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s, attorneys and policy -brokers .Bankers, factors, wharfingers, attorneys of a High Court and policy -brokers may, in the a bsence of a contract to the contrary, retain as a security for a general balance of account, any goods bailed t o them ; but no other persons have a right to retain, as a security for such balance, goods bailed to them, unless there is an express contract to that effect1. Bailments of Pledges 172.Pledge pawnor ,and pawnee defined .The bailment of goods as security for payment of a debt or performance of a promise is called pledge . The bailor is in this case called the pawnor . The bailee is called the pawnee . 173.Pawnee s right of retainer .Thepawnee may retain the goods pledged, not only for payment of the debt or the performance of the promise, but for the interest of the debt, and all necessary expenses incurred by him in respect of the possession or for the pre servation of the goods pledged. 174.Pawnee not to retain for debt or promise other than that for which goods pledged. Presumption in case of subsequent advances .The pawnee shall not, in the absence of a contract to that effect, retain the goods pledged for any debt or promise other than the debt or promise for which they are pledged; but such contract, in the absence of anything to the contrary, shall be presumed in regard to subseque nt advances made by the pawnee. 175. Pawnee s right as to extraordinary expenses incurred. Thepawnee is entitled to receive from the pawnor extraordinary expenses incurred by him for the pre servation of the goods pledged. 176. Pawnee s right where pawnor makes default .If the pawnor makes default in payment of the debt, or performance, at the stipulated time of the promise, in respect of which the goods were pledged, the pawnee may bring a suit against the pawnor upon the debt or promise, and retain the goods pledge d as a collateral security; or he may sell the thing pledged, on giving the pawnor reasonable notice of the sale. If the proceeds of such sale are less than the amount due in respect of the debt or promise, the pawnor is still liable to pay the balance. If the proceeds of the sale are greater than the amount so due, the pawnee shall pay over the surplus to the pawnor. 177. Defaulting pawne rs right to redeem .If a time is stipulated for the payment of the debt, o r performance of the promise, for which the pledge is made, and the pawnor makes default in payment of the debt or performance of the promise at the stipulated time, he may redeem the goods pledged at any subsequent time before the actual sale of them2; but he must, in that case, pay, in addition, any expenses whic h have arisen from his default. 3[178. Pledge by mercantile agent .Where a mercantile agent is, with the consent of the owner, in possession of goods or the document of title to goods, any pledge made by him, when acting in the ordinary course of business of a mercantile agent, shall be as valid as if he were expressly authorised by the owne r of the goods to make the same ; provided that the pawnee acts in good faith and has not at the time of the pledge notice that the pawn or has not authority to pledge. Explanation .In this section, the expressions mercantile agent and documents of title shall have the meanings assigned to them in the Indian Sale o f Goods Act, 1930 (3 of 1930) . 178A. Pledge by person in posse ssion under voidable contract .When the pawnor has obtained possession of the goods pledged by him under a contract voidable under section 19 or section 19A, but 1. As to lien of an agent, see s. 221, infra. As to lien of a Railway Administration, see the Indian Railways Act, 1890 (9 of 1890), s. 55. 2. For limitation, see the Limitation Act, 1 963 (36 of 1963), the Second Schedule . 3. Ss. 178 and 178A subs. by Act 4 of 1930, s. 2, for the original s. 178. 43 the contract has not been rescinded at the time of the pledge, the pawnee acquires a good title to the goods, provided he act s in good faith and without notice of the pawnor s defect of title.] 179. Pledge where pawn or has only a limited interest .Where a person pledges goods in which he has only a limited interest, the pledge is valid to the extent of that interest. Suits by bailees or bailors against wrong -doers 180.Suit by bailo r or bailee against wrong -doer .If a third person wrongfully deprives the bailee of the use or possession of the goods bailed, or does them any injury, the bailee is entitled to use such remedies as t he owner might have used in the like case if no bailment had been made; and either the bailor or the bailee may bring a suit against a third person for such deprivatio n or injury. 181. Apportionment of relief or compe nsation obtained by such suits .Whatever is obtained by way of relief or compensation in any such suit shall, as between the bailor and the bailee, be dealt with according to their respective interests. CHAPTER X AGENCY Appoi ntment and authority of agents 182.Agent and principal defined .An agent is a person employed to do any act for another , or to represent another in dealings with third persons. The person for whom such act is done, or who is so represented, is called the principal . 183. Who may employ agent .Any person who is of the age of majority according to the law to which he is subject, and who is of s ound mind, may employ an agent. 184. Who may be an agent .As between the principal and third persons , any person may become an agent, but no person who is not of the age of majority and of sound mind can become an agent, so as to be responsible to his principal according to the provisions i n that behalf herein contained. 185. Consideration not necessary .No consideration is necessary to create an agency. 186. Agent s authori ty may be expressed or implied .The authority of an agent may be expressed or implied1. 187. Definitions of express and implied authority .An authority is said to be express when it is given by words spoken or written. An authority is said to be implied when it is to be inferred from the circumstances of the case; and things spoken or written, or the ordinary course of dealing, may be accou nted circumstances of the case. Illustration A owns a shop in Serampore, living himself in Calcutta, and visi ting the shop occasionally. Th e shop is managed by B, and he is in the habit of ord ering goods from C in the name of A for the purposes of the shop, and of paying for them out of A s funds with A s knowledge. B has an implied authority from A to order good s from C in the name of A for the pu rposes of the shop. 188. Extent of agent s authority .An agent , having an authority to do an act , has authority to do every lawful thing which is necessary in order to do such a ct. An agent having an authority to carry on a business , has authority to do every lawful thing necessary for the purpose, or usually done in the cours e, of conducting such business. 1. See, however, the Registration Act, 1908 (16 of 1908), s. 33; see also the Code of Civil Procedure, 1908 (5 of 1908), Sch. I, Order III, rule 4. 44 Illustrations (a) A is employed by B, residing in London, to recover at Bombay a debt due to B. A may adopt any legal process necessary for the purpose of recovering the debt, and may give a valid discharge for the same. (b) A constitutes B his agent to carry on his busin ess of a ship -builder. B may purchase timber and other materials, and hire workmen, for the purpo se of carrying on the business. 189.Agent s authority in an emergency .An agent has authority, in an emergency, to do all such acts for the purpose of protecting his principal from loss as would be done by a person of ordinary prudence, in his own cas e, under similar circumstances. Illustrations (a) An agent for sale may have goo ds repaired if it be necessary. (b) A consigns provisions to B at Calcutta, with directions to send them immediately to C, at Cuttack. B may sell the provisions at Calcutta, if they will not bear the journ ey to Cuttack without spoiling. Sub-Agents 190. When agent cannot delegate .An agent cannot lawfully employ another to perform acts which he has expressly or impliedly undertaken to perform personally, unless by the ordinary custom of trade a sub -agent may, or, from the nature of the agency, a sub -agent must, be employed. 191. Sub-agent defined .A sub-agent is a person employed by, and acting under the control of, the original agent in the business of the agency. 192. Representation of principal by sub -agent properly appointed .Where a sub -agent is properly appointed, the principal is, so far as regards third persons, represented by the sub -agent, and is bound by and responsible for his acts, as if he were an agent originally appointed by the principal. Agent s responsibility f or sub -agent .The agent is responsible to the principal for the acts of the sub-agent. Sub-agent s responsibility .The sub -agent is responsible for hi s acts to the agent, but not to the principal, except in cases of fraud or wilful wrong. 193. Agent s responsibility for sub -agent appointed without authority .Where an agent, without having authority to do so, has appointed a person to act as a sub -agent, the agent stands towards such person in the relation of a princi pal to an agent, and is respon sible for his acts both to the principal and to third persons; the principal is not represented , by or responsible for the acts of the person so employed, nor is that person responsible to the principal. 194.Relation between principal and person duly appointed by agen t to act in business of agency .Where an agent, holding an express or implied authority to name another person to act for the principal in the business of the agency, has named another person accordingly, such person is not a sub-agent, but an agent of the principal for such part of the business of the agency as is entrusted to him. Illustrations (a)A directs B, his solicitor, to sell his estate by auction, and to employ an auctioneer for the purpose. B names C, an auctioneer, to conduct the sale. C is not a sub -agent, but is A s age nt for the conduct of the sale. (b)A authorizes B, a merchant in Calcutta, to recover the moneys due to A from C & Co. B instructs D, a solicitor, to take legal proceedings against C & Co. for the recovery of the money. D is not a sub -agent, but is solicitor for A. 195. Agent s duty in naming such person .In selecting such agent for his principal, an agent is bound to exercise the same amount of discretion as a man of ordinary prudence would exercise in his own case; and, if he does this, he is not responsible to the principal for the acts or negli gence of the agent so selected. 45 Illustrations (a)A instructs B, a merchant, to buy a ship for him. B employs a ship -surveyor of good reputation to choose a ship for A. The surveyor makes the choice negligently and the ship turns out to be unseaworthy and is lost. B is not, but the surveyor is, responsible to A. (b)A consigns goods to B, a merchant, for sale. B, in due course, employs an auctioneer in good credit to sell the goods of A, and allows the auctioneer to rece ive the proceeds of the sale. The auctioneer afterwards becomes insolvent without hav ing accounted for the proceeds. B is not res ponsible to A for the proceeds. Ratification 196. Right of person as to acts done for him without his authority . Effect of ratification . Where acts are done by one person on behalf of another, but without his knowledge or authority, he may elect to ratify or to disown such acts. If he ratify them, the same effects will follow as if they had b een performed by his authority. 197.Ratificati on may be expressed or implied .Ratification may be expressed or may be implied in the conduct of the person on whose be half the acts are done. Illustrations (a)A, without authority, buys goods for B. Afterwards B sells them to C on his own account; B s conduct implies a ratification of the purchase made for him by A. (b)A, without B s authority, lends B s money to C. Afterwards B accepts interest on the money from C. B s conduct impl ies a ratification of the loan. 198.Knowledge re quisite for valid ratification .No valid ratification can be made by a person whose knowledge of the facts of th e case is materially defective. 199.Effect of ratifying unauthorized act forming part of a transaction .A person ratifying any unauthorized act done on his behalf ratifies the whole of the transaction of which such act formed a part. 200.Ratification of unauthorized a ct cannot injure third person .An act done by one person on behalf of another, without such other person s authority, which, if done with autho rity, would have the effect of subjecting a third person to damages, or of terminating any right or interest of a third person, cannot, by ratificatio n, be made to have such effect. Illustrations (a)A, not being authorized thereto by B, demands, on behalf of B, the delivery of a chatte l, the property of B, from C, who is in possession of it. This demand cannot be ratified by B, so as to make C liable for dama ges for his refusal to deliver. (b)A holds a lease from B, terminable on three months notice. C, an unauthorized person, gives notice of termination to A. The notice cannot be ratified by B, so as to be binding on A. Revocation of Authority 201. Termination of agency .An agency is terminated by the principal revoking his authority; or by the agent renouncing the business of the agency; or by the business of the agency being completed; or by either the principal or agent dying or becoming of unsound mind; or by the principal being adjudicated an insolvent under the provisions of any Act for the time being in force for

ound mind; or by the principal being adjudicated an insolvent under the provisions of any Act for the time being in force for the relief of insolvent debtors. 202.Termination of agency , where agent has an intere st in subject -matter .Where the agent has himself an interest in the property which forms the subj ect-matter of the agency, the agency cannot, in the absence of an express contract, be terminated to the prejudice of such interest. Illustrations (a) A gives authority to B to sell A s land, and to pay himself, out of the proceeds, the debts due to him from A. A cannot revoke this authority, nor can it be termi nated by his insanity or death. 46 (b) A consigns 1,000 bales of cotton to B, who has made advances to him on such cotton, and desires B to sell the cotton, and to repay himself out of the price, the amount of his own advances. A cannot revoke this authority, nor is it termi nated by his insanity or death. 203.When principal may revoke agent s authority .The principal may, save as is otherwise provided by the last preceding section, revoke the authority given to his agent at any time before the authority has been exercis ed so as to bind the principal. 204.Revocation where autho rity has been partly exercised .The principal cannot revoke the authority given to his agent after the authority has been partly exercised , so far as regards such acts and obligations as arise from a cts already done in the agency. Illustrations (a)A authorizes B to buy 1,000 bales of cotton on account of A, and to pay for it out of A s moneys remaining in B s hands. B buys 1,000 bales of cotton in his own name, so as to make himself personally liable for the price. A cannot revoke B s authority so far as regards payment for the cotton. (b) A authorizes B to buy 1,000 bales of cotton on account of A, and to pay for it out of A s mo neys remaining in B s hands. B buys 1,000 bales of cotton in A s name, and so as not to render himself personally liable for the price. A can revoke B s authority to pay for the cotton. 205.Compensation for revocation by principal, o r renunciation by agent .Where there is an express or implied contract that the agency should be continued for any period of time, the principal must make compensation to the agent, or the agent to the principal, as the case may be, for any previous revocation or renunciation of the a gency without sufficient cause. 206. Notice of revocation or renunciation .Reasonable notice must be given of s uch revocation or renunciation, otherwise the damage thereby resulting to the principal or the agent, as the case may be, must be mad e good to the one by the other. 207.Revocation and renunciatio n may be expressed or implied .Revocation and renunciation may be expressed or may be implied in the conduct of the p rincipal or agent respectively. Illustration A empowers B to let A s house. Afterwards A lets it himself. This is an implied revocation of Bs authority. 208.When termination of agent s authority takes effect as to agent, and as to third persons . The termination of the authority of an agent does not, so far as regards th e agent, take effect before it becomes known to him, or, so far as regards third persons, b efore it becomes known to them. Illustrations (a) A directs B to sell goods for him, and agrees to give B five per cent. commission on the price fetched by the goods. A afterwards, by letter, revoke B s authority. B, after the letter is sent, but before he receives it, sells the goods for 100 rupees. The sale is binding on A, and B is entitled to five rupees as his commission. (b) A, at Madras, by letter, directs B to sell for him some cotton lying in a warehouse in Bombay, and afterwards, by letter, revokes his authority to sell, and directs B to send the cotton to Madras. B, after receiving the second letter, enters into a contract with C, who knows of the first letter, but not of the second, for the sale to him of the cotton. C pays B the money, with which B absconds. C s payment is good as against A. (c) A directs B, his agent, to pay certain money to C. A dies, and D takes out probate to his will. B, after A s death, but before hearing of it, pays the money to C. The payment is g ood as against D, the executor. 209.Agent s duty on termination of agency by principal s death or insanity .When an agency is terminated by the principal dying or becoming of unsound mi nd, the agent is bound to take, on behalf of the representatives of his late principal, all reasonable steps for the protection and preservation of the interests entrusted to him. 47 210. Termination of sub -agent s authority .The termination of the authority of an agent causes the termination (subject to the rules herein contained regarding the termination of an agent s authority) of the authority of a ll sub -agents appointed by him. Agent s duty to principal 211.Agent s duty in conducting principal s business .An agent is bound to conduct the business of his principal according to the directions given by the principal, or, in the absence of any such directions, according to the custom which prevails in doing business of the same kind at the place where the agen t conducts such business. When the agent acts otherwise, if any loss be sustained, he must make it good to his principal, and if any profit a ccrues, he must account for it. Illustrations (a) A, an agent engaged in carrying on for B a business, in which it is the custom to invest from time to time, at interest, the moneys which may be in hand, omits to make such investment. A must make good to B the interest usuall y obtained by such investments. (b) B, a broker, in whose business it is not the custom to sell on credit, sells goods of A on credit to C, whose credit at the time was very high. C, before payment, becomes insolvent. B must mak e good the loss to A. 212. Skill and diligence required from agent .An agent is bound to conduct the business of the agency with as much skill as is generally possessed by perso ns engaged in similar business , unless the principal has notice of his want of skill. The agent is always bound to act with reasonable diligence, and to use such skill as he possesses; and to make compe nsation to his principal in respect of the direct consequences of his own neglect, want of skill , or misconduct, but not in respect of loss or damage which are indirectly or remotely caused by such neglec t, want of skill , or misconduct. Illustrations (a)A, a merchant in Calcutta, has an agent, B, in London, to whom a sum of money is paid on A s account, with orders to remit. B retains the money for a considerable time. A, in consequence of not receiving the money, becomes insolvent. B is lia ble for the mone y and interest from the day on which it ought to have been paid, according to the usual rate, and for any further direct loss -as, e.g., by variation of ra te of exchange -but not further. (b)A, an agent for the sale of goods, having authority to sell on credit, sells to B on credit, without making the proper and usual enquiries as to the solvency of B. B, at the time of such sale, is insolvent. A must make compensation to his principal in respect of any loss thereby sustained. (c)A, an insurance -broker em ployed by B to effect an insurance on a ship , omits to see that the usual clauses are inserted in the policy. The ship is after wards lost. In consequence of the omission of the clauses nothing can be recovered from the underwriters. A is bo und to make goo d the loss to B. (d)A, a merchant in England, directs B, his agent at Bombay, who accepts the agency, to send him 100 bales of cotton by a certain ship. B, having it in his power to send the cotton, omits to do so. The ship arrives safely in England. Soon after her arrival the price of cotton rises. B is bound to make good to A the profit which he might have made by the 100 bales of cotton at the time the ship arrived, but not any profit he might have made by the subsequent rise. 213.Agent s accounts .An agent is bound to render proper accounts to his principal on demand. 214.Agent s duty to communicate with principal .It is the duty of an agent, in cases of difficulty, to use all reasonable diligence in communicating with his principal, and in seeking to obtain his instructio ns. 215.Right of principal when agent deals, on his own account, in business of agency without principal s consent .If an agent deals on his own account in the business of the agency, without first obtaining the consent of his principal and acquainting him with all material circumstances which have come to his own knowledge on the subject, the principal may repudiate the transaction, if the case shows , either that any material fact has been dishonestly concealed from him by the agent, or that the dealings of the agent have been disadvantageous to him. 48 Illustrations (a)A directs B to sell A s estate. B buys the estate for himself in the name of C. A, on discovering that B has bought the estate for himself, may repudiate the sale, if he can show that B has dishonestly concealed any material fact, or that the sa le has been disadvantageous to him. (b)A directs B to sell A s estate B, on looking over the est ate before selling it, finds a mine on the estate which is unknown to A. B informs A that he wishes to buy the estate for himself, but conceals the discovery of the mine. A allows B to buy , in ignorance of the existence of the mine. A, on discovering that B knew of the mine at the time he bought the estate, may either repudiate or adopt the sale at his option. 216. Principal s right to benefit gained by agent dealing on his own account in business of agency .If an agent, without the knowledge of his principal, deals in the business of the agency on his own account instead of on account of his principal, the principal is entitled to claim from the agent any benefit which may have result ed to him from the transaction. Illustration A directs B, his agent, to buy a certain house for him. B tells A it cannot be bought, and buys the house for himself. A may, on discovering that B has bought the house, compel him to sell it to A at the price he gave for it. 217.Agent s right of retainer out of sums received on principal s account .An agent may retain, out of any sums received on account of the principal in the business of the agency, all moneys due to himself in respect of advances made or expenses properly incurred by him in conducting such business , and also such remuneration as may be paya ble to him for acting as agent. 218. Agent s duty to p ay sums received for principal .Subject to such deductions, the agent is bound to pay to his principal al l sums received on his account. 219.When agent s remuneration becomes due .In the absence of any special contract, payment for the performance of any act is not due to the agent until the completion of such act; but an agent may detain moneys received by him on account of goods sold, although the whole of the goods consigned to him fo r sale may not have been sold, o r although the sal e may not be actually complete. 220.Agent not entitled to remunerat ion for business misconducted .An agent who is guilty of misconduct in the business of the agency , is not entitled to any remuneration in respect of that part of the business which he has misconducted. Illustrations (a) A employs B to recover, 1,00,000 rupees from C, and to lay it out on good security. B recovers the 1,00,000 rupees; and lays out 90,00 0 rupees on good security, but lays out 10,000 rupees on security which he ought to have known to be bad, whereby A loses 2,000 rupees. B is entitled to remuneration for recovering the 1,00,000 rupees and for investing the 90,000 rupees. He is not entitled to any remuneration for investing the 10,000 rupees, and he must m ake good the 2,000 rupees to B. (b)A employs B to recover 1,000 rupees from C. Through B s misconduct the money is not recovered. B is entitled to no remuneration for his service s, and must make good the loss. 221. Agent s lien on principal s property .In the absence of any contract to the contrary, an agent is entitled to retain goods, papers and other property , whether movable or immovable of the principal received by him, until the amount due to himself for c ommission, disbursements and services in respect of the same has bee n paid or accounted for to him. Principal s duty to agent 222.Agent to be indemnified agains t consequences of lawful acts .The employer of an agent is bound to indemnify him against the consequences of all lawful acts done by such agent in exercise of th e authority c onferred upon him. 49 Illustrations (a)B, at Singapur, under instructions from A of Calcutta, contracts with C to deliver certain goods to him. A does not send the goods to B, and C sues B for breach of contract. B informs A of the suit, and A authorizes him to defend the suit. B defe nds the suit, and is compelled to pay damages and costs, and incurs expenses. A is liable to B for su ch damage s, costs and expenses. (b)B, a broker at Calcutta, by the orders of A, a merchant there, contracts with C for the purchase of 10 casks of oil for A. Afterwards A refuses to receive the oil, and C sues B. B informs A, who repudiates the contract altogether. B defends, but unsuccessfully, and has to pay damages and costs and incurs expenses. A is liable to B for su ch damages, costs and expenses. 223.Agent to be indemnified against consequen ces of acts done in good faith .Where one person employs another to do an act, and the agent does the act in good faith, the employer is liable to indemnify the agent against the consequences of that act, though it cause an injury to the rights of third persons. Illustrations (a)A, a dec ree-holder and entitled to execution of B s goods, requires the officer of the Court to seize certain goods, represe nting them to be the goods of B. The officer

s goods, requires the officer of the Court to seize certain goods, represe nting them to be the goods of B. The officer seizes the goods, and is sued by C, the true owner of the goods. A is liable to indemnify the officer for the sum w hich he is compelled to pay to C, in consequence of obeying A s directions. (b)B, at the request of A, sells goods in the possession of A, but whic h A had no right to dispose of, B does not know this, and hands over the proceeds of th e sale to A. Afterwards C, the true owner of the goods, sues B and recovers the value of the goods and costs. A is liable to indemnify B for what he has been compelled to pay to C , and for B s own expenses. 224.Non -liability of employer of agent to do a cr iminal act .Where one person employs another to do an act which is criminal, the employer is not liable to the agent, either upon an express or an implied promise, to indemnify him against the consequences of that Act1. Illustrations (a) A employs B to beat C, and agrees to indemnify him against all consequences of the act. B thereupon beats C, and has to pay damages to C for so doing. A is not liable to indemnify B for those damages. (b)B, the proprietor of a newspaper, publishes, at A s request, a libe l upon C in the paper, and A agrees to indemnify B against the consequences of the publication, and all costs and damages of any action in respect thereof. B is sued by C and h as to pay damages, and also incurs expenses. A is not liable to B upon the indem nity. 225.Compensation to agent for injury caused by principal s neglect .The principal must make compensation to his agent in respect of injury2caused to such agent by the principal s neg lect or want of skill. Illustration A employs B as a bricklayer in building a house, and puts up the scaffolding himself. The scaffolding is unskilfully put up, and B is in consequence hurt. A must make compensation to B. Effect of agency on contracts with third persons 226. Enforcement and consequences of agent s contracts .Contracts entered into through an agent, and obligations arising from acts done by an agent, may be enforced in the same manner, and will have the same legal consequences, as if the contracts had been entered into and the acts d one by the princi pal in person. Illustrations (a)A buys goods from B, knowing that he is an agent for their sale, but not knowing who is the principal. B s principal is the person entitled to claim from A the price of the goods, and A cannot, in a suit by the principal, set-off against that clai m a debt due to himself from B. 1. See s. 24, supra . 2. Cf. the Indian Fatal Accidents Act, 1855 (13 of 1855). 50 (b)A, being B s agent , with authority to receive money on his behalf, receives from C a sum of money due to B. C is discharged of his obligation t o pay the sum in question to B. 227. Principal how far bound , when agent exceeds authority .When an agent does more than he is authorized to do, and when the part of what he does, which is within his authority, can be separated from the part which is beyond his authority, so much only of what he does as is within his authority is binding as between him and his principal. Illustration A, being owner of a ship and cargo, authorizes B to procure an insurance for 4,000 rupees on the ship. B procures a policy for 4,000 rupees on the ship, and another for the lik e sum on the cargo. A is bound to pay the premium for the policy on the ship, but not the premium for the policy on the ca rgo. 228.Principal not bound when excess of agent s authority is not separable .Where an agent does more than he is authorized to do, and what he does beyond the scope of his authority cannot be separated from what is within it, the principal is not boun d to recognize the transaction. Illustration A authorizes B to buy 500 sheep for him. B buys 500 sheep and 200 lambs for one sum of 6, 000 rupees. A may repudiate the whole transactio n. 229.Consequ ences of notice given to agent .Any notice given to or information obtained by the agent, provided it be given or obtained in the course of the business transacted by him for the principal, shall, as between the principal and third parties, have the same legal consequences as if it had been given to or obtained by the principal. Illustrations (a)A is employed by B to buy from C certain goods, of which C is the apparent owner, and buys them accordingly. In the course of the treaty for the sale, A learns that the goods really belonged to D, but B is ignorant of that fact. B is not ent itled to set-off a debt owing to him from C against the price of the goods. (b)A is employed by B to buy from C goods of which C is the apparent owner. A was, before he was so employed, a servant of C, and then learnt that the goods really belonged to D, but B is ignorant of that fact. In spite of the knowledge of his agent, B may set -off against the price of the goods a deb t owing to him from C. 230.Agent cannot personally enforce, nor be bound by, co ntracts on behalf of principal .In the absence of any contract t o that effect, an agent cannot personally enforce contracts entered into by him on behalf of his principal, nor is he personally bound by them. Presu mption of contract to contrary Such a contract shall be presumed t o exist in the following cases: (1) where the contract is made by an agent for the sale or purchase of goods for a merchant resident abroad; (2) where the agent does not dis close the name of his principal; (3) where the principal, thoug h disclosed, cannot be sued. 231.Rights of parties to a contrac t made by agent not disclosed .If an agent makes a contract with a person who neither knows, nor has reason to suspect, that he is an agent, his principal may require the performance of the contract ; but the other contracting party has, as against the principal, the same rights as he would have had as against the agent i f the agent had been principal. If the principal discloses himself before the contract is completed, the other contracting party may refuse to fulfil the contract, if he can show th at, if he had known who was the principal in the contract, or if he had known that the agent was not a principal, he would not have entered into the contract. 51 232. Performance of contract with a gent supposed to be principal .Where one man makes a contract with another, neither knowing nor having reasonable ground to suspect that the other is an agent, the principal, if he requires the performance of the contract, can only obtain such performance subject to the rights and obligations subsisting between the a gent and t he other party to the contract. Illustration A, who owes 500 rupees to B, sells 1,000 rupees worth of rice to B. A is acting as agent for C i n the transaction, but B has no knowledge nor reasonable ground of suspicion that such is the case. C cannot compel B to take the rice without allowing him to set -off A s debt. 233.Right of person dealin g with agent personally liable .In cases where the agent is personally liable, a person dealing with him may hold either him or his prin cipal, or both of t hem, liable. Illustration A enters into a contract with B to sell him 100 bales of cotton, and afterwards discovers that B was acting as agent for C. A may sue either B or C, or bot h, for the price of the cotton. 234. Consequence of inducing agent or principal to act on belief that principal or agent w ill be held exclusively liable .When a person who has made a contract with an agent induces the agent to act upon the belief that the principal only will be held liable, or induces the principal to act up on the belief that the agent only will be held liable, he cannot afterwards hold liable the agent or principal respectively. 235. Liability of pretended agent .A person untruly representing himself to be the authorized agent of another, and thereby inducing a third person to deal with him as such agent, is liable, if his alleged employer does not ratify his acts, to make compensation to the other in respect of any loss or damage which he has incurred by so dealing. 236.Person falsely contracting as a gent not entitled to performance .A person with whom a contract has been entered into in the character of agent, is not entitled to require the performance of it, if he was in reality acting, not as agent, but on his own account. 237.Liability of principal induc ing belief that agent s unauthoriz ed acts were authorized . When an agent has, without authority, done acts or incurred obligations to third persons on behalf of his principal, the principal is bound by such acts or obligations, if he has by his words or conduct induced such third persons to believe that such acts and obligations were within the scope of the agent s authority. Illustrations (a) A consig ns goods to B for sale, and gives him instructions not to sell under a fixed price. C, being ignorant of B s instructions, enters into a contract with B to buy the goods at a price lower than the reserved pri ce. A is bound by the contract. (b) A entrusts B with negotiable instruments endorsed in blank. B sells them to C in violation of private orders from A. The sale is good. 238. Effect , on agreement, of misrep resentation of fraud, by agent .Misrepresentation made, or frauds committed, by agents acting in the course of their business for their principals, have the same effect on agreements made by such agents as if such misrepresentations or frauds had been made or committed by the principals; but misrepresentations made, or frauds committed, by agents, in matters which do not fall within their authority, do not affect their prin cipals. Illustrations (a) A, being B s agent for the sale of goods, induces C to buy them by a misrepresentation, which he w as not authorized by B to make. The contract is voidable, as betwe en B and C, at the option of C. (b) A, the captain of B s ship, signs bills of lading without having received on board the goods mentioned therein. The bills of lading are void as betwee n B and the pretended cosignor. 52 CHAPTER XI. [OF PARTNERSHIP. ]Rep. by the Indian Partnership Act , 1932 (9 of 1932), s. 73 and the Second Schedule. 239. [Partnership defined.] Rep. by s. 73 and the Second Schedule, ibid. 240. [Lender not a partner by advancing money for share of profits .] Rep. by s . 73 and the Second Schedule , ibid. 241. [Property left in business by retiring partner, or decreased partn ers preventative .] Rep. by s . 73 and the Second Schedule , ibid . 242. [Servant or agent remunerated by share of profits, not a partner .] Rep. by s . 73 and the Second Schedule , ibid. 243. [Widow or child of deceased partner receiving annuity out of profits, not a partner .] Rep. by s. 73 and the Second Schedule , ibid. 244. [Person receiving portion of profits for sale of good -will, no a partner .] Rep. by s . 73 and the Second Schedule , ibid. 245. [Responsibility of person leading another to believe him a partn er.] Rep. by s . 73 and the Second Schedule , ibid. 246. [Liability of person permitting him self to be represented as a partner .] Rep. by s . 73 and the Second Schedule , ibid. 247. [Minor partner not personally liable, but his share is .] Rep. by s . 73 and the Second Schedule , ibid. 248. [Liability of minor partner on attaining majority .] Rep. by s . 73 and the Second Schedule , ibid 249. [Partners liability for debts of partnership .] Rep. bys . 73 and the Second Schedule , ibid. 250. [Partners liability to th ird person for neglect or fraud of co -partner .] Rep. by s . 73 and the Second Schedule , ibid. 251. [Partners power to bind co -partners .] Rep. by s . 73 and the Second Schedule , ibid. 252. [Annulment of contract defining partners rights and obligations .] Rep. by s . 73 and the Second Schedule , ibid . 253. [Rules determining partners mutual relations, where no contract to contrary .] Rep. by s . 73 and the Second Schedule , ibid . 254. [When Court may dissolve partnership .] Rep. by s. 73 and the Second Schedule , ibid. 255. [Dissolution of partnership by prohibition of business .] Rep. by s . 73 and the Second Schedule, ibid. 256. [Rights and obligations of partners in partnership continued after expiry of term for which it was entered into. ] Rep. by s. 73 and the Se cond Schedule, ibid. 257. [General duties of partners .] Rep. by s . 73 and the Second Schedule , ibid 258. [Account, to firm, of benefit derived from transaction affecting partnership. ]Rep. by s. 73 and the Second Schedule, ibid. 259. [Obligations, to firm, of partner carrying on business .] Rep. by s . 73 and the Second Schedule, ibid. 53 260. [Revocation of continuing guarantee by charge by change in firm .] Rep. by the Indian Partnership Act , 1932 (9 of 1932), s. 73 and the Second Schedule . 261. [Non-liability of deceased partners estate for subsequent obligations .] Rep. by s. 73 and the Second Schedule , ibid. 262. [Payment of partnership debts, and of separate debts .] Rep. by s . 73and the Second Schedule , ibid. 263. [Continuance, of partners rights and obligations after dissolution .] Rep. by s . 73and the Second Schedule , ibid. 264. [Notice of dissolution .] Rep. by s. 73 and the Second Schedule , ibid. 265. [Right of partners to apply for winding -up after termination of partnership .] Rep. by s . 73 and the S econd Schedule ,

apply for winding -up after termination of partnership .] Rep. by s . 73 and the S econd Schedule , ibid. 266. [Limited -liability partnerships, incorporate partnerships, and joint -stock companies .] Rep. by s . 73and the Second Schedule, ibid. SCHEDULE. [Enactments repealed .] Rep. by the Repealing and Amending Act, 1914 (10 of 1914), s. 3 and the Second Schedule .

THE FOREIGN EXCHANGE MANAGEMENT ACT, 1999 ACT NO. 42 OF 1999 [29th December , 1999.] An Act to consolidate and amend the law relating to foreign exchange with the objective of facilitating external trade and payments and for promoting the orderly development and maintenance of foreign exchange market in India . BE it enacted by Parliament in the Fiftieth Year of the Republic of India as follows: CHAPTER I PRELIMINARY 1. Short title, extent, application and commencement. (1) This Act may be called the Foreign Exchange Management Act, 1999. (2) It extends to the whole of India. (3) It shall also apply to all branches, offices and agencies outside India owned or controlled by a person resident in India and also to any contrav ention there under committed outside India by any p erson to whom this Act applies. (4) It shall come into force on such date1 as the Central Government may, by notification in the Official Gazette, appoint: Provided that different dates may be appointed fo r different provisions of this Act and any reference in any such provision to the commencement of this Act shall be construed as a reference to the coming into force of that provision. 2. Definitions. In this Act, unless t he context otherwise requires, (a) Adjudicating Authority means an officer authorised under sub -section ( 1) of section 16; 2[(b) Appellate Tribunal means the Appellate Tribunal referred to in section 18;] (c) authoris ed person means an authorised dealer, money changer, off -shore banking unit or any other person for the time being authorised under sub -section ( 1) of section 10 to deal in foreign exchange or foreign securities; 3[(cc) Authorised Officer means an officer of the Directorate of Enforcement authorised by the Central Government under section 37A;] (d) Bench means a B ench of the Appellate Tribunal; (e) capital account transaction means a transaction which alters the assets or liab ilities, including contingent liabilities, outside India of persons resident in India or assets or liabilities in India of persons resident outside India, and includes transactions referred to i n sub -section ( 3) of section 6; (f) Chairperson means the Ch airpe rson of the Appellate Tribunal; (g) chartered accountant shall have the meaning assigned to it in clause ( b) of sub -section ( 1) of section 2 of the Chartered A ccount ants Act, 1949 (38 of 1949); 3[(gg) Competent Authority means the Authority appointed by the Central Government under sub-section ( 2) of section 37A;] (h) currency includes all currency notes, postal notes, postal orders, money orders, cheques, drafts, travellers cheques, letters of credit, bills of exchange and promissory notes , credit cards or such other similar instruments, as may b e notified by the Reserve Bank; 1. 1st June, 2000, vide notification No . G.S.R. 371(E), dated 1st May, 2000, see Gazette of India, Extraordinary, Part II, sec. 3(i). 2. Subs. by Act 7 of 2017, s. 165 , for clause ( b) (w.e.f. 26-5-2017). 3. Ins. by Act 20 of 2015, s. 138 (w.e.f. 9 -9-2015). 4 (i) currency notes means and includes cash in the form of coins and bank notes; (j) current account transaction means a transaction other than a capital account transaction and without prejudice to the generality of the forego ing such transaction includes, (i) payments due in connection with foreign trade, other current business, services, and short -term ba nking and credit facilities in t he ordinary course of business, (ii) payments due as interest on loans and as net income from investments, (iii) remittances for living expenses of parents, spouse and children residing abroad, and (iv) expenses in connect ion with foreign travel, education and medical care of parents, spouse and children; (k) Director of Enforcement means the Director of Enforcement appointed under sub -section ( 1) of section 36; (l) export , with its grammatical variations and cognate expressions, means (i) the taking out of India to a place outside India any goods, (ii) provision of services from India to any person outside India; (m) foreign currency means any curre ncy other than Indian currency; (n) foreign exchange means foreign currency and includes, (i) deposits, credits and balances payable in any foreign currency, (ii) drafts, travel lers cheques, letters of credit or bills of exchange, expressed or drawn in Indian currency but payable in any foreign currency, (iii) drafts, travel lers cheques, letters of credit or bills of exchange drawn by banks, institutions or persons outside India, but payable in Indian currency; (o) foreign security means any security, in the form of shares, stocks, bonds, debentures or any other instrument denominated or expressed in foreign currency and includes securities expressed in foreign currency, but where redemption or any form of return such as interest or dividends is payable in Indian currency; (p) import , with its grammatical variations and cognate expressions, means bringing into India any goods or services; (q) Indian currency means currency which is expressed or drawn in Indian rupees but does no t include special bank notes and special one rupee notes issued under section 28A of the Reserve Bank of India Act, 1934 (2 of 1934); (r) legal practitioner shall have the meaning assigned to it in clause ( i) of sub -section ( 1) of section 2 of the Ad vocates Act, 1961 (25 of 1961); (s) Member means a Member of the Appellate Tribunal and includes the Chairperson thereof; (t) notify means to notify in the Official Gazette and the expression notification shall be construed accordingly; (u) person includes (i) an individual, (ii) a Hindu undivided family, (iii) a company, (iv) a firm, (v) an association of persons or a body of individuals, whether incorporated or not, (vi) every artificial juridical person, not falling within any of the prec eding sub -clauses, and (vii) any agency, office or branch owned or controlled by such person; 5 (v) person resident in India means (i) a person residing in India for more than one hundred and eighty -two days during the course of the preceding finan cial year but does not include (A) a person who has gone out of India or who stay s outside India, in either case (a) for or on taking up employment outside India, or (b) for carrying on outside India a business or vocation outside India, or (c) for any oth er purpose, in such circumstances as would indicate his intention to stay outside India for an uncertain period; (B) a person who has come to or stays in India, in either case, otherwise than (a) for or on taking up employment in India, or (b) for carry ing on in India a business or vocation in India, or (c) for any other purpose, in such circumstances as would indicate his intention to stay in India for an uncertain period; (ii) any person or body corporate registered or incorporated in India, (iii) an office, branch or agency in India owned or controlled by a person resident outside India, (iv) an office, branch or agency outside India owned or controlled by a person resident in India; (w) person resident outside India means a person who is not r esident in India; (x) prescribed means prescribe d by rules made under this Act; (y) repatriate to India means bringing into India th e realis ed foreign exchange and (i) the selling of such foreign exchange to an authorised person in India in exchange for rupees, or (ii) the holding of realised amount in an account with an authorised person in India to the extent notified by the Reserve Bank, and includes use of the realised amount for discharge of a debt or liability deno minated in foreign exchange and the expression repatriation shall be construed accordingly; (z) Reserve Bank means the Reserve Bank of India constituted under sub -section ( 1) of section 3 of the Reserve Bank of India Act, 1934 (2 of 1934); (za) security means shares, stocks, bonds and debentures, Government securities as defined in the Public Debt Act, 1944 (18 of 1944), savings certificates to which the Government Savings Certificates Act, 1959 (46 of 1959) applies, deposit receipts in respect of deposits of securities and units of the Unit Trust of India established under sub -section ( 1) of section 3 of the Unit Trust of India Act, 1963 (52 of 1963) * or of any mutual fund and includes certificates of title to securities, but does not include bills of exchange or promissory notes other than Government promissory notes or any other instruments which may be notified by the Reserve Bank as security for th e purposes of this Act; (zb) service means service of any description which is made available to potential users and includes the provision of facilities in connection with banking, financing, insurance, medical assistance, legal assistance, chit fund, real estate, transport, processing, supply of electrical or other energy, boarding or lodging or both, entertainment, amusement or the purveying of news or other information, but does not include the rendering of any service free of charge or under a contr act of personal service ; (zc) Special Director (Appeals) means an officer appointed under 1[section 1 7]; (zd) specify means to specify by regulations made under this Act and the expression specified shall be construed accordingly; 1. Subs. by Act 7 of 2017, s .165, for section 18 (w.e.f. 26 -5-2017). *Now see the Unit Trust of India (transfer of Undertaking of Repeal) Act, 2002 (58 of 2002). 6 (ze) transfer includes sale, purchase, exchange, mortgage, pledge, gift, loan or any other form of transfer of right, title, possession or lien. CHAPTER II REGULATION AND MANAGEMENT OF FOREIGN EXCHANGE 3. Dealing in foreign exchange, etc. Save as otherwise provided in this Act, rules or regulations made there under, or with the general or special permission of the Reserve Bank, no person shall (a) deal in or transfer any foreign exchange or foreign security to any person not being an authorised person; (b) make any payment to or for the credit of any person resident outside India in any manner; (c) receive otherwise through an authorised person, any payment by order or on behalf of any person reside nt outside India in any manner. Explanation .For the purpose of this clause, where any person in, or resident in, India receives any payment by order or on behalf of any person resident outside India through any other person (including an authorised person) without a corresponding inward remittance f rom any place outside India, then, such person shall be deemed to have received such payment otherwise than through an authorised person; (d) enter into any financial transaction in India as consideration for or in association with acquisition or creation or transfer of a right to acquire, any asset outside India by any person. Explanation .For the purpose of this clause, financial transaction means making any payment to, or for the credit of any person, or receiving any payment for, by order or on beha lf of any person, or drawing, issuing or negotiating any bill of exchange or promissory note, or transferring any security or acknowledging any debt. 4. Holding of foreign exchange, etc. Save as otherwise provided in this Act, no person resident in India shall acquire, hold, own, possess or transfer any foreign exchange, foreign security or any immovable property situated outside India. 5. Current account transactions. Any person may sell or draw foreign exchange to or from an authorised person if such sale or draw al is a current account transaction: Provided that the Central Government may, in public interest and in consultation with the Reserve Bank, impose such reasonable restrictions f or current account transactions as may be prescribed. 6. Capital account transactions. (1) Subject to the provisions of sub -section ( 2), any person may sell or draw foreign exchange to or from an authorised person for a capital account transaction. (2) The Reserve Bank may, in consultation with t he Central Government, specify 1[(a) any class or classes of capital account transactions, involving debt instruments, which are permissible ;] (b) the limit up to which foreign exchange shall be admissible for such tran sactions: 2[(c) any conditions which may be placed on such transactions;] 3[Provided that the Reserve Bank or the Central Government shall not impose any restrictions on the drawal of foreign exchange for payment due on account of amortisation of loans or for depreciation of direct investments in the ordinary course of business .] 1. Subs. by Act 20 of 2015, s. 139, for Clause ( a) (w.e.f. 15 -10-2019). 2. Ins. by s. 139 , ibid. (w.e.f. 15 -10-2019). 3. The Proviso s ubs. by s. 139, ibid. (w.e.f. 15 -10-2019). 7 1[(2A) The Central Government may, in consultation with the Reserve Bank, prescribe (a) any class or classes of capital account transactions, not involving debt instruments, which are permissible; (b) the limit up to which foreign exchange shall be admissible for such transactions; and (c) any conditions which may be placed on such transactions. ] 2* * * * * (4) A person resident in India may hold, own, transfer or invest in foreign currency, foreign security or any immovable property situated outside India if such currency, security or property was acquired, held or owned by such person when he was resident out side India or inherited from a person who was resident outside India. (5) A person resident outside India may hold, own, transfer or invest in Indian currency, security or any immovable property situated in India if such currency, security or property was acquired, held or owned by such person when he was resident in India or inherited from a pe rson who was resident in India. (6) Without prejudice to the provisions of this section, the Reserve Bank may, by regulation, prohibit, restrict, or regulate establi shment in India of a branch, office or other place of business by a person resident outside India, for carrying on

or regulate establi shment in India of a branch, office or other place of business by a person resident outside India, for carrying on any activity relating to such branch, off ice or other place of business. 3[(7) For the purposes of this section, the term debt instruments shall mean, such instruments as may be determined by the Central Government in consultation with the Reserve Bank.] 7. Export of goods and services. (1) Every exporter of goods shall (a) furnish to the Reserve Bank or to such other authority a declaration in such form and in such manner as may be specified, containing true and correct material particulars, including the amount representing the full export value or, if the full export val ue of the goods is not ascertainable at the time of export, the value which the exporter, having regard to the prevailing market conditions, expects to receive on the sale of the goods in a market outside India; (b) furnish to the Reserve Bank such other information as may be required by the Reserve Bank for the purpose of ensuring the realisation of the export proceeds by such exporter. (2) The Reserve Bank may, for the purpose of ensuring that the full export value of the goods or such reduced value of the goods as the Reserve Bank determines, having regard to the prevailing market conditions, is received without any delay, direct any exporter to comply with suc h requirements as it deems fit. (3) Every exporter of services shall furnish to the Reserve Ba nk or to such other authorities a declaration in such form and in such manner as may be specified, containing the true and correct material particulars in relatio n to payment for such services. 8. Realisation and re patriation of foreign exchange. Save as o therwise provided in this Act, where any amount of foreign exchange is due or has accrued to any person resident in India, such person shall tak e all reasonable steps to realis e and repatriate to India such foreign exchange within such period and in such manner as may be specified by the Reserve Bank. 9. Exemption from realisation and repatriation in certain cases. The provisions of sections 4 and 8 shall not a pply to the follow ing, namely: (a) possession of foreign currency or foreign coins by any person up to such limit as the Reserve Bank may specify; 1. Ins. by Act 20 of 2015, s. 139 (w.e.f. 15 -10-2019) . 2. Sub -section ( 3) omitted by s. 139, ibid. (w.e.f. 15 -10-2019). 3. Ins. by s. 139, ibid. (w.e.f. 15 -10-2019). 8 (b) foreign currency account held or operated by such person or class of persons and the limit up to which the Reserve Bank m ay specify; (c) foreign exchange acquired or received before the 8th day of July, 1947 or any income arising or accruing thereon which is held outside India by any person in pursuance of a general or special permission granted by the Reserve Bank; (d) foreign exchange held by a person resident in India up to such limit as the Reserve Bank may specify, if such foreign exchange was acquired by way of gift or inheritance from a person referred to in clause ( c), inc luding any income arising there from; (e) foreign exchange acquired from employment, business, trade, vocation, services, honorarium, gifts, inheritance or any other legitimate means up to such limit as the Reserve Bank may specify; and (f) such other receipts in foreign exchange as the Reserve Ba nk may specify. CHAPTER III AUTHORISED PERSON 10. Authorised person. (1) The Reserve Bank may, on an application mad e to it in this behalf, authoris e any person to be known as authorised person to deal in foreign exchange or in foreign securities, as an authorised dealer, money changer or off -shore banking unit or in an y other manner as it deems fit. (2) An authorisation under this section shall be in writing and shall be subject to the conditions laid down therein. (3) An authorisation granted under sub -section ( 1) may be revoked by the Reserve Bank at any time if the Reserve Bank is satisfied that (a) it is in public interest so to do; or (b) the authorised person has failed to comply with the condition subject to which the authorisation was granted or has contravened any of the provisions of the Act or any rule, regulation, notification, direction or order made thereunder : Provided that no such authorisation shall be revoked on any ground referred to in clause ( b) unless the authorised person has been given a reasonable opportunity of making a representation in the matter. (4) An authorised person shall, in all his dealings in foreign exchange or foreign security, comply with such general or special directions or orders as the Reserve Ba nk may, from time to time, think fit to give, and, except with the previous permission of the Reserve Bank, an authorised person shall not engage in any transaction involving any foreign exchange or foreign security which is not in conformity with the terms of his authorisation under this section. (5) An authorised person shall, before undertaking any transaction in foreign exchange on behalf of any person, require that person to make such declaration and to give such information as will reasonably satisfy him that the transaction will not involve , and is not designed for the purpose of any contravention or evasion of the provisions of this Act or of any rule, regulation, notification, direction or order made thereunder , and where the said person refuses to comply with any such requirement or make s only unsatisfactory compliance therewith, the authorised person shall refuse in writing to undertake the transaction and shall, if he has reason to believe that any such contravention or evasion as aforesaid is contemplated by the person, report the matter to the Reserve Bank. (6) Any person, other than an authorised person, who has acquired or purchased foreign exchange for any purpose mentioned in the declaration made by him to authorised person under sub -section ( 5) does not use it for such purpose or does not surrender it to authorised person within the spec ified period or uses the foreign exchange so acquired or purchased for any other purpose for which purchase or acquisition o f foreign exchange is not permissible under the provisions of the Act or the rules or regulations or direction 9 or order made thereun der shall be deemed to have committed contravention of the provisions of the Act for the purpose of this s ection. 11. Reserve Bank s powers to issue directions to authorised person. (1) The R eserve Bank may, for the purpose of securing compliance with the provisions of this Act and of any rules, regulations, notifications or directions made thereunder , give to the authorised persons any direction in regard to making of payment or the doing or desist from doing any act relating to foreig n exchange or foreign security. (2) The Reserve Bank may, for the purpose of ensuring the compliance with the provisions of this Act or of any rule, regulation, notification, direction or order made thereunder , direct any authorised person to furnish such information, i n such manner, as it deems fit. (3) Where any authorised person contravenes any direction given by the Reserve Bank under this Act or fails to file any return as directed by the Reserve Bank, the Re serve Bank may, after giving reasonable opportunity of being heard, impose on the authorised person a penalty which may extend to ten thousand rupees and in the case of continuing contravention with an additional penalty which may extend to two thousand ru pees for every day during which such contravention continues. 12. Power of Reserve Bank to inspect authorised person .(1) The Reserve Bank may, at any time, cause an inspection to be made, by any officer of the Reserve Bank specially authorised in writing by the Reserve Bank in this behalf, of the business of any authorised person as may appear to it to be necessary o r expedient for the purpose of (a) verifying the correctness of any statement, information or particulars furnished to the Reserve Bank; (b) obtaining any information or particulars which such authorised person has failed to furnish on being called upon to do so; (c) securing compliance with the provisions of this Act or of any rules, regulations, directions or orders made thereunder . (2) It shall be the duty of every authorised person, and where such person is a company or a firm, every director, partner or other officer of such company or firm, as the case may be, to produce to any officer making an inspection under sub -section ( 1), suc h books, accounts and other documents in his custody or power and to furnish any statement or information relating to the affairs of such person, company or firm as the said officer may require within such time and in such manner as the said officer may direct. CHAPTER IV CONTRAVENTION AND PENALTIES 13. Penalties. (1) If any person contravenes any provision of this Act, or contravenes any rule, regulation, notification, direction or order issued in exercise of the powers under this Act, or contravenes any condition subject to which an authorisation is issued by the Re serve Bank, he shall, upon adjudication, be liable to a penalty up to thrice the sum involved in such contravention where such amount is quantifiable, or up to two lakh rupees where the amount is not quantifiable, and where such contravention is a continui ng one, further penalty which may extend to five thousand rupees for every day after the first day during which the contravention continues. 1[(1A) If any person is found to have acquired any foreign exchange, foreign security or immovable property, situated outside India, of the aggregate value exceeding the threshold prescribed under the proviso to sub -section ( 1) of section 37A, he shall be liable to a penalty up to three times the sum involved in such contravention and confiscation of the value eq uivalent, situated in India, the Foreign exchange, foreign security or immovable property. 1. Ins. by Act 20 of 2015, s. 140 (w.e.f. 9 -9-2015). 10 (1B) If the Adjudicating Authority, in a proceeding under sub -section ( 1A) deems fits, he may, after recording the reasons in writing, recommend for the initiation o f prosecution and if the Director of Enforcement is satisfied, he may, after recording the reasons in writing, may direct prosecution by filing a Criminal Complaint against the guilty person by an officer not below the rank of Assistant Director. (1C) If a ny person is found to have acquired any foreign exchange, foreign security or immovable property, situated outside India, of the aggregate value exceeding the threshold prescribed under the proviso to sub -section ( 1) of section 37A, he shall be, in additio n to the penalty imposed under sub-section ( 1A), punishable with imprisonment for a term which may extend to five years and with fine. (1D) No court shall take cognizance of an offence under sub -section ( 1C) of section 13 except as on complaint in writing by an officer not below the rank of Assistant Director referred to in sub-section ( 1B).] (2) Any Adjudicating Authority adjudging any contravention under sub -section ( 1), may, if he thinks fit in addition to any penalty which he may impose for such contravention direct that any currency, security or any other money or property in respect of which the contravention has taken place shall be confiscated to the Central Government and further direct that the foreig n exchange holdings, if any, of the persons committing the contraventions or any part thereof, shall b e brought back into India or shal l be retained outside India in accordance with the directions made in this behalf. Explanation. For the purposes of this sub-section, property in respect of which contravention has taken place, shall include (a) deposits in a bank, where the said property is converted into such deposits; (b) Indian currency, where the said property is converted into that currency; and (c) any other property which has resulted out of the conversion of that property. 14. Enforcement of the orders of Adjudicating Authority. (1) Subject to the provisions of sub-section ( 2) of section 19, if any person fails to make full payment of the penalty imposed on him under section 13 within a period of ninety days from the date on which the notice for payment of such penalty is served on him, he shall be liable to civil imprisonment under this section. (2) No order for the arrest and detention in civil prison of a defaulter shall be made unless the Adjudicating Authority has issued and served a notice upon the defaulter calling upon him to appear before him on the date specified in the notice and to show cause why he should not be committed to the civil prison, and unless the Adjudicating Authority, for re asons in writing, is satisfied (a) that the defaulter, with the object or effect of obstructing the recovery of penalty, has afte r the issue of notice by the Adjudicating Authority, dishonestly transferred, concealed, or remov ed any part of his property, or (b) that the defaulter has, or has had since the issuing of notice by the Adjudicating Authority, the means to pay the arrears or some substantial part thereof and refuses or neglects or has refused or neglected to pay the same. (3) Notwithstanding anything contained in sub -section ( 1), a warrant for the arrest of the defaulter may be issued by the Adjudicating Authority if the Adjudicating Authority is satisfied, by affidavit or otherwise, that with the object or effect of delaying the execution of the cert ificate the defaulter is likely to abscond or leave the local limits of the jurisdiction of the Adjudicating Authority. (4) Where appearance is not made pursuant to a notice issued and served under sub -section ( 1), the Adjudicating Authority may issue a wa rrant for the arrest of the defaulter. (5) A warrant of arrest issued by the Adjudicating Authority under sub -section ( 3) or sub -section ( 4) may also be executed by any other Adjudicating Authority within whose jurisdiction the defaulter may for the time being be found. (6) Every person arrested in pursuance of a warrant of arrest under this section shall be brought before the Adjudicating Authority issuing the warrant as soon as practicable and in any event within twenty -four hours of his arrest (exclusi ve of the time re quired for the journey): 11 Provide d that, if the defaulter pays the amount entered in the warrant of arrest as due and the costs of the arrest to the officer arresting him, such off icer shall at once release him. Explanation. For the purposes of this sub -section, where the defaulter is a Hindu undivided family, the karta thereof shall be deemed to be the defaulter. (7) When a defaulter appears before the Adjudicating Authority pursuant to a notice to show cause or is brought befor e the Adjudicating Authority under this section, the Adjudicating Authority shall give the defaulter an opportunity showing cause why he should not be committed to the civil

this section, the Adjudicating Authority shall give the defaulter an opportunity showing cause why he should not be committed to the civil prison. (8) Pending the conclusion of the inquiry, the Adjudicating Authority may , in his discretion, order the defaulter to be detained in the custody of such officer as the Adjudicating Authority may think fit or release him on his furnishing the security to t he satisfaction of the Adjudicating Authority for his appearance as and whe n required. (9) Upon the conclusion of the inquiry, the Adjudicating A uthority may make an order for the detention of the defaulter in the civil prison and shall in that event cause him to be arrested if he is not already under arrest: Provide d that in o rder to give a defaulter an opportunity of satisfying the arrears, the Adjudicating Authority may, before making the order of detention, leave the defaulter in the custody of the officer arresting him or of any other officer for a specified period not exce eding fifteen days, or release him on his furnishing security to the satisfaction of the Adjudicating Authority for his appearance at the expiration of the specified period if the arrears are not satisfied. (10) When the Adjudicating Authority does not ma ke an order of detention under sub -section ( 9), he shall, if the defaulter is under arrest, direct his release. (11) Every person detained in the civil prison in execution of the c ertificate may be so detained, (a) where the certificate is for a demand of an amount exceeding rupees one crore, up to three years, and (b) in any other case, up to six months: Provided that he shall be released from such detention on the amount mentioned in the warrant for his detention bein g paid to the officer -in-charge of the civil prison. (12) A defaulter released from detention under this section shall not, merely by reason of his release, be discharged from his liability for the arrears, but he shall not be liable to be arrested under t he certificate in execution of which he was detained in the civil prison. (13) A detention order may be executed at any place in India in the manner provided for the execution of warrant of arrest under the Code of Criminal Procedure, 1973 (2 of 1974). 1[14A. Power of recover arrears of penalty .(1) Save as otherwise provided in this Act, the Adjudicating Authority may, by order in writing, authorise an officer of Enforcement not below the rank of Assistant Director to recover any arrears of penalty from any person who fails to make full payment of penalty imposed on him under section 13 within the period of ninety days from the date on which the notice for payment of such penalty is served on him. (2) The officer referred to in sub -section ( 1) shall exercise all the like powers which are conferred on the income -tax authority in relation to recovery of tax under the Income -tax Act, 1961 (43 of 196 1) and the procedure laid down under the Second Schedule to the said Act shall mutatis mutandis apply in relation to recovery of arrears of penalty under this Act.] 15. Power to compound contravention. (1) Any contravention under section 13 may, on an application made by the person committing such contravention, be compounded within one hundred and eighty days from the date of receipt of application by the Director of Enforcement or such other officers of the Directorate of Enforcement and officers of the Reserve Bank as may be authorised in this behalf by the Central Government in such manner as may be prescribed. 1. Section 14A shall stand i nserted (date to be notified) by Act 28 of 2016, s. 229. 12 (2) Where a contravention has been compounded under sub -section ( 1), no proceeding or furthe r proceeding, as the case may be, shall be initiated or continued, as the case may be, against the person committing such contravention under that section, in respect of the contravention so compounded. CHAPTER V ADJUDICATION AND APPEAL 16. Appointment of Adjudicating Authority. (1) For the purpose of adjudication under section 13, the Central Government may, by an order published in the Official Gazette, appoint as many officers of the Central Government as it may think fit, as the Adjudicating Authorities for holding an inquiry in the manner prescribed after giving the person alleged to have committed contravention under section 13, against whom a complaint has been made under sub -section ( 3) (hereinafter in this section referred to as the said person) a reasonable opportunity of being heard for the purpose of imposing any penalty: Provided that where the Adjudicating Authority is of opinion that the said person is likely to abscond or is likely to evade in any manner, the payment of penalty, if levied, it may direct the said person to furnish a bond or guarantee for such amount and subject to such conditions as it may deem fit. (2) The Central Government shall, while appointing the Adjudicating Authorities under sub-section ( 1), also specify in the order published in the Official Gazette, their respective jurisdictions. (3) No Adjudicating Authority shall hold an enquiry under sub -section ( 1) except upon a complaint in writing made by any officer authorised by a general or special order by the Central Government. (4) The said person may appear either in person or take the assistance of a legal practitioner or a chartered accountant of his choice for presenting his case before the Adjudicating Authority. (5) Every Adjudicating Authority shall have the same powers of a civil court which are conferred on the Appellate Tribunal under sub -section ( 2) of section 28 and (a) all proceedings before it shall be deemed to be judicial proceedings within the meaning of sections 193 and 228 of the Indian Penal Code (45 of 1860); (b) shall be deemed to be a civil court for the purposes of sections 345 and 346 of the Code of Criminal Procedure, 1973 (2 of 1974) . (6) Every Adjudicating Authority shall deal with the complaint under sub -section ( 2) as expeditiously as possible and endeavour shall be made to dispose of the complaint finally within one year from the date of receipt of the complaint: Provided that where the complaint cannot be disposed of within the said period, the Adjudicating Authority shall record periodically the reasons in writing for not disposing of the co mplaint within the said period. 17. Appeal to Special Director (Appeals). (1) The Central Government shall, by notification, appoint one or more Special Directors (Appeals) to hear appeals against the orders of the Adjudicating Authorities under this section and shall also specify in the said notification the matter and places in relation to which the Special Director (Appe als) may exercise jurisd iction. (2) Any person aggrieved by an order made by the Adjudicating Authority , being an Assistant Director of Enforcement or a Deputy Director of Enforcement, may prefer an appeal to the Special Director (Appeals). (3) Every appeal under sub -section ( 1) shall be filed within forty -five days from the date on which the copy of the order made by the Adjudicating Authority is received by the aggrieved person and it shall be in such form, verified in such manner and be accompanied by such fee as may be prescri bed: Provided that the Special Director (Appeals) may entertain an appeal after the expiry of the said period of forty -five days, if he is satisfied that there was sufficient cause for not filing it within that period. (4) On receipt of an appeal under su b-section ( 1), the Special Director (Appeals) may after giving the parties to the appeal an opportunity of being heard, pass such order thereon as he thinks fit, confirming, modifying or setting as ide the order appealed against. 13 (5) The Special Director (A ppeals) shall send a copy of every order made by him to the parties to appeal and to the co ncerned Adjudicating Authority. (6) The Special Director (Appeals) shall have the same powers of a civil court which are conferred on the Appellate Tribunal under sub-section ( 2) of section 28 and (a) all proceedings before him shall be deemed to be judicial proceedings within the meaning of sections 193 and 228 of the Indian Penal Code (45 o f 1860) ; (b) shall be deemed to be a civil court for the purposes of sections 345 and 346 of the Code of Criminal Procedure, 1973 (2 of 1974). 1[18. Appellate Tribunal. The Appellate Tribunal constituted under sub -section ( 1) of section 12 of the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 (13 of 1976) , shall, on and from the commencement of Part XIV of Chapter VI of the Finance Act, 2017 (7 of 2017) , be the Appellate Tribunal for the purposes of this Act and the said Appellate Tribuna l shall exercise the jurisdiction, powers and authority conferred on it by or under this Act.] 19. Appeal to Appellate Tribunal (1) Save as provided in sub -section ( 2), the Central Government or any person aggrieved by an order made by an Adjudicating Authority, other than those referred to in sub-section ( 1) of section 17, or the Special Director (Appeals), may prefer an app eal to the Appellate Tribunal : Provided that any person appealing against the order of the Adjudicating Authority or the Special Director (Appeals) levying any penalty, shall while filing the appeal, deposit the amount of such penalty with such authority as may be notified by the Central Government: Provided further that where in any particular case, the Appellate Tribunal is of the opinion that the deposit of such penalty would cause undue hardship to such person, the Appellate Tribunal may dispense with such deposit subject to such conditions as it may deem fit to impose so as to safegu ard the realisation of penalty. (2) Every appe al under sub -section ( 1) shall be filed within a period of forty -five days from the date on which a copy of the order made by the Adjudicating Authority or the Special Director (Appeals) is received by the aggrieved person or by the Central Government and it shall be in such form, verified in such manner and be accompanied by such fee as may be prescribed: Provided that the Appellate Tribunal may entertain an appeal after the expiry of the said period of forty -five days if it is satisfied that there was su fficient cause for not filing it within that period. (3) On receipt of an appeal under sub -section ( 1), the Appellate Tribunal may, after giving the parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit, confirming, modifying or setting aside the order appealed against. (4) The Appellate Tribunal shall send a copy of every order made by it to the parties to the appeal and to the concerned Adjudicating Authority or the Special Director (Appeals), as the case may be. (5) The appeal filed before the Appellate Tribunal under sub -section ( 1) shall be dealt with by it as expeditiously as possible and endeavour shall be made by it to dispose of the appeal finally within one hundred and eighty days from the date of receipt o f the appeal: Provided that where any appeal could not be disposed of within the said period of one hundred and eighty days, the Appellate Tribunal shall record its reasons in writing for not disposing off the appeal within the said period. (6) The Appell ate Tribunal may, for the purpose of examining the legality, propriety or correctness of any order made by the Adjudicating Authority under section 16 in relation to any proceeding, on its own motion or otherwise, call for the records of such proceedings a nd make such order in the case as it thinks fit. 20. [Composition of Appellate Tribunal.] Omitted by the finance Act , 2017 (7 of 2017), s. 165 (w.e.f . 26-5-2017). 1. Subs. by Act 7 of 2017, s. 165, for section 18 (w.e.f. 26 -5-2017). 14 1[21. Qualification s, for appointment of Special Director (Appeals). A person shall not be qualified for appointment as a Special Director (Appeals) unless he (a) has been a member of the Indian Legal Service and has held a post in Grade I of that Service; or (b) has been a member of the Indian Revenue Service and has he ld a post equivalent to a Joint Secreta ry to the Government of India.] 22. [Term of office.] Omitted by the Finance Act , 2017 (7 of 2017), s. 165 ( w.e.f . 26-5-2017). 2[23. Terms and Condition of service of Special Director of (Appeal s).The salary and allowances payable to and the other terms and conditions of service of the Special Director (Appeals) shall be such as may be prescribed.] 24. [Vacancies .] Omitted by the Finance Act , 2017 (7 of 2017), s. 165 ( w.e.f. 26-5-2017). 25. [Resignatio n and removal .] Omitted by s. 165, ibid. (w.e.f. 26-5-2017). 26. [Member to act as Chairperson in certain circumstances .] Omitted by s. 165, ibid. (w.e.f. 26-5-2017). 3[27. Staff of Special Director (Appeal). (1) The Central Government shall provide the office of the Special Director (Appeals) with such officers and employees as it may deem fit. (2) The officers and employees of the office of the Special Director (Appeals) shall discharge their functions under the general superintendence of t he Special Director (Appeals). (3) The salaries and allowances and other terms and conditions of service of the officers and employees of the office of the Special Director (Appeals) shall be such as may be prescribed.] 28. Procedure and powers of Appellat e Tribunal and Special Director (Appeals). (1) The Appellate Tribunal and the Special Director (Appeals) shall not be bound by the procedure laid down by the Code of Civil Procedure, 1908 (5 of 1908) , but shall be guided by the principles of natural justice and,

Procedure, 1908 (5 of 1908) , but shall be guided by the principles of natural justice and, subject to the other provisions of this Act, the Appellate Tribunal and the Special Director (Appeals) shall have powers to regulate its own procedure. (2) The A ppellate Tribunal and the Special Director (Appeals) shall have, for the purposes of discharging its functions under this Act, the same powers as are vested in a civil court under the Code of Civil Procedure, 1908 (5 of 1908) , while trying a suit, in respect of the following matt ers, namely: (a) summoning and enforcing the attendance of any person and examining him on oath; (b) requiring the discovery and production of documents; (c) receiving evidence on affidavits; (d) subject to the provisions of section s 123 and 124 of the Indian Evidence Act, 1872 (1 of 1872) , requisitioning any public record or document or copy of such record or document from any office; (e) issuing commissions for the examination of witnesses or documents; (f) reviewing its decisions; (g) dismissing a representation of default or deciding it ex parte ; (h) setting aside any order of dismissal of any representation for default or any order passed by it ex parte ; and (i) any other matter which may be prescribed by the Central Government. (3) An order made by the Appellate Tri bunal or the Special Director (A ppeals) under this Act s hall be executable by the Appellate Tribunal or the Special Director (Appeals) as a decree of civil court and, for 1. Subs. by Act 7 of 2017 , s. 165, for section 21 (w.e.f. 26 -5-2017). 2. Subs. by s. 165, ibid., for section 23 (w.e.f. 26 -5-2017). 3. Subs. by s. 165, ibid., for section 27 (w.e.f. 26 -5-2017). 15 this purpose, the Appellate Tribunal and the Spec ial Director (Appeals) shall have a ll the powers of a civil court. (4) Notwithstanding anything contained in sub -section ( 3), the Appellate Tribunal or the Special Director (Appeals) may transmit any order made by it to a civil court having local jurisdict ion and such civil court shall execute the order as if it we re a decree made by that court. (5) All proceedings before the Appellate Tribunal and the Special Director (Appeals) shall be deemed to be judicial proceedings within the meaning of sections 193 a nd 228 of the Indian Penal Code (45 of 1860) and the Appellate Tribunal shall be deemed to be a civil court for the purposes of sections 345 and 346 of the Code of Crimin al Procedure, 1973 (2 of 1974). 29. [Distribution of business amongst Benches .] Omitted by the Finance Act , 2017 (7 of 2017), s. 165 ( w.e.f. 26-5-2017). 30. [Power of Chairperson to transfer cases .] Omitted by s. 165 , ibid. (w.e.f. 26-5-2017). 31. [Decision to be by majority .] Omitted by s. 165, ibid. (w.e.f. 26-5-2017). 32. Right of appellant to take assistance of legal practitioner or chartered accountant and of Government, to appoint presenting officers .(1) A person preferring an appeal to the 1[Special Director (Appeals)] under this Act may either appear in person or take the assistance of a legal practitioner or a chartered accountant of his choice to present his case before the 2[Special Director (Appeals)] . (2) The Central Government may authorise on e or more legal practitioners or chartered accountants or any of its officers to act as presenting officers and every perso n so authorised may present the case with respect to any appeal before the 2[Special Director (Appeals)] . 3[33. Officers and employees etc. , to be public servant. The Adjudicating Authority, Competent Authority and the Special Director (Appeals) and other officers and employees of the Special Director (Appeals) shall be deemed to be public servants within the meaning of section 21 of the Indian Penal Code , 1860 (45 of 1860) .] 34. Civil court not to have jurisdiction. No civil court shall have jurisdiction to entertain any suit or proceeding in respect of any matter which an Adjudicating Authority or the Appellate Tribunal or the Special Director (Appeals) is empowered by or under this Act to determine and no injunction shall be granted by any court or other authority in respect of any action taken or to be taken in pursuance of any power conferred by or under this Act. 35. Appeal to High Court. Any person aggrieved by any decision or order of the Appellate Tribunal may file an appeal to the High Court within sixty days from the date of communication of the decision or order of the Appellate Tribunal to him on any question of law arising out of such order: Provided that the High Court may, if it is satisfied that the appe llant was prevented by sufficient cause from filing the appeal within the said period, allow it to be filed within a further p eriod not exceeding sixty days. Explanation. In this section High Court means (a) the High Court within the jurisdiction of whi ch the aggrieved party ordinarily resides or carries on business or personally works for gain; and 1. Subs by Act 7 of 2017, s. 165, for Appellate Tribunal or the Special Director (Appeals (w.e.f. 26 -5-2017). 2. Subs. by s. 165, ibid., for Appellate Tribunal or the Special Director (Appeals), as the case may be (w.e.f. 26 -5-2017). 3. Subs. by s. 165, ibid., for section 33 (w.e.f. 26 -5-2017). 16 (b) where the Central Government is the aggrieved party, the High Court within the jurisdiction of which the respondent, or in a case where there are more t han one respondent, any of the respondents, ordinarily resides or carries on business or personally works for gain. CHAPTER VI DIRECT ORATE OF ENFORCEMENT 36. Directorate of Enforcement. (1) The Central Government shall establish a Directorate of Enforcement with a Director and such other officers or class of officers as it thinks fit, who shall be called officers of Enforcement , for the purposes of this Act. (2) Without prejudice to the provisions of sub -section ( 1), the Central Government may aut horise the Director of Enforcement or an Additional Director of Enforcement or a Special Director of Enforcement or a Deputy Director of Enforcement to appoint officers of Enforcement below the rank of an Ass istant Director of Enforcement. (3) Subject to such conditions and limitations as the Central Government may impose, an officer of Enforcement may exercise the powers and discharge the duties conferred or imposed on him under this Act. 37. Power of s earch, seizure, etc. (1) The Director of Enforcement and other officers of Enforcement, not below the rank of an Assistant Director , shall take up for investigation the contraven tion referred to in section 13. (2) Without prejudice to the provisions of sub -section ( 1), the Central Government may also, by notification, authorise any officer or class of officers in the Central Government, State Government or the Reserve Bank, not below the rank of an Under Secretary to the Government of India to investigate any contravention referred to in section 13. (3) The officers referred to in sub -section ( 1) shall exercise the like powers which are conferred on income -tax authorities under the Income -tax Act, 19 61 (43 o f 1961) and shall exercise such powers, subject to such limita tions laid down under that Act. 1[37A. Special provisions relating to assets held outside India in contravention of section 4. (1) Upon receipt of any information or otherwise, if the Authorised Officer prescribed by the Central Government has reason to believe that any foreign exchange, foreign security, or any immovable property, situated outside India, is suspected to have been held in contravention of section 4, he may after recording the reasons in writing, by an order, seize value equivalent, situated within Ind ia, of such foreign exchange, foreign security or immovable property: Provided that no such seizure shall be made in case where the aggregate value of such foreign exchange, foreign security or any immovable property, situated outside India, is less than t he value as may be prescribed. (2) The order of seizure along with relevant material shall be placed before the Competent Authority, appointed by the Central Government, who shall be an officer not below the rank of Joint Secretary to the Government of Ind ia by the Authorised Officer within a period of thirty days from the date of such seizure. (3) The Competent Authority shall dispose of the petition within a period of one hundred eighty days from the date of seizure by either confirming or by setting asid e such order, after giving an opportunity of being heard to the representatives of the Directorate of Enforcement and the aggrieved person. Explanation .While computing the period of one hundred eighty days, the period of stay granted by court shall be exc luded and a further period of at least thirty days shall be granted from the date of communication of vacation of such stay order. (4) The order of the Competent Authority confirming seizure of equivalent asset shall continue till the disposal of adjudicat ion proceedings and thereafter, the Adjudicating Authority shall pass appropriate directions in the adjudication order with regard to further action as regards the seizure made under sub-section ( 1): 1. Ins. by Act 20 of 2015, s. 142 (w.e.f. 9 -9-2015). 17 Provided that if, at any stage of the pro ceedings under this Act, the aggrieved person discloses the fact of such foreign exchange, foreign security or immovable property and brings back the same into India, then the Competent Authority or the Adjudicating Authority, as the case may be, on receip t of an application in this regard from the aggrieved person, and after affording an opportunity of being heard to the aggrieved person and representatives of the Directorate of Enforcement, shall pass an appropriate order as it deems fit, including settin g aside of the seizure made under sub -section ( 1). (5) Any person aggrieved by any order passed by the Competent Authority may prefer an appeal to the Appellate Tribunal. (6) Nothing contained in section 15 shall apply to this section.] 38. Empowering other officers. (1) The Central Government may, by order and subject to such conditions and limitations as it thinks fit to impose, authorise any officer of customs or any central excise officer or any police officer or any other officer of the Central Gov ernment or a State Government to exercise such of the powers and discharge such of the duties of the Director of Enforcement or any other officer of Enforcement under this Act as may be stated in the order. (2) The officers referred to in sub -section ( 1) shall exercise the like powers which are conferred on the income -tax authorities under the Income -tax Act, 1961 (43 of 1961) , subject to such conditions and limitations as the Central Government may impose. CHAPTER VII MISCELLANEOUS 39. Presumption as to documents in certain cases. Where any document (i) is produced or furnished by any person or has been seized from the custody or control of any person, in either case, under this Act or under any other law; or (ii) has been received from any place outsid e India (duly authenticated by such authority or person and in such manner as may be prescribed) in the course of investigation of any contravention under this Act alleged to have been committed by any person, and such document is tendered in any proceedi ng under this Act in evidence against him, or against him and any other person who is proceeded against jointly with him, the court or the Adjudicating Authority, as the case may be, shall (a) presume, unless the contrary is proved, that the signature and every other part of such document which purports to be in the handwriting of any particular person or which the court may reasonably assume to have been signed by, or to be in the handwriting of, any particular pe rson, is in that person s handwriting, and in the case o f a document executed or attested, that it was executed or attested by the person by whom it purports to hav e been so executed or attested; (b) admit the document in evidence notwithstanding that it is not duly stamped, if such document is otherwise admissible in evidence; (c) in a case falling under clause ( i), also presume, unless the contrary is proved, the truth of the contents of such document. 40. Suspe nsion of operation of this Act. (1) If the Central Government is satisfied that circumstances have arisen rendering it necessary that any permission granted or restriction imposed by this Act should cease to be granted or imposed, or if it considers necessary or expedient so to do in public interest, the Central Government may , by notification, suspend or relax to such extent either indefinitely or for such period as may be notified, the operation of all or any of the provisions of this Act. (2) Where the operation of any provision of this Act has under sub -section ( 1) been suspended or relaxed indefinitely, such suspension or relaxation may, at any time while this Act remains in force, be removed by the Cent ral Government by notification. (3) Every notification issued under this section shall be laid, as soon as may be after it is issued, before each House of Parliament, while it is in session, for a total period of thirty days which may be comprised in one session or in two or more successiv e sessions, and if, before the expiry of the session 18 immediately following the session or the successive sessions aforesaid, both Houses agree in making any modification in the notification or both Houses agree that the notification shoul d not be issued, t he notification shall thereafter have effect only in such modified form or be of no effect, as the case may be; so, however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under that notifica tion. 41. Power of Central Government to give directions. For the purposes of this Act

anything previously done under that notifica tion. 41. Power of Central Government to give directions. For the purposes of this Act, the Central Government may, from time to time, give to the Reserve Bank such general or special directions as it thinks fit, and the Reserve Bank shall, in the discharge of its functions under this Act, c omply with any such direc tions. 42. Contravention by companies. (1) Where a person committing a contravention of any of the provisions of this Act or of any rule, direction or order made thereunder is a company, every person who, at the time the contravention was committed, was in charge of, and was responsible to, the company for the conduct of the business of the company as well as the company, shall be deemed to be guilty of the contravention and shall be liable to be proceeded ag ainst and punished accordingly: Provided that not hing contained in this sub -section shall render any such person liable to punishment if he proves that the contravention took place without his knowledge or that he exercised due diligence to prevent such contravention. (2) Notwithstanding anything contain ed in sub -section ( 1), where a contravention of any of the provisions of this Act or of any rule, direction or order made thereunder has been committed by a company and it is proved that the contravention has taken place with the consent or connivance of, or is attributable to any neglect on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of the contravention and shall be liable to be proceede d against and punished accordingly. Explanation .For the purposes of this section (i) company means any body corporate and includes a firm or ot her association of individuals; and (ii) director , in relation to a firm, means a partner in the firm. 43. Death or insolvency in certain cases. Any right, obligation, liability, proceeding or appeal arising in relation to the provisions of section 13 shall not abate by reason of death or insolvency of the person liable under that section and upon such death or insolvency such rights and obligations shall devolve on the legal representative of such person or the official receiver or the officia l assignee, as the case may be: Provided that a legal representative of the deceased shall be liable only to the extent of the inheri tance or estate of the deceased. 44. Bar of legal proceedings. No suit, prosecution or other legal proceeding shall lie against the Central Government or the Reserve Bank or any officer of that Government or of the Reserve Bank or any other person exercising any power or discharging any functions or performing any duties under this Act, for anything in good faith done or intended to be done under this Act or any rule, regulation, notification, direc tion or order made thereunder . 1[44A. Powers of Reserve Bank not to apply to International Financial Services Centre . Notwithstanding anything contained in any other law for the time being in force, the powers exercisable by the Reserve Bank under this Act, (a) shall not extend to an International Financial Services Centre set up under sub -section (1) of section 18 of the Special Economic Zones Act, 2005 (28 of 2005); (b) shall be exercisable by the Inte rnational Financial Services Centres Authority established under sub -section (1) of section 4 of the International Financial Services Centres Authority Act, 2019, in so far as regulation of financial products, financial services and financial institutions that are permitted in the International Financial Services Centres are concerned.] 1. Ins. by Act 50 of 2019, s. 33 and the second Schedule (w.e.f. 1 -10-2020 ). 19 45. Removal of difficulties. (1) If any difficulty arises in giving effect to the provisions of this Act, the Central Government may, by order, do anything not inconsistent with the provisions of this Act for the purp ose of removing the difficulty: Provided th at no such order shall be made under this section after the expiry of two years fro m the commencement of this Act. (2) Every order made under this section shall be laid, as soon as may be after it is made, b efore each House of Parliament. 46. Power to make rules .(1) The Central Government may, by notification, make rules to carry out the provisions of this Act. (2) Without prejudice to the generality of the foregoing power, such rules m ay provide for, (a) the imposition of reasonable restrictions on current account transactions under section 5; 1[(aa) the instruments which are determined to be debt instruments under sub -section ( 7) of section 6; (ab) the permissible classes of capital account transactions in accordance with sub-section ( 2A) of section 6, the limits of admissibility of foreign exchange, and the prohibition, restriction or regulation of such transactions; ] (b) the manner in which the contravention may be compounded under sub -section ( 1) of section 15; (c) the manner of holding an inquiry by the Adjudicating Authority under sub -section ( 1) of section 16; (d) the form of appeal and fee for filing such appeal under sections 17 and 19; (e) the salary and allowances payable to and the other terms and conditions of service of the 2[Special Director (Appeals)] under section 23; (f) the salaries and allowances and oth er conditions of service of the officers and employees of the 3[office of the Special Director (Appeals)] under sub -section ( 3) of section 27; (g) the additional matters in respect of which the Appellate Tribunal and the Special Director (Appeals) may exercise the powers of a civil court under clause ( i) of sub -section ( 2) of section 28; 4[(gg) the aggregate value of foreign exchange referred to in sub -section ( 1) of section 37A;] (h) the authority or person and the manner in which any document may be authenticated under clause ( ii) of section 39; and (i) any other matter which is required to be, or may be, prescribed. 47. Power to make regulations. (1) The Reserve Bank may, by notification, make regulations to carry out the provisions of this Act and the rules made thereunder . (2) Without prejudice to the generality of the foregoing power, suc h regulations may provide for, 5[(a) the permissible classes of capital account transactions involving debt instruments determined under sub -section ( 7) of section 6, the limits of admissibility of foreign exchange for such transactions, and the prohibition, restriction or regulation of such capital account transactions under section 6 ;] (b) the manner and the f orm in which the declaration is to be furnished under clause ( a) of sub-section ( 1) of section 7; 1. Ins. by Act 20 of 2015, s. 143 (w.e.f. 15 -10-2019) . 2. Subs. by Act 7 of 2017, s. 165 , for Chairperson and other Member of the Appellate Tribunal and the Special Director (Appeals) (w.e.f. 26-5-2017). 3. Subs. by s. 165 , ibid., for Appellate Tribunal and the office of the Special Director (Appeals) (w.e.f. 26-5-2017). 4. Ins. by Act 20 of 2015, s. 143 (w.e.f. 15-10-2019 ). 5. Subs. by s. 144, ibid., for clause ( a) (w.e.f. 15 -10-2019). 20 (c) the period within which and the manner of repatriation of foreign exchange under section 8; (d) the limit up to which any person may possess foreign currency or foreign coins under clause ( a) of section 9; (e) the class of persons and the limit u p to which foreign currency account may be held or operated under clause ( b) of section 9; (f) the limit up to which foreign exchange acquired may be exempted under clause ( d) of section 9; (g) the limit up to which foreign exchange acquired may be retained under clause ( e) of section 9; 1[(ga) export, import or holding of currency or currency notes;] (h) any other matter which is required to be, or may be , specified. 2[(3) All regulations made by the Reserve Bank before the date on which the provisions of this section are notified under section 6 and section 47 of this Act on capital account transactions, the regulation making power in respect of which now vests with the Central Government, shall continue to be valid, until amended or res cinded by the Central Government.] 48. Rules and regulatio ns to be laid before Parliament .Every rule and regulation made under this Act shall be laid, as soon as may be after it is made, before each House of Parliament, while it is in session for a total period of thirty days which may be comprised in one session or in two or more successive se ssions, and if, before the expiry of the session immediately following the session or the successive sessions aforesaid, both Houses agree in making any modification in the rule or regulation, or both Houses agree that the rule or regulation should not be made, the rule or regulation shall thereafter have effect only in such modified form or be of no effect, as the case may be; so, however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under that rule or regulation. 49. Repeal and saving. (1) The Foreign Exchange Regulation Act, 1973 (46 of 1973) is hereby repealed and the Appellate Board constituted under sub -section ( 1) of section 52 of the said Act (hereinafter referred to as the repea led Ac t) shall stand dissolved. (2) On the dissolution of the said Appellate Board, the person appointed as Chairman of the Appellate Board and every other person appointed as Member and holding office as such immediately before such date shall vacate their respective offices and no such Chairman or other person shall be entitled to claim any compensation for the premature termination of the term of his office or of any contract of service. (3) Notwithstanding anything contained in any other law f or the time being in force, no court shall take cognizance of an offence under the repealed Act and no adjudicating officer shall take notice of any contravention under section 51 of the repealed Act after the expiry of a period of two years from the date of the comme ncement of this Act. (4) Subject to the provisions of sub -section ( 3) all offences committed under the repealed Act shall continue to be governed by the provisions of the repealed Act as if that Act had not been repealed. (5) Notwithstanding such repeal, (a) anything done or any action taken or purported to have been done or taken including any rule, notification, inspection, order or notice made or issued or any appointment, confirmation or declaration made or any license, permission, authoriz ation or exemption granted or any document or instrument executed or any direction given under the Act hereby repealed shall, in so far as it is not inconsistent with the provisions of this Act, be deemed to have been done or taken under the corresponding provi sions of this Act; (b) any appeal preferred to the Appellate Board under sub -section ( 2) of section 52 of the repealed Act but not disposed of before the commencement of this Act shall stand transferred to and shall disposed of by the Appellate Tribunal c onstituted under this Act; 1. Ins. by Act 20 of 2015, s. 144 (w.e.f. 15 -10-2019) . 2. Ins. by s. 144. ibid. (w.e.f. 15 -10-2019). 21 (c) every appeal fro m any decision or order of the A ppellate Board under sub -section ( 3) or sub-section ( 4) of section 52 of the repealed Act shall, if not filed before the commencement of this Act, be filled before the High Court within a period of sixty days of such commencement: Provided that the High Court may entertain such appeal after the expiry of the said period of sixty days if it is satisfied that the appellant was prevented by sufficient cause from filing the appeal with in the said period. (6) Save as otherwise provided in sub -section ( 3), the mention of particular matters in sub-section s (2), (4) and ( 5) shall not be held to prejudice or affect the general application of section 6 of the General Clauses Act, 1897 (10 of 1897) with regard to the effect of repeal.

