Section 339 of the Companies Act, 2013
Section 339 of the Companies Act, 2013 deals with the Liability for fraudulent conduct of business during winding up of a company.
📜 Section 339 – Liability for Fraudulent Conduct of Business
🔹 Key Provisions:
When It Applies:
This section applies during the winding up of a company.
If it appears to the Tribunal that any business of the company was carried on with intent to defraud:
Creditors, or
Any other person, or
For any fraudulent purpose,
Who Can Be Held Liable:
Every person who was knowingly involved in carrying on the business fraudulently:
Can be declared personally responsible, without any limitation of liability, for all or any of the debts or liabilities of the company.
Application for Declaration:
The application for declaring such personal liability can be made by:
The Official Liquidator,
The Company Liquidator, or
Any creditor or contributory.
Other Legal Consequences:
Such persons may also face:
Punishment under Section 447 (for fraud),
Imprisonment and/or fine, as applicable under criminal law.
⚖️ Purpose:
To hold promoters, directors, officers, or any person in management personally liable when they misuse the company structure to carry on fraudulent activities, especially when creditors suffer loss during winding up.
✅ Summary in Simple Terms:
If, during winding up, it is found that the company’s business was run to cheat creditors or others, the people responsible can be made personally liable for the company’s debts and can also be punished for fraud.
RELATED Blog
0 comments