Powers of an Official Liquidator: Section 360

The powers of an Official Liquidator are set by section 360 of the Companies Act, 2013 in three lines, and the section is unusual for how much it leaves to rules. It gives the Central Government the power to prescribe, then borrows the whole toolkit of a Company Liquidator, then adds an investigation power that only a direction can switch on. This page reads section 360 as printed, with section 359 for the office itself.

What are the powers of an Official Liquidator?

Whatever the Central Government prescribes, in the first instance. Section 360(1) states that The Official Liquidator shall exercise such powers and perform such duties as the Central Government may prescribe. Powers and duties are both delegated to rules, and the sub-section fixes neither on the face of the Act.

Section 360(2) then adds two things without prejudice to the provisions of sub-section (1), so they sit alongside the prescribed set rather than replacing it. Clause (a) lets him exercise all or any of the powers as may be exercised by a Company Liquidator under the provisions of this Act. Clause (b) lets him conduct inquiries or investigations, if directed by the Tribunal or the Central Government, in respect of matters arising out of winding up proceedings.

The two clauses work differently. Clause (a) is a standing borrowing of another office's powers. Clause (b) is conditional: the inquiry power exists only where a direction has been given, and two authorities can give it.

What does clause (a) actually pull in?

The section 290 toolkit. Because clause (a) borrows the powers as may be exercised by a Company Liquidator under the provisions of this Act, the Official Liquidator can reach the same powers to carry on the business, sell property, raise money on security and do all acts necessary for winding up, which are set out in the powers and duties of a Company Liquidator.

The borrowing is expressed as all or any, not as a transfer, so it is a permission rather than an automatic vesting of every power in every case.

Some of those powers are not free standing even for a Company Liquidator. Section 343 requires the sanction of the Tribunal before a liquidator can pay any class of creditors in full or make a compromise or arrangement with creditors, and nothing in section 360 removes that.

How is the office constituted?

By the Central Government, in a tiered structure. Section 359(1) states that For the purposes of this Act, so far as it relates to the winding up of companies by the Tribunal, the Central Government may appoint as many Official Liquidators, Joint, Deputy or Assistant Official Liquidators as it may consider necessary to discharge the functions of the Official Liquidator.

The opening words limit the office's field to winding up by the Tribunal. Section 359(2) makes the appointees whole-time officers of the Central Government, and section 359(3) has the Central Government pay the salary and other allowances of the Official Liquidator, Joint Official Liquidator, Deputy Official Liquidator and Assistant Official Liquidator.

That is a different kind of appointee from the one the Tribunal picks. Under section 275(2) a Company Liquidator is drawn from amongst the insolvency professionals registered under the Insolvency and Bankruptcy Code, 2016, a point covered in the Company Liquidator.

The two offices are not mutually exclusive. Section 275(1) requires that the Tribunal shall appoint an Official Liquidator or a liquidator from the panel maintained under sub-section (2) as the Company Liquidator, so an Official Liquidator can hold the Company Liquidator's office in a Tribunal winding up. The appointment itself is a duty; only the choice between the two appointees is left open.

Where does an Official Liquidator act in his own right?

Most visibly in the summary route. Section 361(2) requires the Central Government, on ordering a summary procedure, to appoint the Official Liquidator as the liquidator of the company, and sections 362 to 365 then give him the asset disposal, claim settlement and final report duties directly, covered in summary procedure for liquidation.

He is also a named applicant in the personal liability sections. Section 339(1) and section 340(1) both let the Official Liquidator apply to the Tribunal, alongside the Company Liquidator, any creditor and any contributory, which is treated in fraudulent conduct of business.

The powers of an Official Liquidator are therefore best read as three layers: a prescribed layer that lives in rules rather than in the Act, a borrowed layer that mirrors the Company Liquidator, and a directed layer that stays dormant until the Tribunal or the Central Government switches it on.

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