THE ELECTRICITY ACT, 2003 ACT NO. 36 OF 2003 [26th May , 2003 .] An Act to co nsolidate the laws relating to generation, transmission, distribution, trading and use of electricity and generally for taking measures conducive to development of electricity industry, promoting competition therein, protecting interest of consumers and su pply of electricity to all areas, rationalis ation of electricity tariff, ensuring transparent policies regarding subsidies, promotion of efficient and environmentally benign policies, constitution of Central Electricity Authority, Regulatory Commissions an d establishment of Appellate Tribunal and for matters connected therewith or incidental thereto. BE it enacted by Parliament in the Fifty -fourth Year of th e Republic of India as follows: PART I PRELIMINARY 1. Short title, extent and commencement . (1) This Act may be called the Electricity Act, 2003. (2) It extends to the whole of India 1***. (3) It shall come into force on such date2 as the Central Government may, by notification, appoint: Provided that different dates may be appointed for different prov isions of this Act and any reference in any such provision to the commencement of this Act shall be construed as a reference to the coming into force of that provision. 2. Definitions .In this Act, unless t he context otherwise requires, (1) Appellate Tri bunal means the Appellate Tribunal for Electricity established under section 110; (2) appointed date means such date as the Central Government may, by notification, appoint; (3) area of supply means the area within which a distribution licensee is aut horised by his licence to supply electricity; (4) Appropriate Commission means the Central Regulatory Commis sion referred to in sub-section (1) of section 76 or the State Regulatory Commission referred to in section 82 or the Joint Commiss ion referred to in section 83, as the case may be ; (5) Appropriate Government means, (a) the Central Government, (i) in respect of a generating company wholly or partly owned by it; (ii) in relation to any inter -State generation, transmission, trading or supply of electricity and with respect to any mines, oil -fields, railways, national highways, airports, telegraphs, broadcasting stations and any works of defence, dockyard, nuclear power installations; (iii) in respect of the National Load Despatch Cen tre and Regional Load Despatch Centre; (iv) in relation to any works or electric installation belonging to it or under its control ; (b) in any other case, the State Government, having jurisdiction under this Act; (6) Authority means the Central Electric ity Authority referred to in sub-section (1) of section 70; 1. The words except the State of Jammu and Kashmir omitted by Act 34 of 2019, s. 95 and the Fifth Schedule (w.e.f. 31 -10- 2019). 2. 10th June, 2003 (s s. 1 to 120 and ss. 122 to 185), vide notification No. S.O. 669( E), dated 10 th June, 2003, see Gazette of India, Extraordinary, Part II, sec. 3( ii). 10 (7) Board means a State Electricity Board, constituted before the commencement of this Act, under sub -section ( 1) of section 5 of the Electricity (Supply) Act, 1948 (54 of 1948) ; (8) Captive generating plant means a power plant set up by any person to generate electricity primarily for his own use and includes a power plant set up by any co -operative society or association of persons for generating electricity primarily for use of members of such co -operative society or association; (9) Central Commission means the Central Electricity Regulatory Commission referred to in sub-section ( 1) of section 76; (10) Central Transmission Utility means any Government company which the Central Government may notify under sub -section ( 1) of section 38; (11) Chairperson means the Chairperson of the Authority or Appropriate Commission or the Appellate Tribunal, as the case may be; (12) Co -generation means a process which simultaneously produces two or more forms of useful energy (including electricity); (13) company means a company formed and registered under the Companies Act, 1956 (1 of 1956) and includes any body corporate under a Central, State or Provincial Act; (14) conservatio n means any reduction in consumption of electricity as a result of increase in the efficiency in supply and use of electricity; (15) consumer means any person who is supplied with electricity for his own use by a licensee or the Government or by any oth er person engaged in the business of supplying electricity to the public under this Act or any other law for the time being in force and includes any person whose premises are for the time being connected for the purpose of receiving electricity with the w orks of a licensee, the Government or such other person, as the case may be; (16) dedicated transmission lines means any electric supply -line for point to point transmission which are required for the purpose of connecting electric lines or electric plan ts of a captive generating plant referred to in section 9 or generating station referred to in section 10 to any transmission lines or sub-stations , or generating stations, or the load centre, as the case may be; (17) distribution licensee means a licen see authorised to operate and maintain a distribution system for supplying electricity to the consumers in his area of supply; (18) distributing main means the portion of any main with which a service line is, or is intended to be, immediately connected; (19) distribution system means the system of wires and associated facilities between the delivery points on the transmission lines or the generating station connection and the point of connection to the installation of the consumers; (20) electric line means any line which is used for carrying electricity for any purpose and includes (a) any support for any such line, that is to say, any structure, tower, pole or other thing in, on, by or from which any such line is, or may be, supported, carried or s uspended; and (b) any apparatus connected to any such line for the purpose of carrying electricity; (21) Electrical Inspector means a person appointed as such by the Appropriate Government under sub-section ( 1) of section 162 and also includes Chief Electrical Inspector; 11 (22) electrical plant means any plant, equipment, apparatus or appliance or any part thereof used for, or connected with, the generation, transmission, distribution or supply of e lectricity but does not include (a) an electric line; or (b) a meter used for ascertaining the quantity of electricity supplied to any premises; or (c) an electrical equipment, apparatus or appliance under the control of a consumer; (23) elect ricity means electrical energy (a) generated, transmitted, supplie d or traded for any purpose; or (b) used for any purpose except the transmission of a message; (24) Electricity Supply Code means the Electricity Supply Code specified under section 50; (25) electricity system means a system under the control of a gene rating company or licensee, as the c ase may be, having one or more (a) generating stations; or (b) transmission lines; or (c) electric lines and sub -stations, and when used in the context of a State or the Union, the entire electricity system within the t erritories thereof; (26) electricity trader means a person who has been granted a licence to undertake trading in electricity under section 12; (27) franchisee means a person authorised by a distribution licensee to distribute electricity on its behalf in a particular area within his area of supply; (28) generating company means any company or body corporate or association or body of individuals, whether incorporated or not, or artificial juridical person, which owns or operates or maintains a generat ing station; (29) generate means to produce electricity from a generating station for the purpose of giving supply to any premises or enabling a supply to be so given; (30) generating station or station means any station for generating electricity, i ncluding any building and plant with step -up transformer, switch -gear, switch yard, cables or other appurtenant equipment, if any, used for that purpose and the site thereof; a site intended to be used for a generating station, and any building used for ho using the operating staff of a generating station, and where electricity is generated by water -power, includes penstocks, head and tail works, main and regulating reservoirs, dams and other hydraulic works, but does not in any case include any sub -station; (31) Government company shall have the meaning assigned to it in section 617 of the Companies Act, 1956 (1 of 1956) ; (32) grid means the high voltage backbone system of inter -connected transmission lines, sub-station and generating plants; (33) Grid Code means the Grid Code specified by the Central Commission under clause ( h) of sub-section ( 1) of section 79; (34) Grid Standards means the Grid Standards specified under clause ( d) of section 73 by the Authority; 12 (35) high voltage line means an electric line or cable of a nominal voltage as may be specified by the Authority from time to time; (36) inter-State transmission system includes (i) any system for the conveyance of electricity by means of main transmission line from the territory of one State to another State; (ii) the conveyance of electricity across the territory of an intervening State as well as conveyance within the State which is incidental to such inter -State transmission of electricity; (iii) the transmission of elect ricity within the territory of a State on a system built, owned, operated, maintained or controlled by a Central Transmission Utility; (37) intra -State transmission system means any system for transmission of electricity other than an inter-State transmi ssion system ; (38) licence means a licence granted under section 14; (39) licensee means a person who has been granted a licence under section 14; (40) line means any wire, cable, tube, pipe, insulator, conductor or other similar thing (including its casing or coating) which is designed or adapted for use in carrying electricity and includes any l ine which surrounds or supports, or is surrounded or supported by or is installed in close proximity to, or is supported, carried or suspended in association with, any such line; (41) local authority means any Nagar Panchayat, Municipal Council, municipal corporation, Panchayat constituted at the village, intermediate and district levels, body of port commissioners or other authority legally entitled to, or entrusted by the Union or any State Government with, the control or management of any area or local fund; (42) main means any electric supply -line through which electricity is, or is intended to be, supplied ; (43) Member means the Member of the Approp riate Commission or Authority or Joint Commission, or the Appellate Tribunal, as the case may be, and includes the Chairperson of such Commission or Authority or Appellate Tribunal; (44) National Electricity Plan means the National Electricity Plan notif ied under sub-section ( 4) of section 3; (45) National Load Despatch Centre means the Centre established under sub -section (1) of section 26; (46) notification means notification published in the Official Gazette and the expression notify shall be co nstrued accordingly; (47) open access means the non -discriminatory provision for the use of transmission lines or distribution system or associated facilities with such lines or system by any licensee or consumer or a person engaged in generation in accordance with the regulations specified by the Appropriate Commission; (48) overhead line means an electric line which is placed above the ground and in the open air but does not include live rails of a traction system; (49) person shall include any comp any or body corporate or association or body of individuals, whether incorporated or not, or artificial juridical person; 13 (50) power system means all aspects of generation, transmission, distribution and supply of electricity and includes one or more of the following, namely: (a) generating stations; (b) transmission or main transmission lines; (c) sub -stations; (d) tie-lines; (e) load despatch activities; (f) mains or distribution mains; (g) electric supply -lines; (h) overhead lines; (i) service lines; (j) works; (51) premises includes any land, building or structure; (52) prescribed means prescribed by rules made by the Appropriate Government under this Act; (53) public lamp means an electric lamp used for the lighting of any street; (54) real t ime operation means action to be taken at a given time at which information about the electricity system is made available to the concerned Load Despatch Centre; (55) Regional Power Committee means a committee established by resolution by the Central Government for a specified region for facilitating the integrated operation of the power systems in that region; (56) Regional Load Despatch Centre means the Centre established under sub -section (1) of section 27; (57) regulations means regulations made under this Act; (58) repealed laws means the Indian Electricity Act, 1910 (9 of 1910) , the Electricity (Supply) Act, 1948 (54 of 1948) and the Electricity Regulatory Commissions Act, 1998 (14 of 1998) repealed by section 185; (59) rules means rules ma de under this Act; (60) Schedule means the Schedule to this Act; (61) service -line means any electric supply -line through which electricity is, or is intended to be, supplied (a) to a single consumer either from a distributing main or immediately from the Distribution Licensee s premises; or (b) from a distributing main to a group of consumers on the same premises or on contiguous premises supplied from the same point of the distributing main; (62) specified means specified by regulations made by the Appropriate Commission or the Authority, as the case may be, under this Act

specified means specified by regulations made by the Appropriate Commission or the Authority, as the case may be, under this Act; (63) stand alone system me ans the electricity system set -up to generate power and distribute electricity in a specified area without connection to the grid; (64) State Commiss ion means the State Electricity Regulatory Commission constituted under sub-section ( 1) of section 82 and includes a Joint Commission constituted under sub -section ( 1) of section 83; 14 (65) State Grid Code means the State Grid Code specified under claus e (h) of sub-section ( 1) of section 86; (66) State Load Despatch Centre means the centre established under sub -section (1) of section 31; (67) State Transmission Utility means the Board or the Government company specified as such by th e State Government under sub -section ( 1) of section 39; (68) street includes any way, road, lane, square, court, alley, passage or open space, whether a thoroughfare or not, over which the public have a right of way and also the roadway and footway over any public bridge or causeway; (69) sub -station means a station for transforming or converting electricity for the transmission or distribution thereof and includes transformers , converters, switch -gears, capacitors, synchronous condensers, structures, c able and other appurtenant equipment and any buildings used for that purpose and the site thereof; (70) supply , in relation to electricity, means the sale of electricity to a licensee or consumer; (71) trading means purchase of electricity for resale t hereof and the expression trade shall be construed accordingly; (72) transmission lines means all high pressure cables and overhead lines (not being an essential part of the distribution system of a licensee) transmitting electricity from a generating station to another generating station or a sub -station, together with any step -up and step -down transformers, switch -gear and other works necessary to and used for the control of such cables or overhead lines, and such buildings or part thereof as may be r equired to accommodate such transformers, switch -gear and other works; (73) transmission licensee means a licensee authorised to establish or operate transmission lines; (74) transmit means conveyance of electricity by means of transmission lines and the expression transmission shall be construed accordingly; (75) utility means the electric lines or electrical plant, and includes all lands, buildings, works and materials attached thereto belonging to any person acting as a generating company or lice nsee under the provisions of this Act; (76) wheeling means the operation whereby the distribution system and associated facilities of a transmission licensee or distribution licensee, as the case may be, are used by another person for the conveyance of e lectricity on payment of charges to be determined under section 62; (77) works includes electric line, and any building, plant, machinery, apparatus and any other thing of whatever description required to transmit, distribute or supply electricity to the public and to carry into effect the objects of a licence or sanction granted under this Act or any other law for the time being in force. PART II NATIONAL ELECTRICITY POLICY AND PLAN 3. National Electricity Policy and Plan .(1) The Central Government shall, from time to time, prepare the National Electricity Policy and tariff policy, in consultation with the State Governments and the Authority for development of the power system based on optimal utilisation of resources such as coal, natural gas, nuclear s ubstances or materials, hydro and renewable sources of energy. (2) The Central Government shall publish National Electricity Policy and tariff policy from time to time. 15 (3) The Central Government may, from time to time, in consultation with the State Gover nments and the Authority, review or revise the National Electricity Policy and tariff policy referred to in sub-section ( 1). (4) The Authority shall prepare a National Electricity Plan in accordance with the National Electricity Policy and notify such plan once in five years: Provided that the Authority while preparing the National Electricity Plan shall publish the draft National Electricity Plan and invite suggestions and objections thereon from licensees, generating companies and the public within such time as may be prescribed: Provided fu rther that the Authority shall (a) notify the plan after obtaining the approval of the Central Government; (b) revise the plan incorporating therein the directions, if any, given by the Central Gove rnment while granting approval under clause ( a). (5) The Authority may review or revise the National Electricity Plan in accordance with the National Electricity Policy. 4. National p olicy on stand alone systems for rural areas and non -conventional energy systems. The Central Government shall, after consultation with the State Governments, prepare and notify a national policy, permitting stand alone systems (including those based on renewable sources of energy and other non -conventional sourc es of energy) for rural areas. 5. National policy on electrification and local distribution in rural areas .The Central Government shall also formulate a national policy, in consultation with the State Governments and the State Commissions, for rural elect rification and for bulk purchase of power and management of local distribution in rural areas through Panchayat Institutions, users associations, co -operative societies, non-Governmental organisations or franchisees. 1[6. Joint responsibility of State Government and Central Government in rural electrification. The concerned State Government and the Central Government shall jointly endeavour to provide access to electricity to all areas including villages and hamlets through rural electricit y infrastructure and electrification of households.] PART III GENERATION OF ELECTRICITY 7. Generating company and requirement for setting up of generating station .Any generating company may establish, operate and maintain a generating station without obta ining a licence under this Act if it complies with the technical standards relating to connectivity with the grid referred to in clause ( b) of section 73. 8. Hydro -electric generation .(1) Notwithstanding anything contained in section 7, any gene rating company intending to set up a hydro -generating station shall prepare and submit to the Authority for its concurrence, a scheme estimated to involve a capital expenditure exceeding such sum, as may be fixed by the Central Government, from time to time, by notification. (2) The Authority shall, before concurring in any scheme submitted to it under sub -section ( 1) have particular regard to, whether or not in its opinion, (a) the proposed river -works will prejudice the prospects for the best ultimate develop ment of the river or its tributaries for power generation, consistent with the requirements of drinking water, 1. Subs. by Act 26 of 2007, s. 2, for section 6 (w.e.f. 15 -6-2007). 16 irrigation, navigation, flood -control, or other public purposes, and for this purpose the Authority shall satisfy itself, after consultation with the State Government, the Central Government, or such other agencies as it may deem appropriate, that an adequate study has been made of the optimum location of dams and other river -works; (b) the proposed scheme meets the norms regarding dam design and safety. (3) Where a multi -purpose scheme for the development of any river in any region is in operation, the State Government and the generating company shall co-ordinate their activities with the activities of the person s responsible for such scheme in so far as they are inter -related. 9. Captive generation. (1) Notwithstanding anything contained in this Act, a person may construct, maintain or operate a captive generating plant and dedicated transmission lines: Provided that the supply of electricity from the captive generating plant through the grid shall be regulated in the same manner as the generating station of a generating company: 1[Provided further that no licence shall be required under this Act for supply of electricity generated from a captive ge nerating plant to any licen see in accordance with the provisions of this Act and the rules and regulations made thereunder and to any consumer subject to the regulations made under sub-section ( 2) of section 42. ] (2) Every person, who has co nstructed a captive generating plant and maintains and operates such plant, shall have the right to open access for the purposes of carrying electricity from his captive generating plant to the destination of his use: Provided that such open access shall be subject to availability of adequate transmission facility and such availability of transmission facility shall be determined by the Central Transmission Utility or the State Transmission Utility, as the case may be: Provided further that any dispute reg arding the availability of transmission facility shall be adjudicated upon by the Appropriate Commission. 10. Duties of generating companies .(1) Subject to the provisions of this Act, the duties of a generating company shall be to establish, operate and maintain generating stations, tie -lines, sub -stations and dedicated transmission lines connected therewith in accordance with the provisions of this Act or the rules or regulations made thereunder. (2) A generating company may supply electricity to any lice nsee in accordance with this Act and the rules and regulations made thereunder and may, subject to the regulations made under sub -section ( 2) of section 42, supply electricity to any consumer. (3) Every generating company shall (a) submit technical detail s regarding its generating stations to the Appropriate Commission and the Authority; (b) co-ordinate with the Central Transmission Utility or the State Transmission Utility, as the case may be, for transmission of the electricity generated by it. 11. Dire ctions to generating companies .(1) The Appropriate Government may specify that a generating company shall, in extraordinary circumstances operate and maintain any generating station in accordance with the directions of that Government. 1. Ins. by Act 26 of 2007, s. 3 (w.e.f. 15-6-2007). 17 Explanation . For t he purposes of this section, the expression extraordinary circumstances means circumstances arising out of threat to security of the State, public order or a natural calamity or such other circumstances arising in the public interest. (2) The Appropriate Commission may offset the adverse financial impact of the directions referred to in sub -section ( 1) on any generating company in such manner as it considers appropriate. PART IV LICENSING 12. Authorised persons to trans mit, supply, etc., electricity. No p erson shall (a) transmit electricity; or (b) distribute electricity; or (c) undertake trading in electricity, unless he is authorised to do so by a licence issued under section 14, or is exempt under section 13. 13. Power to exempt. The Appropriate Com mission may, on the recommendations of the Appropriate Government, in accordance with the national policy formulated under section 5 and in the public interest, direct, by notification that subject to such conditions and restrictions, if any, and for such period or periods, as may be specified in the notification, the provisions of section 12 shall not apply to any local authority, Panchayat Institution, users association, co -operative societies, non-governmental organisations, or franchisees. 14. Grant of licence. The Appropriate Commission may, on an application made to it under section 15, grant a licence to any person (a) to transmit electricity as a transmission licensee; or (b) to distribute electricity as a distribution licensee; or (c) to undertake trading in electricity as an electricity trader, in any area as may be specified in the licence: Provided that any person engaged in the business of transmission or supply of electricity under the provisions of the repealed laws or any Act specified in th e Schedule on or before the appointed date shall be deemed to be a licensee under this Act for such period as may be stipulated in the licence, clearance or approval granted to him under the repealed laws or such Act specified in the Schedule, and the prov isions of the repealed laws or such Act specified in the Schedule in respect of such licence shall apply for a period of one year from the date of commencement of this Act or such earlier period as may be specified, at the request of the licensee, by the A ppropriate Commission and thereafter the provisions of this Act shall apply to such business: Provided further that the Central Transmission Utility or the State Transmission Utility shall be deemed to be a transmission licensee under this Act: Provided al so that in case an Appropriate Government transmits electricity or distributes electricity or undertakes trading in electricity, whether before or after the commencement of this Act, such Government shall be deemed to be a licensee under this Act, but shal l not be required to obtain a licence under this Act: Provided also that the Damodar Valley Corporation, established under sub-section ( 1) of section 3 of the Damodar Valley Corporation Act, 1948 (14 of 1948) , shall be deemed to be a licensee under this Ac t but shall not be required to obtain a licence under this Act and the provisions of the Damodar Valley 18 Corporation Act, 1948 in so far as they are not inconsistent with the provisions of this Act, shall continue to apply to that Corporation: Provided also that the Government company or the company referred to in sub -section ( 2) of section 131 of this Act and the company or companies created in pursuance of the Acts specified in the Schedule, shall be deemed to be a licensee under this Act: Provided also th at the Appropriate Commission may grant a licence to two or more persons for distribution of electricity through their own distribution system within the same area, subject to the conditions that the applicant for grant of licence within the same area shal l, without prejudice to the other conditions or requirements under this Act, comply with the additional requirements 1[relating to the capital adequacy, credit worthiness, or code of conduct] as may be prescribed by the Central Government, and no such appli cant, who complies with all the requirements for grant of licence, shall be refused grant of licence on the ground that there already exists a licensee in the same area for the same purpose: Provided also that in a case where a distribution licensee propos es to undertake distribution of electricity for a specified area within his area of supply through another person, that person shall not be required to obtain any separate licence from the concerned State Commission and such distribution licensee shall be responsible for distribution of electricity in his area of supply: Provided also that

Commission and such distribution licensee shall be responsible for distribution of electricity in his area of supply: Provided also that where a person intends to generate and distribute electricity in a rural area to be notified by the State Government, such person shall not require any licence for such g eneration and distribution of electricity, but he shall comply with the measures which may be specified by the Authority under section 53: Provided also that a distribution licensee shall not require a licence to undertake trading in electricity. 15. Proce dure for grant of licence . (1) Every application under section 14 shall be made in such form and in such manner as may be specified by the Appropriate Commission and shall be accompanied by such fee as may be prescribed. (2) Any person who has made an app lication for grant of a licence shall, within seven days after making such application, publish a notice of his application with such particulars and in such manner as may be specified and a licence shall not be granted (i) until the objections, if any, r eceived by the Appropriate Commission in response to publication of the application have been considered by it: Provided that no objection shall be so considered unless it is received before the expiration of thirty days from the date of the publication of the notice as aforesaid; (ii) until, in the case of an application for a licence for an area including the whole or any part of any cantonment, aerodrome, fortress, arsenal, dockyard or camp or of any building or place in the occupation of the Government for defence purposes, the Appropriate Commission has ascertained that there is no objection to the grant of the licence on the part of the Central Government. (3) A person intending to act as a transmission licensee shall, immediately on making the applica tion, forward a copy of such application to the Central Transmission Utility or the State Transmission Utility, as the case may be. (4) The Central Transmission Utility or the State Transmission Utility, as the case may be, shall, within thirty days after the receipt of the copy of the application referred to in sub -section ( 3), send its recommendations, if any, to the Appropriate Commission: 1. Subs. by Act 57 of 2003, s. 2, for (including t he capital adequacy , creditworthiness, or c ode of conduct) (w.e.f. 27 -1-2004). 19 Provided that such recommendations shall not be binding on the Commission. (5) Before granting a licence under secti on 14, the Appropriate Commission shall (a) publish a notice in two such daily newspapers, as that Commission may consider necessary, stating the name and address of the person to whom it proposes to issue the licence; (b) consider all suggestions or obje ctions and the recommendations, if any, of the Central Transmission Utility or the State Transmission Utility, as the case may be. (6) Where a person makes an application under sub -section ( 1) of section 14 to act as a licensee, the Appropriate Commission shall, as far as practicable, within ninety days afte r receipt of such application, (a) issue a licence subject to the provisions of this Act and the rules and regulations made thereunder; or (b) reject the application for reasons to be r ecorded in writing if such application does not conform to the provisions of this Act or the rules and regulations made thereunder or the provisions of any other law for the time being in force: Provided that no application shall be rejected unless the app licant has been given an opportunity of being heard. (7) The Appropriate Commission shall, immediately after issue of a licence, forward a copy of the licence to the Appropriate Government, Authority, local authority, and to such other person as the Approp riate Commission considers necessary. (8) A licence shall continue to be i n force for a period of twenty -five years unless such licence is revoked. 16. Condition s of licence .The Appropriate Commission may specify any general or specific conditions which shall apply either to a licensee or class of licensees and such conditions shall be deemed to be conditions of such licence: Provided that the Appropriate Commission shall, within one year from the appointed date, specify any general or specific conditions of licence applicable to the licensees referred to in the first, second, third, fourth and fifth provisos to section 14 after the expiry of one year from the commencement of this Act. 17. Licensee not to do certain things .(1) No licensee shall, without prior approval of the Appropriate Commission, (a) undertake any transaction to acquire by purchase or takeover or otherwise, the utility of any other licensee; or (b) merge his utility with the utility of any other licensee: Provided that nothing containe d in this sub -section shall apply if the utility of the licensee is situate in a State other than the State in which the utility referred to in clause ( a) or clause ( b) is situate. (2) Every licensee shall, before obtaining the approval under sub -section (1), give not less than one months notice to every other licensee who transmits or distributes, electricity in the area of such licensee who applies for such approval. (3) No licensee shall at any time assign his licence or transfer his utility, or any par t thereof, by sale, lease, exchange or otherwise without the prior approval of the Appropriate Commission. (4) Any agreement, relating to any transaction specified in sub -section ( 1) or sub -section ( 3), unless made with the prior approval of the Appropriat e Commission, shall be void. 20 18. Amendment of licence .(1) Where in its opinion the public interest so permits, the Appropriate Commission, may, on the application of the licensee or otherwise, make such alterations and amendments in the terms and conditio ns of his licence as it thinks fit: Provided that no such alterations or amendments shall be made except with the consent of the licensee unless such consent has, in the opinion of the Appropriate Commission, been unreasonably withheld. (2) Before any alte rations or amendments in the licence are made under this section, the following provisi ons shall have effect, namely: (a) where the licensee has made an application under sub -section ( 1) proposing any alteration or modifications in his licence, the licens ee shall publish a notice of such application with such particulars and in such manner as may be specified; (b) in the case of an application proposing alterations or modifications in the area of supply comprising the whole or any part of any cantonment, a erodrome, fortress, arsenal, dockyard or camp or any building or place in the occupation of the Government for defence purposes, the Appropriate Commission shall not make any alterations or modifications except with the consent of the Central Government; (c) where any alterations or modifications in a licence are proposed to be made otherwise than on the application of the licensee, the Appropriate Commission shall publish the proposed alterations or modifications with such particulars and in such manner as may be specified; (d) the Appropriate Commission shall not make any alterations or modification s unless all suggestions or objections received within thirty days from the date of the first publication of the notice have been considered. 19. Revocation of licence . (1) If the Appropriate Commission, after making an enquiry, is satisfied that public interest so requires, it may revoke a licence in any o f the following cases, namely: (a) where the licensee, in the opinion of the Appropriate Commission, makes wilful and prolonged default in doing anything required of him by or under this Act or the rules or regulations made thereunder; (b) where the licensee breaks any of the terms or conditions of his licence the breach of which is expressly declared by such licence to render it liable to revocation; (c) where the licensee fails, within the period fixed in this behalf by his licence, or any longer period which the Appropriate Commission may have granted therefor (i) to show, to the satisfaction of the Appropr iate Commission, that he is in a position fully and efficiently to discharge the duties and obligations imposed on him by his licence; or (ii) to make the deposit or furnish the security, or pay the fees or other charges required by his licence; (d) where in the opinion of the Appropriate Commission the financial position of the licensee is such that he is unable fully and efficiently to discharge the duties and obligations imposed on him by his licence. (2) Where in its opinion the public interest so requi res, the Appropriate Commission may, on application, or with the consent of the licensee, revoke his licence as to the whole or any part of his area of distribution or transmission or trading upon such terms and conditions as it thinks fit. (3) No licence shall be revoked under sub -section ( 1) unless the Appropriate Commission has given to the licensee not less than three months notice, in writing, stating the grounds on which it is proposed 21 to revoke the licence, and has considered any cause shown by the licensee within the period of that notice, against the proposed revocation. (4) The Appropriate Commission may, instead of revoking a licence under sub-section ( 1), permit it to remain in force subject to such further terms and conditions as it thinks fit to impose, and any further terms and conditions so imposed shall be binding upon and be observed by the licensee and shall be of like force and effect as if they were contained in the licence. (5) Where the Commission revokes a licence under this section, it shall serve a notice of revocation upon the licensee and fix a date on which the revocation shall take effect. (6) Where the Appropriate Commission has given notice for revocation of licence under sub-section ( 5), without prejudice to any penalty which may be imposed or prosecution proceeding which may be initiated under this Act, the licensee may, after prior approval of that Commission, sell his utility to any person who is found eligible by that Commission for grant of licence. 20. Sale of utilities of licensees .(1) Where the Appropriate Commission revokes under section 19 the licence of any licensee, the following provisions shall apply, namely: (a) the Appropriate Commission shall invite applications for acquiring the utility of the licensee whose licence has been revoked and determine which of such applications should be accepted, primarily on the basis of the highest and best price offered for the utility; (b) the Appropriate Commission may, by notice in writing, require the license e to sell his utility and thereupon the licensee shall sell his utility to the person (hereafter in this section referred to as the purchaser) whose application has been accepted by that Commission; (c) all the rights, duties, obligations and liabilities of the licensee, on and from the date of revocation of licence or on and from the date, if earlier, on which the utility of the licensee is sold to a purchaser, shall absolutely cease except for any liabilities which have accrued prior to that date; (d) the Appropriate Commission may make such interim arrangements in regard to the operation of the utility as may be considered appropriate including the appointment of Administrators; (e) The Administrator appointed under clause ( d) shall exercise such powers and discharge such functions as the Appropriate Commission may direct. (2) Where a utility is sold under sub -section ( 1), the purchaser shall pay to the licensee the purchase price of the utility in such manner as may be agreed upon. (3) Where the Appropr iate Commission issues any notice under sub -section (1) requiring the licensee to sell the utility, it may, by such notice, require the licensee to deliver the utility, and thereupon the licensee shall deliver on a date specified in the notice, the utility to the designated purchaser on payment of the purchase price thereof. (4) Where the licensee has delivered the utility referred to in sub -section (3) to the purchaser but its sale has not been completed by the date fixed in the notice issued under that su b-section, the Appropriate Commission may, if it deems fit, permit the intending purchaser to operate and maintain the utility system pending the completion of the sale. 21. Vesting of utility i n purchaser. Where a utility is sold under section 20 or secti on 24, then, upon completion of the sale or on the date on which the utility is delivered to the intending purchaser, as the ca se may be, whichever is earlier (a) the utility shall vest in the purchaser or the intending purchaser, as the case may be, free from any debt, mortgage or similar obligation of the licensee or attaching to the utility: Provided that any such debt, mortgage or similar obligation shall attach to the purchase money in substitution for the utility; and 22 (b) the rights, powers, authorit ies, duties and obligations of the licensee under his licence shall stand transferred to the purchaser and such purchaser shall be deemed to be the licensee. 22. Provisions where no purchase takes place .(1) If the utility is not sold in the manner provide d under section 20 or section 24, the Appropriate Commission may, to protect the interest of consumers or in the public interest, issue such directions or formulate such scheme as it may deem necessary for operation of the utility. (2) Where no directions are issued or scheme is formulated by the Appropriate Commission under sub-section (1), the licensee referred to in section 20 or section 24 may dispose of the utility in such manner as it may deem fit: Provided that, if the licensee does not dispose of th e utility, within a period of six months from the date of revocation, under section 20 or section 24, the Appropriate Commission may cause the works of the licensee in, under, over, along, or across any street or public land to be removed and every such street or public land to be reinstated, and recover the cost of such removal and reinstatement from the licensee. 23. Directions to licensees .If the Appropriate Commission is of the opinion that it is necessary or expedient so to do for maintaining the effi cient supply, securing the equitable distribution of electricity and promoting competition, it may, by order, provide for regulating supply, distribution, consumption or use thereof. 24. Suspension of distribution licence and sale of utility .(1) If at any time the Appropriate Commission is of the opinion that a distribution licensee (a) has persistently failed to maintain uninterrupted supply of electricity conforming to standards regarding quality of electricity to the consumers; or (b) is unable to disc harge the functions or perform the duties

regarding quality of electricity to the consumers; or (b) is unable to disc harge the functions or perform the duties imposed on it by or under the provisions of this Act; or (c) has persistently defaulted in complying with any direction given by the Appropriate Commission under this Act; or (d) has broken the terms and conditions of licence, and circumstances exist which render it necessary for it in public interest so to do, the Appropriate Commission may, for reasons to be recorded in writing, suspend, for a period not exceeding one year, the licence of the distribution license e and appoint an Administrator to discharge the functions of the distribution licensee in accordance with the terms and conditions of the licence: Provided that before suspending a licence under this section, the Appropriate Commission shall give a reasona ble opportunity to the distribution licensee to make representations against the proposed suspension of licen ce and shall consider the representations, if any, of the distribution licensee. (2) Upon suspension of licenc e under sub -section ( 1) the utilities of the distribution licensee shall vest in the Administrator for a period not exceeding one year or up to the date on which such utility is sold in accordance with the provisions contained in section 20, whichever is later. (3) The Appropriate Commission shall, within one year of appointment of the Administrator under sub -section ( 1), either revoke the licence in accordance with the provisions contained in section 19 or revoke suspension of the licence and restore the utility to the distribution licen see whose licence had been suspended, as the case may be. (4) In a case where the Appropriate Commission revokes the licence under sub-section ( 3), the utility of the distribution licensee shall be sold within a period of one year from the date of revocati on of the licence in accordance with the provisions of section 20 and the price after deducting the administrative and other expenses on sale of utilities be remitted to the distribution licensee. 23 PART V TRANSMISSION OF ELECTRICITY Inter -State transmissi on 25. Inter -State, regional and inter -regional transmission .For the purposes of this Part, the Central Government may, make region -wise demarcation of the country, and, from time to time, make such modifications therein as it may consider necessary for t he efficient, economical and integrated transmission and supply of electricity, and in particular to facilitate voluntary inter -connections and co-ordinat ion of facilities for the inter -State, regional and inter -regional generation and transmission of electricity. 26. National Load Despatch Centre .(1) The Central Government may establish a Centre at the national level, to be known as the National Load Despatch Centre for optimum scheduling and despatch of electricity among the Regional Load Despatch Centres. (2) The constitution and functions of the National Load Despatch Centre shall be such as may be prescribed by the Central Government: Provided that the National Load Despatch Centre shall not engage in the business of trading in electricity. (3) The National Load Despatch Centre shall be operated by a Government company or any authority or corporation established or constituted by or under any Central Act, as may be notified by the Central Government. 27. Constitution of Regional Load Despatch Cen tre.(1) The Central Government shall establish a Centre for each region to be known as the Regional Load Despatch Centre having territorial jurisdiction as determined by the Central Government in accordance with section 25 for the purposes of exercising t he powers and discharging the functions under this Part. (2) The Regional Load Despatch Centre shall be operated by a Government company or any authority or corporation established or constituted by or under any Central Act, as may be notified by the Centr al Government: Provided that until a Government company or authority or corporation referred to in this sub -section is notified by the Central Government, the Central Transmission Utility shall operate the Regional Load Despatch Centre: Provided further th at no Regional Load Despatch Centre shall engage in the business of generation of electricity or trading in electricity. 28. Functions of Regional Load Despatch Centre .(1) The Regional Load Despatch Centre shall be the apex body to ensure integrated opera tion of the power system in the concerned region. (2) The Regional Load Despatch Centre shall comply with such principles, guidelines and methodologies in respect of wheeling and optimum scheduling and despatch of electricity as the Central Commission may specify in the Grid Code. (3) The Regional Load Despatch Centre shall (a) be responsible for optimum scheduling and despatch of electricity within the region, in accordance with the contracts entered into with the licensees or the generating companies ope rating in the region; (b) monitor grid operations; (c) keep accounts of quantity of electricity transmitted through the regional grid; 24 (d) exercise supervision and control over the inter -State transmission system; and (e) be responsible for carrying out re al time operations for grid control and despatch of electricity within the region through secure and economic operation of the regional grid in accordance with the Grid Standards and the Grid Code. (4) The Regional Load Despatch Centre may levy and collect such fee and charges from the generating companies or licensees engaged in inter -State transmission of electricity as may be specified by the Central Commission. 29. Compliance of directions .(1) The Regional Load Despatch Centre may give such directions and exercise such supervision and control as may be required for ensuring stability of grid operations and for achieving the maximum economy and efficiency in the operation of the power system in the region under its control. (2) Every licensee, generating company, generating station, sub -station and any other person connected with the operation of the power system shall comply with the directions issued by the Regional Load Despatch Centres under sub -section (1). (3) All directions issued by the Regional L oad Despatch Centres to any transmission licensee of State transmission lines or any other licensee of the State or generating company (othe r than those connected to inter-State transmission system) or sub -station in the State shall be issued through the S tate Load Despatch Centre and the State Load Despatch Centres shall ensure that such directions are duly complied with by the licensee or generating company or sub-station. (4) The Regional Power Committee in the region may, from time to time, agree on mat ters concerning the stability and smooth operation of the integrated grid and economy and efficiency in the operation of the power system in that region. (5) If any dispute arises with reference to the quality of electricity or safe, secure and integrated operation of the regional grid or in relation to any direction given under sub -section ( 1), it shall be referred to the Central Commission for decision : Provided that pending the decision of the Central Commission, the directions of the Regional Load Despa tch Centre shall be complied with by the State Load Despatch Centre or the licensee or the generating company, as the case may be. (6) If any licensee, generating company or any other person fails to comply with the directions issued under sub -section ( 2) or sub -section ( 3), he shall be liable to a penalty not exceeding rupees fifteen lacs. Intra -State transmission 30. Transmission within a State. The State Commission shall facilitate and promote transmission, wheeling and inter -connection arrangements with in its territorial jurisdiction for the transmission and supply of electricity by economical and efficient utilisation of the electricity. 31. Constitution of State Load Despatch Centres .(1) The State Government shall establish a Centre to be known as the State Load Despatch Centre for the purposes of exercising the powers and discharging the functions under this Part. (2) The State Load Despatch Centre shall be operated by a Government company or any authority or corporation established or constituted by or under any State Act, as may be notified by the State Government: Provided that until a Government company or any authority or corporation is notified by the State Government, the State Transmission Utility shall operate the State Load Despatch Centre: Provided further that no State Load Despatch Centre shall engage in the business of trading in electricity. 25 32. Functions of State Load Despatch Centres .(1) The State Load Despatch Centre shall be the apex body to ensure integrated operation of the power s ystem in a State. (2) The State Load Desp atch Centre shall (a) be responsible for optimum scheduling and despatch of electricity within a State, in accordance with the contracts entered into with the licensees or the generating companies operating in that State; (b) monitor grid operations; (c) keep accounts of the quantity of electricity transmitted through the State grid; (d) exercise supervision and control over the intra -State transmission system; and (e) be responsible for carrying out real time opera tions for grid control and despatch of electricity within the State through secure and economic operation of the State grid in accordance with the Grid Standards and the State Grid Code. (3) The State Load Despatch Centre may levy and collect such fee and charges from the generating companies and licensees engaged in intra -State transmission of electricity as may be specified by the State Commission. 33. C ompliance of directions. (1) The State Load Despatch Centre in a State may give such directions and exe rcise such supervision and control as may be required for ensuring the integrated grid operations and for achieving the maximum economy and efficiency in the operation of power system in that State. (2) Every licensee, generating company, generating statio n, sub -station and any other person connected with the operation of the power system shall comply with the directions issued by the State Load Depatch Centre under sub -section (1). (3) The State Load Despatch Centre shall comply with the directions of the Regional Load Despatch Centre. (4) If any dispute arises with reference to the quality of electricity or safe, secure and integrated operation of the State grid or in relation to any direction given under sub -section ( 1), it shall be referred to the State Commission for decision: Provided that pending the decision of the State Commission, the directions of the State Load Despatch Centre shall be complied with by the licensee or generating company. (5) If any licensee, generating company or any other person fails to comply with the directions issued under sub -section (1), he shall be liable to a penalty not exceeding rupees five lacs. Other provisions relating to transmission 34. Grid Standards .Every transmission licensee shall comply with such technical standards, of operation and maintenance of transmission lines, in accordance with the Grid Standards, as may be specified by the Authority. 35. Intervening transmission facilities .The Appropriate Commission may, on an application by any licensee, by order re quire any other licensee owning or operating intervening transmission facilities to provide the use of such facilities to the extent of surplus capacity available with such licensee: Provided that any dispute, regarding the extent of surplus capacity avail able with the licensee, shall be adjudicated upon by the Appropriate Commission. 26 36. Charges for intervening transmission facilities .(1) Every licensee shall, on an order made under section 35, provide his intervening transmission facilities at rates, cha rges and terms and conditions as may be mutually agreed upon : Provided that the Appropriate Commission may specify rates, charges and terms and conditions if these cannot be mutually agreed upon by the licensees. (2) The rates, charges and terms and condit ions referred to in sub -section ( 1) shall be fair and reasonable, and may be allocated in proportion to the use of such facilities. Explanation .For the purposes of section s 35 and 36, the expression intervening transmission facilities means the electri c lines owned or operated by a licensee where such electric lines can be utilised for transmitting electricity for and on behalf of another licensee at his request and on payment of a tariff or charge. 37. Directions by Appropriate Government .The Appropri ate Government may issue directions to the Regional Load Despatch Centres or State Load Despatch Centres, as the case may be, to take such measures as may be necessary for maintaining smooth and stable transmission and supply of electricity to any region o r State. 38. Central Transmission Utility and functions .(1) The Central Government may notify any Government company as the Central Transmission Utility: Provided that the Central Transmission Utility shall not engage in the business of generation of electricity or trading in electricity: Provided further that the Central Government may transfer, and vest any property, interest in property, rights and liabilities connected with, and personnel involved in transmission of electricity of such Central Transmis sion Utility, to a company or companies to be incorporated under the Companies Act, 1956 (1 of 1956) to function as a transmission licensee, through a transfer scheme to be effected in the manner specified under Part XIII and such company or companies shall be deemed to be transmission licensees under this Act. (2) The functions of the Central Transmission Utility shall be (a) to undertake transmission of electricity through inter -State transmission system; (b) to discharge all functions of planning and co -ordination relating to inter -State transmission system with (i) State Transmission Utilities; (ii) Central Government; (iii) State Governments; (iv) generating companies; (v) Regional Power Committees; (vi) Authority; (vii) licensees; (viii) any other pe rson notified by the Central Government in this behalf; (c) to ensure development of an efficient, co -ordinated and economical system of inter -State transmission lines for smooth flow of electricity from generating stations to the load centres; (d) to prov ide non -discriminatory open access to its transmission system for use by (i) any licensee or generating company on payment of the transmission charges; or 27 (ii) any consumer as and when such open access is provided by the State Commission under sub-section (2) of section 42, on payment of the transmission charges and a surcharge thereon, as may be specified by the Central Commission: Provided that such surcharge shall be utilised for the purpose of meeting the requirement of current level cross -subsidy: Provided further that such surcharge and cross subsidies shall be progressively reduced 1*** in the manner as may be specified by the Central Commission: 2* * * * * Provided also that the manner of payment and utilisation of the surcharge shall be spec ified by the Central Commission: Provided also that such surcharge shall not be leviable in case open access is provided to a person who has established a captive generating plant for carrying the electricity to the destination of his own use. 39. State Tr ansmission Utility and functions .(1) The State Government may notify the

destination of his own use. 39. State Tr ansmission Utility and functions .(1) The State Government may notify the Board or a Government company as the State Transmission Utility: Provided that the State Transmission Utility shall not engage in the business of trading in electricity: Provided fur ther that the State Government may transfer, and vest any property, interest in property, rights and liabilities connected with, and personnel involved in transmission of electricity, of such State Transmission Utility, to a company or companies to be inco rporated under the Companies Act, 1956 (1 of 1956) to function as transmission licensee through a transfer scheme to be effected in the manner specified under Part XIII and such company or companies shall be deemed to be transmission licensees unde r this Act. (2) The functions of the State Transmission Utility shall be (a) to undertake transmission of electricity through intra -State transmission system; (b) to discharge all functions of planning and co -ordination relating to intra-State transmissio n system with (i) Central Transmission Utility; (ii) State Governments; (iii) generating companies; (iv) Regional Power Committees; (v) Authority; (vi) licensees; (vii) any other person notified by the State Government in this behalf; (c) to ensure develo pment of an efficient, co -ordinated and economical system of intra -State transmission lines for smooth flow of electricity from a generating station to the load cente rs; (d) to provide non -discriminatory open access to its transmission system for use by (i) any licensee or generating company on payment of the transmission charges ; or 1. The words and eliminated omitted by Act 26 of 2007, s. 4 (w.e.f. 15 -6-2007). 2. The t hird proviso omitted by s. 4, ibid. (w.e.f. 15 -6-2007). 28 (ii) any consumer as and when such open access is provided by the State Commission under sub-section ( 2) of section 42, on payment of the transmission charges and a surcharg e thereon, as may be specified by the State Commission: Provided that such surcharge shall be utilised for the purpose of meeting the requirement of current level cross -subsidy: Provided further that such surcharge and cross subsidies shall be progressivel y reduced 1*** in the manner as may be specified by the State Commission: 2* * * * * Provided also that the manner of payment and utilisation of the surcharge shall be specified by the State Commission: Provided also that such surcharge shall not be leviable in case open access is provided to a person who has established a captive generating plant for carrying the electricity to the destination of his own use. 40. Duties of transmission licensees .It shall be the duty of a transmission licensee (a) to build, maintain and operate an efficient, co -ordinated and economical inter -State transmission system or intra -State transmission system, as the case may be; (b) to comply with the directions of the Regional Load Despatch Centre and the State Load Despa tch Centre as the case may be; (c) to provide non -discriminatory open access to its transmission system for use by (i) any licensee or generating company on payment of the transmission charges; or (ii) any consumer as and when such open access is provided by the State Commission under sub-section ( 2) of section 42, on payment of the transmission charges and a surcharge thereon, as may be specified by the State Commission: Provided that such surcharge shall be utilised for the purpose of meeting the require ment of current level cross -subsidy: Provided further that such surcharge and cross subsidies shall be progressively reduced 3*** in the manner as may be specified by the Appropriate Commission: 1. The words and eliminated omitted by Act 26 of 2007, s. 5 (w.e.f. 15 -6-2007). 2. The third proviso omitted by s. 5, ibid. (w.e.f. 15 -6-2007). 3. The words and eliminated omitted by s. 6, ibid. (w.e.f. 15 -6-2007). 29 1* * * * * Provided also that the manner of payment and utilisation of the surcharge shall be specified by the Appropriate Commission: Provided also that such surcharge shall not be leviable in case open access is provided to a person who has established a captive generating plant for carrying the electri city to the destination of his own use. 41. Other business of transmission licensee .A transmission licensee may, with prior intimation to the Appropriate Commission , engage in any business for optimum utilisation of its assets: Provided that a proportion of the revenues derived from such business shall, as may be specified by the Appropriate Commission, be utilised for reducing its charges for transmission and wheeling: Provided further that the transmission licensee shall maintain separate accounts for ea ch such business undertaking to ensure that transmission business neither subsidises in any way such business undertaking nor encumbers its transmission assets in any way to support such business: Provided also that no transmission licensee shall enter int o any contract or otherwise engage in the business of trading in electricity. PART VI DISTRIBUTION OF ELECTRICITY Provisions with respect to distribution licensee s 42. Duties of distribution licensee and open access .(1) It shall be the duty of a distribut ion licensee to develop and maintain an efficient, co-ordinated and economical distribution system in his area of supply and to supply electricity in accordance with the provisions contained in this Act. (2) The State Commission shall introduce open access in such phases and subject to such conditions, (including the cross subsidies, and other operational constraints) as may be specified within one year of the appointed date by it and in specifying the extent of open access in successive phases and in deter mining the charges for wheeling, it shall have due regard to all relevant factors including such cross subsidies, and other operational constraints: Provided that 2[such open access shall be allowed on payment of a surcharge] in addition to the charges for wheeling as may be determined by the State Commission: Provided further that such surcharge shall be utilised to meet the requirements of current level of cross subsidy within the area of supply of the distribution licensee : Provided also that such surcha rge and cross subsidies shall be progressively reduced 3*** in the manner as may be specified by the State Commission: Provided also that such surcharge shall not be leviable in case open access is provided to a person who has established a captive generat ing plant for carrying the electricity to the destination of his own use: 1. The Third proviso omitted by Act 26 of 2007, s. 6 (w.e.f. 15-6-2007). 2. Subs. by s.7, ibid., for such open access may be allowed before the cross subsidies are eliminated on payment of a surcharge (w.e.f. 15 -6-2007) . 3. The words and eliminated omitted by s . 7, ibid. (w.e.f. 15 -6-2007 ). 30 1[Provided also that the State Commission shall, not later than five years from the date of commencement of the Electricity (Amendment) Act, 2003 (57 of 2003) , by regulations, prov ide such open access to all consumers who require a supply of electricity where the maximum power to be made available at any time exceeds one megawatt.] (3) Where any person, whose premises are situated within the area of supply of a distribution license e, (not being a local authority engaged in the business of distribution of electricity before the appointed date) requires a supply of electricity from a generating company or any licensee other than such distribution licensee, such person may, by notice, require the distribution licensee for wheeling such electricity in accordance with regulations made by the State Commission and the duties of the distribution licensee with respect to such supply shall be of a common carrier providing non-discriminatory op en access . (4) Where the State Commission permits a consumer or class of consumers to receive supply of electricity from a person other than the distribution licensee of his area of supply, such consumer shall be liable to pay an additional surcharge on th e charges of wheeling, as may be specified by the State Commission, to meet the fixed cost of such distribution licensee arising out of his obligation to supply. (5) Every distribution licensee shall, within six months from the appointed date or date of gr ant of licence, whichever is earlier, establish a forum for redressal of grievances of the consumers in accordance with the guidelines as may be specified by the State Commission. (6) Any consumer, who is aggrieved by non -redressal of his grievances under sub-section ( 5), may make a representation for the redressal of his grievance to an authority to be known as Ombudsman to be appointed or designated by the State Commission. (7) The Ombudsman shall settle the grievance of the consumer within such time and in such manner as may be specified by the State Commission. (8) The provisions of sub -sections ( 5), (6) and ( 7) shall be without prejudice to right which the consumer may have apart from the rights conferred upon him by those sub -sections. 43. Duty to supp ly on request .(1) 2[Save as otherwise provided in this Act, every distribution] licensee, shall, on an application by the owner or occupier of any premises, give supply of electricity to such premises, within one month after receipt of the application req uiring such supply: Provided that where such supply requires extension of distribution mains, or commissioning of new sub-stations, the distribution licensee shall supply the electricity to such premises immediately after such extension or commissioning or within such period as may be specified by the Appropriate Commission: Provided further that in case of a village or hamlet or area wherein no provision for supply of electricity exists, the Appropriate Commission may extend the said period as it may consi der necessary for electrification of such village or hamlet or area. 3[Explanation .For the purposes of this sub -section, application means the application complete in all respects in the appropriate form, as required by the distribution licensee, along with documents showing payment of necessary charges and other compliances.] 1. Ins. by Act 57 o f 2003, s. 3 (w.e.f. 27 -1-2004 ). 2. Subs. by Act 26 of 2007, s . 8, for Every distribution (w.e.f. 15 -6- 2007) . 3. Ins. by s. 8, ibid. (w.e.f. 15-6-2007). 31 (2) It shall be the duty of every distribution licensee to provide, if required, electric plant or electric line for giving electric supply to the premises specified in sub-section (1): Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of electricity for any premises having a separate supply unless he has agreed with the licensee to pay to him such price as determined by the A ppropriate Commission. (3) If a distribution licensee fails to supply the electricity within the period specified in sub-section ( 1), he shall be liable to a penalty which may extend to one thousand rupees for each day of default. 44. Exce ptions from duty to supply electricity .Nothing contained in section 43 shall be taken as requiring a distribution licensee to give supply of electricity to any premises if he is prevented from so doing by cyclone, floods, storms or other occurrences beyon d his control. 45. Power to recover charges .(1) Subject to the provisions of this section, the prices to be charged by a distribution licensee for the supply of electricity by him in pursuance of section 43 shall be in accordance with such tariffs fixed f rom time to time and conditions of his licence. (2) The charges for electricity supplied by a distribution licensee shall be (a) fixed in accordance with the methods and the principles as may be specified by the concerned State Commission ; (b) published i n such manner so as to give adequate publicity for such charges and prices. (3) The charges for electricity supplied by a distribution licensee may include (a) a fixed charge in addition to the charge for the actual electricity supplied; (b) a rent or ot her charges in respect of any electric meter or electrical plant provided by the distribution licensee. (4) Subject to the provisions of section 62, in fixing charges under this section a distribution licensee shall not show undue preference to any person or class of persons or discrimination against any person or class of persons. (5) The charges fixed by the distribution licensee shall be in accordance with the provisions of this Act and the regulations made in this behalf by the concerned State Commissio n. 46. Power to recover expenditure .The State Commission may, by regulations, authorise a distribution licensee to charge from a person requiring a supply of electricity in pursuance of section 43 any expenses reasonably incurred in providing any electric line or electrical plant used for the purpose of giving that supply. 47. Power to require security .(1) Subject to the provisions of this section, a distribution licensee may require any person, who requires a supply of electricity in pursuance of section 43, to give him reasonable security, as may be determined by regulations, for the payment to him of all monies which may become due to him (a) in respect of the electricity supplied to such persons; or (b) where any electric line or electrical plant or e lectric meter is to be provided for supplying electricity to such person, in respect of the provision of such line or plant or meter, and if that person fails to give such security, the distribution licensee may, if he thinks fit, refuse to give the supply of electricity or to provide the line or plant or meter for the period during which the failure continues. (2) Where any person has not given such security as is mentioned in sub -section (1) or the security given by any person has become invalid or insuff icient, the distribution licensee may, by notice, require that person, within thirty days after the service of the notice,

insuff icient, the distribution licensee may, by notice, require that person, within thirty days after the service of the notice, to give him reasonable security for the 32 payment of all monies which may become due to him in respect of the supply of electricity or provision of such line or plant or meter. (3) If the person referred to in sub -section ( 2) fails to give such security, the distribution licensee may, if he thinks fit, discontinue the supply of electricity for the period during which the failure continues . (4) The distribution licensee shall pay interest equivalent to the bank rate or more, as may be specified by the concerned State Commission, on the security referred to in sub -section ( 1) and refund such security on the request of the person who gave suc h security. (5) A distribution licensee shall not be entitled to require security in pursuance of clause ( a) of sub-section ( 1) if the person requiring the supply is prepared to take the supply through a pre -payment meter. 48. Additional terms of supp ly.A distribution licensee may require any person who requires a supply of electricity in pursuance of section 43 to accept (a) any restrictions which may be imposed for the purpose of enabling the distribution licensee to comply with the regulations mad e under section 53; (b) any terms restricting any liability of the distribution licensee for economic loss resulting from negligence of the person to whom the electricity is supplied. 49. Agreement s with respect to supply or purchase of electricity .Where the Appropriate Commission has allowed open access to certain consumers under section 42, such consumers, notwithstanding the provisions contained in clause ( d) of sub -section ( 1) of section 62, may enter into an agreement with any person for supply or pur chase of electricity on such terms and conditions (including tariff) as may be agreed upon by them. 1[50. The Electricity supply code. The State Commission shall specify an electricity supply code to provide for recovery of electricity charges, intervals f or billing of electricity charges, disconnection of supply of electricity for non -payment thereof, restoration of supply of electricity, measures for preventing tampering, distress or damage to elect rical plant or electrical line or meter, entry of distrib ution licensee or any person acting on his behalf for disconnectin g supply and removing the meter, entry for replacing, altering or maintaining electric lines or electrical plants or meter and such other matters.] 51. Other businesses of distribution licen sees.A distribution licensee may, with prior intimation to the Appropriate Commission, engage in any other business for optimum utilisation of its assets: Provided that a proportion of the revenues derived from such business shall, as may be specified by the concerned State Commission, be utilised for reducing its charges for wheeling : Provided further that the distribution licensee shall maintain separate accounts for each such business undertaking to ensure that distribution business neither subsidises in any way such business undertaking nor encumbers its distribution assets in a ny way to support such business: Provided also that nothing contained in this section shall apply to a local authority engaged, before the commencement of this Act, in the busin ess of distribution of electricity. Provisions with respect to electricity traders 52. Provisions with respect to electricity trader. (1) Without prejudice to the provisions contained in clause ( c) of section 12, the Appropriate Commission may, specify the technical requirement, capital adequacy requirement and credit worthiness for being an electricity trader. (2) Every electricity trader shall discharge such duties, in relation to supply and trading in electricity, as may be specified by the Appropriate C ommission. 1. Subs. by Act 26 of 2007, s . 9, for section 50 ( w.e.f. 15 -6-2007) . 33 Provisions with respect to supply generally 53. Provision relating to safety and electricity supply .The Authority may , in consultation with the State Government, specify suitable measures for (a) protecting the public (including the persons engaged in the generation, transmission or distribution or trading) from dangers arising from the generation, transmission or distribution or trading of electricity, or use of electricity supplied or installation, maintenance or use of any electric line or electrical plant; (b) eliminating or reducing the risks of personal injury to any person, or damage to property of any person or interference with use of such property ; (c) prohibiting the supply or transmission of electricity except by means of a system which conforms to the specification s as may be specified; (d) giving notice in the specified form to the Appropriate Commission and the Electrical Inspector, of accidents and failures of supplies or transmissions of electricity; (e) keeping by a generating company or licensee the maps, plans and sections relating to supply or transmission of electricity; (f) inspection of maps, plans and sections by any person authorised by it or by Electrical Inspector or by any person on payment of specified fee; (g) spec ifying action to be taken in relation to any electric line or electrical plant, or any electrical appliance under the control of a consumer for the purpose of eliminating or reducing the risk of personal injury or damage to property or interference with it s use. STATE AMENDMENT Karnataka Insertion of sections 53A .-In the Electricity Act, 2003 (Central Act 36 of 2003) (herein after referred to as Principal Act), after section 53, the following shall be inserted, namely: 53-A. Powers of State Government re lating to Safety and Electricity supply .Where Central Government or the Authority has made no provision relating to following Safety measures and electricity supply the State Government may by rules provide for, - (a) terms and Conditions and manner of Ins pection by the Chief Electrical Inspector and Electrical Inspectors; (b) manner of Issue of Licence to electrical contractors, Permits to Supervisors and wiremen and competency certificates; (c) manner of Scrutiny and approval of Electrical Installation dr awings, (d) levy of fee for the Inspection or other services rendered by the Chief Electrical Inspector or the Electrical Inspectors; and (e) the rate and manner of collection of fee. If not remitted within the stipulated time, to recover the same as an ar rears of Land revenue. [Vide Karnataka Act 39 of 2014, s. 2] 54. Control of transmission and use of electricity .(1) Save as otherwise exempted under this Act, no person other than the Central Transmission Utility or a State Transmission Utility, or a lic ensee shall transmit or use electricity at a rate exceeding two hundred and fifty watts and one hundred volts (a) in any street, or (b) in any place, 34 (i) in which one hundred or more persons are ordinarily likely to be assembled; or (ii) which is a facto ry within the meaning of the Factories Act, 1948 (63 of 1948) or a mine within the meaning of the Mines Act, 1952 (35 of 1952) ; or (iii) to which the State Government, by general or special order, declares the provisions of this sub -section to apply, witho ut giving, before the commencement of transmission or use of electricity, not less than seven days notice in writing of his intention to the Electrical Inspector and to the District Magistrate or the Commissioner of Police, as the case may be, containing particulars of the electrical installation and plant, if any, the nature and the purpose of supply and complying with such of the provisions of Part XVII of this Act, as may be applicable: Provided that nothing in this section shall apply to electricity us ed for the public carriage of passengers, animals or goods, on, or for the lighting or ventilation of the rolling stock of any railway or tramway subject to the provisions of the Railways Act, 1989 (24 of 1989) . (2) Where any difference or dispute arises a s to whether a place is or is not one in which one hundred or more persons are ordinarily likely to be assembled, the matter shall be referred to the State Government, and the decision of the State Government thereon shall be final. (3) The provisions of t his section shall be binding on the Government. 55. Use, etc., of meters .(1) No licensee shall supply electricity, after the expiry of two years from the appointed date, except through installation of a correct meter in accordance with the regulations to be made in this behalf by the Authority: Provided that the licensee may require the consumer to give him security for the price of a meter and enter into an agreement for the hire thereof, unless the consumer elects to purchase a meter: Provided further th at the State Commission may, by notification, extend the said period of two years for a class or classes of persons or for such area as may be specified in that notification. (2) For proper accounting and audit in the generation, transmission and distribut ion or trading of electricity, the Authority may direct the installation of meters by a generating company or licensee at such stages of generation, transmission or distribution or trading of electricity and at such locations of generation, transmission or distribution or trading, as it may deem necessary. (3) If a person makes default in complying with the provisions contained in this section or the regulations made under sub -section ( 1), the Appropriate Commission may make such order as it thinks fit for requiring the default to be made good by the generating company or licensee or by any officers of a company or other association or any other person who is responsible for its default. 56. Disconnection of supply in default of payment .(1) Where any person neglects to pay any charge for electricity or any sum other than a charge for electricity due from him to a licensee or the generating company in respect of supply, transmission or distribution or wheeling of electricity to him, the licensee or the genera ting company may, after giving not less than fifteen clear days notice in writing, to such person and without prejudice to his rights to recover such charge or other sum by suit, cut off the supply of electricity and for that purpose cut or disconnect any electric supply line or other works being the property of such licensee or the generating company through which electricity may have been supplied, transmitted, distributed or wheeled and may discontinue the supply until such charge or other sum, together with any expenses incurred by him in cutting off and reconnecting the supply, are paid, but no longer: Provided that the supply of electricity shall not be cut off if such person deposits, under protest, (a) an amount equal to the sum claimed from him, o r 35 (b) the electricity charges due from him for each month calculated on the basis of average charge for electricity paid by him during the preceding six months, whichever is less, pending disposal of any dispute between him and the licensee. (2) Notwithsta nding anything contained in any other law for the time being in force, no sum due from any consumer, under this section shall be recoverable after the period of two years from the date when such sum became first due unless such sum has been shown continuou sly as recoverable as arrear of charges for electricity supplied and the licensee shall not cut off the supply of the electricity. Consumer protection: Standards of performance 57. Standards of performance of licensee .(1) The Appropriate Commission may, a fter consultation with the licensees and persons likely to be affected, specify standards of performance of a licensee or a class of licensees. (2) If a licensee fails to meet the standards specified under sub -section ( 1), without prejudice to any penalty which may be imposed or prosecution be initiated, he shall be liable to pay such compensation to the person affected as may be determined by the Appropriate Commission: Provided that before determination of compensation, the concerned licensee shall be giv en a reasonable opportunity of being heard. (3) The compensation determined under sub -section ( 2) shall be paid by the concerned licensee within ninety days of such determination. 58. Different standards of performance by licensee .The Appropriate Commissi on may specify different standards under sub -section (1) of section 57 for a class or classes of licensee s. 59. Information with respect to levels of performance .(1) Every licensee shall, within the period specified by the Appropriate Commission, furnish to the Commission the following information, namely: (a) the level of performance achieved under sub -section ( 1) of section 57; (b) the number of cases in which compensation was made under sub -section (2) of section 57 and the aggregate amount of the comp ensation. (2) The Appropriate Commission shall at least once in every year arrange for the publication, in such form and manner as it considers appropriate, of such of the information furnished to it under sub-section ( 1). 60. Market dominat ion.The Appropriate Commission may issue such directions as it considers appropriate to a licensee or a generating company if such licensee or generating company enters into any agreement or abuses its dominant position or enters into a combination which is likely to cause or causes an adverse effect on competition in electricity industry. PART VII TARIFF 61. Tariff regulations. The Appropriate Commission shall, subject to the provisions of this Act, specify the terms and conditions for the determination o f tariff, and in doing so, shall be g uided by the following, namely: (a) the principles and methodologies specified by the Central Commission for determination of the tariff applicable to generating companies and transmission licensees; (b) the generation , transmission, distribution and supply of electricity are conducted on commercial principles; 36 (c) the factors which would encourage competition, efficiency, economical use of the resources, good performance and optimum investments; (d) safeguarding of con sumers interest and at the same time, recovery of the cost of electricity in a reasonable manner; (e) the principles rewarding efficiency in performance; (f) multi year tariff principles; 1[(g) that the tariff progressively reflects the cost of supply of electricity and also reduces cross -subsidies in the manner specified by the Appropriate Commission;] (h) the promotion of co -generation and generation of electricity from renewable sources of energy; (i) the National Electricity Policy and tariff poli cy: Provided that the terms and conditions for determination of tariff under the Electricity (Supply) Act, 1948 (54 of 1948) , the Electricity Regulatory Commission Act, 1998 (14 of 1998) and the enactments specified in the Schedule as

Commission Act, 1998 (14 of 1998) and the enactments specified in the Schedule as they stood immediatel y before the appointed date, shall continue to apply for a period of one year or until the terms and conditions for tariff are specified under this section, whichever is earlier. 62. Determination of tariff .(1) The Appropriate Commission shall determine t he tariff in accordance with the provisions of this Act for (a) supply of electricity by a generating company to a distribution licensee: Provided that the Appropriate Commission may, in case of shortage of supply of electricity, fix the minimum and maxim um ceiling of tariff for sale or purchase of electricity in pursuance of an agreement, entered into between a generating company and a licensee or between licensees, for a period not exceeding one year to ensure reasonable prices of electricity; (b) transm ission of electricity ; (c) wheeling of electricity; (d) retail sale of electricity: Provided that in case of distribution of electricity in the same area by two or more distribution licensees, the Appropriate Commission may, for promoting competition among distribution licensees, fix only maximum ceiling of tariff for retail sale of electricity. (2) The Appropriate Commission may require a licensee or a generating company to furnish separate details, as may be specified in respect of generation, transmissio n and distribution for determination of tariff. (3) The Appropriate Commission shall not, while determining the tariff under this Act, show undue preference to any consumer of electricity but may differentiate according to the consumer's load factor, power factor, voltage, total consumption of electricity during any specified period or the time at which the supply is required or the geographical position of any area, the nature of supply and the purpose for which the supply is required. (4) No tariff or par t of any tariff may ordinarily be amended, more frequently than once in any financial year, except in respect of any changes expressly permitted under the terms of any fuel surcharge formula as may be specified. 1. Subs. by Act 26 of 2007, s. 10, for clause ( g) (w.e.f. 15 -6-2007 ). 37 (5) The Commission may require a licensee or a generating company to comply with such procedures as may be specified for calculating the expected revenues from the tariff and charges which he or it is permitted to recover. (6) If any licensee or a generating company recovers a price or charge exceed ing the tariff determined under this section, the excess amount shall be recoverable by the person who has paid such price or charge along with interest equivalent to the bank rate without prejudice to any other liability incurred by the licensee. 63. Dete rmination of tariff by bidding process . Notwithstanding anything contained in section 62, the Appropriate Commission shall adopt the tariff if such tariff has been determined through transparent process of bidding in accordance with the guidelines issued b y the Central Government. 64. Procedure for tariff order .(1) An application for determination of tariff under section 62 shall be made by a generating company or licensee in such manner and accompanied by such fee, as may be determined by regulations. (2) Every applicant shall publish the application, in such abridged form and manner, as may be specified by the Appropriate Commission. (3) The Appropriate Commission shall, within one hundred and twenty days from receipt of an application under sub -section ( 1) and after considering all suggestions and objec tions received from the public, (a) issue a tariff order accepting the application with such modifications or such conditions as may be specified in that order; (b) reject the application for reasons to be recorded in writing if such application is not in accordance with the provisions of this Act and the rules and regulations made thereunder or the provisions of any other law for the time being in force: Provided that an applicant shall be given a reasonab le opportunity of being heard before rejecting his application. (4) The Appropriate Commission shall, within seven days of making the order, send a copy of the order to the Appropriate Government, the Authority, and the concerned licensees and to the perso n concerned. (5) Notwithstanding anything contained in P art X, the tariff for any inter -State supply, transmission or wheeling of electricity, as the case may be, involving the territories of two States may, upon application made to it by the parties inten ding to undertake such supply, transmission or wheeling, be determined under this section by the State Commission having jurisdiction in respect of the licensee who intends to distribute electricity and make payment therefor. (6) A tariff order shall, unle ss amended or revoked, continue to be in force for such period as may be specified in the tariff order. 65. Provision of subsidy by State Government. If the State Government requires the grant of any subsidy to any consumer or class of consumers in the tar iff determined by the State Commission under section 62, the State Government shall, notwithstanding any direction which may be given under section 108, pay, in advance and in such manner as may be specified, the amount to compensate the person affe cted by the grant of subsidy in the manner the State Commission may direct, as a condition for the licence or any other person concerned to implement the subsidy provided for by the State Government: Provided that no such direction of the State Government shall be operative if the payment is not made in accordance with the provisions contained in this section and the tariff fixed by the State Commission shall be applicable from the date of issue of orders by the Commission in this regard. 38 66. Development of market .The Appropriate Commission shall endeavour to promote the development of a market (including trading) in power in such manner as may be specified and shall be guided by the National Electricity Policy referred to in section 3 in this regard. PART VIII WORKS Works of licensees 67. Provision as to opening up of streets, railways, etc. (1) A licensee may, from time to time but subject always to the terms and conditions of his licence, within his area of supply or transmission or when permitted by the terms of his licence to lay down or place electric supply lines without the area of supply, without tha t area carry out works such as (a) to open and break up the soil and pavement of any street, railway or tramway; (b) to open and break up any sewer, dra in or tunnel in or under any street, railway or tramway; (c) to alter the position of any line or works or pipes, other than a main sewer pipe; (d) to lay down and place electric lines, electrical plant and other works; (e) to repair, alter or remove the s ame; (f) to do all other acts necessary for transmission or supply of electricity. (2) The Appropriate Government may, by rules made by it in this behalf, specify, (a) the cases and circumstances in which the consent in writing of the a ppropriate Governme nt, local authority, owner or occupier, as the case may be, shall be required for carrying out works; (b) the authority which may grant permission in the circumstances where the owner or occupier objects to the carrying out of works; (c) the nature and per iod of notice to be given by the licensee before carrying out works; (d) the procedure and manner of consideration of objections and suggestion s received in accordance with the notice referred to in clause ( c); (e) the determination and payment of compensa tion or rent to the persons affected by works under this section; (f) the repairs and works to be carried out when emergency exists; (g) the right of the owner or occupier to carry out certain works under this section and the payment of expenses therefor; (h) the procedure for carrying out other works near sewers, pipes or other electric lines or works; (i) the procedure for alteration of the position of pipes, electric lines, electrical plant, telegraph lines, sewer lines, tunnels, drains, etc.; (j) the pr ocedure for fencing, guarding, lighting and other safety measures relating to works on streets, railways, tramways, sewers, drains or tunnels and immediate reinstatement thereof; (k) the avoidance of public nuisance, environmental damage and unnecessary da mage to the public and private property by such works; (l) the procedure for undertaking works which are not reparable by the Appropriate Government, licensee or local authority; (m) the manner of deposit of amount required for restoration of any railways, tramways, waterways, etc.; 39 (n) the manner of restoration of property affected by such works and maintenance thereof; (o) the procedure for deposit of compensation payable by the licensee and furnishing of security; and (p) such other matters as are incide ntal or consequential to the construction and maintenance of works under this section. (3) A licensee shall, in exercise of any of the powers conferred by or under this section and the rules made thereunder, cause as little damage, detriment and inconvenie nce as may be, and shall make full compensation for any damage, detriment or inconvenience caused by him or by any one employed by him. (4) Where any difference or dispute [including amount of compensation under sub -section ( 3)] arises under this section, the matter shall be determined by the Appropriate Commission. (5) The Appropriate Commission, while determining any difference or dispute arising under this section in addition to any compensation under sub -section ( 3), may impose a penalty not exceeding t he amount of compensation payable under that sub -section. Provisions relating to o verhead lines 68. Overhead lines .(1) An overhead line shall, with prior approval of the Appropriate Government, be installed or kept installed above ground in accordance wit h the provisions of sub -section (2). (2) The provisions contained in sub -section ( 1) shall not apply (a) in relation to an electric line which has a nominal voltage not exceeding 11 kilovolts and is used or intended to be used for supplying to a single co nsumer; (b) in relation to so much of an electric line as is or will be within premises in the occupation or control of the person responsible for its installation; or (c) in such other cases, as may be prescribed. (3) The Appropriate Government shall, whi le granting approval under sub -section (1), impose such conditions (including conditions as to the ownership and operation of the line) as appear to it to be necessary. (4) The Appropriate Government may vary or revoke the approval at any time after the en d of such period as may be stipulated in the approval granted by it. (5) Where any tree standing or lying near an overhead line or where any structure or other object which has been placed or has fallen near an overhead line subsequent to the placing of s uch line, interrupts or interferes with, or is likely to interrupt or interfere with, the conveyance or transmission of electricity or the accessibility of any works, an Executive Magistrate or authority specified by the Appropriate Government may, on the application of the licensee, cause the tree, structure or object to be removed or otherwise dealt with as he or it thinks fit. (6) When disposing of an application under sub -section ( 5), an Executive Magistrate or authority specified under that sub -section shall, in the case of any tree in existence before the placing of the overhead line, award to the person interested in the tree such compensation as he thinks reasonable, and such person may recover the same from the licensee. Explanation .For the purpose s of this section, the expression tree shall be deemed to include any shrub, hedge, jungle growth or other plant. 69. Notice to telegraph authority .(1) A licensee shall, before laying down or placing, within ten meters of any telegraph line, electric li ne, electrical plant or other works, not being either service lines, or 40 electric lines or electrical plant, for the repair, renewal or amendment of existing works of which the character or position is not to be altered, (a) submit a proposal in case of a new installation to an authority to be designated by the Central Government and such authority shall take a decision on the proposal within thirty days; (b) give not less than ten days' notice in writing to the telegraph authority in case of repair, renewa l or amendment of existing works, specifying (i) the course of th e works or alterations proposed ; (ii) the manner in whi ch the works are to be utilised ; (iii) the amount and nature of the electricity to be transmitted; (iv) the extent to, and the manner i n which (if at all), earth returns are to be used , and the licensee shall conform to such reasonable requirements, either general or special, as may be laid down by the telegraph authority within that period for preventing any telegraph line from being injuriously affected by such works or alterations: Provided that in case of emergency (which shall be stated by the licensee in writing to the telegraph authority) arising from defects in any of the electric lines or electrical plant or other works of the lic ensee, the licensee shall be required to give only such notice as may be possible after the necessity for the proposed new works or alterations has arisen. (2) Where the works of the laying or placing of any service line is to be executed , the licensee sha ll, not less than forty -eight hours before commencing the work, serve upon the telegraph authority a notice in writing of his intention to execute such works. PART IX CENTRAL ELECTRICITY AUTHORITY Constitution and functions of Authority 70. Constitution, e tc., of Central Electricity Authority .(1) There shall be a body to be called the Central Electricity Authority to exercise such functions and perform such duties as are assigned to it under this Act. (2) The Central Electricity Authority, established unde r section 3 of the Electricity (Supply) Act, 1948 (54 of 1948) and functioning as such immediately before the appointed date, shall be the Central Electricity Authority for the purposes of this Act and the Chairperson , Members, Secretary and other officers and employees thereof shall be deemed to have been appointed under this Act and they shall continue to hold office on the same terms and conditions on which they were appointed under the Electricity (Supply) Act, 1948. (3) The Authority shall consist of n ot more than fourteen Members (including its Chairperson) of whom not more than eight shall be full -time Members to be appointed by the Central Government. (4

Chairperson) of whom not more than eight shall be full -time Members to be appointed by the Central Government. (4) The Central Government may appoint any person, eligible to be appointed as Member of the Authori ty, as the Chairperson of the Authority, or, designate one of the full -time Members as the Chairperson of the Authority. (5) The Members of the Authority shall be appointed from amongst persons of ability, integrity and standing who have knowledge of, and adequate experience and capacity in, dealing with problems relating to engineering, finance, commerce, economics or industrial matters, and at least one Member shall be appointed from each of th e following categories, namely: 41 (a) engineering with speciali sation in design, construction, operation and maintenance of generating stations; (b) engineering with specialisation in transmission and supply of electricity; (c) applied research in the field of electricity; (d) applied economics, accounting, commerce o r finance. (6) The Chairperson and all the Members of the Authority shall hold office during the pleasure of the Central Government. (7) The Chairperson shall be the Chief Executive of the Authority. (8) The headquarters of the Authority shall be at Delhi. (9) The Authority shall meet at the head office or any other place at such time as the Chairperson may direct, and shall observe such rules of procedure in regard to the transaction of business at its meetings (including the quorum at its meetings) as it may specify. (10) The Chairperson, or if he is unable to attend a meeting of the Authority, any other Member nominated by the Chairperson in this behalf and in the absence of such nomination or where there is no Chairperson, any Member chosen by the Member s present from among themselves shall preside at the meeting. (11) All questions which come up before any meeting of the Authority shall be decided by a majority of votes of the Members present and voting, and in the event of an equality of votes, the Chai rperson or the person presiding shall have the right to exercise a second or casting vote. (12) All orders and decisions of the Authority shall be authenticated by the Secretary or any other officer of the Authority duly authorised by the Chairperson in th is behalf. (13) No act or proceeding of the Authority shall be questioned or shall be invalidated merely on the ground of existence of any vacancy in, or any defect in, the constitution of, the Authority. (14) The Chairperson of the Authority and other ful l-time Members shall receive such salary and allowances as may be determined by the Central Government and other Members shall receive such allowances and fees for attending the meetings of the Authority, as the Central Government may prescribe. (15) The o ther terms and conditions of service of the Chairperson and Members of the Authority including, subject to the provisions of sub -section ( 6), their terms of office shall be such as the Central Government may prescribe. 71. Members not to have certain inter est.No Member of the Authority shall have any share or interest, whether in his own name or otherwise, in any company or other body corporate or an association of person s (whether incorporated or not) or a firm engaged in the business of generation, trans mission, distribution and trading of electricity or fuel for the generation thereof or in the manufacture of electrical equipment. 72. Officers and staff of Authority .The Authority may appoint a Secretary and such other officers and employees as it consid ers necessary for the performance of its functions under this Act and on such terms as to salary, remuneration, fee, allowance, pension, leave and gratuity, as the authority may in consultation with the Central Government, fix: Provided that the appointmen t of the Secretary shall be subject to the approval of the Central Government. 73. Functions and duties of Authority .The Authority shall perform such functions and duties as the Central Government may prescribe o r direct, and in particular to 42 (a) advise the Central Government on the matters relating to the national electricity policy, formulate short -term and perspective plans for development of the electricity system and co -ordinate the activities of the planning agencies for the optimal utilisation of resources to subserve the interests of the national economy and to provide reliable and affordable electricity for all consumers; (b) specify the technical standards for construction of electrical plants, electric lines and connectivity to the grid; (c) spe cify the safety requirements for construction, operation and maintenance of electrical plants and electric lines; (d) specify the Grid Standards for operation and maintenance of transmission lines; (e) specify the conditions for installation of meters for transmission and supply of electricity; (f) promote and assist in the timely completion of schemes and projects for improving and augmenting the electricity system; (g) promote measures for advancing the skill of persons engaged in the electricity industry ; (h) advise the Central Government on any matter on which its advice is sought or make recommendation to that Government on any matter if, in the opinion of the Authority, the recommendation would help in improving the generation, transmission, trading, distribution and utilisation of electricity; (i) collect and record the data concerning the generation, transmission, trading, distribution and utilisation of electricity and carry out studies relating to cost, efficiency, competitiveness and such like matters; (j) make public from time to time the information secured under this Act, and provide for the publication of reports and investigations; (k) promote research in matters affecting the generation, transmission, distribution and trading of electricity; (l) carry out, or cause to be carried out , any investigation for the purposes of generating or transmitting or distributing electricity; (m) advise any State Government, licensees or the generating companies on such matters which shall enable them to operat e and maintain the electricity system under their ownership or control in an improved manner and where necessary, in co -ordination with any other Government, licensee or the generating company owning or having the control of another electricity system; (n) advise the Appropriate Government and the Appropriate Commission on all technical matters relating to generation, transmission and distribution of electricity; and (o) discharge such other functions as may be provided under this Act. Certain powers and di rections 74. Power to require statistics and returns .It shall be the duty of every licensee, generating company or person generating electricity for its or his own use to furnish to the Authority such statistics, returns or other information relating to g eneration, transmission, distribution, trading and use of electricity as it may require and at such times and in such form and manner as may be specified by the Authority. 75. Directions by Central Government to Authority .(1) In the discharge of its funct ions, the Authority shall be guided by such directions in matters of policy involving public interest as the Central Government may give to it in writing. 43 (2) If any question arises as to whether any such direction relates to a matter of policy involving public interest, the decision of the Central Government thereon shall be final. PART X REGULATORY COMMISSIONS Constitution, powers and functions of Central Commission 76. Constitution of Central Commission .(1) There shall be a Commission to be known as the Central Electricity Regulatory Commission to exercise the powers conferred on, and discharge the functions assigned to it under this Act. (2) The Central Electricity Regulatory Commission, established under section 3 of the Electricity Regulatory Commissi ons Act, 1998 (14 of 1998) and functioning as such immediately before the appointed date, shall be deemed to be the Central Commission for the purposes of this Act and the Chairperson, Members, Secretary, and other officers and employees thereof shall be d eemed to have been appointed under this Act and they shall continue to hold office on the same terms and conditions on which they were appointed under the Electricity Regulatory Commissions Act, 1998: Provided that the Chairperson and other Members of the Central Commission appointed, before the commencement of this Act, under the Electricity Regulatory Commissions Act, 1998 (14 of 1998) , may, on the recommendations of the Selection Committee constituted under sub -section ( 1) of section 78, be allowed, to o pt for the terms and conditions under this Act by the Central Government. (3) The Central Commission shall be a body corporate by the name aforesaid, having perpetual succession and a common seal with power to acquire, hold and dispose of property, both mo vable and immovable, and to contract and shall, by the said name, sue or be sued. (4) The head office of the Central Commission shall be at such place as the Central Government may, by notification, specify. (5) The Central Commission shall consist of the following Members, namely: (a) a Chairperson and three other Members; (b) the Chairperson of the Authority who shall be the Member, ex officio . (6) The Chairperson and Members of the Central Commission shall be appointed by the Central Government on the r ecommendation of the Selection Committee referred to in section 78. 77. Qualifications for appointment of Members of Central Commission .(1) The Chairperson and the Members of the Central Commission shall be persons having adequate knowledge of, or experie nce in, or shown capacity in, dealing with, problems relating to engineering, law, economics, commerce, finance or management and shall be appointed in the following manner, namely: (a) one person having qualifications and experience in the field of engin eering with specialisation in generation, transmission or distribution of electricity; (b) one person having qualifications and experience in the field of finance; (c) two persons having qualifications and experience in the field of economics, commerce, la w or management: Provided that not more than one Member shall be appointed under the same category under clause ( c). (2) Notwithstanding anything contained in sub -section ( 1), the Central Government may appoint any person as the Chairperson from amongst pe rsons who is, or has been, a Judge of the Supreme Court or the Chief Justice of a High Court: 44 Provided that no appointment under this sub -section shall be made except after consultation with the Chief Justice of India. (3) The Chairperson or any other Memb er of the Central Commission shall not hold any other office. (4) The Chairperson shall be the Chief Executive of the Central Commission. 78. Constitution of Selection Committee to recommend Members .(1) The Central Government shall, for the purposes of se lecting the Members of the Appellate Tribunal and the Chairperson and Members of the Central Commission, constitute a Selection Comm ittee consisting of (a) Member of the Planning Commission incharge of the energy sector Chairperson; (b) Secretary -in-charge of the Ministry of the Central Government dealing with the Department of Legal Affairs . Member; (c) Chairperson of the Public Enterprises Selection Board .Member; (d) a person to be nominated by the Central Government in accordance with sub-section ( 2) Member; (e) a person to be nominated by the Central Government in accordance with sub-section ( 3).. Member; (f) Secretary -in-charge of the Ministry of the Central Gover nmen t dealing with power. Member. (2) For the purposes of clause ( d) of sub -section ( 1), the Central Government shall nominate from amongst persons holding the post of chairperson or managing director, by whatever name called, of any public financial instit ution specified in section 4A of the Companies Act, 1956 (1 of 1956) . (3) For the purposes of clause ( e) of sub -section ( 1), the Central Government shall, by notification, nominate from amongst persons holding the post of director or the head of the instit ution, by whatever name called, of any research, technical or management institution for this purpose. (4) Secretary -in-charge of the Ministry of the Central Government dealing with Power shall be the Convenor of the Selection Committee. (5) The Central Go vernment shall, within one month from the date of occurrence of any vacancy by reason of death, resignation or removal of a Member of the Appellate Tribunal or the Chairperson or a Member of the Central Commission and six months before the superannuation o r end of tenure of the Member of the Appellate Tribunal or Member of the Central Commission, make a reference to the Selection Committee for filling up of the vacancy. (6) The Selection Committee shall finalise the selection of the Chairperson and Members referred to in sub -section ( 5) within three months from the date on which the reference is made to it. (7) The Selection Committee shall recommend a panel of two names for every vacancy referred to it. (8) Before recommending any person for appointment as Member of the Appellate Tribunal or the Chairperson or other Member of the Central Commission, the Selection Committee shall satisfy itself that such person does not have any financial or other interest which is likely to affect prejudicially his functions as the Chairperson or Member. (9) No appointment of the Chairperson or other Member shall be invalid merely by reason of any vacancy in the Selection Committee: 45 Provided that nothing contained in this section shall apply to the appointment of a person as the Chairperson of the Central Commission where such person is, or has been , a Judge of the Supreme Court or the Chief Justice of a High Court. 79. Functions of Central Commission .(1) The Central Commission shall discharge t he following functions, namely: (a) to regulate the tariff of generating companies owned or controlled by the Central Government; (b) to regulate the tariff of generating companies other than those owned or controlled by the Central Government specified in clause (a), if such generatin g companies enter into or otherwise have a composite scheme for generation and sale of electricity in more than one State; (c) to regulate the inter -State t ransmission of electricity ; (d) to determine tariff for inter -State transmission of electricity; (e) to issue licenc es to persons to function as transmission licensee and electricity trader with respect to their inter -State operations; (f) to adjudicate upon disputes involving generating companies or transmission licensee in regard to matters connected w ith clauses (a) to ( d) above and to refer any dispute for arbitration; (g) to levy fees for the purposes of this Act; (h) to specify Grid Code having regard to Grid Standards; (i) to specify and enforce the standards with respect to quality, continuity and reliability of service by licensees; (j) to fix the trading margin in the inter -State trading of electricity, if considered, necessary; (k) to discharge such other functions as may be assigned under this Act. (2) The Central Commission shall advise the Ce ntral Government on all or any of the follow ing matters, namely: (i) formulation of

