shall forthwith intimate the Registrar with whom the erstwhile inter-State co-operative society was earlier registered for appropriate deletion of the society from its register.
Effect of incorporation of
Producer Company.
581K. Every shareholder of the inter-State co-operative society immediately
before the date of registration of Producer Company (hereafter referred to as
the transformation date) shall be deemed to be registered on and from that date
as a shareholder of the Producer Company to the extent of the face value of the
shares held by such shareholder.
Vesting of undertaking in
Producer Company.
581L. (1) All
properties and assets, movable and immovable, of, or belonging to, the
inter-State co-operative society as on the transformation date, shall vest in the
Producer Company.
(2) All the rights, debts, liabilities,
interests, privileges and obligations of the inter-State co-operative society
as on the transformation date shall stand transferred to, and be the rights,
debts, liabilities, interests, privileges and obligations of, the Producer
Company.
(3) Without prejudice to the provisions
contained in sub-section (2), all debts, liabilities and obligations incurred,
all contracts entered into and all matters and things engaged to be done by,
with or for, the society as on the transformation date for or in connection
with their purposes, shall be deemed to have been incurred, entered into, or
engaged to be done by, with or for, the Producer Company.
(4) All sums of money due to the inter-State
co-operative society immediately before the transformation date, shall be
deemed to be due to the Producer Company.
(5) Every organisation, which was being
managed immediately before the transformation date by the inter-State
co-operative society shall be managed by the Producer Company for such period,
to such extent and in such manner as the circumstances may require.
(6) Every organisation which was getting
financial, managerial or technical assistance from the inter-State co-operative
society, immediately before the transformation date, may continue to be given
financial, managerial or technical assistance, as the case may be, by the
Producer Company, for such period, to
such extent and in such manner as that company may deem fit.
(7) The amount representing the capital of
the erstwhile inter-State co-operative society shall form part of the capital
of the Producer Company.
(8) Any reference to the inter-State
co-operative society in any law other than this Act or in any contract or other
instrument, shall be deemed to be reference to the Producer Company.
(9) If, on the transformation date, there is
pending any suit, arbitration, appeal or other legal proceeding of whatever
nature by or against the inter-State co-operative society, the same shall not
abate, be discontinued or be in any way prejudicially affected by reason of the
incorporation of the Producer Company under section 581C or transformation of
the inter-State co-operative society as a Producer Company under section 581J, as the case may
be, but the suit, arbitration, appeal or other proceeding, may be continued,
prosecuted and enforced by or against the Producer Company in the same manner and to the same
extent as it would have, or may have been continued, prosecuted and enforced by
or against the inter-State co-operative
society as if the provisions contained in this Part had not come into force.
Concession, etc., to be deemed
to have been granted to Producer Company.
581M. With effect from the transformation date,
all fiscal and other concessions, licences, benefits, privileges and exemptions
granted to the inter-State co-operative society in connection with the affairs
and business of the inter-State co-operative society under any law for the time
being in force shall be deemed to have been granted to the Producer Company.
Provisions in respect of
officers and other employees of inter-State co-operative society.
581N. (1) Notwithstanding
anything contained in section 581-O, all the directors in the inter-State
co-operative society before the incorporation of the Producer Company shall continue in office for a period
of one year from the transformation date and in accordance with the provisions
of this Act.
(2) Every officer or other employee of the
inter-State co-operative society (except a director of the Board, Chairman or
Managing Director) serving in its employment immediately before the
transformation date shall, insofar as such officer or other employee is
employed in connection with the inter-State co-operative society which has vested
in the Producer Company by virtue of this Act, become, as from the
transformation date, an officer or, as the case may be, other employee of the
Producer Company and shall hold his
office or service therein by the same tenure, at the same remuneration, upon
the same terms and conditions, with the same obligations and with the same
rights and privileges as to leave, leave travel concession, welfare scheme,
medical benefit scheme, insurance, provident fund, other funds, retirement,
voluntary retirement, gratuity and other benefits as he would have held under
the erstwhile inter-State co-operative society if its undertaking had not
vested in the Producer Company and shall continue to do so as an officer or, as
the case may be, other employee of the Producer Company.
(3) Where an officer or other employee of the
inter-State co-operative society opts under sub-section (2) not to be in employment
or service of the Producer Company, such officer or other employee shall be
deemed to have resigned.
(4) Notwithstanding anything contained in the
Industrial Disputes Act, 1947 (14 of 1947) or in any other law for the time
being in force, the transfer of the services of any officer or other employee
of the inter-State co-operative society to the Producer Company shall not
entitle such officer or other employee to any compensation under this Act or
under any other law for the time being in force and no such claim shall be
entertained by any court, tribunal or other authority.
(5) The officers and other employees who have
retired before the transformation date from the service of the inter-State
co-operative society and are entitled to any benefits, rights or privileges,
shall be entitled to receive the same benefits, rights or privileges from the
Producer Company.
(6) The trusts of the provident fund or the
gratuity fund of the inter-State co-operative society and any other bodies
created for the welfare of officers or employees shall continue to discharge
functions in the Producer Company as was
being done hitherto in the inter-State co-operative society and any tax
exemption granted to the provident fund or the gratuity fund would continue to
be applied to the Producer Company.
(7) Notwithstanding
anything contained in this Act or in any other law for the time being in force
or in the regulations of the inter-State co-operative society, no director of
the Board, Chairman, Managing Director or any other person entitled to manage
the whole or substantial part of the business and affairs of the inter-State
co-operative society shall be entitled to any compensation against the
inter-State co-operative society or the Producer Company for the loss of office or for the
premature termination of any contract of management entered into by him with
the inter-State co-operative society.
Management of producer Company
581-O. Every Producer Company shall have at least five and
not more than fifteen directors :
Provided that in the case of an
inter-State co-operative society incorporated as a Producer Company, such
Company may have more than fifteen directors for a period of one year from the
date of its incorporation as a Producer Company.
581P. (1) Save
as provided in section 581N, the Members who sign the memorandum and the
articles may designate therein the Board of directors (not less than five) who
shall govern the affairs of the Producer Company until the directors are
elected in accordance with the provisions of this section.
(2) The election of directors shall be
conducted within a period of ninety days of the registration of the Producer
Company :
Provided that in the case of an
inter-State co-operative society which has been registered as a Producer
Company under sub-section (4) of section 581J in which at least five directors
(including the directors continuing in office under sub-section (1) of section
581N) hold office as such on the date of registration of such company, the
provisions of this sub-section shall have effect as if for the words “ninety
days”, the words “three hundred and sixty-five days” had been substituted.
(3) Every person shall hold office of a
director for a period not less than one year but not exceeding five years as
may be specified in the articles.
(4) Every director, who retires in accordance
with the articles, shall be eligible for re-appointment as a director.
(5) Save as provided in sub-section (2), the
directors of the Board shall be elected or appointed by the Members in the
annual general meeting.
(6) The Board may co-opt one or more expert
directors or an additional director not exceeding one-fifth of the total number
of directors or appoint any other person as additional director for such period
as the Board may deem fit:
Provided that the expert directors
shall not have the right to vote in the election of the Chairman but shall be
eligible to be elected as Chairman, if so provided by its articles :
Provided further that
the maximum period, for which the expert director or the additional director
holds office, shall not exceed such period as may be specified in the articles.
Vacation of office by directors.
581Q. (1) The
office of the director of a Producer Company shall become vacant if —
(a) he
is convicted by a Court of any offence
involving moral turpitude and sentenced in respect thereof to imprisonment for
not less than six months;
(b) the
Producer Company, in which he is a
director, has made a default in repayment of any advances or loans taken from
any company or institution or any other person and such default continues for
ninety days;
(c) he
has made a default in repayment of any advances or loans taken from the
Producer Company in which he is a director;
(d) the
Producer Company, in which he is a director—
(i) has not filed the annual accounts and annual
return for any continuous three financial years commencing on or after the 1st day of April, 2002; or
(ii) has failed to, repay its deposit or withheld
price or patronage bonus or interest thereon on due date, or pay dividend and
such failure continues for one year or more;
(e) default
is made in holding election for the office of director, in the Producer Company
in which he is a director, in accordance with the provisions of this Act and articles;
(f) the
annual general meeting or extraordinary general meeting of the Producer
Company, in which he is a director, is not called in accordance with the
provisions of this Act except due to natural calamity or such other reason.
(2) The provisions of sub-section (1) shall,
as far as may be, apply to the director of a producer institution which is a
member of a Producer Company.
Powers and functions of Board.
581R. (1) Subject
to the provisions of this Act and articles, the Board of directors of a
Producer Company shall exercise all such powers and to do all such acts and
things, as that company is authorised so to do.
(2) In particular and without prejudice to
the generality of the foregoing powers, such powers may include all or any of
the following matters, namely :—
(a) determination
of the dividend payable;
(b) determination
of the quantum of withheld price and recommend patronage to be approved at
general meeting;
(c) admission
of new Members;
(d) pursue and formulate the
organisational policy, objectives, establish specific long-term and annual
objectives, and approve corporate strategies and financial plans;
(e) appointment of a Chief
Executive and such other officers of the Producer Company, as may be specified
in the articles;
(f) exercise
superintendence, direction and control over Chief Executive and other officers
appointed by it;
(g) cause
proper books of account to be maintained; prepare annual accounts to be placed
before the annual general meeting with the auditor’s report and the replies on
qualifications, if any, made by the auditors;
(h) acquisition
or disposal of property of the Producer Company in its ordinary course of
business;
(i) investment
of the funds of the Producer Company in the ordinary course of its business;
(j) sanction
any loan or advance, in connection with the business activities of the Producer
Company to any Member, not being a director or his relative;
(k) take
such other measures or do such other acts as may be required in the discharge
of its functions or exercise of its powers.
(3) All
the powers specified in sub-sections (1) and (2) shall be exercised by the
Board, by means of resolution passed at its meeting on behalf of the Producer
Company.
Explanation.—For the removal of doubts, it is hereby
declared that a director or a group of directors, who do not constitute the
Board, shall not exercise any of the powers exercisable by it.
Matters
to be transacted at general meeting.
581S. (1) Board of directors of a Producer
Company shall exercise the following powers on behalf of that company, and it
shall do so only by means of resolutions passed at the annual general meeting
of its Members, namely :—
(a) approval
of budget and adoption of annual accounts of the Producer Company;
(b) approval
of patronage bonus;
(c) issue
of bonus shares;
(d) declaration
of limited return and decision on the distribution of patronage;
(e) specify
the conditions and limits of loans that may be given by the Board to any
director; and
(f) approval
of any transaction of the nature as is to be reserved in the articles for
approval by the members.
581T.
(1)When
the directors vote for a resolution, or approve by any other means, anything
done in contravention of the provisions of this Act or any other law for the
time being in force or articles, they shall be jointly and severally liable to
make good any loss or damage suffered by the Producer Company.
(2) Without
prejudice to the provisions contained in sub-section (1), the Producer Company
shall have the right to recover from its director—
(a) where
such director has made any profit as a result of the contravention specified in
sub-section (1), an amount equal to the profit so made;
(b) where
the Producer Company incurred a loss or damage as a result of the contravention
specified in sub-section (1), an amount equal to that loss or damage;
(3) The
liability imposed under this section shall be
in addition to and not in derogation of a liability imposed on a director
under this Act or any other law for the time being in force.
581U.
(1) The Board may constitute such number of
committees as it may deem fit for the purpose of assisting the Board in the
efficient discharge of its functions:
Provided that
the Board shall not delegate any of its powers or assign the powers of the
Chief Executive, to any committee.
(2) A
committee constituted under sub-section (1) may, with the approval of the
Board, co-opt such number of persons as it deems fit as members of the
committee:
Provided that
the Chief Executive appointed under section 581W or a director of the Producer
Company shall be a member of such
committee.
(3) Every
such committee shall function under the general superintendence, direction and control of the Board, for such
duration, and in such manner as the
Board may direct.
(4) The
fee and allowances to be paid to the members of the committee shall be such as
may be determined by the Board.
(5) The
minutes of each meeting of the committee shall be placed before the Board at
its next meeting.
581V. (1) A
meeting of the Board shall be held not less than once in every three months and
at least four such meetings shall be held in every year.
(2) Notice
of every meeting of the Board of directors shall be given in writing to every
director for the time being in
(3) The
Chief Executive shall give notice as aforesaid not less than seven days prior
to the date of the meeting of the Board and if he fails to do so, he shall be
punishable with fine which may extend to one thousand rupees:
Provided that
a meeting of the Board may be called at shorter notice and the reasons thereof
shall be recorded in writing by the Board.
(4) The
quorum for a meeting of the Board shall be one-third of the total strength of
directors, subject to a minimum of three.
(5) Save
as provided in the articles, directors including the co-opted director, may be
paid such fees and allowances for attendance at the meetings of the Board, as
may be decided by the Members in the general meeting.
Chief
Executive and his functions.
581W. (1) Every
Producer Company shall have a full time
Chief Executive, by whatever name called, to be appointed by the Board from
amongst persons other than Members.
(2) The
Chief Executive shall be ex
officio director of the Board and such
director shall not retire by rotation.
(3) Save
as otherwise provided in articles, the qualifications, experience and the terms
and conditions of service of the Chief Executive shall be such as may be
determined by the Board.
(4) The
Chief Executive shall be entrusted with substantial powers of management as the
Board may determine.
(5) Without
prejudice to the generality of sub-section (4), the Chief Executive may
exercise the powers and discharge the functions, namely :—
(a) do administrative acts of a routine nature
including managing the day-to-day affairs of the Producer Company;
(b) operate bank accounts or authorise any
person, subject to the general or special approval of the Board in this behalf,
to operate the bank account;
(c) make arrangements for safe custody of cash
and other assets of the Producer Company;
(d) sign such documents as may be authorised by
the Board, for and on behalf of the company;
(e) maintain proper books of account; prepare
annual accounts and audit thereof; place the audited accounts before the Board
and in the annual general meeting of the Members;
(f) furnish Members with periodic information
to apprise them of the operation and functions of the Producer Company;
(g) make appointments to posts in accordance
with the powers delegated to him by the Board;
(h) assist the Board in the formulation of
goals, objectives, strategies, plans and policies;
(i) advise the Board with respect to legal and
regulatory matters concerning the proposed and ongoing activities and take
necessary action in respect thereof;
(j) exercise the powers as may be necessary in
the ordinary course of business;
(k) discharge such other functions, and
exercise such other powers, as may be delegated by the Board.
(6) The Chief Executive shall manage the
affairs of the Producer Company under the general superintendence, direction
and control of the Board and be accountable for the performance of the Producer
Company.
Secretary of Producer Company.
