Power to Summon Suspected Persons: Section 299

The power to summon suspected persons is how a Tribunal in an Indian winding up reaches property and information sitting outside the company. Section 299 of the Companies Act, 2013 lets it call before it anyone suspected of holding company property, examine them on oath, and order the property or the debt back. This page reads the section as printed.

What is the power to summon suspected persons, and when does it arise?

After a liquidator is in place, not before. Section 299(1) opens with the timing: the Tribunal may act at any time after the appointment of a provisional liquidator or the passing of a winding up order. Either event opens the power. A pending petition does not, which matters because a winding up petition can sit for some time before either happens.

The persons who can be called are set out in one sentence. The Tribunal may summon 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.

Four limbs are separated by or there: an officer; a person suspected of holding property, books or papers; a person suspected of owing money; and a person capable of giving information. The last is the widest. It requires neither possession nor a debt, only that the Tribunal thinks the person capable of giving information, and the subjects listed run from promotion and formation through to the affairs of the company generally.

How is a summoned person examined?

On oath, in one of three forms. Section 299(2) lets the Tribunal 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.

That restriction is worth reading closely. The signing requirement attaches to oral examination, because written interrogatories and affidavits are already signed documents.

Section 299(3) handles documents. The Tribunal may require production of 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. A person with a lien cannot refuse to produce, and does not lose the lien by producing.

Section 299(4) lets the Tribunal direct the liquidator to file before it a report in respect of debt or property of the company in possession of other persons, which is how the liquidator's own investigation feeds the process. The liquidator's general powers to get in and realise assets sit in section 290.

What orders can the Tribunal make?

Two, and section 299(5) splits them by what the Tribunal finds. If it finds a person is indebted to the company, clause (a) lets it order him to pay 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. If it finds a person is in possession of any property belonging to the company, clause (b) lets it order delivery of that property or any part thereof, at such time, in such manner and on such terms as the Tribunal may consider just.

Both clauses name the provisional liquidator or the liquidator as the recipient, so the order works whether or not a winding up order has yet been passed.

What happens if the person fails to appear, and what if he complies?

Section 299(6) deals with absence: 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. The consequence is a cost, expressed as a discretion, and the sub-section carries no fine or imprisonment of its own. Non appearance with a reasonable cause is outside it.

Section 299(7) makes the orders enforceable outside the winding up: every order 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 (5 of 1908).

Section 299(8) is the protection for the person who complies. Anyone 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. The discharge is subject to the order itself saying otherwise, which is why the terms of the order matter as much as the fact of compliance.

How does this sit next to the other examination powers?

Section 299 is the information and recovery power; it does not depend on any allegation of fraud. The separate power in section 300 to examine promoters and directors does, because it is triggered by a liquidator's report stating a fraud opinion, and it is covered in the examination of promoters in winding up.

The power to summon suspected persons is therefore the routine one of the three. It reaches a debtor who has simply not paid and a person who happens to hold the books, and section 299(8) is what makes handing them over safe to do.

Flock reports the filings themselves, each stamped with its date and linked back to the exchange or regulator that published it. What any of it means for you is your call to make.