shall advise the Ce ntral Government on all or any of the follow ing matters, namely: (i) formulation of National electricity Policy and tariff policy; (ii) promotion of competition, efficiency and economy in activities of the electricity industry; (iii) promotion of investme nt in electricity industry; (iv) any other matter referred to the Central Commission by that Government. (3) The Central Commission shall ensure transparency while exercising its powers and discharging its functions. (4) In discharge of its functions, the Central Commission shall be guided by the National Electricity Policy, National Electricity Plan and tariff policy published under section 3. 80. Central Advisory Committee .(1) The Central Commission may, by notification, establish with effect from such d ate as it may specify in such notification, a Committee to be known as the Central Advisory Committee. (2) The Central Advisory Committee shall consist of not more than thirty -one members to represent the interests of commerce, industry, transport, agricul ture, labour, consumers, non -governmental organisations and academic and research bodies in the electricity sector. (3) The Chairperson of the Central Commission shall be the ex officio Chairperson of the Central Advisory Committee and the Members of that Commission and Secretary to the Government of India in 46 charge of the Ministry or Department of the Central Government dealing with Consumer Affairs and Public Distribution System shall be the ex officio Members of the Committee. 81. Objects of Central Advi sory Committee .The objects of the Central Advisory Committee shall be to advise the Central Commission on (i) major questions of policy; (ii) matters relating to quality, continuity and extent of service provided by the licensees; (iii) compliance by the licensees with the conditions and requirements of their licence; (iv) protection of consumer interest; (v) electricity supply and overall standards of performance by utilities. Constitution, powers and functions of State Commissions 82. Constitution of St ate Commission .(1) Every State Government shall, within six months from the appointed date, by notification, constitute for the purposes of this Act, a Commission for the State to be known as the (name of the State) Electricity Regulatory Commission: Prov ided that the State Electricity Regulatory Commission, established by a State Government under section 17 of the Electricity Regulatory Commissions Act, 1998 (14 of 1998) and the enactments specified in the Schedule, and functioning as such immediately bef ore the appointed date, shall be the State Commission for the purposes of this Act and the Chairperso n, Members, Secretary, and officers and other employees thereof shall continue to hold office, on the same terms and conditions on which they were appointe d under those Acts: Provided further that the Chairperson and other Members of the State Commission appointed, before the commencement of this Act , under the Electricity Regulatory Commissions Act, 1998 (14 of 1998) or under the enactments specified in the Schedule, may , on the recommendations of the Selection Committee constituted under sub -section ( 1) of section 85 , be allowed to opt for the terms and conditions under this Act by the concerned State Government. (2) The State Commission shall be a body cor porate by the name aforesaid, having perpetual succession and a common seal, with power to acquire, hold and dispose of property, both movable and immovable, and to contract and shall, by the said name, sue or be sued. (3) The head office of the State Comm ission shall be at such place as the State Government may, by notification, specify. (4) The State Commission shall consist of not more than three Members, including the Chairperson. (5) The Chairperson and Members of the State Commission shall be appointe d by the State Government on the recommendation of a Selection Committee referred to in section 85. 83. Joint Commission .(1) Notwithstanding anything to the contrary contained in section 82, a Joint Commission may be constituted by an agreement to be ente red into (a) by two or more Governments of States; or (b) by the Central Government, in respect of one or more Union territories, and one or more Governments of States, and shall be in force for such period and shall be subject to renewal for each further period, if any, as may be stipulated in the agreement: Provided that the Joint Commissio n, constituted under section 21 A of Electricity Regulatory Commissions Act, 1998 (14 of 1998) and functioning as such immediately before the appointed day, shall be th e Joint Commission for the purposes of this Act and the Chairperson, Members, Secretary and other 47 officers and employees thereof shall be deemed to have been appointed as such under this Act and they shall continue to hold office, on the same terms and conditions on which they were appointed under the Electricity Regulatory Commissions Act, 1998. (2) The Joi nt Commission shall consist of one Member from each of the participating States and Union t erritories and the Chairperson shall be appointed from amongs t the Members by consensus, failing which by rotation. (3) An agreement under sub -section ( 1) shall contain provisions as to the name of the Joint Commission, the manner in which the participating States may be associated in the selection of the Chairperso n and Members of the Joint Commission, manner of appointment of Members and appointment of Chairperson by rotation or consensus, places at which the Commission shall sit, apportionment among the participating States of the expenditure in connection with th e Joint Commission, manner in which the differences of opinion between the Joint Commission and the State Government concerned would be resolved and may also contain such other supplemental, incidental and consequential provisions not inconsistent with thi s Act as may be deemed necessary or expedient for giving effect to the agreement. (4) The Joint Commission shall determine tariff in respect of the participating States or Union territories separately and independently. (5) Notwithstanding anything contain ed in this section, the Central Government may, if so authorised by all the participating States, constitute a Joint Commission and may exercise the powers in respect of all or any of the matters specified under sub -section ( 3) and when so specifically aut horised by the participating States. 84. Qualifications for appointment of Chairperson and Members of State Commission .(1) The Chairperson and the Members of the State Commission shall be persons of ability, integrity and standing who have adequate knowle dge of, and have shown capacity in, dealing with problems relating to engineering, finance, commerce, economics, law or management. (2) Notwithstanding anything contained in sub -section ( 1), the State Government may appoint any person as the Chairperson fr om amongst persons who is, or has been, a Judge of a High Court: Provided that no appointment under this sub -section shall be made except after consultation with the Chief Justice of that High Court. (3) The Chairperson or any other Member of the State Com mission shall not hold any other office. (4) The Chairperson shall be the Chief Executive of the State Commission. 85. Constitution of Selection Committee to select Members of State Commission .(1) The State Government shall, for the purposes of selecting the Members of the State Commission, constitute a Selection Committee consisting of (a) a person who has been a Judge of the High Court. Chairperson; (b) the Chief Secret ary of the concerned State .Member; (c) the Chairperson of the Authority or the Ch airperson of the Central Commission .. Member: Provided that nothing contained in this section shall apply to the appointment of a person as the Chairperson who is or has been a Judge of the High Court. (2) The State Government shall, within one month fro m the date of occurrence of any vacancy by reason of death, resignation or removal of the Chairperson or a Member and six months before the superannuation or end of tenure of the Chairperson or Member, make a reference to the Selection Committee for fillin g up of the vacancy. 48 (3) The Selection Committee shall finalise the selection of the Chairperson and Members within three months from the date on which the reference is made to it. (4) The Selection Committee shall recommend a panel of two names for every vacancy referred to it. (5) Before recommending any person for appointment as the Chairperson or other Member of the State Commission, the Selection Committee shall satisfy itself that such person does not have any financial or other interest which is likely to affect prejudicially his functions as such Chairperson or Member, as the case may be. (6) No appointment of Chairperson or other Member shall be invalid merely by reason of any vacancy in the Selection Committee. 86. Functions of State Commission .(1) The State Commission shall discharge th e following functions, namely: (a) determine the tariff for generation, supply, transmission and wheeling of electricity, wholesale, bulk or retail, as the case may be, within the State: Provided that where open ac cess has been permitted to a category of consumers under section 42, the State Commission shall determine only the wheeling charges and surcharge thereon, if any, for the said category of consumers; (b) regulate electricity purchase and procurement process of distribution licensees including the price at which electricity shall be procured from the generating companies or licensees or from other sources through agreements for purchase of power for distribution and supply within the State; (c) facilitate int ra-State transmission and wheeling of electricity; (d) issue licences to persons seeking to act as transmission licensees, distribution licensees and electricity traders with respect to their operations within the State; (e) promote co -generation and gener ation of electricity from renewable sources of energy by providing suitable measures for connectivity with the grid and sale of electricity to any person, and also specify, for purchase of electricity from such sources, a percentage of the total consumptio n of electricity in the area of a distribution licensee; (f) adjudicate upon the disputes between the licensees and generating companies and to refer any dispute for arbitration; (g) levy fee for the purposes of this Act; (h) specify State Grid Code consis tent with the Grid Code specified under clause ( h) of sub-section ( 1) of section 79; (i) specify or enforce standards with respect to quality, continuity and reliability of service by licensees; (j) fix the trading margin in the intra -State tradi ng of electricity, if considered, necessary; (k) discharge such other functions as may be assigned to it under this Act. (2) The State Commission shall advise the State Government on all or any of the following matters, namely: (i) promotion of competitio n, efficiency and economy in activities of the electricity industry; (ii) promotion of investment in electricity industry; (iii) reorgani sation and restructuring of electricity industry in the State; 49 (iv) matters concerning generation, transmission, distri bution and trading of electricity or any other matter referred to the State Commission by that Government. (3) The State Commission shall ensure transparency while exercising its powers and discharging its functions. (4) In discharge of its functions, the State Commission shall be guided by the National Electricity Policy, National Electricity Plan and tariff policy published under section 3. 87. State Advisory Committee .(1) The State Commission may, by notification, establish with effect from such date as it may specify in such notification, a Committee to be known as the State Advisory Committee. (2) The State Advisory Committee shall consist of not more than twenty -one members to represent the interests of commerce, industry, transport, agriculture, labour, consumers, non -governmental organisations and academic and research bodies in the electricity sector. (3) The Chairperson of the State Commission shall be the ex officio Chairperson of the State Advisory Committee and the Members of the State Commissio n and the S ecretary to State Government in charge of the Ministry or Department dealing with Consumer Affairs and Public Distribution System shall be the ex officio Members of the Committee. 88. Objects of State Advisory Committee .The objects of the Stat e Advisory Committee shall be to advise the Commission on (i) major questions of policy; (ii) matters relating to quality, continuity and extent of service provided by the licensees; (iii) compliance by licensees with the conditions and requirements of their licence ; (iv) protection of consumer interest; and (v) electricity supply and overall standards of performance by utilities. Appropriate Commission other provisions 89. Term of office and conditions of service of Members. (1) The Chairperson or other Member shall hold office for a term of five years from the date he enters upon his office: Provided that the Chairperson or other Member in the Central Commission or the State Commission shall not be eligible for re -appointment in the same capacity as the Chairperson or a Member in that Commission in which he had earlier held office as such : Provided further that no Chairperson or Member shall hold office as such after he has attained the age of sixty -five years. (2) The salary, allowances and other terms and conditions of service of the Chairperson and Members shall be such as may be prescribed by the Appropriate Government: Provided that the salary, allowances and other terms and conditions of service of the Members, shall not be varied to their disadvant age after appointment. (3) Every Member shall, before entering upon his office, make and subscribe to an oath of office and secrecy in such form and in such manner and before such authority as may be prescribed. (4) Notwithstanding anything contained i n sub-section ( 1), a Member may (a) relinquish his office by giving in writing to the Appropriate Government a notice of not less than three months; or (b) be removed from his office in accordance with the provisions of section 90. 50 (5) Any member ceasin g to h old office as such shall (a) not accept any commercial employment for a period of two years from the date he ceases to hold such office; and (b) not represent any person before the Central Commission or any State Commission in any manner. Explanation. For the purposes of this sub -section , commercial employment means employment in any capacity in any organisation which has been a party to the proceedings before the Appropriate Commission or employment in any capacity under, or agency of, a person engaged in trading, commercial, industrial or financial business in electricity industry and includes a director of a company or partner of a firm or setting up practice either independently or as partner of a firm or as an advisor or a consultant. STATE AMENDMEN T Andhra Pradesh: In section

an advisor or a consultant. STATE AMENDMEN T Andhra Pradesh: In section 89, in sub -section ( 1), for the existing two provisos, the following provisos shall be substituted, in their application to the State of Andhra Pradesh, namely: Provided that the Chairperson or other Member in the State Commi ssion shall be eligible for re-appointment in the same capacity and shall hold office as such, till he completes the term of five years including the term already held before such re -appointment: Provided further that no Chairperson or Member sha ll hold office as such after he attained the age of seventy years. [Vide Andhra Pradesh Act 11 of 2016, s. 3] 90. Removal of Member . (1) No Member shall be removed from office except in accordance with the provisions of this section. (2) The Central Gover nment , in the case of a Member of the Central Commission, and the State Government, in the case of a Member of the State Commission, may by order remov e from office any Member, if he (a) has been adjudged an insolvent; (b) has been convicted of an offence which, in the opinion of the Appropriate Government, involves moral turpitude; (c) has become physically or mentally incapable of acting as a Member; (d) has acquired such financial or other interest as is likely to affect prejudicially his functions as a Member; (e) has so abused his position as to render his continuance in office prejudicial to the public interest; or (f) has been guilty of proved misbehaviour: Provided that no Member shall be removed from his office on any ground specified in clauses ( d), (e) and ( f) unless the Chairperson of the Appellate Tribunal on a reference being made to him in this behalf by the Central Government or the State Government, as the case may be, has, on an inquiry, held by him in accordance with such procedure as may be prescribed by the Central Government, reported that the Member ought on such ground or grounds to be removed. (3) The Central Government or the State Government, as the case may be, may, in consultation with the Chairperson of the Appellate Tribunal sus pend any Member of the Appropriate Commission in 51 respect of whom a reference has been made to the Chairperson of the Appellate Tribunal, under sub-section ( 2) until the Central Government or the State Government, as the case may be, has passed orders on receipt of the report of the Chairperson of the Appellate Tribunal, on such reference : Provided that nothing contained in this section shall apply to the Chairperson of the Appropriate Commission who, at the time of his appointment as such is a sit ting Judge of the Supreme Court or the chief Justice of a High Court or a Judge of a High Court. Proceedings and powers of Appropriate Commission 91. Secretary, officers and other employees of Appropriate Commission . (1) The Appropriate Commission may appo int a Secretary to exercise such powers and perform such duties as may be specified. (2) The Appropriate Commission may, with the approval of the Appropriate Government, specify the numbers, nature and categories of other officers and employees. (3) The sa laries and allowances payable to, and other terms and conditions of service of, the Secretary, officers and other employees shall be such as may be specified with the approval of the Appropriate Government. (4) The Appropriate Commission may appoint consul tants required to assist that Commission in the discharge of its functions on the terms and conditions as may be specified. 92. Proceedings of Appropriate Commission .(1) The Appropriate Commission shall meet at the head office or any other place at such time as the Chairperson may direct, and shall observe such rules of procedure in regard to the transaction of business at its meetings (including the quorum at its meetings) as it may specify. (2) The Chairperson, or if he is unable to attend a meeting of t he Appropriate Commission, any other Member nominated by the Chairperson in this behalf and, in the absence of such nomination or where there is no Chairperson, any Member chosen by the Members present from amongst themselves, shall preside at the meeting. (3) All questions which come up before any meeting of the Appropriate Commission shall be decided by a majority of votes of the Members present and voting, and in the event of an equality of votes, the Chairperson or in his absence, the person presiding s hall have a second or casting vote. (4) Save as otherwise provided in sub -section ( 3), every Member shall have one vote. (5) All orders and decisions of the Appropriate Commission shall be authenticated by its Secretary or any other officer of the Commissi on duly authorised by the Chairperson in this behalf. 93. Vacancies, etc. , not to invalidate proceedings .No act or proceedings of the Appropriate Commission shall be questioned or shall be invalidated merely on the ground of existence of any vacancy or defect in the constitution of the Appropriate Commission. 94. Powers of Appropriate Commission .(1) The Appropriate Commission shall, for the purposes of any inquiry or proceedings under this Act, have the same powers as are vested in a civil court under the Code of Civil Procedure, 1908 (5 of 1908) in respect of the following matters, namely: (a) summoning and enforcing the attendance of any person and examining him on oath; (b) discovery and production of any document or other material object producible as evidence; (c) receiving evidence on affidavits; (d) requisitioning of any public record; (e) issuing commission for the examination of witnesses; 52 (f) reviewing its decisions, directions and orders; (g) any other matter which may be prescribed. (2) The App ropriate Commission shall have the powers to pass such interim order in any proceeding, hearing or matter before the Appropriate Commission, as that Commission may consider appropriate. (3) The Appropriate Commission may authorise any person, as it deems f it, to represent the interest of the consumers in the proceedings before it. 95. Proceedings before Commission. All proceedings before the Appropriate Commission shall be deemed to be judicial proceedings within the meaning of sections 193 and 228 of the I ndian Penal Code (45 of 1860) and the Appropriate Commission shall be deemed to be a civil court for the purposes of sections 345 and 346 of the Code of Criminal Procedure, 1973 (2 of 1974) . 96. Powers of entry and seizure .The Appropriate Commission or a ny officer, not below the rank of a Gazette d Officer specially authorised in this behalf by the Commission, may enter any building or place where the Commission has reason to believe that any document relating to the subject matter of the inquiry may be fo und, and may seize any such document or take extracts or copies therefrom subject to the provisions of section 100 of the Code of Criminal Procedure, 1973 (2 of 1974) , in so far as it may be applicable. 97. Delegation .The Appropriate Commission may, by g eneral or special order in writing, delegate to any Member, Secretary, officer of the Appropriate Commission or any other person subject to such conditions, if any, as may be specified in the order, such of its powers and functions under this Act (except t he powers to adjudicate disputes under section 79 and section 86 and the powers to make regulations under section 178 or section 181) as it may deem necessary. Grants, Fund , Accounts, Audit and Report 98. Grants a nd loans by Central Government. The Central Government may, after due appropriation made by Parliament in this behalf, make to the Central Commission grants and loans of such sums of money as that Government may consider necessary. 99. Establishment of Fund by Central Government .(1) There shall be constituted a Fund to be called the Central Electricity Regulatory Commission Fund and there shall be credited thereto (a) any grants and loans made to the Central Commission by the Central Government under section 98; (b) all fees received by the Centra l Commission under this Act; (c) all sums received by the Central Commission from such other sources as may be decided upon by the Central Government. (2) The Fun d shall be applied for meeting (a) the salary, allowances and other remuneration of Chairpers on, Members, Secretary, officers and other employees of the Central Commission; (b) the expenses of the Central Commission in discharge of its function s under section 79; (c) the expenses on objects and for purposes authorised by this Act. (3) The Central Government may, in consultation with the Comptroller and Auditor -General of India, prescribe the manner of applying the Fund for meeting the expenses specified in clause ( b) or clause ( c) of sub-section ( 2). 100. Accounts and audit of Central Commission .(1) The Central Commission shall maintain proper accounts and other relevant records and prepare an annual statement of accounts in such form as 53 may be prescribed by the Central Government in consultation w ith the Comptroller and Auditor -General of India. (2) The accounts of the Central Commission shall be audited by the Comptroller and Auditor -General of India at such intervals as may be specified by him and any expenditure incurred in connection with such audit shall be payable by the Central Commission to the Comptroller and Auditor -General of India. (3) The Comptroller and Auditor -General of India and any person appointed by him in connection with the audit of the accounts of the Central Commission under this Act shall have the same rights and privileges and authority in connection with such audit as the Comptroller and Auditor -General of India has in connection with the audit of the Government accounts and, in particular, shall have the right to demand the production of books, accounts, connected vouchers and other documents and papers and to inspect any of the offices of the Central Commission. (4) The accounts of the Central Commission, as certified by the Comptroller and Auditor -General of India or any other person appointed by him in this behalf, toget her with the audit report thereon, shall be forwarded annually to the Central Government and that Government shall cause the same to be laid, as soon as may be after it is received, before each House of Parliament. 101. Annual r eport of Central Commission .(1) The Central Commission shall prepare once every year, in such form and at such time as may be prescribed, an annual report giving a summary of its activities during the previous year and copies of the report shall be forwarded to the Central Governmen t. (2) A copy of the report received under sub -section ( 1) shall be laid, as soon as may be after it is received, before each House of Parliament. 102. Grants and loans by State Government .The State Government may, after due appropriation made by Legislat ure of a State in this behalf, make to the State Commission grants and loans of such sums of money as that Government may consider necessary. 103. Establishment of Fund by State Government .(1) There shall be constituted a Fund to be called the State Elect ricity Regulatory Commission Fund and there shall be credited thereto (a) any grants and loans made to the State Commission by the State Government under section 102; (b) all fees received by the State Commission under this Act; (c) all sums receive d by the State Commission from such other sources as may be decided upon by the State Government. (2) The Fu nd shall be applied for meeting (a) the salary, allowances and other remuneration of Chairperson, Members, Secretary, officers and other employees of the State Commission; (b) the expenses of the State Commission in discharge of its function s under section 86; (c) the expenses on objects and for purposes authorised by this Act. (3) The State Government may, in consultation with the Comptroller and Auditor-General of India, prescribe the manner of applying the Fund for meeting the expenses specified in clause ( b) or clause ( c) of sub-section ( 2). 104. Accounts and audit of State Commission . (1) The State Commission shall maintain proper accounts and ot her relevant records and prepare annual sta tement of accounts in such form as may be prescribed by the State Government in consultation with the Comptroller and Auditor -General of India. 54 (2) The Accounts of the State Commission shall be audited by the Comp troller and Auditor -General of India at such intervals as may be specified by him and any expenditure incurred in connection with such audit shall be payable by the State Commission to the Comptroller and Auditor -General of India. (3) The Comptroller and A uditor -General of India and any person appointed by him in connection with the audit of the accounts of the State Commission under this Act shall have the same rights and privileges and authority in connection with such audit as the Comptroller and Auditor -General of India generally has in connection with the audit of Government accounts and, in particular, shall have the right to demand the production of books, accounts, connected vouchers and other documents and papers and to inspect any of the offices of the State Commission. (4) The accounts of the State Commission, as certified by the Comptroller and Auditor -General of India or any other person appointed by him in this behalf, together with the audit report thereon shall be forwarded annually to the Sta te Government and that Government shall cause the same to be laid , as soon as may be after it is received, before the State Legislature. 105. Annual r eport of State Commission .(1) The State Commission shall prepare once every year in such form and at such time as may be prescribed, an annual report giving a summary of its activities during the previous year and copies of the report shall be forwarded to the State Government. (2) A copy of the repo rt received under sub -section ( 1) shall be laid, as soon as may be after it is received, before the State Legislature. 106. Budget of Appropriate Commission .The Appropriate Commission shall prepare, in such form and at such time in each financial year as may be prescribed, its budget for the next financial year, showing the estimated receipts and expenditure of that Commission and forward the same to the Appropriate Government. 107. Directions by Central Government .(1) In the discharge of its functions, the Central Commission shall be guided by such directions in matters of policy involving public interest as the Central Government may give to it in writing. (2) If any question arises as to whether any such direction relates to a matter of policy involving public interest, the decision of the Central Government the

If any question arises as to whether any such direction relates to a matter of policy involving public interest, the decision of the Central Government the reon shall be final. 108. Directions by State Government .(1) In the discharge of its functions, the State Commission shall be guided by such directions in matters of policy involving public interest as the State Government may give to it in writing. (2) If any question arises as to whether any such direction relates to a matter of policy involving public interest, the decision of the State Government thereon shall be final. 109. Directions to Joint Commission .Notwithstanding anything contained in this Ac t, where any Joint Commission is established under section 83 (a) the Government of the State, for which the Joint Commission is established, shall be competent to give any direction under this Act only in cases where such direction relates to matter within the exclusive territorial jurisdiction of the State; (b) the Central Government alone shall be competent to give any direction under this Act where such direction relates to a matter within the territorial jurisdiction of two or more States or pertainin g to a Union territory if the participating Governments fail to reach an agreement or the participating States or majority of them request the Central Government to issue such directions. 55 PART XI APPELLATE TRIBUNAL FOR ELECT RICITY 110. Establishment of A ppellate Tribunal .The Central Government shall, by notification, establish an Appellate Tribunal to be known as the Appellate Tribunal for Electricity to hear appeals against the orders of the adjudicating officer or the Appropriate Commission 1[under thi s Act or any other law for the time being in force] . 111. Appeal to Appellate Tribunal .(1) Any person aggrieved by an order made by an adjudicating officer under this Act (except under section 127) or an order made by the Appropriate Commission under this Act may prefer an appeal to the Appellate Tribunal for Electricity: Provided that any person appealing against the order of the adjudicating officer levying any penalty shall, while filing the appeal , deposit the amount of such penalty: Provided further t hat where in any particular case, the Appellate Tribunal is of the opinion that the deposit of such penalty would cause undue hardship to such person, it may dispense with such deposit subject to such conditions as it may deem fit to impose so as to safegu ard the realisation of penalty. (2) Every appeal under sub -section ( 1) shall be filed within a period of forty -five days from the date on which a copy of the order made by the adjudicating officer or the Appropriate Commission is received by the aggrieved person and it shall be in such form, verified in such manner and be accompanied by such fee as may be prescribed: Provided that the Appellate Tribunal may entertain an appeal after the expiry of the said period of forty -five days if it is satisfied that th ere was sufficient cause for not filing it within that period. (3) On receipt of an appeal under sub -section ( 1), the Appellate Tribunal may, after giving the parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit, c onfirming, modifying or setting aside the order appealed against. (4) The Appellate Tribunal shall send a copy of every order made by it to the parties to the appeal and to the concerned adjudicating officer or the Appropriate Commission, as the case may b e. (5) The appeal filed before the Appellate Tribunal under sub -section ( 1) shall be dealt with by it as expeditiously as possible and endeavour shall be made by it to dispose of the appeal finally within one hundred and eighty days from the date of receip t of the appeal: Provided that where any appeal could not be disposed of within the said period of one hundred and eighty days, the Appellate Tribunal shall record its reasons in writing for not disposing of the appeal within the said period. (6) The Appel late Tribunal may, for the purpose of examining the legality, propriety or correctness of any order made by the adjudicating officer or the Appropriate Commission under this Act, as the case may be, in relation to any proceeding, on its own motion or other wise, call for the records of such proceedings and make such order in the case as it thinks fit. 112. Composition of Appellate Tribunal .(1) The Appellate Tribunal shall consist of a Chairperson and three other Members. (2) Subject to the provisions of thi s Act, (a) the jurisdiction of the Appellate Tribunal may be exercised by Benches thereof; (b) a Bench may be constituted by the Chairperson of the Appellate Tribunal with two or more Members of the Appellate Tribunal as the Chairperson of the Appellate T ribunal may deem fit: Provided that every Bench constituted under this clause shall include at least one Judicial Member and one Technical Member; 1. Subs. by Act 28 of 2010, s. 16 and the Schedule, for under this Act (w.e.f. 24 -8-2010). 56 (c) the Benches of the Appellate Tribunal shall ordinarily sit at Delhi and such other places as the Central Government may, in consultation with the Chairperson of the Appellate Tribunal, notify; (d) the Central Government shall notify the areas in relation to which each Bench of the Appellate Tribunal may exercise jurisdiction. (3) Notwithstanding anything cont ained in sub -section ( 2), the Chairperson of the Appellate Tribunal may transfer a Member of the Appellate Tribunal from one Bench to another Bench. Explanation .For the purposes of this Chapter, (i) Judicial Member means a Member of the Appellate Tribu nal appointed as such under sub-clause ( i) of caluse ( b) of sub -section (1) of section 113, and includes the Chairperson of the Appellate Tribunal; (ii) Technical Member means a Member of the Appellate Tribunal appointed as such under sub-claus e (ii) or sub -clause ( iii) of clause ( b) of sub -section (1) of section 113. 113. Qualification s for appoin tment of Chairperson and Member of Appellate Tribunal . (1) A person shall not be qualified for appointment as the Chairperson of the Appellate Tribuna l or a Member of the Appellate Tribunal unless he (a) in the case of the Chairperson of the Appellate Tribunal, is, or has been, a judge of the Supreme Court or the Chief Justice of a High Court; and (b) in the case of a Me mber of the Appellate Tribunal, (i) is, or has been, or is qualified to be, a Judge of a High Court; or (ii) is, or has been, a Secretary for at least one year in the Ministry or Department of the Central Government dealing with economic affairs or matters or infrastructure; or (iii) is, or has been, a person of ability and standing, having adequate knowledge or experience in dealing with the matters relating to electricity generation, transmission and distribution and regulation or economics, commerce, law or management. (2) The Chairpe rson of the Appellate Tribunal shall be appointed by the Central Government after consultation with the Chief Justice of India. (3) The Members of the Appellate Tribunal shall be appointed by the Central Government on the recommendation of the Selection Co mmittee referred to in section 78. (4) Before appointing any person for appointment as Chairperson or other Member of the Appellate Tribunal, the Central Government shall satisfy itself that such person does not have any financial or other interest which i s likely to affect prejudicially his functions as such Chairperson or Member. 114. Term of o ffice.The Chairperson of the Appellate Tribunal or a Member of the Appellate Tribunal shall hold office as such for a term of three years from the date on which he enters upon his office: Provided that such Chairperson or other Member shall be eligible for re-appointment for a second term of three years: Provided further that no Chairperson of the Appellate Tribunal or Member of the Appellate Tribunal shall hold off ice as such after he has attained, (a) in the case of the Chairp erson of the Appellate Tribunal , the age of seventy years; (b) in the case of a Member of the Appellate Tribunal, the age of sixty -five years. 57 115. T erms and conditions of service .The salary and allowances payable to, and the other terms and conditions of service of, the Chairperson of the Appellate Tribunal and Members of the Appellate Tribunal shall be such as may be prescribed by the Central Government : Provided that neither the salary and allowances nor the other terms and conditions of service of the Chairperson of the Appellate Tribunal or a Member of the Appellate Tribunal shall be varied to his disadvantage after appointment. 116. Vacancies .If, for reason other than temporary absence, any vacancy occurs in the office of the Chairperson of the Appellate Tribunal or a Member of the Appellate Tribunal, the Central Government shall appoint another person in accordance with the provisions of this Act to fill the vacancy and the proceedings may be continued before the Appellate Tribunal from the stage at which the vacancy is filled. 117. Resignation and r emoval .(1) The Chairperson of the Appellate Tribunal or a Member of the Appellate Tribunal may, by notice in writing under his hand address ed to the Central Government, resign his office: Provided that the Chairperson of the Appellate Tribunal or a Member of the Appellate Tribunal shall, unless he is permitted by the Central Government to relinquish his office sooner, continue to hold office until the expiry of three months from the date of receipt of such notice or until a person duly appointed as his successor enters upon his office or until the expiry of term of office, whichever is the earliest. (2) The Chairperson of the Appellate Tribuna l or a Member of the Appellate Tribunal shall not be removed from his office except by an order by the Central Government on the ground of proved misbehaviour or incapacity after an inquiry made by a judge of the Supreme Court as the Central Government may appoint for this purpose in which the Chairperson or a Member of the Appellate Tribunal concerned has been informed of the charges against him and given a reasonable opportunity of being heard in respect of such charges. 1[117A. Qualifications , terms and conditions o f service of Chairperson and Member . Notwithstanding anything contained in this Act, the qualifications, appointment , term of office, salaries and allowances, resignation, removal and the other term and conditions of service of the Chairperso n and other Members of the Appellate Tribunal appointed after the commencement of 2[the Tribunal s Reforms Act, 2021, shall be governed by the provisions of Chapter II of the said Act ]: Provided that the Chairperson and Member appointed before the commencem ent of Part XIV of Chapter VI of the Finance Act, 2017 (7 of 2017) , shall continue to be governed by the provisions of this Act, and the rules made thereunder as if the provisions of section 184 of the Finance Act, 2017 had not come into force.] 118. Membe r to act as Chairperson in certain circumstances .(1) In the event of the occurrence of any vacancy in the office of the Chairperson of the Appellate Tribunal by reason of his death, resignation or otherwise, the senior -most Member of the Appellate Tribuna l shall act as the Chairperson of the Appellate Tribunal until the date on which a new Chairperson, appointed in accordance with the provisions of this Act to fill such vacancy, enters upon his office. (2) When the Chairperson of the Appellate Tribunal is unable to discharge his functions owing to absence, illness or any other cause, the senior -most Member of the Appellate Tribunal shall discharge the functions of the Chairperson of the Appellate Tribunal until the date on which the Chairperson of the Appel late Tribunal resumes his duties. 1. Ins. by Act 7 of 2017, s. 180 (w.e.f. 26 -5-2017). 2. Subs. by Act 33 of 2021, s. 25, for Part XIV of Chapter VI of th e Finance Act, 2017 (7 of 2017), shall be governed by the provisions of the section 184 of that Act (w.e.f. 4 -4-2021). 58 119. Officers and other employees of Appellate Tribunal . (1) The Central Government shall provide the Appellate Tribunal with such officers and other employees as it may deem fit. (2) The officers and other employees of th e Appellate Tribunal shall discharge their functions under the general superintendence of the Chairperson of the Appellate Tribunal. (3) The salaries and allowances and other terms and conditions of service of the officers and other employees of the Appell ate Tribunal shall be such as may be prescribed by the Central Government. 120. Procedure and powers of Appellate Tribunal . (1) The Appellate Tribunal shall not be bound by the procedure laid down by the Code of Civil Procedure, 1908 (5 of 1908) , but shall be guided by the principles of natural justice and, subject to the other provisions of this Act, the Appellate Tribunal shall have powers to regulate its own procedure. (2) The Appellate Tribunal shall have, for the purposes of discharging its functions u nder this Act, the same powers as are vested in a civil court under the Code of Civil Procedure, 1908 (5 of 1908) , while trying a suit, in respect of the following matters, namely: (a) summoning and enforcing the attendance of any person and examining him on oath; (b) requiring the discovery and production of documents; (c) receiving evidence on affidavits; (d) subject to the provisions of sections 123 and 124 of the Indian Evidence Act, 1872 (1 of 1872), requisitioning any public record or document or copy of such record or document from any office; (e) issuing commissions for the examination of witnesses or documents; (f) reviewing its decisions; (g) dismissing a representation of default or deciding it ex parte ; (h) setting aside any orde r of dismissal or any representation for

dismissing a representation of default or deciding it ex parte ; (h) setting aside any orde r of dismissal or any representation for default or any order passed by it ex parte ; (i) any other matter which may be prescribed by the Central Government. (3) An order made by the Appellate Tribunal under this Act shall be executable by the Appellate Tribunal as a decree of civil court and, for this purpose, the Appellate Tribunal shall have all the powers of a civil court. (4) Notwithstanding anything contained in sub -section ( 3), the Appellate Tribunal may transmit any order made by it to a civil court having local jurisdiction and such civil court shall execute the order as if it were a decree made by that court. (5) All proceedings before the Appellate Tribunal shall be deemed to be judicial proceedings within the meaning of sections 193 and 228 of the Indian Penal Code (45 of 1860) and the Appellate Tribunal shall be deemed to be a civil court for the purposes of section s 345 and 346 of the C ode of Criminal Procedure, 1973 (2 of 1974) . 1[121. Power of Appellate Tribunal .The Appellate Tribunal may, aft er hearing the Appropriate Commission or other interested party, if any, from time to time, issue such orders, instructions or directions as it may deem fit, to any Appropriate Commission for the performance of its statutory functions under this Act.] 122. Distribution of business amongst Benches and transfer of cases from one Bench to another Bench. (1) Where Benches are constituted, the Chairperson of the Appellate Tribunal may, from time to time, by notification, make provisions as to the distribution of the business of the Appellate Tribunal amongst the Benches and also provide for the matters which may be dealt with by each Bench. 1. Subs. by Act 57 of 2003, s. 4, for section 121 (w.e.f. 27-1-2004 ). 59 (2) On the application of any of the parties and after notice to the parties, and after hearing such of them as he may desir e to be heard, or on his own motion without such notice, the Chairperson of the Appellate Tribunal may transfer any case pending before one Bench, for disposal, to any other Bench. 123. Decision to be by majority .If the Members of the Appellate Tribunal o f a Bench consisting of two Members differ in opinion on any point, they shall state the point or points on which they differ, and make a reference to the Chairperson of the Appellate Tribunal who shall either hear the point or points himself or refer the case for hearing on such point or points by one or more of the other Members of the Appellate Tribunal and such point or points shall be decided according to the opinion of the majority of the Members of the Appellate Tribunal who have heard the case, incl uding those who first heard it. 124. Right of appellant to take assistance of legal practitioner and of Appropriate Commission to appoint presenting officers . (1) A person preferring an appeal to the Appellate Tribunal under this Act may either appear in person or take the assistance of a legal practitioner of his choice to present his case before the Appellate Tribunal, as the case may be. (2) The Appropriate Commission may authorise one or more legal practitioners or any of its officers to act as presenti ng officers and every person so authorised may present the case with respect to any appeal before the Appellate Tribunal, as the case may be. 125. Appeal to Supreme Court .Any person aggrieved by any decision or order of the Appellate Tribunal, may, file a n appeal to the Supreme Court within sixty days from the date of communication of the decision or order of the Appellate Tribunal, to him, on any one or more of the grounds specified in section 100 of the Code of Civil Procedure, 1908 (5 of 1908) : Provided that the Supreme Court may, if it is satisfied that the appellant was prevented by sufficient cause from filing the appeal within the said period, allow it to be filed within a further period not exceeding sixty days. PART XII INVESTIGATION AND ENFORCEMEN T 126. Assessment . (1) If on an inspection of any place or premises or after inspection of the equipments, gadgets, machines, devices found connected or used, or after inspection of records maintained by any person, the assessing officer comes to the concl usion that such person is indulging in unauthoris ed use of electricity, he shall provisionally assess to the best of his judgment the electricity charges payable by such person or by any other person benefited by such use. (2) The order of provisional asse ssment shall be served upon the person in occupation or possession or in charge of the place or premises in such manner as may be prescribed. 1[(3) The person, on whom an o rder has been served under sub -section ( 2), shall be entitled to file objections, if any, against the provisional assessment before the assessing officer, who shall, after affording a reasonable opportunity of hearing to such person, pass a final order of assessment within thirty days from the date of service of such order of provisional assessment , of the electricity charges payable by such person.] (4) Any person served with the order of provisional assessment may, accept such assessment and deposit the assessed amount with the licensee within seven days of service of such provisional as sessment order upon him: 2* * * * * 3[(5) If the assessing officer reaches to the conclusion that unauthorised use of electricity has taken place, the assessment shall be made for the entire period during which such unauthoris ed use of electricity 1. Subs. by Act 26 of 2007, s. 11, for sub -section ( 3) (w.e.f. 15 -6-2007). 2. The proviso omitted by s. 11 , ibid. (w.e.f. 15 -6-2007). 3. Subs. by s. 11, ibid., for sub -section ( 5) (w.e.f. 15 -6-2007). 60 has taken place and if, however, the period during which such unauthorised use of electricity has taken place cannot be ascertained, such period shall be limited to a period of twelve months immediately preceding the date of inspection.] (6) The assessment under this section shall be made at a rate equal to 1[twice] the tariff applicable for the relevant category of services specified in sub -section ( 5). Explanation .For the purpos es of this section, (a) assessing officer means an officer of a State Gove rnment or Board or licensee, as the case may be, designated as such by the State Government; (b) unauthorised use of electricity means the usage of electricity (i) by any artificial means; or (ii) by a means not authorised by the concerned person or authority or licensee; or (iii) through a tampered meter; or 2[(iv) for the purpose other than for which the usage of electricity was authorised; or (v) for the premises or areas other than those for which the supply of electricity was authorised. ] 127. Appea l to Appellate Authority .(1) Any person aggrieved by the final order made under section 126 may, within thirty days of the said order, prefer an appeal in such form, verified in such manner and be accompanied by such fee as may be specified by the State C ommission, to an appellate authority as may be prescribed. (2) No appeal against an order of assessment under sub -section ( 1) shall be enterta ined unless an amount equal to 3[half of the assessed amount] is deposited in cash or by way of bank draft with th e licensee and documentary evidence of such deposit has been enclosed along with the appeal. (3) The appellate authority referred to in sub -section ( 1) shall dispose of the appeal after hearing the parties and pass appropriate order and send copy of the or der to the assessing officer and the appellant. (4) The order of the appellate authority referred to in sub -section ( 1) passed under sub -section ( 3) shall be final. (5) No appeal shall lie to the appellate authority referred to in sub -section ( 1) against t he final order made with the consent of the parties. (6) When a person defaults in making payment of assessed amount, he, in addition to the assessed amount shall be liable to pay, on the expiry of thirty days from the date of order of assessment, an amoun t of interest at the rate of sixteen per cent. per annum compounded every six months. 128. Investigation of certain matters .(1) The Appropriate Commission may, on being satisfied that a licensee has failed to comply with any of the conditions of licence o r a generating company or a licensee has failed to comply with any of the provisions of this Act or the rules or regulations made thereunder, at any time, by order in writing, direct any person (hereafter in this section referred to as Investigating Autho rity) specified in the order to investigate the affairs of any generating company or licensee and to report to that Commission on any investigation made by such Investigating Authority: 1. Subs. by Act 26 of 200 7, s. 11 , for one -and-half times (w.e.f. 15 -6-2007). 2. Subs. by s. 11, ibid., for sub -clause (iv) (w.e.f. 15 -6-2007). 3. Subs. by s. 12, ibid., for one -third of the assessed amount (w.e.f. 15 -6-2007). 61 Provided that the Investigating Authority may, wherever necessary, employ any auditor or any other person for the purpose of assisting him in any investigation under this section. (2) Notwithstanding anything to the contrary contained in section 235 of the Companies Act, 1956 (1 of 1956) , the Investigating Authority may, at any time, and shall, on being directed so to do by the Appropriate Commission, cause an inspection to be made, by one or more of its officers, of any licensee or generating company and his books of account; and the Investigating Authority shall supply t o the licensee or generating company, as the case may be, a copy of his report on such inspection. (3) It shall be the duty of every manager, managing director or other officer of the licensee or generating company, as the case may be, to produce before th e Investigating Authority directed to make the investigation under sub -section ( 1), or inspection under sub -section ( 2), all such books of account, registers and other documents in his custody or power and to furnish him with any statement and information relating to the affairs of the licensee or generating company, as the case may be, as the said Investigating Authority may require of him within such time as the said Investigating Authority may specify. (4) Any Investigating Authority, directed to make an investigation under sub -section (1), or inspection under sub -section ( 2), may examine on oath any manager, managing director or other officer of the licensee or generating company, as the case may be, in relation to his business and may administer oaths a ccordingly. (5) The Investigating Authority, shall, if it has been directed by the Appropriate Commission to cause an inspection to be made, and may, in any other case, report to the Appropriate Commission on any inspection made under this section. (6) On receipt of any report under sub -section ( 1) or sub -section ( 5), the Appropriate Commission may, after giving such opportunity to the licensee or generating company, as the case may be, to make a representation in connection with the report as in the opini on of the Appropriate Commis sion seems reasonable, by order in writing (a) require the licensee or the generating company to take such action in respect of any matter arising out of the report as the Appropriate Commission may think fit; or (b) cancel th e licen ce; or (c) direct the generating company to cease to carry on the business of generation of electricity. (7) The Appropriate Commission may, after giving reasonable notice to the licensee or the generating company, as the case may be, publish the r eport submitted by the Investigating Authority under sub-section ( 5) or such portion thereof as may appear to it to be necessary. (8) The Appropriate Commission may specify the minimum information to be maintained by the licensee or the generati ng company in their books, the manner in which such information shall be maintained, the checks and other verifications to be adopted by licensee or the generating company in that connection and all other matters incidental thereto as are, in its opinion, necessary to enable the Investigating Authority to discharge satisfactorily its functions under this section. Explanation .For the purposes of this section, the expression licensee or the generating company shall include in the case of a licensee incorpo rated in India (a) all its subsidiaries formed for the purpose of carrying on the business of generation or transmission or distribution or trading of electricity exclusively outside India; and (b) all its branches whether situated in India or outside Ind ia. (9) All expenses of, and incidental to, any investigation made under this section shall be defrayed by the licensee or the generating company, as the case may be, a nd shall have priority over the debts due from the licensee or the generating company an d shall be recoverable as an arrear of land revenue. 62 129. Orders for securing compliance . (1) Where the Appropriate Commission, on the basis of material in its possession, is satisfied that a licensee is contravening, or is likely to contravene, any of the conditions mentioned in his licence or conditions for grant of exemption or the licensee or the generating company has contravened or is likely to contravene any of the provisions of this Act, it shall, by an order, give such directions as may be necessar y for the purpose of securing compliance with that condition or provision. (2) While giving direction under sub -section ( 1), the Appropriate Commission shall have due regard to the extent to which any person is likely to sustain loss or damage due to such contravention. 130. Procedure for issuing directions by Appropriate Commission .The Appropriate Commission, before issuing any direction under section 129, shall (a) serve notice in the manner as may be specified

Commission, before issuing any direction under section 129, shall (a) serve notice in the manner as may be specified to the concerned licensee or the generati ng company; (b) publish the notice in the manner as may be specified for the purpose of bringing the matters to the attention of persons, likely to be affected, or affected; (c) consider suggestions and objections from the concerned licensee or generating company and the persons, likely to be affected, or affected. PART XIII REORGANISATION OF BOARD 131. Vesting of property of Board in State Government . (1) With effect from the date on which a transfer scheme, prepared by the State Government to give effect to the objects and purposes of this Act, is published or such further date as may be stipulated by the State Government (hereafter in this Part referred to as the effective date), any property, interest in property, rights and liabilities which immediately before the effective date belonged to the State Electricity Board (hereinafter referred to as the Board) shall vest in the State Government on such terms as may be agreed between the State Government and the Board. (2) Any property, interest in property, rights and liabilities vested in the State Government under sub-section ( 1) shall be re -vested by the State Government in a Government company or in a company or companies, in accordance with the transfer scheme so published along with such other propert y, interest in property, rights and liabilities of the State Government as may be stipulated in such scheme, on such terms and conditions as may be agreed between the State Government and such company or companies being State Transmission Utility or genera ting company or transmission licensee or distribution licensee, as the case may be : Provided that the transfer value of any assets transferred hereunder shall be determined, as far as may be, based on the revenue potential of such assets at such terms and conditions as may be agreed between the State Government and the State Transmission Utility or generating company or transmission licensee or distribution licensee, as the case may be. (3) Notwithstanding anything contained in this section, where, (a) the transfer scheme involves the transfer of any property or rights to any person or undertaking not wholly owned by the State Government, the scheme shall give effect to the transfer only for fair value to be paid by the transferee to the State Government; (b) a transaction of any description is effected in pursuance of a transfer scheme, it shall be binding on all persons including third parties and even if such persons or third parties have not consented to it. (4) The State Government may, after consultin g the Government company or company or companies being State Transmission Utility or generating company or transmission licensee or distribution licensee, referred to in sub -section ( 2) (hereinafter referred to as the transferor), require such transferor t o draw up 63 a transfer scheme to vest in a transferee being any other generating company or transmission licensee or distribution licensee, the property, interest in property, rights and liabilities which have been vested in the transferor under this section , and publish such scheme as statutory transfer scheme under this Act. (5) A transfer scheme under thi s section may (a) provide for the formation of subsidiaries, joint venture companies or other schemes of division, amalgamation, merger, reconstruction or arrangements which shall promote the profitability and viability of the resulting entity, ensure economic efficiency, encourage competition and protect consumer interests; (b) define the property, interest in property, rights and liabilities to be alloca ted (i) by specifying or describing the property, rights and liabilities in question; or (ii) by referring to all the property, interest in property, rights and liabilities comprised in a described part of the transferor's undertaking; or (iii) partly in one way and partly in the other; (c) provide that any rights or liabilities stipulated or described in the scheme shall be enforceable by or against the transferor or the transferee; (d) impose on the transferor an obligation to enter into such written agreements with or execute such other instruments in favour of any other subsequent transferee as may be stipulated in the scheme; (e) mention the functions and duties of the transferee; (f) make such supplemental, incidental and consequential provisions as the transferor considers appropriate including provision stipulating the order as taking effect; and (g) provide that the transfer shall be provisional for a stipulated period. (6) All debts and obligations incurred, all contracts entered into and all matte rs and things engaged to be done by the Board, with the Board or for the Board, or the State Transmission Utility or generating company or transmission licensee or distribution licensee, before a transfer scheme becomes effective shall, to the extent speci fied in the relevant transfer scheme, be deemed to have been incurred, entered into or done by the Board, with the Board or for the State Government or the transferee and all suits or other legal proceedings instituted by or against the Board or transferor , as the case may be, may be continued or instituted by or against the State Government or concerned transferee, as the case may be. (7) The Board shall cease to be charged with and shall not perform the functions and duties with regard to transfers made o n and after the effective date. Explanation .For the purpose of this Part, (a) Government company means a Government Company formed and registered under the Companies Act, 1956 (1 of 1956) . (b) company means a company to be formed and registered under the Companies Act, 1956 (1 of 1956) to undertake generation or transmission or distribution in accordance with the scheme under this Part. 132. Use of proceeds of sale or transfer of Board, etc. In the event that a Board or any utility owned or control led by the Appropriate Government is sold or transferred in any manner to a person who is not owned or controlled by the Appropriate Government, the proceeds from such sale or transfer shall be utilised in priority to all other dues in the following order, namely : (a) dues (including retirement benefits due) to the officers and employees of such Board or utility, who have been affected by the aforesaid sale or transfer; 64 (b) payment of debt or other liabilities of the transferor as may be required by the ex isting loan covenants. 133. Provisions relating to officers and employees . (1) The State Government may, by a transfer scheme, provide for the transfer of the officers and employees to the transferee on the vesting of properties, rights and liabilities in such transferee as provided under section 131. (2) Upon such transfer under the transfer scheme, the personnel shall hold office or service under the transferee on such terms and conditions as may be determined in accordance with the transfer scheme: Prov ided that such terms and conditions on the transfer shall not in any way be less favourable than those which would have been applicable to them if there had been no such transfer under the transfer scheme: Provided further that the transfer can be provisio nal for a stipulated period. Explanation .For the purposes of this section and the transfer scheme, the expression officers and employees shall mean all officers and employees who on the date specified in the scheme are the officers and employees of the Board or transferor, as the case may be. 134. Payment of compensation or damages on transfer .Notwithstanding anything contained in the Industrial Disputes Act, 1947 (14 of 1947) or any other law for the time being in force and except for the provisions ma de in this Act, the transfer of the employment of the officers and employees referred to in sub -section ( 1) of section 133 shall not entitle such officers and employees to any compensation or damages under this Act, or any other Central or State law, save as provided in the transfer scheme. PART XIV OFFENCES AND PENALTIES 135. Theft of electricity .1[(1) Whoever, dishonestly, (a) taps, makes or causes to be made any connection with overhead, underground or under water lines or cables, or service wires, o r service facilities of a licensee or supplier , as the case may be; or (b) tampers a meter, installs or uses a tampered meter, current reversing transformer, loop connection or any other device or method which interferes with accurate or proper registratio n, calibration or metering of electric current or otherwise results in a manner whereby electricity is stolen or wasted; or (c) damages or destroys an electric meter, apparatus, equipment, or wire or causes or allows any of them to be so damaged or destroy ed as to interfere with the proper or a ccurate metering of electricity; or (d) uses electricity through a tampered meter; or (e) uses electricity for the purpose other than for which the usage of electricity was authorised, so as to abstract or consume o r use electricity shall be punishable with imprisonment for a term which may extend to three years or with fine or with both: Provided that in a case where the load abstracted, consumed, or used or attempted abstraction or attempte d consumption or attempte d use (i) does not exceed 10 kilowatt, the fine imposed on first conviction shall not be less than three times the financial gain on account of such theft of electricity and in the event of second or subsequent conviction the fine imposed shall not be les s than six times the financial gain on account of such theft of electricity; 1. Subs. by A ct 26 of 2007, s. 13, for sub -section ( 1) (w.e.f. 15-6-2007). 65 (ii) exceeds 10 kilowatt, the fine imposed on first conviction shall not be less than three times the financial gain on account of such theft of electricity and in the event of se cond or subsequent conviction, the sentence shall be imprisonment for a term not less than six months , but which may extend to five years and with fine not less than six times the financial gain on account of such theft of electricity: Provided further tha t in the event of second and subsequent conviction of a person where the load abstracted, consumed, or used or attempted abstraction or attempted consumption or attempted use exceeds 10 kilowatt, such person shall also be debarred from getting any supply o f electricity for a period which shall not be less than three months but may extend to two years and shall also be debarred from getting supply of electricity for that period from any other source or generating station: Provided also that if it is proved t hat any artificial means or means not authoris ed by the Board or licensee or supplier, as the case may be, exist for the abstraction, consumption or use of electricity by the consumer, it shall be presumed, until the contrary is proved, that any abstractio n, consumption or use of electricity has been dishonestly caused by such consumer. (1A) Without prejudice to the provisions of this Act, the licensee or supplier, as the case may be, may, upon detection of such theft of electricity, immediately disconnect the supply of electricity: Provided that only such officer of the l icensee or supplier, as authoris ed for the purpose by the Appropriate Commission or any other officer of the licensee or supplier, as the case may be, of the rank higher than the rank so authorised shall disconnect the supply line of electricity: Provided further that such officer of the licensee or supplier, as the case may be, shall lodge a complaint in writing relating to the commission of such offence in police station ha ving jurisdictio n within twenty -four hours from the time of such disconnection: Provided also that the licensee or supplier, as the case may be, on deposit or payment of the assessed amount or electricity charges in accordance with the provisions of this Act, shall, witho ut prejudice to the obligation to lodge the complaint as referred to in the second proviso to this clause, restore the supply line of electricity within forty -eight hours of such deposit or payment.] (2) 1[Any officer of the licensee o r supplier as the cas e may be, authoris ed] in this behalf by the State Government may (a) enter, inspect, break open and search any place or premises in which he has reason to believe that electricity 2[has been or is being] used unauthorisedly; (b) search, seize and remove all such devices, instruments, wires and any other facilitator or article which 2[has been, or is being ] used for unauthoris ed use of electricity; (c) examine or seize any books of account or documents which in his opinion shall be useful for or relevant t o, any proceedings in respect of the offence under sub -section ( 1) and allow the person from whose custody such books of account or documents are seized to make copies thereof or take extracts therefrom in his presence. (3) The occupant of the place of sea rch or any person on his behalf shall remain present during the search and a list of all things seized in the course of such search shall be prepared and delivered to such occupant or person who shall sign the list: Provided that no inspection, search and seizure of any domestic places or domestic premises shall be carried out between sunset and sunrise except in the presence of an adult male member occupying such premises. (4) The provisions of the Code of Criminal Procedure, 1973 (2 of 1974) , relating to search and seizure shall apply, as far as may be, to searches and seizure under this Act. 1. Subs. by Act 26 of 2007, s. 13, for Any officer authorised (w.e.f. 15 -6-2007). 2. Subs. by Act 57 of 2003, s. 5, for has been, is being, or is likely to be, (w.e.f. 27 -1-2004). 66 136. Theft of electric lines and materials .(1) Whoever, dishonestly (a) cuts or removes or takes way or transfers any electric line, material or meter from a tower, pole, any other installation or place of installation or any other place, or site where it may be rightfully or lawfully stored, deposited, kept, stocked, situated or located , including during transportation, without the consent of the licensee or the own er, as the case may be, whether or not the act is done for profit or gain; or (b) stores, possesses or otherwise keeps in his premises, custody or control, any electric line, material or meter without the consent of the owner, whether or not the act is co mmitted for profit or gain; or (c) loads

the consent of the owner, whether or not the act is co mmitted for profit or gain; or (c) loads, carries, or moves from one place to another any electric line, material or meter without the consent of its owner, whether or not the act is done for profit or gain, is said to have committed an offence of theft of electric lines and materials, and shall be punishable with imprisonment for a term which may extend to three years or with fine or with both. (2) If a person, having been convicted of an offence punishable under sub -section (1) is again guilty of an offen ce punishable under that sub -section, he shall be punishable for the second or subsequent offence for a term of imprisonment which shall not be less than six months but which may extend to five years and shall also be liable to fine which shall not be less than ten thousand rupees. 137. Punishment for receiving stolen property .Whoever, dishonestly receives any stolen electric line or material knowing or having reasons to believe the same to be stolen property, shall be punishable with imprisonment of eithe r description for a term which may extend to three years or with fine or with both. 138. Interference with meters or works of licensee . (1) Whoever, (a) unauthorisedly connects any meter, indicator or apparatus with any electric line through which electri city is supplied by a licensee or disconnects the same from any such electric line; or (b) unauthorisedly reconnects any meter, indicator or apparatus with any electric line or other works being the property of a licensee when the said electric line or oth er works has or have been cut or disconnected; or (c) lays or causes to be laid, or connects up any works for the purpose of communicating with any other works belonging to a licensee; or (d) maliciously injures any meter, indicator, or apparatus belonging to a license e or wi lfully or fraudulently alters the index of any such meter, indicator or apparatus or prevents any such meter, indicator or apparatus from duly registering, shall be punishable with imprisonment for a term which may extend to three year s, or with fine which may extend to ten thousand rupees, or with both, and , in the case of a continuing offence, with a daily fine which may extend to five hundred rupees; and if it is proved that any means exist for making such connection as is referred t o in clause ( a) or such re -connection as is referred to in clause ( b), or such communication as is referred to in clause ( c), for causing such alteration or prevention as is referred to in clause ( d), and that the meter, indicator or apparatus is under the custody or control of the consumer, whether it is his property or not, it shall be presumed, until the contrary is proved, that such connection, reconnection, communication, alteration, prevention or improper use, as the case may be, has been knowingly an d wilfully caused by such consumer. 67 1[139. Negligently brea king or damaging works .Whoever, negligently breaks, injures, throws down or damages any material connected with the supply of electricity, shall be punishable with fine which may extend to ten tho usand rupees. 140. Penalty for intentionally injuring works .Whoever, with intent to cut off the supply of electricity, cuts or injures, or attempts to cut or injure, any electric supply line or works, shall be punishable with fine which may extend to ten thousand rupees.] 141. Extinguishing public lamps .Whoever, maliciously extinguishes any public lamp shall be punishable with fine which may extend to two thousand rupees. 142. Punishment for non -compliance of directions by Appropriate Commission .In case any complaint is filed before the Appropriate Commission by any person or if that Commission is satisfied that any person has contravened any of the provisions of this Act or the rules or regulations made thereunder, or any direction issued by the Commissi on, the Appropriate Commission may after giving such person an opportunity of being heard in the matter, by order in writing, direct that, without prejudice to any other penalty to which he may be liable under this Act, such person shall pay, by way of pen alty, which shall not exceed one lakh rupees for each contravention and in case of a continuing failure with an additional penalty which may extend to six thousand rupees for every day during which the failure continues after contravention of the first suc h direction. 143. Power to adjudicate .(1) For the purpose of adjudging under this Act, the Appropriate Commission shall appoint any of its Members to be an adjudicating officer for holding an inquiry in such manner as may be prescribed by the Appropriate Gove rnment , after giving any person concerned a reasonable opportunity of being heard for the purpose of imposing any penalty. (2) While holding an inquiry, the adjudicating officer shall have power to summon and enforce the attendance of any person acquai nted with the facts and circumstances of the case to give evidence or produce any document which in the opinion of the adjudicating officer, may be useful for or relevant to the subject -matter of the inquiry, and if, on such inquiry, he is satisfied that t he person has failed to comply with the provisions of section 29 or section 33 or section 43, he may impose such penalty as he thinks fit in accordance with the provisions of any of those sections. 144. Factors to be taken into a ccount by adjudicating offi cer.While adjudicating the quantum of penalty under section 29 or section 33 or section 43, the adjudicating officer shall have due regard to the following factors, namely: (a) the amount of disproportionate gain or unfair advantage, wherever quantifiabl e, made as a result of the default; (b) the repetitive nature of the default. 145. Civil court not to have jurisdiction .No civil court shall have jurisdiction to entertain any suit or proceeding in respect of any matter which an assessing officer referred to in section 126 or an appellate authority referred to in section 127 or the adjudicating officer appointed under this Act is empowered by or under this Act to determine and no injunction shall be granted by any court or other authority in respect of any action taken or to be taken in pursuance of any power conferred by or under this Act. 146. Punishment for non -compliance of orders or directions .Whoever, fails to comply with any order or direction given under this Act, within such time as may be specifi ed in the said order or direction or contravenes or attempts or abets the contravention of any of the provisions of this Act or any rules or regulations made thereunder, shall be punishable with imprisonment for a term which may extend to three 1. Subs. by Act 57 of 2003, s. 6, for sections 139 and 140 (w.e.f. 27 -1-2004). 68 months or w ith fine which may extend to one lakh rupees, or with both in respect of each offence and in the case of a continuing failure, with an additional fine which may extend to five thousand rupees for every day during which the failure continues after convictio n of the first such offence: 1[Provided that nothing contained in this section shall apply to the orders, instructions or directions issued under section 121.] 147. Penalties not to affect other liabilities .The penalties imposed under this Act shall be in addition to, and not in derogation of, any liability in respect of payment of compensation or, in the case of a licensee, the revocation of his licence which the offender may have incurred. 148. Penalty where works belong to Government .The provisions of this Act shall, so far as they are applicable, be deemed to apply also when the acts made punishable thereunder are committed in the case of electricity supplied by or of works belonging to the Appropriate Government. 149. Offences by companies .(1) Where an offence under this Act has been committed by a company, every person who at the time the offence was committed was in charge of and was responsible to the company for the conduct of the business of the company, as well as the company shall be deemed to be guilty of having committed the offence and shall be liable to be proceeded against and punished accordingly: Provided that nothing contained in this sub -section shall render any such person liable to any punishment if he proves that the offence was comm itted without his knowledge or that he had exercised all due diligence to prevent the commission of such offence. (2) Notwithstanding anything contained in sub -section ( 1), where an offence under this Act has been committed by a company and it is proved th at the offence has been committed with the consent or connivance of or is attributable to any neglect on the part of any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed t o be guilty of having committed such offence and shall be liable to be proceeded against and punished accordingly. Explanation .For the purposes of this section, (a) company means a body corporate and includes a firm or other association of individuals; and (b) director , in relation to a firm, means a partner in the firm. 150. Abetment .(1) Whoever abets an offence punishable under this Act, shall, notwithstanding anything contained in the Indian Penal Code (45 of 1860) , be punished with the punishme nt provided for the offence. (2) Without prejudice to any penalty or fine which may be imposed or prosecution proceeding which may be initiated under this Act or any other law for the time being in force, if any officer or other employee of the Board or th e licensee enters into or acquiesces in any agreement to do, abstains from doing, permits, conceals or connives at any act or thing whereby any theft of electricity is committed, he shall be punishable with imprisonment for a term which may extend to three years, or with fine, or with both. 1. Ins. by Act 57 of 2003, s . 7 (w.e.f. 27 -1-2004). 69 1[(3) Notwithstanding anything contained in sub -section ( 1) of section 135, sub -section ( 1) of section 136, section 137 and section 138, the licence or certificate of competency or permit or such other authorisation issu ed under the rules made or deemed to have been made under this Act to any person who acting as an electrical contractor, supervisor or worker abets the commission of an offence punishable under sub -section ( 1) of section 135, sub-section ( 1) of section 136 , section 137, or section 138, on his conviction for such abetment, may also be cancelled by the licensing authority: Provided that no order of such cancellation shall be made without giving such person an opportunity of being heard. Explanation .For the p urposes of this sub -section, licencing authority means the officer who for the time being in force is issuing or renewing such licence or certificate of competency or permit or such other authorisation.] 151. Cognizance of offences .No court shall take c ognizance of an offence punishable under this Act except upon a complaint in writing made by the Appropriate Government or Appropriate Commission or any of their officer authorised by them or a Chief Electrical Inspector or an Electrical Inspector or licen see or the generating company, as the case may be, for this purpose: 2[Provided that the court may also take cognizance of an offence punishable under this Act upon a report of a police officer filed under section 173 of the Code of Criminal Procedure, 19 73 (2 of 1974): Provided further that a special court constituted under section 153 shall be competent to take cognizance of an offence without the accused being committed to it for trial.] STATE AMENDMENT Karnataka Substitution of section 151 .For section 151 of the Electricity Act, 2003 (Central Act 36 of 2003), the following shall be substituted, namely: - 151. Institution of prosecution. No prosecution, shall be instituted against may person for any offence under this Act or any rule, regulation, licenc e or order made or issued there under, except at the instance of the State Government or a licencee or a generating company under the Act or an officer authorised in this behalf by the State Government or a licencee or a generating company or by any person affected by the act alleged to constitute the offence. [Vide Karnataka Act 12 of 2006, s. 2] Maharashtra Substitution of section 151 of Act 36 of 2003. For section 151 of the Electricity Act, 2003 (36 of 2003), in its application to the State of Mahara shtra (hereinafter referred to as the principal Act), the following section shall be substituted, namely: - 151. Cognizance of offences . No Court shall take cognizance of an offence punishable under this Act except, (a) upon a complaint in writing made by Appropriate Government or Appropriate Commission or any of their officer authorised by them or a Chief Electrical Inspector or an Electrical Inspector or a licensee or the generating company, as the case may be, for this purpose; or (b) upon a police r eport of facts which constitute an offence: Provided that, such police report is based on the First Information Report filed a person who is authorised to file a complaint under clause ( a). [Vide Maharashtra Act 36 of 200 5, s. 2] 3[151A. Power of police to investigate .For the purposes of investigation of an offence punishable under this Act, the police officer shall have all the powers as provided in Chapter XII of the Code of Criminal Procedure, 1973 (2 of 1974). 151B. Certain offences to be cognizable a nd non -bailable .Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), an offence punishable under sections 135 to 140 or section 150 shall be cognizable and non -bailable.] 152. Compounding of offences .(1) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 19

.(1) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), the Appropriate Government or any officer authorised by it in this behalf 1. Ins. by Act 26 of 2007, s. 14 (w.e.f. 15 -6-2007). 2. Ins. by s.15, ibid. (w.e.f. 15 -6-2007). 3. Ins. by s.16, ibid. (w.e.f. 15 -6-2007 ). 70 may accept from any consumer or person who committed or who is reasonably suspected of having committed an offence of theft of electricity punishable under this Act, a sum of money by way of compounding of the offence as specified in the Table below: TABLE Nature of Service Rate at which the sum of money for compounding to be collected per Kilowatt (KW)/Horse Power (HP) or part thereof for Low Tension (LT) supply and per Kilo Volt Ampere (KVA) of contracted demand for High Tension (HT) (1) (2) 1. Industrial Service 2. Commercial Service 3. Agricultural Service 4. Other Services twenty thousa nd rupees; ten thousand rupees; two thousand rupees; four thousand rupees: Provided that the Appropriate Government may, by notification in the Official Gazette, amend the rates specified in the Table above. (2) On payment of the sum of money in accordanc e with sub -section ( 1), any person in custody in connection with that offence shall be set at liberty and no proceedings shall be instituted or continued against such consumer or person in any criminal court. (3) The acceptance of the sum of money for comp ounding an offence in accordance with sub-section ( 1) by the Appropriate Government or an officer empowered in this behalf shall be deemed to amount to an acquittal within the meaning of section 300 of the Code of Criminal Procedure, 1973 (2 of 1974) . (4) The compounding of an offence under sub -section ( 1) shall be allowed only once for any person or consumer. PART XV SPECIA L COURTS 153. Constitution of Special Courts .(1) The State Government may, for the purposes of providing speedy trial of offences referred to in 1[sections 135 to 140 and section 150], by notification in the Official Gazette, constitute as many Special Courts as may be necessary for such area or areas, as may be specified in the notification. (2) A Special Court sh all consist of a single Judge who shall be appointed by the State Government with the concurrence of the High Court. (3) A person shall not be qualified for appointment as a Judge of a Special Court unless he was, immediately before such appointment, an Ad ditional District and Sessions Judge. (4) Where the office of the Judge of a Special Court is vacant, or such Judge is absent from the ordinary place of sitting of such Special Court, or he is incapacitated by illness or otherwise for the performance of hi s duties, any urgent business in the Spe cial Court shall be disposed of (a) by a Judge, if any, exercising jurisdiction in the Special Court; 1. Subs. by Act 26 of 2007, s. 17, for sections 135 to 139 (w.e.f. 15 -6-2007). 71 (b) where there is no such other Judge available, in accordance with the direction of District and Sessions Judge having jurisdiction over the ordinary place of sitting of Special Court, as notified under sub -section ( 1). STATE AMENDMENT Maharashtra Amendment of section 153 of Act (36 of 2003 ).In section 153 of the principal Act, after sub -section ( 4), the following sub-section shall be added, namely: (5) Where no Special Court for any area or areas has been constituted under sub -section ( 1), one or more Additional District and Sessions Judges, as may be designated by the High Court, for such area or areas, from ti me to time, shall exercise the powers of the Special Court under this Act and any Judge so designated shall be deemed to be a special Court for the purposes of this Act. [Vide Maharashtra Act 36 of 200 5, s. 3] 154. Procedure and power of Special Court. (1) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), every offence punishable under 1[sections 135 to 140 and section 150] shall be triable only by the Special Court within whose jurisdiction such offence has been commi tted. (2) Where it appears to any court in the course of any inquiry or trial that an offence punishable under 1[sections 135 to 140 and section 150] in respect of any offence that the case is one which is triable by a Special Court constituted under this Act for the area in which such case has arisen, it shall transfer such case to such Special Court, and thereupon such case shall be tried and disposed of by such Special Court in accordance with the provisions of this Act: Provided that it shall be lawful for such Special Court to act on the evidence, if any, recorded by any court in the case of presence of the accused before the transfer of the case to any Special Court: Provided further that if such Special Court is of opinion that further examination, cr oss-examination and re - examination of any of the witnesses whose evidence has already been recorded, is required in the interest of justice, it may re -summon any such witness and after such further examination, cross - examination or re -examination, if any, as it may permit, the witness shall be discharged. (3) The Special Court may, notwithstanding anything contained in sub -section ( 1) of section 260 or section 262 of the Code of Criminal Procedure, 1973 (2 of 1974), try the offence referred to in 1[section s 135 to 140 and section 150] in a summary way in accordance with the procedure prescribed in the said Code and the provisions of sections 263 to 265 of the said Code shall, so far as may be, apply to such trial: Provided that where in the course of a summ ary trial under this sub -section, it appears to the Special Court that the nature of the case is such that it is undesirable to try such case in summary way, the Special Court shall recall any witness who may have been examined and proceed to re -hear the c ase in the manner provided by the provisions of the said Code for the trial of such offence: Provided further that in the case of any conviction in a summary trial under this section, it shall be lawful for a Special Court to pass a sentence of imprisonmen t for a term not exceeding five years. (4) A Special Court may, with a view to obtaining the evidence of any person supposed to have been directly or indirectly concerned in or privy to, any offence tender pardon to such person on condition of his making a full and true disclosure of the circumstances within his knowledge relating to the offence and to every other person concerned whether as principal or abettor in the commission thereof, and any pardon so tendered shall, for the purposes of section 308 of the Code of Criminal Procedure, 1973 (2 of 1974) , be deemed to have been tendered under section 307 thereof. (5) The 2[Special Court shall] determine the civil liability against a consumer or a person in terms of money for theft of energy which shall not b e less than an amount equivalent to two times of the tariff rate applicable for a period of twelve months preceding the date of detection of theft of energy or the exact period of theft if determined whichever is less and the amount of civil liability so determined shall be recovered as if it were a decree of civil court. 1. Subs. by Act 26 of 2007, s. 18, for sections 135 to 139 (w.e.f. 15 -6-2007). 2. Subs. by s. 18, ibid., for Special Court may (w.e.f. 15 -6-2007 ). 72 (6) In case the civil liability so determined finally by the Special Court is less than the amount deposited by the consumer or the person, the excess amount so deposited by the consumer o r the person, to the Board or licensee or the concerned person, as the case may be, shall be refunded by the Board or licensee or the concerned person, as the case may be, within a fortnight from the date of communication of the order of the Special C ourt together with interest at the prevailing Reserve Bank of India prime lending rate for the period from the date of such deposit till the date of payment. Explanation .For the purposes of this section, civil liability means loss or damage incurred by the Board or licensee or the concerned person, as the case may be, due to the commission of an offence referred to in 1[sections 135 to 140 and section 150.] STATE AMENDMENT Maharashtra Amendment of section 154 of Act 36 of 2003 .In section 154 of the prin cipal Act, for sub -section (1), the following sub -section shall be substituted, namely: (1) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974 ), (a) every Special Court may take cognizance of an offence without the acc used being committed to it for trial; and (b) every offence punishable under sections 135 to 139 shall be triable only by the Special Court within whose jurisdiction such offence has been committed. [Vide Maharashtra Act 36 of 200 5, s. 4] 155. Special Cou rt to have powers of Court of Session .Save as otherwise provided in this Act, the Code of Criminal Procedure, 1973 (2 of 1974), in so far as they are not inconsistent with the provisions of this Act, shall apply to the proceedings before the Special Court and for the purpose of the provisions of the said enactments, the Special Court shall be deemed to be a Court of Session and shall have all powers of a Court of Session and the person conducting a prosecution before the Special Court shall be deemed to be a Public Prosecutor. 156. Appeal and revision .The High Court may exercise, so far as may be applicable, all the powers conferred by Chapters XXIX and XXX of the Code of Criminal Procedure, 1973 (2 of 1974), as if the Special Court within the local limits of the jurisdiction of the High Court is a District Court, or as the case may be, the Court of Session, trying cases within the local limits of jurisdiction of the High Court. 157. Review .The Special Court may, on a petition or otherwise and in order to prevent miscarriage of justice, review its judgment or order passed under section 154, but no such review petition shall be entertained except on the ground that it was such order passed under a mistake of fact, ignorance of any material fact or any error apparent on the face of the record: Provided that the Special Court shall not allow any review petition and set aside its previous order or judgment without hearing the parties affected. Explanation .For the purposes of this Part, Special Courts means th e Special Courts constituted under sub-section ( 1) of section 153. PART XVI DISPUTE RESOLUTION Arbitration 158. Arbitration .Where any matter is, by or under this Act, directed to be determined by arbitration, the matter shall, unless it is otherwise expr essly provided in the licence of a licensee, be determined by such person or persons as the Appropriate Commission may nominate in that behalf on the application of either 1. Subs. by Act 26 of 2007, s. 18, for sections 135 to 139 (w.e.f. 15 -6-2007). 73 party; but in all other respects the arbitration shall be subject to the provisions of the Arbitration and Conciliation Act, 1996 (26 of 1996) . PART XVII OTHER PROVISIONS Protective clauses 159. Protection of railways, highways, airports and canals, docks, wharfs and piers .No person shall, in the generation, transmission, distribution, s upply or use of electricity, in any way injure any railway, highway, airports, tramway, canal or water -way or any dock, wharf or pier vested in or controlled by a local authority, or obstruct or interfere with the traffic on any railway, airway, tramway, canal or water -way. 160. Protection of telegraphic, telephonic and electric signalling lines .(1) Every person generating, transmitting, distributing, supplying or using electricity (hereinafter in this section referred to as the operator") shall take all reasonable precautions in constructing, laying down and placing his electric lines, electrical plant and other works and in working his system, so as not injuriously to affect, whether by induction or otherwise, the working of any wire or line used for the purpose of telegraphic, telephone or electric signalling communication, or the currents in such wire or line. (2) Where any difference or dispute arises between the operator, and the telegraph authority as to whether the operator has constructed, laid dow n or placed his electric lines, electrical plant or other works, or worked his system, in contravention of sub -section ( 1), or as to whether the working of any wire, line or current is or is not injuriously affected thereby, the matter shall be referred to the Central Government and the Central Government, unless it is of opinion that the wire or line has been placed in unreasonable proximity to the electric lines, electrical plant or works of the operator after the construction of such lines, plant or work s, may direct the operator to make such alterations in, or additions to, his system as may be necessary in order to comply with the provisions of this section, and the operator shall make such alterations or additions accordingly: Provided that nothing in this sub -section shall apply to the repair, renewal or amendment of any electric line or electrical plant so long as the course of the electric line or electrical plant and the amount and nature of the electricity transmitted thereby are not altered

long as the course of the electric line or electrical plant and the amount and nature of the electricity transmitted thereby are not altered. (3) Where the operator makes default in complying with the requirements of this section, he shall make full compensation for any loss or damage incurred by reason thereof, and, where any difference or dispute arises as to the amount of such compensation, the ma tter shall be determined by arbitration. Explanation .For the purposes of this section, a telegraph line shall be deemed to be injuriously affected if telegraphic, telephonic or electric signalling communication by means of such line is, whether through in duction or otherwise, prejudicially inte rfered with by an electric line , electrical plant or other work or by any use made thereof. 161. Notice of accidents and in quiries.(1) If any accident occurs in connection with the generation, transmission, distribu tion, supply or use of electricity in or in connection with, any part of the electric lines or electrical plant of any person and the accident results or is likely to have resulted in loss of human or animal life or in any injury to a human being or an ani mal, such person shall give notice of the occurrence and of any such loss or injury actually caused by the accident, in such form and within such time as may be prescribed, to the Electrical Inspector or such other person as aforesaid and to such other authorities as the Appropriate Government may by general or special order, direct. (2) The Appropriate Government may, if it thinks fit, require any Electrical Inspector, or any other person appointed by it in this behalf, to inquire and report 74 (a) as to the cause of any accident affecting the safety of the public, which may have been occasioned by or in connection with, the generation, transmission, distribution, supply or use of electricity, or (b) as to the manner in, and extent to, which the provisions of this Act or rules and regulations made thereunder or of any licence, so far as those provisions affect the safety of any person, have been complied with. (3) Every Electrical Inspector or other person holding an inquiry under sub -section (2) shall have al l the powers of a civil court under the Code of Civil Procedure, 1908 (5 of 1908) for the purpose of enforcing the attendance of witnesses and compelling the production of documents and material objects, and every person required by an Electrical Inspector be legally bound to do so within the meaning of section 176 of the Indian Penal Code (45 of 1860) . 162. Appointment of Chief Electrical Inspector and Electrical Inspector .(1) The Appropriate Government may, by notification, appoint duly qualified persons to be Chief Electrical Inspector or Electrical Inspectors and every such Inspector so appointed shall exercise the powers and perform the functions of a Chief Electrical Inspector or an Electrical Inspector under this Act and exercise such other powers an d perform such other functions as may be prescribed within such areas or in respect of such class of works and electric installations and subject to such restrictions as the Appropriate Government may direct. (2) In the absence of express provision to the contrary in this Act, or any rule made thereunder, an appeal shall lie from the decision of a Chief Electrical Inspector or an Electrical Inspector to the Appropriate Government or if the Appropriate Government, by general or special order so directs, to a n Appropriate Commission. STATE AMENDMENT Karnataka Amendment of section 162. In section 162 of the Principal Act, after sub -section ( 2), the following shall be inserted, namely: - (3) where no provision is made by Central Government or the Authority in re spect of powers and functions and qualifications of Chief Electrical Inspector and Electrical Inspectors, the State Government may by rules prescribe the same . [Vide Karnataka Act 39 of 2014, s. 3] 163. Power for licensee to enter premises and to remove f ittings or other apparatus of licensee .(1) A licensee or any person duly authorised by a licence may, at any reasonable time, and on informing the occupier of his intention, enter any premises to which electricity is, or has been, supplied by him, of any premises or land, under, over, along, across, in or upon which the electric supply -lines or other works have been lawfully placed by him for the purpose of (a) inspecting, testing, repairing or altering the electric supply -lines, meters, fittings, works a nd apparatus for the supply of electricity belonging to the licensee; or (b) ascertaining the amount of electricity supplied or the electrical quantity contained in the supply; or (c) removing where a supply of electricity is no longer required, or where t he licensee is authorised to take away and cut off such supply, any electric supply -lines, meters, fittings, works or apparatus belonging to the licensee. 75 (2) A licensee or any person authorised as aforesaid may also, in pursuance of a special order in thi s behalf made by an Executive Magistrate and after giving not less than twenty -four hours noti ce in writing to the occupier, (a) enter any premises or land referred to in sub -section ( 1) for any of the purposes mentioned therein; (b) enter any premises to which electricity is to be supplied by him, for the purpose of examining and testing the electric wires fittings, works and apparatus for the use of electricity belonging to the consumer. (3) Where a consumer refuses to allow a licensee or any person auth orised as aforesaid to enter his premises or land in pursuance of the provisions of sub -section (1) or, sub -section ( 2), when such licensee or person has so entered, refuses to allow him to perform any act which he is authorised by those sub-sectio ns to perform, or fails to give reasonable facilities for such entry or performance, the licensee may, after the expiry of twenty -four hours from the service of a notice in writing on the consumer, cut off the supply to the consumer for so long as such ref usal or failure continues, but for no longer. 164. Exercise of powers of Telegraph Authority in certain cases .The Appropriate Government may, by order in writing, for the placing of electric lines or electrical plant for the transmission of electricity or for the purpose of telephonic or telegraphic communications necessary for the proper co-ordination of works, confer upon any public officer, licensee or any other person engaged in the business of supplying electricity under this Act, subject to such cond itions and restrictions, if any, as the Appropriate Government may think fit to impose and to the provisions of the Indian Telegraph Act, 1885 (13 of 1885) , any of the powers which the telegraph authority possesses under that Act with respect to the placin g of telegraph lines and posts for the purposes of a telegraph established or maintained, by the Government or to be so established or maintained. 165. Amendment of sections 40 and 41 of Act 1 of 1894 .(1) In section 40, sub -section ( 1) of clause ( b) and s ection 41, sub -section ( 5) of the Land Acquisition Act, 1894, the term work shall be deemed to include electricity supplied or to be supplied by means of the work to be constructed. (2) The Appropriate Government may, on recommendation of the Appropriate Commission in this behalf, if it thinks fit, on the application of any person, not being a company desirous of obtaining any land for its purposes, direct that he may acquire such land under the provisions of the Land Acquisition Act, 1894 (1 of 1894) in the same manner and on the same conditions as it might be acquired if the person were a company. PART XVIII MISCELLANEOUS 166. Coordination Forum .(1) The Central Government shall constitute a coordination forum consisting of the Chairperson of the Central Commission and Members thereof, the Chairperson of the Authority, representatives of generating companies and transmission licensees engaged in inter-State transmission of electricity for smooth and coordinated development of the power system in the count ry. (2) The Central Government shall also constitute a forum of regulators consisting of the Chairperson of the Central Commission and Chairpersons of the State Commissions. (3) The Chairperson of the Central Commission shall be the Chairperson of the Foru m of regulators referred to in sub -section ( 2). (4) The State Government shall constitute a Coordination Forum consisting of the Chairperson of the State Commission and Members thereof representatives of the generating companies, transmission licensee and distribution licensees engaged in generation, transmission and distribution of electricity in that State for smooth and coordinated development of the power system in the State. 76 (5) There shall be a committee in each district to be constituted by the Appro priate Government (a) to coordinate and review the extension of electrification in each district; (b) to review the quality of power supply and consumer satisfaction; (c) to promote energy efficiency and its conservation. 167. Exemption of electric lines or electrical plants from attachment in certain cases .Where any electric lines or electrical plant, belonging to a licensee are placed in or upon any premises or land not being in the possession of the licensee, such electric lines or electrical plant sha ll not be liable to be taken in execution under any process of any civil court or in any proceedings in insolvency against the person in whose possession the same may be. 168. Protection of action taken in good faith .No suit, prosecution or other proceedi ng shall lie against the Appropriate Government or Appellate Tribunal or the Appropriate Commission or any officer of Appropriate Government, or any Member, Officer or o ther employee of the Appellate Tribunal or any Members, officer or other employees of t he Appropriate Commission or the assessing officer or any public servant for anything done or in good faith purporting to be done under this Act or the rules or regulations made thereunder. 169. Members, officers, etc. , of Appellate Tribunal, Appropriate Commission to be public servants .The Chairperson, Members, officers and other employees of the Appellate Tribunal and the Chairperson, Members, Secretary, officers and other employees of the Appropriate Commission and the assessing officer referred to in s ection 126 shall be deemed, when acting or purporting to act in pursuance of any of the provisions of this Act to be public servants within the meaning of section 21 of the Indian Penal Code (45 of 1860) . 170. Recovery of penalty payable under this Act .Any penalty payable by a person under this Act, if not paid, may be recovered as if it were an arrear of land revenue. 171. Services of notices, orders or documents .(1) Every notice, order or document by or under this Act required, or authorised to be addre ssed to any person may be served on him by delivering the same after obtaining signed acknowledgement receipt therefor or by registered post or such means of delivery as may be prescribed (a) where the Appropriate Government is the addressee, at the offic e of such officer as the Appropriate Government may prescribe in this behalf; (b) where the Appropriate Commission is the addressee, at the office of the Appropriate Commission; (c) where a company is the addressee, at the registered office of the company or, in the event of the registered office of the company not being in India, at the head office of the company in India; (d) where any other person is the addressee, at the usual or last known place of abode or business of the person. (2) Every notice, ord er or document by or under this Act required or authorised to be addressed to the owner or occupier of any premises shall be deemed to be properly addressed if addressed by the description of the owner or occupier of the premises (naming the premises), and may be served by delivering it, or a true copy thereof, to some person on the premises, or if there is no person on the premises to whom the same can with reasonable diligence be delivered, by affixing it on some conspicuous part of the premises. 172. Tra nsitional provisions .Notwithstanding anything to the contrary contained in this Act, (a) a State Electricity Board constituted under the repealed laws shall be deemed to be the State Transmission Utility and a licensee under the provisions of this Act fo r a period of one year from the 77 appointed date or such earlier date as the State Government may notify, and shall perform the duties and functions of the State Transmission Utility and a licensee in accordance with the provisions of this Act and rules and regulations made thereunder: Provided that the State Government may, by notification, authorise the State Electricity Board to continue to function as the State Transmission Utility or a licensee for such further period beyond the said period of one year a s may be mutually decided by the Central Government and the State Government; (b) all licences, authorisations , approvals, clearances and permissions granted under the provisions of the repealed laws may, for a period not exceeding one year from the appoin ted date or such earlier period, as may be notified by the Appropriate Government, continue to operate as if the repealed laws were in force with respect to such licences, authorisations, approvals, clearances and permissions, as the case may be, and there after such licences, authorisations, approvals, clearances and permissions shall be deemed to be licences, authorisations, approvals, clearances and permission under this Act and all provisions of this Act shall apply accordingly to such licences, authori sations, approvals, clearances and permissions; (c) the undertaking of the State Electricity Boards established under section 5 of the Electricity (Supply) Act, 1948 (54 of 1948) may after the expiry of the period specified in clause ( a) be transferred in a ccordance with the provisions of Part XIII of this Act; (d) the State Government may, by notification, declare that any or all the provisions contained in this Act, shall not apply in that State for such period, not exceeding six months from the appointed date, as may be stipulated in the notification. 173. Inconsistency in laws .Nothing contained in this Act or any rule or regulation made thereunder or any instrument having effect by virtue of this Act, rule or regulation shall have effect in so far as it is inconsistent with any other provisions of the Consumer Protection Act,

or regulation shall have effect in so far as it is inconsistent with any other provisions of the Consumer Protection Act, 1986 (68 of 1986) or the Atomic Energy Act, 1962 (33 of 1962) or the Railways Act, 1989 (24 of 1989) . 174. Act to have overriding effect .Save as otherwise provided in section 173, t he provisions of this Act shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force or in any instrument having effect by virtue of any law other than this Act. 175. Provisions of this Act to b e in addition to and not in derogation of other laws .The provisions of this Act are in addition to and not in derogation of any other law for the time being in force. 176. Power of Central Government to make rules .(1) The Central Government may, by notif ication, make rules for carrying out the provisions of this Act. (2) In particular and without prejudice to the generality of the foregoing power, such rules may provide for all or any of the following matters, namely: (a) the time within which the object ion and suggestions on the draft National Electricity Plan to be invited by the Authority under the proviso to sub -section ( 4) of section 3; (b) the additional requirements 1[relating to the capital adequacy, creditworthiness or code of conduct] under sixt h proviso to section 14; (c) the payment of fees for application for grant of licence under sub -section (1) of section 15; (d) the constitution and functions of the National Load Despatch Centre under sub -section ( 2) of section 26; 1. Subs. by Act 26 of 2007, s . 19, for (including the cap ital adequacy, creditworthiness or code of conduct) (w.e.f. 15 -6-2007). 78 (e) the works of license es affecting the property of owner or occupier under sub -section ( 2) of section 67; (f) such other cases which may be prescribed under clause ( c) of sub -section (2) of section 68; (g) allowances and fees payable to other Members for attending the meetings of Authority under sub-section ( 14) of section 70. (h) other terms and conditions of service of the Chairperson and Members of the Authority under sub-section ( 15) of section 70; (i) the functions and duties of the Central Electricity Authority under secti on 73; (j) the salary, allowances and other conditions of service of Chairperson and Member of Central Commission under sub -section (2) of section 89; (k) the form and manner in which and the authority before whom oath of office and secrecy should be subsc ribed under sub -section (3) of section 89; (l) the procedure to be pres cribed by the Central Government under the pro viso to sub -section ( 2) of section 90; (m) any other matter required to be prescribed under clause ( g) of sub -section (1) of section 94; (n) the form in which the Central Commission shall prepare its annual statement of accounts under sub -section ( 1) of section 100; (o) the form in which and time at which the Central Commission shall prepare its annual report under sub -section ( 1) of section 101; (p) the form in which and time at which the Central Commission shall prepare its budget under section 106; (q) the form and the manner of verifying such form, and fee for filing appeal under sub-section ( 2) of section 111; (r) the sa lary and allowances payable to and the other terms and conditions of service of the Chairperson of the Appellate Tribunal and Members of the Appellate Tribunal under section 115; (s) the salary and allowances and other conditions of service of the officers and employees of the Appellate Tribunal under sub -section (3) of section 119; (t) the additional matters in respect of which the Appellate Tribunal may exercise the powers of a civil court under clause ( i) of sub -section (2) of section 120; (u) the author ity to whom the appeal shall be filed under sub -section (1) of section 127; (v) manner of holding inquiry by an adjudicating officer under sub -section (1) of section 143; (w) the form in which and the time at which service of notices to any person or to th e Central Government for the purpose under sub -section (1) of section 161; (x) the powers to be exercised and the functions to be performed by the Inspectors under sub-section ( 1) of section 162; (y) the manner of delivery of every notice, order or document to be served under sub -section ( 1) of section 171; (z) any other matter which is required to be, or may be, prescribed. 177. Powers of Authority to make regulations .(1) The Authority may, by notification, make regulations consistent with this Ac t and the rules generally to carry out the provisions of this Act. 79 (2) In particular and without prejudice to the generality of the power conferred in sub -section ( 1), such regulations may provide for all or any of the following matters, namely: (a) the G rid Standards under section 34; (b) suitable measures relating to safety and electric supply under section 53; (c) the installation and operation of meters under section 55; (d) the rules of procedure for transaction of business under sub -section (9) of se ction 70; (e) the technical standards for construction of electrical plants and electric lines and connectivity to the grid under clause ( b) of section 73; (f) the form and manner in which and the time at which the State Government and licensees shall furnish statistics, returns or other information under section 74. (g) any other matter which is to be, or may be, specified . (3) All regulations made by the Authority under this Act shall be subject to the conditions of previous publication. 178. Powers of Ce ntral Commission to make regulations . (1) The Central Commission may, by notification make regulations consistent with this Act and the rules generally to carry out the provisions of this Act. (2) In particular and without prejudice to the generality of th e power contained in sub -section ( 1), such regulations may provide for all or any of following matters, namely: (a) period to be specified under the first proviso to section 14; (b) the form and the manner of the application under sub -section ( 1) of section 15; (c) the manner and particulars of notice under sub -section ( 2) of section 15; (d) the conditions of licence under section 16; (e) the manner and particulars of notice under clause ( a) of sub -section (2) of section 18; (f) publication of alterations or amendments to be made in the licence under clause (c) of sub-section ( 2) of section 18; (g) Grid Code under sub -section ( 2) of section 28; (h) levy and collection of fees and charge from generating companies or transmission utilities or licensee s under sub -section ( 4) of section 28; (i) rates, charges and terms and conditions in respect of intervening transmission facilities under proviso to section 36; (j) payment of the transmissio n charges and a surcharge under sub-clause (ii) of clause ( d) of sub-section ( 2) of section 38; (k) reduction 1*** of surcharge and cross subsidies under second proviso to sub -clause ( ii) of clause ( d) of sub -section ( 2) of section 38; (l) payment of transmission charges and a surcharge under sub -clause (ii) of clause (c) of section 40; (m) reduction 1*** of surcharge and cross -subsidies under the second proviso to sub -clause ( ii) of clause ( c) of section 40; 1. The words and elimination omitted by Act 26 of 2007, s. 20 (w.e.f. 15 -6-2007). 80 (n) proportion of revenues from other business to be utilised for reducing the transmission and wheeling ch arges under proviso to section 41; (o) duties of electricity trader under sub -section ( 2) of section 52; (p) standards of performance of a licensee or class of licensees under sub-section ( 1) of section 57; (q) the period within which information to be furnished by the licensee under sub -section ( 1) of section 59; 1 [(r) the manner of reduction of cross -subsidies under clause ( g) of section 61;] (s) the terms and conditions for the determination of tariff under section 61; (t) details to be furnished by licensee or generating company under sub-section ( 2) of section 62; (u) the procedures for calculating the expected revenue from tariff and charges under sub-section ( 5) of section 62; (v) the manner of making an application before the Cen tral Commission and the fee payable therefor under sub -section ( 1) of section 64; (w) the manner of publication of application under sub -section ( 2) of section 64; (x) issue of tariff order with modifications or conditions under sub -section (3) of section 64; (y) the manner by which development of market in power including trading specified under section 66; (z) the powers and duties of the Secretary of the Central Commission under sub -section ( 1) of section 91; (za) the terms and conditions of service of t he Secretary, officers and other employees of Central Commission under sub -section ( 3) of section 91; (zb) the rules of procedure for transaction of business under sub -section (1) of section 92; (zc) minimum information to be maintained by a licensee or th e generating company and the manner of such information to be maintained under sub -section ( 8) of section 128; (zd) the manner of service and publication of notice under section 130; (ze) any other matter which is to be, or may be specified by regulations. (3) All regulations made by the Central Commission under this Act shall be subject to the conditions of previous publication. 179. Rules and regulation s to be laid before Parliament .Every rule made by the Central Government, every regulation made by the Authority, and every regulation made by the Central Commission shall be laid, as soon as may be after it is made, before each House of the Parliament, while it is in session, for a total period of thirty days which may be comprised in one session or in two or more successive sessions, and if, before the expiry of the session immediately following the session or the successive sessions aforesaid, both Houses agree in making any modification in the rule or regulation or agree that the rule or regulation shoul d not be made, the rule or regulation shall thereafter have effect only in such modified form or be of no effect, as the case may be; so, however, that any such modification or annulment shall be without prejudice to the validity of anything previously don e under that rule or regulation. 1. Subs. by Act 26 of 2007 , s. 20, for clause ( r) (w.e.f. 15 -6-2007). 81 180. Powers of State Governments to make rules .(1) The State Government may, by notification, make rules for carrying out the provisions of this Act. (2) In particular and without prejudice to the generality of the foregoi ng power, such rules may provide for all or any of the following matters, namely: (a) the payment of fees for application for grant of licence under sub -section (1) of section 15; (b) the works of licensees affecting the property of other persons under sub-section (2) of section 67; (c) such other matters which may be prescribed under clause ( c) of sub-section ( 2) of section 68; (d) the salary, allowances and other terms and conditions of service of the Chairperson and Members of the State Commission und er sub -section (2) of section 89; (e) the form and manner in which and the authority before whom oath of office and secrecy should be subscribed under sub -section ( 3) of section 89; (f) any other matter required to be prescribed by the State Commission und er clause ( g) of sub-section ( 1) of section 94; (g) the manner of applying the Fund under sub -section ( 3) of section 103; (h) the form in which and the time at which the State Commission shall prepare its annual accounts under sub -section ( 1) of sect ion 104; (i) the form in which and the time at which the State Commission shall prepare its annual report under sub -section ( 1) of section 105; (j) the form in which and the time at which the State Commission shall prepare its budget under section 106; (k) manner of service of provisional order of assessment under sub -section (2) of section 126; (l) manner of holding inquiry by an adjudicating officer under sub -section (1) of section 143; (m) the form in which and the time at which notice to the Electrical Inspector under sub-section ( 1) of section 161; (n) the manner of delivery of every notice, order or document under sub-section ( 1) of section 171; and (o) any other matter which is required to be, or may be, prescribed. STATE AMEND MENT Karnataka Amendment of section 18 0.In section 18 0 of the Principal Act, in sub -section ( 2), (a) after clause ( a), the following shall be inserted, namely : (aa) Subject to section 53, (i) regarding procedure of Inspection by the Chief Electrical I nspector and Electrical Inspectors; (ii) regarding terms and conditions and manner of issue of Licence to electrical Contractors, permit to Supervisors and Wireman and Competency certificates; (iii) manner of Scrutiny and approval of Electrical Installatio n drawings; 82 (iv) Levy

(iii) manner of Scrutiny and approval of Electrical Installatio n drawings; 82 (iv) Levy of fee for inspections and other services rendered by the Chief Electrical Inspector and Electrical Inspectors; (v) manner of Collection of fee and if not remitted within the stipulated time to recover the same as arrears of land reve nue. (b) after clause ( m), the following shall be inserted, namely: (mm) Subject to section 162 regarding powers and functions and qualifications of the Chief Electrical Inspector and Electrical Inspectors. [Vide Karnataka Act 39 of 2014, s. 4] 181. Po wers of State Commissions to make regulations .(1) The State Commissions may, by notification, make regulations consistent with this Act and the rules generally to carry out the provisions of this Act. (2) In particular and without prejudice to the general ity of the power contained in sub -section ( 1), such regulations may provide for all or any of the following matters, namely: (a) period to be specified under the first proviso to section 14; (b) the form and the manner of application under sub -section ( 1) of section 15; (c) the manner and particulars of application for licence to be published under sub -section ( 2) of section 15; (d) the conditions of licence unde section 16; (e) the manner and particulars of notice under clause (a) of sub -section (2) of se ction 18; (f) publication of the alterations or amendments to be made in the licence under clause ( c) of sub-section ( 2) of section 18; (g) levy and collection of fees and charges from generating companies or licensees under sub-section ( 3) of sec tion 32; (h) rates, charges and the term s and conditions in respect of intervening transmission facilities under proviso to section 36; (i) payment of the transmission charges and a surcharge under sub -clause (ii) of clause (d) of sub-section ( 2) of sec tion 39; (j) reduction 1*** of surcharge and cross subsidies under second proviso to sub -clause (ii) of clause ( d) of sub -section ( 2) of section 39; (k) manner and utilisation of payment and surcharge under the fourth proviso to sub -clause (ii) of clause ( d) of sub -section ( 2) of section 39; (l) payment of the transmission charges and a surcharge under sub -clause (ii) of clause ( c) of section 40; (m) reduction 1*** of surcharge and cross subsidies under second proviso to sub -clause ( ii) of clause ( c) of se ction 40; (n) the manner of payment of surcharge under the fourth proviso to sub-clause ( ii) of clause ( c) of section 40; 1. The words and eliminatio n omitted by Act 26 of 2007, s . 21 (w.e.f. 15 -6-2007). 83 (o) proportion of revenues from other business to be utilised for reducing the transmission and wheeling charges under the proviso to section 41; (p) reduction 1*** of surcharge and cross -subsidies under the third proviso to sub -section ( 2) of section 42; (q) payment of additional charges on charges of wheeling under sub -section (4) of section 42; (r) guidelines under sub -section ( 5) of section 42; (s) the time and manner for settlement of grievances under sub -section (7) of section 42; (t) the period to be specified by the State Commission for the purposes specified under sub-section ( 1) of section 43; (u) methods and principl es by which charges for electricity shall be fixed under sub -section ( 2) of section 45; (v) reasonable security payable to the distribution licensee under sub-section ( 1) of section 47; (w) payment of interest on security under sub -section ( 4) of section 4 7; (x) electricity supply code under section 50; (y) the proportion of revenues from other business to be utilised for reducing wheeling charges under the proviso to section 51; (z) duties of electricity trader under sub -section ( 2) of section 52; (za) standards of performance of a licensee or a class of licensees under sub-section ( 1) of section 57; (zb) the period within which information to be furnished by the licensee under sub-section ( 1) of section 59; 2[(zc) the manner of reduction of cross -subsidi es under clause ( g) of section 61;] (zd) the terms and conditions for the determination of tariff under section 61; (ze) details to be furnished by licensee or generating company under sub-section ( 2) of section 62; (zf) the methodologies and procedures fo r calculating the expected revenue from tariff and charges under sub -section ( 5) of section 62; (zg) the manner of making an application before the State Commission and the fee payable therefor under sub -section ( 1) of section 64; (zh) issue of tariff orde r with modifications or conditions under sub -section (3) of section 64; (zi) the manner by which development of market in power including trading specified under section 66; (zj) the powers and duties of the Secretary of the State Commission under sub -section ( 1) of section 91; (zk) the terms and conditions of service of the secretary, officers and other employees of the State Commission under sub -section ( 2) of section 91; 1. The words and elimination omitted by Act 26 of 2007, s. 21 (w.e.f. 15 -6-2007). 2. Subs. by s. 20, ibid., for clause (zc) (w.e.f. 15 -6-2007). 84 (zl) rules of procedure for transaction of business under sub -section (1) of section 92; (zm) minimum information to be maintained by a licensee or the generating company and the manner of such information to be maintained under sub -section ( 8) of section 128; (zn) the manner of service and publication of notice under section 130; (zo) the form of preferring the appeal and the manner in which such form shall be verified and the fee for preferring the appeal under sub-section ( 1) of section 127; (zp) any other matter which is to be, or may be, specified. (3) All regulations made by the Stat e Commission under this Act shall be subject to the condition of previous publication. 182. Rules and regulations to be laid before State Legislature .Every rule made by the State Government and every regulation made by the State Commission shall be laid, as soon as may be after it is made, before each House of the State Legislature where it consists of two Houses, or where such Legislature consists of one House, before that House. 183. Power to remove difficulties . (1) If any difficulty arises in giving ef fect to the provisions of this Act, the Central Government may, by order published, make such provisions not inconsistent with the provisions of this Act, as may appear to be necessary for removing the difficulty: Provided that no order shall be made under this section after the expiry of two years from the date of commencement of this Act. (2) Every order made under this section shall be laid, as soon as may be after it is made, before each House of Parliament. 184. Provisions of Act not to apply in certai n cases .The provisions of this Act shall not apply to the Ministry or Department of the Central Government dealing with Defence, Atomic Energy or such other similar Ministries or Departments or undertakings or Boards or institutions under the control of s uch Ministries or Departments as may be notified by the Central Government. 185. Repeal and saving .(1) Save as otherwise provided in this Act, the Indian Electricity Act, 1910 (9 of 1910) , the Electricity (Supply) Act, 1948 (54 of 1948) and the Electricit y Regulatory Commissions Act, 1998 (14 of 998) are hereby repealed. (2) Notwithstanding such repeal, (a) anything done or any action taken or purported to have been done or taken including any rule, notification, inspection, order or notice made or issue d or any appointment, confirmation or declaration made or any licence, permission, authorisation or exemption granted or any document or instrument executed or any direction given under the repealed laws shall, in so far as it is not inconsistent with the provisions of this Act, be deemed to have been done or taken under the corre sponding provisions of this Act; (b) the provisions contained in sections 12 to 18 of the Indian Electricity Act, 1910 (9 of 1910) and rules made thereunder shall have effect until the rules under section s 67 to 69 of this Act are made; (c) the Indian Electricity Rules, 1956 made under section 37 of the Indian Electricity Act, 1910 (9 of 1910) as it stood before such repeal shall continue to be in force till the regulations under s ection 53 of this Act are made; (d) all rules made under sub -section ( 1) of section 69 of the Electricity (Supply) Act, 1948 (54 of 1948) shall continue to have effect until such rules are rescinded or modified, as the case may be; 85 (e) all directives issu ed, before the commencement of this Act, by a State Government under the enactments specified in the Schedule shall continue to apply for the period for which such directions were issued by the State Government. (3) The provisions of the enactments specifi ed in the Schedule, not inconsistent with the provisions of this Act, shall apply to the States in which such enactments are applicable. (4) The Central Government may, as and when considered necessary, by notification, amend the Schedule. (5) Save as othe rwise provided in sub -section ( 2), the mention of particular matters in that section, shall not be held to prejudice or affect the general application of section 6 of the General Clauses Act, 1897 (10 of 1897) , with regard to the effect of repeals. 86 THE S CHEDULE ENACTMENTS [See sub-section ( 3) of section 185] 1. The Orissa Electricity Reform Act, 1995 (Orissa Act No. 2 of 1996) . 2. The Haryana Electricity Reform Act, 1997 (Haryana Act No. 10 of 1998) . 3. The Andhra Pradesh Electricity Reform Act, 1998 (And hra Pradesh Act No. 30 of 1998) . 4. The Uttar Pradesh Electricity Reform Act, 1999 (Uttar Pradesh Act No. 24 of 1999) . 5. The Karnataka Electricity Reform Act, 1999 (Karnataka Act No. 25 of 1999) . 6. The Rajasthan Electricity Reform Act, 1999 (Rajasthan Ac t No. 23 of 1999) . 7. The Delhi Electricity Reforms Act, 2000 (Delhi Act No. 2 of 2001) . 8. The Madhya Pradesh Vidyut Sudhar Adhiniyam, 2000 (Madhya Pradesh Act No. 4 of 2001) . 1[9. The Gujarat Electricity Industry (Reorganisation and Regulation) Act, 2003 (Gujarat Act No. 24 of 2003).] 1. Ins. by S.O. No. 1039( E), dated 5 -9-2003.