581X. (1) Every
Producer Company having an average annual turnover exceeding five crore rupees
in each of three consecutive financial years shall have a whole-time secretary.
(2) No individual shall be appointed as
whole-time secretary unless he possesses membership of the Institute of Company
Secretaries of India constituted under the Company Secretaries Act, 1980 (56
of 1980).
(3) If a Producer Company fails to comply
with the provisions of sub-section (1), the company and every officer of the
company who is in default, shall be punishable with fine which may extend to
five hundred rupees for every day during which the default continues :
Provided that in any proceedings
against a person in respect of an offence under this sub-section, it shall be a
defence to prove that all reasonable efforts to comply with the provisions of
sub-section (1) were taken or that the financial position of the company was
such that it was beyond its capacity to engage a whole-time secretary.
581Y. Unless the articles require a larger number,
one-fourth of the total membership shall constitute the quorum at a general
meeting.
581Z. Save as otherwise provided in sub-sections
(1) and (3) of section 581D, every Member shall have one vote and in the case
of equality of votes, the Chairman or the person presiding shall have a casting
vote except in the case of election of the Chairman.
General meetings
581ZA.
(1) Every Producer Company shall in each
year, hold, in addition to any other meetings, a general meeting, as its annual
general meeting and shall specify the meeting as such in the notices calling
it, and not more than fifteen months shall elapse between the date of one
annual general meeting of a Producer Company and that of the next :
Provided that
the Registrar may, for any special reason, permit extension of the time for
holding any annual general meeting (not being the first annual general meeting)
by a period not exceeding three months.
(2) A
Producer Company shall hold its first annual general meeting within a period
of ninety days from the date of its incorporation.
(3) The
Members shall adopt the articles of the Producer Company and appoint directors
of its Board in the annual general meeting.
(4) The
notice calling the annual general meeting shall be accompanied by the
following documents, namely:—
(a) the agenda of the annual general meeting;
(b) the minutes of the previous annual general
meeting or the extra-ordinary general meeting;
(c) the names of candidates for election, if
any, to the office of director including a statement of qualifications in
respect of each candidate;
(d) the audited balance sheet and profit and
loss accounts of the Producer Company and its subsidiary, if any, together with
a report of the Board of Directors of such Company with respect to—
(i) the state of affairs of the Producer
Company;
(ii) the amount proposed to be carried to
reserve;
(iii) the amount to be paid as limited return on
share capital;
(iv) the amount proposed to be disbursed as
patronage bonus;
(v) the material changes and commitments, if
any, affecting the financial position of the Producer Company and its subsidiary,
which have occurred in between the date of the annual accounts of the Producer
Company to which the balance-sheet relates and the date of the report of the
Board;
(vi) any other matter of importance relating to
energy conservation, environmental protection, expenditure or earnings in
foreign exchanges;
(vii) any other matter which is required to be, or
may be, specified by the Board;
(e) the text of the draft resolution for
appointment of auditors;
(f) the text of any draft resolution proposing
amendment to the memorandum or articles to be considered at the general meeting,
along with the recommendations of the Board.
(4) The
Board of directors shall, on the requisition made in writing, duly signed and
setting out the matters for the consideration, made by one-third of the
Members entitled to vote in any general meeting, proceed to call an
extraordinary general meeting in accordance with the provisions contained in
sections 169 to 186 of this Act.
(5) Every
annual general meeting shall be called, for a time during business hours, on a
day that is not a public holiday and shall be held at the registered office of
the Producer Company or at some other place within the city, town or village in
which the registered office of the Company is situate.
(6) A
general meeting of the Producer Company shall
be called by giving not less than fourteen days prior notice in writing.
(7) The
notice of the general meeting indicating the date, time and place of the
meeting shall be sent to every Member and auditor of the Producer Company.
(8) Unless
the articles of the Producer Company provide for a larger number, one-fourth of
the total number of members of the Producer Company shall be the quorum for its
annual general meeting.
(9) The
proceedings of every annual general meeting along with the Directors’ Report,
the audited balance sheet and the profit and loss account shall be filed with the
Registrar within sixty days of the date on which the annual general meeting is
held, with an annual return along with the filing fees as applicable under the
Act.
(10) In
the case where a Producer Company is formed by Producer institutions, such
institutions shall be represented in the general body through the Chairman or the Chief
Executive thereof who shall be competent to act on its behalf :
Provided that
a Producer institution shall not be represented if such institution makes a
default or failure referred to in clauses (d) to (f) of sub-section
(1) of section 581Q.
Share capital and members rights
581ZB. (1) The share capital of a Producer Company
shall consist of equity shares only.
(2) The shares held by a Member in a Producer
Company, shall as far as may be, be in proportion to the patronage of that
company.
581ZC.(1) The producers, who are active Members
may, if so provided in the articles, have special rights and the Producer
Company may issue appropriate instruments to them in respect of such special
rights.
(2) The instruments of the Producer Company
issued under sub-section (1) shall, after obtaining approval of the Board in
that behalf, be transferable to any other active Member of that Producer
Company.
Explanation.—For the purposes of this section, the expression “special right” means
any right relating to supply of additional produce by the active Member or any
other right relating to his produce which may be conferred upon him by the
Board.
Transferability of shares and
attendant rights.
581ZD. (1) Save as otherwise provided in sub-sections
(2) to (4), the shares of a Member of a Producer Company shall not be transferable.
(2) A Member of a Producer Company may, after
obtaining the previous approval of the Board, transfer the whole or part of his
shares along with any special rights, to an active Member at par value.
(3) Every Member shall, within three months
of his becoming a Member in the Producer Company, nominate, in the manner
specified in articles, a person to whom his shares in the Producer Company
shall vest in the event of his death.
(4) The nominee shall, on the death of the
Member, become entitled to all the rights in the shares of the Producer
Company and the Board of that Company shall transfer the shares of the deceased
Member to his nominee :
Provided that in a case where such
nominee is not a producer, the Board shall direct the surrender of shares together
with special rights, if any, to the Producer Company at par value or such other
value as may be determined by the Board.
(5) Where the Board of a Producer Company is
satisfied that—
(a) any Member has ceased to be a primary
producer; or
(b) any Member has failed to retain his
qualifications to be a Member as specified in articles,
the Board shall
direct the surrender of shares together
with special rights, if any, to the Producer Company at par value or such other
value as may be determined by the Board :
Provided that the Board shall not
direct such surrender of shares unless the Member has been served with a
written notice and given an opportunity of being heard.
Finance, accounts and audit
581ZE. (1) Every Producer Company shall keep at its
registered office proper books of account with respect to—
(a) all sums of money received and expended by
the Producer Company and the matters in respect of which the receipts and
expenditure take place;
(b) all sales and purchase of goods by the
Producer Company;
(c) the instruments of liability executed by or
on behalf of the Producer Company;
(d) the assets and liabilities of the Producer
Company;
(e) in case of a Producer Company engaged in production,
processing and manufacturing, the particulars relating to utilisation of
materials or labour or other items of costs.
(2) The balance sheet and profit and loss
accounts of the Producer Company shall be prepared, as far as may be, in
accordance with the provisions contained in section 211.
581ZF.Every Producer
Company shall have internal audit of its accounts carried out, at such interval
and in such manner as may be specified
in articles, by a chartered accountant as defined in clause (b) of
sub-section (1) of section 2 of the Institute of Chartered Accountants Act,
1949 (38 of 1949).
Duties of auditor under this
Part.
581ZG.Without prejudice
to the provisions contained in section 227, the auditor shall report on the following
additional matters relating to the Producer Company, namely:—
(a) the amount of debts due along with
particulars of bad debts if any;
(b) the verification of cash balance and
securities;
(c) the details of assets and liabilities;
(d) all transactions which appear to be
contrary to the provisions of this Part;
(e) the loans given by the Producer Company to
the directors;
(f) the donations or subscriptions given by
the Producer Company;
(g) any other matter as may be considered
necessary by the auditor.
Donations or subscription by
Producer Company.
581ZH.A Producer Company
may, by special resolution, make donation or subscription to any institution or
individual for the purposes of—
(a) promoting the social and economic welfare
of Producer Members or producers or general public; or
(b) promoting the mutual assistance principles:
Provided that the aggregate amount of
all such donation and subscription in any financial year shall not exceed three
per cent of the net profit of the Producer Company in the financial year
immediately preceding the financial year in which the donation or subscription
was made :
Provided further that
no Producer Company shall make directly or indirectly to any political party or
for any political purpose to any person any contribution or subscription or
make available any facilities including personnel or material.
581ZI. (1) Every
Producer Company shall maintain a general reserve in every financial year, in addition
to any reserve maintained by it as may be specified in articles.
(2) In a case where the Producer Company does
not have sufficient funds in any financial year for transfer to maintain the
reserves as may be specified in articles, the contribution to the reserve shall
be shared amongst the Members in proportion to their patronage in the business
of that company in that year.
581ZJ. Any Producer Company may, upon recommendation of
the Board and passing of resolution in the general meeting, issue bonus shares
by capitalisation of amounts from general reserves referred to in section
581ZI in proportion to the shares held by the Members on the date of the issue
of such shares.
Loans to members and investments
581ZK. The Board may, subject to the provisions
made in articles, provide financial assistance to the Members of the Producer
Company by way of—
(a) credit facility, to any Member, in connection
with the business of the Producer Company, for a period not exceeding six
months;
(b) loans and advances, against security
specified in articles to any Member, repayable within a period exceeding three
months but not exceeding seven years from the date of disbursement of such
loan or advances:
Provided that any loan or advance to
any director or his relative shall be granted only after the approval by the
Members in general meeting.
Investment in other companies,
formation of subsidiaries, etc.
581ZL. (1) The general reserves of any Producer
Company shall be invested to secure the highest returns available from approved
securities, fixed deposits, units, bonds issued by the Government or
co-operative or scheduled bank or in such other mode as may be prescribed.
(2) Any Producer Company may, for promotion
of its objectives acquire the shares of another Producer Company.
(3) Any Producer Company may subscribe to the
share capital of, or enter into any agreement or other arrangement, whether by
way of formation of its subsidiary company, joint venture or in any other
manner with any body corporate, for the purpose of promoting the objects of
the Producer Company by special resolution in this behalf.
(4) Any Producer Company, either by itself or
together with its subsidiaries, may invest, by way of subscription, purchase or
otherwise, shares in any other company, other than a Producer Company,
specified under sub-section (2), or subscription of capital under sub-section
(3), for an amount not exceeding thirty per cent of the aggregate of its paid
up capital and free reserves:
Provided that a Producer Company may,
by special resolution passed in its general meeting and with prior approval of
the Central Government, invest in excess of the limits specified in this
section.
(5) All investments by a Producer Company may
be made if such investments are consistent with the objects of the Producer
Company.
(6) The Board of a Producer Company may, with
the previous approval of Members by a special resolution, dispose of any of
its investments referred to in sub-sections (3) and (4).
(7) Every Producer Company shall maintain a
register containing particulars of all the investments, showing the names of
the companies in which shares have been acquired, number and value of shares;
the date of acquisition; and the manner and price at which any of the shares
have been subsequently disposed of.
(8) The register referred to in sub-section
(7) shall be kept at the registered office of the Producer Company and the same
shall be open to inspection by any Member who may take extracts therefrom.
Penalties
581ZM. (1) If any person, other than a Producer
Company registered under this Part, carries on business under any name which
contains the words “Producer Company Limited”, he shall be punishable with fine
which may extend to ten thousand rupees for every day during which such name
has been used by him.
(2) If a director or an officer of a Producer
Company, who wilfully fails to furnish any information relating to the affairs
of the Producer Company required by a Member or a person duly authorised in
this behalf, he shall be liable to imprisonment for a term which may extend to
six months and with fine equivalent to five per cent of the turnover of that
company during preceding financial year.
(3) If a director or officer of a Producer
Company—
(a) makes a default in handing over the custody
of books of account and other documents or property in his custody to the Producer
Company of which he is a director or officer; or
(b) fails to convene annual general meeting or
other general meetings,
he shall be
punishable with fine which may extend to one lakh rupees, and in the case of a
continuing default or failure, with an additional fine which may extend to ten
thousand rupees for every day during which such default or failure continues.
Amalgamation, merger or division
Amalgamation, merger or
division, etc., to form new Producer Companies.
581ZN. (1) A
Producer Company may, by a resolution passed at its general meeting,—
(a) decide to transfer its assets and
liabilities, in whole or in part, to any other Producer Company, which agrees
to such transfer by a resolution passed at its general meeting, for any of the
objects specified in section 581B;
(b) divide itself into two or more new Producer
Companies.
(2) Any two or more Producer Companies may, by a
resolution passed at any general or special meetings of its Members, decide to—
(a) amalgamate and form a new Producer Company;
or
(b) merge one Producer Company (hereafter
referred to as “merging company”) with another Producer Company (hereafter
referred to as “merged company”).
(3) Every resolution of a Producer Company
under this section shall be passed at its general meeting by a majority of
total members, with right of vote not less than two-thirds of its Members
present and voting and such resolution shall contain all particulars of the
transfer of assets and liabilities, or division, amalgamation, or merger, as
the case may be.
(4) Before passing a resolution under this
section, the Producer Company shall give notice thereof in writing together
with a copy of the proposed resolution to all the Members and creditors who may
give their consent.
(5) Notwithstanding anything contained in
articles or in any contract to the contrary, any Member, or any creditor not
consenting to the resolution shall, during the period of one month of the date
of service of the notice on him, have the option,—
(a) in the case of any such Member, to transfer
his shares with the approval of the Board to any active Member thereby ceasing
to continue as a Member of that company; or
(b) in the case of a creditor, to withdraw his deposit
or loan or advance, as the case may be.
(6) Any Member or creditor, who does not
exercise his option within the period specified in sub-section (5), shall be
deemed to have consented to the resolution.
(7) A resolution passed by a Producer Company
under this section shall not take effect until the expiry of one month or until
the assent thereto of all the Members and creditors has been obtained,
whichever is earlier.
