Companies Act Section 336 — Offences by officers of companies in liquidation
CHAPTER XX WINDING UP
Commercial / Corporate
Summary
Sub-section (1) sets out the offences that can be committed by a person who is or has been an officer of a company that is being wound up by the Tribunal under this Act, or that is later ordered to be wound up by the Tribunal. It lists various acts or omissions that are punishable, and the punishment is imprisonment for a term of not less than three years and up to five years, along with a fine of not less than one lakh rupees and up to three lakh rupees.
Under clause (a) of sub-section (1), an officer commits an offence if he does not, to the best of his knowledge and belief, fully and truly disclose to the Company Liquidator all the property of the company, both movable and immovable, and also how, to whom, for what consideration, and when the company disposed of any part of that property, except for property disposed of in the ordinary course of the company's business.
Under clause (b) of sub-section (1), an officer commits an offence if he does not deliver up to the Company Liquidator, or as the Liquidator directs, all movable and immovable property of the company that is in his custody or under his control and that he is required by law to deliver up.
Under clause (c) of sub-section (1), an officer commits an offence if he does not deliver up to the Company Liquidator, or as the Liquidator directs, all books and papers of the company that are in his custody or under his control and that he is required by law to deliver up.
Under clause (d) of sub-section (1), an officer commits an offence if, within the twelve months immediately before the commencement of the winding up or at any time after that, he does any of the following: conceals any part of the company's property valued at one thousand rupees or more, or conceals any debt due to or from the company; fraudulently removes any part of the company's property valued at one thousand rupees or more; conceals, destroys, mutilates, or falsifies any book or paper affecting or relating to the company's property or affairs, or is privy to such acts; makes, or is privy to making, any false entry in any such book or paper; fraudulently parts with, alters, or makes any omission in any such book or paper, or is privy to such acts; by false representation or other fraud, obtains property on credit for or on behalf of the company that the company does not subsequently pay for; under the false pretence that the company is carrying on its business, obtains property on credit for or on behalf of the company that the company does not subsequently pay for; or pawns, pledges, or disposes of any property of the company that was obtained on credit and has not been paid for, unless this is done in the ordinary course of the company's business.
Under clause (e) of sub-section (1), an officer commits an offence if he makes any material omission in any statement relating to the affairs of the company.
Under clause (f) of sub-section (1), an officer commits an offence if, knowing or believing that a false debt has been proved by any person under the winding up, he fails for a period of one month to inform the Company Liquidator of this.
Under clause (g) of sub-section (1), an officer commits an offence if, after the commencement of the winding up, he prevents the production of any book or paper affecting or relating to the company's property or affairs.
Under clause (h) of sub-section (1), an officer commits an offence if, after the commencement of the winding up, or at any meeting of the company's creditors within the twelve months before the commencement of the winding up, he attempts to account for any part of the company's property by fictitious losses or expenses.
Under clause (i) of sub-section (1), an officer commits an offence if he is guilty of any false representation or fraud for the purpose of obtaining the consent of the company's creditors, or any of them, to an agreement with reference to the company's affairs or to the winding up.
The proviso to sub-section (1) states that it is a good defence if the accused proves that he had no intent to defraud, to conceal the true state of affairs of the company, or to defeat the law.
Sub-section (2) deals with a separate offence. Where any person pawns, pledges, or disposes of property in circumstances that amount to an offence under sub-clause (viii) of clause (d) of sub-section (1), every person who takes the property in pawn or pledge, or otherwise receives it, knowing that it was pawned, pledged, or disposed of in such circumstances, is punishable with imprisonment for a term of not less than three years and up to five years, along with a fine of not less than three lakh rupees and up to five lakh rupees.
The Explanation clarifies that, for the purposes of this section, the expression "officer" includes any person in accordance with whose directions or instructions the directors of the company have been accustomed to act.
Official Text
(1) If any person, who is or has been an officer of a company which, at the time of the commission of the alleged offence, is being wound up, 2[by the Tribunal under this Act or which is subsequently ordered to be wound up by the Tribunal under this Act],—
(a) does not, to the best of his knowledge and belief, fully and truly disclose to the Company Liquidator all the property, movable and immovable, of the company, and how and to whom and for what consideration and when the company disposed of any part thereof, except such part as has been disposed of in the ordinary course of the business of the company;
(b) does not deliver up to the Company Liquidator, or as he directs, all such part of the movable and immovable property of the company as is in his custody or under his control and which he is required by law to deliver up; to be wound up by the Tribunal or which subsequently passes a resolution for voluntary winding up” (w.e.f. 15-11-2016).
(c) does not deliver up to the Company Liquidator, or as he directs, all such books and papers of the company as are in his custody or under his control and which he is required by law to deliver up;
(d) within the twelve months immediately before the commencement of the winding up or at any time thereafter,—
(i) conceals any part of the property of the company to the value of one thousand rupees or more, or conceals any debt due to or from the company;
(ii) fraudulently removes any part of the property of the company to the value of one thousand rupees or more;
(iii) conceals, destroys, mutilates or falsifies, or is privy to the concealment, destruction, mutilation or falsification of, any book or paper affecting or relating to, the property or affairs of the company;
(iv) makes, or is privy to the making of, any false entry in any book or paper affecting or relating to, the property or affairs of the company;
(v) fraudulently parts with, alters or makes any omission in, or is privy to the fraudulent parting with, altering or making of any omission in, any book or paper affecting or relating to the property or affairs of the company;
(vi) by any false representation or other fraud, obtains on credit, for or on behalf of the company, any property which the company does not subsequently pay for;
(vii) under the false pretence that the company is carrying on its business, obtains on credit, for or on behalf of the company, any property which the company does not subsequently pay for; or
(viii) pawns, pledges or disposes of any property of the company which has been obtained on credit and has not been paid for, unless such pawning, pledging or disposing of the property is in the ordinary course of business of the company;
(e) makes any material omission in any statement relating to the affairs of the company;
(f) knowing or believing that a false debt has been proved by any person under the winding up, fails for a period of one month to inform the Company Liquidator thereof;
(g) after the commencement of the winding up, prevents the production of any book or paper affecting or relating to the property or affairs of the company;
(h) after the commencement of the winding up or at any meeting of the creditors of the company within the twelve months next before the commencement of the winding up, attempts to account for any part of the property of the company by fictitious losses or expenses; or
(i) is guilty of any false representation or fraud for the purpose of obtaining the consent of the creditors of the company or any of them, to an agreement with reference to the affairs of the company or to the winding up, he shall be punishable with imprisonment for a term which shall not be less than three years but which may extend to five years and with fine which shall not be less than one lakh rupees but which may extend to three lakh rupees:
Provided that it shall be a good defence if the accused proves that he had no intent to defraud or to conceal the true state of affairs of the company or to defeat the law.
(2) Where any person pawns, pledges or disposes of any property in circumstances which amount to an offence under sub-clause (viii) of clause (d) of sub-section (1), every person who takes in pawn or pledge or otherwise receives the property, knowing it to be pawned, pledged, or disposed of in such circumstances as aforesaid, shall be punishable with imprisonment for a term which shall not be less than three years but which may extend to five years and with fine which shall not be less than three lakh rupees but which may extend to five lakh rupees.
Explanation.—For the purposes of this section, the expression “officer” includes any person in accordance with whose directions or instructions the directors of the company have been accustomed to act.