THE COMPANIES ACT, 2013 ACT NO. 18 OF 2013 [29th August, 2013.] An Act to consolidate and amend the law relating to companies. BE it enacted by Parliament in the Sixty -fourth Year of the Republic of India as follows: CHAPTER I PRELIMINARY 1. Short title, extent, commencement and application. (1) This Act may be called the Companies Act, 2013. (2) It ex tends to the whole of India. (3) This section shall come into force at once and the remaining provisions of this Act shall come into force on such date1 as the Central Government may, by notification in the Official Gazette, appoint and *different dates may be appointed for different provisions of this Act and any reference in any provision to the commencement of this Act shall be construed as a referen ce to the coming into force of that provision. (4) The provisions of this Act shall apply to (a) companies incorporated under this Act or under any previous company law; (b) insurance companies, except in so far as the said provisions are inconsistent with the provisions of the Insurance Act, 1938 (4 of 1938) or the Insurance Regulatory and Development Authority Act, 1999 (41 of 1999); (c) banking companies, except in so far as the said provisions are inconsistent with the provisions of the Banking Regu lation Act, 1949 (10 of 1949); (d) companies engaged in the generation or supply of electricity, except in so far as the said provisions are inconsistent with the provisions of the Electricity Act, 2003 (36 of 2003); (f) such body corporate, incorporated by any Act for the time being in force, as the Central Government may, by notification, specify in this behalf, subject to such exceptions, modifications or adaptation, as may be specified in the notification. 2. Definitions. In this Act, unless the conte xt otherwise requires, (1) abridged prospectus means a memorandum containing such salient features of a prospectus as may be specified by the Securities and Exchange Board by making regulations in this behalf; (2) accounting standards means the standa rds of accounting or any addendum thereto for companies or class of companies referred to in section 133; (3) alter or alteration includes the making of additions, omissions and substitutions; (4) Appellate Tribunal means the National Company Law App ellate Tribunal constituted under section 410; (5) articles means the articles of association of a company as originally framed or as altered from time to time or applied in pursuance of any previous company law or of this Act; (6) associate company , in relation to another company, means a company in which that other company has a significant influence, but which is not a subsidiary company of the company having such influence and includes a joint venture company. 1[Explanation .For the purpose of this clause, (a) the expression significant influence means control of at least twenty per cent. of total voting power, or control of or participation in business decisions under an agreement; (b) the expression joint venture means a joint arrangement w hereby the parties that have joint control of the arrangement have rights to the net assets of the arrangement;] (7) auditing standards means the standards of auditing or any addendum thereto for companies or class of companies referred to in sub -section (10) of section 143; (8) authorised capital or nominal capital means such capital as is authorised by the memorandum of a company to be the maximum amount of share capital of the company; (9) banking company means a banking company as defined in cla use (c) of section 5 of the Banking Regulation Act, 1949 (10 of 1949); (10) Board of Directors or Board , in relation to a company, means the collective body of the directors of the company; (11) body corporate or corporation includes a company inco rporated outside India, but does not include (i) a co -operative society registered under any law relating to co -operative societies; and (ii) any other body corporate (not being a company as defined in this Act), which the Central Government may, by notification, specify in this behalf; (12) book and paper and book or paper include books of account, deeds, vouchers, writings, documents, minutes and registers maintained on paper or in electronic form; (13) books of account includes records mainta ined in respect of 1. The Explanation subs. by Act 1 of 2018, s. 2 (w.e.f. 7 -5-2018). 18 (i) all sums of money received and expended by a company and matters in relation to which the receipts and expenditure take place; (ii) all sales and purchases of goods and services by the company; (iii) the assets and liabilities of the company; and (iv) the items of cost as may be prescribed under section 148 in the case of a company which belongs to any class of companies specified under that section; (14) branch office , in relation to a company, means any establishment described as such by the company; (15) called -up capital means such part of the capital, which has been called for payment; (16) charge means an interest or lien created on the property or assets of a company or any of its undertakings or both as security and in cludes a mortgage; (17) chartered accountant means a chartered accountant as defined in clause ( b) of sub -section ( 1) of section 2 of the Chartered Accountants Act, 1949 (38 of 1949) who holds a valid certificate of practice under sub -section ( 1) of sect ion 6 of that Act; (18) Chief Executive Officer means an officer of a company, who has been designated as such by it; (19) Chief Financial Officer means a person appointed as the Chief Financial Officer of a company; (20) company means a company inco rporated under this Act or under any previous company law; (21) company limited by guarantee means a company having the liability of its members limited by the memorandum to such amount as the members may respectively undertake to contribute to the assets of the company in the event of its being wound up; (22) company limited by shares means a company having the liability of its members limited by the memorandum to the amount, if any, unpaid on the shares respectively held by them; 1[(23) Company Liquidator means a person appointed by the Tribunal as the Company Liquidator in accordance with t he provisions of section 275 for the winding up of a company under this Ac t;] (24) company secretary or secretary means a company secretary as defined in clause ( c) of sub - section ( 1) of section 2 of the Company Secretaries Act, 1980 (56 of 1980) who is appointed by a company to perform the functions of a company secretary under this Act; (25) company secretary in practice means a company secretary who is deemed to be in practice under sub -section ( 2) of section 2 of the Company Secretaries Act, 1980 (56 of 1980); (26) contributory means a person liable to contribute towards the assets of the company in the event of its being wound up. Explanation. For the purposes of this clause, it is hereby clarified that a person holding fully paid - up shares in a company shall be considered as a contributory but shall have no liabilities of a contributory under the Act whilst retaining rights of such a contributory; (27) control shall include the right to appoint majority of the directors or to control the man agement or policy decisions exercisable by a person or persons acting individually or in concert, directly or indirectly, including by virtue of their shareholding or management rights or shareholders agreements or voting agreements or in any other manner; 1. Subs. by Act 31 of 2016, s. 255 and the Eleventh Schedule, for clause ( 23) (w.e.f. 15 -11-2016). 19 1[(28) Cost Accountant means a cost accountant as defined in clause ( b) of sub -section ( 1) of section 2 of the Cost and Works Accountants Act, 1959 (23 of 1959) and who holds a valid certificate of practice under sub-section ( 1) of section 6 of that Act;] (29) court means (i) the High Court having jurisdiction in relation to the place at which the registered office of the company concerned is situate, except to the extent to which jurisdiction has been conferred on any district court or district courts subordinate to that High Court under sub -clause ( ii); (ii) the district court, in cases where the Central Government has, by notification, empowered any district court to exercise all or any of the jurisdictions conferred upon the High Court, within the scope of its jurisdiction in respect of a company whose registered office is situate in the district; (iii) the Court of Session having jurisdiction to try any offence under this Act or under any previous company law; (iv) the Special Court establishe d under section 435; (v) any Metropolitan Magistrate or a Judicial Magistrate of the First Class having jurisdiction to try any offence under this Act or under any previous company law; (30) debenture includes debenture stock, bonds or any other instrume nt of a company evidencing a debt, whether constituting a charge on the assets of the company or not: 2[Provided that (a) the instruments referred to in Chapter III -D of the Reserve Bank of India Act, 1934 (2 of 1934); and (b) such other instrument, as may be prescribed by the Central Government in consultation with the Reserve Bank of India, issued by a company, shall not be treated as debenture ;] (31) deposit includes any receipt of money by way of deposit or loan or in any other form by a company, b ut does not include such categories of amount as may be prescribed in consultation with the Reserve Bank of India; (32) depository means a depository as defined in clause ( e) of sub -section ( 1) of section 2 of the Depositories Act, 1996 (22 of 1996); (33) derivative means the derivative as defined in clause ( ac) of section 2 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956); (34) director means a director appointed to the Board of a company; (35) dividend includes any interim dividend; (36) document includes summons, notice, requisition, order, declaration, form and register, whether issued, sent or kept in pursuance of this Act or under any other law for the time being in force or otherwise, maintained on paper or in electronic form; (37) employees stock option means the option given to the directors, officers or employees of a company or of its holding company or subsidiary company or companies, if any, which gives such directors, officers or employees, the benefit or right to pur chase, or to subscribe for, the shares of the company at a future date at a pre -determined price; 1. Subs. by Act 1 of 2018, s. 2, for clause ( 28) (w.e.f. 9 -2-2018). 2. The Proviso i ns. by s. 2 , ibid. (w.e.f. 9 -2-2018). 20 (38) expert includes an engineer, a valuer, a chartered accountant, a company secretary, a cost accountant and any other person who has the power or authori ty to issue a certificate in pursuance of any law for the time being in force; (39) financial institution includes a scheduled bank, and any other financial institution defined or notified under the Reserve Bank of India Act, 1934 (2 of 1934); (40) financial statement in relation to a company, includes (i) a balance sheet as at the end of the financial year; (ii) a profit and loss account, or in the case of a company carrying on any activity not for profit, an income and expenditure account for the financial year; (iii) cash flow statement for the financial year; (iv) a statement of changes in equity, if applicable; and (v) any explanatory note annexed to, or forming part of, any document referred to in sub -clause (i) to sub -clause ( iv): Provided tha t the financial statement, with respect to One Person Company, small company and dormant company, may not include the cash flow statement; (41) financial year , in relation to any company or body corporate, means the period ending on the 31st day of March every year, and where it has been incorporated on or after the 1st day of January of a year, the period ending on the 31st day of March of the following year, in respect whereof financial statement of the company or body corporate is made up: 1[Provided that where a company or body corporate, which is a holding company or a subsidiary or associate company of a company incorporated outside India and is required to follow a different financial year for consolidation of its accounts outside India, the Centra l Government may, on an application made by that company or body corporate in such form and manner as may be prescribed, allow any period as its financial year, whether or not that period is a year: Provided further that any application pending before the Tribunal as on the date of commencement of the Companies (Amendment) Act, 2019, shall be disposed of by the Tribunal in accordance with the provisions applicable to it before such commencement ;] 2[Provided also that] a company or body corporate, existing o n the commencement of this Act, shall, within a period of two years from such commencement, align its financial year as per the provisions of this clause; (42) foreign company means any company or body corporate incorporated outside India which (a) has a place of business in India whether by itself or through an agent, physically or through electronic mode; and (b) conducts any business activity in India in any other manner; (43) free reserves means such reserves which, as per the latest audited balanc e sheet of a company, are available for distribution as dividend: Provided that (i) any amount representing unrealised gains, notional gains or revaluation of assets, whether shown as a reserve or otherwise, or (ii) any change in carrying amount of an ass et or of a liability recognised in equity, including surplus in profit and loss account on measurement of the asset or the liability at fair value, shall not be treated as free reserves; 1. The proviso

or the liability at fair value, shall not be treated as free reserves; 1. The proviso subs. by Act 22 of 2019, s. 2 (w.e.f. 2 -11-2018). 2. Subs. by s. 2, ibid., for Provided further that (w.e.f. 2 -11-2018). 21 (44) Global Depository Receipt means any instrument in the form of a depository receipt, by whatever name called, created by a foreign depository outside India and authorised by a company making an issue of such depository receipts; (45) Government company means any company in which not less than fifty -one per cent. of the paid-up share capital is held by the Central Government, or by any State Government or Governments, or partly by the Central Government and partly by one or more State Governments, and includes a company which is a subsidiary company of such a Government company; (46) holding company , in relation to one or more other companies, means a company of which such companies are subsidiary companies; 1[Explanation. For the purposes of this clause, the expression company includes any body corporate;] (47) independent director means an independent director referred to in sub -section ( 6) of section 149; (48) Indian Depository Receipt means any instrument in the form of a depository receipt created by a domestic depository in India and authorised by a company incorporated outside India making an issue of such depository receipts; 2* * * * * (50) issued capital means such capit al as the company issues from time to time for subscription; (51) key managerial personnel , in relation to a company, means (i) the Chief Executive Officer or the managing director or the manager; (ii) the company secretary; (iii) the whole -time directo r; (iv) the Chief Financial Officer; 3*** 4[(v) such other officer, not more than one level below the directors who is in whole -time employment, designated as key managerial personnel by the Board; and (vi) such other officer as may be prescribed ;] (52) listed company means a company which has any of its securities listed on any recognised stock exchange : 5[Provided that such class of companies, which have listed or intend to list such class of securities, as may be prescribed in consultation with the Securities and Exchange Board, shall not be considered as listed companies. ] (53) manager means an individual who, subject to the superintendence, control and direction of the Board of Directors, has the management of the whole, or substantially the whol e, of the affairs of a company, and includes a director or any other person occupying the position of a manager, by whatever name called, whether under a contract of service or not; (54) managing director means a director who, by virtue of the articles o f a company or an agreement with the company or a resolution passed in its general meeting, or by its Board of Directors, is entrusted with substantial powers of management of the affairs of the company and includes a director occupying the position of man aging director, by whatever name called. 1. The Explanatio n ins. by Act 1 of 2018, s. 2 (w.e.f. 9 -2-2018). 2. Clause ( 49) omitted by s. 2, ibid. (w.e.f. 9 -2-2018). 3. The word and omitted by s. 2, ibid. (w.e.f. 9 -2-2018). 4. Subs. by s. 2, ibid., for sub -clause ( v) (w.e.f. 9 -2-2018). 5. The Proviso ins. by Act 29 of 2020, s. 2 (w.e.f. 22 -1-2021). 22 Explanation .For the purposes of this clause, the power to do administrative acts of a routine nature when so authorised by the Board such as the power to affix the common seal of the company to any document or to d raw and endorse any cheque on the account of the company in any bank or to draw and endorse any negotiable instrument or to sign any certificate of share or to direct registration of transfer of any share, shall not be deemed to be included within the subs tantial powers of management; (55) member , in relation to a company, means (i) the subscriber to the memorandum of the company who shall be deemed to have agreed to become member of the company, and on its registration, shall be entered as member in its register of members; (ii) every other person who agrees in writing to become a member of the company and whose name is entered in the register of members of the company; (iii) every person holding shares of the company and whose name is entered as a benef icial owner in the records of a depository; (56) memorandum means the memorandum of association of a company as originally framed or as altered from time to time in pursuance of any previous company law or of this Act; (57) net worth means the aggregat e value of the paid -up share capital and all reserves created out of the profits 1[, securities premium account and debit or credit balance of profit and loss account, ] after deducting the aggregate value of the accumulated losses, deferred expenditure and miscellaneous expenditure not written off, as per the audited balance sheet, but does not include reserves created out of revaluation of assets, write -back of depreciation and amalgamation; (58) notification means a notification published in the Official Gazette and the expression notify shall be construed accordingly; (59) officer includes any director, manager or key managerial personnel or any person in accordance with whose directions or instructions the Board of Directors or any one or more of the directors is or are accustomed to act; (60) officer who is in default , for the purpose of any provision in this Act which enacts that an officer of the company who is in default shall be liable to any pena lty or punishment by way of imprisonment, fine or otherwise, means any of the following officers of a company, namely: (i) whole -time director; (ii) key managerial personnel; (iii) where there is no key managerial personnel, such director or directors as specified by the Board in this behalf and who has or have given his or their consent in writing to the Board to such specification, or all the directors, if no director is so specified; (iv) any person who, under the immediate authority of the Board or any key managerial personnel, is charged with any responsibility including maintenance, filing or distribution of accounts or records, authorises, actively participates in, knowingly permits, or knowingly fails to take active steps to prevent, any default; (v) any person in accordance with whose advice, directions or instructions the Board of Directors of the company is accustomed to act, other than a person who gives advice to the Board in a professional capacity; (vi) every director, in respect of a contrave ntion of any of the provisions of this Act, who is aware of such contravention by virtue of the receipt by him of any proceedings of the Board or participation 1. Subs. by Act 1 of 2018, s. 2, for and securities premium account (w.e.f. 9 -2-2018). 23 in such proceedings without objecting to the same, or where such contravention had taken place w ith his consent or connivance; (vii) in respect of the issue or transfer of any shares of a company, the share transfer agents, registrars and merchant bankers to the issue or transfer; (61) Official Liquidator means an Official Liquidator appointed unde r sub -section ( 1) of section 59; (62) One Person Company means a company which has only one person as a member; (63) ordinary or special resolution means an ordinary resolution, or as the case may be, special resolution referred to in sec tion 114; (64) paid-up share capital or share capital paid -up means such aggregate amount of money credited as paid -up as is equivalent to the amount received as paid -up in respect of shares issued and also includes any amount credited as paid -up in re spect of shares of the company, but does not include any other amount received in respect of such shares, by whatever name called; (65) postal ballot means voting by post or through any electronic mode; (66) prescribed means prescribed by rules made under this Act; (67) previous company law means any of the laws specified below: (i) Acts relating to companies in force before the Indian Companies Act, 1866 (10 of 1866); (ii) the Indian Companies Act, 1866 (10 of 1866); (iii) the Indian Companies Act, 1882 (6 of 1882); (iv) the Indian Companies Act, 1913 (7 of 1913); (v) the Registration of Transferred Companies Ordinance, 1942 (Ord. 54 of 1942); (vi) the Companies Act, 1956 (1 of 1956); and (vii) any law correspon ding to any of the aforesaid Acts or the Ordinances and in force (A) in the merged territories or in a Part B State (other than the State of Jammu and Kashmir *), or any part thereof, before the extension thereto of the Indian Companies Act, 1913 (7 of 191 3); or (B) in the State of Jammu and Kashmir *, or any part thereof, before the commencement of the Jammu and Kashmir (Extension of Laws) Act, 1956 (62 of 1956), in so far as banking, insurance and financial corporations are concerned, and before the commen cement of the Central Laws (Extension to Jammu and Kashmir) Act, 1968 (25 of 1968), in so far as other corporations are concerned; (viii) the Portuguese Commercial Code, in so far as it relates to sociedades anonimas ; and (ix) the Registration of Companies (Sikkim) Act, 1961 (Sikkim Act 8 of 1961); (68) private company means a company having a minimum paid -up share capital 1*** as may be prescribed, and which by its articles, (i) restricts the right to transfer its shares; (ii) except in case of One Pers on Company, limits the number of its members to two hundred: Provided that where two or more persons hold one or more shares in a company jointly, they shall, for the purposes of this clause, be treated as a single member: 1. The words of one lakh rupees or such higher paid -up share capital omitted by Act 21 of 2015, s. 2 (w.e.f. 29 -5-2015). *. Vide Notification No. S.O. 3912 (E), dated 30th October, 2019, this Act is made applicable to the Union territory of Jammu and Kashmir and the Union territory of Ladakh. 24 Provided further that (A) persons who are in the employment of the company; and (B) persons who, having been formerly in the employment of the company, were members of the company while in that employment and have continued to be members after the employment ceased, shall not be in cluded in the number of members; and (iii) prohibits any invitation to the public to subscribe for any securities of the company; (69) promoter means a person (a) who has been named as such in a prospectus or is identified by the company in the annual return referred to in section 92; or (b) who has control over the affairs of the company, directly or in directly whether as a share holder, director or otherwise; or (c) in accordance with whose advice, directions or instructions the Board of Directors of the company is accustomed to act: Provided that nothing in sub -clause ( c) shall apply to a person who is acting merely in a professional capacity; (70) prospectus means any document described or issued as a prospectus and includes a red herring prospectus referred to in section 32 or shelf prospectus referred to in section 31 or any notice, circular, advertisement or other document inviting offers from the public f or the subscription or purchase of any securities of a body corporate; (71) public company means a company which (a) is not a private company; 1[and] (b) has a minimum paid -up share capital 2*** as may be prescribed: Provided that a company which is a s ubsidiary of a company, not being a private company, shall be deemed to be public company for the purposes of this Act even where such subsidiary company continues to be a private company in its articles ; (72) public financial institution means (i) the Life Insurance Corporation of India, established under section 3 of the Life Insurance Corporation Act, 1956 (31 of 1956); (ii) the Infrastructure Development Finance Company Limited, referred to in clause ( vi) of sub-section ( 1) of section 4A of the Companies Act, 1956 (1 of 1956) so repealed under section 465 of this Act; (iii) specified company referred to in the Unit Trust of India (Transfer of Undertaking and Repeal) Act, 2002 (58 of 2002); (iv) institutions notified by the Central Government under sub -section ( 2) of section 4A of the Companies Act, 1956 (1 of 1956) so repealed under section 465 of this Act; (v) such other institution as may be notified by the Central Government in consultation with the Reserve Bank of India: Provided that no i nstitution shall be so notified unless (A) it has been established or constituted by or under any Central or State Act 1[other than this Act or the previous company law]; or 1. Ins. by Act 1 of 2018, s. 2 (w.e.f. 9 -2-2018). 2. The words of five lakh rupees or such higher paid -up capital, omitted by Act 21 of 2015, s. 2 (w.e.f. 29 -5-2015). 25 (B) not less than fifty -one per cent. of the paid -up share capital is held or con trolled by the Central Government or by any State Government or Governments or partly by the Central Government and partly by one or more State Governments; (73) recognised stock exchange means a recognised stock exchange as defined in clause ( f) of section 2 of the Securities Contracts (Regulation) Act, 195

exchange as defined in clause ( f) of section 2 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956); (74) register of companies means the register of companies maintained by the Registrar on paper or in any electronic mode under this Act; (75) Registrar means a Registrar, an Ad ditional Registrar, a Joint Registrar, a Deputy Registrar or an Assistant Registrar, having the duty of registering companies and discharging various functions under this Act; (76) related party , with reference to a company, means (i) a director or his relative; (ii) a key managerial personnel or his relative; (iii) a firm, in which a director, manager or his relative is a partner; (iv) a private company in which a director or manager 1[or his relative] is a member or director; (v) a public company in which a director or manager is a director 2[and holds] along with his relatives, more than two per cent. of its paid -up share capital; (vi) any body corporate whose Board of Directors, managing director or manager is accustomed to act in accordance with the advice, directions or instructions of a director or manager; (vii) any person on whose advice, directions or instructions a director or manager is accustomed to act: Provided that nothing in sub -clauses ( vi) and ( vii) shall apply to the advice, directions or instructions given in a professional capacity; 3[(viii) any body corporate which is (A) a holding, subsidiary or an associate company of such company; (B) a subsidiary of a holding company to which it is also a subsidiary; or (C) an investing company or the venturer of the company. Explanation. For the purpose of this clause, the investing company or the venturer of a company means a body corporate whose investment in the company would result in the company becoming an associate company of the body corporate ]; (ix) such other person as may be prescribed; (77) relative , with reference to any person, means any one who is relat ed to another, if (i) they are members of a Hindu Undivided Family; (ii) they are husband and wife; or (iii) one person is related to the other in such manner as may be prescribed; (78) remuneration means any money or its equivalent given or passed to a ny person for services rendered by him and includes perquisites as defined under the Income -tax Act, 1961 (43 of 1961); (79) Schedule means a Schedule annexed to this Act; 1. Ins. by S.O. 1894 (E), dated 24th July, 2014. 2. Subs. by S.O. 1820 (E), dated 9 th July, 2014 for or holds . 3. Subs. by Act 1 of 2018, s. 2, for sub -clause (viii) (w.e.f. 9 -2-2018). 26 (80) scheduled bank means the scheduled bank as defined in clause ( e) of section 2 of the Reserve Bank of India Act, 1934 (2 of 1934); (81) securities means the securities as defined in clause ( h) of section 2 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956); (82) Securities and Exchange Board means the Securities and Exchange Board of India established under section 3 of the Securities and Exchange Board of India Act, 1992 (15 of 1992); (83) Serious Fraud Investigation Office means the office referred to in section 211; (84) share means a share in the share capital of a company and includes stock; (85) small company means a company, other than a public company, (i) paid -up share capital of which does not exceed fifty lakh rupees or such higher amount as may be prescribed which s hall not be more than 1[ten crore rupees]; 2[and] (ii) turnover of which 3[as per profit and loss account for the immediately preceding financial year] does not exceed two crore rupees or such higher amount as may be prescribed which shall not be more than 4[one hundred crore rupees]: Provided that nothing in this clause shall apply to (A) a holding company or a subsidiary company; (B) a company registered under section 8; or (C) a company or body corporate governed by any special Act; (86) subscribed cap ital means such part of the capital which is for the time being subscribed by the members of a company; (87) subsidiary company or subsidiary , in relation to any other company (that is to say the holding company), means a company in which the holding company (i) controls the composition of the Board of Directors; or (ii) exercises or controls more than one -half of the 5[total voting power] either at its own or together with one or more of its subsidiary companies: Provided that such class or classes o f holding companies as may be prescribed shall not have layers of subsidiaries beyond such numbers as may be prescribed. Explanation. For the purposes of this clause, (a) a company shall be deemed to be a subsidiary company of the holding company even if the control referred to in sub -clause ( i) or sub -clause ( ii) is of another subsidiary company of the holding company; (b) the composition of a companys Board of Directors shall be deemed to be controlled by another company if that other company by exercis e of some power exercisable by it at its discretion can appoint or remove all or a majority of the directors; (c) the expression company includes any body corporate; (d) layer in relation to a holding company means its subsidiary or subsidiaries; 1. Subs. by Act 1 of 2018, s. 2, for five crore rupees (w.e.f. 9 -2-2018). 2. Subs. by notification No. S.O. 504(E), dated 13th February, 2015 , for word or (w.e.f. 13-2-2015). 3. Subs. by Act 1 of 2018, s. 2, for as per its last profit and loss account (w.e.f. 9 -2-2018). 4. Subs. by s. 2, ibid., for twenty crore rupees(w.e.f. 9 -2-2018). 5. Subs. by s. 2, ibid., for total share capital (w.e.f. 7 -5-2018). 27 (88) sweat equity shares means such equity shares as are issued by a company to its directors or employees at a discount or for consideration, other than cash, for providing their know -how or making available rights in the nature of intellectual property righ ts or value additions, by whatever name called; (89) total voting power , in relation to any matter, means the total number of votes which may be cast in regard to that matter on a poll at a meeting of a company if all the members thereof or their proxies having a right to vote on that matter are present at the meeting and cast their votes; (90) Tribunal means the National Company Law Tribunal constituted under section 408; 1[(91) turnover means gross amount of revenue recognised in the profit and los s account from the sale, supply, or distribution of goods or on account of services rendered, or both, by a company during a financial year;] (92) unlimited company means a company not having any limit on the liability of its members; (93) voting right means the right of a member of a company to vote in any meeting of the company or by means of postal ballot; (94) whole -time director includes a director in the whole -time employment of the company; 2[(94A) winding up means winding up under this Act or liquidation under the Insolvency and Bankruptcy Code, 2016 (31 of 2016), as applicable;] (95) words and expressions used and not defined in this Act but defined in the Securities Contracts (Regulation) Act, 1956 (42 of 1 956) or the Securities and Exchange Board of India Act, 1992 (15 of 1992) or the Depositories Act, 1996 (22 of 1996) shall have the meanings respectively assigned to them in those Acts. CHAPTER II INCORPORATION OF COMPANY AND MATTERS INCIDE NTAL THERETO 3. Formation of company. (1) A company may be formed for any lawful purpose by (a) seven or more persons, where the company to be formed is to be a public company; (b) two or more persons, where the company to be formed is to be a private com pany; or (c) one person, where the company to be formed is to be One Person Company that is to say, a private company, by subscribing their names or his name to a memorandum and complying with the requirements of this Act in respect of registration: Provided that the memorandum of One Person Company shall indicate the name of the other person, with his prior written consent in the prescribed form, who shall, in the event of the subscribers death or his incapacity to contract become the member of the company and the written consent of such person shall also be filed with the Registrar at the time of incorporation of the One Person Company along with its memorandum and articles: Provided further that such other person may withdraw his consent in such ma nner as may be prescribed: Provided also that the member of One Person Company may at any time change the name of such other person by giving notice in such manner as may be prescribed: Provided also that it shall be the duty of the member of One Person Co mpany to intimate the company the change, if any, in the name of the other person nominated by him by indicating in the memorandum or otherwise within such time and in such manner as maybe prescribed, and the company shall intimate the Registrar any such c hange within such time and in such manner as may be prescribed: Provided also that any such change in the name of the person shall not be deemed to be an alteration of the memorandum. 1. Subs. by Act 1 of 2018, s. 2, for clause ( 91) (w.e.f. 9 -2-2018). 2. Ins. by Act 31 of 2016, s. 255 and the Eleventh Schedule (w.e.f. 15 -11-2016). 28 (2) A company formed under sub -section ( 1) may be either (a) a compan y limited by shares; or (b) a company limited by guarantee; or (c) an unlimited company. 1[3A. Members severally liable in certain cases. -If at any time the number of members of a company is reduced, in the case of a public company, below seven, in the cas e of a private company, below two, and the company carries on business for more than six months while the number of members is so reduced, every person who is a member of the company during the time that it so carries on business after those six months and is cognisant of the fact that it is carrying on business with less than seven members or two members, as the case may be, shall be severally liable for the payment of the whole debts of the company contracted during that time, and may be severally sued th erefor.] 4. Memorandum. (1) The memorandum of a company shall state (a) the name of the company with the last word Limited in the case of a public limited company, or the last words Private Limited in the case of a private limited company: Provided that nothing in this clause shall apply to a company registered under section 8; (b) the State in which the registered office of the company is to be situated; (c) the objects for which the company is proposed to be incorporated and any matter considered necessary in furtherance thereof; (d) the liability of members of the company, whether limited or unlimited, and also state, (i) in the case of a company limited by shares, that liability of its members is limited to the amount unpaid, if any, on the share s held by them; and (ii) in the case of a company limited by guarantee, the amount up to which each member undertakes to contribute (A) to the assets of the company in the event of its being wound up while he is a member or within one year after he ceases to be a member, for payment of the debts and liabilities of the company or of such debts and liabilities as may have been contracted before he ceases to be a member, as the case may be; and (B) to the costs, charges and expenses of winding up and for adju stment of the rights of the contributories among themselves; (e) in the case of a company having a share capital, (i) the amount of share capital with which the company is to be registered and the division thereof into shares of a fixed amount and the num ber of shares which the subscribers to the memorandum agree to subscribe which shall not be less than one share; and (ii) the number of shares each subscriber to the memorandum intends to take, indicated opposite his name; (f) in the case of One Person Com pany, the name of the person who, in the event of death of the subscriber, shall become the member of the company. (2) The name stated in the memorandum shall not (a) be identical with or resemble too nearly to the name of an existing company registered u nder this Act or any previous company law; or (b) be such that its use by the company (i) will constitute an offence under any law for the time being in force; or (ii) is undesirable in the opinion of the Central Government. (3) Without prejudice to the p rovisions of sub -section ( 2), a company shall not be registered with a name which contains (a) any word or expression which is likely to give the impression that the company is in any way connected with, or having the patronage of, the Central Government, any State Government, or any local authority, corporation or body constituted by the Central Government or any State Government under any law for the time being in force; or 1. Ins. by Act 1 of 2018, s. 3 (w.e.f. 9 -2-2018). 29 (b) such word or expression, as may be prescribed, unless the previous approval o f the Central Government has been obtained for the use of any such word or expression. (4) A person may make an application, in such form and manner and accompanied by such fee, as may be prescribed, to the Registrar for the reservation of a name set out i n the application as (a) the name of the proposed company; or (b) the name

reservation of a name set out i n the application as (a) the name of the proposed company; or (b) the name to which the company proposes to change its name. (5) 1[(i) Upon receipt of an application under sub -section ( 4), the Registrar may, on the basis of information and documents furni shed along with the application, reserve the name for a period of twenty days from the date of approval or such other period as may be prescribed: Provided that in case of an application for reservation of name or for change of its name by an existing comp any, the Registrar may reserve the name for a period of sixty days from the date of approval .] (ii) Where after reservation of name under clause ( i), it is found that name was applied by furnishing wrong or incorrect information, then, (a) if the company has not been incorporated, the reserved name shall be cancelled and the person making application under sub -section ( 4) shall be liable to a penalty which may extend to one lakh rupees; (b) if the company has been incorporated, the Registrar may, after giv ing the company an opportunity of being heard (i) either direct the company to change its name within a period of three months, after passing an ordinary resolution; (ii) take action for striking off the name of the company from the register of companies; or (iii) make a petition for winding up of the company. (6) The memorandum of a company shall be in respective forms specified in Tables A, B, C, D and E in Schedule I as may be applicable to such company. (7) Any provision in the memorandum or articles, in the case of a company limited by guarantee and not having a share capital, purporting to give any person a right to participate in the divisible profits of the company otherwise than as a member, shall be void. 5. Articles. (1) The articles of a company shall contain the regulations for management of the company. (2) The articles shall also contain such matters, as may be prescribed: Provided that nothing prescribed in this sub -section shall be deemed to prevent a company from including such additional m atters in its articles as may be considered necessary for its management. (3) The articles may contain provisions for entrenchment to the effect that specified provisions of the articles may be altered only if conditions or procedures as that are more rest rictive than those applicable in the case of a special resolution, are met or complied with. (4) The provisions for entrenchment referred to in sub -section ( 3) shall only be made either on formation of a company, or by an amendment in the articles agreed t o by all the members of the company in the case of a private company and by a special resolution in the case of a public company. (5) Where the articles contain provisions for entrenchment, whether made on formation or by amendment, the company shall give notice to the Registrar of such provisions in such form and manner as may be prescribed. (6) The articles of a company shall be in respective forms specified in Tables, F, G, H, I and J in Schedule I as may be applicable to such company. 1. Subs. by Act 1 of 2018, s. 4, for clause ( i) (w.e.f. 26 -1-2018). 30 (7) A company may adopt all or any of the regulations contained in the model articles applicable to such company. (8) In case of any company, which is registered after the commencement of this Act, in so far as the registered articles of such company do not exclude or modif y the regulations contained in the model articles applicable to such company, those regulations shall, so far as applicable, be the regulations of that company in the same manner and to the extent as if they were contained in the duly registered articles o f the company. (9) Nothing in this section shall apply to the articles of a company registered under any previous company law unless amended under this Act. 6. Act to override memorandum, articles, etc. Save as otherwise expressly provided in this Act (a) the provisions of this Act shall have effect notwithstanding anything to the contrary contained in the memorandum or articles of a company, or in any agreement executed by it, or in any resolution passed by the company in general meeting or by its Board o f Directors, whether the same be registered, executed or passed, as the case may be, before or after the commencement of this Act; and (b) any provision contained in the memorandum, articles, agreement or resolution shall, to the extent to which it is repu gnant to the provisions of this Act, become or be void, as the case may be. 7. Incorporation of company. (1) There shall be filed with the Registrar within whose jurisdiction the registered office of a company is proposed to be situated, the following documents and information for registration, namely: (a) the memorandum and articles of the company duly signed by all the subscribers to the memorandum in such manner as may be prescribed; (b) a declaration in the prescribed form by an advocate, a charter ed accountant, cost accountant or company secretary in practice, who is engaged in the formation of the company, and by a person named in the articles as a director, manager or secretary of the company, that all the requirements of this Act and the rules m ade thereunder in respect of registration and matters precedent or incidental thereto have been complied with; (c) 1[a declaration] from each of the subscribers to the memorandum and from persons named as the first directors, if any, in the articles that h e is not convicted of any offence in connection with the promotion, formation or management of any company, or that he has not been found guilty of any fraud or misfeasance or of any breach of duty to any company under this Act or any previous company law during the preceding five years and that all the documents filed with the Registrar for registration of the company contain information that is correct and complete and true to the best of his knowledge and belief; (d) the address for correspondence till i ts registered office is established; (e) the particulars of name, including surname or family name, residential address, nationality and such other particulars of every subscriber to the memorandum along with proof of identity, as may be prescribed, and in the case of a subscriber being a body corporate, such particulars as may be prescribed; (f) the particulars of the persons mentioned in the articles as the first directors of the company, their names, including surnames or family names, the Director Ident ification Number, residential address, nationality and such other particulars including proof of identity as may be prescribed; and (g) the particulars of the interests of the persons mentioned in the articles as the first directors of the company in other firms or bodies corporate along with their consent to act as directors of the company in such form and manner as may be prescribed. (2) The Registrar on the basis of documents and information filed under sub -section ( 1) shall register all the documents an d information referred to in that sub -section in the register and issue a certificate of incorporation in the prescribed form to the effect that the proposed company is incorporated under this Act. (3) On and from the date mentioned in the certificate of i ncorporation issued under sub -section ( 2), the Registrar shall allot to the company a corporate identity number, which shall be a distinct identity for the company and which shall also be included in the certificate. 1. Subs. by Act 1 of 2018, s. 5, for an affidavit (w.e .f. 27 -7-2018). 31 (4) The company shall maintain and preserve at its registered office copies of all documents and information as originally filed under sub -section ( 1) till its dissolution under this Act. (5) If any person furnishes any false or incorrect particulars of any information or suppresses any material information, of which he is aware in any of the documents filed with the Registrar in relation to the registration of a company, he shall be liable for action under section 447. (6) Without prejudice to the provisions of sub -section ( 5) where, at any time after the incorporation of a company, it is proved that the company has been got incorporated by furnishing any false or incorrect information or representation or by suppressing any material fact or information in any of the documents or declaration filed or made for incorporating such company, or by any fraudulent action, the promoters, the persons named as the first directors of the company and the persons making declaration under clause (b) of sub -section( 1) shall each be liable for action under s ection 447. (7) Without prejudice to the provisions of sub -section ( 6), where a company has been got incorporated by furnishing any false or incorrect information or representation or by suppressing any material fact or information in any of the documents or declaration filed or made for incorporating such company or by any fraudulent action, the Tribunal may, on an application made to it, on being satisfied that the situation so warrants, (a) pass such orders, as it may think fit, for regulation of the ma nagement of the company including changes, if any, in its memorandum and articles, in public interest or in the interest of the company and its members and creditors; or (b) direct that liability of the members shall be unlimited; or (c) direct removal of the name of the company from the register of companies; or (d) pass an order for the winding up of the company; or (e) pass such other orders as it may deem fit: Provided that before making any order under this sub -section, (i) the company shall be given a reasonable opportunity of being heard in the matter; and (ii) the Tribunal shall take into consideration the transactions entered into by the company, including the obligations, if any, contracted or payment of any liability. 8. Formation of companies wi th charitable objects, etc. (1) Where it is proved to the satisfaction of the Central Government that a person or an association of persons proposed to be registered under this Act as a limited company (a) has in its objects the promotion of commerce, art , science, sports, education, research, social welfare, religion, charity, protection of environment or any such other object; (b) intends to apply its profits, if any, or other income in promoting its objects; and (c) intends to prohibit the payment of an y dividend to its members, the Central Government may, by licence issued in such manner as may be prescribed, and on such conditions as it deems fit, allow that person or association of persons to be registered as a limited company under this section witho ut the addition to its name of the word Limited , or as the case may be, the words Private Limited , and thereupon the Registrar shall, on application, in the prescribed form, register such person or association of persons as a company under this section . (2) The company registered under this section shall enjoy all the privileges and be subject to all the obligations of limited companies. (3) A firm may be a member of the company registered under this section. (4) (i) A company registered under this sect ion shall not alter the provisions of its memorandum or articles except with the previous approval of the Central Government. (ii) A company registered under this section may convert itself into company of any other kind only after complying with such cond itions as may be prescribed. 32 (5) Where it is proved to the satisfaction of the Central Government that a limited company registered under this Act or under any previous company law has been formed with any of the objects specified in clause ( a) of sub -section (1) and with the restrictions and prohibitions as mentioned respectively in clauses (b) and ( c) of that sub -section, it may, by licence, allow the company to be registered under this section subject to such conditions as the Central Government deems fi t and to change its name by omitting the word Limited , or as the case may be, the words Private Limited from its name and thereupon the Registrar shall, on application, in the prescribed form, register such company under this section and all the provis ions of this section shall apply to that company. (6) The Central Government may, by order, revoke the licence granted to a company registered under this section if the company contravenes any of the requirements of this section or any of the conditions subject to which a licence is issued or the affairs of the company are conducted fraudulently or in a manner violative of the objects of the company or prejudicial to public interest, and without prejudice to any other action against the company under this Act, direct the company to convert its status and change its name to add the word Limited or the words Private Limited , as the case may be, to its name and thereupon the Registrar shall, without prejudice to any action that may be taken under sub -section (7), on application, in the prescribed form, register the company accordingly: Provided that no such order shall be made unless the company is given a reasonable opportunity of being heard: Provided further that a copy of every such order shall be given to the Registrar. (7) Where a licence is revoked under sub -section ( 6), the Central Government may, by order, if it is satisfied that it is essential in the public interest, direct that the company be wound up under this Act or amalgamated with anoth er company registered under this section: Provided that no such order shall be made unless the company is given a reasonable opportunity of being heard. (8) Where a licence is revoked under sub -section ( 6) and where the Central Government is satisfied that it is essential in the public interest that the company registered under this section should be amalgamated with another company registered under this section and having similar objects, then, notwithstanding anything to the contrary contained in this Act , the Central Government may, by order, provide for such amalgamation to form a single company with such constitution, properties, powers, rights, interest, authorities and privileges and with such liabilities, duties and obligations as may be specified in the order. (9) If on the winding up or dissolution of a company registered under this section, there remains, after the satisfaction of its debts and liabilities, any asset, they may be transferred to another company registered under this section and havi ng similar objects, subject to such conditions as the Tribunal may impose, or may be sold and proceeds thereof credited to 1[Insolvency and Bankruptcy Fund formed under section 224 of the Insolvency and Bankruptcy Code, 2016 (31 of 2016)]. (10) A company r egistered under this section shall amalgamate only with another company registered under this section and having similar objects. (11) If a company makes any default in complying with any of the requirements laid down in this section, the company shall, wi thout prejudice to any other action under the provisions of this section, be punishable with fine which shall not be less than ten lakh rupees but which may extend to one crore rupees and the directors and every officer of the company who is in default sha ll be punishable 2*** with fine which shall not be less than twenty -five thousand rupees but which may extend to 3[twenty -five lakh rupees ]: Provided that when it is proved that the affairs of the company were conducted fraudulently, every officer in defau lt shall be liable for action under section 447. 9. Effect of registration. From the date of incorporation mentioned in the certificate of incorporation,

for action under section 447. 9. Effect of registration. From the date of incorporation mentioned in the certificate of incorporation, such subscribers to the memorandum and all other persons, as may, from time to time, become membe rs 1. Subs. by Act 31 of 2016, s. 255 and the Eleventh Schedule, for the Rehabilitation and Insolvency Fund formed under sectio n 269 (w.e.f. 15 -11-2016). 2. The words with imprisonment for a term which may extend to three years or omitted by Act 29 of 2020, s. 3 (w.e.f. 21 -12- 2020). 3. Subs . by Act 29 of 2020, s. 3, for twenty -five lakh rupees, or with both (w.e.f. 21 -12-2020). 33 of the company, shall be a body corporate by the name contained in the memorandum, capable of exercising all the functions of an incorporated company under this Act and having perpetual succession 1*** with power to acquire, hold and dispose of property , both movable and immovable, tangible and intangible, to contract and to sue and be sued, by the said name. 10. Effect of memorandum and articles. (1) Subject to the provisions of this Act, the memorandum and articles shall, when registered, bind the company and the members thereof to the same extent as if they respectively had been signed by the company and by each member, and contained covenants on its and his part to observe all the provisions of the memorandum and of the articles. (2) All monies pa yable by any member to the company under the memorandum or articles shall be a debt due from him to the company. 2[10A. Commencement of business, etc. (1) A company incorporated after the commencement of the Companies (Amendment) Act, 2019 and having a sha re capital shall not commence any business or exercise any borrowing powers unless (a) a declaration is filed by a director within a period of one hundred and eighty days of the date of incorporation of the company in such form and verified in such manner as may be prescribed, with the Registrar that every subscriber to the memorandum has paid the value of the shares agreed to be taken by him on the date of making of such declaration; and (b) the company has filed with the Registrar a verification of its r egistered office as provided in sub-section ( 2) of section 12. (2) If any default is made in complying with the requirements of this section, the company shall be liable to a penalty of fifty thousand rupees and every officer who is in default shall be lia ble to a penalty of one thousand rupees for each day during which such default continues but not exceeding an amount of one lakh rupees. (3) Where no declaration has been filed with the Registrar under clause ( a) of sub -section ( 1) within a period of one hundred and eighty days of the date of incorporation of the company and the Registrar has reasonable cause to believe that the company is not carrying on any business or operations, he may, without prejudice to the provisions of sub -section ( 2), initiate a ction for the removal of the name of the company from the register of companies under Chapter XVIII.] 11. [Commencement of business, etc. ] Omitted by the Companies (Amendment ) Act, 2015 (21 of 2015), s. 4 (w.e.f. 29-5-2015). 12. Registered office of company. (1) A company shall, 3[within thirty days of its incorporation] and at all times thereafter, have a registered office capable of receiving and acknowledging all communications and notices as may be addressed to it. (2) The company shall furnish to the Registrar verification of its registered office within a period of thirty days of its incorporation in such manner as may be prescribed. (3) Every company shall (a) paint or affix its name, and the address of its registered office, and keep the same painted or affixed, on the outside of every office or place in which its business is carried on, in a conspicuous position, in legible letters, and if the characters employed therefor are not those of the language or of one of the languages in general use in that locality, also in the characters of that language or of one of those languages; 4[(b) have its name engraved in legible characters on its seal, if any;] (c) get its name, address of its registered office and the Corporate Identity Number along with telephone number, fax number, if any, e -mail and website addresses, if any, printed in all its business letters, billheads, letter papers and in all its notices and other official publications; and 1. The words and a common seal omitted by Act 21 of 2015, s. 3 (w.e.f. 29 -5-2015). 2. Ins. by Act 22 of 2019, s. 3 (w.e.f. 2 -11-2018). 3. Subs. by Act 1 of 2018, s. 6, for on and from the fifteenth day of its incorporation(w.e.f. 27 -7-2018). 4. Subs. by Act 21 of 2015, s. 5, for clause ( b) (w.e.f. 29 -5-2015). 34 (d) have its name printed on hundies , promissory notes, b ills of exchange and such other documents as may be prescribed: Provided that where a company has changed its name or names during the last two years, it shall paint or affix or print, as the case may be, along with its name, the former name or names so ch anged during the last two years as required under clauses ( a) and ( c): Provided further that the words One Person Company shall be mentioned in brackets below the name of such company, wherever its name is printed, affixed or engraved. (4) Notice of every change of the situation of the registered office, verified in the manner prescribed, after the date of incorporation of the company, shall be given to the Registrar 1[within thirty days] of the change, who shall record the same. (5) Excep t on the authority of a special resolution passed by a company, the registered office of the company shall not be changed, (a) in the case of an existing company, outside the local limits of any city, town or village where such office is situated at the c ommencement of this Act or where it may be situated later by virtue of a special resolution passed by the company; and (b) in the case of any other company, outside the local limits of any city, town or village where such office is first situated or where it may be situated later by virtue of a special resolution passed by the company: Provided that no company shall change the place of its registered office from the jurisdiction of one Registrar to the jurisdiction of another Registrar within the same State unless such change is confirmed by the Regional Director on an application made in this behalf by the company in the prescribed manner. (6) The confirmation referred to in sub -section ( 5) shall be communicated within a period of thirty days from the date of receipt of application by the Regional Director to the company and the company shall file the confirmation with the Registrar within a period of sixty days of the date of confirmation who shall register the same and certify the registration within a per iod of thirty days from the date of filing of such confirmation. (7) The certificate referred to in sub -section ( 6) shall be conclusive evidence that all the requirements of this Act with respect to change of registered office in pursuance of sub -section ( 5) have been complied with and the change shall take effect from the date of the certificate. (8) If any default is made in complying with the requirements of this section, the company and every officer who is in default shall be liable to a penalty of one thousand rupees for every day during which the default continues but not exceeding one lakh rupees. 2[(9) If the Registrar has reasonable cause to believe that the company is not carrying on any business or operations, he may cause a physical verification of the registered office of the company in such manner as may be prescribed and if any default is found to be made in complying with the requirements of sub - section ( 1), he may without prejudice to the provisions of sub -section ( 8), initiate action for th e removal of the name of the company from the register of companies under Chapter XVIII. ] 13. Alteration of memorandum. (1) Save as provided in section 61, a company may, by a special resolution and after complying with the procedure specified in this section, alter the provisions of its memorandum. (2) Any change in the name of a company shall be subject to the provisions of sub -sections ( 2) and ( 3) of section 4 and shall not have effect except with the approval of the Central Government in writing: Provided that no such approval shall be necessary where the only change in the name of the company is the deletion therefrom, or addition thereto, of the word Private , consequent on the conversion of any one class of companies to another class in accordanc e with the provisions of this Act. 1. Subs. by Act 1 of 2018, s. 6, for within fifteen days (w.e.f. 27 -7-2018). 2. Ins. by Act 22 of 2019, s. 4 (w.e.f. 2 -11-2018). 35 (3) When any change in the name of a company is made under sub -section ( 2), the Registrar shall enter the new name in the register of companies in place of the old name and issue a fresh certificate of incorporation with the new name and the change in the name shall be complete and effective only on the issue of such a certificate. (4) The alteration of the memorandum relating to the place of the registered office from one State to another shall not have any effect unless it is approved by the Central Government on an application in such form and manner as may be prescribed. (5) The Central Government shall dispose of the application under sub -section ( 4) within a period of sixty days and before passing its order may satisf y itself that the alteration has the consent of the creditors, debenture -holders and other persons concerned with the company or that the sufficient provision has been made by the company either for the due discharge of all its debts and obligations or tha t adequate security has been provided for such discharge. (6) Save as provided in section 64, a company shall, in relation to any alteration of its memorandum, file with the Registrar (a) the special resolution passed by the company under sub -section ( 1); (b) the approval of the Central Government under sub -section ( 2), if the alteration involves any change in the name of the company. (7) Where an alteration of the memorandum results in the transfer of the registered office of a company from one State to a nother, a certified copy of the order of the Central Government approving the alteration shall be filed by the company with the Registrar of each of the States within such time and in such manner as may be prescribed, who shall register the same, and the R egistrar of the State where the registered office is being shifted to, shall issue a fresh certificate of incorporation indicating the alteration. (8) A company, which has raised money from public through prospectus and still has any unutilised amount out of the money so raised, shall not change its objects for which it raised the money through prospectus unless a special resolution is passed by the company and (i) the details, as may be prescribed, in respect of such resolution shall also be published in the newspapers (one in English and one in vernacular language) which is in circulation at the place where the registered office of the company is situated and shall also be placed on the website of the company, if any, indicating therein the justification for such change; (ii) the dissenting shareholders shall be given an opportunity to exit by the promoters and shareholders having control in accordance with regulations to be specified by the Securities and Exchange Board. (9) The Registrar shall register any alteration of the memorandum with respect to the objects of the company and certify the registration within a period of thirty days from the date of filing of the special resolution in accordance with clause ( a) of sub -section ( 6) of this section. (10) No alteration made under this section shall have any effect until it has been registered in accordance with the provisions of this section. (11) Any alteration of the memorandum, in the case of a company limited by guarantee and not having a share capital , purporting to give any person a right to participate in the divisible profits of the company otherwise than as a member, shall be void. 14. Alteration of articles. (1) Subject to the provisions of this Act and the conditions contained in its memorandum, if any, a company may, by a special resolution, alter its articles including alterations having the effect of conversion of (a) a private company into a public company; or (b) a public company into a private company: Provided that where a company being a private company alters its articles in such a manner that they no longer include the restrictions and limitations which are required to be included in the articles of a private 36 company under this Act, the company shall, as from the date of such alteration, cease to be a private company: 1[Provided further that any alteration having the effect of conversion of a public company into a private company shall not valid unless it its approved by an order of the Central Government on an application made in such fo rm and manner as may be prescribed: Provided also that any application pending before the Tribunal, as on the date of commencement of the Companies (amendment) Act, 2019, shall be disposed of by the Tribunal in accordance with the provisions applicable to it before such commencement.] (2) Every alteration of the articles under this section and a copy of the order of the 2[Central Gover nment] approving the alteration as per sub -section ( 1) shall be filed with the Registrar, together with a printed copy of the altered articles, within a period of fifteen days in such manner as may be prescribed, who shall register the same. (3) Any alteration of the articles registered under sub -section ( 2) shall, subject to the provisions of this Act, be valid as if it were originally in the articles. 15. Alteration of memorandum or articles to be noted in every copy. (1) Every alteration made in the memorandum or articles of a company shall be noted in every copy of the memorandum or articles, as the case may be. (2) If a c ompany makes any default in complying with the provisions of sub -section ( 1), the company and every officer who is in default shall be liable to a penalty of one thousand rupees for every copy of the memorandum or articles issued without such alteration. 16. Rectification of name of company. (1) If, through inadvertence or otherwise, a

issued without such alteration. 16. Rectification of name of company. (1) If, through inadvertence or otherwise, a company on its first registration or on its registration by a new name, is registered by a name which, (a) in the opinion of the Central Government, is identical with or too nearly resembles the name by which a company in existence had been previously registered, whether under this Act or any previous company law, it may direct the company to change its name and the company shall change its name or new name, as the case may b e, within a period of three months from the issue of such direction, after adopting an ordinary resolution for the purpose; (b) on an application by a registered proprietor of a trade mark that the name is identical with or too nearly resembles to a registered trade mark of such proprietor under the Trade Marks Act, 1999 (47 of 1999), made to the Central Government within three y ears of incorporation or registration or change of name of the company, whether under this Act or any previous company law, in the opinion of the Central Government, is identical with or too nearly resembles to an existing trade mark, it may direct the com pany to change its name and the company shall change its name or new name, as the case may be, within a 3[period of three months ] from the issue of such direction, after adopting an ordinary resolution for the purpose. (2) Where a company changes its name or obtains a new name under sub -section ( 1), it shall within a period of fifteen days from the date of such change, give notice of the change to the Registrar along with the order of the Central Government, who shall carry out necessary changes in the cert ificate of incorporation and the memorandum. 4[(3) If a company is in default in complying with any direction given under sub -section (1) , the Central Government shall allot a new name to the company in such manner as may be prescribed and the Registrar shall enter the new name in the register of companies in place of the old name and issue a fresh certificate of incorporation with the new name, which the company shall use thereafter: Provided that nothing in this sub -section shall prevent a company from subsequently changing its name in accordance with the provisions of section 13. ] 17. Copies of memorandum, articles, etc., to be given to members. (1) A company shall, on being so requested by a member, send to him within seven days of the request and subj ect to the payment of such fees as may be prescribed, a copy of each of the following documents, namely: 1. Subs. by Act 22 of 2019, s. 5, for the Proviso (w.e.f. 2 -11-2018). 2. Subs. by s. 5, ibid., for Tribunal (w.e.f. 2 -11-2018). 3. Subs. by Act 29 of 2020, s. 4, for period of six months (w.e.f.1 -9-2021). 4. Subs. by s. 4, ibid., for sub -section (3) (w.e.f. 1 -9-2021). 37 (a) the memorandum; (b) the articles; and (c) every agreement and every resolution referred to in sub -section ( 1) of section117, if and in so far as t hey have not been embodied in the memorandum or articles. (2) If a company makes any default in complying with the provisions of this section, the company and every officer of the company who is in default shall be liable for each default, to a penalty of one thousand rupees for each day during which such default continues or one lakh rupees, whichever is less. 18. Conversion of companies already registered. (1) A company of any class registered under this Act may convert itself as a company of other class under this Act by alteration of memorandum and articles of the company in accordance with the provisions of this Chapter. (2) Where the conversion is required to be done under this section, the Registrar shall on an application made by the company, after s atisfying himself that the provisions of this Chapter applicable for registration of companies have been complied with, close the former registration of the company and after registering the documents referred to in sub -section ( 1), issue a certificate of incorporation in the same manner as its first registration. (3) The registration of a company under this section shall not affect any debts, liabilities, obligations or contracts incurred or entered into, by or on behalf of the company before conversion an d such debts, liabilities, obligations and contracts may be enforced in the manner as if such registration had not been done. 19. Subsidiary company not to hold shares in its holding company. (1) No company shall, either by itself or through its nominees, hold any shares in its holding company and no holding company shall allot or transfer its shares to any of its subsidiary companies and any such allotment or transfer of shares of a company to its subsidiary company shall be void: Provided that nothing in this sub -section shall apply to a case (a) where the subsidiary company holds such shares as the legal representative of a deceased member of the holding company; or (b) where the subsidiary company holds such shares as a trustee; or (c) where the subsidiary company is a shareholder even before it became a subsidiary company of the holding company: Provided further that the subsidiary company referred to in the preceding proviso shall have a right to vote at a meeting of the holding company only in respect of the shares held by it as a legal representative or as a trustee, as referred to in clause ( a) or clause ( b) of the said proviso. (2) The reference in this section to the shares of a holding company which is a company limited by guarantee or an u nlimited company, not having a share capital, shall be construed as a reference to the interest of its members, whatever be the form of interest. 20. Service of documents. (1) A document may be served on a company or an officer thereof by sending it to the company or the officer at the registered office of the company by registered post or by speed post or by courier service or by leaving it at its registered office or by means of such electronic or other mode as may be prescribed: Provided that where secur ities are held with a depository, the records of the beneficial ownership may be served by such depository on the company by means of electronic or other mode. (2) Save as provided in this Act or the rules made thereunder for filing of documents with the R egistrar in electronic mode, a document may be served on Registrar or any member by sending it to him by post or by registered post or by speed post or by courier or by delivering at his office or address, or by such electronic or other mode as may be pres cribed: Provided that a member may request for delivery of any document through a particular mode, for which he shall pay such fees as may be determined by the company in its annual general meeting. 38 Explanation .For the purposes of this section, the term courier means a person or agency which delivers the document and provides proof of its delivery. 21. Authentication of documents, proceedings and contracts. Save as otherwise provided in this Act, (a) a document or proceeding requiring authentication by a company; or (b) contracts made by or on behalf of a company, may be signed by any key managerial personnel or 1[an officer or employee of the company] duly authorised by the Board in this behalf. 22. Execution of bills of exchange, etc. (1) A bill of exc hange, hundi or promissory note shall be deemed to have been made, accepted, drawn or endorsed on behalf of a company if made, accepted, drawn, or endorsed in the name of, or on behalf of or on account of, the company by any person acting under its authori ty, express or implied. (2) A company may, by writing 2[under its common seal, if any,] authorise any person, either generally or in respect of any specified matters, as its attorney to execute other deeds on its behalf in any place either in or outside In dia: 3[Provided that in case a company does not have a common seal, the authorisation under this sub-section shall be made by two directors or by a director and the Company Secretary, wherever the company has appointed a Company Se cretary.] (3) A deed signed by such an attorney on behalf of the company and under his seal shall bind the company 4***. CHAPTER III PROSPECTUS AND ALLOTMENT OF SECURITIES PART I.Public offer 23. Public offer and private placement. (1) A public company may issue securities (a) to public through prospectus (herein referred to as public offer ) by complying with the provisions of this Part; or (b) through private placement by complying with the provisions of Part II of this Chapter; or (c) through a righ ts issue or a bonus issue in accordance with the provisions of this Act and in case of a listed company or a company which intends to get its securities listed also with the provisions of the Securities and Exchange Board of India Act, 1992 (15 of 1992) an d the rules and regulations made thereunder. (2) A private company may issue securities (a) by way of rights issue or bonus issue in accordance with the provisions of this Act; or (b) through private placement by complying with the provisions of Part II of this Chapter. Explanation. For the purposes of this Chapter, public offer includes initial public offer or further public offer of securities to the public by a company, or an offer for sale of securities to the public by an existing shareholder, thro ugh issue of a prospectus. 24. Power of Securities and Exchange Board to regulate issue and transfer of securities, etc.(1) The provisions contained in this Chapter, Chapter IV and in section 127 shall, (a) in so far as they relate to (i) issue and transfer of securities; and 1. Subs. by Act 1 of 2018, s. 7, for an officer of the company (w.e.f. 9 -2-2018). 2. Subs. by Act 21 of 2015, s. 6, for under its common seal (w.e.f. 29-5-2015). 3. The proviso i ns. by s. 6, ibid. (w.e.f. 29 -5-2015). 4. The words and have the effect as if it were made under its common seal omitted by s. 6, ibid. (w.e.f. 29 -5-2015). 39 (ii) non -payment of dividend, by listed companies or those companies which intend to get their securities listed on any recognised stock exchange in India, except as provided under this Act, be administered by the Secu rities and Exchange Board by making regulations in this behalf; (b) in any other case, be administered by the Central Government. Explanation .For the removal of doubts, it is hereby declared that all powers relating to all other matters relating to prospe ctus, return of allotment, redemption of preference shares and any other matter specifically provided in this Act, shall be exercised by the Central Government, the Tribunal or the Registrar, as the case may be. (2) The Securities and Exchange Board shall, in respect of matters specified in sub -section ( 1) and the matters delegated to it under proviso to sub -section ( 1) of section 458, exercise the powers conferred upon it under sub -sections ( 1), (2A), (3) and ( 4) of section 11, sections 11A, 11B and 11D of the Securities and Exchange Board of India Act, 1992 (15 of 1992). 25. Document containing offer of securities for sale to be deemed prospectus. (1) Where a company allots or agrees to allot any securities of the company with a view to all or any of those securities being offered for sale to the public, any document by which the offer for sale to the public is made shall, for all purposes, be deemed to be a prospectus issued by the company; and all enactments and rules of law as to the contents of prospect us and as to liability in respect of mis -statements, in and omissions from, prospectus, or otherwise relating to prospectus, shall apply with the modifications specified in sub -sections (3) and ( 4) and shall have effect accordingly, as if the securities h ad been offered to the public for subscription and as if persons accepting the offer in respect of any securities were subscribers for those securities, but without prejudice to the liability, if any, of the persons by whom the offer is made in respect of mis-statements contained in the document or otherwise in respect thereof. (2) For the purposes of this Act, it shall, unless the contrary is proved, be evidence that an allotment of, or an agreement to allot, securities was made with a view to the securiti es being offered for sale to the public if it is shown (a) that an offer of the securities or of any of them for sale to the public was made within six months after the allotment or agreement to allot; or (b) that at the date when the offer was made, the whole consideration to be received by the company in respect of the securities had not been received by it. (3) Section 26 as applied by this section shall have effect as if (i) it required a prospectus to state in addition to the matters required by that section to be stated in a prospectus (a) the net amount of the consideration received or to be received by the company in respect of the securities to which the offer relates; and (b) the time and place at which the contract where under the said secu rities have been or are to be allotted may be inspected; (ii) the persons making the offer were persons named in a prospectus as directors of a company. (4) Where a person making an offer to which this section relates is a company or a firm, it shall be sufficient if the document referred to in sub -section ( 1) is signed on behalf of the company or firm by two directors of the company or by not less than one -half of the partners in the firm, as the case may be. 26. Matters to be stated in prospectus .(1) Every prospectus issued by or on behalf of a public company either with reference to its formation or subsequently, or by or on behalf of any person who is or has been engaged or interested in the formation of a public company, shall be dated and signed and shall, 1[state such information and set out such reports on financial information as may be specified by the Securities and Exchange Board in consultation with the Central Government: Provided that until the Securities and Exchange Board specifies the information and reports on financial information under this sub -section, the regulations made by the Securities and Exchange Board under the Securities and Exchange Board of India Act, 1992 (15 of 1992), in respect of such financial information or reports on financial information shall apply]; 1. Ins. by Act 1 of

information or reports on financial information shall apply]; 1. Ins. by Act 1 of 2018, s. 8 (w.e.f. 7 -5-2018). 40 1* * * * * (c) make a declaration about the compliance of the provisions of this Act and a statement to the effect that nothing in the prospectus is contrary to the provisions of this Act, the Securities C ontracts (Regulation) Act, 1956 (42 of 1956) and the Securities and Exchange Board of India Act, 1992 (15 of 1992) and the rules and regulations made thereunder; and 2* * * * * (2) Nothing in sub -section ( 1) shall apply (a) to the issue to existing members or debenture -holders of a company, of a prospectus or form of application relating to shares in or debentures of the company, whether an applicant has a right to renounce the shares or not under sub -clause ( ii) of clause ( a) of sub -section (1) of section 62 in favour of any other person; or (b) to the issue of a prospectus or form of application relating to shares or debentures which are, or are to be, in all respects uniform with shares or debentures previously issued and for the time bein g dealt in or quoted on a recognised stock exchange. (3) Subject to sub -section ( 2), the provisions of sub -section ( 1) shall apply to a prospectus or a form of application, whether issued on or with reference to the formation of a company or subsequently. Explanation .The date indicated in the prospectus shall be deemed to be the date of its publication. (4) No prospectus shall be issued by or on behalf of a company or in relation to an intended company unless on or before the date of its publication, there has been delivered to the Registrar for 2[filing] , a copy thereof signed by every person who is named there in as a director or proposed director of the company or by his duly authorised attorney. (5) A prospectus issued under sub -section ( 1) shall not include a statement purporting to be made by an expert unless the expert is a person who is not, and has not been, engaged or interested in the formation or promotion or management, of the company and has given his written consent to the issue of the prospectus and has not withdrawn such consent before the delivery of a copy of the prospectus to the Registra r for 1[filing] and a statement to that effect shall be included in the prospectus. (6) Every prospectus issued under sub -section ( 1) shall, on the face of it, (a) state that a copy has been delivered for 1[filing] to the Registrar as required under sub- section ( 4); and (b) specify any documents required by this section to be attached to the copy so delivered or refer to statements included in the prospectus which specify these documents. 3* * * * * (8) No prospectus shall be valid i f it is issued more than ninety days after the date on which a copy thereof is delivered to the Registrar under sub -section ( 4). (9) If a prospectus is issued in contravention of the provisions of this section, the company shall be punishable with fine whi ch shall not be less than fifty thousand rupees but which may extend to three lakh rupees and every person who is knowingly a party to the issue of such prospectus shall be punishable 4*** with fine which shall not be less than fifty thousand rupees but which may extend to 5[three lakh rupees ]. 1. Clause s (a), (b) and ( d) omitted by Act 1 of 2018, s. 8 (w.e.f. 7 -5-2018). 2. Subs. by Act 22 of 2019, s. 6, for registration (w.e.f. 15 -8-2019). 3. Sub -section ( 7) omitted by s. 6, ibid. (w.e.f. 15 -8-2019). 4. The words with imprisonment for a term which may extend to three years or omitted by Act 29 of 2020, s. 6 (w.e.f. 21 -12- 2020). 5. Subs. by s. 6, ibid., for three lakh rupees, or with both (w.e.f. 21 -12-2020). 41 27. Variation in terms of contract or objects in prospectus. (1) A company shall not, at any time, vary the terms of a contract referred to in the prospectus or objects for which the prospectus was issued, except subject to the approval of, or except subject to an authority given by the company in general meeting by way of special resolution: Provided that the details, as may be prescribed, of the n otice in respect of such resolution to shareholders, shall also be published in the newspapers (one in English and one in vernacular language) in the city where the registered office of the company is situated indicating clearly the justification for such variation: Provided further that such company shall not use any amount raised by it through prospectus for buying, trading or otherwise dealing in equity shares of any other listed company. (2) The dissenting shareholders being those shareholders who have not agreed to the proposal to vary the terms of contracts or objects referred to in the prospectus, shall be given an exit offer by promoters or controlling shareholders at such exit price, and in such manner and conditions as may be specified by the Secur ities and Exchange Board by making regulations in this behalf. 28. Offer of sale of shares by certain members of company. (1) Where certain members of a company propose, in consultation with the Board of Directors to offer, in accordance with the provision s of any law for the time being in force, whole or part of their holding of shares to the public, they may do so in accordance with such procedure as may be prescribed. (2) Any document by which the offer of sale to the public is made shall, for all purpos es, be deemed to be a prospectus issued by the company and all laws and rules made thereunder as to the contents of the prospectus and as to liability in respect of mis -statements in and omission from prospectus or otherwise relating to prospectus shall ap ply as if this is a prospectus issued by the company. (3) The members, whether individuals or bodies corporate or both, whose shares are proposed to be offered to the public, shall collectively authorise the company, whose shares are offered for sale to th e public, to take all actions in respect of offer of sale for and on their behalf and they shall reimburse the company all expenses incurred by it on this matter. 29. Public offer of securities to be in dematerialised form. (1) Notwithstanding anything con tained in any other provisions of this Act, (a) every company making public offer; and (b) such other class or classes of 1*** companies as may be prescribed, shall issue the securities only in dematerialised form by complying with the provisions of the Depositories Act, 1996 (22 of 1996) and the regulations made thereunder. 2[(1A) In case of such class or classes of unlisted companies as may be prescribed, the securities shall be held or transferred only in demateriali sed form in the manner laid down in the Depositories Act, 1996 and the regulations made thereunder.] (2) Any company, other than a company mentioned in sub -section ( 1), may convert its securities into dematerialised form or issue its securities in physical form in accordance with the provisi ons of this Act or in dematerialised form in accordance with the provisions of the Depositories Act, 1996 (22 of 1996) and the regulations made thereunder. 30. Advertisement of prospectus. Where an advertisement of any prospectus of a company is published in any manner, it shall be necessary to specify therein the contents of its memorandum as regards the objects, the liability of members and the amount of share capital of the company, and the names of the signatories to the memorandum and the number of sha res subscribed for by them, and its capital structure. 31. Shelf prospectus. (1) Any class or classes of companies, as the Securities and Exchange Board may provide by regulations in this behalf, may file a shelf prospectus with the Registrar at the stage of the first offer of securities included therein which shall indicate a period not exceeding one year as the period of validity of such prospectus which shall commence from the date of opening of the first offer of securities under that prospectus, and in respect of a second or subsequent offer of such securities issued during the period of validity of that prospectus, no further prospectus is required. (2) A company filing a shelf prospectus shall be required to file an information memorandum containing a ll material facts relating to new charges created, changes in the financial position of the 1. The word public omitted by Act 22 of 2019, s. 7 (w.e.f. 15 -8-2019). 2. Ins. by s. 7, ibid. (w.e.f . 15-8-2019). 42 company as have occurred between the first offer of securities or the previous offer of securities and the succeeding offer of securities and such other changes as may be prescribed, with the Registrar within the prescribed time, prior to the issue of a second or subsequent offer of securities under the shelf prospectus: Provided that where a company or any other person has received applications for the allotment of securities along with advance payments of subscription before the making of any such change, the company or other person shall intimate the changes to such applicants and if they express a desire to withdraw their application, the company or other person s hall refund all the monies received as subscription within fifteen days thereof. (3) Where an information memorandum is filed, every time an offer of securities is made under sub-section ( 2), such memorandum together with the shelf prospectus sha ll be deemed to be a prospectus. Explanation. For the purposes of this section, the expression shelf prospectus means a prospectus in respect of which the securities or class of securities included therein are issued for subscription in one or more issue s over a certain period without the issue of a further prospectus. 32. Red herring prospectus. (1) A company proposing to make an offer of securities may issue a red herring prospectus prior to the issue of a prospectus. (2) A company proposing to issue a red herring prospectus under sub -section ( 1) shall file it with the Registrar at least three days prior to the opening of the subscription list and the offer. (3) A red herring prospectus shall carry the same obligations as are applicable to a prospectus and any variation between the red herring prospectus and a prospectus shall be highlighted as variations in the prospectus. (4) Upon the closing of the offer of securities under this section, the prospectus stating therein the total capital raised, whether by way of debt or share capital, and the closing price of the securities and any other details as are not included in the red herring prospectus shall be filed with the Registrar and the Securities and Exchange Board. Explanation. For the purposes of this section, the expression red herring prospectus means a prospectus which does not include complete particulars of the quantum or price of the securities included therein. 33. Issue of application forms for securities. (1) No form of application for the p urchase of any of the securities of a company shall be issued unless such form is accompanied by an abridged prospectus: Provided that nothing in this sub -section shall apply if it is shown that the form of application was issued (a) in connection with a bona fide invitation to a person to enter into an underwriting agreement with respect to such securities; or (b) in relation to securities which were not offered to the public. (2) A copy of the prospectus shall, on a request being made by any person befor e the closing of the subscription list and the offer, be furnished to him. (3) If a company makes any default in complying with the provisions of this section, it shall be liable to a penalty of fifty thousand rupees for each default. 34. Criminal liabilit y for mis -statements in prospectus. Where a prospectus, issued, circulated or distributed under this Chapter, includes any statement which is untrue or misleading in form or context in which it is included or where any inclusion or omission of any matter i s likely to mislead, every person who authorises the issue of such prospectus shall be liable under section 447: Provided that nothing in this section shall apply to a person if he proves that such statement or omission was immaterial or that he had reason able grounds to believe, and did up to the time of issue of the prospectus believe, that the statement was true or the inclusion or omission was necessary. 35. Civil liability for mis -statements in prospectus. (1) Where a person has subscribed for securiti es of a company acting on any statement included, or the inclusion or omission of any matter, in the prospectus 43 which is misleading and has sustained any loss or damage as a consequence thereof, the company and every person who (a) is a director of the co mpany at the time of the issue of the prospectus; (b) has authorised himself to be named and is named in the prospectus as a director of the company, or has agreed to become such director, either immediately or after an interval of time; (c) is a promoter of the company; (d) has authorised the issue of the prospectus; and (e) is an expert referred to in sub -section ( 5) of section 26, shall, without prejudice to any punishment to which any person may be liable under section 36, be liable to pay compensation to every person who has sustained such loss or damage. (2) No person shall be liable under sub -section ( 1), if he proves (a) that, having consented to become a director of the company, he withdrew his consent before the issue of the prospectus, and that it was issued without his authority or consent; or (b) that the prospectus was issued without his knowledge or consent, and that on becoming aware of its issue, he forthwith gave a reasonable public notice that it was issued without his knowledge or consen t. 1[(c) that, as regards every misleading statement purported to be made by an expert or contained in what purports to be a copy of or an extract from a report or valuation of an expert, it was a correct and fair representation of the statement, or a correct copy of, or a correct and fair extract from, the report or valuation; and he had reasonable ground to believe and did up to the time of the issue of the prospectus believe, that the person making the statement was competent to make it and that the said person had given the consent required by sub -section ( 5) of section 26 to the issue of the prospectus and had not withdrawn that

consent required by sub -section ( 5) of section 26 to the issue of the prospectus and had not withdrawn that consent before 2[filing of a copy of the prospectus with the Registrar ] or, to the defendant's knowledge, before allotmen t thereunder.] (3) Notwithstanding anything contained in this section, where it is proved that a prospectus has been issued with intent to defraud the applicants for the securities of a company or any other person or for any fraudulent purpose, every perso n referred to in sub -section ( 1) shall be personally responsible, without any limitation of liability, for all or any of the losses or damages that may have been incurred by any person who subscribed to the securities on the basis of such prospectus. 36. P unishment for fraudulently inducing persons to invest money. Any person who, either knowingly or recklessly makes any statement, promise or forecast which is false, deceptive or misleading, or deliberately conceals any material facts, to induce another pe rson to enter into, or to offer to enter into, (a) any agreement for, or with a view to, acquiring, disposing of, subscribing for, or underwriting securities; or (b) any agreement, the purpose or the pretended purpose of which is to secure a profit to any of the parties from the yield of securities or by reference to fluctuations in the value of securities; or (c) any agreement for, or with a view to obtaining credit facilities from any bank or financial institution, shall be liable for action under sectio n 447. 37. Action by affected persons. A suit may be filed or any other action may be taken under section 34 or section 35 or section 36 by any person, group of persons or any association of persons affected by any misleading statement or the inclusion or omission of any matter in the prospectus. 38. Punishment for personation for acquisition, etc., of securities. (1) Any person who (a) makes or abets making of an application in a fictitious name to a company for acquiring, or subscribing for, its securiti es; or 1. Ins. by Act 1 of 2018, s. 9 (w.e.f. 9 -2-2018). 2. Subs. by Act 22 of 2019, s. 8, for delivery of a copy of the prospectus for registration (w.e.f. 15 -8-2019). 44 (b) makes or abets making of multiple applications to a company in different names or in different combinations of his name or surname for acquiring or subscribing for its securities; or (c) otherwise induces directly or indirectly a company to allo t, or register any transfer of, securities to him, or to any other person in a fictitious name, shall be liable for action under section 447. (2) The provisions of sub -section ( 1) shall be prominently reproduced in every prospectus issued by a company and in every form of application for securities. (3) Where a person has been convicted under this section, the Court may also order disgorgement of gain, if any, made by, and seizure and disposal of the securities in possession of, such person. (4) The amount received through disgorgement or disposal of securities under sub -section ( 3) shall be credited to the Investor Education and Protection Fund. 39. Allotment of securities by company. (1) No allotment of any securities of a company offered to the public for subscription shall be made unless the amount stated in the prospectus as the minimum amount has been subscribed and the sums payable on application for the amount so stated have been paid to and received by the company by cheque or other instrument. (2) The amount payable on application on every security shall not be less than five per cent. of the nominal amount of the security or such other percentage or amount, as may be specified by the Securities and Exchange Board by making regulations in this behal f. (3) If the stated minimum amount has not been subscribed and the sum payable on application is not received within a period of thirty days from the date of issue of the prospectus, or such other period as may be specified by the Securities and Exchange Board, the amount received under sub -section ( 1) shall be returned within such time and manner as may be prescribed. (4) Whenever a company having a share capital makes any allotment of securities , it shall file with the Registrar a return of allotment in such manner as may be prescribed. (5) In case of any default under sub -section ( 3) or sub -section ( 4), the company and its officer who is in default shall be liable to a penalty, for each default, of one thousand rupees for each day during which such defau lt continues or one lakh rupees, whichever is less. 40. Securities to be dealt with in stock exchanges. (1) Every company making public offer shall, before making such offer, make an application to one or more recognised stock exchange or exchanges and obtain permission for the securities to be dealt with in such stock exchange or exchanges. (2) Where a prospectus states that an application under sub -section ( 1) has been made, such prospectus shall also state the name or names of the stock exchange in which the securities shall be dealt with. (3) All monies received on application from the public for subscription to the securities shall be kept in a separate bank account in a scheduled bank and shall not be utilised for any purpose other than (a) for adjust ment against allotment of securities where the securities have been permitted to be dealt with in the stock exchange or stock exchanges specified in the prospectus; or (b) for the repayment of monies within the time specified by the Securities and Exchange Board, received from applicants in pursuance of the prospectus, where the company is for any other reason unable to allot securities. (4) Any condition purporting to require or bind any applicant for securities to waive compliance with any of the requirem ents of this section shall be void. (5) If a default is made in complying with the provisions of this section, the company shall be punishable with a fine which shall not be less than five lakh rupees but which may extend to fifty lakh rupees and every 45 officer of the company who is in default shall be punishable 1*** or with fine which shall not be less than fifty thousand rupees but which may extend to 2[three lakh rupees ]. (6) A company may pay commission to any person in connection with the subscription to its securities subject to such conditions as may be prescribed. 41. Global depository receipt. A company may, after passing a special resolution in its general meeting, issue depository receipts in any foreign country in such manner, and subject to such conditions, as may be prescribed. PART II.Private placement 3[42. Issue of shares on private placement basis. (1) A company may, subject to the provisions of this section, make a private placement of securities. (2) A private placement shall be made only to a select group of persons who have been identified by the Board (herein referred to as identified persons ), whose number shall not exceed fifty or such higher number as may be prescribed [excluding the qualifie d institutional buyers and employees of the company being offered securities under a scheme of employees stock option in terms of provisions of clause ( b) of sub-section ( 1) of section 62], in a financial year subject to such conditions as may be prescribe d. (3) A company making private placement shall issue private placement offer and application in such form and manner as may be prescribed to identified persons, whose names and addresses are recorded by the company in such manner as may be prescribed: Provided that the private placement offer and application shall not carry any right of renunciation. Explanation I .private placement means any offer or invitation to subscribe or issue of securities to a select group of persons by a company (other than by way of public offer) through private placement offer - cum-application, which satisfies the conditions specified in this section. Explanation II .qualified institutional buyer means the qualified institutional buyer as defined in the Securities and Exc hange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009, as amended from time to time, made under the Securities and Exchange Board of India Act, 1992, (15 of 1992). Explanation III .If a company, listed or unlisted, makes an offer to allot or invites subscription, or allots, or enters into an agreement to allot, securities to more than the prescribed number of persons, whether the payment for the securities has been received or not or whether the company intends to list its s ecurities or not on any recognised stock exchange in or outside India, the same shall be deemed to be an offer to the public and shall accordingly be governed by the provisions of Part I of this Chapter. (4) Every identified person willing to subscribe to the private placement issue shall apply in the private placement and application issued to such person alongwith subscription money paid either by cheque or demand draft or other banking channel and not by cash: Provided that a company shall not utilise monies raised through private placement unless allotment is made and the return of allotment is filed with the Registrar in accordance with sub -section ( 8). (5) No fresh offer or invitation under this secti on shall be made unless the allotments with respect to any offer or invitation made earlier have been completed or that offer or invitation has been withdrawn or abandoned by the company: Provided that, subject to the maximum number of identified persons under sub -section ( 2), a company may, at any time, make more than one issue of securities to such class of identified persons as may be prescribed. (6) A company making an offer or invitation under this section shall allot its securities within sixty days from the date of receipt of the application money for such securities and if the company is not able to allot the securities within that period, it shall repay the application money to the subscribers within fifteen days from the expiry of sixty days and if the company fails to repay the application money within the aforesaid 1. The words with imprisonment for a term which may extend to one year or om itted by Act 29 of 2020, s. 7 (w.e.f. 21 -12- 2020). 2. Subs. by s. 7, ibid., for three lakh rupees, or with both (w.e.f. 21 -12-2020). 3. Subs. by Act 1 of 2018, s. 10 (w.e.f. 7 -8-2018). 46 period, it shall be liable to repay that money with interest at the rate of twelve per cent. per annum from the expiry of the sixtieth day: Provided that monies received on applicati on under this section shall be kept in a separate bank account in a scheduled bank and shall not be utilised for any purpose other than (a) for adjustment against allotment of securities; or (b) for the repayment of monies where the company is unable to allot securities. (7) No company issuing securities under this section shall release any public advertisements or utilise any media, marketing or distribution channels or agents to inform the pu blic at large about such an issue. (8) A company making any allotment of securities under this section, shall file with the Registrar a return of allotment within fifteen days from the date of the allotment in such manner as may be prescribed, including a complete list of all allottees, with their full names, addresses, number of securities allotted and such other relevant information as may be prescribed. (9) If a company defaults in filing the return of allotment within the period prescribed under sub -section (8), the company, its promoters and directors shall be liable to a penalty for each default of one thousand rupees for each day during which such default continues but not exceeding twenty -five lakh rupees. (10) Subject to sub -section ( 11), if a co mpany makes an offer or accepts monies in contravention of this section, the company, its promoters and directors shall be liable for a penalty which may extend to the amount raised through the private placement or two crore rupees, whichever is lower, and the company shall also refund all monies with interest as specified in sub -section ( 6) to subscribers within a period of thirty days of the order imposing the penalty. (11) Notwithstanding anything contained in sub -section ( 9) and sub -section ( 10), any p rivate placement issue not made in compliance of the provisions of sub -section ( 2) shall be deemed to be a public offer and all the provisions of this Act and the Securities Contracts (Regulation) Act, 1956 (42 of 1956) and the Securities and Exchange Boa rd of India Act, 1992 (15 of 1992) shall be applicable.] CHAPTER IV SHARE CAPITAL AND DEBENTURES 43. Kinds of share capital. The share capital of a company limited by shares shall be of two kinds, namely: (a) equity share capital (i) with voting rights; or (ii) with differential rights as to dividend, voting or otherwise in accordance with such rules as may be prescribed; and (b) preference share capital: Provided that nothing contained in this Act shall affect the rights of the preference share holders who are entitled to participate in the proceeds of winding up before the commencement of this Act. Explanation. For the purposes of this section, (i) equity share capital , with reference to any company limited by shares, means all share capital which is not preference share capital; (ii) preference share capital , with reference to any company limited by shares, means that part of the issued share capital of the company which carries or would carry a preferential right with respect to (a) payment of di vidend, either as a fixed amount or an amount calculated at a fixed rate, which may either be free of or subject to income -tax; and (b) repayment, in the case of a winding up or repayment of capital, of the amount of the share capital paid -up or deemed to have been paid -up, whether or not, there is a preferential right to the payment of any fixed premium or premium on any fixed scale, specified in the memorandum or articles of the company; 47 (iii) capital shall be deemed to be preference capital, notwithstand ing that it is entitled to either or both of the following rights, namely: (a) that in respect of dividends, in addition to the preferential rights to the amounts specified in sub-clause ( a) of clause ( ii), it has a right to participate, whether fully or to a limited extent, with capital not entitled to the preferential right aforesaid; (b) that in respect of capital, in addition to the preferential right to the repayment, on a winding up, of the