(8) The resolution referred to in this
section shall provide for—
(a) the regulation of conduct of the Producer
Company’s affairs in the future;
(b) the purchase of shares or interest of any
Members of the Producer Company by other Members or by the Producer Company;
(c) in the case of purchase of shares of one
Producer Company by another Producer Company, the consequent reduction of its
share capital;
(d) termination, setting aside or modification
of any agreement, howsoever arrived between the company on the one hand
and the directors, secretaries and
manager on the other hand, apart from such terms and conditions as may, in the
opinion of the majority of shareholders, be just and equitable in the circumstances
of the case;
(e) termination, setting aside or modification
of any agreement between the Producer Company and any person not referred to
in clause (d):
Provided
that no such agreement shall be
terminated, set aside or modified except after giving due notice to the party
concerned:
Provided
further that
no such agreement shall be modified except after obtaining the consent of the
party concerned;
(f) the setting aside of any transfer,
delivery of goods, payment, execution or other act relating to property, made
or done by or against the Producer Company within three months before the date
of passing of the resolution, which would if made or done against any
individual, be deemed in his insolvency to be a fraudulent preference;
(g) the transfer to the merged company of the
whole or any part of the undertaking, property or liability of the Producer
Company;
(h) the allotment or appropriation by the
merged company of any shares, debentures, policies, or other like interests in
the merged company;
(i) the continuation by or against the merged
company of any legal proceedings pending by or against any Producer Company;
(j) the dissolution, without winding up, of
any Producer Company;
(k) the provision to be made for the Members or
creditors who make dissent;
(l) the taxes if any, to be paid by the
Producer Company;
(m) such incidental, consequential and
supplemental matters as are necessary to secure that the division, amalgamation
or merger shall be fully and effectively carried out.
(9) When a resolution passed by a Producer
Company under this section takes effect, the resolution shall be a sufficient
conveyance to vest the assets and liabilities in the transferee.
(10) The Producer Company shall make arrangements
for meeting in full or otherwise satisfying all claims of the Members and the
creditors who exercise the option, within the period specified in sub-section
(4), not to continue as the Member or creditor, as the case may be.
(11) Where the whole of the assets and liabilities
of a Producer Company are transferred to another Producer Company in accordance
with the provisions of sub-section (9), or where there is merger under
sub-section (2), the registration of the first mentioned Company or the merging
company, as the case may be, shall stand cancelled and that Company shall be
deemed to have been dissolved and shall cease to exist forthwith as a corporate
body.
(12) Where two or more Producer Companies are
amalgamated into a new Producer Company in accordance with the provisions of
sub-section (2) and the Producer Company so formed is duly registered by the
Registrar, the registration of each of the amalgamating companies shall stand
cancelled forthwith on such registration and each of the Companies shall
thereupon cease to exist as a corporate body.
(13) Where a Producer Company divides itself into
two or more Producer Companies in accordance with the provisions of clause (b) of
sub-section (1) and the new Producer Companies are registered in accordance
with the provisions of sub-section (8), the registration of the erstwhile
Producer Company shall stand cancelled forthwith and that Company shall be
deemed to have been dissolved and cease to exist as a corporate body.
(14) The amalgamation, merger or division of
companies under the foregoing sub-sections shall not in any manner whatsoever
affect the pre-existing rights or obligations and any legal proceedings that
might have been continued or commenced by or against any erstwhile company
before the amalgamation, merger or division, may be continued or commenced by,
or against, the concerned resulting company, or merged company, as the case may
be.
(15) The Registrar shall strike off the names of
every Producer Company deemed to have been dissolved under sub-sections (11) to
(14).
(16) Any member or creditor or employee aggrieved
by the transfer of assets, division, amalgamation or merger may, within thirty
days of the passing of the resolution, prefer an appeal to the High Court.
(17) The High Court shall, after giving a
reasonable opportunity to the person concerned, pass such orders thereon as it
may deem fit.
(18) Where an appeal has been filed under
sub-section (16), the transfer of assets, division, amalgamation or merger of
the Producer Company shall be subject to the decision of the High Court.
Resolution of disputes
581ZO.(1) Where any dispute relating to the
formation, management or business of a Producer Company arises—
(a) amongst Members, former Members or persons
claiming to be Members or nominees of deceased Members; or
(b) between a Member, former Member or a person
claiming to be a Member, or nominee of deceased Member and the Producer
Company, its Board of directors, office-bearers, or liquidator, past or
present; or
(c) between the Producer Company or its Board,
and any director, office-bearer or any former director, or the nominee, heir or
legal representative of any deceased director of the Producer Company,
such dispute shall
be settled by conciliation or by arbitration as provided under the Arbitration
and Conciliation Act, 1996 (26 of 1996) as if the parties to the dispute have
consented in writing for determination of such disputes by conciliation or by
arbitration and the provisions of the said Act shall apply accordingly.
Explanation.—For the purposes of this section, a dispute
shall include—
(a) a claim for any debt or other amount due;
(b) a claim by surety against the principal
debtor, where the Producer Company has recovered from the surety amount in
respect of any debtor or other amount
due to it from the principal debtor as a result of the default of the
principal debtor whether such debt or amount due be admitted or not;
(c) a claim by Producer Company against a
Member for failure to supply produce as required of him;
(d) a claim by a Member against the Producer
Company for not taking goods supplied by him.
(2) If any
question arises whether the dispute relates to formation, management or
business of the Producer Company, the question shall be referred to the
arbitrator, whose decision thereon shall be final.
Miscellaneous provisions
Strike
off name of Producer Company.
581ZP.(1) Where a Producer Company fails to
commence business within one year of its registration or ceases to transact
business with the Members or if the Registrar is satisfied, after making such
inquiry as he thinks fit, that the Producer Company is no longer carrying on
any of its objects specified in section 581B, he shall make an order striking
off the name of the Producer Company, which shall thereupon cease to exist
forthwith:
Provided that
no such order cancelling the registration as aforesaid shall be passed until a
notice to show cause has been given by the Registrar to the Producer Company
with a copy to all its directors on the proposed action and reasonable
opportunity to represent its case has been given.
(2) Where
the Registrar has reasonable cause to believe that a Producer Company is not
maintaining any of the mutual assistance principles specified, he shall strike
its name off the register in accordance with the provisions contained in
section 560 of this Act.
(3) Any
Member of a Producer Company, who is aggrieved by an order made under
sub-section (1), may appeal to the Company Law Board within sixty days of the
order.
(4) Where
an appeal is filed under sub-section (3), the order striking off the name shall
not take effect until the appeal is disposed of.
Provisions
of this Part to override other laws.
581ZQ.The provisions of
this Part shall have effect notwithstanding anything inconsistent therewith
contained in this Act or any other law for the time being in force or any
instrument having effect by virtue of any such law; but the provisions of any
such Act or law or instrument insofar as the same are not varied by, or are
inconsistent with, the provisions of this Part shall apply to the Producer
Company.
Application
of provisions relating to private companies.
581ZR.All the
limitations, restrictions and provisions of this Act, other than those
specified in this Part, applicable to a private company, shall, as far as may
be, apply to a Producer Company, as if it is a private limited company under
this Act insofar as they are not in conflict with the provisions of this Part.
Reconversion of
producer company to
inter-state co-operative society
Reconversion of Producer Company
to inter-State co-operative society.
581ZS. (1) Any
Producer Company, being an erstwhile inter-State co-operative society, formed
and registered under this Part, may make an application—
(a) after passing a resolution in the general meeting
by not less than two-third of its Members present and voting; or
(b) on request by its creditors representing
three-fourth value of its total creditors,
to the High Court
for its reconversion to the inter-State co-operative society.
(2) The High Court shall, on the application
made under sub-section (1), direct holding meeting of its Members or such creditors,
as the case may be, to be conducted in such manner as it may direct.
(3) If a majority in number representing
three-fourths in value of the creditors,
or Members, as the case may be, present and voting in person at the meeting
conducted in pursuance of the directions of the High Court under sub-section
(2), agree for reconversion, if sanctioned by the High Court, be binding on all
the Members and all the creditors, as the case may be, and also on the company
which is being converted :
Provided that no order sanctioning
reconversion shall be made by the Court unless the Court is satisfied that the
company or any other person by whom an application has been made under
sub-section (1) has disclosed to the Court, by affidavit or otherwise, all
material facts relating to the company, such as the latest financial position
of the company, the latest auditor’s report on the accounts of the company, the
pendency of any investigation proceedings in relation to the company under
sections 235 to 251, and the like.
(4) An order made by the Court under
sub-section (3) shall have no effect until a certified copy of the order has
been filed with the Registrar.
(5) A copy of every such order shall be
annexed to every copy of the memorandum of the company issued after the
certified copy of the order has been filed as aforesaid, or in the case of a
company not having a memorandum, to every copy so issued of the instrument
constituting or defining the constitution of the company.
(6) If default is made in complying with
sub-section (4), the company, and every officer of the company who is in
default, shall be punishable with fine which may extend to one hundred rupees,
for each copy in respect of which default is made.
(7) The Court may, at any time after an
application has been made to it under this section, stay the commencement or
continuation of any suit or proceeding against the company on such terms as the
Court thinks fit, until the application is finally disposed of.
(8) Every Producer Company which has been
sanctioned reconversion by the High Court, shall make an application, under the
Multi-State Co-operative Societies Act, 1984 (51 of 1984) or any other law for
the time being in force for its registration as multi-State co-operative
society or co-operative society, as the case may be, within six months of
sanction by the High Court and file a report thereof to the High Court and the
Registrar of companies and to the Registrar of the co-operative societies under
which it has been registered as a multi-State co-operative society or
co-operative society, as the case may be.
Power to modify Act in its
application to Producer Companies.
581ZT.(1) The Central Government may, by
notification in the Official Gazette, direct that any of the provisions of this
Act (other than those contained in this Part) specified in the said
notification—
(a) shall
not apply to the Producer Companies or any class or category thereof; or
(b) shall
apply to the Producer Companies or any class or category thereof with such
exception or adaptation as may be specified in the notification.
(2) A copy of every notification proposed to
be issued under sub-section (1), shall be laid in draft before each House of
Parliament, while it is in session, for a total period of thirty days which
may be comprised in one session or in two or more successive sessions, and if,
before the expiry of the session immediately following the session or the
successive sessions aforesaid, both Houses agree in disapproving the issue of
the notification or both houses agree in making any modification in the
notification, the notification shall not be issued or, as the case may be,
shall be issued only in such modified form as may be agreed upon by both the
Houses.]
Winding up of
unregistered companies
Meaning of “unregistered
company”.
582. For the purposes of this Part,
the expression “unregistered company”—
(a) shall not include—
(i) a
railway company incorporated by any Act of Parliament or other Indian law or
any Act of Parliament of the
(ii) a company
registered under this Act; or
(iii) a company registered
under any previous companies law and not being a company the registered office
whereof was in
(b) save
as aforesaid, shall include any partnership, association or company consisting
of more than seven members [at the time when the petition for winding up the
partnership, association or company, as the case may be, is presented before
the [Tribunal].]
Winding up of unregistered
companies.
583. (1) Subject to the provisions of this Part,
any unregistered company may be wound up under this Act, and all the provisions
of this Act with respect to winding up shall apply to an unregistered company,
with the exceptions and additions mentioned in sub-sections [(3)] to (5).
(2) [***]
(3) No unregistered company shall be wound up under this Act
voluntarily [by the Tribunal].
(4) The circumstances in which an unregistered company may be
wound up are as follows:—
(a) if
the company is dissolved, or has ceased to carry on business, or is carrying on
business only for the purpose of winding up its affairs;
(b) if the company is unable to pay its
debts;
(c) if
the [Tribunal] is
of opinion that it is just and equitable that the company should be wound up.
(5) An unregistered company shall, for the purposes of this Act,
be deemed to be unable to pay its debts—
(a) if
a creditor, by assignment or otherwise, to whom the company is indebted in a
sum exceeding five hundred rupees then due, has served on the company, by
leaving at its principal place of business, or by delivering to the secretary,
or some director, [***] manager or principal officer of the company, or by
otherwise serving in such manner as the [Tribunal] may approve or direct, a demand under his hand
requiring the company to pay the sum so due, and the company has, for three
weeks after the service of the demand, neglected to pay the sum or to secure or
compound for it to the satisfaction of the creditor;
(b) if
any suit or other legal proceeding has been instituted against any member for
any debt or demand due, or claimed to be due, from the company, or from him in
his character of member, and notice in writing of the institution of the suit
or other legal proceeding having been served on the company by leaving the same
at its principal place of business or by delivering it to the secretary, or
some director, [***] manager or principal officer of the company or by
otherwise serving the same in such manner as the [Tribunal] may approve or
direct, the company has not, within ten days after service of the notice,—
(i) paid, secured
or compounded for the debt or demand; or
(ii) procured the
suit or other legal proceeding to be stayed; or
(iii) indemnified
the defendant to his satisfaction against the suit or other legal proceeding,
and against all costs, damages and expenses to be incurred by him by reason of
the same;
(c) if
execution or other process issued on a decree or order of any Court [or Tribunal] in favour of a
creditor against the company, or any member thereof as such, or any person
authorised to be sued as nominal defendant on behalf of the company, is
returned unsatisfied in whole or in part;
(d) if
it is otherwise proved to the satisfaction of the [Tribunal] that the company is
unable to pay its debts.
Power to wind up foreign
companies, although dissolved.
584. Where
a body corporate incorporated outside India which has been carrying on business
in India, ceases to carry on business in India, it may be wound up as an
unregistered company under this Part, notwithstanding that the body corporate
has been dissolved or otherwise ceased to exist as such under or by virtue of
the laws of the country under which it was incorporated.
Contributories in winding up of
unregistered company.
585. (1) In
the event of an unregistered company being wound up, every person shall be
deemed to be a contributory, who is liable to pay, or contribute to the payment
of,—
(a) any debt or liability of the
company; or
(b) any
sum for the adjustment of the rights of the members among themselves; or
(c) the costs, charges and expenses of
winding up the company.
(2) Every contributory shall be liable to contribute to the assets
of the company all sums due from him in respect of any liability to pay or
contribute as aforesaid.
(3) In the event of the death or insolvency of any contributory,
the provisions of this Act with respect to the legal representatives of
deceased contributories, or with respect to the assignees of insolvent
contributories, as the case may be, shall apply.
Power to stay or restrain
proceedings.
586. The
provisions of this Act with respect to staying and restraining suits and legal
proceedings against a company at any time after the presentation of a petition
for winding up and before the making of a winding up order, shall, in the case
of an unregistered company, where the application to stay or restrain is by a
creditor, extend to suits and legal proceedings against any contributory of the
company.
Suits, etc., stayed on winding
up order.
587. Where
an order has been made for winding up an unregistered company, no suit or other
legal proceeding shall be proceeded with or commenced against any contributory
of the company in respect of any debt of the company, except by leave of the [Tribunal] and except on such terms as the [Tribunal] may impose.
Directions as to property in
certain cases.
588. (1)If an unregistered company has no power to
sue and be sued in a common name, or if for any reason it appears expedient,
the [Tribunal] may, by the winding up order or by any
subsequent order, direct that all or any part of the property, movable or
immovable (including actionable claims), belonging to the company or held by
trustees on its behalf, shall vest in the Official Liquidator by his official
name; and thereupon the property or the part thereof specified in the order
shall vest accordingly.
