THE COMPANIES ORDINANCE, 1972

Offences antecedent to or in course of winding up

286.—(1) If any person, being a past or present director or officer of a company which at the time of the commission of the alleged offence is being wound up, whether by the court or voluntarily, or is subsequently ordered to be wound up by the court, or subsequently passes a resolution for voluntary winding up : —

(a)   does not to the best of his knowledge and belief fully and truly disclose to the liquidator all the assets of the company, and how, and to whom, and for what consideration, and when, the company disposed of any of such assets, otherwise than in the course of carrying on the business of the company in the ordinary way ; or

(b)  does not deliver up to the liquidator, or as he directs, such of the assets of the company as are in his custody or under his control, and which he is required by law to deliver up ; or

(c)   does not deliver up to the liquidator, or as he directs, all books and papers in his custody or under his control, being books and papers which belong to the company and which he is required by law to deliver up ; or

(d) within twelve months next before the com mencement of the winding up or at any time thereafter conceals any of the assets of the company to the value of one thousand rupees or upwards, or conceals any debt due to or from the company ; or

(e) within twelve months next before the commencement of the winding up or at any time thereafter fraudulently removes any part of the assets of the company to the value of one thousand rupees or upwards ; or

(f) makes any material omission in any statement relating to the affairs of the company ; or

(g) knowing or believing that a false debt has been proved by any person under the winding up, fails for the period of a month to inform the liquidator thereof; or

(h) 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 ; or

(i) within twelve months next before the commencement of the winding up or at any time thereafter, conceals, destroys, mutilates, or falsities, 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 ; or

(j) within twelve months next before the commencement of the winding up or at any time thereafter, makes or concurs in the making of any false entry in any book or paper affecting or relating to the property or affairs of the company ; or

(k) within twelve months next before the commencement of the winding up or at any time thereafter, fraudulently parts with, alters, or makes any omission in, or concurs in the fraudulent parting with, altering, or making any omission in, any document affecting or relating to the assets or affairs of the company; or

(l) after the commencement of the winding up or at any meeting of the creditors of the company within twelve months next before the commencement of the winding up, attempts to account for any assets of the company by fictitious losses or expenses ; or

(m) has within twelve months next before the commencement of the winding up or at any time thereafter, by any false representation or other fraud, obtained any assets for or on behalf of the company on credit which the company does not subsequently pay for; or

(n) within twelve months next before the commencement of the winding up or at any time thereafter, sells, transfers, hypothecates, mortgages, charges, pledges, or otherwise disposes of any assets of the company which have been obtained on credit and have not been paid for, unless such sale, transfer, hypothecation, mortgage, charge, pawning, pledge, or disposition is made in the course of carrying on the business of the company in the ordinary way; or

(o) is guilty of any false representation or other 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 guilty of an offence and shall, in the case of the offences mentioned respectively in paragraphs (m), (n) and (o) of this subsection, be liable to imprisonment for not more than five years, and in the case of any other offence mentioned in this subsection shall be liable to imprisonment for not more than two years :

Provided that it shall be a good defence to a charge under any of paragraphs (a), (b), (c), (d), (f), (m), (n) and (o), if the accused proves that he had no intent to defraud, and to a charge under any of paragraphs (h), (i) and (j), if he proves that he had no intent to conceal the state of affairs of the company or to defeat the law.

(2) Where any person sells, transfers, hypothecates, mortgages, charges, pawns, pledges or otherwise disposes of any assets in circumstances which amount to an offence under paragraph (n) of subsection (1) of this section, and another person purchases, accepts or takes an hypothecation, mortgage, charge or pledge or other disposition of the assets knowing that thereby an offence is committed by the first mentioned person, that other person shall be guilty of an offence punishable by imprisonment for not more th^n five years.

287.  If any director or officer, shareholder or contributory of any company being wound up destroys, mutilates, alters, or falsifies any books, papers, or securities, or makes or concurs in the making of any false or fraudulent entry in any register, book of account, or document belonging to the company with intent to defraud or deceive any person, he shall be guilty of an offence punishable by imprisonment for not more than two years.

288.  If any person, being at the time of the commission of the alleged offence a director or officer of a company which is subsequently ordered to be wound up by the court, or subsequently passes a resolution for voluntary winding up—

(a)   has by false pretences or by means of any other fraud induced any person to give credit to the company;

(b)   with intent to defraud creditors of the company, has made or caused to be made any gift, transfer, hypothecation, mortgage or pledge of, or charge on, or has caused or connived at the levying of any execution against, any of the assets of the company;

(c)   with intent to defraud creditors of the company, has concealed or removed any part of the assets of the company since, or within two months before, the date of any unsatisfied iudgment or order for payment of money obtained against the company ;

he shall be guilty of an offence punishable by imprison-ment for not more than five years.

289.—(1) If, where a company is wound up, it is shown that proper books of account were not kept by the company throughout the period of two years immediately preceding the commencement of the winding up, every director or officer of i.he company who was knowingly a p:arty to or connived at the default of the company shall, unless he shows that he acted honestly or.that in the circumstances in which the business of the company was carried on the default was excusable, be guilty of an offence punishable by imprisonment for not more than two years.

(2) For the purposes of this section, proper books of account shall be deemed not to have been kept in the case of atiy company if there have not been kept such books or accounts as are necessary to exhibit and explain the transactions and financial position of the trade or business of the company, including books containing entries from day to day in sufficient detail of all cash received and cash paid, and, where the trade or business has involved dealings in goods, statements of the annual stocktakings and (except in the case of goods sold by way of ordinary retail trade) of all goods sold and purchased, showing the goods and the buyers and sellers thereof in sufficient detail to enable those goods and those buyers and sellers to be identified.