(b) that in respect of capital, in addition to the preferential right to the repayment, on a winding up, of the amounts specified in sub -clause ( b) of clause ( ii), it has a right to participate, whether fully or to a limited extent, with capital not entitled to that preferential right in any surplus which may remain after the entire capital has been repaid. 44. Nature of shares or debentures. The shares or debentures or othe r interest of any member in a company shall be movable property transferable in the manner provided by the articles of the company. 45. Numbering of shares. Every share in a company having a share capital shall be distinguished by its distinctive number: Provided that nothing in this section shall apply to a share held by a person whose name is entered as holder of beneficial interest in such share in the records of a depository. 46. Certificate of shares. (1) A certificate, 1[issued under the common seal, if any, of the company or signed by two directors or by a director and the Company Secretary, wherever the company has appointed a Company Secretary], specifying the shares held by any person, shall be prima facie evidence of the title of the person to suc h shares. (2) A duplicate certificate of shares may be issued, if such certificate (a) is proved to have been lost or destroyed; or (b) has been defaced, mutilated or torn and is surrendered to the company. (3) Notwithstanding anything contained in the articles of a company, the manner of issue of a certificate of shares or the duplicate thereof, the form of such certificate, the particulars to be entered in the register of members and other matters shall be such as may be prescribed. (4) Where a share i s held in depository form, the record of the depository is the prima facie evidence of the interest of the beneficial owner. (5) If a company with intent to defraud issues a duplicate certificate of shares, the company shall be punishable with fine which s hall not be less than five times the face value of the shares involved in the issue of the duplicate certificate but which may extend to ten times the face value of such shares or rupees ten crores whichever is higher and every officer of the company who i s in default shall be liable for action under section 447. 47. Voting rights. (1) Subject to the 2[provisions of section 43, sub -section ( 2) of section 50 and sub - section ( 1) of section 188], (a) every member of a company limited by shares and holding equity share capital therein, shall have a right to vote on every resolution placed before the company; and (b) his voting right on a poll shall be in proportion to his share in the paid -up equity share capital of the company. (2) Every member of a company limited by shares and holding any preference share capital therein shall, in respect of such capital, have a right to vote only on resolutions placed before the company which directly affect the rights attached to his preference shares and, any resolution for the winding up of the company or for the repayment or reduction of its equity or preference share capital and his voting right on a poll shall be in proportion to his share in the paid -up preference share capital of the company: 1. Subs. by Act 21 of 2015, s. 7, for issued under the common seal of the company (w.e.f. 29 -5-2015). 2. Subs. by Act 1 of 2018, s. 11, for provisions of section 43 and sub -section ( 2) of section 50 (w.e.f. 9 -2-2018). 48 Provided that the prop ortion of the voting rights of equity shareholders to the voting rights of the preference shareholders shall be in the same proportion as the paid -up capital in respect of the equity shares bears to the paid -up capital in respect of the preference shares: Provided further that where the dividend in respect of a class of preference shares has not been paid for a period of two years or more, such class of preference shareholders shall have a right to vote on all the resolutions placed before the company. 48. Variations of shareholders rights. (1) Where a share capital of the company is divided into different classes of shares, the rights attached to the shares of any class may be varied with the consent in writing of the holders of not less than three -fourths of the issued shares of that class or by means of a special resolution passed at a separate meeting of the holders of the issued shares of that class, (a) if provision with respect to such variation is contained in the memorandum or articles of the compa ny; or (b) in the absence of any such provision in the memorandum or articles, if such variation is not prohibited by the terms of issue of the shares of that class: Provided that if variation by one class of shareholders affects the rights of any other cl ass of shareholders, the consent of three -fourths of such other class of shareholders shall also be obtained and the provisions of this section shall apply to such variation. (2) Where the holders of not less than ten per cent. of the issued shares of a cl ass did not consent to such variation or vote in favour of the special resolution for the variation, they may apply to the Tribunal to have the variation cancelled, and where any such application is made, the variation shall not have effect unless and unti l it is confirmed by the Tribunal: Provided that an application under this section shall be made within twenty -one days after the date on which the consent was given or the resolution was passed, as the case maybe, and may be made on behalf of the sharehol ders entitled to make the application by such one or more of their number as they may appoint in writing for the purpose. (3) The decision of the Tribunal on any application under sub -section ( 2) shall be binding on the shareholders. (4) The company shall, within thirty days of the date of the order of the Tribunal, file a copy thereof with the Registrar. 1* * * * * 49. Calls on shares of same class to be made on uniform basis. Where any calls for further share capital are made on the shares of a class, such calls shall be made on a uniform basis on all shares falling under that class. Explanation .For the purposes of this section, shares of the same nominal value on which different amounts have been paid -up shall not be deemed to fall under the sa me class. 50. Company to accept unpaid share capital, although not called up. (1) A company may, if so authorised by its articles, accept from any member, the whole or a part of the amount remaining unpaid on any shares held by him, even if no part of that amount has been called up. (2) A member of the company limited by shares shall not be entitled to any voting rights in respect of the amount paid by him under sub -section ( 1) until that amount has been called up. 51. Payment of dividend in proportion to a mount paid -up.A company may, if so authorised by its articles, pay dividends in proportion to the amount paid -up on each share. 1. Sub -section ( 5) omitted by Act 29 of 2020, s. 8 (w.e.f. 21 -12-2020). 49 52. Application of premiums received on issue of shares. (1) Where a company issues shares at a premium, whether for cash or ot herwise, a sum equal to the aggregate amount of the premium received on those shares shall be transferred to a securities premium account and the provisions of this Act relating to reduction of share capital of a company shall, except as provided in this section, apply as if the securities premium account were the paid -up share capital of the company. (2) Notwithstanding anything contained in sub -section ( 1), the securities premium account may be applied by the company (a) towards the issue of unissued s hares of the company to the members of the company as fully paid bonus shares; (b) in writing off the preliminary expenses of the company; (c) in writing off the expenses of, or the commission paid or discount allowed on, any issue of shares or debentures of the company; (d) in providing for the premium payable on the redemption of any redeemable preference shares or of any debentures of the company; or (e) for the purchase of its own shares or other securities under section 68. (3) The securities premium a ccount may, notwithstanding anything contained in sub -sections ( 1) and (2), be applied by such class of companies, as may be prescribed and whose financial statement comply with the accounting standards prescribed for such class of companies under section 133, (a) in paying up unissued equity shares of the company to be issued to members of the company as fully paid bonus shares; or (b) in writing off the expenses of or the commission paid or discount allowed on any issue of equity shares of the company; o r (c) for the purchase of its own shares or other securities under section 68. 53. Prohibition on issue of shares at discount. (1) Except as provided in section 54, a company shall not issue shares at a discount. (2) Any share issued by a company at a 1[discount] shall be void. 2[(2A) Notwithstanding anything contained in sub -sections ( 1) and ( 2), a company may issue shares at a discount to its creditors when its debt is converted into shares in pursuance of any statutory resolution plan or debt restructuring scheme in accordance with any guidelines or directions or regulations specified by the Reserve Bank of India under the Reserve Bank of India Act, 1934 (2 of 1934) or the Banking (Regulation) Act, 1949 (10 of 1949).] 3[(3) Where any company fa ils to comply with the provisions of this section, such company and every officer who is in default shall be liable to a penalty which may extend to an amount equal to the amount raised through the issue of shares at a discount of five lakh rupees, whichev er is less, and the company shall also be liable to refund all monies received with interest at the rate of twelve per cent. per annum from the date of issue of such shares to the persons to whom such shares have been issued. ] 54. Issue of sweat equity sha res.(1) Notwithstanding anything contained in section 53, a company may issue sweat equity shares of a class of shares already issued, if the following conditions are fulfilled, namely: (a) the issue is authorised by a special resolution passed by the co mpany; 1. Subs. by Act 1 of 2018, s. 12, for discounted price (w.e.f. 9 -2-2018). 2. Ins. by s. 12 , ibid. (w.e.f. 9 -2-2018). 3. Subs. by Act 22 of 2019, s. 9, for sub -section ( 3) (w.e.f. 2 -11-2018). 50 (b) the resolution specifies the number of shares, the current market price, consideration, if any, and the class or classes of directors or employees to whom such equity shares are to be issued; 1* * * * * (d) where the equity shares of the company are listed on a recognised stock exchange, the sweat equity shares are issued in accordance with the regulations made by the Securities and Exchange Board in this behalf and if they are not so listed, the sweat equity shares are issued in accordan ce with such rules as may be prescribed. (2) The rights, limitations, restrictions and provisions as are for the time being applicable to equity shares shall be applicable to the sweat equity shares issued under this section and the holders of such shares shall rank pari passu with other equity shareholders. 55. Issue and redemption of preference shares. (1) No company limited by shares shall, after the commencement of this Act, issue any preference shares which are irredeemable. (2) A company limited by sh ares may, if so authorised by its articles, issue preference shares which are liable to be redeemed within a period not exceeding twenty years from the date of their issue subject to such conditions as may be prescribed: Provided that a company may issue p reference shares for a period exceeding twenty years for infrastructure projects, subject to the redemption of such percentage of shares as may be prescribed on an annual basis at the option of such preferential shareholders: Provided further that (a) no such shares shall be redeemed except out of the profits of the company which would otherwise be available for dividend or out of the proceeds of a fresh issue of shares made for the purposes of such redemption; (b) no such shares shall be redeemed unless t hey are fully paid; (c) where such shares are proposed to be redeemed out of the profits of the company, there shall, out of such profits, be transferred, a sum equal to the nominal amount of the shares to be redeemed, to a reserve, to be called the Capita l Redemption Reserve Account, and the provisions of this Act relating to reduction of share capital of a company shall, except as provided in this section, apply as if the Capital Redemption Reserve Account were paid -up share capital of the company; and (d) (i) in case of such class of companies, as may be prescribed and whose financial statement comply with the accounting standards prescribed for such class of companies under section 133, the premium, if any, payable on redemption shall be provided for out of the profits of the company, before the shares are redeemed: Provided also that premium, if any, payable on redemption of any preference shares issued on or before the commencement of this Act by any such company shall be provided for out of the profits of the company or out of the companys securities premium account, before such shares are redeemed. (ii) in a case not falling under sub -clause ( i) above, the premium, if any, payable on redemption shall be provided for out of the profits of the company o r out of the companys securities premium account, before such shares are redeemed. (3) Where a company is not in a position to redeem any preference shares or to pay dividend , if any, on such shares in accordance with the terms of issue (such shares hereinafter referred to as unredeemed preference shares), it may, with the consent of the holders of three -fourths in value of such preference shares and with the approval of the Tribunal on a petition made by it in this behalf, issue further redeemable preference shares equal to the amount due, including the dividend thereon, in respect of the unredeemed preference shares, and on the issue of such further redeemable preference shares, the unredeemed preference shares shall be deemed to have been redeemed: 1. Clause ( c) omitted by Act 1 of 2018, s. 13 (w.e.f. 7 -5-2018). 51 Provided that the Trib

13 (w.e.f. 7 -5-2018). 51 Provided that the Tribunal shall, while giving approval under this sub -section, order the redemption forthwith of preference shares held by such persons who have not consented to the issue of further redeemable preference shares. Explanation. For the remov al of doubts, it is hereby declared that the issue of further redeemable preference shares or the redemption of preference shares under this section shall not be deemed to be an increase or, as the case may be, a reduction, in the share capital of the comp any. (4) The capital redemption reserve account may, notwithstanding anything in this section, be applied by the company, in paying up unissued shares of the company to be issued to members of the company as fully paid bonus shares. Explanation. For the pu rposes of sub -section ( 2), the term infrastructure projects means the infrastructure projects specified in Schedule VI. 56.Transfer and transmission of securities. (1) A company shall not register a transfer of securities of the company, or the interest of a member in the company in the case of a company having no share capital, other than the transfer between persons both of whose names are entered as holders of beneficial interest in the records of a depository, unless a proper instrument of transfer, i n such form as may be prescribed, duly stamped, dated and executed by or on behalf of the transferor and the transferee and specifying the name, address and occupation, if any, of the transferee has been delivered to the company by the transferor or the tr ansferee within a period of sixty days from the date of execution, along with the certificate relating to the securities, or if no such certificate is in existence, along with the letter of allotment of securities: Provided that where the instrument of tra nsfer has been lost or the instrument of transfer has not been delivered within the prescribed period, the company may register the transfer on such terms as to indemnity as the Board may think fit. (2) Nothing in sub -section ( 1) shall prejudice the power of the company to register, on receipt of an intimation of transmission of any right to securities by operation of law from any person to whom such right has been transmitted. (3) Where an application is made by the transferor alone and relates to partly p aid shares, the transfer shall not be registered, unless the company gives the notice of the application, in such manner as may be prescribed, to the transferee and the transferee gives no objection to the transfer within two weeks from the receipt of noti ce. (4) Every company shall, unless prohibited by any provision of law or any order of Court, Tribunal or other authority, deliver the certificates of all securities allotted, transferred or transmitted (a) within a period of two months from the date of i ncorporation, in the case of subscribers to the memorandum; (b) within a period of two months from the date of allotment, in the case of any allotment of any of its shares; (c) within a period of one month from the date of receipt by the company of the ins trument of transfer under sub -section ( 1) or, as the case may be, of the intimation of transmission under sub - section ( 2), in the case of a transfer or transmission of securities; (d) within a period of six months from the date of allotment in the case of any allotment of debenture: Provided that where the securities are dealt with in a depository, the company shall intimate the details of allotment of securities to depository immediately on allotment of such securities. (5) The transfer of a ny security or other interest of a deceased person in a company made by his legal representative shall, even if the legal representative is not a holder thereof, be valid as if he had been the holder at the time of the execution of the instrument of transf er. 52 1[(6) Where any default is made in complying with the provisions of sub -sections ( 1) to (5), the company and every officer of the company who is in default shall be liable to a penalty of fifty thousand rupees .] (7) Without prejudice to any liability under the Depositories Act, 1996 (22 of 1996), where any depository or depository participant, with an intention to defraud a person, has transferred shares, it shall be liable under section 447. 57. Punishment for personation of shareholder. If any person deceitfully personates as an owner of any security or interest in a company, or of any share warrant or coupon issued in pursuance of this Act, and thereby obtains or attempts to obtain any such security or interest or any such share warrant or coupon, or receives or attempts to receive any money due to any such owner, he shall be punishable with imprisonment for a term which shall not be less than one year but which may extend to three years and with fine which shall not be less than one lakh rupees but w hich may extend to five lakh rupees. 58. Refusal of registration and appeal against refusal. (1) If a private company limited by shares refuses, whether in pursuance of any power of the company under its articles or otherwise, to register the transfer of, or the transmission by operation of law of the right to, any securities or interest of a member in the company, it shall within a period of thirty days from the date on which the instrument of transfer, or the intimation of such transmission, as the case m ay be, was delivered to the company, send notice of the refusal to the transfer or and the transferee or to the person giving intimation of such transmission, as the case may be, giving reasons for such refusal. (2) Without prejudice to sub -section ( 1), the securities or other interest of any member in a public company shall be freely transferable: Provided that any contract or arrangement between two or more persons in respect of transfer of securities shall be enforceable as a contract. (3) The transferee may appeal to the Tribunal against the refusal within a period of thirty days from the date of receipt of the notice or in case no notice has been sent by the company, within a period of sixty days from the date on which the instrument of transfer or the intimation of transmission, as the case may be, was delivered to the company. (4) If a public company without sufficient cause refuses to register the transfer of securities within a period of thirty days from the date on which the instrument of transfer o r the intimation of transmission, as the case may be, is delivered to the company, the transferee may, within a period of sixty days of such refusal or where no intimation has been received from the company, within ninety days of the delivery of the instru ment of transfer or intimation of transmission, appeal to the Tribunal. (5) The Tribunal, while dealing with an appeal made under sub -section ( 3) or sub -section ( 4), may, after hearing the parties, either dismiss the appeal, or by order (a) direct that th e transfer or transmission shall be registered by the company and the company shall comply with such order within a period of ten days of the receipt of the order; or (b) direct rectification of the register and also direct the company to pay damages, if a ny, sustained by any party aggrieved. (6) If a person contravenes the order of the Tribunal under this section, he shall be punishable with imprisonment for a term which shall not be less than one year but which may extend to three years and with fine whic h shall not be less than one lakh rupees but which may extend to five lakh rupees. 59. Rectification of register of members. (1) If the name of any person is, without sufficient cause, entered in the register of members of a company, or after having been e ntered in the register, is, without sufficient cause, omitted there from, or if a default is made, or unnecessary delay takes place in entering in the register, the fact of any person having become or ceased to be a member, the person aggrieved, or any mem ber of the company, or the company may appeal in such form as may be prescribed, to the Tribunal, 1. Subs. by Act 29 of 2020, s. 9, for sub -section ( 6) (w.e.f. 21 -12-2020). 53 or to a competent court outside India, specified by the Central Government by notification, in respect of foreign members or debenture holders residing outsid e India, for rectification of the register. (2) The Tribunal may, after hearing the parties to the appeal under sub -section ( 1) by order, either dismiss the appeal or direct that the transfer or transmission shall be registered by the company within a period of ten days of the receipt of the order or direct rectification of the records of the depository or the register and in the latter case, direct the company to pay damages, if any, sustained by the party aggrieved. (3) The provisions of this section shal l not restrict the right of a holder of securities, to transfer such securities and any person acquiring such securities shall be entitled to voting rights unless the voting rights have been suspended by an order of the Tribunal. (4) Where the transfer of securities is in contravention of any of the provisions of the Securities Contracts (Regulation) Act, 1956 (42 of 1956), the Securities and Exchange Board of India Act, 1992 (15 of 1992) or this Act or any other law for the time being in force, the Tribunal may, on an application made by the depository, company, depository participant, the holder of the securities or the Securities and Exchange Board, direct any company or a depository to set right the contravention and rectify its register or record s concerned. 1* * * * *. 60. Publication of authorised, subscribed and paid -up capital. (1) Where any notice, advertisement or other official publication, or any business letter, billhead or letter paper of a company contains a statement of the amount of the authorised capital of the company, such notice, advertisement or other official publication, or such letter, billhead or letter paper shall also contain a statement, in an equally prominent position and in equally conspicuous characters, of t he amount of the capital which has been subscribed and the amount paid -up. (2) If any default is made in complying with the requirements of sub -section ( 1), the company shall be liable to pay a penalty of ten thousand rupees and every officer of the compan y who is in default shall be liable to pay a penalty of five thousand rupees, for each default. 61. Power of limited company to alter its share capital. (1) A limited company having a share capital may, if so authorised by its articles, alter its memorandu m in its general meeting to (a) increase its authorised share capital by such amount as it thinks expedient; (b) consolidate and divide all or any of its share capital into shares of a larger amount than its existing shares: Provided that no consolidation and division which results in changes in the voting percentage of shareholders shall take effect unless it is approved by the Tribunal on an application made in the prescribed manner; (c) convert all or any of its fully paid -up shares into stock, and reco nvert that stock into fully paid - up shares of any denomination; (d) sub-divide its shares, or any of them, into shares of smaller amount than is fixed by the memorandum, so, however, that in the sub -division the proportion between the amount paid and the amount, if any, unpaid on each reduced share shall be the same as it was in the case of the share from which the reduced share is derived; (e) cancel shares which, at the date of the passing of the resolution in that behalf, have not been taken or agreed to be taken by any person, and diminish the amount of its share capital by the amount of the shares so cancelled. (2) The cancellation of shares under sub -section ( 1) shall not be deemed to be a reduction of share capital. 62. Further issue of share capital. (1) Where at any time, a company having a share capital proposes to increase its subscribed capital by the issue of further shares, such shares shall be offered 1. Sub -section ( 5) omitted by Act 29 of 2020, s. 10 (w.e.f. 21 -12-2020). 54 (a) to persons who, at the date of the offer, are holders of equity shares of the company in proportion, as nearly as circumstances admit, to the paid -up share capital on those shares by sending a letter of offer subject to the following conditions, namely: (i) the offer shall be made by notice specifying the number of shares offered and limiting a time not being less than fifteen days 1[or such lesser number of days as may be prescribed ] and not exceeding thirty days from the date of the offer within which the offer, if not accepted, shall be deemed to have been declined; (ii) unless the articles of the company otherwise provide, the offer aforesaid shall be deemed to include a right exercisable by the person concerned to renounce the shares offered to him or any of them in favour of any other person; and the notice referred to in clause ( i) shall contain a statement of this right; (iii) after the expiry of the time specified in the notice aforesaid, or on receipt of earlier intimation from the person to whom such notice is given that he declines to accept the shares offered, the Board of Directors may dispose of them in such manner which is not dis - advantageous to the share holders and the company; (b) to employees under a scheme of employees stock option, subject to special resolution passed by company and subject to such co nditions as may be prescribed; or (c) to any persons, if it is authorised by a special resolution, whether or not those persons include the persons referred to in clause ( a) or clause ( b), either for cash or for a consideration other than cash, if the pric e of such shares is determined by the valuation report 2[of a registered valuer, subject to the compliance with the applicable provisions of Chapter III and any other conditions as may be prescribed]. 3[(2) The notice referred to in sub -clause ( i) of claus e (a) of sub -section ( 1) shall be dispatched through registered post or speed post or through electronic mode or courier or any other mode having proof of delivery to all the existing shareholders at least three days before the opening of the issue.] (3) Nothing in this section shall apply to the increase of the subscribed capital of a company caused by the exercise of an option as a term attached to the debentures issued or loan raised by the company to convert such debentures or loans into shares in the c ompany: Provided that the terms of issue of such debentures or loan containing such an option have been approved before the issue of such debentures or the raising of loan by a special resolution passed by the company in general meeting. (4) Notwithstandin g anything contained in sub -section ( 3), where any debentures have been issued, or loan has been obtained from any Government by a company, and if that Government considers it necessary in the public interest so to do, it may, by order, direct

from any Government by a company, and if that Government considers it necessary in the public interest so to do, it may, by order, direct that such de bentures or loans or any part thereof shall be converted into shares in the company on such terms and conditions as appear to the Government to be reasonable in the circumstances of the case even if terms of the issue of such debentures or the raising of such loans do not include a term for providing for an option for such conversion: Provided that where the terms and conditions of such conversion are not acceptable to the company, it may, within sixty days from the date of communication of such order, appe al to the Tribunal which shall after hearing the company and the Government pass such order as it deems fit. (5) In determining the terms and conditions of conversion under sub -section ( 4), the Government shall have due regard to the financial position of the company, the terms of issue of debentures or loans, as the case may be, the rate of interest payable on such debentures or loans and such other matters as it may consider necessary. (6) Where the Government has, by an order made under sub -section ( 4), directed that any debenture or loan or any part thereof shall be converted into shares in a company and where no appeal has been preferred to the Tribunal under sub -section ( 4) or where such appeal has been dismissed, the memorandum of such 1. Ins. by Act 29 of 2020, s. 11 (w.e.f. 22 -1-2021). 2. Subs. by Act 1 of 2018, s. 14, for of a registered valuer subject to such conditions as may be prescribed (w.e.f. 9-2-2018). 3. Subs. by s. 14, ibid., for sub -section ( 2) (w.e.f. 9 -2-2018). 55 company shall, where such order has the effect of increasing the authorised share capital of the company, stand altered and the authorised share capital of such company shall stand increased by an amount equal to the amount of the value of shares which such debentures or loans or part thereof has been converted into. 63. Issue of bonus shares. (1) A company may issue fully paid -up bonus shares to its members, in any manner whatsoever, out of (i) its free reserves; (ii) the securities premium account; or (iii) the capital redemption reserve account: Provided that no issue of bonus shares shall be made by capitalising reserves created by the revaluation of assets. (2) No company shall capitalise its profits or reserves for the purpose of issuing fully paid -up bonus shares u nder sub -section ( 1), unless (a) it is authorised by its articles; (b) it has, on the recommendation of the Board, been authorised in the general meeting of the company; (c) it has not defaulted in payment of interest or principal in respect of fixed depo sits or debt securities issued by it; (d) it has not defaulted in respect of the payment of statutory dues of the employees, such as, contribution to provident fund, gratuity and bonus; (e) the partly paid -up shares, if any outstanding on the date of allot ment, are made fully paid -up; (f) it complies with such conditions as may be prescribed. (3) The bonus shares shall not be issued in lieu of dividend. 64. Notice to be given to Registrar for alteration of share capital. (1) Where (a) a company alters its share capital in any manner specified in sub -section ( 1) of section 61; (b) an order made by the Government under sub -section ( 4) read with sub -section ( 6) of section 62 has the effect of increasing authorised capital of a company; or (c) a company redeems any redeemable preference shares, the company shall file a notice in the prescribed form with the Registrar within a period of thirty days of such alteration or increase or redemption, as the case may be, along with an altered memorandum. 1[(2) where any company fails to comply with the provisions of sub -section ( 1), such company rupees and every officer who is in default shall be liable to a penalty of 2[five hundred rupees ] for each day during which such default continues, 3[subject to a maximum of five lakh rupees in case of a company and one lakh rupees in case of an officer who is in default] .] 65. Unlimited company to provide for reserve share capital on conversion into limited company. An unlimited company having a share capital may, by a resolution for registration as a limited company under this Act, do either or both of the following things, namely (a) increase the nominal amount of its share capital by increasing the nominal amount of each of its shares, subject to the condition t hat no part of the increased capital shall be capable of being called up except in the event and for the purposes of the company being wound up; (b) provide that a specified portion of its uncalled share capital shall not be capable of being called up exce pt in the event and for the purposes of the company being wound up. 1. Subs. by Act 22 of 201 9, s. 10, for sub -section ( 2) (w.e.f. 2 -11-2018). 2. Subs. by Act 29 of 2020, s. 12, for one thousand rupees (w.e.f. 21 -12-2020). 3. Subs. by s. 12, ibid., for or five lakh rupees whichever is less (w.e.f. 21 -12-2020). 56 66. Reduction of share capital. (1) Subject to confirmation by the Tribunal on an application by the company, a company limited by shares or limited by guarantee and having a share capital may, by a special resolution, reduce the share capital in any manner and in particular, may (a) extinguish or reduce the liability on any of its shares in respect of the share capital not paid-up; or (b) either with or without extinguishing o r reducing liability on any of its shares, (i) cancel any paid -up share capital which is lost or is unrepresented by available assets; or (ii) pay off any paid -up share capital which is in excess of the wants of the company, alter its memorandum by reduci ng the amount of its share capital and of its shares accordingly: Provided that no such reduction shall be made if the company is in arrears in the repayment of any deposits accepted by it, either before or after the commencement of this Act, or the intere st payable thereon. (2) The Tribunal shall give notice of every application made to it under sub -section ( 1) to the Central Government, Registrar and to the Securities and Exchange Board, in the case of listed companies, and the creditors of the company and shall take into consideration the representations, if any, made to it by that Government, Registrar, the Securities and Exchange Board and the creditors within a period of three months from the date of receipt of the notice: Provided that where no representation has been received from the Central Government, Registrar, the Securities and Exchange Board or the creditors within the said period, it shall be presumed that they have no objection to the reduction. (3) The Tribunal may, if it is satisfied that the debt or claim of every creditor of the company has been discharged or determined or has been secured or his consent is obtained, make an order confirming the reduction of share capital on such terms and conditions as it deems fit: Provided that no application for reduction of share capital shall be sanctioned by the Tribunal unless the accounting treatment, proposed by the company for such reduction is in conformity with the accounting standards specified in section 133 or any other provision of th is Act and a certificate to that effect by the companys auditor has been filed with the Tribunal. (4) The order of confirmation of the reduction of share capital by the Tribunal under sub -section ( 3) shall be published by the company in such manner as the Tribunal may direct. (5) The company shall deliver a certified copy of the order of the Tribunal under sub -section ( 3) and of a minute approved by the Tribunal showing (a) the amount of share capital; (b) the number of shares into which it is to be divid ed; (c) the amount of each share; and (d) the amount, if any, at the date of registration deemed to be paid -up on each share, to the Registrar within thirty days of the receipt of the copy of the order, who shall register the same and issue a certificate t o that effect. (6) Nothing in this section shall apply to buy -back of its own securities by a company under section 68. (7) A member of the company, past or present, shall not be liable to any call or contribution in respect of any share held by him exceeding the amount of difference, if any, between the amount paid on the share, or reduced amount, if any, which is to be deemed to have been paid thereon, as the case may be, and the amount of the share as fixed by the order of reduction. (8) Where the name of any creditor entitled to object to the reduction of share capital under this section is, by reason of his ignorance of the proceedings for reduction or of their nature and effect with respect to his debt or claim, not entered on the list of cre ditors, and after such reduction, the company 1[commits a 1. Subs. by Act 31 of 201 6, s. 255 and the Eleventh Schedule, for is unable , within the meaning of sub -section ( 2) of section 271, to pay the amount of his debt or claim, (w.e.f. 15 -11-2016). 57 default, within the meaning of section 6 of the Insolvency and Bankruptcy Code, 2016 (31 of 2016), in respect of the amount of his debt or claim], (a) every person, who was a member of th e company on the date of the registration of the order for reduction by the Registrar, shall be liable to contribute to the payment of that debt or claim, an amount not exceeding the amount which he would have been liable to contribute if the company had commenced winding up on the day immediately before the said date; and (b) if the company is wound up, the Tribunal may, on the application of any such creditor and proof of his ignorance as aforesaid, if it thinks fit, settle a list of persons so liable to contribute, and make and enforce calls and orders on the contributories settled on the list, as if they were ordinary contributories in a winding up. (9) Nothing in sub -section ( 8) shall affect the rights of the contributories among themselves. (10) If any officer of the company (a) knowingly conceals the name of any creditor entitled to object to the reduction; (b) knowingly misrepresents the nature or amount of the debt or claim of any creditor; or (c) abets or is privy to any such concealment or misrepr esentation as aforesaid, he shall be liable under section 447. 1* * * * *. 67. Restriction on purchase by company or giving of loans by it for purchase of its shares. (1) No company limited by shares or by guarantee and having a share capital shall have power to buy its own shares unless the consequent reduction of share capital is effected under the provisions of this Act. (2) No public company shall give, whether directly or indirectly and whether by means of a loan, guarantee, the provision of se curity or otherwise, any financial assistance for the purpose of, or in connection with, a purchase or subscription made or to be made, by any person of or for any shares in the company or in its holding company. (3) Nothing in sub -section ( 2) shall apply to (a) the lending of money by a banking company in the ordinary course of its business; (b) the provision by a company of money in accordance with any scheme approved by company through special resolution and in accordance with such requirements as may b e prescribed, for the purchase of, or subscription for, fully paid -up shares in the company or its holding company, if the purchase of, or the subscription for, the shares held by trustees for the benefit of the employees or such shares held by the employe e of the company; (c) the giving of loans by a company to persons in the employment of the company other than its directors or key managerial personnel, for an amount not exceeding their salary or wages for a period of six months with a view to enabling th em to purchase or subscribe for fully paid -up shares in the company or its holding company to be held by them by way of beneficial ownership: Provided that disclosures in respect of voting rights not exercised directly by the employees in respect of shares to which the scheme relates shall be made in the Board's report in such manner as may be prescribed. (4) Nothing in this section shall affect the right of a company to redeem any preference shares issued by it under this Act or under any previous company law. (5) If a company contravenes the provisions of this section, it shall be punishable with fine which shall not be less than one lakh rupees but which may extend to twenty -five lakh rupees and every officer of the company who is in default shall be puni shable with imprisonment for a term which may extend to three years and with fine which shall not be less than one lakh rupees but which may extend to twenty -five lakh rupees. 1. Sub -section ( 11) omitted by Act 29 of 2020, s. 13 (w.e.f. 21 -12-2020). 58 68. Power of company to purchase its own securities. (1) Notwithstanding anythin g contained in this Act, but subject to the provisions of sub -section ( 2), a company may purchase its own shares or other specified securities (hereinafter referred to as buy -back) out of (a) its free reserves; (b) the securities premium account; or (c) the proceeds of the issue of any shares or other specified securities: Provided that no buy -back of any kind of shares or other specified securities shall be made out of the proceeds of an earlier issue of the same kind of shares or same kind of other speci fied securities. (2) No company shall purchase its own shares or other specified securities under sub -section ( 1), unless (a) the buy -back is authorised by its articles; (b) a special resolution has been passed at a general meeting of the company authorising the buy-back: Provided that nothing contained in this clause shall apply to a case where (i) the buy -back is, ten per cent. or less of the total paid -up equity capital and free reserves of the company; and (ii) such buy -back has been authorised by the Board by means of a resolution passed at its meeting; (c) the buy -back is twenty -five per cent. or less of the aggregate of paid -up

a resolution passed at its meeting; (c) the buy -back is twenty -five per cent. or less of the aggregate of paid -up capital and free reserves of the company: Provided that in respect of the buy -back of equity shares in any financial year, the reference to twenty - five per cent. in this clause shall be construed with respect to its total paid -up equity capital in that financial year; (d) the ratio of the aggregate of secured and unsecured debts owed by the company after buy -back is not more than twice the paid -up capital and its free reserves: Provided that the Central Government may, by order, notify a higher ratio of the debt to capital and free reserves for a class or classes of companies; (e) all the shares or other specif ied securities for buy -back are fully paid -up; (f) the buy -back of the shares or other specified securities listed on any recognized stock exchange is in accordance with the regulations made by the Securities and Exchange Board in this behalf; and (g) the buy-back in respect of shares or other specified securities other than those specified in clause (f) is in accordance with such rules as may be prescribed: Provided that no offer of buy -back under this sub -section shall be made within a period of one year reckoned from the date of the closure of the preceding offer of buy -back, if any. (3) The notice of the meeting at which the special resolution is proposed to be passed under clause ( b) of sub -section ( 2) shall be accompanied by an explanatory statement st ating (a) a full and complete disclosure of all material facts; (b) the necessity for the buy -back; (c) the class of shares or securities intended to be purchased under the buy -back; (d) the amount to be invested under the buy -back; and (e) the time -limit for completion of buy -back. (4) Every buy -back shall be completed within a period of one year from the date of passing of the special resolution, or as the case may be, the resolution passed by the Board under clause ( b) of sub-section ( 2). 59 (5) The buy -back under sub -section ( 1) may be (a) from the existing shareholders or security holders on a proportionate basis; (b) from the open market; (c) by purchasing the securities issued to employees of the company pursuant to a scheme of stock option or sweat equity. (6) Where a company proposes to buy -back its own shares or other specified securities under this section in pursuance of a special resolution under clause ( b) of sub -section ( 2) or a resolution under item (ii) of the proviso thereto, it shall, before making such buy -back, file with the Registrar and the Securities and Exchange Board, a declaration of solvency signed by atleast two directors of the company, one of whom shall be the managing director, if any, in such fo rm as may be prescribed and verified by an affidavit to the effect that the Board of Directors of the company has made a full inquiry into the affairs of the company as a result of which they have formed an opinion that it is capable of meeting its liabili ties and will not be rendered insolvent within a period of one year from the date of declaration adopted by the Board: Provided that no declaration of solvency shall be filed with the Securities and Exchange Board by a company whose shares are not listed o n any recognised stock exchange. (7) Where a company buys back its own shares or other specified securities, it shall extinguish and physically destroy the shares or securities so bought back within seven days of the last date of completion of buy -back. (8) Where a company completes a buy -back of its shares or other specified securities under this section, it shall not make a further issue of the same kind of shares or other securities including allotment of new shares under clause ( a) of sub -section ( 1) of section 62 or other specified securities within a period of six months except by way of a bonus issue or in the discharge of subsisting obligations such as conversion of warrants, stock option schemes, sweat equity or conversion of preference shares or de bentures into equity shares. (9) Where a company buys back its shares or other specified securities under this section, it shall maintain a register of the shares or securities so bought, the consideration paid for the shares or securities bought back, the date of cancellation of shares or securities, the date of extinguishing and physically destroying the shares or securities and such other particulars as may be prescribed. (10) A company shall, after the completion of the buy -back under this section, file with the Registrar and the Securities and Exchange Board a return containing such particulars relating to the buy -back within thirty days of such completion, as may be prescribed: Provided that no return shall be filed with the Securities and Exchange Boa rd by a company whose shares are not listed on any recognised stock exchange. (11) If a company makes any default in complying with the provisions of this section or any regulation made by the Securities and Exchange Board, for the purposes of clause ( f) of sub -section ( 2), the company shall be punishable with fine which shall not be less than one lakh rupees but which may extend to three lakh rupees and every officer of the company who is in default shall be punishable 1*** with fine which shall not be les s than one lakh rupees but which may extend to 2[three lakh rupees ]. Explanation I. For the purposes of this section and section 70, specified securities includes employees stock option or other securities as may be notified by the Central Government fr om time to time. Explanation II .For the purposes of this section, free reserves includes securities premium account. 69. Transfer of certain sums to capital redemption reserve account. (1) Where a company purchases its own shares out of free reserves or securities premium account, a sum equal to the nominal 1. The words with imprisonment for a term which may extend to three years or omitted by Act 29 of 2020, s. 14 (w.e.f. 21 -12- 2020) . 2. Subs. by s. 14, ibid., for three lakh rupees, or with both (w.e.f. 21 -12-2020). 60 value of the shares so purchased shall be transferred to the capital redemption reserve account and details of such transfer shall be disclosed in the balance sheet. (2) The capital redemption reserve account may be applied by the company, in paying up unissued shares of the company to be issued to members of the company as fully paid bonus shares. 70. Prohibition for buy -back in certain circumstances. (1) No company shall directly or indirectly purcha se its own shares or other specified securities (a) through any subsidiary company including its own subsidiary companies; (b) through any investment company or group of investment companies; or (c) if a default , is made by the company , in the repayment of deposits accepted either before or after the commencement of this Act, interest payment thereon, redemption of debentures or preference shares or payment of dividend to any shareholder, or re payment of any term loan or interest payable thereon to any f inancial institution or banking company: Provided that the buy -back is not prohibited, if the default is remedied and a period of three years has lapsed after such default ceased to subsist. (2) No company shall, directly or indirectly, purchase its own sh ares or other specified securities in case such company has not complied with the provisions of sections 92, 123,127 and section 129. 71. Debentures. (1) A company may issue debentures with an option to convert such debentures into shares, either wholly or partly at the time of redemption: Provided that the issue of debentures with an option to convert such debentures into shares, wholly or partly, shall be approved by a special resolution passed at a general meeting. (2) No company shall issue any debentur es carrying any voting rights. (3) Secured debentures may be issued by a company subject to such terms and conditions as may be prescribed. (4) Where debentures are issued by a company under this section, the company shall create a debenture redemption reserve account out of the profits of the company available for payment of dividend and the amount credited to such account shall not be utilised by the company except for the redemption of debentures. (5) No company shall issue a prospectus or make an off er or invitation to the public or to its members exceeding five hundred for the subscription of its debentures, unless the company has, before such issue or offer, appointed one or more debenture trustees and the conditions governing the appointment of su ch trustees shall be such as may be prescribed. (6) A debenture trustee shall take steps to protect the interests of the debenture -holders and redress their grievances in accordance with such rules as may be prescribed. (7) Any provision contained in a tru st deed for securing the issue of debentures, or in any contract with the debenture -holders secured by a trust deed, shall be void in so far as it would have the effect of exempting a trustee thereof from, or indemnifying him against, any liability for bre ach of trust, where he fails to show the degree of care and due diligence required of him as a trustee, having regard to the provisions of the trust deed conferring on him any power, authority or discretion: Provided that the liability of the debenture tru stee shall be subject to such exemptions as may be agreed upon by a majority of debenture -holders holding not less than three -fourths in value of the total debentures at a meeting held for the purpose. (8) A company shall pay interest and redeem the debent ures in accordance with the terms and conditions of their issue. (9) Where at any time the debenture trustee comes to a conclusion that the assets of the company are insufficient or are likely to become in sufficient to discharge the principal amount as an d when it becomes due, the debenture trustee may file a petition before the Tribunal and the Tribunal may, after hearing the 61 company and any other person interested in the matter, by order, impose such restrictions on the incurring of any further liabiliti es by the company as the Tribunal may consider necessary in the interests of the debenture -holders. (10) Where a company fails to redeem the debentures on the date of their maturity or fails to pay interest on the debentures when it is due, the Tribunal ma y, on the application of any or all of the debenture -holders, or debenture trustee and, after hearing the parties concerned, direct, by order, the company to redeem the debentures forth with on payment of principal and interest due thereon. 1* * * * * (12) A contract with the company to take up and pay for any debentures of the company may be enforced by a decree for specific performance. (13) The Central Government may prescribe the procedure, for securing the issue of debentures, the form of deben ture trust deed, the procedure for the debenture -holders to inspect the trust deed and to obtain copies thereof, quantum of debenture redemption reserve required to be created and such other matters. 72. Power to nominate. (1) Every holder of securities of a company may, at any time, nominate, in the prescribed manner, any person to whom his securities shall vest in the event of his death. (2) Where the securities of a company are held by more than one person jointly, the joint holders may together nominate , in the prescribed manner, any person to whom all the rights in the securities shall vest in the event of death of all the joint holders. (3) Notwithstanding anything contained in any other law for the time being in force or in any disposition, whether te stamentary or otherwise, in respect of the securities of a company, where a nomination made in the prescribed manner purports to confer on any person the right to vest the securities of the company, the nominee shall, on the death of the holder of securiti es or, as the case may be, on the death of the joint holders, become entitled to all the rights in the securities, of the holder or, as the case may be, of all the joint holders, in relation to such securities, to the exclusion of all other persons, unless the nomination is varied or cancelled in the prescribed manner. (4) Where the nominee is a minor, it shall be lawful for the holder of the securities, making the nomination to appoint, in the prescribed manner, any person to become entitled to the securit ies of the company, in the event of the death of the nominee during his minority. CHAPTER V ACCEPTANCE OF DEPOSITS BY COMPANIES 73. Prohibition on acceptance of deposits from public. (1) On and after the commencement of this Act, no company shall invite, accept or renew deposits under this Act from the public except in a manner provided under this Chapter: Provided that nothing in this sub -section shall apply to a banking company and non -banking financial company as defined in the Reserve Bank of India Act , 1934 (2 of 1934) and to such other company as the Central Government may, after consultation with the Reserve Bank of India, specify in this behalf. (2) A company may, subject to the passing of a resolution in general meeting and subject to such rules as may be prescribed in consultation with the Reserve Bank of India, accept deposits from its members on such terms and conditions, including the provision of security, if any, or for the repayment of such deposits with interest, as may be agreed upon betwee n the company and its members, subject to the fulfilment of the following conditions, namely: (a) issuance of a circular to its members including therein a statement showing the financial position of the company, the credit rating obtained, the total number of depositors and the amount due towards deposits in respect of any previous deposits accepted by the company and such other particulars in such form and in such manner as may be prescribed; (b) filing a copy of the circular along with such statemen t with the Registrar within thirty days before the date of issue of the circular; 1. Sub -section ( 11) omitted by Act 29 of 2020, s. 15 (w.e.f. 21 -12-2020). 62 1[(c) depositing, on or before the thirtieth day of April each year, such sum which shall not be less than twenty per cent. of the amount of its deposits maturing during the following financial year and kept in a scheduled bank in a separate bank account to be called deposit repayment reserve account ;] 2* * * * * (e) certifying that the company has not committed any default in the repayment of deposits accepted either before or after the commencement of this

certifying that the company has not committed any default in the repayment of deposits accepted either before or after the commencement of this Act or payment of interest on, 3[such deposits and where a default had occurred, the company made good the default and a period of five years had lapsed since the date of making good the default;] and (f) providing security, if any for the due repayment of the amount of deposit or the interest thereon including the creation of such charge on the property or assets of the company: Provided that in case where a company does not secure the deposits or secures such depo sits partially, then, the deposits shall be termed as unsecured deposits and shall be so quoted in every circular, form, advertisement or in any document related to invitation or acceptance of deposits. (3) Every deposit accepted by a company under sub -section ( 2) shall be repaid with interest in accordance with the terms and conditions of the agreement referred to in that sub -section. (4) Where a company fails to repay the deposit or part thereof or any interest thereon under sub - section ( 3), the depositor concerned may apply to the Tribunal for an order directing the company to pay the sum due or for any loss or damage incurred by him as a result of such non -payment and for such other orders as the Tribunal may deem fit. (5) The deposit repaym ent reserve account referred to in clause ( c) of sub -section ( 2) shall not be used by the company for any purpose other than repayment of deposits. 74. Repayment of deposits, etc., accepted before commencement of this Act. (1) Where in respect of any deposit accepted by a company before the commencement of this Act, the amount of such deposit or part thereof or any interest due thereon remains unpaid on such commencement or becomes due at any time thereafter, the company shall (a) file, within a perio d of three months from such commencement or from the date on which such payments, are due, with the Registrar a statement of all the deposits accepted by the company and sums remaining unpaid on such amount with the interest payable thereon along with the arrangements made for such repayment, notwithstanding anything contained in any other law for the time being in force or under the terms and conditions subject to which the deposit was accepted or any scheme framed under any law; and 4[(b) repay within thr ee years from such commencement or on or before expiry of the period for which the deposits were accepted, whichever is earlier: Provided that renewal of any such deposits shall be done in accordance with the provisions of Chapter V and the rules made ther eunder. ] (2) The Tribunal may on an application made by the company, after considering the financial condition of the company, the amount of deposit or part thereof and the interest payable thereon and such other matters, allow further time as considered reasonable to the company to repay the deposit. (3) If a company fails to repay the deposit or part thereof or any interest thereon within the time specified in sub -section ( 1) or such further time as may be allowed by the Tribunal under sub -section ( 2), the company shall, in addition to the payment of the amount of deposit or part thereof and the interest due, be punishable with fine which shall not be less than one crore rupees but which may extend to ten crore rupees and every officer of the company who is in default shall be punishable with imprisonment which may extend to seven years or with fine which shall not be less than twenty -five lakh rupees but which may extend to two crore rupees, or with both. 75. Damages for fraud. (1) Where a company fails t o repay the deposit or part thereof or any interest thereon referred to in section 74 within the time specified in sub -section ( 1) of that section or such further time as may be allowed by the Tribunal under sub -section ( 2) of that section, and it is prove d that the 1. Subs. by Act 1 of 2018, s. 15, for clause ( c) (w.e.f. 15 -8-2018). 2. Clause ( d) omitted by s. 15, ibid. (w.e.f. 15 -8-2018). 3. Subs. by s. 15, ibid., for such deposits; (w.e.f. 15 -8-2018). 4. Subs. by s. 16, ibid., for clause ( b) (w.e.f. 15 -8-2018). 63 deposits had been accepted with intent to defraud the depositors or for any fraudulent purpose, every officer of the company who was responsible for the acceptance of such deposit shall, without prejudice to the provisions contained in sub -section (3) of that section and liability under section 447, be personally responsible, without any limitation of liability, for all or any of the losses or damages that may have been incurred by the depositors. (2) Any suit, proceedings or other action may be taken by any person, group of persons or any association of persons who had incurred any loss as a result of the failure of the company to repay the deposits or part thereof or any interest thereon. 76. Acceptance of deposits from public by certain compani es.(1) Notwithstanding anything contained in section 73, a public company, having such net worth or turnover as may be prescribed, may accept deposits from persons other than its members subject to compliance with the requirements provided in sub -section (2) of section 73 and subject to such rules as the Central Government may, in consultation with the Reserve Bank of India, prescribe: Provided that such a company shall be required to obtain the rating (including its networth, liquidity and ability to pay its deposits on due date) from a recognised credit rating agency for informing the public the rating given to the company at the time of invitation of deposits from the public which ensures adequate safety and the rating shall be obtained for every year du ring the tenure of deposits: Provided further that every company accepting secured deposits from the public shall within thirty days of such acceptance, create a charge on its assets of an amount not less than the amount of deposits accepted in favour of t he deposit holders in accordance with such rules as may be prescribed. (2) The provisions of this Chapter shall, mutatis mutandis , apply to the acceptance of deposits from public under this section. 1[76A. Punishment for contravention of section 73 or sect ion 76. Where a company accepts or invites or allows or causes any other person to accept or invite on its behalf any deposit in contravention of the manner or the conditions prescribed under section 73 or section 76 or rules made thereunder or if a compan y fails to repay the deposit or part thereof or any interest due thereon within the time specified under section 73 or section 76 or rules made thereunder or such further time as may be allowed by the Tribunal under section73, (a) the company shall, in addition to the payment of the amount of deposit or part thereof and the interest due, be punishable with fine which shall not be less than 2[one crore rupees or twice the amount of deposit accepted by the company, whichever is lowe r] but which may extend to ten crore rupees; and (b) every officer of the company who is in default shall be punishable with imprisonment which may extend to 3[seven years and with fine] which shall not be less than twenty -five lakh rupees but which may ex tend to two crore rupees, 4***: Provided that if it is proved that the officer of the company who is in default, has contravened such provisions knowingly or wilfully with the intention to deceive the company or its shareholders or depositors or creditors or tax authorities, he shall be liable for action under section 447.] CHAPTER VI REGISTRATION OF CHARGES 77. Duty to register charges, etc. (1) It shall be the duty of every company creating a charge within or outside India, on its property or assets or an y of its undertakings, whether tangible or otherwise, and situated in or outside India, to register the particulars of the charge signed by the company and the charge - holder together with the instruments, if any, creating such charge in such form, on payme nt of such fees and in such manner as may be prescribed, with the Registrar within thirty days of its creation: 5[Provided that the Registrar may, on an application by the company, all ow such registration to be made (a) in case of cha rges created before the commencement of the Companies (Amendment) Act, 2019, within a period of three hundred days of such creation; or 1. Ins. by Act 21 of 2015, s. 8 (w.e.f. 29 -5-2015). 2. Subs. by Act 1 of 2018, s. 17, for one crore rupees (w.e.f. 9 -2-2018). 3. Subs. by s. 17, ibid., for seven years or with fine (w.e.f. 9 -2-2018). 4. The words or with both omitted by s. 17, ibid. (w.e.f. 9 -2-2018). 5. Subs. by Act 22 of 2019, s. 11, for first and second provisos (w.e.f. 2 -11-2018). 64 (b) in case of cha rges created on or after the commencement of the Companies (Amendment) Act, 2019, within a period of sixty days of such creation, on payment of such additional fees as may be prescribed: Provided further that if the registration is not made within the period specified (a) in clause ( a) to the first proviso, the registration of the charges shall be made within six months from the date of commencement of the Companies (Amendment) Act, 2019, on payment of such additional fees as may be prescribed and different fees may be prescribed for different classes of companies; (b) in clause ( b) to the first proviso, the Registrar may, on an application, allow such registration to be made within a further period of sixty days after payment of such ad valorem fees as may be prescribed.] Provided also that any subsequent registration of a charge s hall not prejudice any right acquired in respect of any property before the charge is actually registered: 1[Provided also that this section shall not apply to such charges as may be prescribed in consultation with the Reserve Bank of India.] (2) Where a c harge is registered with the Registrar under sub -section ( 1), he shall issue a certificate of registration of such charge in such form and in such manner as may be prescribed to the company and, as the case may be, to the person in whose favour the charge is created. (3) Notwithstanding anything contained in any other law for the time being in force, no charge created by a company shall be taken into account by the liquidator 2[appointed under this Act or the Insolvency and Bankruptcy Code, 2016 (31 of 2016 ), as the case may be,] or any other creditor unless it is duly registered under sub -section ( 1) and a certificate of registration of such charge is given by the Registrar under sub - section ( 2). (4) Nothing in sub -section ( 3) shall prejudice any contract o r obligation for the repayment of the money secured by a charge. 78. Application for registration of charge. Where a company fails to 3[register the charge within the period of thirty days referred to in sub -section ( 1) of section 77] without prejudice to its liability in respect of any offence under this Chapter, the person in whose favour the charge is created may apply to the Registrar for registration of the charge along with the instrument created for the charge, within such time and in such form and m anner as may be prescribed and the Registrar may, on such application, within a period of fourteen days after giving notice to the company, unless the company itself registers the charge or shows sufficient cause why such charge should not be registered, a llow such registration on payment of such fees, as may be prescribed: Provided that where registration is effected on application of the person in whose favour the charge is created, that person shall be entitled to recover from the company the amount of a ny fees or additional fees paid by him to the Registrar for the purpose of registration of charge. 79. Section 77 to apply in certain matters. The provisions of section 77 relating to registration of charges shall, so far as may be, apply to (a) a company acquiring any property subject to a charge within the meaning of that section; or (b) any modification in the terms or conditions or the extent or operation of any charge registered under that section. 80. Date of notice of charge. Where any charge on any property or assets of a company or any of its undertakings is registered under section 77, any person acquiring such property, assets, undertakings or part thereof or any share or interest therein shall be deemed to have notice of the charge from the date of such registration. 81. Register of charges to be kept by Registrar. (1) The Registrar shall, in respect of every company, keep a register containing particulars of the charges registered under this Chapter in such form and in such manner as may be pres cribed. 1. The proviso ins. by Act 1 of 2018, s. 18 (w.e.f. 7 -5-2018). 2. Ins. by Act 31 of 2016, s. 255 and the Eleventh Schedule (w.e.f. 15 -11-2016). 3. Subs. by Act 1 of 2018, s. 19, for register the charge within the period speci fied in section 77 (w.e .f. 7-5-2018). 65 (2) A register kept in pursuance of this section shall be open to inspection by any person on payment of such fees as may be prescribed for each inspection. 82. Company to report satisfaction of charge. (1) A company shall give intimation to the Registrar in the prescribed form, of the payment or satisfaction in full of any charge registered under this Chapter within a period of thirty days from the date of such payment or satisfaction 1***. 2[Provided that the Registrar may, on an application by the company or the charge holder, allow such intimation of payment or satisfaction to be made within a period of three hundred days of such payment or satisfaction on payment of such additional fees as may be prescr ibed .] (2) The Registrar shall, on receipt of intimation under sub -section ( 1), cause a notice to be sent to the holder of the charge calling upon him to show cause within such time not exceeding fourteen days, as may be specified in such notice, as to why payment or satisfaction in full should not be recorded as intimated to the

, as may be specified in such notice, as to why payment or satisfaction in full should not be recorded as intimated to the Registrar, and if no cause is shown, by such holder of the charge, the Registrar shall order that a memorandum of satisfaction shall be entered in the register of charges kept by h im under section 81 and shall inform the company that he has done so: Provided that the notice referred to in this sub -section shall not be required to be sent, in case the intimation to the Registrar in this regard is in the specified form and signed by t he holder of charge. (3) If any cause is shown, the Registrar shall record a note to that effect in the register of charges and shall inform the company. (4) Nothing in this section shall be deemed to affect the powers of the Registrar to make an entry in the register of charges under section 83 or otherwise than on receipt of an intimation from the company. 83. Power of Registrar to make entries of satisfaction and release in absence of intimation from company. (1) The Registrar may, on evidence being give n to his satisfaction with respect to any registered charge, (a) that the debt for which the charge was given has been paid or satisfied in whole or in part; or (b) that part of the property or undertaking charged has been released from the charge or has ceased to form part of the companys property or undertaking, enter in the register of charges a memorandum of satisfaction in whole or in part, or of the fact that part of the property or undertaking has been released from the charge or has ceased to form part of the companys property or undertaking, as the case may be, notwithstanding the fact that no intimation has been received by him from the company. (2) The Registrar shall inform the affected parties within thirty days of making the entry in the reg ister of charges kept under sub -section ( 1) of section 81. 84. Intimation of appointment of receiver or manager. (1) If any person obtains an order for the appointment of a receiver of, or of a person to manage, the property, subject to a charge, of a comp any or if any person appoints such receiver or person under any power contained in any instrument, he shall, within a period of thirty days from the date of the passing of the order or of the making of the appointment, give notice of such appointment to th e company and the Registrar along with a copy of the order or instrument and the Registrar shall, on payment of the prescribed fees, register particulars of the receiver, person or instrument in the register of charges. (2) Any person appointed under sub -section ( 1) shall, on ceasing to hold such appointment, give to the company and the Registrar a notice to that effect and the Registrar shall register such notice. 85. Companys register of charges. (1) Every company shall keep at its registered office a re gister of charges in such form and in such manner as may be prescribed, which shall include there in all charges and floating charges affecting any property or assets of the company or any of its undertakings, indicating in each case such particulars as ma y be prescribed: Provided that a copy of the instrument creating the charge shall also be kept at the registered office of the company along with the register of charges. 1. Omitted by Act 1 of 2018, s. 20 , for certain words (w.e.f. 5 -7-2018). 2. The Proviso i ns. by s. 20, ibid. (w.e.f. 5 -7-2018). 66 (2) The register of charges and instrument of charges, kept under sub -section ( 1) sha ll be open for inspection during business hours (a) by any member or creditor without any payment of fees; or (b) by any other person on payment of such fees as may be prescribed, subject to such reasonable restrictions as the company may, by its articles, impose. 86. Punishment for contravention. 1[ 2[(1)] If any company is in default in complying with any of the provisions of this Chapter, the company shall be liable to a penalty of five lakh rupees and every officer of the company who is in default shall be liable to a penalty of fifty thousand rupees] . 3[(2) If any person willfully furnishes any false or incorrect information or knowingly suppresses any material information, required to be registered in accordance with the provisions of sect ion 77, he shall be liable for action under section 447.] 4[87. Rectification by Central Government in Register of charges. The Central Government on being satisfied that (a) the omission to give intimate to the Registrar of the payment or satisfaction of a charge, within the time required under this Chapter; or (b) the omission or misstatement of any particulars, in any filing previously made to the Registrar with respect to a ny charge or modification thereof or with respect to a ny memorandum of satisfact ion or other entry made in pursuance of section 82 or section 83, was accidental or due to inadvertence or some other sufficient cause or it is not of a nature to prejudice the position of creditors or shareholders of the company, it may, on the applicatio n of the company or any person interested and on such terms and conditions as it deems just and expedient, direct that the time for the giving of intimation of payment or satisfaction shall be extended or, as the case may require, that the omission or miss tatement shall be rectified.] CHAPTER VII MANAGEMENT AND ADMINISTRATION 88. Register of members, etc. (1) Every company shall keep and maintain the following registers in such form and in such manner as may be prescribed, namely: (a) register of members indicating separately for each class of equity and preference shares held by each member residing in or outside India; (b) register of debenture -holders; and (c) register of any other security holders. (2) Every register maintained under sub -section ( 1) shall include an index of the names included therein. (3) The register and index of beneficial owners maintained by a depository under section 11 of the Depositories Act, 1996 (22 of 1996), shall be deemed to be the corresponding register and index for the purposes of this Act. (4) A company may, if so authorised by its articles, keep in any country outside India, in such manner as may be prescribed, a part of the register referred to in sub -section ( 1), called foreign register containing the names and part iculars of the members, debenture -holders, other security holders or beneficial owners residing outside India. 5[(5) If a company does not maintain a register of members or debenture -holders or other security holders or fails to maintain them in accordance with the provisions of sub -section ( 1) or sub -section ( 2), the 1. Subs. by Act 29 of 2020, s. 16, for sub -section ( 1) (w.e.f. 21 -12-2020). 2. Section 86 numbered as sub -section ( 1) thereof by Act 22 of 2019, s.12 (w.e.f. 2 -11-2018). 3. Ins. by s. 12, ibid. (w.e.f. 2 -11-2018). 4. Subs. by s. 13, ibid., for section 86 (w.e.f. 2 -11-2018). 5. Subs. by Act 29 of 2020, s. 17, for sub -section ( 5) (w.e.f. 21-12-2020). 67 company shall be liable to a penalty of three lakh rupees and every officer of the company who is in default shall be liable to a penalty of fifty thousand rupees .] 89. Declaration in respect of beneficial interest in any share. (1) Where the name of a person is entered in the register of members of a company as the holder of shares in that company but who does not hold the beneficial interest in such shares, such person shall make a declaratio n within such time and in such form as may be prescribed to the company specifying the name and other particulars of the person who holds the beneficial interest in such shares. (2) Every person who holds or acquires a beneficial interest in share of a com pany shall make a declaration to the company specifying the nature of his interest, particulars of the person in whose name the shares stand registered in the books of the company and such other particulars as may be prescribed. (3) Where any change occurs in the beneficial interest in such shares, the person referred to in sub - section ( 1) and the beneficial owner specified in sub -section ( 2) shall, within a period of thirty days from the date of such change, make a declaration to the company in such form and containing such particulars as may be prescribed. (4) The Central Government may make rules to provide for the manner of holding and disclosing beneficial interest and beneficial ownership under this section. 1[(5) If any person fails to make a d eclaration as required under sub -section ( 1) or sub -section ( 2) or sub-section (3), he shall be liable to a penalty of fifty thousand rupees and in case of continuing failure, with a further penalty of two hundred rupees for each day after the first during which such failure continues, subject to a maximum of five lakh rupees .] (6) Where any declaration under this section is made to a company, the company shall make a note of such declaration in the register concerned and shall file, within thirty days from the date of receipt of declaration by it, a return in the prescribed form with the Registrar in respect of such declaration with such fees or additional fees as may be prescribed, 2***. 3[(7) If a company, required to file a return under sub -section ( 6), fails to do so before the expiry of the time specified therein, the company and every officer of the company who is in default shall be liable to a penalty of one thousand rupees for each day during which such failure continues, subject to a maximum of five lakh rupees in the case of a company and two lakh rupees in case of an officer who is in default.] (8) No right in relation to any share in respect of which a declaration is required to be made under this section but not made by the beneficial owner, sha ll be enforceable by him or by any person claiming through him. (9) Nothing in this section shall be deemed to prejudice the obligation of a company to pay dividend to its members under this Act and the said obligation shall, on such payment, stand dischar ged. 4[(10) For the purposes of this section and section 90, beneficial interest in a share includes, directly or indirectly, through any contract, arrangement or otherwise, the right or entitlement of a person alone or together with any other person to (i) exercise or cause to be exercised any or all of the rights attached to such share; or (ii) receive or participate in any dividend or other distribution in respect of such share.] 5[(11) The Central Government may, by notification, exempt any class or cl asses of persons from complying with any of the requirements of this section, except sub -section ( 10), if it is considered necessary to grant such exemption in the public interest and any such exemption may be granted either unconditionally or subject to s uch conditions as may be specified in the notification.] 6[90. Register of significant beneficial owners in a company. (1) Every individual, who acting alone or together, or through one or more persons or trust, including a trust and persons resident outside India, holds beneficial interests, of not less than twenty -five per cent. or such other percentage as may be prescribe d, in shares of a company or the right to exercise, or the actual exercising of significant influence 1. Subs. by Act 29 of 2020, s. 18, for sub -section ( 5) (w.e.f. 21 -12-2020). 2. The words and figures within the time specified under section 403 omitted by Act 1 of 2018, s. 21 (w.e.f. 7 -5-2018). 3. Subs. by Act 29 of 2020, s. 18, for sub -section ( 7) (w.e.f. 21 -12-2020). 4. Ins. by Act 1 of 2018, s. 21, (w.e.f. 13 -6-2018). 5. Ins. by Act 29 of 2020, s. 18 (w.e.f. 22 -1-2021). 6. Subs. by Act 1 of 2018, s. 22, for section 90 (w.e.f. 13 -6-2018). 68 or control as defined in clause ( 27) of section 2, over the company (herein referred to as significant beneficial owner ), shall make a declaration to th e company, specifying the nature of his interest and other particulars, in such manner and within such period of acquisition of the beneficial interest or rights and any change thereof, as may be prescribed: Provided that the Central Government may prescr ibe a class or classes of persons who shall not be required to make declaration under this sub -section. (2) Every company shall maintain a register of the interest declared by individuals under sub - section ( 1) and changes therein whi ch shall include the name of individual, his date of birth, address, details of ownership in the company and such other details as may be prescribed. (3) The register maintained under sub -section ( 2) shall be open to inspection by any member of the compan y on payment of such fees as may be prescribed. (4) Every company shall file a return of significant beneficial owners of the company and changes therein with the Registrar containing names, addresses and other details as may be prescribed within such time, in such form and manner as may be prescribed. 1[(4A) Every company shall take necessary steps to identify an individual who is a significant beneficial owner in relation to the company and require him to comply with the provisions of this section.] (5) A company shall give notice, in the prescribed manner, to any person (whether or not a member of the company) whom the company knows or has reasonable cause to believe (a) to be a significant beneficial owner of the company; (b) to be having knowledge of the identity of a significant beneficial owner or another person likely to have such knowledge; or (c) to have been a significant beneficial owner of the company at any time during the three years immediately preceding the date on which the notice is issued, and who is not registered as a significant beneficial owner with the company as required under this section. (6) The information required by the notice under sub -section ( 5) shall be given by the concerned person within a period not exceeding thirty days of the date of the notice. (7) The company shall, (a) where that person fails to give the company the information required by the notice within the time specified therein; or (b) where the information given is not satisfactory, apply to the Tribunal within a period of fifteen days of the expiry of the period specified in

where the information given is not satisfactory, apply to the Tribunal within a period of fifteen days of the expiry of the period specified in the notice, for an order directing that the shares in question be subject to restrictions with regard to transfer of interest, suspension of all rights attached to the share s and such other matters as may be prescribed. (8) On any application made under sub -section ( 7), the Tribunal may, after giving an opportunity of being heard to the parties concerned, make such order restricting the rights attached with the shares within a period of sixty days of receipt of application or such other period as may be prescribed. 2[(9) The company or the person aggrieved by the order of the Tribunal may make an application to the Tribunal for relaxation or lifting of the restrictions place d under sub -section ( 8), within a period of one year from the date of such order: Provided that if no such application has been filed within a period of one year from the date of the order under sub -section ( 8), such shares shall be transferred, without any restrictions, to the authority constituted under sub -section ( 5) of section 125, in such manner as may be prescribed; ] 3[(9A) The Central Government may make rules for the purposes of this section.] 4[(10) If any person fails to make a declaration as required under sub -section ( 1), he shall be liable to a penalty of fifty thousand rupees and in case of continuing failure, with a further penalty of one thousand 1. Ins. by Act 22 of 2019, s. 14 (w.e.f. 15 -8-2019). 2. Subs. by Act 22 of 2019, s. 14, for sub -section ( 9) (w.e.f. 2 -11-2018). 3. Ins. by s. 14, ibid. (w.e.f. 15 -8-2019). 4. Subs.by Act 29 of 2020, s. 19, for sub -section ( 10) (w.e.f. 21 -12-2020). 69 rupees for each day after the first during which such failure continues, subject to a maximum of two lakh rupees .] 1[(11) If a company, required to maintain register under sub -section ( 2) and file the information under sub-section ( 4) 2[or required to take necessary steps under sub -section ( 4A)], fails to do so or denies inspection as provided therein, the company shall be liable to a penalty of one lakh rupees and in case of continuing failure, with a further penalty of five hundred rupees for each day, after the first during which such failure continues, subject to a maximum of five lakh rupee s and every officer of the company who is in default shall be liable to a penalty of twenty -five thousand rupees and in case of continuing failure, with a further penalty of two hundred rupees for each day, after the first during which such failure continu es, subject to a maximum of one lakh rupees.] (12) If any person wilfully furnishes any false or incorrect information or suppresses any material information of which he is aware in the declaration made under this section, he shall be liable to action under section 447.] 91. Power to close register of members or debenture -holders or other security holders. (1) A company may close the register of members or the register of debenture -holders or the register of other security holders for any period or peri ods not exceeding in the aggregate forty -five days in each year, but not exceeding thirty days at any one time, subject to giving of previous notice of at least seven days or such lesser period as may be specified by Securities and Exchange Board for liste d companies or the companies which intend to get their securities listed, in such manner as may be prescribed. (2) If the register of members or of debenture -holders or of other security holders is closed without giving the notice as provided in sub -sectio n (1), or after giving shorter notice than that so provided, or for a continuous or an aggregate period in excess of the limits specified in that sub -section, the company and every officer of the company who is in default shall be liable to a penalty of fi ve thousand rupees for every day subject to a maximum of one lakh rupees during which the register is kept closed. 92. Annual return. (1) Every company shall prepare a return (hereinafter referred to as the annual return) in the prescribed form containing the particulars as they stood on the close of the financial year regarding (a) its registered office, principal business activities, particulars of its holding, subsidiary and associate companies; (b) its shares, debentures and other securities and shareh olding pattern; 2* * * * * (d) its members and debenture -holders along with changes therein since the close of the previous financial year; (e) its promoters, directors, key managerial personnel along with changes there in since the close of the pre vious financial year; (f) meetings of members or a class thereof, Board and its various committees along with attendance details; (g) remuneration of directors and key managerial personnel; (h) penalty or punishment imposed on the company, its directors or officers and details of compounding of offences and appeals made against such penalty or punishment; (i) matters relating to certification of compliances, disclosures as may be prescribed; (j) details, as may be prescribed, in respect of shares held by or on behalf of the Foreign Institutional Investors 3***; and (k) such other matters as may be prescribed, and signed by a director and the company secretary, or where there is no company secretary, by a company secretary in practice: Provided that in relation to One Person Company and small company, the annual return shall be signed by the company secretary, or where there is no company secretary, by the director of the company. 1. Subs. by Act 29 of 2020, s. 19, for sub -section ( 11) (w.e.f. 21 -12-2020). 2. Clause ( c) omitted by Act 1 of 2018, s. 23 (w.e.f. 5-3-2021 ). 3. The words indicating their names, addresses, countries of incorporation, registration and percentage of shareholding held by them omitted by s. 23, ibid (w.e.f. 5-3-2021 ). 70 1[Provided further that the Central Government may prescribe abridged form of annual return for One Person Company, small company and such other class of classes of companies as may be prescribed .] (2) 2[The annual return, filed by a listed company or, by a company having such paid -up capital or turnover as may be prescribed] shall be certified by a company secretary in practice in the prescribed form, stating that the annual return discloses the facts correctly and adequately and that the company has complied with all the provisions of this Act. (3) An extract of the annual re turn in such form as may be prescribed shall form part of the Boards report. (4) Every company shall file with the Registrar a copy of the annual return, within sixty days from the date on which the annual general meeting is held or where no annual general meeting is held in any year within sixty days from the date on which the annua l general meeting should have been held together with the statement specifying the reasons for not holding the annual general meeting, with such fees or additional fees as may be prescribed, 3***. 4[(5) If any company fails to file its annual return under sub-section ( 4), before the expiry of the period specified therein, such company and its every officer who is in default shall be liable to a penalty of 5[ten thousand rupees ] and in ca se of continuing failure, with a further penalty of one hundred rupees for each day after the first during which such failure continues, subject to a maximum of 6[two lakh rupees in case of a company and fifty thousand rupees in case of an officer who is an default] .] (6) If a company secretary in practice certifies the annual return otherwise than in conformity with the requirements of this section or the rules made thereunder, he shall be 7[liable to a penalty of two lakh rupees] . 93. [Return to be filed with Registrar in case promoters stake changes .] Omitted by the Companies Act , 2017 (1 of 2018), s. 24 (w.e.f . 13-6-2018). 94. Place of keeping and inspection of registers, returns, etc. (1) The registers required to be kept and maintained by a company under section 88 and copies of the annual return filed under section 92 shall be kept at the registered office of the company: Provided that such registers or copies of return may also be kept at any other place in India in which more than one -tenth of the total number of members entered in the register of members reside, if approved by a special resolution passed at a general meeting of the company 8***: Provided further that the period for which the registers, returns and records are required to be kept shall be such as m ay be prescribed. (2) The registers and their indices, except when they are closed under the provisions of this Act, and the copies of all the returns shall be open for inspection by any member, debenture -holder, other security holder or beneficial owner, during business hours without payment of any fees and by any other person on payment of such fees as may be prescribed. (3) Any such member, debenture -holder, other security holder or beneficial owner or any other person may (a) take extracts from any reg ister, or index or return without payment of any fee; or (b) require a copy of any such register or entries therein or return on payment of such fees as may be prescribed. 9[Provided that such particulars of the register or index or return as may be prescribed shall not be available for inspection under sub -section ( 2) or for taking extracts or copies under this sub -section.]. 1. Ins. by Act 1 of 2018, s. 23 (w.e.f. 5-3-2021 ). 2. Subs. by S.O. 1177 (E), dated 29th April, 2014 for certain words (w.e.f. 29 -4-2014). 3. The words within the time as specified, under section 403 omitted by Act 1 of 2018, s. 23 (w.e.f. 7 -5-2018). 4. Subs. by Act 22 of 2019, s. 15, for sub -section ( 5) (w.e.f. 2 -11-2018). 5. Subs. by Act 29 of 2020, s. 20, for fifty thousand rupees (w.e.f. 21 -12-2020). 6. Subs. by s. 20, ibid., for five lakh rupees (w.e.f. 21 -12-2020). 7. Subs. by s. 20, ibid., for punishable with fine which shall not be less than fifty thousand rupees but which may extend to five lakh rupees (w.e.f. 21 -12-2020). 8. The words and the Registrar has been given a copy of the proposed special resolution in advance omit ted by Act 1 of 2018, s. 25 (w.e.f. 13 -6-2018). 9. The proviso ins. by Act 1 of 2018, s. 25 (w.e.f. 13 -6-2018). 71 (4) If any inspection or the making of any extract or copy required under this section is refused, the company and every off icer of the company who is in default shall be liable, for each such default, to a penalty of one thousand rupees for every day subject to a maximum of one lakh rupees during which the refusal or default continues. (5) The Central Government may also, by o rder, direct an immediate inspection of the document, or direct that the extract required shall forthwith be allowed to be taken by the person requiring it. 95. Registers, etc., to be evidence. The registers, their indices and copies of annual returns maintained under sections 88 and 94 shall be prima facie evidence of any matter directed or authorised to be inserted therein by or under this Act. 96. Annual general meeting. (1) Every company oth er than a One Person Company shall in each year hold in addition to any other meetings, a general meeting as its annual general meeting and shall specify the meeting as such in the notices calling it, and not more than fifteen months shall elapse between t he date of one annual general meeting of a company and that of the next: Provided that in case of the first annual general meeting, it shall be held within a period of nine months from the date of closing of the first financial year of the company and in a ny other case, within a period of six months, from the date of closing of the financial year: Provided further that if a company holds its first annual general meeting as aforesaid, it shall not be necessary for the company to hold any annual general meeti ng in the year of its incorporation: Provided also that the Registrar may, for any special reason, extend the time within which any annual general meeting, other than the first annual general meeting, shall be held, by a period not exceeding three months. (2) Every annual general meeting shall be called during business hours, that is, between 9 a.m. and 6 p.m. on any day that is not a National Holiday and shall be held either at the registered office of the company or at some other place within the city, to wn or village in which the registered office of the company is situate: 1[Provided that annual general meeting of an unlisted company may be held at any place in India if consent is given in writing or by electronic mode by all the members in advance: Provided further that] the Central Government may exempt any company from the provisions of this sub-section subject to such conditions as it may impose. Explanation .For the purposes of this sub -section, National Holiday means and includes a day declared a s National Holiday by the Central Government. 97. Power of Tribunal to call annual general meeting. (1) If any default is made in holding the annual general meeting of a company under section 96, the Tribunal may, notwithstanding anything contained in this Act or the articles of the company, on the application of any member of the company, call, or direct the calling of, an annual general meeting of the company and give such ancillary or consequential directions as the Tribunal thinks expedient: Provided th at such directions may include a direction that one member of the company present in person or by proxy shall be deemed to constitute a meeting. (2) A general meeting held in pursuance of sub -section ( 1) shall, subject to any directions of the Tribunal, be