(2) The Official Liquidator may, after giving such indemnity, if
any, as the [Tribunal]
may direct, bring or defend in his
official name any suit or legal proceeding relating to that property, or which
it is necessary to bring or defend for the purpose of effectually winding up
the company and recovering its property.
Provisions of Part cumulative.
589. (1) The provisions of this Part with respect
to unregistered companies shall be in addition to and not in derogation of, any
provisions hereinbefore in this Act contained with respect to the winding up of
companies by the [Tribunal].
(2) The [Tribunal]
or Official Liquidator may exercise any powers or do any act in the case of
unregistered companies which might be exercised or done by the [Tribunal] or Official
Liquidator in winding up companies formed and registered under this Act :
Provided that an unregistered company shall not, except in the event of its
being wound up, be deemed to be a company under this Act, and then only to the
extent provided by this Part.
590. Nothing
in this Part shall affect the operation of any enactment which provides for any
partnership, association or company being wound up, or being wound up as a
company or as an unregistered company, under the Indian Companies Act, 1913 (7
of 1913) or any Act repealed by that Act :
Provided that references in any such enactment to any provision contained in the
Indian Companies Act, 1913 (7 of 1913) or in any Act repealed by that Act shall
be read as references to the corresponding provision, if any contained in this
Act.
Companies
incorporated outside
Provisions as to establishment of places of
business in India
Application of sections 592 to
602 to foreign companies.
591. [(1)] Sections
592 to 602, both inclusive, shall apply to all foreign companies, that is to
say, companies falling under the following two classes, namely :—
(a) companies
incorporated outside
(b) companies
incorporated outside
(2) Notwithstanding anything contained in sub-section (1), where
not less than fifty per cent, of the paid-up share capital (whether equity or
preference or partly equity and partly preference) of a company incorporated
outside India and having an established place of business in India, is held by
one or more citizens of India or by one or more bodies corporate incorporated
in India, or by one or more citizens of India and one or more bodies corporate
incorporated in India, whether singly or in the aggregate, such company shall
comply with such of the provisions of this Act as may be prescribed with regard
to the business carried on by it in India, as if it were a company incorporated
in India.]
Documents, etc., to be delivered
to Registrar by foreign companies carrying on business in
592. (1) Foreign companies which, after the
commencement of this Act, establish a place of business within
(a) a
certified copy of the charter, statutes, or memorandum and articles, of the
company or other instrument constituting or defining the constitution of the
company; and, if the instrument is not in the English language, a certified
translation thereof;
(b) the
full address of the registered or principal office of the company;
(c) a
list of the directors and secretary of the company, containing the particulars
mentioned in sub-section (2);
(d) the
name and address or the names and addresses of some one or more persons
resident in India, authorised to accept on behalf of the company service of
process and any notices or other documents required to be served on the
company; and
(e) the
full address of the office of the company in
(2) The list referred to in clause (c) of sub-section (1) shall contain the following particulars,
that is to say:—
(a) with
respect to each director,—
(i) in the case of an individual, his present
name and surname in full, any former name or names and surname or surnames in
full, his usual residential address, his nationality, and if that nationality
is not the nationality of origin, his nationality of origin, and his business
occupation, if any, or if he has no business occupation but holds any other
directorship or directorships, particulars of that directorship or of some one
of those directorships; and
(ii) in the case of a body corporate, its
corporate name and registered or principal office; and the full name, address,
nationality, and nationality of origin, if different from that nationality of
each of its directors;
(b) with
respect to the secretary, or where there are joint secretaries, with respect to
each of them—
(i) in the case of an individual, his present
name and surname, any former name or names and surname or surnames, and his
usual residential address; and
(ii) in the case of a body corporate, its
corporate name and registered or principal office :
Provided that, where all the partners in a firm are joint secretaries of the
company, the name and principal office of the firm may be stated instead of the
particulars mentioned in clause (b)
of this sub-section.
(3) Clauses (2)
and (3) of the Explanation to sub-section (1) of
section 303 shall apply for the purpose of the construction of references in sub-section
(2) to present and former names and surnames as they apply for the purposes of
the construction of such references in sub-section (1) of section 303.
(4) Foreign companies, other than those mentioned in sub-section
(1), shall, if they have not delivered to the Registrar before the commencement
of this Act the documents and particulars specified in sub-section (1) of
section 277 of the Indian Companies Act, 1913 (7 of 1913), continue to be
subject to the obligation to deliver those documents and particulars in
accordance with that Act.
Return to be delivered to
Registrar by foreign company where documents, etc., altered.
593. If any alteration is made or
occurs in—
(a) the
charter, statutes, or memorandum and articles of a foreign company or other
instrument constituting or defining the constitution of a foreign company; or
(b) the
registered or principal office of a foreign company ; or
(c) the
directors or secretary of a foreign company [***] ; or
(d) the
name or address of any of the persons authorised to accept service on behalf of
a foreign company; or
(e) the
principal place of business of the company in
the company shall, within the prescribed time,
deliver to the Registrar for registration a return containing the prescribed
particulars of the alteration.
594. (1) Every foreign company
shall, in every calendar year,—
(a) make
out a balance sheet and profit and loss account in such form, containing such
particulars and including or having annexed or attached thereto such documents
(including, in particular documents relating to every subsidiary of the
foreign company) as under the provisions of this Act it would, if it had been
a company within the meaning of this Act, have been required to make out and
lay before the company in general meeting; and
(b) deliver
three copies of those documents to the Registrar :
Provided that the Central Government may, by notification in the Official
Gazette, direct that, in the case of any foreign company or class of foreign
company the requirements of clause (a)
shall not apply, or shall apply, subject to such exceptions and modifications
as may be specified in the notification.
(2) If any such document as is mentioned in sub-section (1) is not
in the English language, there shall be annexed to it a certified translation
thereof.
(3) Every foreign company shall send to the Registrar with the
documents required to be delivered to him under sub-section (1), three copies
of a list in the prescribed form of all places of business established by the
company in
Obligation to state name of
foreign company, whether limited, and country where incorporated.
595. Every foreign company shall—
(a) in
every prospectus inviting subscriptions in
(b) conspicuously
exhibit on the outside of every office or place where it carries on business in
India, the name of the company and the country in which it is incorporated, in
letters easily legible in English characters, and also in the characters of the
language or one of the languages in general use in the locality in which the
office or place is situate;
(c) cause
the name of the company and of the country in which the company is
incorporated, to be stated in legible English characters in all business
letters, bill-heads and letter paper, and in all notices, [***] and other
official publications of the company; and
(d) if
the liability of the members of the company is limited, cause notice of that
fact—
(i) to be stated in every such prospectus as
aforesaid and in all business letters, bill-heads, letter paper, notices,
advertisements and other official publications of the company, in legible
English characters; and
(ii) to be conspicuously exhibited on the
outside of every office or place where it carries on business in India, in
legible English characters and also in legible characters of the language or
one of the languages in general use in the locality in which the office or
place is situate.
596. Any
process, notice, or other document required to be served on a foreign company
shall be deemed to be sufficiently served, if addressed to any person whose
name has been delivered to the Registrar under the foregoing provisions of this
Part and left at, or sent by post to, the address which has been so delivered :
Provided that—
(a) where
any such company makes default in delivering to the Registrar the name and
address of a person resident in India who is authorised to accept on behalf of
the company service of process, notices or other documents; or
(b) if
at any time all the persons whose names and addresses have been so delivered
are dead or have ceased so to reside, or refuse to accept service on behalf of
the company, or for any reason, cannot be served;
a document may be served on the company by
leaving it at, or sending it by post to, any place of business established by
the company in
Office where documents to be
delivered.
597. (1) Any document which any foreign company
is required to deliver to the Registrar shall be delivered to the Registrar
having jurisdiction over New Delhi, and references to the Registrar in this
Part [except in sub-section (2)] shall be construed accordingly.
(2) Any such document as is referred to in sub-section (1) shall
also be delivered to the Registrar of the State in which the principal place of
business of the company is situate.
(3) If any foreign company ceases to have a place of business in
598. If
any foreign company fails to comply with any of the foregoing provisions of
this Part, the company, and every officer or agent of the company who is in
default, shall be punishable with fine which may extend to [ten] thousand
rupees, and in the case of a continuing offence, with an additional fine which
may extend to [one thousand] rupees for every day during which the default continues.
Company’s failure to comply with
Part not to affect its liability under contracts, etc.
599. Any
failure by a foreign company to comply with any of the foregoing provisions of this
Part shall not affect the validity of any contract, dealing or transaction
entered into by the company or its liability to be sued in respect thereof; but
the company shall not be entitled to bring any suit, claim any set off, make
any counter-claim or institute any legal proceeding in respect of any such
contract, dealing or transaction, until it has complied with the provisions of
this Part.
Registration of charges,
appointment of receiver and books of account.
600. (1) The provisions of Part V (sections 124 to
145) shall apply mutatis mutandis
to—
(a) charges
on properties in
(b) charges
on property in
Provided that where a charge is created, or the completion of the acquisition of
the property takes place, outside India, sub-section (5) of section 125 and the
proviso to sub-section (1) of section 127 shall have effect as if the property,
wherever situated, were situated outside India.
(2) The provisions of section 118 shall apply mutatis mutandis to a foreign
company.
(3) [(a)]
The provisions of section 209 shall apply to a foreign company to the extent of
requiring it to keep at its principal place of business in India the books of
account referred to in that section, with respect to moneys received and
expended, sales and purchases made, and assets and liabilities, in the course
of or in relation to its business in India.
[(b) On and from the
commencement of the Companies (Amendment) Act, 1974,—
(i) the
provisions of section 159 shall, subject to such modifications or adaptations
as may be made therein by the rules made under this Act, apply to a foreign
company having an established place of business in India, as they apply to a
company incorporated in India;
(ii) the
provisions of sections 209, 209A, 233A and 233B and sections 234 to 246 (both
inclusive) shall, so far as may be, apply only to the Indian business of a
foreign company having an established place of business in India, as they apply
to a company incorporated in India.]
(4) In applying the sections referred to in sub-sections (1), (2)
and (3) to a foreign company as aforesaid, references in those sections to the
Registrar shall be deemed to be references to the Registrar having jurisdiction
over New Delhi, and references to the registered office of the foreign company
shall be deemed to be references to its principal place of business in India.
Fees for registration of documents
under Part.
601. There
shall be paid to the Registrar for registering any document required by the
foregoing provisions of this Part to be registered by him, such fees as may be
prescribed.
Interpretation of foregoing
sections of Part.
602. For the purposes of the
foregoing provisions of this Part—
(a) the
expression “certified” means certified in the prescribed manner to be a true
copy or a correct translation;
(b) the
expression “director”, in relation to a company, includes any person in accordance
with whose directions or instructions the Board of directors of the company is
accustomed to act;
(c) the
expression “place of business” includes a share transfer or share registration
office;
(d) the
expression “prospectus” has the same meaning as when used in relation to a
company incorporated under this Act; and
(e) the
expression “secretary” includes any person occupying the position of
secretary, by whatever name called.
Dating of prospectus and
particulars to be contained therein.
603. (1) No person shall issue, circulate or
distribute in India any prospectus offering for subscription shares in or
debentures of a company incorpo-rated or to be incorporated outside India,
whether the company has or has not established, or when formed will or will not
establish, a place of business in India, unless the prospectus is dated; and
(a) contains
particulars with respect to the following matters :—
(i) the instrument constituting or defining
the constitution of the company;
(ii) the enactments or provisions having the
force of enactments, by or under which the incorporation of the company was
effected;
(iii) an address in India where the said
instrument, enactments, or provision, or copies thereof, and if the same are
not in English, a translation thereof certified in the prescribed manner, can
be inspected;
(iv) the date on which and the country in which
the company was incorporated;
(v) whether the company has established a place
of business in
(b) subject
to the provisions of this section, states the matters specified in Part I of
Schedule II and sets out the reports specified in Part II of that Schedule,
subject always to the provisions contained in Part III of that Schedule :
Provided that sub-clauses (i), (ii) and (iii) of clause (a)
shall not apply in the case of a prospectus issued more than two years after
the date at which the company is entitled to commence business; and in the application
of Part I of Schedule II for the purposes of this sub-section, clause (a) thereof shall have effect with the
substitution, for references to the articles, of references to the constitution
of a company.
(2) Any condition requiring or binding an applicant for shares or
debentures to waive compliance with any requirement imposed by virtue of clause
(a) or (b) of sub-section (1), or purporting to affect him with notice
of any contract, document or matter not specifically referred to in the prospectus,
shall be void.
(3) No person shall issue to any person in India a form of application for shares in or debentures of
such a company or intended company as is mentioned in sub-section (1), unless
the form is issued with a prospectus which complies with the provisions of this
part and the issue whereof in India does not contravene the provisions of
section 604 :
Provided that this sub-section shall not apply if it is shown that the form of
application was issued in connection with a bona fide invitation to a person to enter into an under writing
agreement with respect to the shares or debentures.
(4) In the event of non-compliance with or contravention of any of
the requirements imposed by clauses (a)
and (b) of sub-section (1), a
director or other person responsible for the prospectus shall not incur any
liability by reason of the non-compliance or contravention, if—
(a) as
regards any matter not disclosed, he proves that he had no knowledge thereof;
or
(b) he
proves that the non-compliance or contravention arose from an honest mistake of
fact on his part; or
(c) the
non-compliance or contravention was in respect of matters which, in the opinion
of the Court dealing with the case, were immaterial, or was otherwise such as
ought in the opinion of that Court, having regard to all the circumstances of
the case, reasonably to be excused :
Provided that, in the event of failure to include in a prospectus a statement
with respect to the matters contained in clause 18 of Schedule II, no director
or other person shall incur any liability in respect of the failure, unless it
be proved that he had knowledge of the matters not disclosed.
(5) This section—
(a) shall
not apply to the issue to existing members or debenture holders of a company of
a prospectus or form of application relating to shares in or debentures of the
company, whether an applicant for shares or debentures will or will not have
the right to renounce in favour of other persons; and
(b) except
in so far as it requires a prospectus to
be dated, shall not apply to the issue of a prospectus relating to shares or
debentures which are or are to be in all respects uniform with shares or
debentures previously issued and for the time being dealt in or quoted on a
recognised stock exchange;
but, subject as aforesaid, this section shall
apply to a prospectus or form of application whether issued on or with
reference to the formation of a company or subsequently.
(6) Nothing in this section shall limit or diminish any liability
which any person may incur under the general law or under this Act apart from
this section.
Provisions as to expert’s
consent and allotment.
