Companies Act Section 276 — Removal and replacement of liquidator
CHAPTER XX WINDING UP
Commercial / Corporate
Summary
Sub-section (1) allows the Tribunal to remove a provisional liquidator or Company Liquidator if a reasonable cause is shown and reasons are recorded in writing. The grounds for removal are misconduct, fraud or misfeasance, professional incompetence or failure to exercise due care and diligence in performing powers and functions, inability to act as liquidator, or a conflict of interest or lack of independence during the appointment that justifies removal.
Sub-section (2) states that if the provisional liquidator or Company Liquidator dies, resigns, or is removed, the Tribunal may transfer the work assigned to that liquidator to another Company Liquidator, with reasons recorded in writing.
Sub-section (3) provides that if the Tribunal believes a liquidator caused loss or damage to the company due to fraud, misfeasance, or failure to exercise due care and diligence, the Tribunal may recover that loss or damage from the liquidator and pass any other orders it thinks fit.
Sub-section (4) requires the Tribunal to give the provisional liquidator or Company Liquidator a reasonable opportunity to be heard before passing any order under this section.
Official Text
(1) The Tribunal may, on a reasonable cause being shown and for reasons to be recorded in writing, remove the provisional liquidator or the Company Liquidator, as the case may be, as liquidator of the company on any of the following grounds, namely:—
(a) misconduct;
(b) fraud or misfeasance;
(c) professional incompetence or failure to exercise due care and diligence in performance of the powers and functions;
(d) inability to act as provisional liquidator or as the case may be, Company Liquidator;
(e) conflict of interest or lack of independence during the term of his appointment that would justify removal.
(2) In the event of death, resignation or removal of the provisional liquidator or as the case may be, Company Liquidator, the Tribunal may transfer the work assigned to him or it to another Company Liquidator for reasons to be recorded in writing.
(3) Where the Tribunal is of the opinion that any liquidator is responsible for causing any loss or damage to the company due to fraud or misfeasance or failure to exercise due care and diligence in the performance of his or its powers and functions, the Tribunal may recover or cause to be recovered such loss or damage from the liquidator and pass such other orders as it may think fit.
(4) The Tribunal shall, before passing any order under this section, provide a reasonable opportunity of being heard to the provisional liquidator or, as the case may be, Company Liquidator.