A general meeting held in pursuance of sub -section ( 1) shall, subject to any directions of the Tribunal, be deemed to be an annual general meeting of the company under this Act. 98. Power of Tribunal to call meetings of members, etc. (1) If for any reason it is impracticable to call a meeting of a company, other than an annual general meeting, in any manner in which meetings of the company may be called, or to hold or conduct the meeting of the company in the manner prescribed by this Act or the articles of the company, the Tribunal may, either suo motu or on the application of any director or member of the comp any who would be entitled to vote at the meeting, (a) order a meeting of the company to be called, held and conducted in such manner as the Tribunal thinks fit; and 1. Subs. by Act 1 of 2018, s. 26, for Provided that (w.e.f. 13 -6-2018). 72 (b) give such ancillary or consequential directions as the Tribunal thinks expedient, including directions modifying or supplementing in relation to the calling, holding and conducting of the meeting, the operation of the provisions of this Act or articles of the company: Provided that such directions may include a direction that one member of the company present in person or by proxy shall be deemed to constitute a meeting. (2) Any meeting called, held and conducted in accordance with any order made under sub -section ( 1) shall, for all purposes, be deemed to be a meeting of the company duly called, held and conducted. 99. Punishment for default in complying with provisions of sections 96 to 98. If any default is made in holding a meeting of the company in accordance with section 96 or section 97 or section 98 or in complying with any directi ons of the Tribunal, the company and every officer of the company who is in default shall be punishable with fine which may extend to one lakh rupees and in the case of a continuing default, with a further fine which may extend to five thousand rupees for every day during which such default continues. 100. Calling of extraordinary general meeting. (1) The Board may, whenever it deems fit, call an extraordinary general meeting of the company. 1[Provided that an extraordinary general meeting of the company, o ther than of the wholly owned subsidiary of a company incorporated outside India, shall be held at a place within India .] (2) The Board shall, at the requisition made by, (a) in the case of a company having a share capital, such number of members who hold, on the date of the receipt of the requisition, not less than one -tenth of such of the paid -up share capital of the company as on that date carries the right of voting; (b) in the case of a company not having a share capital, such number of members wh o have, on the date of receipt of the requisition, not less than one -tenth of the total voting power of all the members having on the said date a right to vote, call an extraordinary general meeting of the company within the period specified in sub -section (4). (3) The requisition made under sub -section ( 2) shall set out the matters for the consideration of which the meeting is to be called and shall be signed by the requisitionists and sent to the registered office of the company. (4) If the Board does not , within twenty -one days from the date of receipt of a valid requisition in regard to any matter, proceed to call a meeting for the consideration of that matter on a day not later than forty - five days from the date of receipt of such requisition, the meeti ng may be called and held by the requisitionists themselves within a period of three months from the date of the requisition. (5) A meeting under sub -section ( 4) by the requisitionists shall be called and held in the same manner in which the meeting is cal led and held by the Board. (6) Any reasonable expenses incurred by the requisitionists in calling a meeting under sub -section ( 4) shall be reimbursed to the requisitionists by the company and the sums so paid shall be deducted from any fee or other remuner ation under section 197 payable to such of the directors who were in default in calling the meeting. 101. Notice of meeting. (1) A general meeting of a company may be called by giving not less than clear twenty -one days notice either in writing or through electronic mode in such manner as maybe prescribed: 2[Provided that a general meeting may be called after giving shorter notice than that specified in this sub-section if consent, in writing or by electronic mode, is accorded thereto (i) in the case of an annual general meeting, by not less than ninty -five per cent. of the members entitled to vote thereat; and (ii) in the case of any other general meeting, by members of the company 1. The proviso ins. by Act 1 of 2018, s. 27 (w.e.f. 9 -2-2018). 2. The proviso subs. by Act 1 of 2018, s. 28 (w.e.f. 9 -2-2018). 73 (a) holding, if the company has a share capital, majority in number of members entitled to vote and who represent not less than ninety -five per cent. of such part of the paid -up share capital of the company as gives a right to vote at the meeting; or (b) having, if the company has no share capital, not less than ninty -five pe r cent. of the total voting power exercisable at that meeting: Provided further that where any member of a company is entitled to vote only on some resolution or resolutions to be moved at a meeting and not on the others, those members shall be taken into account for the purposes of this sub-section in respect of the former resolution or resolutions and not in respect of the latter. ] (2) Every notice of a meeting shall specify the place, date, day and the hour of the meeting and shall contain a statement of the business to be transacted at such meeting. (3) The notice of every meeting of the company shall be given to (a) every member of the company, legal representative of any deceased member or the assignee of an insolvent member; (b) the auditor or audito rs of the company; and (c) every director of the company. (4) Any accidental omission to give notice to, or the non -receipt of such notice by, any member or other person who is entitled to such notice for any meeting shall not invalidate the proceedings of the meeting. 102. Statement to be annexed to notice. (1) A statement setting out the following material facts concerning each item of special business to be transacted at a general meeting, shall be annexed to the notice calling such meeting, namely: (a) the nature of concern or interest, financial or otherwise, if any, in respect of each items of (i) every director and the manager, if any; (ii) every other key managerial personnel; and (iii) relatives of the persons mentioned in sub -clauses ( i) and ( ii); (b) any other information and facts that may enable members to understand the meaning, scope and implications of the items of business and to take decision thereon. (2) For the purposes of sub -section ( 1), (a) in the case of an annual general meeting, all business to be transacted thereat shall be deemed special, other than (i) the consideration of financial statements and the reports of the Board of Directors and auditors; (ii) the declaration of any dividend; (iii) the appointment of directors in pla ce of those retiring; (iv) the appointment of, and the fixing of the remuneration of, the auditors; and (b) in the case of any other meeting, all business shall be deemed to be special: Provided that where any item of special business to be transacted at a meeting of the company relates to or affects any other company, the extent of shareholding interest in that other company of every promoter, director, manager, if any, and of every other key managerial personnel of the first mentioned company shall, if the extent of such shareholding is not less than two per cent. of the paid -up share capital of that company, also be set out in the statement. 74 (3) Where any item of business refers to any document, which is to be considered at the meeting, the time and place where such document can be inspected shall be specified in the statement under sub - section ( 1). (4) Where as a result of the non -disclosure or insufficient disclosure in any statement referred to in sub - section ( 1), being made by a promo ter, director, manager, if any, or other key managerial personnel, any benefit which accrues to such promoter, director, manager or other key managerial personnel or their relatives, either directly or indirectly, the promoter, director, manager or other k ey managerial personnel, as the case may be, shall hold such benefit in trust for the company, and shall, without prejudice to any other action being taken against him under this Act or under any other law for the time being in force, be liable to compensa te the company to the extent of the benefit received by him. 1[(5) Without prejudice to the provisions of sub -section (4), if any default is made in complying with the provisions of this section, every promoter, director, manager or other key managerial pe rsonnel of the company who is in default shall be liable to a penalty of fifty thousand rupees or five times the amount of benefit accruing to the promoter, director, manager or other key managerial personnel or any of his relatives, whichever is higher.] 103. Quorum for meetings. (1) Unless the articles of the company provide for a larger number, (a) in case of a public company, (i) five members personally present if the number of members as on the date of meeting is not more than one thousand; (ii) fifteen members personally present if the number of members as on the date of meeting is more than one thousand but up to five thousand; (iii) thirty members personally present if the number of members as on the date of the meeting exceeds five thousand; (b) in the case of a private company, two members personally present, shall be the quorum for a meeting of the company. (2) If the quorum is not present within half -an-hour from the time appointed for holding a meeting of the company (a) the meeting shall stand adjourned to the same day in the next week at the same time and place, or to such other date and such other time and place as the Board may determine; or (b) the meeting, if called by requisitionists under section 100, shall stand cancelled: Provided that in case of an adjourned meeting or of a change of day, time or place of meeting under clause ( a), the company shall give not less than three days notice to the members either individually or by publishing an advertisement in the newspapers (one in En glish and one in vernacular language) which is in circulation at the place where the registered office of the company is situated. (3) If at the adjourned meeting also, a quorum is not present within half -an-hour from the time appointed for holding meeting , the members present shall be the quorum. 104. Chairman of meetings. (1) Unless the articles of the company otherwise provide, the members personally present at the meeting shall elect one of themselves to be the Chairman thereof on a show of hands. (2) If a poll is demanded on the election of the Chairman, it shall be taken forthwith in accordance with the provisions of this Act and the Chairman elected on a show of hands under sub -section ( 1) shall continue to be the Chairman of the meeting until some ot her person is elected as Chairman as a result of the poll, and such other person shall be the Chairman for the rest of the meeting. 1. Subs. by Act 22 of 2019, s. 16, for sub -section ( 5) (w.e.f. 2 -11-2018). 75 105. Proxies. (1) Any member of a company entitled to attend and vote at a meeting of the company shall be entitled to appoi nt another person as a proxy to attend and vote at the meeting on his behalf: Provided that a proxy shall not have the right to speak at such meeting and shall not been titled to vote except on a poll: Provided further that, unless the articles of a compan y otherwise provide, this sub -section shall not apply in the case of a company not having a share capital: Provided also that the Central Government may prescribe a class or classes of companies whose members shall not be entitled to appoint another person as a proxy: Provided also that a person appointed as proxy shall act on behalf of such member or number of members not exceeding fifty and such number of shares as may be prescribed. (2) In every notice calling a meeting of a company which has a share capital, or the articles of which provide for voting by proxy at the meeting, there shall appear with reasonable prominence a statement that a member entitled to attend and vote is entitled to appoint a proxy, or, where that is allowed, one or more proxies , to attend and vote instead of himself, and that a proxy need not be a member. (3) If default is made in complying with sub -section ( 2), every officer of the company who is in default shall be 1[liable to a penalty of five thousands rupees ]. (4) Any provi sion contained in the articles of a company which specifies or requires a longer period than forty -eight hours before a meeting of the company, for depositing with the company or any other person any instrument appointing a proxy or any other document nece ssary to show the validity or otherwise relating to the appointment of a proxy in order that the appointment may be effective at such meeting, shall have effect as if a period of forty -eight hours had been specified in or required by such provision for suc h deposit. (5) If for the purpose of any meeting of a company, invitations to appoint as proxy a person or one of a number of persons specified in the invitations are issued at the companys expense to any member entitled to have a notice of the meeting se nt to him and to vote thereat by proxy, every officer of the company 2[who issues the invitation as aforesaid or authorises or permits their issue, shall be liable to a penalty of fifty thousand rupees] : Provided that an officer shall not be 3[liable] under this sub -section by reason only of the issue to a member at his request in writing of a form of appointment naming the proxy, or of a list of persons willing to act as proxies, if the form or list is available on request in writing to every member e ntitled to vote at the meeting by proxy. (6) The instrument appointing a proxy shall (a) be in writing; and (b) be signed by the appointer or his attorney duly authorised in writing or, if the appointer is a body corporate, be under its seal or be signed by an officer or an attorney duly authorised by it. (7) An instrument appointing a proxy, if in the form as may be prescribed, shall not be questioned on the ground that it fails to comply with any special requirements specified for such instrument by the articles of a company. (8) Every member entitled to vote at a meeting of

ly with any special requirements specified for such instrument by the articles of a company. (8) Every member entitled to vote at a meeting of the company, or on any resolution to be moved thereat, shall be entitled during the period beginning twenty -four hours before the time fixed for the commencement of the meeting and en ding with the conclusion of the meeting, to inspect the proxies lodged, at any time during the business hours of the company, provided not less than three days notice in writing of the intention so to inspect is given to the company. 1. Subs. by Act 22 of 2019, s. 17, for punishable with fine which may extend to five thousand rupees (w.e.f. 2-11-2018). 2. Subs. by Act 29 of 2020, s. 21, for certain words (w.e.f. 21 -12-2020). 3. Subs. by s. 21, ibid., for punishable (w.e.f. 21 -12-2020). 76 106. Restriction on v oting rights. (1) Notwithstanding anything contained in this Act, the articles of a company may provide that no member shall exercise any voting right in respect of any shares registered in his name on which any calls or other sums presently payable by him have not been paid, or in regard to which the company has exercised any right of lien. (2) A company shall not, except on the grounds specified in sub -section ( 1), prohibit any member from exercising his voting right on any other ground. (3) On a poll tak en at a meeting of a company, a member entitled to more than one vote, or his proxy, where allowed, or other person entitled to vote for him, as the case may be, need not, if he votes, use all his votes or cast in the same way all the votes he uses. 107. V oting by show of hands. (1) At any general meeting, a resolution put to the vote of the meeting shall, unless a poll is demanded under section 109 or the voting is carried out electronically, be decided on a show of hands. (2) A declaration by the Chairman of the meeting of the passing of a resolution or otherwise by show of hands under sub -section ( 1) and an entry to that effect in the books containing the minutes of the meeting of the company shall be conclusive evidence of the fact of passing of such res olution or otherwise. 108. Voting through electronic means. The Central Government may prescribe the class or classes of companies and manner in which a member may exercise his right to vote by the electronic means. 109. Demand for poll. (1) Before or on t he declaration of the result of the voting on any resolution on show of hands, a poll may be ordered to be taken by the Chairman of the meeting on his own motion, and shall be ordered to be taken by him on a demand made in that behalf, (a) in the case a c ompany having a share capital, by the members present in person or by proxy, where allowed, and having not less than one -tenth of the total voting power or holding shares on which an aggregate sum of not less than five lakh rupees or such higher amount as may be prescribed has been paid-up; and (b) in the case of any other company, by any member or members present in person or by proxy, where allowed, and having not less than one -tenth of the total voting power. (2) The demand for a poll may be withdrawn at any time by the persons who made the demand. (3) A poll demanded for adjournment of the meeting or appointment of Chairman of the meeting shall be taken forthwith. (4) A poll demanded on any question other than adjournment of the meeting or appointment of Chairman shall be taken at such time, not being later than forty -eight hours from the time when the demand was made, as the Chairman of the meeting may direct. (5) Where a poll is to be taken, the Chairman of the meeting shall appoint such number of perso ns, as he deems necessary, to scrutinise the poll process and votes given on the poll and to report thereon to him in the manner as may be prescribed. (6) Subject to the provisions of this section, the Chairman of the meeting shall have power to regulate the manner in which the poll shall be taken. (7) The result of the poll shall be deemed to be the decision of the meeting on the resolution on which the poll was taken. 110. Postal ballot. (1) Notwithstanding anything contained in this Act, a company (a) shall, in respect of such items of business as the Central Government may, by notification, declare to be transacted only by means of postal ballot; and (b) may, in respect of any item of business, other than ordinary business and any business in respect of which directors or auditors have a right to be heard at any meeting, transact by means of postal ballot, in such manner as may be prescribed, instead of transacting such business at a general meeting: 77 1[Provided that any item of business required to be t ransacted by means of postal ballot under clause ( a), may be transacted at a general meeting by a company which is required to provide the facility to members to vote by electronic means under section 108, in the manner provided in that section .] (2) If a resolution is assented to by the requisite majority of the shareholders by means of postal ballot, it shall be deemed to have been duly passed at a general meeting convened in that behalf. 111. Circulation of members resolution. (1) A company shall, on requisition in writing of such number of members, as required in section 100, (a) give notice to members of any resolution which may properly be moved and is intended to be moved at a meeting; and (b) circulate to members any statement with resp ect to the matters referred to in proposed resolution or business to be dealt with at that meeting. (2) A company shall not be bound under this section to give notice of any resolution or to circulate any statement unless (a) a copy of the requisition sig ned by the requisitionists (or two or more copies which, between them, contain the signatures of all the requisitionists) is deposited at the registered office of the company, (i) in the case of a requisition requiring notice of a resolution, not less than six weeks before the meeting; (ii) in the case of any other requisition, not less than two weeks before the meeting; and (b) there is deposited or tendered with the requisition, a sum reasonably sufficient to meet the companys expenses in giving effe ct thereto: Provided that if, after a copy of a requisition requiring notice of a resolution has been deposited at the registered office of the company, an annual general meeting is called on a date within six weeks after the copy has been deposited, the c opy, although not deposited within the time required by this sub -section, shall be deemed to have been properly deposited for the purposes thereof. (3) The company shall not be bound to circulate any statement as required by clause ( b) of sub - section ( 1), if on the application either of the company or of any other person who claims to be aggrieved, the Central Government, by order, declares that the rights conferred by this section are being abused to secure needless publicity for defamatory ma tter. (4) An order made under sub -section ( 3) may also direct that the cost incurred by the company by virtue of this section shall be paid to the company by the requisitionists, notwithstanding that they are not parties to the application. (5) If any defa ult is made in complying with the provisions of this section, the company and every officer of the company who is in default shall be liable to a penalty of twenty -five thousand rupees. 112. Representation of President and Governors in meetings. (1) The Pr esident of India or the Governor of a State, if he is a member of a company, may appoint such person as he thinks fit to act as his representative at any meeting of the company or at any meeting of any class of members of the company. (2) A person appointe d to act under sub -section ( 1) shall, for the purposes of this Act, be deemed to be a member of such a company and shall be entitled to exercise the same rights and powers, including the right to vote by proxy and postal ballot, as the President or, as the case may be, the Governor could exercise as a member of the company. 113. Representation of corporations at meeting of companies and of creditors. (1) A body corporate, whether a company within the meaning of this Act or not, may, 1. The Proviso i ns. by Act 1 of 2018, s. 29 (w.e.f. 9 -2-2018). 78 (a) if it is a member of a company within the meaning of this Act, by resolution of its Board of Directors or other governing body, authorise such person as it thinks fit to act as its representative at any meeting of the company, or at any meeting of any class of members of th e company; (b) if it is a creditor, including a holder of debentures, of a company within the meaning of this Act, by resolution of its directors or other governing body, authorise such person as it thinks fit to act as its representative at any meeting of any creditors of the company held in pursuance of this Act or of any rules made thereunder, or in pursuance of the provisions contained in any debenture or trust deed, as the case may be. (2) A person authorised by resolution under sub -section ( 1) shall b e entitled to exercise the same rights and powers, including the right to vote by proxy and by postal ballot, on behalf of the body corporate which he represents as that body could exercise if it were an individual member, creditor or holder of debentures of the company. 114. Ordinary and special resolutions. (1) A resolution shall be an ordinary resolution if the notice required under this Act has been duly given and it is required to be passed by the votes cast, whether on a show of hands, or electronical ly or on a poll, as the case may be, in favour of the resolution, including the casting vote, if any, of the Chairman, by members who, being entitled so to do, vote in person, or where proxies are allowed, by proxy or by postal ballot, exceed the votes, if any, cast against the resolution by members, so entitled and voting. (2) A resolution shall be a special resolution when (a) the intention to propose the resolution as a special resolution has been duly specified in the notice calling the general meeting or other intimation given to the members of the resolution; (b) the notice required under this Act has been duly given; and (c) the votes cast in favour of the resolution, whether on a show of hands, or electronically or on a poll, as the case may be, by members who, being entitled so to do, vote in person or by proxy or by postal ballot, are required to be not less than three times the number of the votes, if any, cast against the resolution by members so entitled and voting. 115. Resolutions requiring sp ecial notice. Where, by any provision contained in this Act or in the articles of a company, special notice is required of any resolution, notice of the intention to move such resolution shall be given to the company by such number of members holding not l ess than one per cent. of total voting power or holding shares on which such aggregate sum not exceeding five lakh rupees, as may be prescribed, has been paid -up and the company shall give its members notice of the resolution in such manner as may be presc ribed. 116. Resolutions passed at adjourned meeting. Where a resolution is passed at an adjourned meeting of (a) a company; or (b) the holders of any class of shares in a company; or (c) the Board of Directors of a company, the resolution shall, for all p urposes, be treated as having been passed on the date on which it was in fact passed, and shall not be deemed to have been passed on any earlier date. 117. Resolutions and agreements to be filed. (1) A copy of every resolution or any agreement, in respect of matters specified in sub -section ( 3) together with the explanatory statement under section 102, if any, annexed to the notice calling the meeting in which the resolution is proposed, shall be filed with the Registrar within thirty days of the passing or making thereof in such manner and with such fees as may be prescribed 1***: Provided that the copy of every resolution which has the effect of altering the articles and the copy of every agreement referred to in sub -section ( 3) shall be embodied in or ann exed to every copy of the articles issued after passing of the resolution or making of the agreement. 2[(2) If any company fails to file the resolution or the agreement under sub -section (1) before the expiry of the period specified therein, such company shall be liable to a penalty of ten thousand rupees and in case of continuing failure, with a further penalty of one hundred rupees for each day after the first during which such failure continues, subject to a maximum of two lakh rupees and every officer of the company 1. The words and figures within the time s pecified under section 403 omitted by Act 1 of 2018, s. 30 (w.e.f. 7 -5-2018). 2. Subs. by Act 2 9 of 20 20, s. 22, for sub -section ( 2) (w.e.f. 2 1-12-2020). 79 who is in default including liquidator of the company, if any, shall be liable to a penalty of ten thousand rupees and in case of continuing failure, with a further penalty of one hundred rupees for each day after the first during which suc h failure continues, subject to a maximum of fifty thousand rupees .] (3) The provisions of this section shall apply to (a) special resolutions; (b) resolutions which have been agreed to by all the members of a company, but which, if not so agreed to, would not have been effective for their purpose unless they had been passed as special resolutions; (c) any resolution of the Board of Directors of a company or agreement executed by a company, relating to the appointment, re -appointment or renewal of the appointment, or variation of the terms of appointment, of a managing director; (d) resolutions or agreements which have been agreed to by any class of members but which, if not so agreed to, would not have been effective for their purpose unless they had b een passed by a specified majority or otherwise in some particular manner; and all resolutions or agreements which effectively bind such class of members though not agreed to by all those members; 1* * * * * (f) resolutions requiring a company to be wound up voluntarily passed in pursuance of 2[section 59 of the Insolvency and Bankruptcy Code, 2016 (31 of 2016)]; (g) resolutions passed in pursuance of sub -section ( 3) of section 179:3*** 4[Provided that no person shall be entitled under section 399 to inspect or obtain copies of such resolutions; 5***] 6[Provided further that nothing contained in

399 to inspect or obtain copies of such resolutions; 5***] 6[Provided further that nothing contained in this clause shall apply in respect of a resolution passed to grant loans, or give guarantee or provide security in respect of loans under clause ( f) of sub-section (3) of section 179 in the ordinary course of its business by (a) a banking company; (b) any class of non -banking financial company registered under Chapter IIIB of the Reserve Bank of India Act, 1934 (2 of 1934) , as may be prescribed in consul tation with the Reserve Bank of India; (c) any class of housing finance company registered under the National Housing Bank Act, 1987 (53 of 1987), as may be prescribed in consultation with the National Housing Bank; and ] (h) any other resolution or agreeme nt as may be prescribed and placed in the public domain. 118. Minutes of proceedings of general meeting, meeting of Board of Directors and other meeting and resolutions passed by postal ballot. (1) Every company shall cause minutes of the proceedings of every general meeting of any class of shareholders or creditors, and every resolution passed by postal ballot and every meeting of its Board of Directors or of every committee of the Board, to be prepared and signed in such manner as may be prescribed and kept within thirty days of the conclusion of every such meeting concerned, or passing of resolution by postal ballot in books kept for that purpose with their pages consecutively numbered. (2) The minutes of each meeting shall contain a fair and correct su mmary of the proceedings thereat. (3) All appointments made at any of the meetings aforesaid shall be included in the minutes of the meeting. (4) In the case of a meeting of the Board of Directors or of a committee of the Board, the minutes shall also cont ain 1.Clause ( e) omitted by Act 1 of 2018, s. 30 (w.e.f. 7 -5-2018). 2. Subs. by Act 31 of 2016, s. 255 and the Eleventh Schedule, for section 304 (w.e.f. 15 -11-2016). 3. The word and omitted by Act 21 of 2015, s. 9 (w.e.f. 29 -5-2015). 4. Ins. by s. 9, ibid. (w.e.f. 29 -5-2015). 5. The and omitted by Act 1 of 2018, s. 30 (w.e.f. 7 -5-2018). 6.The proviso subs. by Act 29 of 2020, s. 22 (w.e.f. 22 -1-2021). 80 (a) the names of the directors present at the meeting; and (b) in the case of each resolution passed at the meeting, the names of the directors, if any, dissenting from, or not concurring with the resolution. (5) There shall not be included in the minutes, any matter which, in the opinion of the Chairman of the meeting, (a) is or could reasonably be regarded as defamatory of any person; or (b) is irrelevant or immaterial to the proceedings; or (c) is detrimental to the interests of the company. (6) The Chairman shall exercise absolute discretion in regard to the inclusion or non -inclusion of any matter in the minutes on the grounds specified in sub -section ( 5). (7) The minutes kept in accordance with the provisions of this section shall be evidence of the proceedings recorded therein. (8) Where the minutes have been kept in accordance with sub -section ( 1) then, until the contrary is proved, the meeting shall be deemed to have been duly called and held, and all proceedings thereat to have duly taken p lace, and the resolutions passed by postal ballot to have been duly passed and in particular, all appointments of directors, key managerial personnel, auditors or company secretary in practice, shall be deemed to be valid. (9) No document purporting to be a report of the proceedings of any general meeting of a company shall be circulated or advertised at the expense of the company, unless it includes the matters required by this section to be contained in the minutes of the proceedings of such meeting. (10) Every company shall observe secretarial standards with respect to general and Board meetings specified by the Institute of Company Secretaries of India constituted under section 3 of the Company Secretaries Act, 1980 (56 of 1980), and approved as such by the Central Government. (11) If any default is made in complying with the provisions of this section in respect of any meeting, the company shall be liable to a penalty of twenty -five thousand rupees and every officer of the company who is in default shall be liable to a penalty of five thousand rupees. (12) If a person is found guilty of tampering with the minutes of the proceedings of meeting, he shall be punishable with imprisonment for a term which may extend to two years and with fine which shall not be less than twenty -five thousand rupees but which may extend to one lakh rupees. 119. Inspection of minute -books of general meeting. (1) The books containing the minutes of the proceedings of any general meeting of a company or of a resolution passed by postal ballot, shall (a) be kept at the registered office of the company; and (b) be open, during business hours, to the inspection by any member without charge, subject to such reasonable restrictions as the company may, by its articles or in general mee ting, impose, so, however, that not less than two hours in each business day are allowed for inspection. (2) Any member shall be entitled to be furnished, within seven working days after he has made a request in that behalf to the company, and on payment o f such fees as may be prescribed, with a copy of any minutes referred to in sub -section ( 1). (3) If any inspection under sub -section ( 1) is refused, or if any copy required under sub -section ( 2) is not furnished within the time specified therein, the compa ny shall be liable to a penalty of twenty -five thousand rupees and every officer of the company who is in default shall be liable to a penalty of five thousand rupees for each such refusal or default, as the case may be. (4) In the case of any such refusal or default, the Tribunal may, without prejudice to any action being taken under sub -section ( 3), by order, direct an immediate inspection of the minute -books or direct that the copy required shall forthwith be sent to the person requiring it. 120. Mainten ance and inspection of documents in electronic form. Without prejudice to any other provisions of this Act, any document, record, register, minutes, etc., 81 (a) required to be kept by a company; or (b) allowed to be inspected or copies to be given to any pe rson by a company under this Act, may be kept or inspected or copies given, as the case may be, in electronic form in such form and manner as may be prescribed. 121. Report on annual general meeting. (1) Every listed public company shall prepare in the prescribed manner a report on each annual general meeting including the confirmation to the effect that the meeting was convened, held and conducted as per the provisions of this Act and the rules made thereunder. (2) The company shall file with the Registrar a copy of the report referred to in sub -section ( 1) within thirty days of the conclusion of the annual general meeting with such fees as may be prescribed, or with such additional fees as may be prescribed, 1***. 2[(3) If the company fails to file the report under sub -section ( 2) before the expiry of the period specified therein, such company shall be liable to a penalty of one lakh rupees and in case of continuing failure, with a further penalty of five hundred rupees for each day after the first durin g which such failure continues, subject to a maximum of five lakh rupees and every officer of the company who is in default shall be liable to a penalty which shall not be less than twenty -five thousand rupees and in case of continuing failure, with a furt her penalty of five hundred rupees for each day after the first during which such failure continues, subject to a maximum of one lakh rupees. ] 122. Applicability of this Chapter to One Person Company. (1) The provisions of section 98 and sections 100 to 11 1 (both inclusive) shall not apply to a One Person Company. (2) The ordinary businesses as mentioned under clause ( a) of sub -section ( 2) of section 102 which a company, other than a One Person Company, is required to transact at its annual general meeting, shall be transacted, in case of One Person Company, as provided in sub -section ( 3). (3) For the purposes of section 114, any business which is required to be transacted at an annual general meeting or other general meeting of a company by means of an ordi nary or special resolution, it shall be sufficient if, in case of One Person Company, the resolution is communicated by the member to the company and entered in the minutes -book required to be maintained under section 118 and signed and dated by the member and such date shall be deemed to be the date of the meeting for all the purposes under this Act. (4) Notwithstanding anything in this Act, where there is only one director on the Board of Director of a One Person Company, any business which is required to be transacted at the meeting of the Board of Directors of a company, it shall be sufficient if, in case of such One Person Company, the resolution by such director is entered in the minutes -book required to be maintained under section 118 and signed and dated by such director and such date shall be deemed to be the date of the meeting of the Board of Directors for all the purposes under this Act. CHAPTER VIII DECLARATION AND PAYMENT OF DIVIDEND 123. Declaration of dividend. (1) No dividend shall be declared or paid by a company for any financial year except (a) out of the profits of the company for that year arrived at after providing for depreciation in accordance with the provisions of sub -section ( 2), or out of the profits of the company for any previous financial year or years arrived at after providing for depreciation in accordance with the provisions of that sub -section and remaining undistributed, or out of 3[both:] 1. The words and figures within the time as specified, under section 403 omitted by Act 1 of 2018, s. 31 (w.e.f. 7 -5-2018). 2. Subs. by Act 22 of 2019, s. 19, for sub -section ( 3) (w.e.f. 2 -11-2018). 3. Subs. by Act 1 of 2018, s. 32, for both; or (w.e.f. 9 -2-2018). 82 1[Provided that in computing profits any amount representing unrealised gains , notional gains or revaluation of assets and any change in carrying amount of an asset or of a liability on measurement of the asset or the liability at fair value shall be excluded; or] (b) out of money provided by the Central Government or a State Gover nment for the payment of dividend by the company in pursuance of a guarantee given by that Government: Provided that a company may, before the declaration of any dividend in any financial year, transfer such percentage of its profits for that financial yea r as it may consider appropriate to the reserves of the company: Provided further that where, owing to inadequacy or absence of profits in any financial year, any company proposes to declare dividend out of the accumulated profits earned by it in previous years and 2[transferred by the company to the free reserves], such declaration of dividend shall not be made except in accordance with such rules as may be prescribed in this behalf: Provided also that no dividend shall be declared or paid by a company fro m its reserves other than free reserves: 3[Provided also that no company shall declare dividend unless carried over previous losses and depreciation not provided in previous year or years are set off against profit of the company for the current year.] (2) For the purposes of clause ( a) of sub -section ( 1), depreciation shall be provided in accordance with the provisions of Schedule II. 4[(3) The Board of Directors of a company may declare interim dividend during any financial year or at any time during the period from closure of financial year till holding of the annual general meeting out of the surplus in the profit and loss account or out of profits of the financial year for which such interim dividend is sought to be declared or out of profits generated in the financial year till the quarter preceding the date of declaration of the interim dividend: Provided that in case the company has incurred loss during the current financial year up to the end of the quarter immediately preceding the date of declarati on of interim dividend, such interim dividend shall not be declared at a rate higher than the average dividends declared by the company during immediately preceding three financial years. ] (4) The amount of the dividend, including interim dividend, shall b e deposited in a scheduled bank in a separate account within five days from the date of declaration of such dividend. (5) No dividend shall be paid by a company in respect of any share therein except to the registered shareholder of such share or to his or der or to his banker and shall not be payable except in cash: Provided that nothing in this sub -section shall be deemed to prohibit the capitalisation of profits or reserves of a company for the purpose of issuing fully paid -up bonus shares or paying up an y amount for the time being unpaid on any shares held by the members of the company: Provided further that any dividend payable in cash may be paid by cheque or warrant or in any electronic mode to the shareholder entitled to the payment of the dividend. (6) A company which fails to comply with the provisions of sections 73 and 74 shall not, so long as such failure continues, declare any dividend on its equity shares. 124. Unpaid Dividend Account. (1) Where a dividend has been declared by a company but has not been paid or claimed within thirty days from the date of the declaration to any shareholder entitled to the payment of the dividend, the company shall, within seven days from the date of expiry of the said period of thirty days, transfer the total amount of dividend which remains unpaid or unclaimed to a special account 1. The proviso ins. by Act 1 of 2018, s. 32 (w.e.f. 9 -2-2018). 2. Subs. by s. 32, ibid., for transferred by the company to the reserve s (w.e.f. 9 -2-2018). 3. The Proviso i ns. by Act 21 of 2015, s. 10 (w.e

3. The Proviso i ns. by Act 21 of 2015, s. 10 (w.e.f. 29 -5-2015). 4. Subs. by Act 1 of 2018, s. 32, for sub -section ( 3) (w.e.f. 9 -2-2018). 83 to be opened by the company in that behalf in any scheduled bank to be called the Unpaid Dividend Account. (2) The company shall , within a period of ninety days of making any transfer of an amount under sub - section ( 1) to the Unpaid Dividend Account, prepare a statement containing the names, their last known addresses and the unpaid dividend to be paid to each person and place it on the website of the company, if any, and also on any other website approved by the Central Government for this purpose, in such form, manner and other particulars as may be prescribed. (3) If any default is made in transferring the total amount referred to in sub -section ( 1) or any part thereof to the Unpaid Dividend Account of the company, it shall pay, from the date of such default, interest on so much of the amount as has not been transferred to the said account, at the rate of twelve per cent. per annum and the interest accruing on such amount shall ensure to the benefit of the members of the company in proportion to the amount remaining unpaid to them. (4) Any person claiming to be entitled to any money transferred under sub -section ( 1) to th e Unpaid Dividend Account of the company may apply to the company for payment of the money claimed. (5) Any money transferred to the Unpaid Dividend Account of a company in pursuance of this section which remains unpaid or unclaimed for a period of seven y ears from the date of such transfer shall be transferred by the company along with interest accrued, if any, thereon to the Fund established under sub-section ( 1) of section 125 and the company shall send a statement in the prescribed form of the d etails of such transfer to the authority which administers the said Fund and that authority shall issue a receipt to the company as evidence of such transfer. (6) All shares in respect of which1[dividend has not been paid or claimed for seven consecutive y ears or more shall be] transferred by the company in the name of Investor Education and Protection Fund along with a statement containing such details as may be prescribed: Provided that any claimant of shares transferred above shall be entitled to claim t he transfer of shares from Investor Education and Protection Fund in accordance with such procedure and on submission of such documents as may be prescribed. 2[Explanation. For the removal of doubts, it is hereby clarified that in case any dividend is pai d or claimed for any year during the said period of seven consecutive years, the share shall not be transferred to Investor Education and Protection Fund.] 3[(7) If a company fails to comply with any of the requirements of this section, such company shall be liable to a penalty of one lakh rupees and in case of continuing failure, with a further penalty of five hundred rupees for each day after the first during which such failure continues, subject to a maximum of ten lakh rupees and every officer of the c ompany who is in default shall be liable to a penalty of twenty -five thousand rupees and in case of continuing failure, with a further penalty of one hundred rupees for each day after the first during which such failure continues, subject to a maximum of t wo lakh rupees .] 125. Investor Education and Protection Fund. (1) The Central Government shall establish a Fund to be called the Investor Education and Protection Fund (herein referred to as the Fund). (2) There shall be credited to the Fund (a) the amount given by the Central Government by way of grants after due appropriation made by Parliament by law in this behalf for being utilised for the purposes of the Fund; (b) donations given to the Fund by the Central Government, State Governments, companie s or any other institution for the purposes of the Fund; (c) the amount in the Unpaid Dividend Account of companies transferred to the Fund under sub - section ( 5) of section 124; (d) the amount in the general revenue account of the Central Government whi ch had been transferred to that account under sub -section ( 5) of section 205A of the Companies Act, 1956 (1 1. Subs. by Act 21 of 2015, s. 11, for unpaid or unclaimed dividend has been transferred under sub -section ( 5) shall also be (w.e.f. 29 -5-2015). 2. The Explanation ins. by s. 11 , ibid. (w.e.f. 29 -5-2015). 3. Subs. by vide Notification No. S.O. 1303(E), for sub -section (7) (w.e.f. 24 -3-2021). 84 of 1956), as it stood immediately before the commencement of the Companies (Amendment) Act, 1999 (21 of 1999), and remaining unpaid or un claimed on the commencement of this Act; (e) the amount lying in the Investor Education and Protection Fund under section 205C of the Companies Act, 1956 (1 of 1956); (f) the interest or other income received out of investments made from the Fund; (g) the amount received under sub -section ( 4) of section 38; (h) the application money received by companies for allotment of any securities and due for refund; (i) matured deposits with companies other than banking companies; (j) matured debentures with companies; (k) interest accrued on the amounts referred to in clauses ( h) to ( j); (l) sale proceeds of fractional shares arising out of issuance of bonus shares, merger and amalgamation for seven or more years; (m) redemption amount of preference shares remaining unpaid or unclaimed for seven or more years; and (n) such other amount as may be prescribed: Provided that no such amount referred to in clauses ( h) to ( j) shall form part of the Fund unless such amount has remained unclaimed and unpaid for a per iod of seven years from the date it became due for payment. (3) The Fund shall be utilised for (a) the refund in respect of unclaimed dividends, matured deposits, matured debentures, the application money due for refund and interest thereon; (b) promotion of investors education, awareness and protection; (c) distribution of any disgorged amount among eligible and identifiable applicants for shares or debentures, shareholders, debenture -holders or depositors who have suffered losses due to wrong actions by any person, in accordance with the orders made by the Court which had ordered disgorgement; (d) reimbursement of legal expenses incurred in pursuing class action suits under sections 37 and 245 by members, debenture -holders or depositors as may be sanctio ned by the Tribunal; and (e) any other purpose incidental thereto, in accordance with such rules as may be prescribed: Provided that the person whose amounts referred to in clauses ( a) to ( d) of sub -section ( 2) of section 205C transferred to Investor Education and Protection Fund, after the expiry of the period of seven years as per provisions of the Companies Act, 1956 (1 of 1956), shall be entitled to get refund out of the Fund in respect of such claims in accordance with rules made under this sectio n. Explanation. The disgorged amount refers to the amount received through disgorgement or disposal of securities. (4) Any person claiming to be entitled to the amount referred in sub -section ( 2) may apply to the authority constituted under sub -section ( 5) for the payment of the money claimed. (5) The Central Government shall constitute, by notification, an authority for administration of the Fund consisting of a chairperson and such other members, not exceeding seven and a chief executive officer, as the C entral Government may appoint. (6) The manner of administration of the Fund, appointment of chairperson, members and chief executive officer, holding of meetings of the authority shall be in accordance with such rules as may be prescribed. 85 (7) The Central Government may provide to the authority such offices, officers, employees and other resources in accordance with such rules as may be prescribed. (8) The authority shall administer the Fund and maintain separate accounts and other relevant records in relat ion to the Fund in such form as may be prescribed after consultation with the Comptroller and Auditor -General of India. (9) It shall be competent for the authority constituted under sub -section ( 5) to spend money out of the Fund for carrying out the object s specified in sub -section ( 3). (10) The accounts of the Fund shall be audited by the Comptroller and Auditor -General of India at such intervals as may be specified by him and such audited accounts together with the audit report thereon shall be forwarded annually by the authority to the Central Government. (11) The authority shall prepare in such form and at such time for each financial year as may be prescribed its annual report giving a full account of its activities during the financial year and forward a copy thereof to the Central Government and the Central Government shall cause the annual report and the audit report given by the Comptroller and Auditor -General of India to be laid before each House of Parliament. 126. Right to dividend, rights shares and bonus shares to be held in abeyance pending registration of transfer of shares. Where any instrument of transfer of shares has been delivered to any company for registration and the transfer of such shares has not been registered by the company, it sh all, notwithstanding anything contained in any other provision of this Act, (a) transfer the dividend in relation to such shares to the Unpaid Dividend Account referred to in section 124 unless the company is authorised by the registered holder of such shares in writing to pay such dividend to the transferee specified in such instrument of transfer; and (b) keep in abeyance in relation to such shares, any offer of rights shares under clause ( a) of sub-section ( 1) of section 62 and any issue of fully paid -up bonus shares in pursuance of first proviso to sub -section ( 5) of section 123. 127. Punishment for failure to distribute dividends. Where a dividend has been declared by a company but has not been paid or the warrant in respect thereof has not been posted within thirty days from the date of declaration to any shareholder entitled to the payment of the dividend, every director of the company shall, if he is knowingly a party to the default, be punishable with imprisonment which may extend to two years and with fine which shall not be less than one thousand rupees for every day during which such default continues and the company shall be liable to pay simple interest at the rate of eighteen per cent. per annum during the period for which such d efault continues: Provided that no offence under this section shall be deemed to have been committed: (a) where the dividend could not be paid by reason of the operation of any law; (b) where a shareholder has given directions to the company regarding the payment of the dividend and those directions cannot be complied with and the same has been communicated to him; (c) where there is a dispute regarding the right to receive the dividend; (d) where the dividend has been lawfully adjusted by the company agai nst any sum due to it from the shareholder; or (e) where, for any other reason, the failure to pay the dividend or to post the warrant within the period under this section was not due to any default on the part of the company. CHAPTER IX ACCOUNTS OF COMPAN IES 128. Books of account, etc., to be kept by company. (1) Every company shall prepare and keep at its registered office books of account and other relevant books and papers and financial statement for every financial year which give a true and fair view of the state of the affairs of the company, including that of its branch office or offices, if any, and explain the transactions effected both at the registered office and its 86 branches and such books shall be kept on accrual basis and according to the doub le entry system of accounting: Provided that all or any of the books of account aforesaid and other relevant papers may be kept at such other place in India as the Board of Directors may decide and where such a decision is taken, the company shall, within seven days thereof, file with the Registrar a notice in writing giving the full address of that other place: Provided further that the company may keep such books of account or other relevant papers in electronic mode in such manner as may be prescribed. (2) Where a company has a branch office in India or outside India, it shall be deemed to have complied with the provisions of sub -section ( 1), if proper books of account relating to the transactions effected at the branch office are kept at that office and proper summarized returns periodically are sent by the branch office to the company at its registered office or the other place referred to in sub -section ( 1). (3) The books of account and other books and papers maintained by the company within India shall be open for inspection at the registered office of the company or at such other place in India by any director during business hours, and in the case of financial information, if any, maintained outside the country, copies of such financial information sh all be maintained and produced for inspection by any director subject to such conditions as may be prescribed: Provided that the inspection in respect of any subsidiary of the company shall be done only by the person authorised in this behalf by a resoluti on of the Board of Directors. (4) Where an inspection is made under sub -section ( 3), the officers and other employees of the company shall give to the person making such inspection all assistance in connection with the inspection which the company may reas onably be expected to give. (5) The books of account of every company relating to a period of not less than eight financial years immediately preceding a financial year, or where the company had been inexistence for a period less than eight years, in respe ct of all the preceding years together with the vouchers relevant to any entry in such books of account shall be kept in good order: Provided that where an investigation has been ordered in respect of the company under Chapter XIV, the Central Government m ay direct that the books of account may be kept for such longer period as it may deem fit. (6) If the managing director, the whole -time director in charge of finance, the Chief Financial Officer or any other person of a company charged by the Board with the duty of complying with the provisions of this section, contravenes such provisions, such ma naging director, whole -time director in charge of finance, Chief Financial Officer or such other person of the company shall be punishable 1*** with fine which shall not be less than fifty thousand rupees but which may extend to five lakh rupees 2***. 129. Financial statement. (1) The financial statements shall give a true

to five lakh rupees 2***. 129. Financial statement. (1) The financial statements shall give a true and fair view of the state of affairs of the company or companies, comply with the accounting standards notified under section133 and shall be in the form or forms as may be provided for different class or classes of companies in Schedule III: Provided that the items contained in such financial statements shall be in accordance with the accounting standards: Provided further that nothing contained in this sub -section shall ap ply to any insurance or banking company or any company engaged in the generation or supply of electricity, or to any other class of company for which a form of financial statement has been specified in or under the Act governing such class of company: 1. The words with imprisonment for a term which may extend to one year or omitted by Act 29 of 2020, s. 24 (w.e.f. 21 -21- 2020). 2. The words or with both omitted by s. 24, ibid. (w.e.f. 21 -12-2020). 87 Prov ided also that the financial statements shall not be treated as not disclosing a true and fair view of the state of affairs of the company, merely by reason of the fact that they do not disclose (a) in the case of an insurance company, any matters which a re not required to be disclosed by the Insurance Act, 1938 (4 of 1938), or the Insurance Regulatory and Development Authority Act, 1999 (41 of 1999); (b) in the case of a banking company, any matters which are not required to be disclosed by the Banking Re gulation Act, 1949 (10 of 1949); (c) in the case of a company engaged in the generation or supply of electricity, any matters which are not required to be disclosed by the Electricity Act, 2003 (36 of 2003); (d) in the case of a company governed by any oth er law for the time being in force, any matters which are not required to be disclosed by that law. (2) At every annual general meeting of a company, the Board of Directors of the company shall lay before such meeting financial statements for the financial year. 1[(3) Where a company has one or more subsidiaries or associate companies, it shall, in addition to financial statements provided under sub -section ( 2), prepare a consolidated financial statement of the company and of all the subsidiaries and associ ate companies in the same form and manner as that of its own and in accordance with applicable accounting standards, which shall also be laid before the annual general meeting of the company along with the laying of its financial statement under sub -sectio n (2): Provided that the company shall also attach along with its financial statement, a separate statement containing the salient features of the financial statement of its subsidiary or subsidiaries and associate company or companies in such form as may be prescribed: Provided further that the Central Government may provide for the consolidation of accounts of companies in such manner as may be prescribed.] (4) The provisions of this Act applicable to the preparation, adoption and audit of the financial statements of a holding company shall, mutatis mutandis, apply to the consolidated financial statements referred to in sub -section ( 3). (5) Without prejudice to sub -section ( 1), where the financial statements of a company do not comply with the accounting standards referred to in sub -section ( 1), the company shall disclose in its financial statements, the deviation from the accounting standards, the reasons for such deviation and the financial effects, if any, arising out of such deviation. (6) The Central Government may, on its own or on an application by a class or classes of companies, by notification, exempt any class or classes of companies from complying with any of the requirements of this section or the rules made thereunder, if it is considered nec essary to grant such exemption in the public interest and any such exemption may be granted either unconditionally or subject to such conditions as may be specified in the notification. (7) If a company contravenes the provisions of this section, the manag ing director, the whole -time director in charge of finance, the Chief Financial Officer or any other person charged by the Board with the duty of complying with the requirements of this section and in the absence of any of the officers mentioned above, all the directors shall be punishable with imprisonment for a term which may extend to one year or with fine which shall not be less than fifty thousand rupees but which may extend to five lakh rupees, or with both. Explanation .For the purposes of this section, except where the context otherwise requires, any reference to the financial statement shall include any notes annexed to or forming part of such financial statement, giving information required to be given and allowed to be given in the form of su ch notes under this Act. 1. Subs. by Act 1 of 2018, s. 33, for sub -section ( 3) (w.e.f. 7 -5-2018). 88 1[129A. Periodical financial results. The Central Government may, require such class or classes of unlisted companies, as may be prescribed, (a) to prepare the financial results of the company on such periodical basis and in such form as may be prescribed; (b) to obtain approval of the Board of Directors and complete audit or limited review of such periodical financial results in such manner as may be prescribed; and (c) file a copy with the Registrar within a period of thirty days of completion of the relevant period with such fees as may be prescribed.] 130. Re -opening of accounts on courts or Tribunals orders. (1) A company shall not re -open its books of account and not recast its financial statements, unless an application in this regard is made by the Central Government, the Income -tax authorities, the Securities and Exchange Board, any other statutory regulatory body or authority or any person concerned and an order is made by a court of competent jurisdiction or the Tribunal to the effect that (i) the relevant earlier accounts were prepared in a fraudulent manner; or (ii) the affairs of the company were mismanaged during the relevant period, casting a doubt on the reliability of financial statements: Provided that the court or the Tribunal, as the case may be, shall give notice to the Central Government, the Income -tax authorities, the Securities and Exchange Board or any other statutory regulatory body or authority concerned 2[or any other person concerned] and shall take in to consideration the representations, if any, made by that Government or the authorities, Securities and Exchange Board or the body or authority concerned 2[or the other person concerned] before passing any order under this section. (2) Without prejudice to the provisions contained in this Act the accounts so revised or re -cast under sub-section ( 1) shall be final. 3[(3) No order shall be made under sub -section ( 1) in respect of re -opening of books of account relating to a period earlier than eight financi al years immediately preceding the current financial year: Provided that where a direction has been issued by the Central Government under the proviso to sub-section ( 5) of section 128 for keeping of books of account for a period longer than eig ht years, the books of account may be ordered to be re -opened within such longer period.] 131. Voluntary revision of financial statements or Boards report. (1) If it appears to the directors of a company that (a) the financial statement of the company; o r (b) the report of the Board, do not comply with the provisions of section 129 or section 134 they may prepare revised financial statement or a revised report in respect of any of the three preceding financial years after obtaining approval of the Tribunal on an application made by the company in such form and manner as may be prescribed and a copy of the order passed by the Tribunal shall be filed with the Registrar: Provided that the Tribunal shall give notice to the Central Government and the Inc ome-tax authorities and shall take into consideration the representations, if any, made by that Government or the authorities before passing any order under this section: Provided further that such revised financial statement or report shall not be prepare d or filed more than once in a financial year: 1. Ins. by Act 29 of 2020, s. 25 (w.e.f. 22 -1-2021). 2. Ins. by Act 1 of 2018, s. 34 (w.e.f. 9 -2-2018). 3. Ins. by s. 34 , ibid. (w.e.f. 9 -2-2018). 89 Provided also that the detailed reasons for revision of such financial statement or report shall also be disclosed in the Boards report in the relevant financial year in which such revision is being made. (2) Where copies of the previous financial statement or report have been sent out to members or delivered to the Registrar or laid before the company in general meeting, the revisions must be confined to (a) the correction in respect of which the previous fi nancial statement or report do not comply with the provisions of section 129 or section 134; and (b) the making of any necessary consequential alternation. (3) The Central Government may make rules as to the application of the provisions of this Act in relation to revised financial statement or a revised director's report and such rules may, in particular (a) make different provisions according to which the previous financial statement or report are replaced or are supplemented by a document indicating the corrections to be made; (b) make provisions with respect to the functions of the company's auditor in relation to the revised financial statement or report; (c) require the directors to take such steps as may be prescribed. 132. Constitution of Nation al Financial Reporting Authority. (1) The Central Government may, by notification, constitute a National Financial Reporting Authority to provide for matters relating to accounting and auditing standards under this Act. 1[(1A) The National Financial Reporting Authority shall perform its functions through such divisions as may be prescribed.] (2) Notwithstanding anything contained in any other law for the time being in force, the National Financial Reporting Authority shall (a) make recommendations to the Cent ral Government on the formulation and laying down of accounting and auditing policies and standards for adoption by companies or class of companies or their auditors, as the case may be; (b) monitor and enforce the compliance with accounting standards and auditing standards in such manner as may be prescribed; (c) oversee the quality of service of the professions associated with ensuring compliance with such standards, and suggest measures required for improvement in quality of service and such other relate d matters as may be prescribed; and (d) perform such other functions relating to clauses ( a), (b) and ( c) as may be prescribed. (3) The National Financial Reporting Authority shall consist of a chairperson, who shall be a person of eminence and having expe rtise in accountancy, auditing, finance or law to be appointed by the Central Government and such other members not exceeding fifteen consisting of part -time and full -time members as may be prescribed: Provided that the terms and conditions and the manner of appointment of the chairperson and members shall be such as may be prescribed: Provided further that the chairperson and members shall make a declaration to the Central Government in the prescribed form regarding no conflict of interest or lack of indep endence in respect of his or their appointment: Provided also that the chairperson and members, who are in full -time employment with National Financial Reporting Authority shall not be associated with any audit firm (including related consultancy firms) during the course of their appointment and two years after ceasing to hold such appointment. 1. Ins. by Act 22 of 2019, s. 20 (w.e.f. 15 -8-2019). 90 1[(3A) Each division of the National Financial Reporting Authority shall be presided over by the Chairperson or a full -time Member authorized by the Chairperson . (3B) There shall be an executive body of the National Financial Reporting Authority consisting of the Chairperson and full -time Members of such Authority for efficient discharge of its functions under sub-section ( 2) [other than clause ( a) and sub-section ( 4).] (4) Notwithstanding anything contained in any other law for the time being in force, the National Financial Reporting Authority shall (a) have the power to investigate, either suo motu or on a reference made to it by the Central Governm ent, for such class of bodies corporate or persons, in such manners may be prescribed into the matters of professional or other misconduct committed by any member or firm of chartered accountants, registered under the Chartered Accountants Act, 1949 (38 of 1949): Provided that no other institute or body shall initiate or continue any proceedings in such matters of misconduct where the National Financial Reporting Authority has initiated an investigation under this section; (b) have the same powers as are ve sted in a civil court under the Code of Civil Procedure, 1908 (5 of 1908), while trying a suit, in respect of the following matters, namely: (i) discovery and production of books of account and other documents, at such place and at such time as ma y be specified by the National Financial Reporting Authority; (ii) summoning and enforcing the attendance of persons and examining them on oath; (iii) inspection of any books, registers and other documents of any person referred to in clause (b) at any pla ce; (iv) issuing commissions for examination of witnesses or documents; (c) where professional or other misconduct is proved, have the power to make order for (A) imposing penalty of (I) not less than one lakh rupees, but which may extend to five times of the fees received, in case of individuals; and (II) not less than 1[five lakh rupees], but which may extend to ten times of the fees received, in case of firms; 2[(B) debarring the member or the firm from I. being appointed as an auditor or internal auditor or undertaking any audit in respect t of financial statements or internal audit of the functions and activities of any company or body corporate; or II. performing any valuation as provided under section 247, for a minimum period of six months or s uch higher period not exceeding ten years as may be determined by the National Financial Reporting Authority.] Explanation. For the purposes of this sub -section, the expression professional or other misconduct shall have the same meaning assigned to it u nder section 22 of the Chartered Accountants Act, 1949 (38 of 1949). (5) Any person aggrieved by any order of the National Financial Reporting Authority issued under clause ( c) of sub -

5) Any person aggrieved by any order of the National Financial Reporting Authority issued under clause ( c) of sub -section ( 4), may prefer an appeal before 3[the Appellate Tribunal in such manner and on payment of such fee as may be prescribed]. 4* * * * * 1. Subs. by Act 1 of 2018, s. 35, for ten lakh rupees (w.e.f. 9 -2-2018). 2. Subs. by Act 22 of 2019, s. 20, for sub -clause ( b) (w.e.f. 15-8-2019). 3. Subs. by s. 35, ibid., for the Appellate Authority constituted under sub -section ( 6) in such manner as may be prescribed (w.e.f. 9-2-2018). 4. Sub -sections ( 6), (7), (8) and (9) omitted by s. 35, ibid. (w.e.f. 9 -2-2018). 91 (10) The National Financial Reporting Authority shall meet at such times and places and shall observe such rules of procedure in regard to the transaction of business at its meetings in such manner as may be prescribed. (11) The Central Government may appoint a secretary and such other employees as it may consider necessary for the efficient performance of functions by the National Financial Reporting Authority under this Act and the terms and conditions of service of the secretary and employees shall be such as may be prescribed. (12) The head office of the National Financial Reporting Authority shall be at New Delhi and the National Financial Reporting Authority may, meet at such other places in India as it deems fit. (13) The National Financial Reporting Authority shall cause to be maintained such books of account and other books in relation to its accounts in such form and in such manner as the Central Government may, in consultation with the Comptroller and Auditor -General of India prescribe. (14) The accounts of the National Financial Reporting Authority shall be audited by the Comptroller and Auditor -General of India at such intervals as may be specified by him and suc h accounts as certified by the Comptroller and Auditor -General of India together with the audit report thereon shall be forwarded annually to the Central Government by the National Financial Reporting Authority. (15) The National Financial Reporting Author ity shall prepare in such form and at such time for each financial year as may be prescribed its annual report giving a full account of its activities during the financial year and forward a copy thereof to the Central Government and the Central Government shall cause the annual report and the audit report given by the Comptroller and Auditor -General of India to be laid before each House of Parliament. 133. Central Government to prescribe accounting standards. The Central Government may prescribe the standa rds of accounting or any addendum thereto, as recommended by the Institute of Chartered Accountants of India, constituted under section 3 of the Chartered Accountants Act, 1949 (38 of 1949), in consultation with and after examination of the recomme ndations made by the National Financial Reporting Authority: 1[Provided that until the National Financial Reporting Authority is constituted under section 132 of the Companies Act, 2013 (18 of 2013), the Central Government may prescribe the standards of accounting or any addendum thereto, as recommended by the Institute of Chartered Accountants of India, constituted under section 3 of the Chartered Accountants Act, 1949 (38 of 1949), in consultation with and after examination of the recommendations made b y National Advisory Committee on Accounting Standards constituted under section 210A of the Companies Act, 1956 (1 of 1956).] 134. Financial statement, Boards report, etc. 2[(1) The financial statement, including consolidated financial statement, if any, shall be approved by the Board of Directors before they are signed on behalf of the Board by the chairperson of the company where he is authorised by the Board or by two directors out of which one shall be managing director, if any, and the Chief Executiv e Officer, the Chief Financial Officer and the company secretary of the company, wherever they are appointed, or in the case of One Person Company, only by one director, for submission to the auditor for his report thereon.] (2) The auditors report shall be attached to every financial statement. (3) There shall be attached to statements laid before a company in general meeting, a report by its Board of Directors, which shall include 3[(a) the web address, if any, where annual return referred to in sub -section ( 3) of section 92 has been placed;] (b) number of meetings of the Board; (c) Directors Responsibility Statement; 4[(ca) details in respect of frauds reported by auditors under sub -section ( 12) of section 143 other than those which are reportable to t he Central Government;] (d) a statement on declaration given by independent directors under sub -section ( 6) of section 149; 1. Ins. by notification No. S.O. 1227(E), dated 29th March, 2016 (w.e.f 1-4-2015). 2. Subs. by Act 1 of 2018, s. 36, sub -section ( 1) (w.e.f. 31 -7-2018). 3. Subs. by s. 36, ibid., for clause ( a) (w.e.f. 31 -7-2018). 4. Ins. by Act 21 of 2015, s. 12 (w.e.f. 29 -5-2015). 92 (e) in case of a company covered under sub -section ( 1) of section 178, companys policy on directors appointment and remuneration i ncluding criteria for determining qualifications, positive attributes, independence of a director and other matters provided under sub -section ( 3) of section 178; (f) explanations or comments by the Board on every qualification, reservation or adverse rema rk or disclaimer made (i) by the auditor in his report; and (ii) by the company secretary in practice in his secretarial audit report; (g) particulars of loans, guarantees or investments under section 186; (h) particulars of contracts or arrangements with related parties referred to in sub -section ( 1) of section 188 in the prescribed form; (i) the state of the companys affairs; (j) the amounts, if any, which it proposes to carry to any reserves; (k) the amount, if any, which it recommends should be paid b y way of dividend; (l) material changes and commitments, if any, affecting the financial position of the company which have occurred between the end of the financial year of the company to which the financial statements relate and the date of the report; (m) the conservation of energy, technology absorption, foreign exchange earnings and outgo, in such manner as may be prescribed; (n) a statement indicating development and implementation of a risk management policy for the company including identification t herein of elements of risk, if any, which in the opinion of the Board may threaten the existence of the company; (o) the details about the policy developed and implemented by the company incorporate social responsibility initiatives taken during the year; (p) in case of a listed company and every other public company having such paid -up share capital as may be prescribed, a statement indicating the manner in which formal 1[annual evaluation of the performance of the Board, its Committees and of individual d irectors has been made]; (q) such other matters as may be prescribed: 2[Provided that where disclosures referred to in this sub -section have been included in the financial statements, such disclosures shall be referred to instead of being repeated in the B oard's report: Provided further that where the policy referred to in clause (e) or clause (o) is made available on company's website, if any, it shall be sufficient compliance of the requirements under such clauses if the salient features of the policy and any change therein are specified in brief in the Board's report and the web - address is indicated therein at which the complete policy is available.] 3[(3A) The Central Government may prescribe an abridged Board's report, for the purpose of compliance with this section by One Person Company or small company.] (4) The report of the Board of Directors to be attached to the financial statement under this section shall, in case of a One Person Company, mean a report containing explanations or comments by the Board on every qualification, reservation or adverse remark or disclaimer made by the auditor in his report . (5) The Directors Responsibility Statement referred to in clause ( c) of sub -section ( 3) shall state that (a) in the preparation of the annual accou nts, the applicable accounting standards had been followed along with proper explanation relating to material departures; (b) the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reason able and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit and loss of the company for that period; (c) the directors had taken proper and sufficient care for the maintenanc e of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud another irregularities; (d) the directors had prepared the annual accounts on a going concern b asis; and (e) the directors, in the case of a listed company, had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively. 1. Subs. by Act 1 of 2018, s. 36 , for annual evaluation has been made by the Board of its own performance and that of its committees and individual directors (w.e.f. 31 -7-2018). 2. The provisos ins. by s. 36, ibid., (w.e.f. 31 -7-2018). 3. Sub-section ( 3A) ins. by s. 36, ibid., (w.e.f. 31 -7-2018). 93 Explanation. For the purposes of th is clause, the term internal financial controls means the policies and procedures adopted by the company for ensuring the orderly and efficient conduct of its business, including adherence to companys policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accu racy and completeness of the accounting records, and the timely preparation of reliable financial information; (f) the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. (6) The Boards report and any annexures thereto under sub -section ( 3) shall be signed by its chairperson of the company if he is authorised by the Board and where he is not so authorised, shall be signed by at least two directo rs, one of whom shall be a managing director, or by the director where there is one director. (7) A signed copy of every financial statement, including consolidated financial statement, if any, shall be issued, circulated or published along with a copy eac h of (a) any notes annexed to or forming part of such financial statement; (b) the auditors report; and (c) the Boards report referred to in sub -section ( 3). 1[(8) If a company is in default in complying with the provisions of this section, the company shall be liable to a penalty of three lakh rupees and every officer of the company who is in default shall be liable to a penalty of fifty thousand rupees .] 135. Corporate Social Responsibility. (1) Every company having net worth of rupees five hundred crore or more, or turnover of rupees one thousand crore or more or a net profit of rupees five crore or more during 2[the immediately preceding financial year] shall constitute a Corporate Social Responsibility Committee of the Board consisting of three or mo re directors, out of which at least one director shall be an independent director: 3[Provided that where a company is not required to appoint an independent director under sub -section (4) of section 149, it shall have in its Corporate Social Responsibility Committee two or more directors.] (2) The Board's report under sub -section ( 3) of section 134 shall disclose the composition of the Corporate Social Responsibility Committee. (3) The Corporate Social Responsibility Committee shall, (a) formulate and recommend to the Board, a Corporate Social Responsibility Policy which shall indicate the activities to be undertaken by the company 4[in areas or subject, specified in Schedule VII]; (b) recommend the amount of expenditure to be incurred o n the activities referred to in clause ( a); and (c) monitor the Corporate Social Responsibility Policy of the company from time to time. (4) The Board of every company referred to in sub -section ( 1) shall, (a) after taking into account the recommendations made by the Corporate Social Responsibility Committee, approve the Corporate Social Responsibility Policy for the company and disclose contents of such Policy in its report and also place it on the companys website, if any, in such manner as may be presc ribed; and (b) ensure that the activities as are included in Corporate Social Responsibility Policy of the company are undertaken by the company. (5) The Board of every company referred to in sub -section ( 1), shall ensure that the company spends, in every financial year, at least two per cent. of the average net profits of the company made during the three immediately preceding financial years, 5[or where the company has not completed the period of three financial years since its incorporation, during such immediately preceding financial years ,] in pursuance of its Corporate Social Responsibility Policy: Provided that the company shall give preference to the local area and areas around it where it operates, for spending the amount earmarked for Corporate Soc ial Responsibility activities: Provided further that if the company fails to spend such amount, the Board shall, in its report made under clause ( o) of sub -section ( 3) of section 134, specify the reasons for not spending the amount 1. Subs. by Act 29 of 2020, s. 26, for sub -section ( 8) (w.e.f. 21 -12-2020). 2. Subs. by Act 1 of 2018, s. 37, for any financial year (w.e.f. 19 -9-2018). 3. The proviso ins.

, for any financial year (w.e.f. 19 -9-2018). 3. The proviso ins. by s. 37, ibid., (w.e.f. 19 -9-2018). 4. Subs. by s. 37, ibid., for as specified in Schedule VII (w.e.f. 19 -9-2018). 5. Ins. by Act 22 of 2019, s. 21 (w.e.f. 22 -1-2021). 94 1[and, unless the unspent amount relates to any ongoing project referred to in sub -section ( 6), transfer such unspent amount to a Fund specified in Schedule VII, within a period of six months of the expiry of the financial years]. 2[Provided also that if the company spends an amount in excess of the requirements provided under this sub-section, such company may set off such excess amount against the requirement to spend under this sub-section for such number of succeeding financial years and in such manner, as may b e prescribed.] 3[Explanation. For the purposes of this section net profit shall not include such sums as may be prescribed, and shall be calculated in accordance with the provisions of section 198. ] 4[(6) Any amount remaining unspent under sub -section ( 5), pursuant to any ongoing project, fulfilling such conditions as may be prescribed, undertaken by a company in pursuance of its Corporate Social Responsibility Policy, shall be transferred by the company within a period of thirty days from the end of the financial year to a special account to be opened by the company in that behalf for that financial year in any scheduled bank to be called the Unspent Corporate Social Responsibility Account, and such amount shall be spent by the company in pursuance of its obligation towards the Corporate Social Responsibility Policy within a period of three financial years from the date of such transfer, failing which, the company shall transfer the same to a Fund specified in Schedule VII, within a period of thirty days f rom the date of completion of the third financial year. 5[(7) If a company is in default in complying with the provisions of sub -section ( 5) or sub -section ( 6), the company shall be liable to a penalty of twice the amount required to be transferred by the company to the Fund specified in Schedule VII or the Unspent Corporate Social Responsibility Account, as the case may be, or one crore rupees, whichever is less, and every officer of the company who is in default shall be liable to a penalty of one -tenth o f the amount required to be transferred by the company to such Fund specified in Schedule VII, or the Unspent Corporate Social Responsibility Account, as the case may be, or two lakh rupees, whichever is less.] (8) The Central Government may give such gene ral or special directions to a company or class of companies as it considers necessary to ensure compliance of provisions of this section and such company or class of companies shall comply with such directions.] 6[(9) Where the amount to be spent by a com pany under sub -section ( 5) does not exceed fifty lakh rupees, the requirement under sub -section ( 1) for constitution of the Corporate Social Responsibility Committee shall not be applicable and the functions of such Committee provided under this section sh all, in such cases, be discharged by the Board of Directors of such company.] 136. Right of member to copies of audited financial statement. (1) 7*** a copy of the financial statements, including consolidated financial statements, if any, auditors report and every other document required by law to be annexed or attached to the financial statements, which are to be laid before a company in its general meeting, shall be sent to every member of the company, to every trustee for the debenture - holder of any deb entures issued by the company, and to all persons other than such member or trustee, being the person so entitled, not less than twenty -one days before the date of the meeting: 8[Provided that if the copies of the documents are sent less than twenty -one days before the date of the meeting, they shall, notwithstanding that fact, be deemed to have been duly sent if it is so agreed by members (a) holding, if the company has a share capital, majority in number entitled to vote and who represent not less than ninety -five per cent. of such part of the paid -up share capital of the company as gives a right to vote at the meeting; or (b) having, if the company has no share capital, not less than ninety -five per cent. of the total voting power exercisable at the me eting: Provided further that ] in the case of a listed company, the provisions of this sub -section shall be deemed to be complied with, if the copies of the documents are made available for inspecti on at its registered 1. Ins. by Act 22 of 2019, s. 21 (w.e.f. 22 -1-2021). 2. The Proviso ins. by Act 29 of 2020, s. 27 (w.e.f. 22 -1-2021). 3. Subs. by Act 1 of 2018, s. 37, for the Explanation (w.e.f. 19 -9-2018). 4. Ins. by Act 22 of 2019, s. 21 (w.e.f. 22 -1-2021). 5. Subs. by Act 29 of 2020, s. 27, for sub -section (7) (w.e.f. 22 -1-2021). 6. Ins. by s. 27, ibid. (w.e.f. 2 2-1-2021). 7. The words and figures Without prejudice to the provisions of section 101 omitted by Act 1 of 2018, s. 38, (w.e.f. 9 -2-2018). 8. Subs. by s. 38, ibid., for Provided that (w.e.f. 9 -2-2018). 95 office during working hours for a period of twenty -one days before the date of the meeting and a statement containing the salient features of such documents in the prescribed form or copies of the documents, as the company may deem fit , is sent to every member of the company and to every trustee for the holders of any debentures issued by the company not less than twenty -one days before the date of the meeting unless the shareholders ask for full financial statements: 1[Provided also] t hat the Central Government may prescribe the manner of circulation of financial statements of companies having such net worth and turnover as may be prescribed: Provided also that a listed company shall also place its financial statements including consoli dated financial statements, if any, and all other documents required to be attached thereto, on its website, which is maintained by or on behalf of the company: 2[Provided also that every listed company having a subsidiary or subsidiaries shall place separate audited accounts in respect of each of subsidiary on its website, if any: Provided also that a listed company which has a subsidiary incorporated outside India (herein referred to as foreign subsidiary ) (a) where such foreign subsidiary is sta tutorily required to prepare consolidated financial statement under any law of the country of its incorporation, the requirement of this proviso shall be met if consolidated financial statement of such foreign subsidiary is placed on the website of the lis ted company; (b) where such foreign subsidiary is not required to get its financial statement audited under any law of the country of its incorporation and which does not get such financial statement audited, the holding Indian listed company may place such unaudited financial statement on its website and where such financial statement is in a language other than English, a translated copy of the financial statement in English shall also be placed on the website. ] (2) A company shall allow every member o r trustee of the holder of any debentures issued by the company to inspect the documents stated under sub -section ( 1) at its registered office during business hours. 3[Provided that every company having a subsidiary or subsidiaries shall provide a copy of separate audited or unaudited financial statements, as the case may be, as prepared in respect of each of its subsidiary to any member of the company who asks for it.] (3) If any default is made in complying with the provisions of this section, the company shall be liable to a penalty of twenty -five thousand rupees and every officer of the company who is in default shall be liable to a penalty of five thousand rupees. 137. Copy of financial statement to be filed with Registrar. (1) A copy of the financial s tatements , including consolidated financial statement, if any, along with all the documents which are required to be or attached to such financial statements under this Act, duly adopted at the annual general meeting of the company, shall be filed with the Registrar within thirty days of the date of annual general meeting in such manner, with such fees or additional fees as may be prescribed 4***: Provided that where the financial statements under sub -section ( 1) are not adopted at annual general meeting or adjourned annual general meeting, such unadopted financial statements along with the required documents under sub -section ( 1) shall be filed with the Registrar within thirty days of the date of annual general meeting and the Registrar shall take them in h is records as provisional till the financial statements are filed with him after their adoption in the adjourned annual general meeting for that purpose: Provided further that financial statements adopted in the adjourned annual general meeting shall be filed with the Registrar within thirty days of the date of such adjourned annual general meeting with such fees or such additional fees as may be prescribed 1***: Provided also that a One Person Company shall file a copy of the financial statements duly adop ted by its member, along with all the documents which are required to be attached to such financial statements, within one hundred eighty days from the closure of the financial year: 1. Subs. by Act 1 of 2018, s. 38, for Provided further (w.e.f. 9 -2-2018). 2. Subs. by s. 38, ibid., for the Fourth proviso (w.e.f. 9 -2-2018). 3. The proviso ins. by s. 38, ibid. (w.e.f. 9 -2-2018). 4. The words and figures within the time specified under section 403 omitted by s. 39, ibid., (w.e.f. 7-5-2018). 96 Provided also that a company shall, along with its financial statements t o be filed with the Registrar, attach the accounts of its subsidiary or subsidiaries which have been incorporated outside India and which have not established their place of business in India. 1[Provided also that in the case of a subsidiary which has been incorporated outside India (herein referred to as foreign subsidiary ), which is not required to get its financial statement audited under any law of the country of its incorporation and which does not get such financial statement audited, the requirements of the fourth proviso shall be met if the holding Indian company files such unaudited financial statement along with a declaration to this effect and where such financial statement is in a language other than English, along with a translated c opy of the financial statement in English.] (2) Where the annual general meeting of a company for any year has not been held, the financial statements along with the documents required to be attached under sub -section ( 1), duly signed along with the statem ent of facts and reasons for not holding the annual general meeting shall be filed with the Registrar within thirty days of the last date before which the annual general meeting should have been held and in such manner, with such fees or additional fees as may be prescribed 2***. (3) If a company fails to file the copy of the financial statements under sub -section ( 1) or sub - section ( 2), as the case may be, before the expiry of the period specified 3[therein] the company shall be 4[liable to a penalty] of 5[ten thousand rupees and in case of continuing failure, with a further penalty of one hundred rupees for each day during which such failure continues, subject to a maximum of two lakh rupees ,] and the managing director and the Chi ef Financial Officer of the company, if any, and, in the absence of the managing director and the Chief Financial Officer, any other director who is charged by the Board with the responsibility of complying with the provisions of this section, and, in the absence of any such director, all the directors of the company, shall be 6[shall be liable to a penalty of 7[ten thousand rupees ] and in case of continuing failure, with a further penalty of one hundred rupees for each day after the first during which such failure continues, subject to a maximum of 8[fifty thousand rupees .] 138. Internal audit. (1) Such class or classes of companies as may be prescribed shall be required to appoint an internal auditor, who shall either be a chartered accountant or a cost accountant, or such other professional as may be decided by the Board to conduct internal audit of the functions and activities of the company. (2) The Central Government may, by rules, prescribe the manner and the intervals in which the internal audit shall be conducted and reported to the Board. CHAPTER X AUDIT AND AUDITORS 139. Appointment of auditors. (1) Subject to the provisions of this Chapter, every company shall, at the first annual general meeting, appoint an individual or a firm as an auditor who shall hold office from the conclusion of that meeting till the conclusion of its sixth annual general meeting and thereafter till the conclusion of every sixth meeting and the manner and procedure of selection of auditors by the members of the company at such meeting shall be such as may be prescribed: 9* * * * * Provided further that before such appointment is made, the writ ten consent of the auditor to such appointment, and a certificate from him or it that the appointment, if made, shall be in accordance with the conditions as may be prescribed, shall be obtained from the auditor: 1. The proviso ins. by Act 1 of 2018, s. 39 (w.e.f. 7 -5-2018). 2. The words and figures within the time specified, under section 403 omitted by s. 39, ibid. (w.e.f. 7 -5-2018). 3. Subs. by s. 39 , ibid., for in section 403 (w.e.f. 7 -5-2018). 4. Subs. by Act 22 of 2019, s. 22, for punishable with fine (w.e.f. 2 -11-2018). 5. Subs. by Act 29 of 2020, s. 28, for one thousand rupees for every day during which the failure continues but which shall not be more than ten lakh rupees (w.e.

thousand rupees for every day during which the failure continues but which shall not be more than ten lakh rupees (w.e.f. 21 -12-2020). 6. Subs. by Act 22 of 2019, s. 22, for punishable with imprisonment for a term which may extend to six months or with fine which shall not be less than one lakh rupees but which may extend to five lakh rupee s, or with both (w.e.f. 2 -11-2018). 7. Subs. by Act 29 of 2020, s. 28, for one lakh rupees (w.e.f. 21 -12-2020). 8. Subs. by s. 28, ibid., for five lakh rupees (w.e.f. 21 -12-2020). 9. The first proviso omitted by Act 1 of 2018, s. 40 (w.e.f. 7 -5-2018). 97 Provided also that the certificate shall al so indicate whether the auditor satisfies the criteria provided in section 141: Provided also that the company shall inform the auditor concerned of his or its appointment, and also file a notice of such appointment with the Registrar within fifteen days o f the meeting in which the auditor is appointed. Explanation. For the purposes of this Chapter, appointment includes re -appointment. (2) No listed company or a company belonging to such class or classes of companies as may be prescribed, shall appoint or re-appoint (a) an individual as auditor for more than one term of five consecutive years; and (b) an audit firm as auditor for more than two terms of five consecutive years: Provided that (i) an individual auditor who has completed his term under clause (a) shall not be eligible for re-appointment as auditor in the same company for five years from the completion of his term; (ii) an audit firm which has completed its term under clause ( b), shall not be eligible for re - appointment as auditor in the same company for five years from the completion of such term: Provided further that as on the date of appointment no audit firm having a common partner or partners to the other audit firm, whose tenure has expired in a company immediately preceding the financial year, shall be appointed as auditor of the same company for a period of five years: 1[Provided also that every company, existing on or before the commencement of this Act which is required to comply with the provisions of this sub -section, shall comply with requirement of this sub - section within a period which shall not be later than the date of the first annual general meeting of the company held, within the period specified under sub -section ( 1) of section 96, after three years fr om the date of commencement of this Act:] Provided also that, nothing contained in this sub -section shall prejudice the right of the company to remove an auditor or the right of the auditor to resign from such office of the company. (3) Subject to the prov isions of this Act, members of a company may resolve to provide that (a) in the audit firm appointed by it, the auditing partner and his team shall be rotated at such intervals as may be resolved by members; or (b) the audit shall be conducted by more tha n one auditor. (4) The Central Government may, by rules, prescribe the manner in which the companies shall rotate their auditors in pursuance of sub -section ( 2). Explanation .For the purposes of this Chapter, the word firm shall include a limited liabili ty partnership incorporated under the Limited Liability Partnership Act, 2008 (6 of 2009). (5) Notwithstanding anything contained in sub -section ( 1), in the case of a Government company or any other company owned or controlled, directly or indirectly, by the Central Government, or by any State Government or Governments, or partly by the Central Government and partly by one or more State Governments, the Comptroller and Auditor -General of India shall, in respect of a financial year, appoint an auditor duly qualified to be appointed as an auditor of companies under this Act, within a period of one hundred and eighty days from the commencement of the financial year, who shall hold office till the conclusion of the annual general meeting. (6) Notwithstanding an ything contained in sub -section ( 1), the first auditor of a company, other than a Government company, shall be appointed by the Board of Directors within thirty days from the date of registration of the company and in the case of failure of the Board to ap point such auditor, it shall inform the members of the company, who shall within ninety days at an extraordinary general meeting appoint such auditor and such auditor shall hold office till the conclusion of the first annual general meeting. 1. Subs. by notification No. S.O. 2264(E), dated 30th June, 2016, for the proviso (w.e.f.1 -4-2014). 98 (7) Notwithsta nding anything contained in sub -section ( 1) or sub -section ( 5), in the case of a Government company or any other company owned or controlled, directly or indirectly, by the Central Government, or by any State Government, or Governments, or partly by the Ce ntral Government and partly by one or more State Governments, the first auditor shall be appointed by the Comptroller and Auditor - General of India within sixty days from the date of registration of the company and in case the Comptroller and Auditor -Genera l of India does not appoint such auditor within the said period, the Board of Directors of the company shall appoint such auditor within the next thirty days; and in the case of failure of the Board to appoint such auditor within the next thirty days, it s hall inform the members of the company who shall appoint such auditor within the sixty days at an extraordinary general meeting, who shall hold office till the conclusion of the first annual general meeting. (8) Any casual vacancy in the office of an audit or shall (i) in the case of a company other than a company whose accounts are subject to audit by an auditor appointed by the Comptroller and Auditor -General of India, be filled by the Board of Directors within thirty days, but if such casual vacancy is a s a result of the resignation of an auditor, such appointment shall also be approved by the company at a general meeting convened within three months of the recommendation of the Board and he shall hold the office till the conclusion of the next annual gen eral meeting; (ii) in the case of a company whose accounts are subject to audit by an auditor appointed by the Comptroller and Auditor -General of India, be filled by the Comptroller and Auditor -General of India within thirty days: Provided that in case the Comptroller and Auditor -General of India does not fill the vacancy within the said period, the Board of Directors shall fill the vacancy within next thirty days. (9) Subject to the provisions of sub -section ( 1) and the rules made thereunder, are tiring au ditor may be re-appointed at an annual general meeting, if (a) he is not disqualified for re -appointment; (b) he has not given the company a notice in writing of his unwillingness to be re -appointed; and (c) a special resolution has not been passed at tha t meeting appointing some other auditor or providing expressly that he shall not be re -appointed. (10) Where at any annual general meeting, no auditor is appointed or re -appointed, the existing auditor shall continue to be the auditor of the company. (11) Where a company is required to constitute an Audit Committee under section 177, all appointments, including the filling of a casual vacancy of an auditor under this section shall be made after taking into account the recommendations of such committee. 140. Removal, resignation of auditor and giving of special notice. (1) The auditor appointed under section 139 may be removed from his office before the expiry of his term only by a special resolution of the company, after obtaining the previous approval of th e Central Government in that behalf in the prescribed manner: Provided that before taking any action under this sub -section, the auditor concerned shall be given a reasonable opportunity of being heard. (2) The auditor who has resigned from the company sha ll file within a period of thirty days from the date of resignation, a statement in the prescribed form with the company and the Registrar, and in case of companies referred to in sub -section ( 5) of section 139, the auditor shall also file such statement w ith the Comptroller and Auditor -General of India, indicating the reasons and other facts as may be relevant with regard to his resignation. 1[(3) If the auditor does not comply with the provisions of sub -section (2), he or it shall be liable to a penalty o f fifty thousand rupees or an amount equal to the remuneration of the auditor, whichever is less, 1. Subs. by Act 22 of 2019, s. 23, for sub -section ( 3) (w.e .f. 2-11-2018). 99 and in case of continuing failure, with a further penalty of five hundred rupees for each day after the first during which such failure continues, subject to a maximum of 1[two lakh rupees ].] (4) (i) Special notice shall be required for a resolution at an annual general meeting appointing as auditor a person other than a retiring auditor, or providing expressly that a retiring auditor shall not be re- appointed, except where the retiring auditor has completed a consecutive tenure of five years or, as the case may be, ten years, as provided under sub -section ( 2) of section 139. (ii) On receipt of notice of such a resolution, the company shall forthwit h send a copy thereof to the retiring auditor. (iii) Where notice is given of such a resolution and the retiring auditor makes with respect thereto representation in writing to the company (not exceeding a reasonable length) and requests its notification to members of the company, the company shall, unless the representation is received by it too late for it to do so, (a) in any notice of the resolution given to members of the company, state the fact of the representation having been made; and (b) send a c opy of the representation to every member of the company to whom notice of the meeting is sent, whether before or after the receipt of the representation by the company, and if a copy of the representation is not sent as aforesaid because it was received t oo late or because of the companys default, the auditor may (without prejudice to his right to be heard orally) require that the representation shall be read out at the meeting: Provided that if a copy of representation is not sent as aforesaid, a copy th ereof shall be filed with the Registrar: Provided further that if the Tribunal is satisfied on an application either of the company or of any other aggrieved person that the rights conferred by this sub -section are being abused by the auditor, then, the copy of the representation may not be sent and the representation need not be read out at the meeting. (5) Without prejudice to any action under the provisions of this Act or any other law for the time being in force, the Tribunal either suo motu or on an ap plication made to it by the Central Government or by any person concerned, if it is satisfied that the auditor of a company has, whether directly or in directly, acted in a fraudulent manner or abetted or colluded in any fraud by, or in relation to, the co mpany or its directors or officers, it may, by order, direct the company to change its auditors: Provided that if the application is made by the Central Government and the Tribunal is satisfied that any change of the auditor is required, it shall within fi fteen days of receipt of such application, make an order that he shall not function as an auditor and the Central Government may appoint another auditor in his place: Provided further that an auditor, whether individual or firm, against whom final order ha s been passed by the Tribunal under this section shall not be eligible to be appointed as an auditor of any company for a period of five years from the date of passing of the order and the auditor shall also be liable for action under section 447. Explanat ion I.It is hereby clarified that the case of a firm, the liability shall be of the firm and that of every partner or partners who acted in a fraudulent manner or abetted or colluded in any fraud by, or in relation to, the company or its director or offic ers. Explanation II .For the purposes of this Chapter the word auditor includes a firm of auditors. 141. Eligibility, qualifications and disqualifications of auditors. (1) A person shall be eligible for appointment as an auditor of a company only if he i s a chartered accountant: Provided that a firm whereof majority of partners practising in India are qualified for appointment as aforesaid may be appointed by its firm name to be auditor of a company. 1. Subs. by Act 29 of 2020, s. 29, for five lakh rupees (w.e.f. 21 -12-2020). 100 (2) Where a firm including a limited liability partnership is appointed as an auditor of a company, only the partners who are chartered accountants shall be authorised to act and sign on behalf of the firm. (3) The following persons shall not be eligible for appointment as an auditor of a company, namely: (a) a body corporate other than a limited liability partnership registered under the Limited Liability Partnership Act, 2008 (6 of 2009); (b) an officer or employee of the company; (c) a person who is a partner, or who is in the employment, of an officer or employee of the company; (d) a person who, or his relative or partner (i) is holding any security of or interest in the company or its subsidiary, or of its holding or associate company or a subsidiary of such holding company: Provided that the relative may hold security or interest in the company office value not exceeding one thousand rupees or such sum as may be prescribed; (ii) is indebted to the company, or its subsidiary, or its holding or associate company or a subsidiary of such holding company, in excess of such amount as may be prescribed; or (iii) has given a guarantee or provided any security in connection with the indebtedness of any third person to the company, or its subsidiary, or its holding or associate company or a subsidiary of such holding company, for such amount as may be prescribed; (e) a person or a firm who, whether directly or indirectly, has business relationship with the company, or its subsidiary, or its holding or associate company or subsidiary of such holding compa ny or associate company of such nature as may be prescribed; (f) a person whose relative is a director or is in the employment of the company as a director or key managerial personnel; (g) a person who is in full time employment elsewhere or a person or a partner

as a director or key managerial personnel; (g) a person who is in full time employment elsewhere or a person or a partner of a firm holding appointment as its auditor, if such persons or partner is at the date of such appointment or reappointment holding appointment as auditor of more than twenty companies; (h) a person who has been convicted by a court of an offence involving fraud and a period of ten years has not elapsed from the date of such conviction; 1[(i) a person who, directly or indirectly, renders any service referred to in section 144 to the company or its holding company or its subsidiary company. Explanation. For the purposes of this clause, the term directly or indirectly shall have the meaning assigned to it in the Explanation to section 144 .] (4) Where a person appointed as an auditor of a company incurs any of the disqualifications mentioned in sub -section ( 3) after his appointment, he shall vacate his office as such auditor and such vacation shall be deemed to be a casual vacancy in the office of the auditor. 142. Remuneration of auditors. (1) The remuneration of the auditor of a company shal l be fixed in its general meeting or in such manner as may be determined therein: Provided that the Board may fix remuneration of the first auditor appointed by it. (2) The remuneration under sub -section ( 1) shall, in addition to the fee payable to an audi tor, include the expenses, if any, incurred by the auditor in connection with the audit of the company and any facility extended to him but does not include any remuneration paid to him for any other service rendered by him at the request of the company. 1. Subs. by Act 1 of 2018, s. 42, for clause ( i) (w.e.f. 9 -2-2018). 101 143. Powers and duties of auditors and auditing standards. (1) Every auditor of a company shall have a right of access at all times to the books of account and vouchers of the company, whether kept at the registered office of the company or at any other pla ce and shall be entitled to require from the officers of the company such information and explanation as he may consider necessary for the performance of his duties as auditor and amongst other matters inquire into the following matters, namely: (a) wheth er loans and advances made by the company on the basis of security have been properly secured and whether the terms on which they have been made are prejudicial to the interests of the company or its members; (b) whether transactions of the company which a re represented merely by book entries are prejudicial to the interests of the company; (c) where the company not being an investment company or a banking company, whether so much of the assets of the company as consist of shares, debentures and other secur ities have been sold at a price less than that at which they were purchased by the company; (d) whether loans and advances made by the company have been shown as deposits; (e) whether personal expenses have been charged to revenue account; (f) where it is stated in the books and documents of the company that any shares have been allotted for cash, whether cash has actually been received in respect of such allotment, and if no cash has actually been so received, whether the position as stated in the account books and the balance sheet is correct, regular and not misleading: Provided that the auditor of a company which is a holding company shall also have the right of access to the records of all 1[its subsidiaries and associate companies] in so far as it rela tes to the consolidation of its financial statements with that of 1[its subsidiaries and associate companies.] (2) The auditor shall make a report to the members of the company on the accounts examined by him and on every financial statements which are req uired by or under this Act to be laid before the company in general meeting and the report shall after taking into account the provisions of this Act, the accounting and auditing standards and matters which are required to be included in the audit report u nder the provisions of this Act or any rules made thereunder or under any order made under sub -section ( 11) and to the best of his information and knowledge, the said accounts, financial statements give a true and fair view of the state of the companys af fairs as at the end of its financial year and profit or loss and cash flow for the year and such other matters as may be prescribed. (3) The auditors report shall also state (a) whether he has sought and obtained all the information and explanations which to the best of his knowledge and belief were necessary for the purpose of his audit and if not, the details thereof and the effect of such information on the financial statements; (b) whether, in his opinion, proper books of account as required by la w have been kept by the company so far as appears from his examination of those books and proper returns adequate for the purposes of his audit have been received from branches not visited by him; (c) whether the report on the accounts of any branch office of the company audited under sub - section ( 8) by a person other than the companys auditor has been sent to him under the proviso to that sub-section and the manner in which he has dealt with it in preparing his report; (d) whether the companys balance sh eet and profit and loss account dealt within the report are in agreement with the books of account and returns; (e) whether, in his opinion, the financial statements comply with the accounting standards; (f) the observations or comments of the auditors on financial transactions or matters which have any adverse effect on the functioning of the company; (g) whether any director is disqualified from being appointed as a director under sub -section ( 2) of section 164; (h) any qualification, reservation or adver se remark relating to the maintenance of accounts and other matters connected therewith; 1. Subs. by Act 1 of 2018, s. 43, for its subsidiaries (w.e.f. 9 -2-2018). 102 (i) whether the company has adequate 1[internal financial controls with reference to financial statements] in place and the operating effectiveness of such controls; (j) such other matters as may be prescribed. (4) Where any of the matters required to be included in the audit report under this section is answered in the negative or with a qualification, the report shall state the reasons therefor. (5) 2[In the case of a Government company or any other company owned or controlled, directly or indirectly, by the Central Government, or by any State Government or Governments, or partly by the Central Government and partly by one or more State Governments, the Comptroller and Auditor General of India shall appoint the auditor under sub -section ( 5) or sub -section ( 7) of Section 139 and direct such auditor the manner in which the accounts of the company are required to be audited and] thereupon the auditor so appointed shall sub mit a copy of the audit report to the Comptroller and Auditor -General of India which, among other things, include the directions, if any, issued by the Comptroller and Auditor - General of India, the action taken thereon and its impact on the a ccounts and financial statement of the company. (6) The Comptroller and Auditor -General of India shall within sixty days from the date of receipt of the audit report under sub -section ( 5) have a right to, (a) conduct a supplementary audit of the financial statement of the company by such person or persons as he may authorise in this behalf; and for the purposes of such audit, require information or additional information to be furnished to any person or persons, so authorised, on such matters, by such person or persons, and in such form, as the Comptroller and Auditor -General of India may direct; and (b) comment upon or supplement such audit report: Provided that any comments given by the Comptroller and Auditor -General of India upon, or supplement to, the audit report shall be sent by the company to every person entitled to copies of audited financial statements under sub section ( 1) of section 136 and also be placed before the annual general meeting of the company at the same time and in the same manner as the audit report. (7) Without prejudice to the provisions of this Chapter, the Comptroller and Auditor -General of India may, in case of any company covered under sub -section ( 5) or sub -section ( 7) of section 139, if he considers necessary, by an order, ca use test audit to be conducted of the accounts of such company and the provisions of section 19A of the Comptroller and Auditor -Generals (Duties, Powers and Conditions of Service) Act, 1971 (56 of 1971), shall apply to the report of such test audit. (8) Where a company has a branch office, the accounts of that office shall be audited either by the auditor appointed for the company (herein referred to as the companys auditor) under this Act or by any other person qualified for appointment as an auditor of the company under this Act and appointed as such under section 139, or where the branch office is situated in a country outside India, the accounts of the branch office shall be audited either by the companys auditor or by an accountant or by any other p erson duly qualified to act as an auditor of the accounts of the branch office in accordance with the laws of that country and the duties and powers of the companys auditor with reference to the audit of the branch and the branch auditor, if any, shall be such as may be prescribed: Provided that the branch auditor shall prepare a report on the accounts of the branch examined by him and send it to the auditor of the company who shall deal with it in his report in such manner as he considers necessary. (9) Every auditor shall comply with the auditing standards. (10) The Central Government may prescribe the standards of auditing or any addendum thereto, as recommended by the Institute of Chartered Accountants of India, constituted under section 3 of the Charte red Accountants Act, 1949 (38 of 1949), in consultation with and after examination of the recommendations made by the National Financial Reporting Authority: 1. Subs. by Act 1 of 2018, s. 43, for internal financial controls system (w.e.f. 9 -2-2018). 2. Subs. by notification No. S.O. 2226(E), dated 4th September, 2014 for certain words (w.e.f. 4 -9-2014). 103 Provided that until any auditing standards are notified, any standard or standards of auditing spe cified by the Institute of Chartered Accountants of India shall be deemed to be the auditing standards. (11) The Central Government may, in consultation with the National Financial Reporting Authority, by general or special order, direct, in respect of suc h class or description of companies, as may be specified in the order, that the auditors report shall also include a statement on such matters as may be specified therein: 1[Provided that until the National Financial Reporting Authority is constituted und er section 132, the Central Government may hold consultation required under this sub -section with the Committee chaired by an officer of the rank of Joint Secretary or equivalent in the Ministry of Corporate Affairs and the Committee shall have the represe ntatives from the Institute of Chartered Accountants of India and Industry Chambers and also special invitees from the National Advisory Committee on Accounting Standards and the office of the Comptroller and Auditor -General.] 2[(12) Notwithstanding anythi ng contained in this section, if an auditor of a company in the course of the performance of his duties as auditor, has reason to believe that an offence of fraud involving such amount or amounts as may be prescribed, is being or has been committed in the company by its officers or employees, the auditor shall report the matter to the Central Government within such time and in such manner as may be prescribed: Provided that in case of a fraud involving lesser than the specified amount, the auditor shall rep ort the matter to the audit committee constituted under section 177 or to the Board in other cases within such time and in such manner as may be prescribed: Provided further that the companies, whose auditors have reported frauds under this sub -section to the audit committee or the Board but not reported to the Central Government, shall disclose the details about such frauds in the Board's report in such manner as may be prescribed .] (13) No duty to which an auditor of a company may be subject to shall be r egarded as having been contravened by reason of his reporting the matter referred to in sub -section ( 12) if it is done in good faith. (14) The provisions of this section shall mutatis mutandis apply to (a) the 3[cost accountant] conducting cost audit unde r section 148; or (b) the company secretary in practice conducting secretarial audit under section 204. 4[(15) If any auditor, cost accountant, or company secretary in practice does not comply with the provisions of sub -section ( 12), he shall, (a) in case of a listed company, be liable to a penalty of five lakh rupees; and (b) in case of any other company, be liable to a penalty of one lakh rupees .] 144. Auditor not to render certain services. An auditor appointed under this Act shall provide to the co mpany only such other services as are approved by the Board of Directors or the audit committee, as the case may be, but which shall not include any of the following services (whether such services are rendered directly or indirectly to the company), or it s holding company or subsidiary company, namely: (a) accounting and book keeping services; (b) internal audit; (c) design and implementation of any financial information system; (d) actuarial services; (e) investment advisory services; (f) investment banking services; 1. Ins. by notification No. S.O. 1226(E), dated 29th March, 2016 (w.e.f. 10 -4-2015). 2. Subs. by Act 21 of 2015, s. 13, for sub -section ( 12) (w.e.f. 14 -12-2015). 3. Subs. by Act 1 of 2018, s. 43, for cost accountant in practice (w.e.f. 9 -2-2018). 4. Subs. by Act 29 of 2020, s. 30, for sub -section ( 15) (w.e.f. 21 -12-2020). 104 (g) rendering of outsourced financial services; (h) management services; and (i) any other kind of services as may be prescribed: Provided that an auditor or audit firm who or which has been performing any non -audit services on or before the commencement of this Act shall comply with the provisions of this section before the closure