604. (1) No person shall issue, circulate or
distribute in India any prospectus offering for subscription shares in or
debentures of a company incorpo-rated or to be incorporated outside India,
whether the company has or has not established, or when formed will or will not
establish, a place of business in India—
(a) if,
where the prospectus includes a statement purporting to be made by an expert,
he has not given, or has before delivery of the prospectus for registration
withdrawn, his written consent to the issue of the prospectus with the
statement included in the form and context in which it is included, or there
does not appear in the prospectus a statement that he has given and has not
withdrawn his consent as aforesaid; or
(b) if
the prospectus does not have the effect, where an application is made in
pursuance thereof, of rendering all persons concerned bound by all the
provisions (other than penal provisions) of sections 72, 73 and 74, so far as
applicable.
(2) In this section, the expression “expert” includes an engineer,
a valuer, an accountant and any other person whose profession gives authority
to a statement made by him; and for the purposes of this section a statement
shall be deemed to be included in a prospectus if it is contained in any
report or memorandum appearing on the face thereof or by reference
incorporated therein or issued therewith.
605.
[(1)] No person shall issue, circulate or distribute in India any
prospectus offering for subscription shares in or debentures of a company
incorporated or to be incorporated outside India, whether the company has or
has not established, or when formed will or will not establish, a place of
business in India, unless before the issue, circulation or distribution of the
prospectus in India, a copy thereof certified by the chairman and two other
directors of the company as having been approved by resolution of the managing
body has been delivered for registration to the Registrar and the prospectus
states on the face of it that a copy has been so delivered, and there is
endorsed on or attached to the copy—
(a) any consent to the issue of the
prospectus required by section 604;
(b) a
copy of any contract required by clause 16 of Schedule II to be stated in the
prospectus or, in the case of a contract not reduced into writing, a memorandum
giving full particulars thereof; and
(c) where
the persons making any report required by Part II of Schedule II have made
therein, or have, without giving the reasons, indicated therein, any such
adjustments as are mentioned in clause 32 of that Schedule, a written statement
signed by those persons setting out the adjustments and giving the reasons
therefor.
(2) The references in clause (b) of sub-section (1) to the copy of
a [contract] required thereby to be endorsed on or attached to a copy of the
prospectus shall, in the case of a contract wholly or partly in a language
other than English, be taken as references to a copy of a translation of the
contract in English or a copy embodying a translation in English of the parts
which are not in English, as the case may be, being a translation certified in
the prescribed manner to be a correct translation.
Penalty
for contravention of sections 603, 604 and 605.
606. Any
person who is knowingly responsible—
(a) for
the issue, circulation or distribution of a prospectus; or
(b) for
the issue of a form of [application for shares, debentures or Indian Depository
Receipts];
in contravention of any of the provisions of
sections 603, 604 [, 605 and 605A], shall be punishable with imprisonment for a
term which may extend to six months, or with fine which may extend to [fifty]
thousand rupees, or with both.
Civil liability for
mis-statements in prospectus.
607. Section
62 shall extend to every prospectus offering for subscription shares in or
debentures of a company incorporated or to be incorporated outside India,
whether the company has or has not established, or when formed will or will not
establish, a place of business in India, with the substitution for references
in section 62 to section 60 of this Act, of references to section 604 thereof.
Interpretation of provisions as
to prospectuses.
608. (1) Where any document by which any shares
in, or debentures of, a company incorporated outside India are offered for sale
to the public, would, if the company concerned had been a company within the
meaning of this Act, have been deemed by virtue of section 64, to be a
prospectus issued by the company, that document shall be deemed, for the
purposes of this Part, to be a prospectus issued by the company offering such
shares or debentures for subscription.
(2) An offer of shares or debentures for subscription or sale to
any person whose ordinary business it is to buy or sell shares or debentures,
whether as principal or as agent, shall not be deemed to be an offer to the
public for the purposes of this Part.
(3) In this Part, the expressions
“prospectus”, “shares” and “debentures” have the same meanings as when used in
relation to a company incorporated under this Act.
Registration Offices and Officers and Fees
609. (1) For the purposes of the registration of
companies under this Act, there shall be offices at such places as the Central Government
thinks fit.
(2) The Central Government may appoint such Registrars, and such
Additional, Joint, Deputy and Assistant Registrars as it thinks necessary for
the registration of companies under this Act, and may make regulations with
respect to their duties.
(3) The salaries of the persons appointed under this section shall
be fixed by the Central Government.
(4) The Central Government may direct a seal or seals to be
prepared for the authentication of documents required for, or connected with, the
registration of companies.
(5) Whenever any act is by this Act directed to be done to or by
the Registrar, it shall, until the Central Government otherwise directs, be
done to or by the existing Registrar of Companies or joint-stock companies, or
in his absence, to or by such person as the Central Government may for the time
being authorise:
Provided that in the event of the Central Government altering the constitution
of the existing registry offices or any of them, any such act shall be done to
or by such officer and at such place, with reference to the local situation of
the registered offices of the companies concerned, as the Central Government
may appoint.
Inspection, production and
evidence of documents kept by Registrar.
610. (1) [Save as otherwise provided elsewhere in
this Act, any person may]—
(a) inspect
any documents kept by the Registrar, [in accordance with the rules made under
the Destruction of Records Act, 1917 (5 of 1917)] being documents filed or
registered by him in pursuance of this Act, or making a record of any fact
required or authorised to be recorded or registered in pursuance of this Act,
on payment for each inspection of [such fee as may be prescribed];
(b) require
a certificate of the incorporation of any company, or a copy or extract of any
other document or any part of any other document to be certified by the
Registrar, on payment of [such fees as may be prescribed] :
Provided that the rights conferred by this sub-section shall be exercisable—
(i) in
relation to documents delivered to the Registrar with a prospectus in pursuance
of sub-clause (i) of clause (b) of sub-section (1) of section 60,
only during the fourteen days beginning with the date of publication of the
prospectus; and at other times, only with the permission of the Central
Government; and
(ii) in
relation to documents so delivered in pursuance of clause (b) of sub-section (1) of section 605,
only during the fourteen days beginning with the date of the prospectus; and at
other times, only with the permission of the Central Government.
(2) No process for compelling the production of any document kept
by the Registrar shall issue from any Court [or the [Tribunal]] except with the
leave of that Court [or the [Tribunal]];
and any such process, if issued, shall bear thereon a statement that it is
issued with the leave of the Court [or the [Tribunal]].
(3) A copy of, or extract
from, any document kept and registered at any of the offices for the
registration of companies under this Act, certified to be a true copy under the
hand of the Registrar (whose official position it shall not be necessary to
prove), shall, in all legal proceedings, be admissible in evidence as of equal
validity with the original document.
(4) [Omitted by the
Companies (Amendment) Act, 1960. For the original sub-section, refer Appendix
I.]
610A. (1) Notwithstanding
anything contained in any other law for the time being in force,—
(a) a micro film
of a document or the reproduction of the image or images embodied in such micro
film (whether enlarged or not); or
(b) a facsimile
copy of a document; or
(c) a statement
contained in a document and included in a printed material produced by a
computer (hereinafter referred to as a “computer printout”), if the conditions
mentioned in sub-section (2) are satisfied,
shall be deemed to be
also a document for the purposes of this Act and the rules made thereunder and
shall be admissible in any proceedings thereunder, without further proof or
production of the original, as evidence of any contents of the original or of
any fact stated therein of which direct evidence should be admissible.
(2)
The conditions referred to in
sub-section (1) in respect of a computer printout shall be the following,
namely :—
(a) the
information contained in the statement reproduces or is derived from returns and
document filed by the company on paper or on computer network, floppy,
diskette, magnetic cartridge tape, CD-Rom or any other computer readable
media;
(b) while
receiving returns or documents on computer media, necessary checks by scanning
the documents filed on computer media will be carried out and media will be
duly authenticated by the Registrar; and
(c) the
Registrar shall also take due care to preserve the computer media by
duplicating, transferring, mastering or storage without loss of data.]
Provisions
relating to filing of applications, documents inspection, etc., through
electronic form.
610B.(1) Notwithstanding anything contained in this
Act, and without prejudice to the provisions contained in section 6 of the Information
Technology Act, 2000 (21 of 2000), the Central Government may, by notification
in the Official Gazette, make rules so as to require from such date as may be
specified in the rules, that—
(a) such applications, balance sheet,
prospectus, return, declaration, memorandum of association, articles of
association, particulars of charges, or any other particulars or document as
may be required to be filed or delivered under this Act or rules made
thereunder, shall be filed, through the electronic form and authenticated in
such manner as may be specified in the rules;
(b) such document, notice, any communication or
intimation, required to be served or delivered under this Act, shall be served
or delivered under this Act through the electronic form and authenticated in
such manner as may be specified in the rules;
(c) such applications, balance sheet,
prospectus, return, register, memorandum of association, articles of
association, particulars of charges, or any other document and return filed
under this Act or rules made thereunder shall be maintained by the Registrar in
the electronic form and registered or authenticated, as the case may be, in
such manner as may be specified in the rules;
(d) such inspections of the memorandum of
association, articles of association, register, index, balance sheet, return or
any other document maintained in the electronic form, which is otherwise
available for such inspection under this Act or rules made thereunder, may be
made by any person through the electronic form as may be specified in the
rules;
(e) such fees, charges or other sums payable
under this Act or rules made thereunder shall be paid through the electronic
form and in such manner as may be specified in the rules;
(f) the Registrar shall, register change of
registered office, alteration of memorandum of association or articles of
association, prospectus, issue certificate of incorporation or certificate of
commencement of business, register such document, issue such certificate,
record notice, receive such communication as may be required to be registered
or issued or recorded or received, as the case may be, under this Act or rules
made thereunder or perform duties or discharge functions or exercise powers
under this Act or rules made thereunder or do any act which is by this Act
directed to be performed or discharged or exercised or done by the Registrar,
by the electronic form, in such manner as may be specified in the rules.
(2) The
Central Government may, by notification in the Official Gazette, frame a scheme
to carry out the provisions specified under sub-section (1) through the
electronic form :
Provided that the Central Government may appoint different dates in respect of different Registrar of Companies or Regional Directors from which such scheme shall come into force.
610C. (1) The
Central Government may, by notification in the Official Gazette, direct that any
of the provisions of this Act, so far as it is required for the purpose of
electronic record specified under section 610B in the electronic form,—
(a) shall not apply, in relation to the matters
specified under clauses (a) to
(f) of sub-section (1) of section
610B, as may be specified in the notification; or
(b) shall apply, in relation to the matters
specified under clauses (a) to
(f) of sub-section (1) of
section 610B only with such consequential exceptions, modifications or
adoptions as may be specified in the notification :
Provided that
no such notification which relates to imposition of fines or other pecuniary
penalties or demand or payment of fees or contravention of any of the
provisions of this Act or offence shall be issued under this sub-section.
(2) A copy of every notification proposed to be issued under sub-section (1), shall be laid in draft before each House of Parliament, while it is in session, for a total period of thirty days which may be comprised in one session or in two or more successive sessions, and if, before the expiry of the session immediately following the session or the successive sessions aforesaid, both Houses agree in disapproving the issue of the notification or both Houses agree in making any modification in the notification, the notification shall not be issued or, as the case may be, shall be issued only in such modified form as may be agreed upon by both the Houses.
Providing
of value added services through electronic form.
610D. The Central Government may provide such value added services through the electronic form and levy such fees as may be prescribed.
Application
of provision of Act 21 of 2000.
610E. All the provisions of the Information Technology Act, 2000 relating to the electronic records (including the manner and format in which the electronic records shall be filed), in so far as they are not inconsistent with this Act, shall apply, or in relation, to the records in electronic form under section 610B.]
Fees in Schedule X to be paid.
611. (1) In
respect of the several matters mentioned in Schedule X, there shall, subject to
the limitations imposed by that Schedule, be paid to the Registrar the several
fees therein specified :
Provided that no fees shall be charged in respect of the registration in pursuance
of Part IX of a company, if it is not registered as a limited company, or if,
before its registration as a limited company, the liability of the shareholders
was limited by some other Act of Parliament or any other Indian law or by an
Act of Parliament of the United Kingdom, Royal Charter or Letters Patent in
force in India :
Provided further that in the case of resolutions to which
section 192 applies, not more than one fee shall be required for the filing of
more resolutions than one passed in the same meeting if such resolutions are
filed with the Registrar at the same time.]
(2) Any document required or authorised by this Act to be filed
or registered, or any fact required or authorised by this Act to be registered,
with the Registrar on payment of the fee specified therefor in Schedule X, may,
without prejudice to any other liability, be filed or registered after the
time, if any, specified in this Act for its filing or registration on payment
of such additional fee not exceeding ten times the amount of the fee so
specified as the Registrar may determine.]
Fees, etc., paid to Registrar
and other officers to be accounted for to Central Government.
612. All
fees, charges, and other sums paid to any Registrar, any Additional, Joint,
Deputy, or Assistant Registrar, or any other officer of the Central Government
in pursuance of this Act shall be paid into the public account of
Power of Central Government to
reduce fees, charges, etc.
613. (1) The Central Government may, by order
notified in the Official Gazette, reduce the amount of any fee, charge, or
other sum specified in any provision contained in this Act, as payable in
respect of any matter, either to the Central Government or to any Registrar,
any Additional, Joint, Deputy, or Assistant Registrar or any other officer of
the Central Government; and thereupon such provision shall, during the period
for which the order is in force, have effect as if the reduced fee had been
substituted for the fee specified in such provision.
(2) Any order notified under sub-section (1) may, by a like order,
be cancelled or varied at any time by the Central Government.
(3) Nothing in this section shall be deemed to affect the power of
the Central Government under section 641 to alter any of the fees specified in
Schedule X.
Enforcement of duty of company
to make returns, etc., to Registrar.
614. (1) If a company, having made default in
complying with any provision of this Act which requires it to file or register
with, or deliver or send to, the Registrar any return, account or other
document, or to give notice to him of any matter, fails to make good the
default within fourteen days after the service of a notice on the company
requiring it to do so, the [Tribunal]
may, on an application made to it by any member or creditor of the company or
by the Registrar, make an order directing the company and any officer thereof
to make good the default within such time as may be specified in the order.
(2) Any such order may provide that all costs of and incidental to
the application shall be borne by the company or by any officers of the company
responsible for the default.
(3) Nothing in this section shall be taken to prejudice the
operation of any provisions in this or any other Act imposing penalties on a
company or its officers in respect of any such default as aforesaid.
Power of Court trying offences
under the Act to direct the filing of documents with Registrar.
