Companies Act Section 299

Companies Act, Section 299: Tribunal’s Power to Summon and Examine Persons Suspected of Holding Company Property or Information 

Section 299 of the Companies Act, 2013, empowers the National Company Law Tribunal (NCLT) to summon and examine individuals who may possess property or documents belonging to the company or may be indebted to it or capable of providing material information concerning the company's affairs. This provision plays a crucial role in asset tracing, information gathering, and ensuring transparency during the winding-up process. It helps liquidators recover dues and property for the benefit of creditors and stakeholders.

1. Authority to Summon Persons Connected to the Company

After a winding-up order has been passed or a provisional liquidator has been appointed, the Tribunal is vested with the power to summon certain individuals before it. The Tribunal may summon:
Any officer of the company, past or present. Any person known or suspected to:
Be in possession of any property, books, or papers belonging to the company. Be indebted to the company.
Be capable of providing useful information regarding the promotion, formation, business dealings, trade, property, records, or affairs of the company.
This power ensures that the Tribunal has wide discretion in calling individuals who might hold key information or assets that are vital to the company's liquidation process.

2. Power to Examine Individuals on Oath

The Tribunal may conduct a formal examination on oath of any person summoned under sub-section (1). The examination may be conducted:
Orally (by word of mouth). Through written interrogatories (a series of written questions).
On affidavit (a sworn written statement). In case of oral examination, the Tribunal may:
Record the responses in writing. Require the person examined to sign the written statement. This mechanism ensures that the testimony or statements made during examination are official, verifiable, and legally binding.

3. Requirement to Produce Books and Documents

The Tribunal may also compel any summoned person to produce books, documents, or papers related to the company that are in his custody or control.
If the person claims a lien (a legal right to retain possession) over the documents produced:
The production will be without prejudice to that lien. The Tribunal will decide any disputes or questions relating to the existence or extent of such lien.
This ensures both cooperation and protection of legal rights of individuals while giving the Tribunal access to crucial records.

4. Power to Direct Liquidator to File Reports

The Tribunal may instruct the liquidator (or provisional liquidator) to file a report detailing:
Any debt owed to the company. Any property belonging to the company that is in possession of other persons.
This provision enables the Tribunal to initiate further action based on the findings and inputs from the liquidator, who plays a central role in identifying and recovering the company’s assets.

5. Tribunal’s Orders on Debts and Property in Possession

Based on the examination and report, the Tribunal may pass specific enforceable orders:
(a) In Case of Debt:
If a person is found to owe money to the company, the Tribunal may direct such person to:
Pay the amount owed or any part thereof. Payment can be ordered to be made to the provisional liquidator or liquidator.
The Tribunal can decide the time, manner, and conditions of such payment. It may also award costs for the examination, as deemed appropriate.
(b) In Case of Property:
If any person is found to be in possession of property that rightfully belongs to the company, the Tribunal may order such person to:
Deliver the property or any part thereof. Delivery must be made to the provisional liquidator or liquidator. The Tribunal may determine the time, terms, and method of delivery in a manner it considers just.
This power gives the Tribunal significant authority to recover assets or dues that are essential for the benefit of creditors and proper winding up of the company.

6. Consequences of Non-Appearance

If any person or officer who has been summoned by the Tribunal fails to appear at the scheduled time without a reasonable cause:
The Tribunal has the authority to impose costs on such person. This acts as a deterrent against non-cooperation and ensures compliance with Tribunal orders.
7. Execution of Orders

Any order made by the Tribunal under sub-section (5)  whether for payment of money or delivery of property  shall be enforceable as if it were a decree passed by a civil court.
This means such orders can be executed under the Code of Civil Procedure, 1908, giving the liquidator a clear legal path to enforce compliance.
8. Legal Discharge on Compliance

If a person makes payment or delivers property as directed by the Tribunal under sub-section (5):
Such person is legally discharged from all future liability concerning that debt or property, unless the Tribunal's order states otherwise. This provides legal certainty and protection to cooperating individuals.