290.—(1) If in the course of the winding up of a company it appears that any business of the company has been carried on : —

(a)   with intent to defraud creditors of the company or the creditors of any other person, or for any fraudulent purpose ; or

(b)   with reckless disregard of the company's obligation to pay its debts and liabilities ; or

(c)   with reckless disregard of the insufficiency of the company's assets to satisfy its debts and liabilities ;

the court, on the application of the Official Receiver or the liquidator or any creditor, shareholder, contributory or debenture holder of the company, may, if it thinks proper so to do, declare that any of the directors or officers, whether past or present, of the company, or any other persons who were knowingly parties to the carrying cm of the business in manner aforesaid, shall be personally responsible, without any limitation of liability, for all or any of the debts or other liabilities of the company as the court may direct, and may order the amount of such debts or other liabilities to be paid to the persons to whom they are respectively owed or to the liquidator for the benefit of the creditors of the company generally.

(2) Where the court makes any such declaration, it may give such further directions as it thinks proper £or the purpose of giving effect to that declaration, and in particular may make provision for making the liability of any such director, officer or other person under the declaration a charge on any debt or obligation payable by the company to him, or on any hypothecation, mortgage or charge, or any interest in any hypothecation, mortgage or charge, on any assets of the company held by or vested in him, or any company or person on his behalf, or any person claiming as assignee from or through the director, or such a company or person, and the court may from time to time make such further order as may be necessary for the purpose of enforcing any charge imposed under this subsection.

For the purpose of this subsection, the expression "assignee" includes any person to whom or in whose favour, by the directions of the director, officer or other person the debt, obligation, hypothecation, mortgage or charge was created, issued or transferred or the interest created, but does not include an assignee for money or money's worth paid or given in good faith by any person who had at the time no notice of any of the matters on the ground of which the declaration is made.

(3) Where any business of a company is carried on with such intent or for such purpose as is mentioned in subsection (1) of this section, every director or officer of the company and any other person who was knowingly a party to the carrying on of the business in manner aforesaid, shall, whether the company is wound up or not, be guilty of an offence punishable by imprisonment for not more than five years.

(4) The provisions of this section shall have effect notwithstanding that the person concerned may be criminally liable in respect of the matters on the ground of which the declaration is to be made.

291.—(1) If it appears to the court in the course of winding up a company that any past or present director or officer, or any member, shareholder, creditor or debenture holder of the company has been guilty of any offence in relation to the company for which he is criminally liable, the court may, either on the application of any person interested in the winding up or of its own motion, direct the liquidator to refer the matter to the Attorney-Gen eral.

(2) If it appears to the liquidator m the course of any winding up that any past or present director or officer, or any member, shareholder, creditor or debenture holder of the company has been guilty of any offence in relation to the company for which he is criminally liable, he shall forthwith report the matter to the Attorney-General and shall furnish him with such information and give to him Each access to and facilities for inspecting and taking copies of any documents, being information or documents in the possession or under the control of the liquidator and relating to the matter in question, as the Attorney-General nay require.

(3)  Where any report is made under the last foregoing subsection to the Attorney-General, he may, if he thinks fit, refer the matter to the Registrar for further enquiry, and the Registrar shall thereupon investigate the matter, and the Attorney-General may, if he thinks it expedient, apply to the court for an order conferring on the Registrar or any person designated by the Registrar for the purpose with respect to the company concerned all such powers of investigating the affairs of the company as are provided by this Ordinance in the case of a winding up by the court.

(4)  If it appears to the court in the course of a voluntary winding up that any past or present director or officer, or any member, shareholder, creditor or debenture holder of the company has been guilty as aforesaid, and that no report with respect to the matter has been made by the liquidator to the Attorney-General under subsection (2) of this section, the court may, on the application of any person interested in the winding up or of its own motion, direct the liquidator to make such a report, and on a report being made accordingly, the provisions of this section shall have effect as though the report had been made in pursuance of the provisions of subsection (2) of this section.

(5)  If, where any matter is reported or referred to the Attorney-General under this section, he considers that the case is one in which a prosecution ought to be instituted, he shall institute proceedings accordingly, and it shall be the duty of the liquidator and of every officer and agent of the company past and present (other than the defendant in the proceedings) to give him all assistance in connection with the prosecution which he is reasonably able to give.

For the purposes of this subsection, the expression "agent" in relation to a company shall be deerhed to include any banker of the company, any barrister, attorney or notary who has acted for the company and any person who is or has been an auditor of the company.

(6)  If any person fails or neglects to give assistance in manner required by the last foregoing subsection, the court may, on the application of the Attorney-General direct that person to comply with the requirements of the said subsection, and where any such application is made with respect to a liquidator the court may, unless it appears that the failure or neglect to comply was due to the liquidator not having in his hands sufficient assets of the company to enable him so to do, direct that the costs of the application shall bo borne by the liquidator personally.

(7) All costs and expenses properly incurred by the liquidator under this section shall be payable out of the assets of the company in priority to all other liabilities.

292.—(1) If in the course of winding up a company it appears that any person who has taken part in the formation or promotion of the company, or any past or present director, liquidator, or any officer of the company, has misapplied or retained or become liable or accountable for any money or assets of the company, or has been guilty of any wrong doing or breach of duty in relation to the company, the court may, on the application of the Official Receiver, or of the liquidator, or of any shareholder, contributory, creditor or debenture holder, enquire into the conduct of the promoter, director, liquidator, or officer, and compel him to repay or restore the money or assets or any part thereof respectively with interest at such rate as the court thinks just, or to contribute such sum to the assets of the company by way of compensation in respect of the misapplication, retainer, wrongdoing, or breach of duty as the court thinks just.

(2) The provisions of this section shall have effect notwithstanding that the offence is one for which the offender may be criminally liable.