614A. (1) Any
Court trying an offence for a default in compliance with any provision of this
Act which requires a company or its officers to file or register with, or
deliver or send to, the Registrar, any return, account or other document, may
at the time of sentencing, acquitting or discharging the accused, direct by
order, if it thinks fit to do so, any officer or other employee of the company
to file or register with, deliver or sent to, the Registrar on payment of the
fee including the additional fee required to be paid under section 611, such
return, account or other document within such time as may be specified in the
order.
(2) Any officer or other employee of the company who fails to
comply with an order of the Court under sub-section (1) shall be punishable
with imprisonment for a term which may extend to six months, or with fine, or
with both.]
General
Collection of information and statistics from
companies
Power of Central Government to
direct companies to furnish information or statistics.
615. (1) The Central Government may, by order,
require companies generally, or any class of companies, or any company, to
furnish such information or statistics with regard to their or its constitution
or working, and within such time, as may be specified in the order.
(2) (a) Every order under
sub-section (1) addressed to companies generally or to any class of companies,
shall be published in the Official Gazette and in such other manner, if any, as
the Central Government may think fit.
(b) The date of
publication of the order in the Official Gazette shall be deemed to be the date
on which the demand for information or statistics is made on such companies or
class of companies, as the case may be.
(3) Every order under sub-section (1) addressed to an individual company
shall be served on it in the manner laid down in section 51.
(4) For the purpose of satisfying itself that any information or
statistics furnished by a company in pursuance of any order under sub-section
(1) is correct and complete, the Central Government may require such company—
(a) to
produce such records or documents in its possession or under its control for
inspection, before such officer and at such time as may be specified by the
Central Government; or
(b) to
furnish such further information as may be specified by the Central Government
and within such time as may be fixed by it.
(5) The Central Government may also, by order, direct an inquiry
to be made by any person or persons named in the order—
(a) for
the purpose of obtaining any information or statistics which a company has
failed to furnish as required of it by an order under sub-section (1); or
(b) for
the purpose of satisfying itself that any information or statistics furnished
by a company in pursuance of an order made under sub-section (1) is correct and
complete; and in so far as such information or statistics may be found to be
incorrect or incomplete, for the purpose of obtaining such information or
statistics as may be necessary to make the information or statistics furnished correct
and complete;
and a person or persons so appointed shall,
for the purposes of such inquiry, have such powers as may be prescribed.
(6) If any company fails to comply with an order made under
sub-section (1) or (4), or knowingly furnishes any information or statistics
which is incorrect or incomplete in any material respect, the company, and
every officer thereof who is in default, shall be punishable with imprisonment
which may extend to three months, or with fine which may extend to [ten]
thousand rupees, or with both.
(7) An order requiring any information or statistics to be furnished
by a company may also be addressed to any person who is, or has at any time
been, an officer or employee of the company, and all the provisions of this
section, so far as may be, shall apply in relation to such person as they apply
in relation to the company:
Provided that no such person shall be punishable under sub-section (6), unless
the Court is satisfied that he was in a position to comply with the order and made
wilful default in doing so.
(8) Where a body corporate incorporated
outside
Application of Act to
companies governed by special Acts
Application of
Act to insurance, banking, electricity supply and other companies governed by
special Acts.
616. The
provisions of this Act shall apply—
(a) to
insurance companies, except in so far as the said provisions are inconsistent
with the provisions of the Insurance Act, 1938 (4 of 1938);
(b) to
banking companies, except in so far as the said provisions are inconsistent
with the provisions of the Banking Companies Act, 1949 (10 of 1949);
(c) to
companies engaged in the generation or supply of electricity, except in so far
as the said provisions are inconsistent with the provisions of [the Indian
Electricity Act, 1910 (9 of 1910), or] the Electricity Supply Act, 1948 (54 of
1948);
(d) to
any other company governed by any special Act for the time being in force,
except in so far as the said provisions are inconsistent with the provisions of
such special Act;
[(e) to such body corporate, incorporated by
any Act for the time being in force, as the Central Government may, by
notification in the Official Gazette, specify in this behalf, subject to such
exceptions, modifications or adaptations, as may be specified in the
notifications.]
Application of Act to
Government companies
Definition of
“Government company”.
617. For
the purposes of [this Act], Government company means any company in which not
less than fifty-one per cent of the [paid-up share capital] is held by the Central
Government, or by any State Government or Governments, or partly by the Central
Government and partly by one or more State Governments [and includes a company
which is a subsidiary of a Government company as thus defined.]
Government companies not to have
managing agents.
618. [Omitted by the Companies
(Amendment) Act, 2000, w.e.f. 13-12-2000.]
Application of sections 224 to
233 to Government companies.
619. (1) In the case of a Government company, the
following provisions shall apply, notwithstanding anything contained in
sections 224 to 233.
(2) The auditor of a Government company shall be appointed or
re-appointed by [***] the Comptroller and Auditor-General of
[Provided that the limits specified in
sub-sections (1B) and (1C) of section 224 shall apply in relation to the
appointment or re-appointment of an auditor under this sub-section.]
(3) The Comptroller and Auditor-General of
(a) to
direct the manner in which the company’s accounts shall be audited by the
auditor appointed in pursuance of sub-section (2) and to give such auditor
instructions in regard to any matter relating to the performance of his
functions as such;
(b) to
conduct a supplementary or test audit of the company’s accounts by such person
or persons as he may authorise in this behalf; and for the purposes of such
audit, to require information or additional information to be furnished to any
person or persons, so authorised, on such matters, by such person or persons,
and in such form, as the Comptroller and Auditor-General may, by general or
special order, direct.
(4) The auditor aforesaid shall submit a copy of his audit report
to the Comptroller and Auditor-General of India who shall have the right to
comment upon, or supplement, the audit report in such manner as he may think
fit.
(5) Any such comments upon, or supplement to, the audit report
shall be placed before the annual general meeting of the company at the same
time and in the same manner as the audit report.
Annual reports on Government
companies.
619A. (1)
Where the Central Government is a member of a Government company, the Central
Government shall cause an annual report on the working and affairs of that
company to be—
(a) prepared
within three months of its annual general meeting before which the audit report
is placed under sub-section (5) of section 619; and
(b) as
soon as may be after such preparation, laid before both Houses of Parliament
together with a copy of the audit report and any comments upon, or supplement
to, the audit report, made by the Comptroller and Auditor-General of India.
(2) Where in addition to the Central Government, any State Government
is also a member of a Government company, that State Government shall cause a
copy of the annual report prepared under sub-section (1) to be laid before the
House or both Houses of the State Legislature together with a copy of the audit
report and the comments or supplement referred to in sub-section (1).
(3) Where the Central Government is not a member of a Government
company, every State Government which is a member of that company, or where
only one State Government is a member of the company, that State Government
shall cause an annual report on the working and affairs of the company to be—
(a) prepared
within the time specified in sub-section (1); and
(b) as
soon as may be after such preparation, laid before the House or both Houses of
the State Legislature with a copy of the audit report and comments or
supplement referred to in sub-section (1).]
(4) The provisions of this section shall, so far as may be, apply to
a Government company in liquidation as they apply to any other Government
company.]
Provisions of section 619 to
apply to certain companies.
619B. The provisions of
section 619 shall apply to a company in which not less than fifty-one per cent
of the paid-up share capital is held by one or more of the following or any
combination thereof, as if it were a Government company, namely :—
(a) the
Central Government and one or more Government companies;
(b) any
State Government or Governments and one or more Government companies;
(c) the
Central Government, one or more State Governments and one or more Government
companies;
(d) the
Central Government and one or more corporations owned or controlled by the
Central Government;
(e) the
Central Government, one or more State Governments and one or more corporations
owned or controlled by the Central Government;
(f) one
or more corporations owned or controlled by the Central Government or the State
Government;
(g) more
than one Government company.]
Power to modify Act in relation
to Government companies.
620. (1) The Central Government may, by
notification in the Official Gazette, direct that any of the provisions of this
Act (other than sections 618, 619 and [619A] specified in the notification:—
(a) shall
not apply to any Government company; or
(b) shall
apply to any Government company, only with such exceptions, modifications and
adaptations, as may be specified in the notification.
(2) A copy of every notification proposed to be issued under
sub-section (1), shall be laid in draft before the each House of Parliament,
while it is in session, for a total period of thirty days which may be
comprised in one session or in two or more successive sessions, and if, before
the expiry of the session immediately following the session or the successive
sessions aforesaid, both Houses agree in disapproving the issue of the notification
or both Houses agree in making any modification in the notification, the
notification shall not be issued or, as the case may be, shall be issued only
in such modified form as may be agreed upon by both the Houses.]
Modification of Act in its application to
Nidhis and Mutual Benefit Societies
Power to modify Act in its
application to Nidhis, etc.
620A. (1) In this section, “Nidhi” or “Mutual Benefit Society” means a company which the
Central Government may, by notification in the Official Gazette, declare to be
a Nidhi or Mutual Benefit
Society, as the case may be.
(2) The Central Government may, by notification in the Official
Gazette, direct that any of the provisions of this Act specified in the
notification—
(a) shall not apply to any Nidhi or Mutual Benefit Society, or
(b) shall
apply to any Nidhi or Mutual
Benefit Society with such exceptions, modifications and adaptations as may be
specified in the notification.
(3) A copy of every notification issued under sub-section (1) shall
be laid as soon as may be after it is issued, before each House of Parliament.]
Special provisions as to
companies in Goa, Daman and
620B. The
Central Government may, by notification in the Official Gazette, direct that
for such period or periods with effect from the 26th January, 1963 or any
subsequent date, any of the provisions of this Act specified in the
notification shall not apply or shall apply only with such exceptions, and
modifications or adaptations as may be specified in the notification, to,—
(a) any
existing company in the
(b) any
company registered in the said
Special provisions as to
companies in
620C. The
Central Government may, by notification in the Official Gazette, direct that
with effect from the commencement of the Central Laws (Extension to Jammu and
Kashmir) Act, 1968, or any subsequent date, any of the provisions of this Act
specified in the notification shall not apply, or shall apply only with such
exceptions and modifications or adaptations as may be specified in the
notification, to—
(a) any existing company in the State of
(b) any
company registered in that State under this Act after the commencement of the
Central Laws (Extension to
Offences against Act to be
cognizable only on complaint by Registrar, share-holder or Government.
621. (1) No Court shall take cognizance of any offence
against this Act [***], which is alleged to have been committed
by any company or any officer thereof, except on the complaint in writing of
the Registrar, or of a shareholder of the company, or of a person authorised by
the Central Government in that behalf :
Provided that nothing in this sub-section shall apply to a prosecution by a
company of any of its officers:
[Provided further that the court may
take cognizance of offence relating to issue and transfer of securities and non-payment
of dividend on a complaint in writing by a person authorised by the Securities
and Exchange Board of India.]
(1A) Notwithstanding anything contained in the Code of Criminal
Procedure, 1898 (5 of 1898), where the complainant under sub-section (1) is the
Registrar or a person authorised by the Central Government, the personal
attendance of the complainant before the Court trying the offence shall not be
necessary unless the court for reasons to be recorded in writing requires his
personal attendance at the trial.]
(2) Sub-section (1) shall not apply to any action taken by the
liquidator of a company in respect of any offence alleged to have been
committed in respect of any of the matters included in Part VII (sections 425
to 560) or in any other provisions of this Act relating to the winding up of
companies.
(3) A liquidator of a company shall not be deemed to be an officer
of the company, within the meaning of sub-section (1).
Composition of certain offences.
621A. (1) Notwithstanding anything contained in the Code of Criminal
Procedure, 1973 (2 of 1974), any offence punishable under this Act (whether
committed by a company or any officer thereof), not being an offence punishable
with imprisonment only, or with imprisonment and also with fine, may, either
before or after the institution of any prosecution, be compounded by the
Central Government on payment or credit, by the company or the officer, as the
case may be, to the Central Government of such sums as that Government may prescribe :
Provided that the sum prescribed shall
not, in any case, exceed the maximum amount of the fine which may be imposed
for the offence so compounded :
Provided further that
in prescribing the sum required to be paid or credited for the compounding of
an offence under this sub-section, the sum, if any, paid by way of additional
fee under sub-section (2) of section 611 shall be taken into account.
(2) Nothing in sub-section (1) shall apply to
an offence committed by a company or its officer within a period of three years
from the date on which a similar offence committed by it or him was compounded
under this section.
Explanation.—For the purposes of this section, any second or subsequent offence
committed after the expiry of a period of three years from the date on which the offence was
previously compounded, shall be deemed to be a first offence.
(3)(a) Every application for the compounding of an
offence shall be made to the Registrar who shall forward the same, together
with his comments thereon to the Central Government.
(b) Where any offence is compounded under
this section, whether before or after the institution of any prosecution, an
intimation thereof shall be given by the company to the Registrar within seven
days from the date on which the offence is so compounded.
(c) Where any offence is compounded before
the institution of any prosecution, no prosecution shall be instituted in
relation to such offence, either by the Registrar or by any shareholder of the
company or by any person authorised by the Central Government against the
offender in relation to whom the offence is so compounded.
(d) Where the composition of any offence is
made after the institution of any prosecution, such composition shall be
brought by the Registrar in writing, to the notice of the Court in which the
prosecution is pending and on such notice of the composition of the offence
being given, the company or its officer in relation to whom the offence is so
compounded shall be discharged.
(4) The Central Government while dealing with
a proposal for the compounding of an offence for a default in compliance with
any provision of this Act which requires a company or its officer to file or
register with, or deliver or send to, the Registrar any return, account or
other document, may, direct, by order, if it or he thinks fit to do so, any
officer or other employee of the company to file or register with, or on
payment of the fee, and the additional fee, required to be paid under section
611, such return, account or other document within such time as may be
specified in the order.
(5) Any officer or other employee of the
company who fails to comply with any order made by the Central Government under
sub-section (4) shall be punishable with imprisonment for a term which may
extend to six months, or with fine not exceeding fifty thousand rupees or with
both.
(6) Notwithstanding anything contained in the
Code of Criminal Procedure, 1973 (2 of 1974)—
(a) any offence which is punishable under this
Act with imprisonment or with fine, or with both, shall be compoundable with
the permission of the Court, in accordance with the procedure laid down in
that Act for compounding of offences;
(b) any offence which is punishable under this
Act with imprisonment only or with imprisonment and also with fine shall not be
compoundable.
(7) No offence specified in this section
shall be compounded except under and in accordance with the provisions of this
section.]
Certain offences triable
summarily in Presidency towns.
623. If
any offence against this Act which is punishable with fine only is committed by
any person within a Presidency town, such person may be tried summarily and
punished by any Presidency Magistrate of that Presidency town.
Offences to be non-cognizable.
