Duty to Cooperate With a Liquidator: S. 284

The duty to cooperate with a liquidator in an Indian winding up is owed by people who may have left the company years earlier. Section 284 of the Companies Act, 2013 binds promoters, directors, officers and employees, present and past, and gives the liquidator one route when they do not cooperate: an application to the Tribunal. This page reads the section as printed, including the 2020 substitution that created its enforcement limb.

What is the duty to cooperate with a liquidator, and who owes it?

Four categories of person, and the section reaches backwards. Section 284(1) states that The promoters, directors, officers and employees, who are or have been in employment of the company or acting or associated with the company shall extend full cooperation to the Company Liquidator in discharge of his functions and duties.

The qualifying phrase is the operative one: who are or have been. A director who resigned, an officer who left, an employee whose employment ended, all remain inside the section. The alternatives that follow widen it again, since the connection can be employment, acting for the company, or being associated with it.

The standard is stated as full cooperation, and it is tied to the liquidator's own functions and duties rather than to any list of documents. What those functions are is set by section 290, covered in the powers and duties of a Company Liquidator.

What happens if a person does not cooperate?

The liquidator asks the Tribunal, and imposes nothing himself. Section 284(2) states that If any person required to assist or cooperate with the Company Liquidator under sub-section (1) does not assist or cooperate, the Company Liquidator may make an application to the Tribunal for necessary directions.

Note the wording widens here. Sub-section (1) speaks of cooperation; sub-section (2) speaks of a person required to assist or cooperate, and of one who does not assist or cooperate. The application is a discretion, so the liquidator is not obliged to run to the Tribunal over every lapse.

Section 284(3) then tells the Tribunal what to do with it: On receiving an application under sub-section (2), the Tribunal shall, by an order, direct the person required to assist or cooperate with the Company Liquidator to comply with the instructions of the Company Liquidator and to cooperate with him in discharging his functions and duties.

The verb is shall, and the order has two limbs: comply with the liquidator's instructions, and cooperate in the discharge of his functions and duties. The section stops at the direction. It prescribes no penalty of its own for breach of that order.

What did the 2020 amendment change?

It supplied the enforcement route. The India Code consolidation of the Act prints sub-sections (2) and (3) inside square brackets carrying a footnote marker, and the footnote reads Subs. by Act 29 of 2020, s. 46, for sub-section (2) (w.e.f. 21-12-2020).

Read that precisely. The footnote records a substitution for sub-section (2), a single sub-section, while the bracketed material that replaced it is the pair of sub-sections (2) and (3) now printed. Both facts are on the page, and the effect is that the present application and direction machinery dates from 21 December 2020.

Section 284 is one of a small set of Chapter XX sections that Act 29 of 2020 reached, and the amendment history of the Chapter is summarised on the grounds for winding up by the Tribunal.

Where else does non cooperation bite?

Not in section 284, which is why the neighbouring sections matter. The custody power in section 283(3) lets the Tribunal require any contributory for the time being on the list of contributories, and any trustee, receiver, banker, agent, officer or other employee of the company, to pay, deliver, surrender or transfer forthwith, or within the time directed, any money, property or books and papers in his custody or under his control.

The criminal end of that table is separate law, not an escalation inside section 284. Failures to disclose property or deliver up books are dealt with as offences under section 336, covered in offences by officers in liquidation, and the Tribunal's power to summon and examine is the power to summon suspected persons.

The duty to cooperate with a liquidator is therefore broad in who it binds and narrow in what it produces on its own: a direction from the Tribunal. Its practical weight comes from the sections around it, which is why a refusal is rarely a section 284 problem for long.

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