performing any non -audit services on or before the commencement of this Act shall comply with the provisions of this section before the closure of the first financial year after the date of such commencement. Explanation .For the purposes of this sub -section, the term directly or indirectly shall inc lude rendering of services by the auditor, (i) in case of auditor being an individual, either himself or through his relative or any other person connected or associated with such individual or through any other entity, whatsoever, in which such individua l has significant influence or control, or whose name or trade mark or brand is used by such individual; (ii) in case of auditor being a firm, either itself or through any of its partners or through its parent, subsidiary or associate entity or through any other entity, whatsoever, in which the firm or any partner of the firm has significant influence or control, or whose name or trade mark or brand is used by the firm or any of its partners. 145. Auditor to sign audit reports, etc. The person appointed as an auditor of the company shall sign the auditors report or sign or certify any other document of the company in accordance with the provisions of sub -section ( 2) of section 141, and the qualifications, observations or comments on financial transactions or matters, which have any adverse effect on the functioning of the company mentioned in the auditors report shall be read before the company in general meeting and shall be open to inspection by any member of the company. 146. Auditors to attend general meeting. All notices of, and other communications relating to, any general meeting shall be forwarded to the auditor of the company, and the auditor shall, unless otherwise exempted by the company, attend either by himself or through his authorised represe ntative, who shall also be qualified to be an auditor, any general meeting and shall have right to be heard at such meeting on any part of the business which concerns him as the auditor. 147. Punishment for contravention. (1) If any of the provisions of se ctions 139 to 146 (both inclusive) is contravened, the company shall be punishable with fine which shall not be less than twenty -five thousand rupees but which may extend to five lakh rupees and every officer of the company who is in default sha ll be punishable 1*** with fine which shall not be less than ten thousand rupees but which may extend to 2[one lakh rupees] . (2) If an auditor of a company contravenes any of the provisions of section 139, section 143, section 144 or section 145, the auditor shall be punishable with fine which shall not be less than twenty -five thousand rupees but which may extend to five lakh rup ees 3[or four times the remuneration of the auditor, whichever is less]: Provided that if an auditor has contravened such provisions knowingly or willfully with the intention to deceive the company or its shareholders or creditors or tax authorities, he sh all be punishable with imprisonment for a term which may extend to one year 4[and with fine which shall not be less than fifty thousand rupees but which may extend to twenty -five lakh rupees or eight times the remuneration of the auditor, whichever is less ]. (3) Where an auditor has been convicted under sub -section ( 2), he shall be liable to (i) refund the remuneration received by him to the company; and 1. The words with imprisonment for a term which may extend to one year or omitted by Act 29 of 2020, s. 31 (w.e.f. 21 -12- 2020). 2. Subs. by s. 31, ibid., for one lakh rupees, or with both (w.e.f. 21 -12-2020). 3. Ins. by Act 1 of 2018, s. 44 (w.e.f. 9 -2-2018). 4. Subs. by Act 1 of 2018, s. 44, for and with fine which shall not be less than o ne lakh rupees but which may extend to twenty - five lakh rupees (w.e.f. 9 -2-2018). 105 (ii) pay for damages to the company, statutory bodies or authorities 1[or to members or creditors of the company] for loss arising out of incorrect or misleading statements of particulars made in his audit report. (4) The Central Government shall, by notification, specify any statutory body or authority or an officer for ensuring prompt payment of damages t o the company or the persons under clause ( ii) of sub - section ( 3) and such body, authority or officer shall after payment of damages to such company or persons file a report with the Central Government in respect of making such damages in such m anner as may be specified in the said notification. (5) Where, in case of audit of a company being conducted by an audit firm, it is proved that the partner or partners of the audit firm has or have acted in a fraudulent manner or a betted or colluded in a ny fraud by, or in relation to or by, the company or its directors or officers, the liability, whether civil or criminal as provided in this Act or in any other law for the time being in force, for such act shall be of the partner or partners concerned of the audit firm and of the firm jointly and severally. 2[Provided that in case of criminal liability of an audit firm, in respect of liability other than fine, the concerned partner or partners, who acted in a fraudulent manner or abetted or, as the case ma y be, colluded in any fraud shall only be liable.] 148. Central Government to specify audit of items of cost in respect of certain companies. (1) Notwithstanding anything contained in this Chapter, the Central Government may, by order, in respect of such c lass of companies engaged in the production of such goods or providing such services as may be prescribed, direct that particulars relating to the utilisation of material or labour or to other items of cost as may be prescribed shall also be included in th e books of account kept by that class of companies: Provided that the Central Government shall, before issuing such order in respect of any class of companies regulated under a special Act, consult the regulatory body constituted or established under such special Act. (2) If the Central Government is of the opinion, that it is necessary to do so, it may, by order, direct that the audit of cost records of class of companies, which are covered under sub -section ( 1) and which have a net worth of such amount as may be prescribed or a turnover of such amount as may be prescribed, shall be conducted in the manner specified in the order. (3) The audit under sub -section ( 2) shall be conducted by a 3[cost accountant] who shall be appointed by the Board on such remune ration as may be determined by the members in such manner as may be prescribed: Provided that no person appointed under section 139 as an auditor of the company shall be appointed for conducting the audit of cost records: Provided further that the auditor conducting the cost audit shall comply with the cost auditing standards. Explanation .For the purposes of this sub -section, the expression cost auditing standards mean such standards as are issued by the 4[Institute of Cost Accountants of India], constit uted under the Cost and Works Accountants Act, 1959 (23 of 1959), with the approval of the Central Government. (4) An audit conducted under this section shall be in addition to the audit conducted under section 143. (5) The qualifications, disqualification s, rights, duties and obligations applicable to auditors under this Chapter shall, so far as may be applicable, apply to a cost auditor appointed under this section and it shall be the duty of the company to give all assistance and facilities to the cost a uditor appointed under this section for auditing the cost records of the company: Provided that the report on the audit of cost records shall be submitted by the 5[cost accountant] to the Board of Directors of the company. 1. Subs. by Act 1 of 2018, s. 44, for or to any other persons (w.e.f. 9 -2-2018). 2. The proviso ins. by s. 44, ibid., (w.e.f. 9 -2-2018). 3. Subs. by s. 45 , ibid., for Cost Accountant in practice(w.e.f. 9 -2-2018). 4. Subs. by s. 45, ibid., for Institute of Cost and Works Accountants of India (w.e.f. 9 -2-2018). 5. Subs. by s. 45, ibid., for cost accountant in practice(w.e.f. 9 -2-2018). 106 (6) A company shall within thirty days from the date of receipt of a copy of the cost audit report prepared in pursuance of a direction under sub -section ( 2) furnish the Central Government with such report along with full information and explanation on every reservation or qualification c ontained therein. (7) If, after considering the cost audit report referred to under this section and the information and explanation furnished by the company under sub -section ( 6), the Central Government is of the opinion that any further information or explanation is necessary, it may call for such further information and explanation and the company shall furnish the same within such time as may be specified by that Government. (8) If any default is made in complying with the provisions of this section, (a) the company and every officer of the company who is in default shall be punishable in the manner as provided in sub -section ( 1) of section 147; (b) the cost auditor of the company who is in default shall be punishable in the manner as provided in sub -sections ( 2) to ( 4) of section 147. CHAPTER XI APPOINTMENT AND QUALIFICATIONS OF DIRECTORS 149. Company to have Board of Directors. (1) Every company shall have a Board of Directors consisting of individuals as directors and shall have (a) a minimum numbe r of three directors in the case of a public company, two directors in the case of a private company, and one director in the case of a One Person Company; and (b) a maximum of fifteen directors: Provided that a company may appoint more than fifteen direct ors after passing a special resolution: Provided further that such class or classes of companies as may be prescribed, shall have at least one woman director. (2) Every company existing on or before the date of commencement of this Act shall within one yea r from such commencement comply with the requirements of the provisions of sub -section ( 1). 1[(3) Every company shall have at least one director who stays in India for a total period of not less than one hundred and eighty -two days during the financial yea r: Provided that in case of a newly incorporated company the requirement under this sub -section shall apply proportionately at the end of the financial year in which it is incorporated]; (4) Every listed public company shall have at least one -third of the total number of directors as independent directors and the Central Government may prescribe the minimum number of independent directors in case of any class or classes of public companies. Explanation. For the purposes of this sub -section, any fraction contained in such one -third number shall be rounded off as one. (5) Every company existing on or before the date of commencement of this Act shall, within one year from such commencement or from the date of notification of the rules in this regard as may be applicable, comply with the requirements of the provisions of sub -section ( 4). (6) An independent director in relation to a company, means a director other than managing director or a whole -time director or a nominee director, (a) who, in the opinion o f the Board, is a person of integrity and possesses relevant expertise and experience; (b) (i) who is or was not a promoter of the company or its holding, subsidiary or associate company; (ii) who is not related to promoters or directors in the company, it s holding, subsidiary or associate company; 1. Subs. by Act 1 of 2018, s. 46, for sub -section ( 3) (w.e.f. 7 -5-2018). 107 (c) who has or had no 1[pecuniary relationship, other than remuneration as such director or having transaction not exceeding ten per cent. of his total income or such amount as may be prescribed,] with the compan y, its holding, subsidiary or associate company, or their promoters, or directors, during the two immediately preceding financial years or during the current financial year; 2[(d) none of whose relatives (i) is holding any security of or interest in the company, its holding, subsidiary or associate company during the two immediately preceding financial years or during the current financial year: Provided that the relative may hold security or interest in th e company of face value not exceeding fifty lakh rupees or two per cent. of the paid -up capital of the company, its holding, subsidiary or associate company or such higher sum as may be prescribed; (ii) is indebted to the company, its holding, subsidiary or associate company or their promoters, or directors, in excess of such amount as may be prescribed during the two immediately preceding financial years or during the current financial year; (iii) has given a guarantee or provided any security in connect ion with the indebtedness of any third person to the company, its holding, subsidiary or associate company or their promoters, or directors of such holding company, for such amount as may be prescribed during the two immediately preceding financial years o r during the current financial year; or (iv) has any other pecuniary transaction or relationship with the company, or its subsidiary, or its holding or associate company amounting to two per cent. or more of its gross turnover or total income singly or in combination with the transactions referred to in sub -clause ( i), (ii) or ( iii);] (e) who, neither himself nor any of his relatives (i) holds or has held the position of a key managerial personnel or is or has been employee of the company or its holding, s ubsidiary or associate company in any of the three financial years immediately preceding the financial year in which he is proposed to be appointed; 3[Provided that in case of a relative who is an employee, the restriction under this clause shall not apply for his employment during preceding three financial years.] (ii) is or has been an employee or proprietor or a partner, in any of the three financial years immediately preceding the financial year in which he is proposed to be appointed, of (A) a firm of auditors or company secretaries in practice or cost auditors of the company or its holding, subsidiary or associate company; or (B) any legal or a consulting firm that has or had any transaction with the company, its holding, subsidiary or associate compa ny amounting to ten per cent. or more of the gross turnover

company, its holding, subsidiary or associate compa ny amounting to ten per cent. or more of the gross turnover of such firm; (iii) holds together with his relatives two per cent. or more of the total voting power of the company; or (iv) is a Chief Executive or director, by whatever name called, of any nonp rofit organisation that receives twenty -five per cent. or more of its receipts from the company, any of its promoters, directors or its holding, subsidiary or associate company or that holds two per cent. or more of the total voting power of the company; o r (f) who possesses such other qualifications as may be prescribed. (7) Every independent director shall at the first meeting of the Board in which he participates as a director and thereafter at the first meeting of the Board in every financial year or wh enever there is any change in the circumstances which may affect his status as an independent director, give a declaration that he meets the criteria of independence as provided in sub -section ( 6). 1. Subs. by Act 1 of 2018, s. 46, for pecuniary relationship (w.e.f. 7 -5-2018). 2. Subs. by s. 46, ibid., for clause ( d) (w.e.f. 7 -5-2018). 3. The proviso ins. by s. 46, ibid., (w.e.f. 7 -5-2018). 108 Explanation .For the purposes of this section, nominee director means a director nominated by any financial institution in pursuance of the provisions of any law for the time being in force, or of any agreement, or appointed by any Government, or any other person to represent its interests. (8) The company an d independent directors shall abide by the provisions specified in Schedule IV. (9) Notwithstanding anything contained in any other provision of this Act, but subject to the provisions of sections 197 and 198, an independent director shall not be entitled to any stock option and may receive remuneration by way of fee provided under sub -section ( 5) of section 197, reimbursement of expenses for participation in the Board and other meetings and profit related commission as may be approved by the members. 1[Provided that if a company has no profits or its profits are inadequate, an independent director may receive remuneration, exclusive of any fees payable under sub -section ( 5) of section 197, in accordance with the provisions of Schedule V.] (10) Subject t o the provisions of section 152, an independent director shall hold office for a term up to five consecutive years on the Board of a company, but shall be eligible for reappointment on passing of a special resolution by the company and disclosure of such a ppointment in the Board's report. (11) Notwithstanding anything contained in sub -section ( 10), no independent director shall hold office for more than two consecutive terms, but such independent director shall be eligible for appointment after the expirati on of three years of ceasing to become an independent director: Provided that an independent director shall not, during the said period of three years, be appointed in or be associated with the company in any other capacity, either directly or indirectly. Explanation. For the purposes of sub -sections ( 10) and ( 11), any tenure of an independent director on the date of commencement of this Act shall not be counted as a term under those sub -sections. (12) Notwithstanding anything contained in this Act, (i) an independent director; (ii) a non -executive director not being promoter or key managerial personnel, shall be held liable, only in respect of such acts of omission or commission by a company which had occurred with his knowledge, attributable through Board processes, and with his consent or connivance or where he had not acted diligently. (13) The provisions of sub -sections ( 6) and ( 7) of section 152 in respect of retirement of directors by rotation shall not be applicable to appointment of independent dire ctors. 150. Manner of selection of independent directors and maintenance of databank of independent directors. (1) Subject to the provisions contained in sub -section ( 6) of section 149, an independent director may be selected from a data bank containing na mes, addresses and qualifications of persons who are eligible and willing to act as independent directors, maintained by any body, ins titute or association, as may be notified by the Central Government, having expertise in creation and maintenance of such data bank and put on their website for the use by the company making the appointment of such directors: Provided that responsibility of exercising due diligence before selecting a person from the data bank referred to above, as an independent director shal l lie with the company making such appointment. (2) The appointment of independent director shall be approved by the company in general meeting as provided in sub -section ( 2) of section 152 and the explanatory statement annexed to the notice of the general meeting called to consider the said appointment shall indicate the justification for choosing the appointee for appointment as independent director. (3) The data bank referred to in sub -section ( 1), shall create and maintain data of persons willing to act as independent director in accordance with such rules as may be prescribed. (4) The Central Government may prescribe the manner and procedure of selection of independent directors who fulfil the qualifications and requirements specified under section 149. 151. Appointment of director elected by small shareholders. A listed company may have one director elected by such small shareholders in such manner and with such terms and conditions as may be prescribed. 1. Ins. by A ct 29 of 2020, s. 32 (w.e.f. 18 -3-2021). 109 Explanation .For the purposes of this section small shareholders means a shareholder holding shares of nominal value of not more than twenty thousand rupees or such other sum as may be prescribed. 152. Appointment of directors. (1) Where no provision is made in the articles of a company for the appoi ntment of the first director, the subscribers to the memorandum who are individuals shall be deemed to be the first directors of the company until the directors are duly appointed and in case of a One Person Company an individual being member shall be deem ed to be its first director until the director or directors are duly appointed by the member in accordance with the provisions of this section. (2) Save as otherwise expressly provided in this Act, every director shall be appointed by the company in genera l meeting. (3) No person shall be appointed as a director of a company unless he has been allotted the Director Identification Number under section 154 1[or any other number as may be prescribed under section 153]. (4) Every person proposed to be appointed as a director by the company in general meeting or otherwise, shall furnish his Director Identification Number 1[or such other number as may be prescribed under section 153] and a declaration that he is not disqualified to become a director under this Act . (5) A person appointed as a director shall not act as a director unless he gives his consent to hold the office as director and such consent has been filed with the Registrar within thirty days of his appointment in such manner as may be prescribed: Prov ided that in the case of appointment of an independent director in the general meeting, an explanatory statement for such appointment, annexed to the notice for the general meeting, shall include a statement that in the opinion of the Board, he fulfils the conditions specified in this Act for such an appointment. (6) (a) Unless the articles provide for the retirement of all directors at every annual general meeting, not less than two -thirds of the total number of directors of a public company shall (i) be persons whose period of office is liable to determination by retirement of directors by rotation; and (ii) save as otherwise expressly provided in this Act, be appointed by the company in general meeting. (b) The remaining directors in the case of any such company shall, in default of, and subject to any regulations in the articles of the company, also be appointed by the company in general meeting. (c) At the first annual general meeting of a public company held next after the date of the general meeting at which the first directors are appointed in accordance with clauses ( a) and ( b) and at every subsequent annual general meeting, one -third of such of the directors for the time being as are liable to retire by rotation, or if their number is neither three nor a multiple of three, then, the number nearest to one -third, shall retire from office. (d) The directors to retire by rotation at every annual general meeting shall be those who have been longest in office since their last appointment, but as between pe rsons who became directors on the same day, those who are to retire shall, in default of and subject to any agreement among themselves, be determined by lot. (e) At the annual general meeting at which a director retires as aforesaid, the company may fill u p the vacancy by appointing the retiring director or some other person thereto. Explanation. For the purposes of this sub -section, total number of directors shall not include independent directors, whether appointed under this Act or any other law for th e time being in force, on the Board of a company. (7) (a) If the vacancy of the retiring director is not so filled -up and the meeting has not expressly resolved not to fill the vacancy, the meeting shall stand adjourned till the same day in the next week, at the 1. Ins. by Act 1 of 2018, s. 47 (w.e.f. 9 -2-2018). 110 same time and place, or if that day is a national holiday, till the next succeeding day which is not a holiday, at the same time and place. (b) If at the adjourned meeting also, the vacancy of the retiring director is not filled up and that meeting also has not expressly resolved not to fill the vacancy, the retiring director shall be deemed to have been re - appointed at the adjourned meeting, unless (i) at that meeting or at the previous meeting a resolution for the re -appointment of such director has been put to the meeting and lost; (ii) the retiring director has, by a notice in writing addressed to the company or its Board of directors, expressed his unwillingness to be so re -appointed; (iii) he is not qualified or is disqualified for appointment; (iv) a resolution, whether special or ordinary, is req uired for his appointment or re -appointment by virtue of any provisions of this Act; or (v) section 162 is applicable to the case. Explanation .For the purposes of this section and section 160, the expression retiring director means a director retiring b y rotation. 153. Application for allotment of Director Identification Number. Every individual intending to be appointed as director of a company shall make an application for allotment of Director Identification Number to the Central Government in such fo rm and manner and along with such fees as may be prescribed: 1[Provided that the Central Government may prescribe any identification number which shall be treated as Director Identification Number for the purposes of this Act and in case any individual hol ds or acquires such identification number, the requirement of this section shall not apply or apply in such manner as may be prescribed.] 154. Allotment of Director Identification Number. The Central Government shall, within one month from the receipt of t he application under section 153, allot a Director Identification Number to an applicant in such manner as may be prescribed. 155. Prohibition to obtain more than one Director Identification Number. No individual, who has already been allotted a Director I dentification Number under section 154, shall apply for, obtain or possess another Director Identification Number. 156. Director to intimate Director Identification Number. Every existing director shall, within one month of the receipt of Director Identifi cation Number from the Central Government, intimate his Director Identification Number to the company or all companies wherein he is a director. 157. Company to inform Director Identification Number to Registrar. (1) Every company shall, within fifteen day s of the receipt of intimation under section 156, furnish the Director Identification Number of all its directors to the Registrar or any other officer or authority as may be specified by the Central Government with such fees as may be prescribed or with s uch additional fees as may be prescribed 2*** and every such intimation shall be furnished in such form and manner as may be prescribed. 3[(2) If any company fails to furnish the Director Identification Number under sub -section ( 1), such company shall be liable to a penalty of twenty -five thousand rupees and in case of continuing failure, with a further penalty of one hundred rupees for each day after the first during which such failure continues, subject to a maximum of one lakh rupees, and every officer of the company who is in default shall be liable to a penalty of not less than twenty -five thousand rupees and in case of continuing failure, with a further penalty of one hundred rupees for each day after the first during which such failure continues, sub ject to a maximum of one lakh rupees .] 158. Obligation to indicate Director Identification Number. Every person or company, while furnishing any return, information or particulars as are required to be furnished under this Act, shall mention the Director I dentification Number in such return, information or particulars in case such return, information or particulars relate to the director or contain any reference of any director. 1. The proviso i ns. by Act 1 of 2018, s. 48 (w.e.f. 9 -2-2018). 2. The words and figures within the time specified under section 403 omitted by Act 1 of 2018, s. 49 (w.e.f. 7 -5-2018). 3. Subs. by Act 22 of 2019, s. 24, for sub -section ( 2) (w.e.f. 2 -11-2018). 111 1[159. Penalty for default of certain provisions. If any individual or director of a company makes any default in complying with any of the provisions of section 152, section 155 and section 156, such individual or director of the company shall be liable to a penalty which may extend to fifty thousand rupees and where the default is a continuing one, with a further penalty which may extend to five hundred rupees for each day after the first during which such default continues .] 160. Right of persons other than retiring directors to stand for directorship. (1) A person who is not a re tiring director in terms of section 152 shall, subject to the provisions of this Act, be eligible for appointment to the office of a director at any general meeting, if he, or some member intending to propose him as a director, has, not less than fourteen days before the meeting, left at the registered office of the company, a notice in writing under his hand signifying his candidature as a director or, as

the meeting, left at the registered office of the company, a notice in writing under his hand signifying his candidature as a director or, as the case may be, the intention of such member to propose him as a candidate for that office, along wit h the deposit of one lakh rupees or such higher amount as may be prescribed which shall be refunded to such person or, as the case may be, to the member, if the person proposed gets elected as a director or gets more than twenty -five per cent. of total val id votes cast either on show of hands or on poll on such resolution. 2[Provided that requirements of deposit of amount shall not apply in case of appointment of an independent director or a director recommended by the Nomination and Remuneration Committee, if any, constituted under sub -section ( 1) of section 178 or a director recommended by the Board of Directors of the Company, in the case of a company not required to constitute Nomination and Remuneration Committee. ] (2) The company shall inform its members of the candidature of a person for the office of director under sub-section ( 1) in such manner as may be prescribed. 161. Appointment of additional director, alternate director and nominee director. (1) The articles of a company may confer on its B oard of Directors the power to appoint any person, other than a person who fails to get appointed as a director in a general meeting, as an additional director at any time who shall hold office up to the date of the next annual general meeting or the last date on which the annual general meeting should have been held, whichever is earlier. (2) The Board of Directors of a company may, if so authorised by its articles or by a resolution passed by the company in general meeting, appoint a person, not being a p erson holding any alternate directorship for any other director in the company 3[or holding directorship in the same company], to act as an alternate director for a director during his absence for a period of not less than three months from India: Provided that no person shall be appointed as an alternate director for an independent director unless he is qualified to be appointed as an independent director under the provisions of this Act: Provided further that an alternate director shall not hold office fo r a period longer than that permissible to the director in whose place he has been appointed and shall vacate the office if and when the director in whose place he has been appointed returns to India: Provided also that if the term of office of the origina l director is determined before he so returns to India, any provision for the automatic re -appointment of retiring directors in default of another appointment shall apply to the original, and not to the alternate director. (3) Subject to the articles of a company, the Board may appoint any person as a director nominated by any institution in pursuance of the provisions of any law for the time being in force or of any agreement or by the Central Government or the State Government by virtue of its shareholdin g in a Government company. (4) 4*** If the office of any director appointed by the company in general meeting is vacated before his term of office expires in the normal course, the resulting casual vacancy may, in default of and subject to any regulations in the articles of the company, be filled by the Board of Directors at a meeting of the Board 1[which shall be subsequently approved by members in the immediate next general meeting]: 1. Subs. by Act 22 of 2019, s. 25, for section 159 (w.e.f. 2-11-2018). 2. The proviso ins. by Act 1 of 2018, s. 50 (w.e.f. 9 -2-2018). 3. Ins. by Act 1 of 2018, s. 51 (w.e.f. 9 -2-2018). 4. The words In the case of a public company, omitted by s. 51 , ibid. (w.e.f. 9 -2-2018). 112 Provided that any person so appointed shall hold office only up to the d ate up to which the director in whose place he is appointed would have held office if it had not been vacated. 162. Appointment of directors to be voted individually. (1) At a general meeting of a company, a motion for the appointment of two or more person s as directors of the company by a single resolution shall not be moved unless a proposal to move such a motion has first been agreed to at the meeting without any vote being cast against it. (2) A resolution moved in contravention of sub -section ( 1) shall be void, whether or not any objection was taken when it was moved. (3) A motion for approving a person for appointment, or for nominating a person for appointment as a director, shall be treated as a motion for his appointment. 163. Option to adopt princi ple of proportional representation for appointment of directors. Notwithstanding anything contained in this Act, the articles of a company may provide for the appointment of not less than two -thirds of the total number of the directors of a company in accordance with the principle of proportional representation, whether by the single transferable vote or by a system of cumulative voting or otherwise and such appointments may be made once in every three years and casual vacancies of such directors sh all be filled as provided in sub -section ( 4) of section 161. 164. Disqualifications for appointment of director. (1) A person shall not be eligible for appointment as a director of a company, if (a) he is of unsound mind and stands so declared by a compe tent court; (b) he is an undischarged insolvent; (c) he has applied to be adjudicated as an insolvent and his application is pending; (d) he has been convicted by a court of any offence, whether involving moral turpitude or otherwise, and sentenced in respect thereof to imprisonment for not less than six months and a period of five years has not elapsed from the date of expiry of the sentence: Provided that if a person has been convicted of any offence and sentenced in respect thereof to imprisonment fo r a period of seven years or more, he shall not be eligible to be appointed as a director in any company; (e) an order disqualifying him for appointment as a director has been passed by a court or Tribunal and the order is in force; (f) he has not paid any calls in respect of any shares of the company held by him, whether alone or jointly with others, and six months have elapsed from the last day fixed for the payment of the call; (g) he has been convicted of the offence dealing with related party transacti ons under section 188 at any time during the last preceding five years; or (h) he has not complied with sub -section ( 3) of section 152. 1[(i) he has not complied with the provisions of sub -section ( 1) of section 165.] (2) No person who is or has been a dir ector of a company which (a) has not filed financial statements or annual returns for any continuous period of three financial years; or (b) has failed to repay the deposits accepted by it or pay interest thereon or to redeem any debentures on the due dat e or pay interest due thereon or pay any dividend declared and such failure to pay or redeem continues for one year or more, shall be eligible to be re -appointed as a director of that company or appointed in other company for a period of five years from th e date on which the said company fails to do so: 1. Ins. by Act 22 of 2019, s. 26 (w.e.f. 2 -11-2018). 113 1[Provided that where a person is appointed as a director of a company which is in default of clause ( a) or clause ( b), he shall not incur the disqualification for a period of six months from the date of his appointment.] (3) A private company may by its articles provide for any disqualifications for appointment as a director in addition to those specified in sub -sections ( 1) and ( 2). 2[Provided that the disqualifications referred to in clauses ( d), (e) and ( g) of sub -section ( 1) shall continue to apply even if the appeal or petition has been filed against the order of conviction or disqualification .] 165. Number of directorships. (1) No person, after the commencement of this Act, shall hold office as a direct or, including any alternate directorship, in more than twenty companies at the same time : Provided that the maximum number of public companies in which a person can be appointed as a director shall not exceed ten. 3[Explanation I ]. For reckoning the limi t of public companies in which a person can be appointed as director, directorship in private companies that are either holding or subsidiary company of a public company shall be included. 4[Explanation II.For reckoning the limit of directorships of twenty companies, the directorship in a dormant company shall not be included.] (2) Subject to the provisions of sub -section ( 1), the members of a company may, by special resolution, specify any lesser number of companies in which a director of the company may act as directors. (3) Any person holding office as director in companies more than the limits as specified in sub - section ( 1), immediately before the commencement of this Act shall, within a period of one year from such commencement, (a) choose not more than the specified limit of those companies, as companies in which he wishes to continue to hold the office of director; (b) resign his office as director in the other remaining companies; and (c) intimate the choice made by him under c lause ( a), to each of the companies in which he was holding the office of director before such commencement and to the Registrar having jurisdiction in respect of each such company. (4) Any resignation made in pursuance of clause ( b) of sub -section ( 3) sha ll become effective immediately on the despatch thereof to the company concerned. (5) No such person shall act as director in more than the specified number of companies, (a) after despatching the resignation of his office as director or non -executive dir ector thereof, in pursuance of clause ( b) of sub -section ( 3); or (b) after the expiry of one year from the commencement of this Act, whichever is earlier. 5[(6) If a person accepts an appointment as a director in violation of this section, he shall be liab le to a penalty of two thousand rupees for each day after the first during which such violation continues, subject to a maximum of two lakh rupees.] 166. Duties of directors. (1) Subject to the provisions of this Act, a director of a company shall act in accordance with the articles of the company. 1. The proviso ins. by Act 1 of 2018, s. 52 (w.e.f. 7 -5-2018). 2. The proviso subs. by Act 1 of 2018 , s. 5 2 (w.e.f. 7 -5-2018). 3. The Explanation renumbered as Explanation I thereof by s. 53 , ibid. (w.e.f. 9 -2-2018). 4. Ins. by s. 5 3, ibid. (w.e.f. 9 -2-2018). 5. Subs. by Act 29 of 2020, s. 33, for sub -section ( 6) (w.e.f. 21 -12-2020). 114 (2) A director of a company shall act in good faith in order to promote the objects of the company for the benefit of its members as a whole, and in the best interests of the company, its employees, the sharehold ers, the community and for the protection of environment. (3) A director of a company shall exercise his duties with due and reasonable care, skill and diligence and shall exercise independent judgment. (4) A director of a company shall not involve in a si tuation in which he may have a direct or indirect interest that conflicts, or possibly may conflict, with the interest of the company. (5) A director of a company shall not achieve or attempt to achieve any undue gain or advantage either to himself or to h is relatives, partners, or associates and if such director is found guilty of making any undue gain, he shall be liable to pay an amount equal to that gain to the company. (6) A director of a company shall not assign his office and any assignment so made s hall be void. (7) If a director of the company contravenes the provisions of this section such director shall be punishable with fine which shall not be less than one lakh rupees but which may extend to five lakh rupees. 167. Vacation of office of director .(1) The office of a director shall become vacant in case (a) he incurs any of the disqualifications specified in section 164: 1[Provided that where he incurs disqualification under sub -section ( 2) of section 164, the office of the director shall become vacant in all the companies, other than the company which is in default under that sub -section]; (b) he absents himself from all the meetings of the Board of Directors held during a period of twelve months with or without seeking leave of absence of the Bo ard; (c) he acts in contravention of the provisions of section 184 relating to entering into contracts or arrangements in which he is directly or indirectly interested; (d) he fails to disclose his interest in any contract or arrangement in which he is directly or indirectly interested, in contravention of the provisions of section 184; (e) he becomes disqualified by an order of a court or the Tribunal; (f) he is convicted by a court of any offence, whether involving moral turpitude or otherwise and sentenced in respect thereof to imprisonment for not less than six months: 2[Provided that the office shall not be vacated by the director in case of orders referred to in clauses (e) and ( f) (i) for thirty days from the date of conviction or order of di squalification; (ii) where an appeal or petition is preferred within thirty days as aforesaid against the conviction resulting in sentence or order, until expiry of seven days from the date on which such appeal or petition is disposed of; or (iii) where any further appeal or petition is preferred against order or sentence within seven days, until such further appeal or petition is disposed of.] (g) he is removed in pursuance of the provisions of this Act; (h) he, having been appointed a director by virtue of his holding any office or other employment in the holding, subsidiary or associate company, ceases to hold such office or other employment in that company. 1. The proviso ins. by Act 1 of 2018, s. 54 (w.e.f. 7 -5-2018). 2. The proviso subs. by Act 1 of 2018, s. 54 (w.e.f. 7 -5-2018). 115 (2) If a person, functions as a director even when he knows that the office of director held

018). 115 (2) If a person, functions as a director even when he knows that the office of director held by him has become vacant on account of any of the disqualifications specified in sub -section ( 1), he shall be punishable 1*** with fine which shall not be less than one lakh rupees but which may extend to 2[five lakh rupees ]. (3) Where all the directors of a company vacate their offices under any of the disqualifications specified in sub -section ( 1), the promoter or, in his absence, the Central Government shall appoint the required number of directors who shall hold office till the directors are appointed by t he company in the general meeting. (4) A private company may, by its articles, provide any other ground for the vacation of the office of a director in addition to those specified in sub -section ( 1). 168. Resignation of director. (1) A director may resign from his office by giving a notice in writing to the company and the Board shall on receipt of such notice take note of the same and the company shall intimate the Registrar in such manner, within such time and in such form as may be prescribed and shall also place the fact of such resignation in the report of directors laid in the immediately following general meeting by the company: Provided that a 3[director may also forward] a copy of his resignation along with detailed reasons for the resignation to the Registrar within thirty days of resignation in such manner as may be prescribed. (2) The resignation of a director shall take effect from the date on which the notice is received by the company or the date, if any, specified by the director in the notice, whichever is later: Provided that the director who has resigned shall be liable even after his resignation for the offences which occurred during his tenure. (3) Where all the directors of a company resign from their offices, or vacate their office s under section 167, the promoter or, in his absence, the Central Government shall appoint the required number of directors who shall hold office till the directors are appointed by the company in general meeting. 169. Removal of directors. (1) A company m ay, by ordinary resolution, remove a director, not being a director appointed by the Tribunal under section 242, before the expiry of the period of his office after giving him a reasonable opportunity of being heard: 4[Provided that an independent director re-appointed for second term under sub -section ( 10) of section 149 shall be removed by the company only by passing a special resolution and after giving him a reasonable opportunity of being heard:] 5[Provided further that] nothing contained in this sub -section shall apply where the company has availed itself of the option given to it under section 163 to appoint not less than two -thirds of the total number of directors according to the principle of proportional representation. (2) A special notice shall b e required of any resolution, to remove a director under this section, or to appoint somebody in place of a director so removed, at the meeting at which he is removed. (3) On receipt of notice of a resolution to remove a director under this section, the co mpany shall forthwith send a copy thereof to the director concerned, and the director, whether or not he is a member of the company, shall be entitled to be heard on the resolution at the meeting. (4) Where notice has been given of a resolution to remove a director under this section and the director concerned makes with respect thereto representation in writing to the company and requests its notification to members of the company, the company shall, if the time permits it to do so, (a) in any notice of t he resolution given to members of the company, state the fact of the representation having been made; and (b) send a copy of the representation to every member of the company to whom notice of the meeting is sent (whether before or after receipt of the rep resentation by the company), 1. The words with impri sonment for a term which may extend to one year or omitted by Act 29 of 2020, s. 34 (w.e.f. 21 -12- 2020). 2. Subs. by s. 34, ibid., for five lakh rupees, or with both (w.e.f. 21 -12-2020). 3. Subs. by Act 1 of 2018, s. 55, for director shall also forward (w.e.f. 7 -5-2018). 4. The proviso ins. by Notification No. S.O. 768(E), dated 21st February, 2018 (w.e.f. 21 -2-2018). 5. Subs. by ibid., for Provided that(w.e.f. 21 -2-2018). 116 and if a copy of the representation is not sent as aforesaid due to insufficient time or for the companys default, the director may without prejudice to his right to be heard orally require that the representation shall be rea d out at the meeting: Provided that copy of the representation need not be sent out and the representation need not be read out at the meeting if, on the application either of the company or of any other person who claims to be aggrieved, the Tribunal is s atisfied that the rights conferred by this sub -section are being abused to secure needless publicity for defamatory matter; and the Tribunal may order the companys costs on the application to be paid in whole or in part by the director notwithstanding tha t he is not a party to it. (5) A vacancy created by the removal of a director under this section may, if he had been appointed by the company in general meeting or by the Board, be filled by the appointment of another director in his place at the meeting a t which he is removed, provided special notice of the intended appointment has been given under sub -section ( 2). (6) A director so appointed shall hold office till the date up to which his predecessor would have held office if he had not been removed. (7) If the vacancy is not filled under sub -section ( 5), it may be filled as a casual vacancy in accordance with the provisions of this Act: Provided that the director who was removed from office shall not be re -appointed as a director by the Board of Directors . (8) Nothing in this section shall be taken (a) as depriving a person removed under this section of any compensation or damages payable to him in respect of the termination of his appointment as director as per the terms of contract or terms of his appointment as director, or of any other appointment terminating with that as director; or (b) as derogating from any power to remove a director under other provisions of this Act. 170. Register of directors and key managerial personnel and their sharehold ing.(1) Every company shall keep at its registered office a register containing such particulars of its directors and key managerial personnel as may be prescribed, which shall include the details of securities held by each of them in the company or its h olding, subsidiary, subsidiary of companys holding company or associate companies. (2) A return containing such particulars and documents as may be prescribed, of the directors and the key managerial personnel shall be filed with the Registrar within thir ty days from the appointment of every director and key managerial personnel, as the case may be, and within thirty days of any change taking place. 171. Members right to inspect. (1) The register kept under sub -section ( 1) of section 170, (a) shall be op en for inspection during business hours and the members shall have a right to take extracts therefrom and copies thereof, on a request by the members, be provided to them free of cost within thirty days; and (b) shall also be kept open for inspection at ev ery annual general meeting of the company and shall be made accessible to any person attending the meeting. (2) If any inspection as provided in clause ( a) of sub -section ( 1) is refused, or if any copy required under that clause is not sent within thirty d ays from the date of receipt of such request, the Registrar shall on an application made to him order immediate inspection and supply of copies required thereunder. 1[172. Penalty . If a company is in default in complying with any of the provisions of this Chapter and for which no specific penalty or punishment is provided therein, the company and every officer of the company who is in default shall be liable to a penalty of fifty thousand rupees, and in case of continuing failure, with a further penalty of five hundred rupees for each day during which such failure continues, subject to a maximum of three lakh rupees in case of a company and one lakh rupees in case of an officer who is in default .] 1. Subs. by Act 29 of 2020, s. 35, for section 35 (w.e.f. 21 -12-2020). 117 CHAPTER XII MEETINGS OF BOARD AND ITS POWERS 173. Meetings of Board. (1) Every company shall hold the first meeting of the Board of Directors within thirty days of the date of its incorporation and thereafter hold a minimum number of four meetings of its Board of Directors every year in such a manner that not mor e than one hundred and twenty days shall intervene between two consecutive meetings of the Board: Provided that the Central Government may, by notification, direct that the provisions of this sub - section shall not apply in relation to any class or description of companies or shall apply subject to such exceptions, modifications or conditions as may be specified in the notification. (2) The participation of directors in a meeting of the Board may be either in person or through video conferencing o r other audio visual means, as may be prescribed, which are capable of recording and recognising the participation of the directors and of recording and storing the proceedings of such meetings along with date and time: Provided that the Central Government may, by notification, specify such matters which shall not be dealt with in a meeting through video conferencing or other audio visual means. 1[Provided further that where there is quorum in a meeting through physical presence of directors, any other dire ctor may participate through video conferencing or other audio visual means in such meeting on any matter specified under the first proviso.] (3) A meeting of the Board shall be called by giving not less than seven days notice in writing to every director at his address registered with the company and such notice shall be sent by hand delivery or by post or by electronic means: Provided that a meeting of the Board may be called at shorter notice to transact urgent business subject to the condition that at least one independent director, if any, shall be present at the meeting: Provided further that in case of absence of independent directors from such a meeting of the Board, decisions taken at such a meeting shall be circulated to all the directors and shal l be final only on ratification thereof by at least one independent director, if any. (4) Every officer of the company whose duty is to give notice under this section and who fails to do so shall be liable to a penalty of twenty -five thousand rupees. (5) A One Person Company, small company and dormant company shall be deemed to have complied with the provisions of this section if at least one meeting of the Board of Directors has been conducted in each half of a calendar year and the gap between the two mee tings is not less than ninety days: Provided that nothing contained in this sub -section and in section 174 shall apply to One Person Company in which there is only one director on its Board of Directors. 174. Quorum for meetings of Board. (1) The quorum for a meeting of the Board of Directors of a company hall be one -third of its total strength or two directors, whichever is higher, and the participation of the directors by video conferencing or by other audio visual means shall also be counted for the pu rposes of quorum under this sub -section. (2) The continuing directors may act notwithstanding any vacancy in the Board; but, if and so long as their number is reduced below the quorum fixed by the Act for a meeting of the Board, the continuing directors or director may act for the purpose of increasing the number of directors to that fixed for the quorum, or of summoning a general meeting of the company and for no other purpose. (3) Where at any time the number of interested directors exceeds or is equal to two-thirds of the total strength of the Board of Directors, the number of directors who are not interested directors and present at the meeting, being not less than two, shall be the quorum during such time. 1. The proviso ins. by Act 1 of 2018, s. 56 (w.e.f. 7 -5-2018). 118 Explanation .For the purposes of this sub -section, interested director means a director within the meaning of sub -section ( 2) of section 184. (4) Where a meeting of the Board could not be held for want of quorum, then, unless the articles of the company otherwise provide, the meeting shall automatica lly stand adjourned to the same day at the same time and place in the next week or if that day is a national holiday, till the next succeeding day, which is not a national holiday, at the same time and place. Explanation .For the purposes of this section, (i) any fraction of a number shall be rounded off as one; (ii) total strength shall not include directors whose places are vacant. 175. Passing of resolution by circulation. (1) No resolution shall be deemed to have been duly passed by the Board or by a committee thereof by circulation, unless the resolution has been circulated in draft, together with the necessary papers, if any, to all the directors, or members of the committee, as the case may be, at their addresses registered with the company in Indi a by hand delivery or by post or by courier, or through such electronic means as may be prescribed and has been approved by a majority of the directors or members, who are entitled to vote on the resolution: Provided that, where not less than one -third of the total number of directors of the company for the time being require that any resolution under circulation must be decided at a meeting, the chairperson shall put the resolution to be decided at a meeting of the Board. (2) A resolution under sub -section (1) shall be noted at a subsequent meeting of the Board or the committee thereof, as the case may be, and made part of the minutes of such meeting. 176. Defects in appointment of directors not to invalidate actions taken. No act done by a person as a dire ctor shall be deemed to be invalid, notwithstanding that it was subsequently noticed that his appointment was invalid by reason of any defect or disqualification or had terminated by virtue of any provision contained in this Act or in the articles of the c ompany: Provided that nothing in this section shall be deemed to give validity to any act done by the director after his appointment has been noticed by the company to be invalid or to have terminated. 177. Audit Committee. (1) The Board of Directors of 1[every listed public company] and such other class or classes of companies, as may be prescribed, shall constitute an Audit Committee. (2) The Audit Committee shall consist of a minimum of three directors with independent directors forming a majority: Pro

(2) The Audit Committee shall consist of a minimum of three directors with independent directors forming a majority: Provided that majority of members of Audit Committee including its Chairperson shall be persons with ability to read and understand, the financial statement. (3) Every Audit Committee of a company existing immediately before the commencement of this Act shall, within one year of such commencement, be reconstituted in accordance with sub -section ( 2). (4) Every Audit Committee shall act in accordance with the terms of reference specified in writing by the Board which shall, inter alia, include, (i) the recom mendation for appointment, remuneration and terms of appointment of auditors of the company; (ii) review and monitor the auditors independence and performance, and effectiveness of audit process; (iii) examination of the financial statement and the audito rs report thereon; (iv) approval or any subsequent modification of transactions of the company with related parties: 1. Subs. by Act 1 of 2018, s. 57, for every listed company (w.e.f. 7 -5-2018). 119 1[Provided that the Audit Committee may make omnibus approval for related party transactions proposed to be entered into by the company su bject to such conditions as may be prescribed;] 2[Provided further that in case of transaction, other than transactions referred to in section 188, and where Audit Committee does not approve the transaction, it shall make its recommendations to the Board: Provided also that in case any transaction involving any amount not exceeding one crore rupees is entered into by a director or officer of the company without obtaining the approval of the Audit Committee and it is not ratified by the Audit Committee with in three months from the date of the transaction, such transaction shall be voidable at the option of the Audit Committee and if the transaction is with the related party to any director or is authorised by any other director, the director concerned shall indemnify the company against any loss incurred by it: Provided also that the provisions of this clause shall not apply to a transaction, other than a transaction referred to in section 188, between a holding company and its wholly owned subsidiary compan y.] (v) scrutiny of inter -corporate loans and investments; (vi) valuation of undertakings or assets of the company, wherever it is necessary; (vii) evaluation of internal financial controls and risk management systems; (viii) monitoring the end use of funds raised through public offers and related matters. (5) The Audit Committee may call for the comments of the auditors about internal control systems, the scope of audit, including the observations of the auditors and review of financial statement befor e their submission to the Board and may also discuss any related issues with the internal and statutory auditors and the management of the company. (6) The Audit Committee shall have authority to investigate into any matter in relation to the items specifi ed in sub -section ( 4) or referred to it by the Board and for this purpose shall have power to obtain professional advice from external sources and have full access to information contained in the records of the company. (7) The auditors of a company and th e key managerial personnel shall have a right to be heard in the meetings of the Audit Committee when it considers the auditors report but shall not have the right to vote. (8) The Boards report under sub -section ( 3) of section 134 shall disclose the com position of an Audit Committee and where the Board had not accepted any recommendation of the Audit Committee, the same shall be disclosed in such report along with the reasons therefor. (9) Every listed company or such class or classes of companies, as ma y be prescribed, shall establish a vigil mechanism for directors and employees to report genuine concerns in such manner as may be prescribed. (10) The vigil mechanism under sub -section ( 9) shall provide for adequate safeguards against victimisation of per sons who use such mechanism and make provision for direct access to the chairperson of the Audit Committee in appropriate or exceptional cases: Provided that the details of establishment of such mechanism shall be disclosed by the company on its website, i f any, and in the Boards report. 178. Nomination and Remuneration Committee and Stakeholders Relationship Committee. (1) The Board of Directors of 3[every listed public company] and such other class or classes of companies, as may be prescri bed shall constitute the Nomination and Remuneration Committee consisting of three or more non -executive directors out of which not less than one -half shall be independent directors: 1. The proviso ins. by Act 21 of 2015, s. 14 (w.e.f. 14 -12-2015). 2. Ins. by Act 1 of 2018, s. 57 (w.e.f. 7 -5-2018). 3. Subs. by Act 1 of 2018, s. 58, for every listed company (w.e.f. 7 -5-2018). 120 Provided that the chairperson of the company (whether executive or non-executive) may be appointed as a member of the Nomination and Remuneration Committee but shall not chair such Committee. (2) The Nomination and Remuneration Committee shall identify persons who are qualified to become directors and who may be appointed in senior management in accordance with the criteria laid down, recommend to the Board their appointment and removal and 1[shall specify the manner for effective evaluation of performance of Board, its committees and individual directors to be carried out either by the Board, by the Nomination and Remuneration Committee or by an independent external agency and review its implementation and compliance ]. (3) The Nomination and Remuneration Committee shall formulate the criteria for determining qualifications , positive attributes and independence of a director and recommend to the Board a policy, relating to the remuneration for the directors, key managerial personnel and other employees. (4) The Nomination and Remuneration Committee shall, while formulating t he policy under sub-section ( 3) ensure that (a) the level and composition of remuneration is reasonable and sufficient to attract, retain and motivate directors of the quality required to run the company successfully; (b) relationship of r emuneration to performance is clear and meets appropriate performance benchmarks; and (c) remuneration to directors, key managerial personnel and senior management involves a balance between fixed and incentive pay reflecting short and long -term performanc e objectives appropriate to the working of the company and its goals: 2[Provided that such policy shall be placed on the website of the company, if any, and the salient features of the policy and changes therein, if any, along with the web address of the p olicy, if any, shall be disclosed in the Board's report .] (5) The Board of Directors of a company which consists of more than one thousand shareholders, debenture -holders, deposit -holders and any other security holders at anytime during a financial year shall constitute a Stakeholders Relationship Committee consisting of a chairperson who shall be a non - executive director and such other members as may be decided by the Board. (6) The Stakeholders Relationship Committee shall consider and re solve the grievances of security holders of the company. (7) The chairperson of each of the committees constituted under this section or, in his absence, any other member of the committee authorised by him in this behalf shall attend the general meetings o f the company. (8) In case of any contravention of the provisions of section 177 and this section, the company shall be punishable with fine which shall not be less than one lakh rupees but which may extend to five lakh rupees and every officer of the comp any who is in default shall be 3[liable to a penalty of five lakh rupees and every officer of the company who is in default shall be liable to a penalty of one lakh rupees ]: Provided that 4[inability to resolve or consider any grievance ] by the Stakeholder s Relationship Committee in good faith shall not constitute a contravention of this section. Explanation. The expression senior management means personnel of the company who are members of its core management team excluding Board of Directors comprising all members of management one level below the executive directors, including the functional heads. 179. Powers of Board. (1) The Board of Directors of a company shall be entitled to exercise all such powers, and to do all such acts and things, as the compa ny is authorised to exercise and do: 1. Subs. by s. 58, ibid., for shall carry out evaluation of every directors performance (w.e.f. 7 -5-2018). 2. Subs. by Act 1 of 2018, s. 58, for the proviso (w.e.f. 7-5-2018). 3. Subs. by Act 29 of 2020, s. 36, for certain words (w.e.f. 21 -12-2020). 4. Subs. by Act 1 of 2018, s. 58, for non -consideration of resolution of any grievance (w.e.f. 7 -5-2018). 121 Provided that in exercising such power or doing such act or thing, the Board shall be subject to the provisions contained in that behalf in this Act, or in the memorandum or articles, or in any regulations not inconsist ent therewith and duly made thereunder, including regulations made by the company in general meeting: Provided further that the Board shall not exercise any power or do any act or thing which is directed or required, whether under this Act or by the memora ndum or articles of the company or otherwise, to be exercised or done by the company in general meeting. (2) No regulation made by the company in general meeting shall invalidate any prior act of the Board which would have been valid if that regulation had not been made. (3) The Board of Directors of a company shall exercise the following powers on behalf of the company by means of resolutions passed at meetings of the Board, namely: (a) to make calls on shareholders in respect of money unpaid on their sha res; (b) to authorise buy -back of securities under section 68; (c) to issue securities, including debentures, whether in or outside India; (d) to borrow monies; (e) to invest the funds of the company; (f) to grant loans or give guarantee or provide security in respect of loans; (g) to approve financial statement and the Boards report; (h) to diversify the business of the company; (i) to approve amalgamation, merger or reconstruction; (j) to take over a company or acquire a controlling or substantial stake in another company; (k) any other matter which may be prescribed: Provided that the Board may, by a resolution passed at a meeting, delegate to any committee of directors, the managing director, the manager or any other principal officer of the comp any or in the case of a branch office of the company, the principal officer of the branch office, the powers specified in clauses (d) to ( f) on such conditions as it may specify: Provided further that the acceptance by a banking company in the ordinary cou rse of its business of deposits of money from the public repayable on demand or otherwise and withdraw able by cheque, draft, order or otherwise, or the placing of monies on deposit by a banking company with another banking company on such conditions as th e Board may prescribe, shall not be deemed to be a borrowing of monies or, as the case may be, a making of loans by a banking company within the meaning of this section. Explanation I .Nothing in clause ( d) shall apply to borrowings by a banking company fr om other banking companies or from the Reserve Bank of India, the State Bank of India or any other banks established by or under any Act. Explanation II .In respect of dealings between a company and its bankers, the exercise by the company of the power spe cified in clause ( d) shall mean the arrangement made by the company with its bankers for the borrowing of money by way of overdraft or cash credit or otherwise and not the actual day - to-day operation on overdraft, cash credit or other accounts by means of which the arrangement so made is actually availed of. (4) Nothing in this section shall be deemed to affect the right of the company in general meeting to impose restrictions and conditions on the exercise by the Board of any of the powers specified in thi s section. 180. Restrictions on powers of Board. (1) The Board of Directors of a company shall exercise the following powers only with the consent of the company by a special resolution, namely: 122 (a) to sell, lease or otherwise dispose of the whole or subs tantially the whole of the undertaking of the company or where the company owns more than one undertaking, of the whole or substantially the whole of any of such undertakings. Explanation .For the purposes of this clause, (i) undertaking shall mean an u ndertaking in which the investment of the company exceeds twenty per cent. of its net worth as per the audited balance sheet of the preceding financial year or an undertaking which generates twenty per cent. of the total income of the company during the previous financial year; (ii) the expression substantially the whole of the undertaking in any financial year shall mean twenty per cent. or more of the value of the undertaking as per the audited balance sheet of the preceding financial year; (b) to invest otherwise in trust securities the amount of compensation received by it as a result of any merger or amalgamation; (c) to borrow money, where the money to be borrowed, together with the money already borrowed by the company will exceed aggregate of its 1[paid -up share capital, free reserves and securities premium], apart from temporary loans obtained from the companys bankers in the ordinary course of business: Provided that the acceptance by a banking company, in the ordinary course of its business , of deposits of money from the public, repayable on demand or otherwise, and withdraw able by cheque, draft, order or otherwise, shall not be deemed to be a borrowing of monies by the banking company within the meaning of this clause. Explanation .For the purposes of this clause, the expression temporary loans means loans repayable on demand or within six months from the date of the loan such as short -term, cash credit arrangements, the discounting of bills and the issue of other short -term loans of a se asonal character, but does not include loans raised for the purpose of financial expenditure of a capital nature; (d) to remit, or give time for the repayment of, any debt due from a director. (2) Every special resolution passed by the company in general m eeting in relation to the exercise of the powers referred to in clause ( c) of sub -section ( 1) shall specify the total amount up to which monies may be borrowed by the Board of Directors. (3)

( 1) shall specify the total amount up to which monies may be borrowed by the Board of Directors. (3) Nothing contained in clause ( a) of sub -section ( 1) shall affect (a) the title of a buyer or other person who buys or takes on lease any property, investment or undertaking as is referred to in that clause, in good faith; or (b) the sale or lease of any property of the company where the ordinary business of the company consists of, or comprises, such selling or leasing. (4) Any special resolution passed by the company consenting to the transaction as is referred to in clause ( a) of sub -section ( 1) may stipulate such conditions as may be specified in such resolution, incl uding conditions regarding the use, disposal or investment of the sale proceeds which may result from the transactions: Provided that this sub -section shall not be deemed to authorise the company to effect any reduction in its capital except in accordance with the provisions contained in this Act. (5) No debt incurred by the company in excess of the limit imposed by clause ( c) of sub -section ( 1) shall be valid or effectual, unless the lender proves that he advanced the loan in good faith and without knowled ge that the limit imposed by that clause had been exceeded. 181. Company to contribute to bona fide and charitable funds, etc. The Board of Directors of a company may contribute to bona fide charitable and other funds: 1. Subs. by Act 1 of 2018, s. 59, for paid -up share capital and free reserves (w.e.f. 9 -2-2018). 123 Provided that prior permission of the company in general meeting shall be required for such contribution in case any amount the aggregate of which, in any financial year, exceed five per cent. of its average net profits for the three immediately preceding financial years. 182. Prohibitions an d restrictions regarding political contributions. (1) Notwithstanding anything contained in any other provision of this Act, a company, other than a Government company and a company which has been in existence for less than three financial years, may contr ibute any amount directly or indirectly to any political party: 1* * * * * Provided 2*** that no such contribution shall be made by a company unless a resolution authorising the making of such contribution is passed at a meeting of the Board of Di rectors and such resolution shall, subject to the other provisions of this section, be deemed to be justification in law for the making 3*** of the contribution authorised by it. (2) Without prejudice to the generality of the provisions of sub -section ( 1), (a) a donation or subscription or payment caused to be given by a company on its behalf or on its account to a person who, to its knowledge, is carrying on any activity which, at the time at which such donation or subscription or payment was given or made, can reasonably be regarded as likely to affect public support for apolitical party shall also be deemed to be contribution of the amount of such donation, subscription or payment to such person for a political purpose; (b) the amount of expenditure i ncurred, directly or indirectly, by a company on an advertisement in any publication, being a publication in the nature of a souvenir, brochure, tract, pamphlet or the like, shall also be deemed, (i) where such publication is by or on behalf of a politica l party, to be a contribution of such amount to such political party, and (ii) where such publication is not by or on behalf of, but for the advantage of a political party, to be a contribution for a political purpose. 4[(3) Every company shall disclose in its profit and loss account the total amount contributed by it under this section during the financial year to which the account relates. (3A) Notwithstanding anything contained in sub -section ( 1), the contribution under this section shall not be made exc ept by an account payee cheque drawn on a bank or an account payee bank draft or use of electronic clearing system through a bank account: Provided that a company may make contribution through any instrument, issued pursuant to any scheme notified under an y law for the time being in force, for contribution to the political parties.] (4) If a company makes any contribution in contravention of the provisions of this section, the company shall be punishable with fine which may extend to five times the amount s o contributed and every officer of the company who is in default shall be punishable with imprisonment for a term which may extend to six months and with fine which may extend to five times the amount so contributed. Explanation .For the purposes of this s ection, political party means a political party registered under section 29A of the Representation of the People Act, 1951 (43 of 1951). 183. Power of Board and other persons to make contributions to national defence fund, etc.(1) The Board of Directors of any company or any person or authority exercising the powers of the Board of Directors of a company, or of the company in general meeting, may, notwithstanding anything contained in sections 180, 181 and section 182 or any other provision of this Act or in the memorandum, articles or any other instrument relating to the company, contribute such amount as it thinks fit to the National Defence Fund or any other Fund approved by the Central Government for the purpose of national defence. (2) Every company shall disclose in its profits and loss account the total amount or amounts contributed by it to the Fund referred to in sub -section ( 1) during the financial year to which the amount relates. 1. The p roviso omitted by Act 7 of 2017, s. 154 (w.e.f. 31 -3-2017). 2. The word further omitted by Act 7 of 2017, s. 154 (w.e.f. 31 -3-2017). 3. The words and the acceptance omitted by s. 154, ibid. (w.e.f. 31 -3-2017). 4. Subs. by s. 154, ibid. for sub -section ( 3) (w.e.f. 31 -3-2017). 124 184. Disclosure of interest by director. (1) Every d irector shall at the first meeting of the Board in which he participates as a director and thereafter at the first meeting of the Board in every financial year or whenever there is any change in the disclosures already made, then at the first Board meeting held after such change, disclose his concern or interest in any company or companies or bodies corporate, firms, or other association of individuals which shall include the shareholding, in such manner as may be prescribed. (2) Every director of a company who is in any way, whether directly or indirectly, concerned or interested in a contract or arrangement or proposed contract or arrangement entered into or to be entered into (a) with a body corporate in which such director or such director in association with any other director, holds more than two per cent. shareholding of that body corporate, or is a promoter, manager, Chief Executive Officer of that body corporate; or (b) with a firm or other entity in which, such director is a partner, owne r or member, as the case may be, shall disclose the nature of his concern or interest at the meeting of the Board in which the contract or arrangement is discussed and shall not participate in such meeting: Provided that where any director who is not so co ncerned or interested at the time of entering into such contract or arrangement, he shall, if he becomes concerned or interested after the contract or arrangement is entered into, disclose his concern or interest forthwith when he becomes concerned or inte rested or at the first meeting of the Board held after he becomes so concerned or interested. (3) A contract or arrangement entered into by the company without disclosure under sub -section ( 2) or with participation by a director who is concerned or interes ted in any way, directly or indirectly, in the contract or arrangement, shall be voidable at the option of the company. (4) If a director of the company contravenes the provisions of sub -section ( 1) or sub -section ( 2), such director shall be 1[liable to a penalty of one lakh rupees ]. (5) Nothing in this section (a) shall be taken to prejudice the operation of any rule of law restricting a director of a company from having any concern or interest in any contract or arrangement with the company; 2[(b) shall apply to any contract or arrangement entered into or to be entered into between two companies or between one or more companies and one or more bodies corporate where any of the directors of the one company or body corporate or two or more of them together holds or hold not more than two per cent. of the paid -up share capital in the other company or the body corporate .] 3[185. Loans to directors, etc. (1) No company shall, directly or indirectly, advance any loan, including any loan represented by a book deb t to, or give any guarantee or provide any security in connection with any loan taken by, (a) any director of company, or of a company which is its holding company or any partner or relative of any such director; or (b) any firm in which any such director or relative is a partner. (2) A company may advance any loan including any loan represented by a book debt, or give any guarantee or provide any security in connection with any loan taken by any person in whom any of the director of the company is interested, subject to the condition that (a) a special resolution is passed by the company in general meeting: Provided that the explanatory statement to the notice for the relevant general meeting shall disclose the full particulars of the loans given, or guarantee given or security provided and the purpose for which 1. Subs. by Act 29 of 2020, s. 37, for certain words (w.e.f. 21 -12-2020). 2. Subs. by Act 1 of 2018, s. 60, for clause ( b) (w.e.f. 9 -2-2018). 3. Subs. by s. 61, ibid., for section 185 (w.e.f. 7-5-2018). 125 the loan or guarantee or security is proposed t o be utilised by the recipient of the loan or guarantee or security and any other relevant fact; and (b) the loans are utilised by the borrowing company for its principal business activities. Explanation .For the purposes of this sub -section, the expressi on any person in whom any of the director of the company is interested means (a) any private company of which any such director is a director or member; (b) any body corporate at a general meeting of which not less than twenty -five per cent. of the tot al voting power may be exercised or controlled by any such director, or by two or more such directors, together; or (c) any body corporate, the Board of directors, managing director or manager, whereof is accustomed to act in accordance with the direction s or instructions of the Board, or of any director or directors, of the lending company. (3) Nothing contained in sub -sections ( 1) and ( 2) shall apply to (a) the giving of any loan to a managing or whole -time director (i) as a part of the conditions of service extended by the company to all its employees; or (ii) pursuant to any scheme approved by the members by a special resolution; or (b) a company which in the ordinary course of its business provides loans or gives guarantees or securities for the due repayment of any loan and in respect of such loans an interest is charged at a rate not less than the rate of prevailing yield of one year, three years, five years or ten years Government security closest to the tenor of the loan; or (c) any loan made by a holding company to its wholly owned subsidiary company or any guarantee given or security provided by a holding company in respect of any loan made to its wholly owned subsidiary company; or (d) any guarantee given or security provided by a holding company in respect of loan made by any bank or financial institution to its subsidiary company: Provided that the loans made under clauses ( c) and ( d) are utilised by the subsidiary company for its principal business activities. (4) If any loan is advanced or a guarantee or security is given or provided or utilised in contravention of the provisions of this section, (i) the company shall be punishable with fine which shall not be less than five lakh rupees but which may extend to twenty -five lakh rupees; (ii) every officer of the company who is in default shall be punishable with imprisonment for a term which may extend to six months or with fine which shall not be less than five lakh rupees but which may extend to twenty -five lakh rupees; and (iii) the d irector or the other person to whom any loan is advanced or guarantee or security is given or provided in connection with any loan taken by him or the other person, shall be punishable with imprisonment which may extend to six months or with fine which sha ll not be less than five lakh rupees but which may extend to twenty -five lakh rupees, or with both.] 186. Loan and investment by company. (1) Without prejudice to the provisions contained in this Act, a company shall unless otherwise prescribed, make investment through not more than two layers of investment companies: Provided that the provisions of this sub -section shall not affect, (i) a company from acquiring any other company incorporated in a country outside India if such other company has invest ment subsidiaries beyond two layers as per the laws of such country; 126 (ii) a subsidiary company from having any investment subsidiary for the purposes of meeting the requirements under any law or under any rule or regulation framed under any law for the tim e being in force. (2) No company shall directly or indirectly (a) give any loan to any person or other body corporate; (b) give any guarantee or provide security in connection with a loan to any other body corporate or person; and (c) acquire by way of subscription, purchase or otherwise, the securities of any other body corporate, exceeding sixty per cent. of its paid -up share capital, free reserves and securities premium account or one hundred per cent. of its free reserves and securities premium accou nt, whichever is more. 1[Explanation .For the purposes of this sub -section, the word person does not include any individual who is in the employment of the company .] 2[(3) Where the aggregate of the loans and investment so far made, the amount for which guarantee or security so far provided to or in all other bodies corporate along with the investment, loan, guarantee or security proposed to be made or given by the Board, exceed the limits specified under sub -section ( 2), no investment or loan shall be ma de or guarantee shall be given or security shall be provided unless previously authorised by a special resolution passed in a general meeting: Provided that where a loan or guarantee is given or where a security has been provided by a company to its wholl y owned subsidiary company or a joint venture company, or acquisition is made by a holding company, by way of subscription, purchase

oll y owned subsidiary company or a joint venture company, or acquisition is made by a holding company, by way of subscription, purchase or otherwise of, the securities of its wholly owned subsidiary company, the requirement of this sub -section shall not apply : Provided further that the company shall disclose the details of such loans or guarantee or security or acquisition in the financial statement as provided under sub -section ( 4).] (4) The company shall disclose to the members in the financial statement the full particulars of the loans given, investment made or guarantee given or security provided and the purpose for which the loan or guarantee or security is proposed to be utilised by the recipient of the loan or guarantee or security. (5) No investment shall be made or loan or guarantee or security given by the company unless the resolution sanctioning it is passed at a meeting of the Board with the consent of all the directors present at the meeting and the prior approval of the public financial instit ution concerned where any term loan is subsisting, is obtained: Provided that prior approval of a public financial institution shall not be required where the aggregate of the loans and investments so far made, the amount for which guarantee or security so far provided to or in all other bodies corporate, along with the investments, loans, guarantee or security proposed to be made or given does not exceed the limit as specified in sub -section ( 2), and there is no default in repayment of loan instalments or payment of interest thereon as per the terms and conditions of such loan to the public financial institution. (6) No company, which is registered under section 12 of the Securities and Exchange Board of India Act, 1992 (15 of 1992) and covered under such c lass or classes of companies as may be prescribed, shall take inter -corporate loan or deposits exceeding the prescribed limit and such company shall furnish in its financial statement the details of the loan or deposits. (7) No loan shall be given under this section at a rate of interest lower than the prevailing yield of one year, three year, five year or ten year Government Security closest to the tenor of the loan. 1. Ins. by Act 1 of 2018, s. 62 (w.e.f. 7 -5-2018). 2. Subs. by s. 62, ibid., for sub -section ( 3) (w.e.f. 7 -5-2018). 127 (8) No company which is in default in the repayment of any deposits accepted before or a fter the commencement of this Act or in payment of interest thereon, shall give any loan or give any guarantee or provide any security or make an acquisition till such default is subsisting. (9) Every company giving loan or giving a guarantee or providing security or making an acquisition under this section shall keep a register which shall contain such particulars and shall be maintained in such manner as may be prescribed. (10) The register referred to in sub -section ( 9) shall be kept at the registered of fice of the company and (a) shall be open to inspection at such office; and (b) extracts may be taken therefrom by any member, and copies thereof may be furnished to any member of the company on payment of such fees as may be prescribed. 1[(11) Nothing contained in this section, except sub -section ( 1), shall apply (a) to any loan made, any guarantee given or any security provided or any investment made by a banking company, or an insurance company, or a housing finance company in the ordinary course of its business, or a company established with the object of and engaged in the business of financing industrial enterprises, or of providing infrastructural facilities; (b) to any investment (i) made by an investment company; (ii) made in shares allotte d in pursuance of clause ( a) of sub -section ( 1) of section 62 or in shares allotted in pursuance of rights issues made by a body corporate; (iii) made, in respect of investment or lending activities, by a non -banking financial company registered under Cha pter III -B of the Reserve Bank of India Act, 1934 (2 of 1934) and whose principal business is acquisition of securities.] (12) The Central Government may make rules for the purposes of this section. (13) If a company contravenes the provisions of this sec tion, the company shall be punishable with fine which shall not be less than twenty -five thousand rupees but which may extend to five lakh rupees and every officer of the company who is in default shall be punishable with imprisonment for a term which may extend to two years and with fine which shall not be less than twenty -five thousand rupees but which may extend to one lakh rupees. Explanation. For the purposes of this section, (a) the expression investment company means a company whose principal busi ness is the acquisition of shares, debentures or other securities 2[and a company will be deemed to be principally engaged in the business of acquisition of shares, debentures or other securities, if its assets in the form of investment in shares, debentur es or other securities constitute not less than fifty per cent. of its total assets, or if its income derived from investment business constitutes not less than fifty per cent. as a proportion of its gross income.]; (b) the expression infrastructure facil ities means the facilities specified in Schedule VI. 187. Investments of company to be held in its own name. (1) All investments made or held by a company in any property, security or other asset shall be made and held by it in its own name: Provided that the company may hold any shares in its subsidiary company in the name of any nominee or nominees of the company, if it is necessary to do so, to ensure that the number of members of the subsidiary company is not reduced below the statutory limit. (2) Noth ing in this section shall be deemed to prevent a company 1. Subs. by Act 1 of 2018, s. 62, for sub -section ( 11) (w.e.f. 7 -5-2018). 2. Ins. by Act 1 of 2018, s. 62 (w.e.f. 7 -5-2018). 128 (a) from depositing with a bank, being the bankers of the company, any shares or securities for the collection of any dividend or interest payable thereon; or (b) from depositing with, or transferring to, or holding in the name of, the State Bank of India or a scheduled bank, being the bankers of the company, shares or securities, in order to facilitate the transfer thereof: Provided that if within a period of six months from the date on wh ich the shares or securities are transferred by the company to, or are first held by the company in the name of, the State Bank of India or a scheduled bank as aforesaid, no transfer of such shares or securities takes place, the company shall, as soon as p racticable after the expiry of that period, have the shares or securities re -transferred to it from the State Bank of India or the scheduled bank or, as the case may be, again hold the shares or securities in its own name; or (c) from depositing with, or t ransferring to, any person any shares or securities, by way of security for the repayment of any loan advanced to the company or the performance of any obligation undertaken by it; (d) from holding investments in the name of a depository when such investme nts are in the form of securities held by the company as a beneficial owner. (3) Where in pursuance of clause ( d) of sub -section ( 2), any shares or securities in which investments have been made by a company are not held by it in its own name, the company shall maintain a register which shall contain such particulars as may be prescribed and such register shall be open to inspection by any member or debenture -holder of the company without any charge during business hours subject to such reasonable restricti ons as the company may by its articles or in general meeting impose. 1[(4) If a company is in default in complying with the provisions of this section, the company shall be liable to a penalty of five lakh rupees and every officer of the company who is in default shall be liable to a penalty of fifty thousand rupees .] 188. Related party transactions. (1) Except with the consent of the Board of Directors given by a resolution at a meeting of the Board and subject to such conditions as may be prescribed, no company shall enter into any contract or arrangement with a related party with respect to (a) sale, purchase or supply of any goods or materials; (b) selling or otherwise disposing of, or buying, property of any kind; (c) leasing of property of any kind; (d) availing or rendering of any services; (e) appointment of any agent for purchase or sale of goods, materials, services or property; (f) such related party's appointment to any office or place of profit in the company, its subsidiary company or associate company; and (g) underwriting the subscription of any securities or derivatives thereof, of the company: Provided that no contract or arrangement, in the case of a company having a paid -up share capital of not less than such amount, or transactio ns exceeding such sums, as may be prescribed, shall be entered into except with the prior approval of the company by a2[resolution]: Provided further that no member of the company shall vote on such 1[resolution], to approve any contract or arrangement whi ch may be entered into by the company, if such member is a related party: 3[Provided also that nothing contained in the second proviso shall apply to a company in which ninety per cent. or more members, in number, are relatives of promoters or are related parties:] 1. Subs. by Act 29 of 2020, s. 38, for sub -section ( 4) (w.e.f. 21 -12-2020). 2. Subs. by Act 21 of 2015, s. 16, for special resolution (w.e.f. 29 -5-2015). 3. The proviso i ns. by Act 1 of 2018, s. 6 3 (w.e.f. 9 -2-2018). 129 Provided also that nothing in this sub -section shall apply to any transactions entered into by the company in its ordinary course of business other than transactions which are not on an arms length basis: 1[Provided also that the requirement of passing the resolution under first proviso shall not be applicable for transactions entered into between a holding company and its wholly owned subsidiary whose accounts are consolidated with such holding company and placed before the shareholders at the g eneral meeting for approval.] Explanation. In this sub -section, (a) the expression office or place of profit means any office or place (i) where such office or place is held by a director, if the director holding it receives from the company anything by way of remuneration over and above the remuneration to which he is entitled as director, by way of salary, fee, commission, perquisites, any rent -free accommodation, or otherwise; (ii) where such office or place is held by an individual other than a dir ector or by any firm, private company or other body corporate, if the individual, firm, private company or body corporate holding it receives from the company anything by way of remuneration, salary, fee, commission, perquisites, any rent -free accommodatio n, or otherwise; (b) the expression arms length transaction means a transaction between two related parties that is conducted as if they were unrelated, so that there is no conflict of interest. (2) Every contract or arrangement entered into under sub -section ( 1) shall be referred to in the Boards report to the shareholders along with the justification for entering into such contract or arrangement. (3) Where any contract or arrangement is entered into by a director or any other employee, without obtain ing the consent of the Board or approval by a 1[resolution] in the general meeting under sub - section ( 1) and if it is not ratified by the Board or, as the case may be, by the shareholders at a meeting within three months from the date on which such contract or arrangement was entered into, such contract or arrangement 2[shall be voidable at the option of th e Board or, as the case may be, of the shareholders] and if the contract or arrangement is with a related party to any director, or is authorised by any other director, the directors concerned shall indemnify the company against any loss incurred by it. (4) Without prejudice to anything contained in sub -section ( 3), it shall be open to the company to proceed against a director or any other employee who had entered into such contract or arrangement in contravention of the provisions of this section for recov ery of any loss sustained by it as a result of such contract or arrangement. (5) Any director or any other employee of a company, who had entered into or authorized the contract or arrangement in violation of the provisions of this section shall, (i) in c ase of listed company, be 3[liable to a penalty of twenty -five lakh rupees] ; and (ii) in case of any other company, be 4[liable to a penalty of five lakh rupees ]]. 189. Register of contracts or arrangements in which directors are interested. (1) Every comp any shall keep one or more registers giving separately the particulars of all contracts or arrangements to which sub-section ( 2) of section 184 or section 188 applies, in such manner and containing such particulars as may be prescribed and after entering t he particulars, such register or registers shall be placed before the next meeting of the Board and signed by all the directors present at the meeting. (2) Every director or key managerial personnel shall, within a period of thirty days of his appointment, or relinquishment of his office, as the case may be, disclose to the company the particulars specified in sub - section ( 1) of section 184 relating to his concern or interest in the other associations which are required to be included in the register under that sub -section or such other information relating to himself as may be prescribed. 1. The proviso i ns. by Act 21 of 2015 , s. 16 (w.e.f. 29 -5-2015) . 2. Subs. by Act 1 of 2018, s. 63, for shall be voidable at the option of the Board (w.e.f. 9 -2-2018). 3. Subs. by Act 29 of 2020, s. 39, for certain words (w.e.f. 21 -12-2020). 4. Subs. by s. 39, ibid., for certain words ( w.e.f. 21 -12-2020). 130 (3) The register referred to in sub -section ( 1) shall be kept at the registered office of the company and it shall be open for inspection at such office during business ho urs and extracts may be taken therefrom, and copies there

company and it shall be open for inspection at such office during business ho urs and extracts may be taken therefrom, and copies thereof as may be required by any member of the company shall be furnished by the company to such extent, in such manner, and on payment of such fees as may be prescribed. (4) The register to be kept unde r this section shall also be produced at the commencement of every annual general meeting of the company and shall remain open and accessible during the continuance of the meeting to any person having the right to attend the meeting. (5) Nothing contained in sub -section ( 1) shall apply to any contract or arrangement (a) for the sale, purchase or supply of any goods, materials or services if the value of such goods and materials or the cost of such services does not exceed five lakh rupees in the aggregate in any year; or (b) by a banking company for the collection of bills in the ordinary course of its business. (6) Every director who fails to comply with the provisions of this section and the rules made thereunder shall be liable to a penalty of twenty -five thousand rupees. 190. Contract of employment with managing or whole -time director. (1) Every company shall keep at its registered office, (a) where a contract of service with a managing or whole -time director is in writing, a copy of the contract; or (b) where such a contract is not in writing, a written memorandum setting out its terms. (2) The copies of the contract or the memorandum kept under sub -section ( 1) shall be open to inspection by any member of the company without payment of fee. (3) If any d efault is made in complying with the provisions of sub -section ( 1) or sub -section ( 2), the company shall be liable to a penalty of twenty -five thousand rupees and every officer of the company who is in default shall be liable to a penalty of five thousand rupees for each default. (4) The provisions of this section shall not apply to a private company. 191. Payment to director for loss of office, etc., in connection with transfer of undertaking, property or shares. (1) No director of a company shall, in conn ection with (a) the transfer of the whole or any part of any undertaking or property of the company; or (b) the transfer to any person of all or any of the shares in a company being a transfer resulting from (i) an offer made to the general body of shareholders; (ii) an offer made by or on behalf of some other body corporate with a view to a company becoming a subsidiary company of such body corporate or a subsidiary company of its holding company; (iii) an offer made by or on behalf of an individual with a view to his obtaining the right to exercise, or control the exercise of, not less than one -third of the total voting power at any general meeting of the company; or (iv) any other offer which is conditional on acceptance to a given extent, receive any payment by way of compensation for loss of office or as consideration for retirement from office, or in connection with such loss or retirement from such company or from the transferee of such undertaking or property, or from the transferees of shares or from any other person, not being such company, unless particulars as may be prescribed with respect to the payment proposed to be made by such transferee or person, including the amount thereof, have been disclosed to the members of the company and the proposal has been approved by the company in general meeting. (2) Nothing in sub -section ( 1) shall affect any payment made by a company to a managing director or whole -time director or manager of the company by way of compensation for loss of office or as 131 consideration for retirement from office or in connection with such loss or retirement subject to limits or priorities, as may be prescribed. (3) If the payment under sub -section ( 1) or sub -section ( 2) is not approved for want of quorum either in a meeting or an adjourned meeting, the proposal shall not be deemed to have been approved. (4) Where a director of a company receives payment of any amount in contravention of sub -section ( 1) or the proposed payment is made before it is approved in the meeting, the amount so received by the director shall be deemed to have been received by him in trust for the company. 1[(5) If a director of the company makes any default in complying with the provisions of this section, such director shall be liable to a penalty of one lakh rupees. ] (6) Nothing in this section shall be taken to prejudice the operation of any law requiring disclosure to be made with respect to any payment received under this section or such other like payments made to a director. 192. Restriction on n on-cash transactions involving directors. (1) No company shall enter into an arrangement by which (a) a director of the company or its holding, subsidiary or associate company or a person connected with him acquires or is to acquire assets for considerati on other than cash, from the company; or (b) the company acquires or is to acquire assets for consideration other than cash, from such director or person so connected, unless prior approval for such arrangement is accorded by a resolution of the company in general meeting and if the director or connected person is a director of its holding company, approval under this sub - section shall also be required to be obtained by passing a resolution in general meeting of the holding company. (2) The no tice for approval of the resolution by the company or holding company in general meeting under sub -section ( 1) shall include the particulars of the arrangement along with the value of the assets involved in such arrangement duly calculated by a registered valuer. (3) Any arrangement entered into by a company or its holding company in contravention of the provisions of this section shall be voidable at the instance of the company unless (a) the restitution of any money or other consideration which is the subject matter of the arrangement is no longer possible and the company has been indemnified by any other person for any loss or damage caused to it; or (b) any rights are acquired bona fide for value and without notice of the contravention of the provisio ns of this section by any other person. 193. Contract by One Person Company. (1) Where One Person Company limited by shares or by guarantee enters into a contract with the sole member of the company who is also the director of the company, the company shal l, unless the contract is in writing, ensure that the terms of the contract or offer are contained in a memorandum or are recorded in the minutes of the first meeting of the Board of Directors of the company held next after entering into contract: Provided that nothing in this sub -section shall apply to contracts entered into by the company in the ordinary course of its business. (2) The company shall inform the Registrar about every contract entered into by the company and recorded in the minutes of the me eting of its Board of Directors under sub -section ( 1) within a period of fifteen days of the date of approval by the Board of Directors. 194. [Prohibition on forward dealings in securities of company by director or key managerial personnel .] Omitted by the Companies (Amendment) Act, 2017 (1 of 2018), s. 64 ( w.e.f . 9-2-2018). 195. [Prohibition on insider trading of securities .] Omitted by s . 65, ibid. (w.e.f . 9-2-2018). 1. Subs. by Act 22 of 2019, s. 28, for sub -section ( 5) (w.e.f. 2 -11-2018). 132 CHAPTER XIII APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL 196. Appointment of managing director, whole -time director or manager. (1) No company shall appoint or employ at the same time a managing director and a manager. (2) No company shall appoint or re -appoint any person as its managing director, whole -time director or manager for a term exceeding five years at a time: Provided that no re -appointment shall be made earlier than one year before the expiry of his term. (3) No company shall appoint or continue the employment of any person as managing director, whole - time director or ma nager who (a) is below the age of twenty -one years or has attained the age of seventy years: Provided that appointment of a person who has attained the age of seventy years may be made by passing a special resolution in which case the explanatory stateme nt annexed to the notice for such motion shall indicate the justification for appointing such person; 1[Provided further that where no such special resolution is passed but votes cast in favour of the motion exceed the votes, if any, cast against the motion and the Central Government is satisfied, on an application made by the Board, that such appointment is most beneficial to the company, the appointment of the person who has attained the age of seventy years may be made.] ; (b) is an undischarged ins olvent or has at any time been adjudged as an insolvent; (c) has at any time suspended payment to his creditors or makes, or has at any time made, a composition with them; or (d) has at any time been convicted by a court of an offence and sentenced for a p eriod of more than six months. (4) Subject to the provisions of section 197 and Schedule V, a managing director, whole -time director or manager shall be appointed and the terms and conditions of such appointment and remuneration payable be approved by the Board of Directors at a meeting which shall be subject to approval by a resolution at the next general meeting of the company and by the Central Government in case such appointment is at variance to the conditions 2[specified in Part I of that Schedule]: Provided that a notice convening Board or general meeting for considering such appointment shall include the terms and conditions of such appointment, remuneration payable and such other matters including interest, of a director or directors in such appoint ments, if any: Provided further that a return in the prescribed form shall be filed within sixty days of such appointment with the Registrar. (5) Subject to the provisions of this Act, where an appointment of a managing director, whole -time director or man ager is not approved by the company at a general meeting, any act done by him before such approval shall not be deemed to be invalid. 197. Overall maximum managerial remuneration and managerial remuneration in case of absence or inadequacy of profits. (1) The total managerial remuneration payable by a public company, to its directors, including managing director and whole -time director, and its manager in respect of any financial year shall not exceed eleven per cent. of the net profits of that company for that financial year computed in the manner laid down in section 198 except that the remuneration of the directors shall not be deducted from the gross profits: Provided that the company in general meeting may, 3*** authorise the payment of remuneration exceeding eleven per cent. of the net profits of the company, subject to the provisions of Schedule V: Provided further that, except with the approval of the company in general meeting, 4[by a special resolution,] (i) the remuneration payable to any one mana ging director; or whole -time director or manager shall not exceed five per cent. of the net profits of the company and if there is more than one such director remuneration shall not exceed ten per cent. of the net profits to all such directors and manager taken together; 1. The proviso ins. by Act 1 of 2018, s. 66 (w.e.f. 12 -9-2018). 2. Subs. by s . 66, ibid., for specified in that Schedule (w.e.f. 12 -9-2018). 3. The words with the approval of the Central Government, omitted by Act 1 of 2018, s. 67 (w.e.f. 12 -9-2018). 4. Ins. by s. 67 , ibid. (w.e.f. 12 -9-2018). 133 (ii) the remuneration payable to directors who are neither managing directors nor whole -time directors shall not exceed, (A) one per cent. of the net profits of the company, if there is a managing or whole -time director or manager; (B) three per cent. of the net profits in any other case. 1[Provided also that, where the company has defaulted in payment of dues to any bank or public financial institution or non -convertible debenture holders or any other secured creditor, the prior approva l of the bank or public financial institution concerned or the non -convertible debenture holders or other secured creditor, as the case may be, shall be obtained by the company before obtaining the approval in the general meeting.] (2) The percentages afor esaid shall be exclusive of any fees payable to directors under sub-section ( 5). (3) Notwithstanding anything contained in sub -sections ( 1) and ( 2), but subject to the provisions of Schedule V, if, in any financial year, a company has no profits or its pro fits are inadequate, the company shall not pay to its directors, including any managing or whole -time director or manager, 2[or any other non-executive director, including an independent director] by way of remuneration any sum exclusive of any fees payabl e to directors under sub -section ( 5) hereunder except in accordance with the provisions of Schedule V 3***. (4) The remuneration payable to the directors of a company, including any managing or whole -time director or manager, shall be determined, in accordance with and subject to the provisions of this section, either by the articles of the company, or by a resolution or, if the articles so require, by a special resolution, passed by the company in general meeting and the remuneration payable to a dir ector determined aforesaid shall be inclusive of the remuneration payable to him for the services rendered by him in any other capacity: Provided that any remuneration for services rendered by any such director in other capacity shall not be so included if (a) the services rendered are of a professional nature; and (b) in the opinion of the Nomination and Remuneration Committee, if the company is covered under sub -section ( 1) of section 178, or the Board of Directors in other cases, the director possesses the requisite qualification for the practice of the profession. (5) A director may receive remuneration by way of fee for attending meetings of the Board or Committee thereof or for any other purpose whatsoever as may be decided by the Board: Provided that the amount of such fees shall not exceed the amount as may be prescribed: Provided further that different fees for different classes of companies and fees in respect of independent director may be such as may be prescribed. (6) A director or manager may b e paid remuneration either by way of a monthly payment or at a specified percentage