624. Notwithstanding
anything in the Code of Criminal Procedure, 1898 (5 of 1898), every offence
against this Act shall be deemed to be non-cognizable within the meaning of the
said Code.
Power of Central Government to
appoint company prosecutors.
624A. Notwithstanding
anything contained in the Code of Criminal Procedure, 1898 (5 of 1898), the
Central Government may appoint generally, or in any case, or for any specified
class of cases in any local area, one or more persons, as company prosecutors
for the conduct of prosecutions arising out of this Act; and the persons so
appointed as company prosecutors shall have all the powers and privileges
conferred by that Code on public prosecutors, appointed by a State Government
under section 492 of that Code.]
624B. Notwithstanding
anything contained in the Code of Criminal Procedure, 1898 (5 of 1898), the
Central Government may, in any case arising out of this Act, direct any company
prosecutor or authorise any other person either by name or by virtue of his
office, to present an appeal from an order of acquittal passed by any Court
other than a High Court and an appeal presented by such prosecutor or other
person shall be deemed to have been validly presented to the appellate Court.]
Payment of compensation in cases
of frivolous or vexatious prosecution.
625. (1) In respect of any case instituted upon the complaint of a shareholder against
the company or any officer thereof in pursuance of section 621, the provisions
of section 250 of the Code of Criminal Procedure, 1898 (5 of 1898), shall not
apply; and the following provisions
shall apply instead.
(2) If the Magistrate by whom any such case is heard discharges or
acquits all or any of the accused and is of opinion that the accusation against
them or any of them was false and either frivolous or vexatious, the Magistrate
may, by his order of discharge or acquittal, if the shareholder upon whose
complaint the accusation was made is present, call upon him forthwith to show
cause why he should not pay compensation to such accused, or to each or any of
such accused when there is more than one, or if such shareholder is not
present, direct the issue of a summons to him to appear and show cause as
aforesaid.
(3) The Magistrate shall record and consider any cause which such
shareholder may show; and if the Magistrate is satisfied that the accusation
was false and either frivolous or vexatious, he may, for reasons to be
recorded, direct that compensation to such amount as he may determine be paid
by such shareholder to the accused or to each or any of them, not exceeding one
thousand rupees in all.
(4) The Magistrate may, by the order directing payment of the
compensation under sub-section (3), further order that, in default of payment,
the shareholder ordered to pay such compensation shall suffer simple
imprisonment for a term not exceeding two months.
(5) When any person is imprisoned under sub-section (4), the
provisions of sections 68 and 69 of the Indian Penal Code (45 of 1860), shall,
so far as may be, apply.
(6) No person who has been directed to pay compensation under this
section shall, by reason of such order, be exempted from any civil or criminal
liability in respect of the complaint made by him :
Provided that any amount paid to an accused person under this section shall be taken
into account in awarding compensation to such person in any subsequent civil
suit relating to the same matter.
(7) A complainant who has been ordered to pay compensation under
sub-section (3) by a Magistrate may appeal from the order, in so far as it
relates to the payment of compensation, as if such complainant had been
convicted on a trial held by such Magistrate.
(8) Where an order for payment of compensation to an accused
person is made, the compensation shall not be paid to him before the period
allowed for the presentation of the appeal under sub-section (7) has elapsed;
or, if an appeal is presented, before the appeal has been decided.
626. The Court [or Tribunal] imposing any fine under this Act may direct that
the whole or any part thereof shall be applied in or towards payment of the
costs of the proceedings, or in or towards the rewarding of the person on whose
information or at whose instance the fine is recovered.
Production and inspection of
books where offence suspected.
627. (1) If,
on an application made to a Judge of a High Court in Chambers [or Tribunal, as the case may be] by
the Public Prosecutor of the State or by the Central Government, [or by a
company prosecutor appointed under section 624A], it is shown that there is
reasonable cause to believe that any person has, while he was an officer of a
company, committed an offence in connection with the management of the
company’s affairs, and that evidence of the commission of the offence is to be
found in any books or papers of or under the control of the company, an order
may be made—
(i) authorising
any person named therein to inspect the said books or papers or any of them for
the purpose of investigating, and obtaining evidence of the commission of, the
offence; or
(ii) requiring
the [***] manager of the company or such other officer thereof as may be named
in the order, to produce the said books or papers or any of them to a person,
and at a place and time, named in the order.
(2) Sub-section (1) shall apply also in relation to any books or
papers of a person carrying on the business of banking so far as they relate to
the company’s affairs, as it applies to any books or papers of or under the
control of the company, except that no such order as is referred to in clause (ii) thereof shall be made by virtue
of this sub-section.
(3) No appeal shall lie from the decision of a Judge of the High
Court [or Tribunal, as the case
may be] under this section.
628. If in
any return, report, certificate, balance sheet, prospectus, statement or other
document required by or for the purposes of any of the provisions of this Act,
any person makes a statement—
(a) which is false in any material
particular, knowing it to be false; or
(b) which omits any material fact,
knowing it to be material;
he shall, save as otherwise expressly provided
in this Act, be punishable with imprisonment for a term which may extend to two
years, and shall also be liable to fine.
629. If any person intentionally
gives false evidence—
(a) upon
any examination upon oath or solemn affirmation, authorised under this Act; or
(b) in
any affidavit, deposition or solemn affirmation, in or about the winding up of
any company under this Act, or otherwise in or about any matter arising under
this Act;
he shall be punishable with imprisonment for a
term which may extend to seven years, and shall also be liable to fine.
Penalty where no specific
penalty is provided elsewhere in the Act.
629A. If a
company or any other person contravenes any provision of this Act for which no
punishment is provided elsewhere in this Act or any condition, limitation or
restriction subject to which any approval, sanction, consent, confirmation, recognition,
direction or exemption in relation to any matter has been accorded, given or
granted, the company and every officer of the company who is in default or
such other person shall be punishable with fine which may extend to [five
thousand] rupees, and where the contravention is a continuing one, with a
further fine which may extend to [five hundred] rupees for every day after the
first during which the contravention continues.]
Penalty for wrongful withholding
of property.
630. (1) If any officer or employee of a company—
(a) wrongfully obtains possession of any
property of a company; or
(b) having
any such property in his possession, wrongfully withholds it or knowingly
applies it to purposes other than those expressed or directed in the articles
and authorised by this Act;
he shall, on the complaint of the company or
any creditor or contributory thereof, be punishable with fine which may extend
to [ten] thousand rupees.
(2) The Court trying the offence may also order such officer or
employee to deliver up or refund, within a time to be fixed by the Court, any
such property wrongfully obtained or wrongfully withheld or knowingly
misapplied, or in default, to suffer
imprisonment for a term which may extend to two years.
Penalty for improper use of
words “Limited” and “Private Limited”.
631. If
any person or persons trade or carry on business under any name or title of
which the word “Limited” or the words “Private Limited”, or any contraction or
imitation thereof is or are the last word or words, that person or each of
those persons, shall, unless duly incorporated with limited liability, or
unless duly incorporated as a private company with limited liability, as the
case may be, be punishable with fine which may extend to [five hundred] rupees
for every day upon which that name or title has been used.
Power to require limited company
to give security for costs.
632. Where
a limited company is plaintiff or petitioner in any suit or other legal
proceeding, any Court [or
Tribunal] having jurisdiction in the matter may, if there is
reason to believe that the company will be unable to pay the costs of the
defendant if he is successful in his defence, require sufficient security to be
given for those costs, and may stay all proceedings until the security is
given.
Power of Court to grant relief
in certain cases.
633. (1) If in any proceeding for negligence,
default, breach of duty, misfeasance or breach of trust against an officer of a
company, it appears to the Court hearing the case that he is or may be liable
in respect of the negligence, default, breach of duty, misfeasance or breach of
trust, but that he has acted honestly and reasonably, and that having regard
to all the circumstances of the case, including those connected with his
appointment, he ought fairly to be excused, the Court may relieve him, either
wholly or partly, from his liability on such terms as it may think fit:
[Provided that in a criminal proceeding
under this sub-section, the Court shall have no power to grant relief from any
civil liability which may attach to an officer in respect of such negligence,
default, breach of duty, misfeasance or breach of trust.]
(2) Where any such officer has reason to apprehend that any proceeding
will or might be brought against him in respect of any negligence, default,
breach of duty, misfeasance or breach of trust, he may apply to the High Court
for relief and the High Court on such application shall have the same power to
relieve him as it would have had if it had been a Court before which a
proceeding against that officer for negligence, default, breach of duty,
misfeasance or breach of trust had been brought under sub-section (1).
(3) No Court shall grant any relief to any officer under
sub-section (1) or sub-section (2) unless it has, by notice served in the
manner specified by it, required the Registrar and such other person, if any,
as it thinks necessary, to show cause why such relief should not be granted.]
Enforcement of orders of Courts.
634. Any
order made by a Court under this Act may be enforced in the same manner as a
decree made by the Court in a suit pending therein.
Enforcement of orders of Company
Law Board.
634A. Any order
made by the Company Law Board [* * *] may be enforced by that Board in the same
manner as if it were a decree made by a Court in a suit pending therein, and it
shall be lawful for that Board to send, in the case of its inability to execute
such order, to the Court within the
local limits of whose jurisdiction,—
(a) in
the case of an order against a company, the registered office of the company
is situated, or
(b) in
the case of an order against any other person, the person concerned voluntarily
resides, or carries on business or personally works for gain:]
[Provided that the provisions of this
section shall not apply on and after the commencement of the Companies
(Second Amendment) Act, 2002.]
Enforcement of orders of one
Court by other Courts.
635. (1) Where any order made by one Court is
required to be enforced by another Court, a certified copy of the order shall
be produced to the proper officer of the Court required to enforce the order.
(2) The production of such certified copy shall be sufficient
evidence of the order.
(3) Upon the production of such certified copy, the Court shall
take the requisite steps for enforcing the order, in the same manner as if it
had been made by itself.
(4) Where any order made by the Company Law Board [or Tribunal] [* * *] is
required to be enforced by a Court, a certified copy of the order shall be
produced to the proper officer of the Court required to enforce the order and
the provisions of sub-sections (2) and (3) shall, as far as may be, apply to
every such order in the same manner and to the same extent as they apply to an
order made by a Court.]
Protection of acts done in good
faith.
635A. No
suit, prosecution or other legal proceeding shall lie against the Government or
any officer of Government or any other person in respect of anything which is
in good faith done or intended to be done in pursuance of this Act or any rules
or orders made thereunder, or in respect of the publication by or under the
authority of the Government or such officer of any report, paper or
proceedings.
Non-disclosure of information in
certain cases.
635AA.Notwithstanding anything contained in any
other law for the time being in force, the Registrar, any officer of Government
or any other person shall not be compelled to disclose to any Court, Tribunal
or other authority whence he got any information which—
(a) has
led the Central Government to direct a special audit under section 233A or to
order an investigation under section 235, 237 [or 247]; or
(b) is
or has been material or relevant in connection with such special audit or
investigation.]
Temporary protection of employees
Protection of employees during
investigation by inspector or pendency of proceeding before [Appellate Tribunal] in certain cases.
635B. (1) If—
(a) during
the course of any investigation of the affairs and other matters of or relating
to a company, body or person under section 235, section 237 or section 239 or
of the membership and other matters of or relating to a company, or the ownership
of shares in or debentures of a company or body corporate, or the affairs and
other matters of or relating to a company, body or person, under section 247
[***]; or
(b) during
the pendency of any proceeding against any person concerned in the conduct and
management of the affairs of a company under Chapter IVA of Part VI,
such company, body or person
proposes—
(i) to discharge, or
(ii) to
punish, whether by dismissal, removal, reduction in rank or otherwise,
any
employee, the company, body or person, as the case may be, shall send by post
to the [Tribunal] previous
intimation in writing of the action proposed against the employee and if the [Tribunal] has any objection to
the action proposed, it shall send by post notice thereof in writing to the
company, body or person concerned.
(2) If the company, body or person concerned does not receive
within thirty days of the sending of the previous intimation of the action
proposed against the employee, any notice of the objection from the [Tribunal], then and only then,
the company, body or person concerned may proceed to take against the employee
the action proposed.
(3) If the company, body or person concerned is dissatisfied with
the objection raised by the [Tribunal],
it may, within thirty days of the receipt of the notice of the objection,
prefer an appeal to the [Appellate
Tribunal] in the prescribed manner and on payment of the
prescribed fee.
(4) The decision of the [Appellate Tribunal] on such appeal shall be final and be
binding on the [Tribunal]
and on the company, body or person concerned.
(5) For the removal of doubt, it is hereby declared that the
provisions of this section shall have effect without prejudice to the
provisions of any other law for the time being in force.]
Reduction of fees payable to company
Reduction of fees, charges,
etc., payable to company.
636. (1) A company which is entitled to any
specified fee, charge or other sum by virtue of any provision contained in this
Act or in its articles, may reduce the amount thereof to such extent as it
thinks fit; and thereupon such provision shall, so long as the reduction is in
force, have effect as if the reduced amount had been substituted for the fee,
charge or sum specified in such provision.
(2) Any reduction made
under sub-section (1) may, at any time, be cancelled or varied by the company.
Delegation of powers and functions of Central
Government
Delegation by Central Government
of its powers and functions under Act.
637. (1)The Central Government may, by
notification in the Official Gazette, and subject to such conditions,
restrictions and limitations as may be specified therein, delegate any of its
powers or functions under this Act (other than the power to appoint a person as
public trustee under section 153A and the power to make rules), to such
authority or officer as may be specified in the notification.]
(2) The powers and functions which cannot be delegated under [***]
sub-section (1) are those conferred by or mentioned in the following provisions
of this Act, namely, sections 10, 81, 89(4), 211(3) and (4), 212, 213, 235,
237, 239, 241, 242, 243, 244, 245, 247, [***] 250, 259, 268, 269, 274(2), 295,
300, 310, 311, [***] 349, [***] 372,
396, 399(4) and (5), 401, 408, [* * *] 410, 411(b), 448, 609, 613, 620, 638, 641 and 642.
(2A) [Omitted by the
Companies Act, 1988, w.e.f. 31-5-1991. For text of original sub-section (2A) of
section 637, refer Appendix I.]]
(3) A copy of every notification issued under sub-section (1)
shall, as soon as may be after it is issued, be placed before both Houses of
Parliament.
Grant of approval, etc.,
subject to conditions and levy of fees on applications]
[Power of Central Government or
Tribunal to accord approval, etc., subject to conditions and to prescribe fees
on applications.
