Companies Act Section 295 — Payment of debts by contributory and extent of set-off
CHAPTER XX WINDING UP
Commercial / Corporate
Summary
Sub-section (1) allows the Tribunal, after it has passed an order to wind up a company, to order any person whose name is on the list of contributors (called a contributory) to pay any money they owe to the company. This payment must be made in the manner directed by the Tribunal, and it covers money owed by the contributory personally or by the estate of the person they represent. This is separate from any money payable through a formal call made under the Act.
Under clause (a) of sub-section (2), when the Tribunal makes such an order, it may, in the case of an unlimited company, allow the contributory to set off any money that the company owes to them or to the estate they represent. This set-off is only permitted for money arising from an independent dealing or contract with the company, and not for any money owed to them simply as a member, such as dividends or profits.
Under clause (b) of sub-section (2), in the case of a limited company, the Tribunal may allow a similar set-off to any director or manager whose liability is unlimited, or to their estate.
Sub-section (3) states that for any company, whether limited or unlimited, once all creditors have been paid in full, any money owed by the company to a contributory on any account may be allowed as a set-off against any later call made on the contributory.
Official Text
(1) The Tribunal may, at any time after passing of a winding up order, pass an order requiring any contributory for the time being on the list of contributories to pay, in the manner directed by the order, any money due to the company, from him or from the estate of the person whom he represents, exclusive of any money payable by him or the estate by virtue of any call in pursuance of this Act.
(2) The Tribunal, in making an order, under sub-section (1), may,—
(a) in the case of an unlimited company, allow to the contributory, by way of set-off, any money due to him or to the estate which he represents, from the company, on any independent dealing or contract with the company, but not any money due to him as a member of the company in respect of any dividend or profit; and
(b) in the case of a limited company, allow to any director or manager whose liability is unlimited, or to his estate, such set-off.
(3) In the case of any company, whether limited or unlimited, when all the creditors have been paid in full, any money due on any account whatever to a contributory from the company may be allowed to him by way of set-off against any subsequent call.