Section 342 of the Companies Act, 2013
Section 342 of the Companies Act, 2013 deals with Prosecution of Delinquent Officers and Members of Company during the course of winding up.
Here is a summary of the provision:
Section 342 – Prosecution of Delinquent Officers and Members of Company
1. Prosecution by Tribunal (Sub-section 1):
If it appears to the Tribunal during the winding-up of a company that any person (past or present director, manager, officer, or member) has:
Committed any offence in relation to the company,
Or has been guilty of any fraud, misfeasance, or other misconduct towards the company or its members,
the Tribunal may direct the liquidator to file a complaint before the Special Court.
2. Duty of the Registrar or Liquidator (Sub-section 2):
If the liquidator or the Registrar has reasonable cause to believe such an offence has been committed, they must report the matter to the Registrar, who may further instruct filing of a complaint to the Special Court.
3. Special Court to Take Cognizance (Sub-section 3):
The Special Court will then take cognizance of the offence upon complaint made by:
The Tribunal,
The liquidator,
Or the Registrar.
4. Penalty (Sub-section 4):
Anyone found guilty under this section may be punished under the relevant provisions of the law, which may include imprisonment and/or fine, depending on the nature of the offence.
Purpose:
To ensure accountability and criminal liability of those involved in fraud or misconduct during the company's affairs, especially at the time of winding up.
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