Amended and updated notes on section 340 of Companies Act 2013. Detail discussion on provisions and rules related to power of Tribunal to assess damages against delinquent directors, etc.
Chapter XX (Section 270–365) of the Companies Act, 2013 (CA 2013) deals with the provisions related to winding up. Section 340 of CA 2013 provides for power of Tribunal to assess damages against delinquent directors, etc.
Recently, we have discussed in detail section 339 (Liability for fraudulent conduct of business) of CA 2013. Today, we learn the provisions of section 340 of the Companies Act 2013.
The provisions of section 340 are effective from 15th December, 2016. You may refer Notification No. S.O. 3677(E) issued dated 7-12-2016. In this article, you will learn detail of the provisions of section 340 the Companies Act 2013.
| Name of Act | The Companies Act 2013 |
|---|---|
| Enacted by | Parliament of India |
| Administered by | Ministry of Corporate Affairs (MCA) |
| Number of Chapters | 29 |
| Number of Sections | 484 (470-43+57) |
| Number of Schedules | 7 |
| You are reading: | |
| Chapter No. | XX |
| Chapter Name | Winding Up |
| Section No. | 340 |
| Section Name | Power of Tribunal to assess damages against delinquent directors, etc. |
| Monthly Updated Edition | Company Law PDF |
Section 340 of Companies Act 2013: Power of Tribunal to assess damages against delinquent directors, etc.
Section 340 shall come into force on 9th September, 2016 to the extent of applicability for section 246 vide Notification No. S.O. 2912(E) issued dated 09.09.2016 and fully applicable from 15th December, 2016 vide Notification No. S.O. 3677(E) dated 07.12.2016.
(1) If in the course of winding up of a company, it appears that any person who has taken part in the promotion or formation of the company, or any person, who is or has been a director, manager, Company Liquidator or officer of the company—
- (a) has misapplied, or retained, or become liable or accountable for, any money or property of the company; or
- (b) has been guilty of any misfeasance or breach of trust in relation to the company,
the Tribunal may, on the application of the Official Liquidator, or the Company Liquidator, or of any creditor or contributory, made within the period specified in that behalf in sub-section (2), inquire into the conduct of the person, director, manager, Company Liquidator or officer aforesaid, and order him to repay or restore the money or property or any part thereof respectively, with interest at such rate as the Tribunal considers just and proper, or to contribute such sum to the assets of the company by way of compensation in respect of the misapplication, retainer, misfeasance or breach of trust, as the Tribunal considers just and proper.
(2) An application under sub-section (1) shall be made within five years from the date of the winding up order, or of the first appointment of the Company Liquidator in the winding up, or of the misapplication, retainer, misfeasance or breach of trust, as the case may be, whichever is longer.
(3) This section shall apply, notwithstanding that the matter is one for which the person concerned may be criminally liable.