Section 299 of Companies Act: Power to summon suspected persons of having property of Company
Section 299 of the Companies Act 2013 empowers the National Company Law Tribunal and National Company Law Appellate Tribunal which are quasi-judicial authority created under the Companies Act, 1956, to summon persons suspected of having property, books or papers of the company, or known to be indebted to the company or any person capable of giving such related information.
The powers of the Court are very wide and it is not at all necessary that the Court must first determine that the person called upon to furnish the information does actually possess that information. If the Court has reasons to think, or if even an allegation is made that a certain person is in possession of information which would be useful for the purposes of the winding up, the Court can call upon him to appear in Court and examine him.
This section related back to Section 477 of the Companies Act 1956, which also empowered the Courts to summon such persons. Both the sections have been legislated with the exact same objective and give the same powers, with just a few sub-sections numbered differently. Section 299 reads as follows:
(1) The Tribunal may, at any time after the appointment of a provisional liquidator or the passing of a winding up order, summon before it any officer of the company or person known or suspected to have in his possession any property or books or papers, of the company, or known or suspected to be indebted to the company, or any person whom the Tribunal thinks to be capable of giving information concerning the promotion, formation, trade, dealings, property, books or papers, or affairs of the company .
(2) The Tribunal may examine any officer or person so summoned on oath concerning the matters aforesaid, either by word of mouth or on written interrogatories or on affidavit and may, in the first case, reduce his answers to writing and require him to sign them.
(3) The Tribunal may require any officer or person so summoned to produce any books and papers relating to the company in his custody or power, but, where he claims any lien on books or papers produced by him, the production shall be without prejudice to such lien, and the Tribunal shall have power to determine all questions relating to that lien.
(4) The Tribunal may direct the liquidator to file before it a report in respect of debt or property of the company in possession of other persons.
(5) If the Tribunal finds that—
(a) a person is indebted to the company, the Tribunal may order him to pay to the provisional liquidator or, as the case may be, the liquidator at such time and in such manner as the Tribunal may consider just, the amount in which he is indebted, or any part thereof, either in full discharge of the whole amount or not, as the Tribunal thinks fit, with or without costs of the examination;
(b) a person is in possession of any property belonging to the company, the Tribunal may order him to deliver to the provisional liquidator or, as the case may be, the liquidator, that property or any part thereof, at such time, in such manner and on such terms as the Tribunal may consider just.
(6) If any officer or person so summoned fails to appear before the Tribunal at the time appointed without a reasonable cause, the Tribunal may impose an appropriate cost.
(7) Every order made under sub-section (5) shall be executed in the same manner as decrees for the payment of money or for the delivery of property under the Code of Civil Procedure, 1908.
(8) Any person making any payment or delivery in pursuance of an order made under sub-section (5) shall by such payment or delivery be, unless otherwise directed by such order, discharged from all liability whatsoever in respect of such debt or property.
Rules applicable to Section 299
Part III of the Companies (Winding Up) Rules, 2020 deals with Winding Up By Tribunal (Other Than Summary Winding Up) Debts And Claims Against Company. Rule 139-143 of the winding up rules, 2020 are applicable to Section 299.
Rule 139: Application for examination under section 299.
Rule 140: Directions at hearing of application
Rule 141: Service of summons
Rule 142: Conduct of examination
Rule 143: Notes of deposition