637A. (1) Where
the Central Government or Tribunal is required or authorised by any provision
of this Act,—
(a) to accord approval, sanction, consent,
confirmation or recognition to or in relation to, any matter; or
(b) to
give any direction in relation to any matter; or
(c) to
grant any exemption in relation to any matter,
then, in the
absence of anything to the contrary contained in such or any other provision of
this Act, the Central Government or Tribunal may accord, give or grant such
approval, sanction, consent, confirmation, recognition, direction or exemption,
subject to such conditions, limitations or restrictions as it may think fit to
impose and may, in the case of contravention of any such condition, limitation
or restriction, rescind or withdraw such approval, sanction, consent,
confirmation, recognition, direction or exemption.
(2) Save as otherwise expressly provided in
this Act, every application which may be, or is required to be, made to the
Central Government or Tribunal under any provision of this Act—
(a) in respect of any approval, sanction,
consent, confirmation or recognition to be accorded by that Government or
Tribunal to, or in relation to, any matter; or
(b) in
respect of any direction or exemption to be given or granted by that Government
or Tribunal in relation to any matter; or
(c) in respect of any other matter,
shall
be accompanied by such fee as may be prescribed:
Provided that different fees may be
prescribed for applications in respect of different matters or in case of
applications by companies, for applications by different classes of companies.]
Power of Central Government to
fix a limit with regard to remuneration.
637AA. Notwithstanding
anything contained in section 198, section 309 or section 637A, the Central
Government may, while according its approval under section 269, to any appointment or to any
remuneration under section 309, section 310, section 311 or section 387, fix the remuneration of the persons so
appointed or the remuneration, as the case may be, within the limits specified
in this Act, at such amount or percentage of profits of the company, as it may
deem fit and while fixing the remuneration, the Central Government shall have
regard to—
(a) the financial position of the
company;
(b) the
remuneration or commission drawn by the individual concerned in any other
capacity, including his capacity as a sole selling agent;
(c) the
remuneration or commission drawn by him from any other company;
(d) professional
qualifications and experience of the individual concerned;
(e) public policy relating to the
removal of disparities in income.]
Condonation of delays in certain
cases.
637B. Notwithstanding anything
contained in this Act,—
(a) where
any application required to be made to the Central Government under any
provision of this Act in respect of any matter is not made within the time
specified therein, that Government may, for reasons to be recorded in writing,
condone the delay;
(b) where
any document required to be filed with the Registrar under any provision of
this Act is not filed within the time specified therein, the Central Government
may, for reasons to be recorded in writing, condone the delay.]
Annual report on working of Act
Annual report by Central
Government.
638. The
Central Government shall cause a general annual report on the working and
administration of this Act to be prepared and laid before both Houses of Parliament,
within one year of the close of the year to which the report relates.
Annual reports on Government
companies to be placed before Parliament, etc.
639. [The section and heading above it, viz., “Annual reports on Government companies”
omitted by the Companies (Amendment) Act, 1960. For the original section, refer
Appendix I.]
Validation of registration of firms in certain
cases
Validation of registration of
firms as members of charitable and other companies.
640. Any
firm which stood registered at the commencement of this Act, as a member of any
association or company licensed under section 26 of the Indian Companies Act,
1913 (7 of 1913), shall be deemed to have been validly so registered with
effect on and from the date of its registration.
Computation of time for
filing orders of Court [or the [Tribunal]]
Exclusion of time required in
obtaining copies of order of Court or Tribunal.
640A. Except as expressly provided in this behalf
elsewhere in this Act, where by any provision of this Act, any order of the
Court or Tribunal is required to be filed with the Registrar, or a company or
any other person within a period specified therein, then, in computing that
period, the time taken in drawing up the order and in obtaining a copy thereof
shall be excluded.]
[Forms of, and procedure in
relation to, certain applications.
640B. (1) Every application made to the Central
Government under section 259, 268, 269, 310 [or 311] shall be in such form as
may be prescribed.
(2)(a) Before any application
is made by a company to the Central Government under any of the sections
aforesaid, there shall be issued by or on behalf of the company a general
notice to the members thereof, indicating the nature of the application proposed
to be made.
(b) Such notice shall be published at least
once in a newspaper in the principal language of the district in which the
registered office of the company is
situate and circulating in that district, and at least once in English in an
English newspaper circulating in that district.
(c) Copies
of the notices, together with a certificate by the company as to the due
publication thereof, shall be attached to the application.
(d) [***]
641. (1) Subject to the provisions of this
section, the Central Government may, by notification in the Official Gazette,
alter any of the regulations, rules, tables, forms and other provisions
contained in any of the Schedules to this Act, except Schedules XI and XII.
(2) Any alteration notified under sub-section (1) shall have
effect as if enacted in this Act and shall come into force on the date of the
notification, unless the notification otherwise directs:
Provided that no such alteration in Table A of Schedule I shall apply to any
company registered before the date of such alteration.
(3) Every alteration made by the Central Government under
sub-section (1) shall be laid as soon as may be after it is made before each
House of Parliament while it is in session for a total period of thirty days
which may be [comprised in one session or in two or more successive sessions,
and if, before the expiry of the session immediately following the session or
the successive sessions aforesaid,] both Houses agree in making any
modification in the alteration, or both Houses agree that the alteration should
not be made, the alteration shall thereafter have effect only in such modified
form or be of no effect, as the case may be, so, however, that any such
modification or annulment shall be without prejudice to the validity of
anything previously done in pursuance of that alteration.]
Power of Central Government to
make rules.
642. (1) In addition to the powers conferred by
section 641, the Central Government may, by notification in the Official
Gazette, make rules—
(a) for
all or any of the matters which by this Act are to be, or may be, prescribed by
the Central Government; and
(b) generally to carry out the purposes
of this Act.
(2) Any rule made under sub-section (1) may provide that a
contravention thereof shall be punishable with fine which may extend to [five
thousand] rupees and where the contravention is a continuing one, with a
further fine which may extend to [five hundred] rupees for every day after the first during
which such contravention continues.
(3) Every rule made by the Central Government under sub-section
(1) shall be laid as soon as may be after it is made before each House of
Parliament while it is in session for a total period of thirty days which may
be [comprised in one session or in two or more successive sessions, and if,
before the expiry of the session immediately following the session or the
successive sessions aforesaid,] both Houses agree in making any modification in
the rule or both Houses agree that the rule should not be made, the rule shall
thereafter have effect only in such modified form or be of no effect, as the
case may be, so, however, that any such modification or annulment shall be
without prejudice to the validity of anything previously done under that rule.]
(4) Every regulation made by the Securities and Exchange Board of
India under this Act shall be laid, as soon as may be after it is made, before each
House of Parliament, while it is in session, for a total period of thirty days
which may be comprised in one session or in two or more successive sessions,
and if, before the expiry of the session immediately following the session or
the successive sessions aforesaid, both Houses agree in making any modification
in the regulation or both Houses agree that the regulation should not be made,
the regulation shall thereafter have effect only in such modified form or be of
no effect, as the case may be; so, however, that any such modification or
annulment shall be without prejudice to the validity of anything previously
done under that regulation.]
Powers of Central Government to
make rules relating to winding up.
643. (1) The
Central Government shall, make rules consistent with the Code of Civil
Procedure, 1908 (5 of 1908), providing for all matters relating to the winding
up of companies, which by this Act, are to be prescribed, and may make rules
providing for all such matters, as may be prescribed.
(2) In particular, and without prejudice to
the generality of the foregoing power, such rule may provide for all or any of
the following matters, namely :—
(i) as to the mode of proceedings to be held
for winding up of a company by the Tribunal;
(ii) for the voluntary winding up of companies,
whether by members or by creditors;
(iii) for the holding of meetings of creditors and
members in connection with proceedings under section 391;
(iv) for giving effect to the provisions of this
Act as to the reduction of the capital;
(v) generally for all applications to be made to
the Tribunal under the provisions of this Act;
(vi) the holding and conducting of meetings to
ascertain the wishes of creditors and contributories;
(vii) the settling of lists of contributories and
the rectifying of the register of members where required and collecting and
applying the assets;
(viii) the payment, delivery, conveyance, surrender
or transfer of money, property, books or papers to the liquidator;
(ix) the
making of calls; and
(x) the
fixing of a time within which debts and claims shall be proved.
(3) All rules made by the Supreme Court on
the matters referred to in this section as it stood immediately before the
commencement of the Companies (Second Amendment) Act, 2002, and in force at
such commencement, shall continue to be in force, insofar as they are not
inconsistent with the provisions of this Act, till such time the rules are made
by the Central Government and any reference to the High Court in relation to
winding up of a company in such rules shall be construed as a reference to the
Tribunal.]
Repeal of Acts specified in
Schedule XII.
644. The enactments mentioned in
Schedule XII are hereby repealed.
Saving of orders, rules, etc., in
force at commencement of Act.
645. Nothing
in this Act shall affect any order, rule, regulation, appointment, conveyance,
mortgage, deed, document or agreement made, fee directed, resolution passed,
direction given, proceeding taken, instrument executed or issued, or thing
done, under or in pursuance of any previous companies law; but any such order,
rule, regulation, appointment, conveyance, mortgage, deed, document, agreement,
fee, resolution, direction, proceeding, instrument or thing shall, if in force
at the commencement of this Act, continue to be in force, and so far as it
could have been made, directed, passed, given, taken, executed, issued or done
under or in pursuance of this Act, shall have effect as if made, directed,
passed, given, taken, executed, issued or done under or in pursuance of this
Act.
Saving of operation of section
138 of Act 7 of 1913.
646. Nothing
in this Act shall affect the operation of section 138 of the Indian Companies
Act, 1913 (7 of 1913), as respects inspectors, or as respects the continuation
of an inspection begun by inspectors, appointed before the commencement of this
Act, and the provisions of this Act shall apply to or in relation to a report
of inspectors appointed under the said section 138 as they apply to or in
relation to a report of inspectors appointed
under section 235 or 237 of this Act.
Saving of pending proceedings
for winding up.
647. Where
the winding up of a company has commenced before the commencement of this Act—
(i) sub-section
(7) of section 555 shall apply in respect of any moneys paid into the Companies
Liquidation Account whether before or after such commencement; and
(ii) the
other provisions with respect to winding up contained in this Act shall not
apply, but the company shall be wound up in the same manner and with the same
incidents as if this Act had not been passed:
[Provided that where the proceedings in
any such winding up are pending at the commencement of the Companies
(Amendment) Act, 1960,—
(a) sections
463, 502, 515 and 524 shall, as far as may be, also apply in relation thereto;
(b) the
liquidator appointed by the Court and functioning in any such winding up shall
in such manner and at such time as may be prescribed by the Central Government,
pay the moneys received by him as such liquidator, into the public account of
India in the Reserve Bank of India.]
Transfer of winding up
proceedings to Tribunal.
647A. All proceedings (including proceedings relating
to arbitration, compromises, arrangements and reconstruction and winding up of
a company) pending before the commencement of the Companies (Second Amendment)
Act, 2002 before any District Court or High Court, under this Act, or the
Insurance Act, 1938 (4 of 1938) or any
other law for the time being in force other than under the Banking Regulation
Act, 1949 (10 of 1949), shall be transferred to the Tribunal from the date to
be notified by the Central Government, in the Official Gazette, and the
Tribunal may proceed with the matter either de novo or from the stage it was so transferred:
Provided that where the winding up of a
company has commenced, subject to the supervision of the District Court or a
High Court, before the commencement of the Companies (Second Amendment) Act,
2002, such winding up shall continue to be under the supervision of the
District Court or the High Court, as the case may be, and the company shall be
wound up in the same manner and in the same incidents as if the Companies
(Second Amendment) Act, 2002 had not been passed.]
Saving of prosecutions instituted
by liquidator or Court under section 237
of Act 7 of 1913.
648. Nothing
in this Act shall affect any prosecution instituted or ordered by the Court to
be instituted under section 237 of the Indian Companies Act, 1913 (7 of 1913);
and the Court shall have the same power of directing how any costs, charges,
and expenses properly incurred in any such prosecution are to be defrayed as it
would have had, if this Act had not been passed.
Construction of references to
former enactments in documents.
649. Any
document referring to any former enactment relating to companies shall be
construed as referring to the corresponding enactment in this Act.
Construction of “Registrar of
joint stock companies” in Act 21 of 1860.
650. [Omitted by the Companies (Amendment) Act,
1960. For the original section, refer Appendix I.]
Construction of references to
extraordinary resolution in articles, etc.
651. Any
reference to an extraordinary resolution in the articles of a company, or in
any resolution passed in general meeting by the company, or in any other
instrument, or in any law in force immediately before the commencement of this
Act, shall, with effect on and from such commencement, be construed as a
reference to a special resolution.
Reference of winding up of
companies in other laws.
651A. Unless the context otherwise requires,—
(a) any reference to the winding up of a company
by a Court or High Court or winding up of a company subject to supervision of a
Court or High Court in any other law [except
the Banking Regulation Act, 1949 (10 of 1949)]
shall, insofar as it relates to winding up of a company, be construed as
winding up of a company by the Tribunal in accordance with the provisions of
this Act;
(b) any reference to the Company Law Board in
any other law, so far as it relates to the Company Law Board, shall be
construed as the Tribunal under this Act.]
Appointment under previous
companies laws to have effect as if made under Act.
652. Any
person appointed to any office under or by virtue of any previous companies law
shall be deemed to have been appointed to that office under or by virtue of
this Act.
Former registration offices
continued.
653. The
offices existing at the commencement of this Act for the registration of
companies shall be continued as if they had been established under this Act.
Registers under previous
companies laws to be deemed to be part of registers under Act.
654. Any
register kept under the provisions of any previous companies law shall be
deemed to be part of the register to be kept under the corresponding provisions
of this Act.
655. All
funds constituted and accounts kept under this Act shall be deemed to be in
continuation of the corresponding funds constituted and accounts kept under
previous companies laws.
Saving of incorporation under
repealed Acts.
656. Nothing
in this Act shall affect the incorporation of any company registered under any
enactment hereby repealed.
Saving of certain Tables under
previous companies laws.
657. Nothing in this Act shall
affect—
(a) Table
B in the Schedule annexed to Act No. 19 of 1857, or any part thereof, so far as
the same applies to any company existing at the commencement of this Act;
(b) Table
A in the First Schedule annexed to the Indian Companies Act, 1882 (6 of 1882),
or any part thereof, so far as the same applies to any company existing at the
commencement of this Act;
(c) Table
A in the First Schedule to the Indian Companies Act, 1913 (7 of 1913), either
as originally contained in that Schedule or as altered in pursuance of section
151 of that Act, so far as the same applies to any company existing at the commencement
of this Act.
658. The
mention of particular matters in sections 645 to 657 or in any other provision
of this Act shall not prejudice the general application of section 6 of the
General Clauses Act, 1897 (10 of 1897), with respect to the effect of repeals.