(6) A director or manager may b e paid remuneration either by way of a monthly payment or at a specified percentage of the net profits of the company or partly by one way and partly by the other. 4* * * * * * (8) The net profits for the purposes of this section shall be computed in the manner referred to in section 198. 5[(9) If any director draws or receives, directly or indirectly, by way of remuneration any such sums in excess of the limit prescribed by this section or without approval required under this section, he shall refu nd such sums to the company, within two years or such lesser period as may be allowed by the company, and until such sum is refunded, hold it in trust for the company.] 1. The proviso ins. by Act 1 of 2018, s. 67 (w.e.f. 12 -9-2018). 2. Ins. by Act 29 of 2020, s. 40 (w.e.f. 18 -3-2021). 3. The words and if it is not able to comply with such provisions, with the previous approval of the Central Government omitted by s. 67 , ibid. (w.e.f.12 -9-2018). 4. Sub -section ( 7) omitted by Act 22 of 2019, s. 29 (w.e.f. 2 -11-2018). 5. Subs. by Act 1 of 2018, s. 67 (w.e.f. 12 -9-2018). 134 (10) The company shall not waive the recovery of any sum refundable to it under sub -section ( 9) unless 1[approved by the company by special resolution within two years from the date the sum becomes refundable]. 2[Provided that where the company has defaulted in payment of dues to any bank or public financial institution or non -convertible debenture holders or any other secured creditor, the prior approval of the bank or public financial institution concerned or the non -convertible debenture holders or other secured creditor, as the case may be, shall be obtained by the company before obtain ing approval of such waiver.] (11) In cases where Schedule V is applicable on grounds of no profits or inadequate profits, any provision relating to the remuneration of any director which purports to increase or has the effect of increasing the amount ther eof, whether the provision be contained in the companys memorandum or articles, or in an agreement entered into by it, or in any resolution passed by the company in general meeting or its Board, shall not have any effect unless such increase is in accorda nce with the conditions specified in that Schedule 3***. (12) Every listed company shall disclose in the Boards report, the ratio of the remuneration of each director to the median employees remuneration and such other details as may be prescribed. (13) Where any insurance is taken by a company on behalf of its managing director, whole -time director, manager, Chief Executive Officer, Chief Financial Officer or Company Secretary for indemnifying any of them against any liability in respect of any negligenc e, default, misfeasance, breach of duty or breach of trust for which they may be guilty in relation to the company, the premium paid on such insurance shall not be treated as part of the remuneration payable to any such personnel: Provided that if such per son is proved to be guilty, the premium paid on such insurance shall be treated as part of the remuneration. (14) Subject to the provisions of this section, any director who is in receipt of any commission from the company and who is a managing or whole -time director of the company shall not be disqualified from receiving any remuneration or commission from any holding company or subsidiary company of such company subject to its disclosure by the company in the Boards report. 4[(15) If any person makes an y default in complying with the provisions of this section, he shall be liable to a penalty of one lakh rupees and where any default has been made by a company, the company shall be liable to a penalty of five lakh rupees .] 5[(16) The auditor of the company shall, in his report under section 143, make a statement as to whether the remuneration paid by the company to its directors is in accordance with the provisions of this section, whether remuneration paid to any director is in excess of the limit laid down under this section and give such other details as may be prescribed. (17) On and from the commencement of the Companies (Amendment) Act, 2017, any application made to the Central Government under the provisions of this secti on [as it stood before such commencement], which is pending with that Government shall abate, and the company shall, within one year of such commencement, obtain the approval in accordance with the provisions of this section, as so amended.] 198. Calculati on of profits. (1) In computing the net profits of a company in any financial year for the purpose of section 197, (a) credit shall be given for the sums specified in sub -section ( 2), and credit shall not be given for those specified in sub -section ( 3); and (b) the sums specified in sub -section ( 4) shall be deducted, and those specified in sub -section ( 5) shall not be deducted. 1. Subs. by Act 1 of 2018, s. 67, for permitted by the Central Government (w.e.f. 12 -9-2018). 2. The proviso ins. by s. 67, ibid., (w.e.f. 12 -9-2018). 3. The words and if such conditions are not bei ng complied, the approval of the Central Government had been obtained by s. 67, ibid., (w.e.f. 12 -9-2018). 4. Subs. by Act 22 of 2019, s. 29, for sub -section ( 15) (w.e.f. 2 -11-2018). 5. Ins. by Act 1 of 2018, s. 67 (w.e.f. 12 -9-2018). 135 (2) In making the computation aforesaid, credit shall be given for the bounties and subsidies received from any Government, or any public authority constituted or authorised in this behalf, by any Government, unless and except in so far as the Central Government otherwise directs. (3) In making the computation aforesaid, credit shall not be given for the following sums, namely: (a) profits, by way of premium on shares or debentures of the company, which are issued or sold by the company 1[unless the company is an investment company as referred to in clause ( a) of the Explanation to section 186]; (b) profits on sales by the company of forfeited shares; (c) profits of a capital nature including profits from the sale of the undertaking or any of the undertakings of the company or of any part thereof; (d) profits from the sale of any immovable property or fixed assets of a capital nature comprised in the undertaking or any of the undertakings of the company, unless the business of the company consists, whether wholly or partly, of buying and selling any such property or assets: Provided that where the amount for which any fixed asset is so ld exceeds the written -down value thereof, credit shall be given for so much of the excess as is not higher than the difference between the original cost of that fixed asset and its written -down value; (e) any change in carrying amount of an asset or of a liability recognised inequity reserves including surplus in profit and loss account on measurement of the asset or the liability at fair value. 2[(f) any amount representing unrealised gains, notional gains or revaluation of assets.] (4) In making the comp utation aforesaid, the following sums shall be deducted, namely: (a) all the usual working charges; (b) directors remuneration; (c) bonus or commission paid or payable to any member of the companys staff, or to any engineer, technician or person employe d or engaged by the company, whether on a whole -time or on a part -time basis; (d) any tax notified by the Central Government as being in the nature of a tax on excess or abnormal profits; (e) any tax on business profits imposed for special reasons or in sp ecial circumstances and notified by the Central Government in this behalf; (f) interest on debentures issued by the company; (g) interest on mortgages executed by the company and on loans and advances secured by a charge on its fixed or floating assets; (h) interest on unsecured loans and advances; (i) expenses on repairs, whether to immovable or to movable property, provided the repairs are not of a capital nature; (j) outgoings inclusive of contributions made under section 181; (k) depreciation to the extent specified in section 123; (l) the excess of expenditure over income, which had arisen in computing the net profits in accordance with this section in any year 3***, in so far as such excess has not been deducted in any subsequent year preceding the year in respect of which the net profits have to be ascertained; (m) any compensation or damages to be paid in virtue of any legal liability including a liability arising from a breach of contract; (n) any sum paid by way of insurance against the risk of m eeting any liability such as is referred to in clause ( m); (o) debts considered bad and written off or adjusted during the year of account. (5) In making the computation aforesaid, the following sums shall not be deducted, namely: (a) income -tax and super -tax payable by the company under the Income -tax Act, 1961 (43 of 1961), or any other tax on the income of the company not falling under clauses ( d) and ( e) of sub - section ( 4); 1. Ins. by Act 1 of 2018 , s. 68 (w.e.f. 12 -9-2018). 2. Clause ( f) ins. by s. 68, ibid. (w.e.f. 12 -9-2018). 3. The words which begins at or after the commencement of this Act omitted by s. 68 , ibid. (w.e.f. 12 -9-2018). 136 (b) any compensation, damages or payments made voluntarily, that is to say, otherwise than in virtue of a liability such as is referred to in clause ( m) of sub -section ( 4); (c) loss of a capital nature including loss on sale of the undertaking or any of the undertakings of the company or of any part thereof not including any excess of the written -down value of any asset which is sold, discarded, demolished or destroyed over its sale proceeds or its scrap value; (d) any change in carrying amount of an asset or of a liability recognised inequity reserves including surplus in profit and loss account on measurement of the asset or the liability at fair value. 199. Recovery of remuneration in certain cases. Without prejudice to any liability incurred under the provisions of this Act or any other law for the time being in force, where a company is required to re-state its financial statements due to fraud or non -compliance with any requirement under this Act and the rules made thereunder, the company shall recover from any past or present managing director or whole-time director or manager or Chief Executive Officer (by whatever name called) who, during the period for which the financial statements are required to be re -stated, received the remuneration (including stock option) in excess of what would have been payable to him as per restatement of financial statements. 200. Central Government or company to fix limit with regard to remuneration. Notwithstanding anything contained in this Chapter, 1*** a company may, while according its approval under section 196, to any appointment or to any remuneration under section 197 in respect of cases where the company has inadequate or no profits, fix the remuneration within the limits specified in this Act, at such amount or percentage of profits of the company, as it may deem fit and while fixing the remuneration, 1*** the company shall have regard to (a) the financial position of the company; (b) the remuneration or commission drawn by the individual concerned in any other capacity; (c) the remuneration or commission dra wn by him from any other company; (d) professional qualifications and experience of the individual concerned; (e) such other matters as may be prescribed. 201. Forms of, and procedure in relation to, certain applications. (1) Every application made to the Central Government under 2[section 196] shall be in such form as may be prescribed. (2) (a) Before any application is made by a company to the Central Government under 3[section 196], there shall be issued by or on behalf of the company a general notice to the members thereof, indicating the nature of the application proposed to be made. (b) Such notice shall be published at least once in a newspaper in the principal language of the district in which the registered office of the company is situate and circu lating in that district, and at least once in English in an English newspaper circulating in that district. (c) The copies of the notices, together with a certificate by the company as to the due publication thereof, shall be attached to the application. 202. Compensation for loss of office of managing or whole -time director or manager. (1) A company may make payment to a managing or whole -time director or manager, but not to any other director, by way of compensation for loss of office, or as consideratio n for retirement from office or in connection with such loss or retirement. (2) No payment shall be made under sub -section ( 1) in the following cases, namely: (a) where the director resigns from his office as a result of the reconstruction of the company, or of its amalgamation with any other body corporate or bodies corporate, and is appointed as the managing or whole -time director, manager or other officer of the reconstructed company or of the body corporate resulting from the amalgamation; (b) where th e director resigns from his office otherwise than on the reconstruction of the company or its amalgamation as aforesaid; (c) where the office of the director is vacated under sub -section ( 1) of section 167; (d) where the company is being wound up, whether by an order of the Tribunal or voluntarily, provided the winding up was due to the negligence or default of the director; 1. The words the Central Government or omitted by Act 1 of 2018 , s. 69 (w.e.f. 12

Central Government or omitted by Act 1 of 2018 , s. 69 (w.e.f. 12 -9-2018). 2. The words this Chapter omitted by s. 70, ibid. (w.e.f. 12 -9-2018). 3. Subs. by s. 70, ibid. for any of the sections aforesaid (w.e.f. 12 -9-2018). 137 (e) where the director has been guilty of fraud or breach of trust in relation to, or of gross negligence in or gross mismanagement of , the conduct of the affairs of the company or any subsidiary company or holding company thereof; and (f) where the director has instigated, or has taken part directly or indirectly in bringing about, the termination of his office. (3) Any payment made to a managing or whole -time director or manager in pursuance of sub -section (1) shall not exceed the remuneration which he would have earned if he had been in office for the remainder of his term or for three years, whichever is shorter, calculated on the bas is of the average remuneration actually earned by him during a period of three years immediately preceding the date on which he ceased to hold office, or where he held the office for a lesser period than three years, during such period: Provided that no su ch payment shall be made to the director in the event of the commencement of the winding up of the company, whether before or at any time within twelve months after, the date on which he ceased to hold office, if the assets of the company on the winding up , after deducting the expenses thereof, are not sufficient to repay to the shareholders the share capital, including the premiums, if any, contributed by them. (4) Nothing in this section shall be deemed to prohibit the payment to a managing or whole -time director, or manager, of any remuneration for services rendered by him to the company in any other capacity. 203. Appointment of key managerial personnel. (1) Every company belonging to such class or classes of companies as may be prescribed shall have the following whole -time key managerial personnel, (i) managing director, or Chief Executive Officer or manager and in their absence, a whole -time director; (ii) company secretary; and (iii) Chief Financial Officer: Provided that an individual shall not be a ppointed or reappointed as the chairperson of the company, in pursuance of the articles of the company, as well as the managing director or Chief Executive Officer of the company at the same time after the date of commencement of this Act unless, (a) the articles of such a company provide otherwise; or (b) the company does not carry multiple businesses: Provided further that nothing contained in the first proviso shall apply to such class of companies engaged in multiple businesses and which has appointed one or more Chief Executive Officers for each such business as may be notified by the Central Government. (2) Every whole -time key managerial personnel of a company shall be appointed by means of a resolution of the Board containing the terms and condition s of the appointment including the remuneration. (3) A whole -time key managerial personnel shall not hold office in more than one company except in its subsidiary company at the same time: Provided that nothing contained in this sub -section shall disentitl e a key managerial personnel from being a director of any company with the permission of the Board: Provided further that whole -time key managerial personnel holding office in more than one company at the same time on the date of commencement of this Act, shall, within a period of six months from such commencement, choose one company, in which he wishes to continue to hold the office of key managerial personnel: Provided also that a company may appoint or employ a person as its managing director, if he is t he managing director or manager of one, and of not more than one, other company and such appointment or employment is made or approved by a resolution passed at a meeting of the Board with the consent of all the directors present at the meeting and of whic h meeting, and of the resolution to be moved thereat, specific notice has been given to all the directors then in India. (4) If the office of any whole -time key managerial personnel is vacated, the resulting vacancy shall be filled -up by the Board at a mee ting of the Board within a period of six months from the date of such vacancy. 138 1[(5) If any company makes any default in complying with the provisions of this section, such company shall be liable to a penalty of five lakh rupees and every director and key managerial personnel of the company who is in default shall be liable to a penalty of fifty thousand rupees and where the default is a continuing one, with a further penalty of one thousand rupees for each day after the first during which such default con tinues but not exceeding five lakh rupees. ] 204. Secretarial audit for bigger companies. (1) Every listed company and a company belonging to other class of companies as may be prescribed shall annex with its Boards report made in terms of sub - section ( 3) of section 134, a secretarial audit report, given by a company secretary in practice, in such form as may be prescribed. (2) It shall be the duty of the company to give all assistance and facilities to the company secretary in practice, for auditing the se cretarial and related records of the company. (3) The Board of Directors, in their report made in terms of sub -section ( 3) of section 134, shall explain in full any qualification or observation or other remarks made by the company secretary in practice in his report under sub -section ( 1). (4) If a company or any officer of the company or the company secretary in practice, contravenes the provisions of this section, the company, every officer of the company or the company secretary in practice, who is in def ault, shall be 2[liable to a penalty of two lakh rupees] . 205. Functions of company secretary. (1) The functions of the company secretary shall include, (a) to report to the Board about compliance with the provisions of this Act, the rules made thereunder and other laws applicable to the company; (b) to ensure that the company complies with the applicable secretarial standards; (c) to discharge such other duties as may be prescribed. Explanation. For the purpose of this section, the expression secretarial standards means secretarial standards issued by the Institute of Company Secretaries of India constituted under section 3 of the Company Secretaries Act, 1980 (56 of 1980) and approved by the Central Government. (2) The provisions contained in section 20 4 and section 205 shall not affect the duties and functions of the Board of Directors, chairperson of the company, managing director or whole -time director under this Act, or any other law for the time being in force. CHAPTER XIV INSPECTION, INQUIRY AND IN VESTIGATION 206. Power to call for information, inspect books and conduct inquiries. (1) Where on a scrutiny of any document filed by a company or on any information received by him, the Registrar is of the opinion that any further information or explanati on or any further documents relating to the company is necessary, he may by a written notice require the company (a) to furnish in writing such information or explanation; or (b) to produce such documents, within such reasonable time, as may be specified in the notice. (2) On the receipt of a notice under sub -section ( 1), it shall be the duty of the company and of its officers concerned to furnish such information or explanation to the best of their knowledge and power and to produce the documents to the R egistrar within the time specified or extended by the Registrar: Provided that where such information or explanation relates to any past period, the officers who had been in the employment of the company for such period, if so called upon by the Registrar through a notice served on them in writing, shall also furnish such information or explanation to the best of their knowledge. 1. Subs. by Act 22 of 2019, s. 30, for sub -section ( 5) (w.e.f. 2 -11-2018). 2. Subs. by Act 29 of 2020, s. 41, for certain words (w.e.f. 21 -12-2020). 139 (3) If no information or explanation is furnished to the Registrar within the time specified under sub - section ( 1) or if the Regi strar on an examination of the documents furnished is of the opinion that the information or explanation furnished is in adequate or if the Registrar is satisfied on a scrutiny of the documents furnished that an unsatisfactory state of affairs exists in th e company and does not disclose a full and fair statement of the information required, he may, by another written notice, call on the company to produce for his inspection such further books of account, books, papers and explanations as he may require at s uch place and at such time as he may specify in the notice: Provided that before any notice is served under this sub -section, the Registrar shall record his reasons in writing for issuing such notice. (4) If the Registrar is satisfied on the basis of information available with or furnished to him or on a representation made to him by any person that the business of a company is being carried on for a fraudulent or unlawful purpose or not in compliance with the provisions of this Act or if the grievance s of investors are not being addressed, the Registrar may, after informing the company of the allegations made against it by a written order, call on the company to furnish in writing any information or explanation on matters specified in the order within such time as he may specify therein and carry out such inquiry as he deems fit after providing the company a reasonable opportunity of being heard: Provided that the Central Government may, if it is satisfied that the circumstances so warrant, direct the R egistrar or an inspector appointed by it for the purpose to carry out the inquiry under this sub -section: Provided further that where business of a company has been or is being carried on for a fraudulent or unlawful purpose, every officer of the company w ho is in default shall be punishable for fraud in the manner as provided in section 447. (5) Without prejudice to the foregoing provisions of this section, the Central Government may, if it is satisfied that the circumstances so warrant, direct inspection of books and papers of a company by an inspector appointed by it for the purpose. (6) The Central Government may, having regard to the circumstances by general or special order, authorise any statutory authority to carry out the inspection of books of acco unt of a company or class of companies. (7) If a company fails to furnish any information or explanation or produce any document required under this section, the company and every officer of the company, who is in default shall be punishable with a fine wh ich may extend to one lakh rupees and in the case of a continuing failure, with an additional fine which may extend to five hundred rupees for everyday after the first during which the failure continues. 207.Conduct of inspection and inquiry. (1) Where a R egistrar or inspector calls for the books of account and other books and papers under section 206, it shall be the duty of every director, officer or other employee of the company to produce all such documents to the Registrar or inspector and furnish him with such statements, information or explanations in such form as the Registrar or inspector may require and shall render all assistance to the Registrar or inspector in connection with such inspection. (2) The Registrar or inspector, making an inspection or inquiry under section 206 may, during the course of such inspection or inquiry, as the case may be, (a) make or cause to be made copies of books of account and other books and papers; or (b) place or cause to be placed any marks of identification in su ch books in token of the inspection having been made. (3) Notwithstanding anything contained in any other law for the time being in force or in any contract to the contrary, the Registrar or inspector making an inspection or inquiry shall have all the powe rs as are vested in a civil court under the Code of Civil Procedure, 1908 (5 of 1908), while trying a suit in respect of the following matters, namely: (a) the discovery and production of books of account and other documents, at such place and time as may be specified by such Registrar or inspector making the inspection or inquiry; (b) summoning and enforcing the attendance of persons and examining them on oath; and 140 (c) inspection of any books, registers and other documents of the company at any place. (4) (i) If any director or officer of the company disobeys the direction issued by the Registrar or the inspector under this section, the director or the officer shall be punishable with imprisonment which may extend to one year and with fine which shall not be less than twenty -five thousand rupees but which may extend to one lakh rupees. (ii) If a director or an officer of the company has been convicted of an offence under this section, the director or the officer shall, on and from the date on which he is so convicted, be deemed to have vacated his office as such and on such vacation of office, shall be disqualified from holding an office in any company. 208. Report on inspection made. The Registrar or inspector shall, after the inspection of the books of acc ount or an inquiry under section 206 and other books and papers of the company under section 207, submit a report in writing to the Central Government along with such documents, if any, and such report may, if necessary, include a recommendation that furth er investigation into the affairs of the company is necessary giving his reasons in support. 209. Search and seizure. (1) Where, upon information in his possession or otherwise, the Registrar or inspector has reasonable ground to believe that the books and papers of a company, or relating to the key managerial personnel or any director or auditor or company secretary in practice if the company has not appointed a company secretary, are likely to be destroyed, mutilated, altered, falsified or secreted, he ma y, after obtaining an order from the Special Court for the seizure of such books and papers, (a) enter, with such assistance as may be required, and search, the place or places where such books or papers are kept; and (b) seize such books and papers as he considers necessary after allowing the company to take copies of, or extracts from, such books or papers at its cost. (2) The Registrar or inspector shall return the books and papers seized under sub -section ( 1), as soon as may be, and in any case not lat er than one hundred and eightieth day after such seizure, to the company from whose custody or power such books or papers were seized: Provided that the books and papers may be called for by the Registrar or inspector for a further period of one hundred an d eighty days by an order in writing if they are needed again: Provided further that the Registrar or inspector may, before returning such books and papers as aforesaid, take copies of, or extracts from

that the Registrar or inspector may, before returning such books and papers as aforesaid, take copies of, or extracts from them or place identification marks on them or any par t thereof or deal with the same in such other manner as he considers necessary. (3) The provisions of the Code of Criminal Procedure, 1973 (2 of 1974) relating to searches or seizures shall apply, mutatis mutandis, to every search and seizure made under this section. 210. Investigation into affairs of company. (1) Where the Central Government is of the opinion, that it is necessary to investigate into the affairs of a company, (a) on the receipt of a report of the Registrar or inspector under section 208 ; (b) on intimation of a special resolution passed by a company that the affairs of the company ought to be investigated; or (c) in public interest, it may order an investigation into the affairs of the company. (2) Where an order is passed by a court or t he Tribunal in any proceedings before it that the affairs of a company ought to be investigated, the Central Government shall order an investigation into the affairs of that company. (3) For the purposes of this section, the Central Government may appoint one or more persons as inspectors to investigate into the affairs of the company and to report thereon in such manner as the Central Government may direct. 141 211. Establishment of Serious Fraud Investigation Office. (1) The Central Government shall, by notif ication, establish an office to be called the Serious Fraud Investigation Office to investigate frauds relating to a company: Provided that until the Serious Fraud Investigation Office is established under sub -section ( 1), the Serious Fraud Investigation O ffice set -up by the Central Government in terms of the Government of India Resolution No. 45011/16/2003 -Adm -I, dated the 2nd July, 2003 shall be deemed to be the Serious Fraud Investigation Office for the purpose of this section. (2) The Serious Fraud Inve stigation Office shall be headed by a Director and consist of such number of experts from the following fields to be appointed by the Central Government from amongst persons of ability, integrity and experience in, (i) banking; (ii) corporate affairs; (iii) taxation; (iv) forensic audit; (v) capital market; (vi) information technology; (vii) law; or (viii) such other fields as may be prescribed. (3) The Central Government shall, by notification, appoint a Director in the Serious Fraud Investigation Office, who shall be an officer not below the rank of a Joint Secretary to the Government of India having knowledge and experience in dealing with matters relating to corporate affairs. (4) The Central Government may appoint such experts and other officers and em ployees in the Serious Fraud Investigation Office as it considers necessary for the efficient discharge of its functions under this Act. (5) The terms and conditions of service of Director, experts, and other officers and employees of the Serious Fraud Inv estigation Office shall be such as may be prescribed. 212. Investigation into affairs of Company by Serious Fraud Investigation Office. (1) Without prejudice to the provisions of section 210, where the Central Government is of the opinion, that it is neces sary to investigate into the affairs of a company by the Serious Fraud Investigation Office (a) on receipt of a report of the Registrar or inspector under section 208; (b) on intimation of a special resolution passed by a company that its affairs are required to be investigated; (c) in the public interest; or (d) on request from any Department of the Central Government or a State Government, the Central Government may, by order, assign the investigation into the affairs of the said company to the Serio us Fraud Investigation Office and its Director, may designate such number of inspectors, as he may consider necessary for the purpose of such investigation. (2) Where any case has been assigned by the Central Government to the Serious Fraud Investigation Office for investigation under this Act, no other investigating agency of Central Government or any State Government shall proceed with investigation in such case in respect of any offence under this Act and in case any such investigation has already been i nitiated, it shall not be proceeded further with and the concerned agency shall transfer the relevant documents and records in respect of such offences under this Act to Serious Fraud Investigation Office. (3) Where the investigation into the affairs of a company has been assigned by the Central Government to Serious Fraud Investigation Office, it shall conduct the investigation in the manner and follow the 142 procedure provided in this Chapter; and submit its report to the Central Government within such perio d as may be specified in the order. (4) The Director, Serious Fraud Investigation Office shall cause the affairs of the company to be investigated by an Investigating Officer who shall have the power of the inspector under section 217. (5) The company and its officers and employees, who are or have been in employment of the company shall be responsible to provide all information, explanation, documents and assistance to the Investigating Officer as he may require for conduct of the investigation. (6) Notwit hstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), 1[offence covered under section 447] of this Act shall be cognizable and no person accused of any offence under those sections shall be released on bail or on his own bond un less (i) the Public Prosecutor has been given an opportunity to oppose the application for such release; and (ii) where the Public Prosecutor opposes the application, the court is satisfied that there are reasonable grounds for believing that he is not gu ilty of such offence and that he is not likely to commit any offence while on bail: Provided that a person, who, is under the age of sixteen years or is a woman or is sick or infirm, may be released on bail, if the Special Court so directs: Provided furthe r that the Special Court shall not take cognizance of any offence referred to this sub - section except upon a complaint in writing made by (i) the Director, Serious Fraud Investigation Office; or (ii) any officer of the Central Government authorised, by a general or special order in writing in this behalf by that Government. (7) The limitation on granting of bail specified in sub -section ( 6) is in addition to the limitations under the Code of Criminal Procedure, 1973 (2 of 1974) or any other law for the time being in force on granting of bail. (8) 2[If any officer not below the rank of Assistant Director] of Serious Fraud Investigation Office authorised in this behalf by the Central Government by general or special order, has on the basis of material in his possession reason to believe (the reason for such belief to be recorded in writing) that any person has been guilty of any offence punishable under sections referred to in sub -section ( 6), he may arrest such person and shall, as soon as may be, inform h im of the grounds for such arrest. (9) 3[The officer authorized under sub -section ( 8) shall, immediately after arrest of such person under such sub -section] , forward a copy of the order, along with the material in his possession, referred to in that sub-section, to the Serious Fraud Investigation Office in a sealed envelope, in such manner as may be prescribed and the Serious Fraud Investigation Office shall keep such order and material for such period as may be prescribed. (10) Every person arrested under sub-section ( 8) shall within twenty -four hours, be taken to a 4[Special Court or Judicial Magistrate] or a Metropolitan Magistrate, as the case may be, having jurisdiction: Provided that the period of twenty -four hours shall exclude the time necessary for the journey from the place of arrest to the 5[Special Court or Magistrate's court ]. (11) The Central Government if so directs, the Serious Fraud Investigation Office shall s ubmit an interim report to the Central Government. 1. Subs. by Act 21 of 2015, s. 17, for certain words, brackets and figures (w.e.f. 29 -5-2015). 2. Subs. by Act 22 of 2019 , s. 31, for If the Director, Additional Director or Assistant Director (w.e.f. 15 -8-2019). 3. Subs. s. 31, ibid., for The Director, Additional Director or Assistant Director of Serious Fraud Investigation Office shall, immediately after arrest of such p erson under sub -section ( 8) (w.e.f. 15 -8-2019). 4. Subs. by s. 31, ibid., for Judic ial Magistrate (w.e.f. 15 -8-2019). 5. Subs. by s. 31, ibid., for Magistrates Court (w.e.f. 15 -8-2019). 143 (12) On completion of the investigation, the Serious Fraud Investigation Office shall submit the investigation report to the Central Government. (13) Notwithstanding anything contained in this Act or in an y other law for the time being in force, a copy of the investigation report may be obtained by any person concerned by making an application in this regard to the court. (14) On receipt of the investigation report, the Central Government may, after examina tion of the report (and after taking such legal advice, as it may think fit), direct the Serious Fraud Investigation Office to initiate prosecution against the company and its officers or employees, who are or have been in employment of the company or any other person directly or indirectly connected with the affairs of the company. 1[(14A) Where the report under sub -section ( 11) or sub -section ( 12) states that fraud has taken place in a company and due to such fraud any director, key managerial personnel, other officer of the company or any other person or entity, has taken undue advantage or benefit, whether in the form of any asset, property or cash or in any other manner, the Central Government may file an application before the Tribunal for appropriate orders with regard to disgorgement of such asset, property or cash and also for holding such director, key managerial personnel, other officer or any other person liable personally without any limitation of liability.] (15) Notwithstanding anything contain ed in this Act or in any other law for the time being in force, the investigation report filed with the Special Court for framing of charges shall be deemed to be a report filed by a police officer under section 173 of the Code of Criminal Procedure, 1973 (2 of 1974). (16) Notwithstanding anything contained in this Act, any investigation or other action taken or initiated by Serious Fraud Investigation Office under the provisions of the Companies Act, 1956 (1 of 1956) shall continue to be proceeded with und er that Act as if this Act had not been passed. (17) (a) In case Serious Fraud Investigation Office has been investigating any offence under this Act, any other investigating agency, State Government, police authority, income -tax authorities having any information or documents in respect of such offence shall provide all such information or documents available with it to the Serious Fraud Investigation Office; (b) The Serious Fraud Investigation Office shall share any information or documents available with it, with any investigating agency, State Government, police authority or income -tax authorities, which may be relevant or useful for such investigating agency, State Government, police authority or income -tax authorities in respect of any offence or matte r being investigated or examined by it under any other law. 213. Investigation into companys affairs in other cases. The Tribunal may, (a) on an application made by (i) not less than one hundred members or members holding not less than one -tenth of the total voting power, in the case of a company having a share capital; or (ii) not less than one -fifth of the persons on the companys register of members, in the case of a company having no share capital, and supported by such evidence as may be necessary for the purpose of showing that the applicants have good reasons for seeking an order for conducting an investigation into the affairs of the company; or (b) on an application made to it by any other person or otherwise, if it is satisfied that there are circumstances suggesting that (i) the business of the company is being conducted with intent to defraud its creditors, members or any other person or otherwise for a fraudulent or unlawful purpose, or in a manner oppressive to any of its members or that th e company was formed for any fraudulent or unlawful purpose; (ii) persons concerned in the formation of the company or the management of its affairs have in connection therewith been guilty of fraud, misfeasance or other misconduct towards the company or towards any of its members; or 1. Ins. by Act 22 of 2019 , s. 31 (w.e.f. 15 -8-2019). 144 (iii) the members of the company have not been given all the information with respect to its affairs which they might reasonably expect, including information relating to the calculation of the commission payable to a managing or other director, or the manager, of the company, order, after giving a reasonable opportunity of being heard to the parties concerned, that the affairs of the company ought to be investigated by an inspector or inspectors appointed by the Central Gover nment and where such an order is passed, the Central Government shall appoint one or more competent persons as inspectors to investigate into the affairs of the company in respect of such matters and to report thereupon to it in such manner as the Central Government may direct: Provided that if after investigation it is proved that (i) the business of the company is being conducted with intent to defraud its creditors, members or any other persons or otherwise for a fraudulent or unlawful purpose, or that the company was formed for any fraudulent or unlawful purpose; or (ii) any person concerned in the formation of the company or the management of its affairs have in connection therewith been guilty of fraud, then, every officer of the company who is in def ault and the person or persons concerned in the formation of the company or the management of its affairs shall be punishable for fraud in the manner as provided in section 447. 214. Security for payment of costs and expenses of investigation. Where an inv estigation is ordered by the Central Government in pursuance of clause ( b) of sub -section ( 1) of section 210, or in pursuance of an order made by the Tribunal under section 213, the Central Government may before appointing an inspector under sub -section ( 3) of section 210 or clause ( b) of section 213, require the applicant to give such security not exceeding twenty -five thousand rupees as may be prescribed, as it may think fit, for payment of the costs and expenses of the investigation and such security sha ll be refunded to the applicant if the investigation results in prosecution.

costs and expenses of the investigation and such security sha ll be refunded to the applicant if the investigation results in prosecution. 215. Firm, body corporate or association not to be appointed as inspector. No firm, body corporate or other association shall be appointed as an inspector. 216. Investigation of o wnership of company. (1) Where it appears to the Central Government that there is a reason so to do, it may appoint one or more inspectors to investigate and report on matters relating to the company, and its membership for the purpose of determining the t rue persons (a) who are or have been financially interested in the success or failure, whether real or apparent, of the company; or (b) who are or have been able to control or to materially influence the policy of the 1[company; or]. 2[(c) who have or had beneficial interest in shares of a company or who are or have been beneficial owners or significant beneficial owner of a company]. (2) Without prejudice to its powers under sub -section ( 1), the Central Government shall appoint one or more inspectors u nder that sub -section, if the Tribunal, in the course of any proceeding before it, directs by an order that the affairs of the company ought to be investigated as regards the membership of the company and other matters relating to the company, for the purp oses specified in sub -section ( 1). (3) While appointing an inspector under sub -section ( 1), the Central Government may define the scope of the investigation, whether as respects the matters or the period to which it is to extend or otherwise, and in partic ular, may limit the investigation to matters connected with particular shares or debentures. (4) Subject to the terms of appointment of an inspector, his powers shall extend to the investigation of any circumstances suggesting the existence of any arrangem ent or understanding which, though not legally binding, is or was observed or is likely to be observed in practice and which is relevant for the purposes of his investigation. 1. Subs. by Act 1 of 2018, s. 71 , for company (w.e.f. 13 -6-2018). 2. Ins. by s. 71, ibid. (w.e.f. 13 -6-2018). 145 217. Procedure, powers, etc., of inspectors. (1) It shall be the duty of all off icers and other employees and agents including the former officers, employees and agents of a company which is under investigation in accordance with the provisions contained in this Chapter, and where the affairs of any other body corporate or a person ar e investigated under section 219, of all officers and other employees and agents including former officers, employees and agents of such body corporate or a person (a) to preserve and to produce to an inspector or any person authorised by him in this beha lf all books and papers of, or relating to, the company or, as the case may be, relating to the other body corporate or the person, which are in their custody or power; and (b) otherwise to give to the inspector all assistance in connection with the investigation which they are reasonably able to give. (2) The inspector may require any body corporate, other than a body corporate referred to in sub -section (1), to furnish such information to, or produce such books and papers before him or any person au thorised by him in this behalf as he may consider necessary, if the furnishing of such information or the production of such books and papers is relevant or necessary for the purposes of his investigation. (3) The inspector shall not keep in his custody an y books and papers produced under sub -section ( 1) or sub-section ( 2) for more than one hundred and eighty days and return the same to the company, body corporate, firm or individual by whom or on whose behalf the books and papers were produced: Provided th at the books and papers may be called for by the inspector if they are needed again for a further period of one hundred and eighty days by an order in writing. (4) An inspector may examine on oath (a) any of the persons referred to in sub -section ( 1); and (b) with the prior approval of the Central Government, any other person, in relation to the affairs of the company, or other body corporate or person, as the case may be, and for that purpose may require any of those persons to appear before him personall y: Provided that in case of an investigation under section 212, the prior approval of Director, Serious Fraud Investigation Office shall be sufficient under clause ( b). (5) Notwithstanding anything contained in any other law for the time being in force or in any contract to the contrary, the inspector, being an officer of the Central Government, making an investigation under this Chapter shall have all the powers as are vested in a civil court under the Code of Civil Procedure, 1908 (5 of 1908), while tryin g a suit in respect of the following matters, namely: (a) the discovery and production of books of account and other documents, at such place and time as may be specified by such person; (b) summoning and enforcing the attendance of persons and examining them on oath; and (c) inspection of any books, registers and other documents of the company at any place. (6) (i) If any director or officer of the company disobeys the direction issued by the Registrar or the inspector under this section, the director or the officer shall be punishable with imprisonment which may extend to one year and with fine which shall not be less than twenty -five thousand rupees but which may extend to one lakh rupees. (ii) If a director or an officer of the company has been convicte d of an offence under this section, the director or the officer shall, on and from the date on which he is so convicted, be deemed to have vacated his office as such and on such vacation of office, shall be disqualified from holding an office in any compan y. (7) The notes of any examination under sub -section ( 4) shall be taken down in writing and shall be read over to, or by, and signed by, the person examined, and may thereafter be used in evidence against him. (8) If any person fails without reasonable ca use or refuses 146 (a) to produce to an inspector or any person authorised by him in this behalf any book or paper which is his duty under sub -section ( 1) or sub -section ( 2) to produce; (b) to furnish any information which is his duty under sub -section ( 2) to furnish; (c) to appear before the inspector personally when required to do so under sub -section ( 4) or to answer any question which is put to him by the inspector in pursuance of that sub -section; or (d) to sign the notes of any examination referred to in sub-section ( 7), he shall be punishable with imprisonment for a term which may extend to six months and with fine which shall not be less than twenty -five thousand rupees but which may extend to one lakh rupees, and also with a further fine which may extend to two thousand rupees for every day after the first during which the failure or refusal continues. (9) The officers of the Central Government, State Government, police or statutory authority shall provide assistance to the inspector for the purpose of inspection, inquiry or investigation, which the inspector may, with the prior approval of the Central Government, require. (10) The Central Government may enter into an agreement with the Government of a foreign State for reciprocal arrangements to ass ist in any inspection, inquiry or investigation under this Act or under the corresponding law in force in that State and may, by notification, render the application of this Chapter in relation to a foreign State with which reciprocal arrangements have bee n made subject to such modifications, exceptions, conditions and qualifications as may be deemed expedient for implementing the agreement with that State. (11) Notwithstanding anything contained in this Act or in the Code of Criminal Procedure, 1973(2 of 1974) if, in the course of an investigation into the affairs of the company, an application is made to the competent court in India by the inspector stating that evidence is, or may be, available in a country or place outside India, such court may issue a l etter of request to a court or an authority in such country or place, competent to deal with such request, to examine orally, or otherwise, any person, supposed to be acquainted with the facts and circumstances of the case, to record his statement made in the course of such examination and also to require such person or any other person to produce any document or thing, which may be in his possession pertaining to the case, and to forward all the evidence so taken or collected or the authenticated copies th ereof or the things so collected to the court in India which had issued such letter of request: Provided that the letter of request shall be transmitted in such manner as the Central Government may specify in this behalf: Provided further that every statem ent recorded or document or thing received under this sub -section shall be deemed to be the evidence collected during the course of investigation. (12) Upon receipt of a letter of request from a court or an authority in a country or place outside India, competent to issue such letter in that country or place for the examination of any person or production of any document or thing in relation to affairs of a company under investigation in that country or place, the Central Government may, if it thinks fit, f orward such letter of request to the court concerned, which shall thereupon summon the person before it and record his statement or cause any document or thing to be produced, or send the letter to any inspector for investigation, who shall thereupon inves tigate into the affairs of company in the same manner as the affairs of a company are investigated under this Act and the inspector shall submit the report to such court within thirty days or such extended time as the court may allow for further action: Provided that the evidence taken or collected under this sub -section or authenticated copies thereof or the things so collected shall be forwarded by the court, to the Central Government for transmission, in such manner as the Central Government may deem fit , to the court or the authority in country or place outside India which had issued the letter of request. 218. Protection of employees during investigation. (1) Notwithstanding anything contained in any other law for the time being in force, if (a) during the course of any investigation of the affairs and other matters of or relating to a company, other body corporate or person under section 210, section 212, section 213 or section 219 or 147 of the membership and other matters of or relating to a company, or the ownership of shares in or debentures of a company or body corporate, or the affairs and other matters of or relating to a company, other body corporate or person, under section 216; or (b) during the pendency of any proceeding against any person concer ned in the conduct and management of the affairs of a company under Chapter XVI, such company, other body corporate or person proposes (i) to discharge or suspend any employee; or (ii) to punish him, whether by dismissal, removal, reduction in rank or oth erwise; or (iii) to change the terms of employment to his disadvantage, the company, other body corporate or person, as the case may be, shall obtain approval of the Tribunal of the action proposed against the employee and if the Tribunal has any objection to the action proposed, it shall send by post notice thereof in writing to the company, other body corporate or person concerned. (2) If the company, other body corporate or person concerned does not receive within thirty days of making of application und er sub -section ( 1), the approval of the Tribunal, then and only then, the company, other body corporate or person concerned may proceed to take against the employee, the action proposed. (3) If the company, other body corporate or person concerned is dissa tisfied with the objection raised by the Tribunal, it may, within a period of thirty days of the receipt of the notice of the objection, prefer an appeal to the Appellate Tribunal in such manner and on payment of such fees as may be prescribed. (4) The decision of the Appellate Tribunal on such appeal shall be final and binding on the Tribunal and on the company, other body corporate or person concerned. (5) For the removal of doubts, it is hereby declared that the provisions of this section shall have e ffect without prejudice to the provisions of any other law for the time being in force. 219. Power of inspector to conduct investigation into affairs of related companies, etc. If an inspector appointed under section 210 or section 212 or section 213 to in vestigate into the affairs of a company considers it necessary for the purposes of the investigation, to investigate also the affairs of (a) any other body corporate which is, or has at any relevant time been the companys subsidiary company or holding co mpany, or a subsidiary company of its holding company; (b) any other body corporate which is, or has at any relevant time been managed by any person as managing director or as manager, who is, or was, at the relevant time, the managing director or the mana ger of the company; (c) any other body corporate whose Board of Directors comprises nominees of the company or is accustomed to act in accordance with the directions or instructions of the company or any of its directors; or (d) any person who is or has at any relevant time been the companys managing director or manager or employee, he shall, subject to the prior approval of the Central Government, investigate into and report on the affairs of the other body corporate or of the managing director or manager , in so far as he considers that the results of his investigation are relevant to the investigation of the affairs of the company for which he is appointed. 220. Seizure of documents by inspector. (1) Where in the course of an investigation under this Chap ter, the inspector has reasonable grounds to believe that the books and papers of, or relating to, any company or other body corporate or managing director or manager of such company are likely to be destroyed, mutilated, altered, falsified or secreted, th e inspector may (a) enter, with such assistance as may be required, the place or places where such books and papers are kept in such manner as may be required; and (b) seize books and papers as he considers necessary after allowing the company to take cop ies of, or extracts from, such books and papers at its cost for the purposes of his investigation. 148 (2) The inspector shall keep in his custody the books and papers seized under this section for such a period not later than the conclusion of the investigati on as he considers necessary and thereafter shall return the same to the company or the other body corporate, or, as the case may be, to the managing director or the manager or any other person from whose custody or power they were seized: Provided that th e inspector may, before returning such books and papers as aforesaid, take copies of, or extracts from them or place identification marks on them or any part thereof or deal with the same in such manner as he considers necessary. (3) The provisions of the Code of Criminal Procedure, 1973 (2 of 1974), relating to searches or seizures shall apply mutatis mutandis to every search or seizure made under this section. 221. Freezing of assets of company on inquiry and investigation. (1)

every search or seizure made under this section. 221. Freezing of assets of company on inquiry and investigation. (1) Where it appears to the Tribunal, on a reference made to it by the Central Government or in connection with any inquiry or investigation into the affairs of a company under this Chapter or on any complaint made by such number of members as specified under sub -section ( 1) of section 244 or a creditor having one lakh amount outstanding against the company or any other person having a reasonable ground to believe that the removal, transfer or disposal of funds, assets, properties of the company is likely to take place in a manner that i s prejudicial to the interests of the company or its shareholders or creditors or in public interest, it may by order direct that such transfer, removal or disposal shall not take place during such period not exceeding three years as may be specified in th e order or may take place subject to such conditions and restrictions as the Tribunal may deem fit. (2) In case of any removal, transfer or disposal of funds, assets, or properties of the company in contravention of the order of the Tribunal under sub -section (1), the company shall be punishable with fine which shall not be less than one lakh rupees but which may extend to twenty -five lakh rupees and every officer of the company who is in default shall be punishable with imprisonment for a term which may extend to three years or with fine which shall not be less than fifty thousand rupees but which may extend to five lakh rupees, or with both. 222. Imposition of restrictions upon securities. (1) Where it appears to the Tribunal, in connection with any invest igation under section 216 or on a complaint made by any person in this behalf, that there is good reason to find out the relevant facts about any securities issued or to be issued by a company and the Tribunal is of the opinion that such facts cannot be fo und out unless certain restrictions, as it may deem fit, are imposed, the Tribunal may, by order, direct that the securities shall be subject to such restrictions as it may deem fit for such period not exceeding three years as may be specified in the order . (2) Where securities in any company are issued or transferred or acted upon in contravention of an order of the Tribunal under sub -section ( 1), the company shall be punishable with fine which shall not be less than one lakh rupees but which may extend to twenty -five lakh rupees and every officer of the company who is in default shall be punishable with imprisonment for a term which may extend to six months or with fine which shall not be less than twenty -five thousand rupees but which may extend to five l akh rupees, or with both. 223. Inspectors report. (1) An inspector appointed under this Chapter may, and if so directed by the Central Government shall, submit interim reports to that Government, and on the conclusion of the investigation, shall submit a final report to the Central Government. (2) Every report made under sub -section ( 1) shall be in writing or printed as the Central Government may direct. (3) A copy of the report made under sub -section ( 1) may be obtained 1[by members, creditors or any other person whose interest is likely to be affected] by making an application in this regard to the Central Government. (4) The report of any inspector appointed under this Chapter shall be authenticated either (a) 2[by the seal, if any] of the company whose affairs have been investigated; or 1. Ins. by Act 1 of 2018, s. 72 (w.e.f. 9 -2-2018). 2. Subs. by Act 21 of 2015, s. 18, for by the seal (w.e.f. 29 -5-2015). 149 (b) by a certificate of a public officer having the custody of the report, as provided under section 76 of the Indian Evidence Act, 1872 (1 of 1872), and such report shall be admissible in any legal proceeding as evidenc e in relation to any matter contained in the report. (5) Nothing in this section shall apply to the report referred to in section 212. 224. Actions to be taken in pursuance of inspectors report. (1) If, from an inspectors report, made under section 223, it appears to the Central Government that any person has, in relation to the company or in relation to any other body corporate or other person whose affairs have been investigated under this Chapter been guilty of any offence for which he is criminally li able, the Central Government may prosecute such person for the offence and it shall be the duty of all officers and other employees of the company or body corporate to give the Central Government the necessary assistance in connection with the prosecution. (2) If any company or other body corporate is liable to be wound up under this Act 1[or under the Insolvency and Bankruptcy Code, 2016 (31 of 2016)] and it appears to the Central Government from any such report made under section 223 that it is expedient so to do by reason of any such circumstances as are referred to in section 213, the Central Government may, unless the company or body corporate is already being wound up by the Tribunal, cause to be presented to the Tribunal by any person authorised by th e Central Government in this behalf (a) a petition for the winding up of the company or body corporate on the ground that it is just and equitable that it should be wound up; (b) an application under section 241; or (c) both. (3) If from any such report a s aforesaid, it appears to the Central Government that proceedings ought, in the public interest, to be brought by the company or any body corporate whose affairs have been investigated under this Chapter (a) for the recovery of damages in respect of any fraud, misfeasance or other misconduct in connection with the promotion or formation, or the management of the affairs, of such company or body corporate; or (b) for the recovery of any property of such company or body corporate which has been misapplied or wrongfully retained, the Central Government may itself bring proceedings for winding up in the name of such company or body corporate. (4) The Central Government, shall be indemnified by such company or body corporate against any costs or expenses incurred by it in, or in connection with, any proceedings brought by virtue of sub -section (3). (5) Where the report made by an inspector states that fraud has taken place in a company and due to such fraud any director, key managerial personnel, other off icer of the company or any other person or entity, has taken undue advantage or benefit, whether in the form of any asset, property or cash or in any other manner, the Central Government may file an application before the Tribunal for appropriate orders with regard to disgorgement of such asset, property, or cash, as the case may be, and also for holding such director, key managerial personnel, officer or other person liable personally without any limitation of liability. 225. Expenses of investigation. (1) The expenses of, and incidental to, an investigation by an inspector appointed by the Central Government under this Chapter other than expenses of inspection under section 214 shall be defrayed in the first instance by the Central Government, but shall be reimbursed by the following persons to the extent mentioned below, namely: (a) any person who is convicted on a prosecution instituted, or who is ordered to pay damages or restore any property in proceedings brought, under section 224, to the extent that he may in the same 1. Ins. by Act 31 of 2016, s. 255 and the Eleventh Schedule (w.e.f. 15 -11-2016). 150 proceedings be ordered to pay the said expenses as may be specified by the court convicting such person, or ordering him to pay such damages or restore such property, as the case may be; (b) any company or body corporate in whose name p roceedings are brought as aforesaid, to the extent of the amount or value of any sums or property recovered by it as a result of such proceedings; (c) unless, as a result of the investigation, a prosecution is instituted under section 224, (i) any company, body corporate, managing director or manager dealt with by the report of the inspector; and (ii) the applicants for the investigation, where the inspector was appointed under section 213, to such extent as the Central Government may direct. (2) Any amount for which a company or body corporate is liable under clause ( b) of sub -section ( 1) shall be a first charge on the sums or property mentioned in that clause. 226. Voluntary winding up of company, etc., not to stop investigation proceedings. An investigation under this Chapter may be initiated notwithstanding, and no such investigation shall be stopped or suspended by reason only of, the fact that (a) an application has been made under section 241; (b) the company has passed a special resolution fo r voluntary winding up; or (c) any other proceeding for the winding up of the company is pending before the Tribunal: Provided that where a winding up order is passed by the Tribunal in a proceeding referred to in clause (c), the inspector shall inform the Tribunal about the pendency of the investigation proceedings before him and the Tribunal shall pass such order as it may deem fit: Provided further that nothing in the winding up order shall absolve any director or other employee of the company from parti cipating in the proceedings before the inspector or any liability as a result of the finding by the inspector. 227. Legal advisors and bankers not to disclose certain information. Nothing in this Chapter shall require the disclosure to the Tribunal or to t he Central Government or to the Registrar or to an inspector appointed by the Central Government (a) by a legal adviser, of any privileged communication made to him in that capacity, except as respects the name and address of his client; or (b) by the ban kers of any company, body corporate, or other person, of any information as to the affairs of any of their customers, other than such company, body corporate, or person. 228. Investigation, etc., of foreign companies. The provisions of this Chapter shall a pply mutatis mutandis to inspection, inquiry or investigation in relation to foreign companies. 229. Penalty for furnishing false statement, mutilation, destruction of documents. Where a person who is required to provide an explanation or make a statement during the course of inspection, inquiry or investigation, or an officer or other employee of a company or other body corporate which is also under investigation, (a) destroys, mutilates or falsifies, or conceals or tampers or unauthorised removes, or is a party to the destruction, mutilation or falsification or concealment or tampering or unauthorised removal of, documents relating to the property, assets or affairs of the company or the body corporate; (b) makes, or is a party to the making of, a false e ntry in any document concerning the company or body corporate; or (c) provides an explanation which is false or which he knows to be false, he shall be punishable for fraud in the manner as provided in section 447. CHAPTER XV COMPROMISES, ARRANGEMENTS AND AMALGAMATIONS 230. Power to compromise or make arrangements with creditors and members. (1) Where a compromise or arrangement is proposed 151 (a) between a company and its creditors or any class of them; or (b) between a company and its members or any class o f them, the Tribunal may, on the application of the company or of any creditor or member of the company, or in the case of a company which is being wound up, of the liquidator,1[appointed under this Act or under the Insolvency and Bankruptcy Code, 2016 (31 of 2016), as the case may be,] order a meeting of the creditors or class of creditors, or of the members or class of members, as the case may be, to be called, held and conducted in such manner as the Tribunal directs. Explanation. For the purposes of this sub -section, arrangement includes a reorganisation of the companys share capital by the consolidation of shares of different classes or by the division of shares into shares of different classes, or by both of those methods. (2) The company or any ot her person, by whom an application is made under sub -section ( 1), shall disclose to the Tribunal by affidavit (a) all material facts relating to the company, such as the latest financial position of the company, the latest auditors report on the accounts of the company and the pendency of any investigation or proceedings against the company; (b) reduction of share capital of the company, if any, included in the compromise or arrangement; (c) any scheme of corporate debt restructuring consented to by not less than seventy -five per cent. of the secured creditors in value, including (i) a creditors responsibility statement in the prescribed form; (ii) safeguards for the protection of other secured and unsecured creditors; (iii) report by the auditor that t he fund requirements of the company after the corporate debt restructuring as approved shall conform to the liquidity test based upon the estimates provided to them by the Board; (iv) where the company proposes to adopt the corporate debt restructuring gui delines specified by the Reserve Bank of India, a statement to that effect; and (v) a valuation report in respect of the shares and the property and all assets, tangible and intangible, movable and immovable, of the company by a registered valuer. (3) Wher e a meeting is proposed to be called in pursuance of an order of the Tribunal under sub- section ( 1), a notice of such meeting shall be sent to all the creditors or class of creditors and to all the members or class of members and the debenture -holders of the company, individually at the address registered with the company which shall be accompanied by a statement disclosing the details of the compromise or arrangement, a copy of the valuation report, if any, and explaining their effect on credito rs, key managerial personnel, promoters and non -promoter members, and the debenture -holders and the effect of the compromise or arrangement on any material interests of the directors of the company or the debenture trustees, and such other matters as may b e prescribed: Provided that such notice and other documents shall also be placed on the website of the company, if any, and in case of a listed company, these documents shall be sent to the Securities and Exchange Board and stock exchange where the securit ies of the companies are listed, for placing on their website and shall also be published in newspapers in such manner as may be prescribed: Provided further that where the notice for the meeting is also issued by way of an advertisement, it shall indicate the time within which copies of the compromise or arrangement shall be made available to the concerned persons free of charge from the registered office of the company. (4) A notice under sub -section ( 3) shall provide

cerned persons free of charge from the registered office of the company. (4) A notice under sub -section ( 3) shall provide that the persons to whom the notice i s sent may vote in the meeting either themselves or through proxies or by postal ballot to the adoption of the compromise or arrangement within one month from the date of receipt of such notice: 1. Ins. by Act 31 of 2016, s. 255 and the Eleventh Schedule (w.e.f. 15 -11-2016). 152 Provided that any objection to the compromise or arrangement shall be made only by persons holding not less than ten per cent. of the shareholding or having outstanding debt amounting to not less than five per cent. of the total outstanding debt as per the latest audited financial statement. (5) A notice under sub -section ( 3) along with all the documents in such form as may be prescribed shall also be sent to the Central Government, the income -tax authorities, the Reserve Bank of India, the Securities and Exchange Board, the Registrar, the respective stock exchanges, the Official Liquidator, the Competition Commission of India established under sub -section ( 1) of section 7 of the Competition Act, 2002 (12 of 2003), if necessary, and such other sectoral regulators or authorities which are likely to be affected by the compromise or arrangement and shall require that representations, if any, to be made by them shall be made within a period of thirty days from the date of receipt of such notice, failing which, it shall be presumed that they have no representations to make on the proposals. (6) Where, at a meeting held in pursuance of sub -section ( 1), majority of persons representing three - fourths in value of the creditors, or class of creditors or members or class of members, as the case may be, voting in person or by proxy or by postal ballot, agree to any compromise or arrangement and if such compromise or arrangement is sanctioned by the Tribunal by an order, the same shall be binding on the company, all the creditors, or class of creditors or members or class of members, as the case may be, or, in case of a company being wound up, on the liquidator 1[appointed under this act or under the Insolvency and Bankruptcy Code, 2016 (31 of 2016), as the case may be,] and the contributories of the company. (7) An order made by the Tribunal under sub -section ( 6) shall provide for all or any of the following matters, namely: (a) where the compromise or arrangement provides for conversion of preference shares into equity shares, such preference shareholders shall be given an option to either obtain arrears of dividend in cash or accept equity shares equal to the value of the dividend payable; (b) the protection of any class of creditors; (c) if the compromise or arrangement results in the variation of the shareholders rights, it shall be given effect to under the provisions of section 48; (d) if the compromise or arrangement is agreed to by the creditors under sub -section ( 6), any proceedings pending before the Board for Industrial and Financial Reconstruction established under section 4 of the Sick Industrial Companies (Special Provisions) Act, 1985 (1 of 1986) shall abate; (e) such other matters including exit offer to dissenting shareholders, if any, as are in the opinion of the Tribunal necessary to effectively implement the terms o f the compromise or arrangement: Provided that no compromise or arrangement shall be sanctioned by the Tribunal unless a certificate by the company's auditor has been filed with the Tribunal to the effect that the accounting treatment, if any, proposed in the scheme of compromise or arrangement is in conformity with the accounting standards prescribed under section 133. (8) The order of the Tribunal shall be filed with the Registrar by the company within a period of thirty days of the receipt of the order. (9) The Tribunal may dispense with calling of a meeting of creditor or class of creditors where such creditors or class of creditors, having at least ninety per cent. value, agree and confirm, by way of affidavit, to the scheme of compromise or arrangement . (10) No compromise or arrangement in respect of any buy -back of securities under this section shall be sanctioned by the Tribunal unless such buy -back is in accordance with the provisions of section 68. (11) Any compromise or arrangement may include take over offer made in such manner as may be prescribed: Provided that in case of listed companies, takeover offer shall be as per the regulations framed by the Securities and Exchange Board. (12) An aggrieved party may make an application to the Tribunal in t he event of any grievances with respect to the takeover offer of companies other than listed companies in such manner as may be prescribed and the Tribunal may, on application, pass such order as it may deem fit. 1. Ins. by Act 31 of 2016, s. 255 and The Eleventh Schedule (w.e.f. 15 -11-2016). 153 Explanation .For the removal of doubts, it is hereby declared that the provisions of section 66 shall not apply to the reduction of share capital effected in pursuance of the order of the Tribunal under this section. 231. Power of Tribunal to enforce compromise or arrangement. (1) Where the Tribuna l makes an order under section 230 sanctioning a compromise or an arrangement in respect of a company, it (a) shall have power to supervise the implementation of the compromise or arrangement; and (b) may, at the time of making such order or at any time thereafter, give such directions in regard to any matter or make such modifications in the compromise or arrangement as it may consider necessary for the proper implementation of the compromise or arrangement. (2) If the Tribunal is satisfied that the compromise or arrangement sanctioned under section 230 cannot be implemented satisfactorily with or without modifications, and the company is unable to pay its debts as per the scheme, it may make an order for winding up the company and such an order shall be deemed to be an order made under section 273. (3) The provisions of this section shall, so far as may be, also apply to a company in respect of which an order has been made before the commencement of this Act sanctioning a compromise or an arrangement. 232. Merger and amalgamation of companies. (1) Where an application is made to the Tribunal under section 230 for the sanctioning of a compromise or an arrangement proposed between a company and any such persons as are mentioned in that section, and it is shown to the Tribunal (a) that the compromise or arrangement has been proposed for the purposes of, or in connection with, a scheme for the reconstruction of the company or companies involving merger or the amalgamation of any two or more companies; and (b) that under the scheme, the whole or any part of the undertaking, property or liabilities of any company (hereinafter referred to as the transferor company) is required to be transferred to another company (hereinafter referred to as the transferee comp any), or is proposed to be divided among and transferred to two or more companies, the Tribunal may on such application, order a meeting of the creditors or class of creditors or the members or class of members, as the case may be, to be called, held and c onducted in such manner as the Tribunal may direct and the provisions of sub -sections ( 3) to ( 6) of section 230 shall apply mutatis mutandis. (2) Where an order has been made by the Tribunal under sub -section ( 1), merging companies or the companies in resp ect of which a division is proposed, shall also be required to circulate the following for the meeting so ordered by the Tribunal, namely: (a) the draft of the proposed terms of the scheme drawn up and adopted by the directors of the merging company; (b) confirmation that a copy of the draft scheme has been filed with the Registrar; (c) a report adopted by the directors of the merging companies explaining effect of compromise on each class of shareholders, key managerial personnel, promoters and non -promot er shareholders laying out in particular the share exchange ratio, specifying any special valuation difficulties; (d) the report of the expert with regard to valuation, if any; (e) a supplementary accounting statement if the last annual accounts of any of the merging company relate to a financial year ending more than six months before the first meeting of the company summoned for the purposes of approving the scheme. (3) The Tribunal, after satisfying itself that the procedure specified in sub -sections ( 1) and ( 2) has been complied with, may, by order, sanction the compromise or arrangement or by a subsequent order, make provision for the following matters, namely: (a) the transfer to the transferee company of the whole or any part of the undertaking, prop erty or liabilities of the transferor company from a date to be determined by the parties unless the Tribunal, for reasons to be recorded by it in writing, decides otherwise; (b) the allotment or appropriation by the transferee company of any shares, deben tures, policies or other like instruments in the company which, under the compromise or arrangement, are to be allotted or appropriated by that company to or for any person: 154 Provided that a transferee company shall not, as a result of the compromise or arr angement, hold any shares in its own name or in the name of any trust whether on its behalf or on behalf of any of its subsidiary or associate companies and any such shares shall be cancelled or extinguished; (c) the continuation by or against the transfer ee company of any legal proceedings pending by or against any transferor company on the date of transfer; (d) dissolution, without winding -up, of any transferor company; (e) the provision to be made for any persons who, within such time and in such manner as the Tribunal directs, dissent from the compromise or arrangement; (f) where share capital is held by any non -resident shareholder under the foreign direct investment norms or guidelines specified by the Central Government or in accordance with any law f or the time being in force, the allotment of shares of the transferee company to such shareholder shall be in the manner specified in the order; (g) the transfer of the employees of the transferor company to the transferee company; (h) where the transferor company is a listed company and the transferee company is an unlisted company, (A) the transferee company shall remain an unlisted company until it becomes a listed company; (B) if shareholders of the transferor company decide to opt out of the transfere e company, provision shall be made for payment of the value of sharesheld by them and other benefits in accordance with a pre -determined price formula or after a valuation is made, and the arrangements under this provision may be made by the Tribunal: Prov ided that the amount of payment or valuation under this clause for anyshare shall not be less than what has been specified by the Securities and Exchange Board under any regulations framed by it; (i) where the transferor company is dissolved, the fee, if a ny, paid by the transferor company on its authorised capital shall be set -off against any fees payable by the transferee company on its authorised capital subsequent to the amalgamation; and (j) such incidental, consequential and supplemental matters as ar e deemed necessary to secure that the merger or amalgamation is fully and effectively carried out: Provided that no compromise or arrangement shall be sanctioned by the Tribunal unless a certificate by the companys auditor has been filed with the Tribunal to the effect that the accounting treatment, if any, proposed in the scheme of compromise or arrangement is in conformity with the accounting standards prescribed under section 133. (4) Where an order under this section provides for the transfer of any pr operty or liabilities, then, by virtue of the order, that property shall be transferred to the transferee company and the liabilities shall be transferred to and become the liabilities of the transferee company and any property may, if the order so directs , be freed from any charge which shall by virtue of the compromise or arrangement, cease to have effect. (5) Every company in relation to which the order is made shall cause a certified copy of the order to be filed with the Registrar for registration with in thirty days of the receipt of certified copy of the order. (6) The scheme under this section shall clearly indicate an appointed date from which it shall be effective and the scheme shall be deemed to be effective from such date and not at a date subseq uent to the appointed date. (7) Every company in relation to which the order is made shall, until the completion of the scheme, file a statement in such form and within such time as may be prescribed with the Registrar every year duly certified by a charte red accountant or a cost accountant or a company secretary in practice indicating whether the scheme is being complied with in accordance with the orders of the Tribunal or not. 155 1[(8) If a company fails to comply with sub -section ( 5), the company and every officer of the company who is in default shall be liable to a penalty of twenty thousand rupees, and where the failure is a continuing one, with a further penalty of one thousand rupees for each day after the first during which such failure continues , subject to a maximum of three lakh rupees. ] Explanation .For the purposes of this section, (i) in a scheme involving a merger, where under the scheme the undertaking, property and liabilities of one or more companies, including the company in respect of which the compromise or arrangement is proposed, are to be transferred to another existing company, it is a merger by absorption, or where the undertaking, property and liabilities of two or more companies, including the company in respect of which the co mpromise or arrangement is proposed, are to be transferred to a new company, whether or not a public company, it is a merger by formation of a new company; (ii) references to merging companies are in relation to a merger by absorption, to the transferor and transferee companies, and, in relation to a merger by formation of a new company, to the transferor companies; (iii) a scheme involves a division, where under the scheme the undertaking, property and liabilities of the company in respect of which the com promise or arrangement is proposed are to be divided among and transferred to two or more companies each of which is either an existing company or a new company; and (iv) property includes assets, rights and interests of every description and liabilities i nclude debts and obligations of every description. 233. Merger or amalgamation of certain companies. (1) Notwithstanding the provisions of section 230 and section 232, a scheme of merger or amalgamation may be entered into between two or more small companies or between a holding company and its wholly -owned subsidiary company or such other class or classes of companies as may be prescribed, subject to the following, namely: (a) a notice of the proposed scheme inviting objections or suggestions, if a

may be prescribed, subject to the following, namely: (a) a notice of the proposed scheme inviting objections or suggestions, if a ny, from the Registrar and Official Liquidators where registered office of the respective companies are situated or persons affected by the scheme within thirty days is issued by the transferor company or companies and the transferee company; (b) the objec tions and suggestions received are considered by the companies in their respective general meetings and the scheme is approved by the respective members or class of members at a general meeting holding at least ninety per cent. of the total number of share s; (c) each of the companies involved in the merger files a declaration of solvency, in the prescribed form, with the Registrar of the place where the registered office of the company is situated; and (d) the scheme is approved by majority representing nin e-tenths in value of the creditors or class of creditors of respective companies indicated in a meeting convened by the company by giving a notice of twenty -one days along with the scheme to its creditors for the purpose or otherwise approved in writing. (2) The transferee company shall file a copy of the scheme so approved in the manner as may be prescribed, with the Central Government, Registrar and the Official Liquidator where the registered office of the company is situated. (3) On the receipt of the s cheme, if the Registrar or the Official Liquidator has no objections or suggestions to the scheme, the Central Government shall register the same and issue a confirmation thereof to the companies. (4) If the Registrar or Official Liquidator has any objecti ons or suggestions, he may communicate the same in writing to the Central Government within a period of thirty days: 1. Subs. by Act 29 of 2020, s. 42, for sub-section ( 8) (w.e.f. 21 -12-2020). 156 Provided that if no such communication is made, it shall be presumed that he has no objection to the scheme. (5) If the Central Government after receiving the objections or suggestions or for any reason is of the opinion that such a scheme is not in public interest or in the interest of the creditors, it may file an application before the Tribunal within a period of sixty days of the receipt of the scheme under sub -section ( 2) stating its objections and requesting that the Tribunal may consider the scheme under section 232. (6) On receipt of an application from the Central Government or from any person, if the Tribunal, for reasons to be recor ded in writing, is of the opinion that the scheme should be considered as per the procedure laid down in section 232, the Tribunal may direct accordingly or it may confirm the scheme by passing such order as it deems fit: Provided that if the Central Gover nment does not have any objection to the scheme or it does not file any application under this section before the Tribunal, it shall be deemed that it has no objection to the scheme. (7) A copy of the order under sub -section ( 6) confirming the scheme shall be communicated to the Registrar having jurisdiction over the transferee company and the persons concerned and the Registrar shall register the scheme and issue a confirmation thereof to the companies and such confirmation shall be communicated to the Reg istrars where transferor company or companies were situated. (8) The registration of the scheme under sub -section ( 3) or sub -section ( 7) shall be deemed to have the effect of dissolution of the transferor company without process of winding -up. (9) The registration of the scheme shall have the following effects, namely: (a) transfer of property or liabilities of the transferor company to the transferee company so that the property becomes the property of the transferee company and the liabilities become the liabilities of the transferee company; (b) the charges, if any, on the property of the transferor company shall be applicable and enforceable as if the charges were on the property of the transferee company; (c) legal proceedings by or against the tra nsferor company pending before any court of law shall be continued by or against the transferee company; and (d) where the scheme provides for purchase of shares held by the dissenting shareholders or settlement of debt due to dissenting creditors, such am ount, to the extent it is unpaid, shall become the liability of the transferee company. (10) A transferee company shall not on merger or amalgamation, hold any shares in its own name or in the name of any trust either on its behalf or on behalf of any of i ts subsidiary or associate company and all such shares shall be cancelled or extinguished on the merger or amalgamation. (11) The transferee company shall file an application with the Registrar along with the scheme registered, indicating the revised autho rised capital and pay the prescribed fees due on revised capital: Provided that the fee, if any, paid by the transferor company on its authorised capital prior to its merger or amalgamation with the transferee company shall be set -off against the fees paya ble by the transferee company on its authorised capital enhanced by the merger or amalgamation. (12) The provisions of this section shall mutatis mutandis apply to a company or companies specified in sub -section ( 1) in respect of a scheme of compromise or arrangement referred to in section 230 or division or transfer of a company referred to clause ( b) of sub -section ( 1) of section 232. (13) The Central Government may provide for the merger or amalgamation of companies in such manner as may be prescribed. (14) A company covered under this section may use the provisions of section 232 for the approval of any scheme for merger or amalgamation. 234. Merger or amalgamation of company with foreign company. (1) The provisions of this Chapter unless otherwise provi ded under any other law for the time being in force, shall apply mutatis 157 mutandis to schemes of mergers and amalgamations between companies registered under this Act and companies incorporated in the jurisdictions of such countries as may be notified from time to time by the Central Government: Provided that the Central Government may make rules, in consultation with the Reserve Bank of India, in connection with mergers and amalgamations provided under this section. (2) Subject to the provisions of any othe r law for the time being in force, a foreign company, may with the prior approval of the Reserve Bank of India, merge into a company registered under this Act or vice versa and the terms and conditions of the scheme of merger may provide, among other thing s, for the payment of consideration to the shareholders of the merging company in cash, or in Depository Receipts, or partly in cash and partly in Depository Receipts, as the case may be, as per the scheme to be drawn up for the purpose. Explanation. For t he purposes of sub -section ( 2), the expression foreign company means any company or body corporate incorporated outside India whether having a place of business in India or not. 235. Power to acquire shares of shareholders dissenting from scheme or contract approved by majority. (1) Where a scheme or contract involving the transfer of shares or any class of shares in a company (the transferor company) to another company (the transferee company) has, within four months after making of an offer in that behalf by the transferee company, been approved by the holders of not less than nine -tenths in value of the shares whose transfer is involved, other than shares already held at the date of the offer by, or by a nominee of the transferee company or its sub sidiary companies, the transferee company may, at any time within two months after the expiry of the said four months, give notice in the prescribed manner to any dissenting shareholder that it desires to acquire his shares. (2) Where a notice under sub -section ( 1) is given, the transferee company shall, unless on an application made by the dissenting shareholder to the Tribunal, within one month from the date on which the notice was given and the Tribunal thinks fit to order otherwise, be entitled to and b ound to acquire those shares on the terms on which, under the scheme or contract, the shares of the approving shareholders are to be transferred to the transferee company. (3) Where a notice has been given by the transferee company under sub -section ( 1) and the Tribunal has not, on an application made by the dissenting shareholder, made an order to the contrary, the transferee company shall, on the expiry of one month from the date on which the notice has been given, or, if an application to the Tribunal by the dissenting shareholder is then pending, after that application has been disposed of, send a copy of the notice to the transferor company together with an instrument of transfer, to be executed on behalf of the shareholder by any person appointed by th e transferor company and on its own behalf by the transferee company, and pay or transfer to the transferor company the amount or other consideration representing the price payable by the transferee company for the shares which, by virtue of this section, that company is entitled to acquire, and the transferor company shall (a) thereupon register the transferee company as the holder of those shares; and (b) within one month of the date of such registration, inform the dissenting shareholders of the fact of such registration and of the receipt of the amount or other consideration representing the price payable to them by the transferee company. (4) Any sum received by the transferor company under this section shall be paid into a separate bank account, and a ny such sum and any other consideration so received shall be held by that company in trust for the several persons entitled to the shares in respect of which the said sum or other consideration were respectively received and shall be disbursed to the entit led shareholders within sixty days. (5) In relation to an offer made by a transferee company to shareholders of a transferor company before the commencement of this Act, this section shall have effect with the following modifications, namely: (a) in sub-section ( 1), for the words the shares whose transfer is involved other than shares already held at the date of the offer by, or by a nominee of, the transferee company or its subsidiaries, , the words the shares affected shall be substituted; and 158 (b) in sub -section ( 3), the words together with an instrument of transfer, to be executed on behalf of the shareholder by any person appointed by the transferee company and on its own behalf by the transferor company shall be omitted. Explanation. For the purposes of this section, dissenting shareholder includes a shareholder who has not assented to the scheme or contract and any shareholder who has failed or refused to transfer his shares to the transferee company in accordance with the scheme or contrac t. 236. Purchase of minority shareholding. (1) In the event of an acquirer, or a person acting in concert with such acquirer, becoming registered holder of ninety per cent. or more of the issued equity share capital of a company, or in the event of any per son or group of persons becoming ninety per cent. majority or holding ninety per cent. of the issued equity share capital of a company, by virtue of an amalgamation, share exchange, conversion of securities or for any other reason, such acquirer, person or group of persons, as the case may be, shall notify the company of their intention to buy the remaining equity shares. (2) The acquirer, person or group of persons under sub -section ( 1) shall offer to the minority shareholders of the company for buying the equity shares held by such shareholders at a price determined on the basis of valuation by a registered valuer in accordance with such rules as may be prescribed. (3) Without prejudice to the provisions of sub -sections ( 1) and ( 2), the minority shareholde rs of the company may offer to the majority shareholders to purchase the minority equity shareholding of the company at the price determined in accordance with such rules as may be prescribed under sub -section ( 2). (4) The majority shareholders shall depos it an amount equal to the value of shares to be acquired by them under sub -section ( 2) or sub -section ( 3), as the case may be, in a separate bank account to be operated by the 1[company whose shares are being transferred] for at least one year for payment to the minority shareholders and such amount shall be disbursed to the entitled shareholders within sixty days: Provided that such disbursement shall continue to be made to the entitled shareholders for a period of one year, who for any reason had not been made disbursement within the said period of sixty days or if the disbursement have been made within the aforesaid period of sixty days, fail to receive or claim payment arising out of such disbursement. (5) In the event of a purchase under this section, the 2[company whose shares are being transferred] shall act as a transfer agent for receiving and paying the price to the minority shareholders and for taking delivery of the shares and delivering such share s to the majority, as the case may be. (6) In the absence of a physical delivery of shares by the shareholders within the time specified by the company, the share certificates shall be deemed to be cancelled, and the 1[company whose shares are being transf erred] shall be authorised to issue shares in lieu of the cancelled shares and complete the transfer in accordance with law and make payment of the price out of deposit made under sub -section ( 4) by the majority in advance to the minority by dispatch of su ch payment. (7) In the event of a majority shareholder or shareholders requiring a full purchase and making payment of price by deposit with the company for any shareholder or shareholders who have died or ceased to exist, or whose heirs, successors, admin istrators or assignees have not been brought on record by transmission, the right of such shareholders to make an offer for sale of minority equity shareholding shall continue and be available for a period of three years from the date of majority acquisiti on or majority shareholding. (8) Where the shares of minority shareholders have been acquired in pursuance of this section and as on or prior to the date of transfer following such acquisition, the shareholders holding seventy -five per cent. or more minori ty equity shareholding negotiate or reach an understanding on a higher price for any transfer, proposed or agreed upon, of the shares held by them without disclosing the fact or likelihood of transfer taking place on the basis of such negotiation, understa nding or agreement, the majority shareholders shall share the additional compensation so received by them with such minority shareholders on a pro rata basis. 1. Subs. by Act 1 of 2018, s. 73, for transferor company (w.e.f. 9 -2-2018). 2. Subs. by Act 1 of 2018, s. 73, for transferor company (w.e.f. 9 -2-2018). 159 Explanation. For the purposes of this section, the expressions acquirer and person acting in concert shall have the meanings respectively assigned to them in clause ( b) and clause ( e) of sub - regulation ( 1) of regulation

have the meanings respectively assigned to them in clause ( b) and clause ( e) of sub - regulation ( 1) of regulation 2 of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997. (9) When a shareholder or the majority equity shareholder fails to acquire full purchase of the shares of the minority equity shareholders, then, the provisions of this section shall continue to apply to the residual minority equity shareholders, even tho ugh, (a) the shares of the company of the residual minority equity shareholder had been delisted; and (b) the period of one year or the period specified in the regulations made by the Securities and Exchange Board under the Securities and Exchange Board o f India Act, 1992 (15 of 1992), had elapsed. 237. Power of Central Government to provide for amalgamation of companies in public interest. (1) Where the Central Government is satisfied that it is essential in the public interest that two or more companies should amalgamate, the Central Government may, by order notified in the Official Gazette, provide for the amalgamation of those companies into a single company with such constitution, with such property, powers, rights, interests, authorities and privilege s, and with such liabilities, duties and obligations, as may be specified in the order. (2) The order under sub -section ( 1) may also provide for the continuation by or against the transferee company of any legal proceedings pending by or against any transf eror company and such consequential, incidental and supplemental provisions as may, in the opinion of the Central Government, be necessary to give effect to the amalgamation. (3) Every member or creditor, including a debenture holder, of each of the transf eror companies before the amalgamation shall have, as nearly as may be, the same interest in or rights against the transferee company as he had in the company of which he was originally a member or creditor, and in case the interest or rights of such membe r or creditor in or against the transferee company are less than his interest in or rights against the original company, he shall be entitled to compensation to that extent, which shall be assessed by such authority as may be prescribed and every such asse ssment shall be published in the Official Gazette, and the compensation so assessed shall be paid to the member or creditor concerned by the transferee company. (4) Any person aggrieved by any assessment of compensation made by the prescribed authority und er sub-section ( 3) may, within a period of thirty days from the date of publication of such assessment in the Official Gazette, prefer an appeal to the Tribunal and thereupon the assessment of the compensation shall be made by the Tribunal. (5) No order sh all be made under this section unless (a) a copy of the proposed order has been sent in draft to each of the companies concerned; (b) the time for preferring an appeal under sub -section ( 4) has expired, or where any such appeal has been preferred, the appeal has been finally disposed off; and (c) the Central Government has considered, and made such modifications, if any, in the draft order as it may deem fit in the light of suggestions and objections which may be received by it from any such company within such period as the Central Government may fix in that behalf, not being less than two months from the date on which the copy aforesaid is received by that company, or from any class of shareholders therein, or from any creditors or any class of cred itors thereof. (6) The copies of every order made under this section shall, as soon as may be after it has been made, be laid before each House of Parliament. 238. Registration of offer of schemes involving transfer of shares. (1) In relation to every offe r of a scheme or contract involving the transfer of shares or any class of shares in the transferor company to the transferee company under section 235, 160 (a) every circular containing such offer and recommendation to the members of the transferor company b y its directors to accept such offer shall be accompanied by such information and in such manner as may be prescribed; (b) every such offer shall contain a statement by or on behalf of the transferee company, disclosing the steps it has taken to ensure tha t necessary cash will be available; and (c) every such circular shall be presented to the Registrar for registration and no such circular shall be issued until it is so registered: Provided that the Registrar may refuse, for reasons to be recorded in writi ng, to register any such circular which does not contain the information required to be given under clause ( a) or which sets out such information in a manner likely to give a false impression, and communicate such refusal to the parties within thirty days of the application. (2) An appeal shall lie to the Tribunal against an order of the Registrar refusing to register any circular under sub -section ( 1). (3) The director who issues a circular which has not been presented for registration and registered under clause ( c) of sub -section ( 1), shall be 1[liable to a penalty of one lakh rupees .] 239. Preservation of books and papers of amalgamated companies. The books and papers of a company which has been amalgamated with, or whose shares have been acquired by, an other company under this Chapter shall not be disposed of without the prior permission of the Central Government and before granting such permission, that Government may appoint a person to examine the books and papers or any of them for the purpose of asc ertaining whether they contain any evidence of the commission of an offence in connection with the promotion or formation, or the management of the affairs, of the transferor company or its amalgamation or the acquisition of its shares. 240. Liability of o fficers in respect of offences committed prior to merger, amalgamation, etc. Notwithstanding anything in any other law for the time being in force, the liability in respect of offences committed under this Act by the officers in default, of the transferor company prior to its merger, amalgamation or acquisition shall continue after such merger, amalgamation or acquisition. CHAPTER XVI PREVENTION OF OPPRESSION AND MISMANAGEMENT 241. Application to Tribunal for relief in cases of oppression, etc. (1) Any memb er of a company who complains that (a) the affairs of the company have been or are being conducted in a manner prejudicial to public interest or in a manner prejudicial or oppressive to him or any other member or members or in a manner prejudicial to the interests of the company; or (b) the material change, not being a change brought about by, or in the interests of, any creditors, including debenture holders or any class of shareholders of the company, has taken place in the management or control of the c ompany, whether by an alteration in the Board of Directors, or manager, or in the ownership of the companys shares, or if it has no share capital, in its membership, or in any other manner whatsoever, and that by reason of such change, it is likely that t he affairs of the company will be conducted in a manner prejudicial to its interests or its members or any class of members, may apply to the Tribunal, provided such member has a right to apply under section 244, for an order under this Chapter. (2) The Ce ntral Government, if it is of the opinion that the affairs of the company are being conducted in a manner prejudicial to public interest, it may itself apply to the Tribunal for an order under this Chapter. 1. Subs. by Act 22 of 2019, s. 32, for punishable with fine w hich shall not be less than twenty -five thousand rupees but which may extend to five lakh rupees (w.e.f. 2 -11-2018). 161 1[Provided that the applicants under this sub-section, in respect of such company or class of companies, as may be prescribed, shall be made before the Principal Bench of the Tribunal which shall be dealt with by such Bench.] 1[(3) Where in the opinion of the Central Government there exist circumstances suggesting that (a) any person concerned in the conduct and management of the affairs of a company is or has been in connection therewith guilty of fraud, misfeasance, persistent negligence or default in carrying out his obligations and func tions under the law or of breach of trust; (b) the business of a company is not or has not been conduct ed and managed by such person in accordance with sound business principle or prudent commercial practices; (c) a company is or has been conducted and man aged by such person in a manner which likely to cause, or has caused, serious injury or damage to the interest of the trade, industry or business to which such company pertains; or (d) the business of a company is or has been conducted and managed by such person with intent to default its creditors, members or any other person or otherwise for a fraudulent or unlawful purpose or in a manner prejudicial to public interest, the Central Government may intiate a case against such person and refer the same to th e Tribunal with a request that the Tribunal may inquire into the case and record a decision as to whether or not such person is a fit and proper person to hold the officer of director or any other office connected with the conduct and management of any com pany. (4) The person against whom a case is referred to the Tribunal under sub -section ( 3), shall be jointed as a respondent to the application . (5) Every application under sub -section ( 3) (a) shall contain a concise statement of such circumstances and materials as the Central Government may consider necessary for the purpose of the inquiry; and (b) shall be signed and verified in the manner laid down in the Code of Civil Procedure (5 of 1908), for the signature and verification of a plaint in a suit by the Central Government. ] 242. Powers of Tribunal. (1) If, on any application made under section 241, the Tribunal is of the opinion (a) that the companys affairs have been or are being conducted in a manner prejudicial or oppressive to any member or memb ers or prejudicial to public interest or in a manner prejudicial to the interests of the company; and (b) that to wind up the company would unfairly prejudice such member or members, but that otherwise the facts would justify the making of a winding -up ord er on the ground that it was just and equitable that the company should be wound up, the Tribunal may, with a view to bringing to an end the matters complained of, make such order as it thinks fit. (2) Without prejudice to the generality of the powers under sub -section ( 1), an order under that sub - section may provide for (a) the regulation of conduct of affairs of the company in future; (b) the purchase of shares or interests of any members of the company by other members thereof or by the comp any; (c) in the case of a purchase of its shares by the company as aforesaid, the consequent reduction of its share capital; (d) restrictions on the transfer or allotment of the shares of the company; 1. Ins. by Act 22 of 2019, s. 33 (w.e.f. 15 -8-2019). 162 (e) the termination, setting aside or modification, of any agreement, howsoever arrived at, between the company and the managing director, any other director or manager, upon such terms and conditions as may, in the opinion of the Tribunal, be just and equitable in the circumstances of the case; (f) the termin ation, setting aside or modification of any agreement between the company and any person other than those referred to in clause ( e): Provided that no such agreement shall be terminated, set aside or modified except after due notice and after obtaining the consent of the party concerned; (g) the setting aside of any transfer, delivery of goods, payment, execution or other act relating to property made or done by or against the company within three months before the date of the application under this section, which would, if made or done by or against an individual, be deemed in his insolvency to be a fraudulent preference; (h) removal of the managing director, manager or any of the directors of the company; (i) recovery of undue gains made by any managing di rector, manager or director during the period of his appointment as such and the manner of utilisation of the recovery including transfer to Investor Education and Protection Fund or repayment to identifiable victims; (j) the manner in which the managing d irector or manager of the company may be appointed subsequent to an order removing the existing managing director or manager of the company made under clause ( h); (k) appointment of such number of persons as directors, who may be required by the Tribunal t o report to the Tribunal on such matters as the Tribunal may direct; (l) imposition of costs as may be deemed fit by the Tribunal; (m) any other matter for which, in the opinion of the Tribunal, it is just and equitable that provision should be made. (3) A certified copy of the order of the Tribunal under sub -section ( 1) shall be filed by the company with the Registrar within thirty days of the order of the Tribunal. (4) The Tribunal may, on the application of any party to the proceeding, make any interim o rder which it thinks fit for regulating the conduct of the companys affairs upon such terms and conditions as appear to it to be just and equitable. 1[(4A) At the conclusion of the hearing of the case in respect of sub -section (3) of section 241, the Tribunal shall record its decision stating therein specifically as to whether or not respondent is a fit and proper person to hold the officer of director or any other officer connected with the conduct and management of any company.] (5) Where an order of the Tribunal under sub -section ( 1) makes any alteration in the memorandum or articles of a company, then, notwithstanding any other provision of this Act, the company shall not have power, except to the extent, if any, permitted in the order, to make, wit hout the leave of the Tribunal, any alteration whatsoever which is inconsistent with the order, either in the memorandum or in the articles. (6) Subject to the provisions of sub -section ( 1), the alterations made by the order in the memorandum or articles o f a company shall, in all respects, have the same effect as if they had been duly made by the company in accordance with the provisions of this Act and the said provisions shall apply accordingly to the memorandum or articles so altered. (7) A certified copy of every order altering, or giving leave to alter, a companys memorandum or articles, shall within thirty days after the making thereof, be filed by the company with the Registrar who shall register the same. (8) If a company contravenes the provisio ns of sub -section ( 5), the company shall be punishable with fine which shall not be less than one lakh rupees but which may extend to twenty -five lakh rupees and every 1. Ins. by Act 22 of 2019, s. 34 (w.e.f. 15 -8-2019). 163 officer of the company who is

4 (w.e.f. 15 -8-2019). 163 officer of the company who is in default shall be punishable 1*** with fine which shall not be less than twenty -five thousand rupees but which may extend to 2[one lakh rupees ]. 243. Consequence of termination or modification of certain agreements. (1) Where an order made under section 242 terminates, sets aside or modifies an agreement such a s is referred to in sub -section ( 2) of that section, (a) such order shall not give rise to any claims whatever against the company by any person for damages or for compensation for loss of office or in any other respect either in pursuance of the agreemen t or otherwise; (b) no managing director or other director or manager whose agreement is so terminated or set aside shall, for a period of five years from the date of the order terminating or setting aside the agreement, without the leave of the Tribunal, be appointed, or act, as the managing director or other director or manager of the company: Provided that the Tribunal shall not grant leave under this clause unless notice of the intention to apply for leave has been served on the Central Government and t hat Government has been given a reasonable opportunity of being heard in the matter. 3[(1A) The person who is not a fit and proper person pursuant to sub -section (4A) of section 242 shall not hold the officer of a director or any other officer connected with the conduct and management of the affairs of any other officer connected with the conduct and management of the affairs of any company for a period of five years from the date of the said decision: Provided that the Central Government may, with the le ave of the Tribunal, permit such person to hold any such office before the expiry of the said period of five years. (1B) Notwithstanding anything contained in any other provisions of this Act, or any other law for the time being in force, or any contract, memorandum or articles, on the removal of a person from the officer of a director or any other officer connected with the conduct and management of the affairs of the company, that person shall not be entitled to, or be paid, any compensation for the loss or termination of officer.] (2) Any person who knowingly acts as a managing director or other director or manager of a company in contravention of clause ( b) of sub -section ( 1) 4[or sub -section ( 1A)], and every other director of the company who is knowingl y a party to such contravention, shall be punishable 5*** with fine which may extend to 6[five lakh rupees ]. 244. Right to apply under section 241. (1) The following members of a company shall have the right to apply under section 241, namely: (a) in the case of a company having a share capital, not less than one hundred members of the company or not less than one -tenth of the total number of its members, whichever is less, or any member or members holding not less than one -tenth of the issued share capita l of the company, subject to the condition that the applicant or applicants has or have paid all calls and other sums due on his or their shares; (b) in the case of a company not having a share capital, not less than one -fifth of the total number of its me mbers: Provided that the Tribunal may, on an application made to it in this behalf, waive all or any of the requirements specified in clause ( a) or clause ( b) so as to enable the members to apply under section 241. Explanation. For the purposes of this sub -section, where any share or shares are held by two or more persons jointly, they shall be counted only as one member. 1. The words with imprisonment for a term which may extend to six months or omitted by Act 29 of 2020, s. 43 (w.e.f. 21 -12-2020). 2. Subs. by s. 4 3, ibid., for one lakh rupees, or with both (w.e.f. 21 -12-2020). 3. Ins. by Act 22 of 2019, s. 35 (w.e.f. 15 -8-2019). 4. Ins. by Act 22 of 2019, s. 35 (w.e.f. 15 -8-2019). 5. The words w ith imprisonment for a term which may extend to six months or omitted by Act 29 of 2020, s. 44 (w.e.f. 21 -12-2020). 6. Subs. by s. 44, ibid., for five lakh rupees, or with both (w.e.f. 21 -12-2020). 164 (2) Where any members of a company are entitled to make an application under sub -section ( 1), any one or more of them having obtained the consent in writing of the rest, may make the application on behalf and for the benefit of all of them. 245. Class action. (1) Such number of member or members, depositor or depositors or any class of them, as the case may be, as are indicated in sub -section (2) may, if they are of the opinion that the management or conduct of the affairs of the company are being conducted in a manner prejudicial to the interests of the company or its members or depositors, file an application before the Tribunal on behalf of the members or depositors for seeking all or any of the following orders, namely: (a) to restrain the company from committing an act which is ultra vires the articles or memorandum of the company; (b) to restrain the company from committing breach of any provision of the companys memorandum or articles; (c) to declare a resolution altering the memorandum or articles of the company as void if the resolution was passed by suppression of material facts or obtained by mis -statement to the members or depos itors; (d) to restrain the company and its directors from acting on such resolution; (e) to restrain the company from doing an act which is contrary to the provisions of this Act or any other law for the time being in force; (f) to restrain the company fro m taking action contrary to any resolution passed by the members; (g) to claim damages or compensation or demand any other suitable action from or against (i) the company or its directors for any fraudulent, unlawful or wrongful act or omission or conduct or any likely act or omission or conduct on its or their part; (ii) the auditor including audit firm of the company for any improper or misleading statement of particulars made in his audit report or for any fraudulent, unlawful or wrongful act or conduct ; or (iii) any expert or advisor or consultant or any other person for any incorrect or misleading statement made to the company or for any fraudulent, unlawful or wrongful act or conduct or any likely act or conduct on his part; (h) to seek any other reme dy as the Tribunal may deem fit. (2) Where the members or depositors seek any damages or compensation or demand any other suitable action from or against an audit firm, the liability shall be of the firm as well as of each partner who was involved in makin g any improper or misleading statement of particulars in the audit report or who acted in a fraudulent, unlawful or wrongful manner. (3) (i) The requisite number of members provided in sub -section ( 1) shall be as under: (a) in the case of a company having a share capital, not less than one hundred members of the company or not less than such percentage of the total number of its members as may be prescribed, whichever is less, or any member or members holding not less than such percentage of the issued sha re capital of the company as may be prescribed, subject to the condition that the applicant or applicants has or have paid all calls and other sums due on his or their shares; (b) in the case of a company not having a share capital, not less than one -fifth of the total number of its members. (ii) The requisite number of depositors provided in sub -section ( 1) shall not be less than one hundred depositors or not less than such percentage of the total number of depositors as may be prescribed, whichever is les s, or any depositor or depositors to whom the company owes such percentage of total deposits of the company as may be prescribed. 165 (4) In considering an application under sub -section ( 1), the Tribunal shall take into account, in particular (a) whether the member or depositor is acting in good faith in making the application for seeking an order; (b) any evidence before it as to the involvement of any person other than directors or officers of the company on any of the matters provided in clauses ( a) to ( f) of sub -section ( 1); (c) whether the cause of action is one which the member or depositor could pursue in his own right rather than through an order under this section; (d) any evidence before it as to the views of the members or depositors of the company w ho have no personal interest, direct or indirect, in the matter being proceeded under this section; (e) where the cause of action is an act or omission that is yet to occur, whether the act or omission could be, and in the circumstances would be likely to be (i) authorised by the company before it occurs; or (ii) ratified by the company after it occurs; (f) where the cause of action is an act or omission that has already occurred, whether the act or omission could be, and in the circumstances would be like ly to be, ratified by the company. (5) If an application filed under sub -section ( 1) is admitted, then the Tribunal shall have regard to the following, namely: (a) public notice shall be served on admission of the application to all the members or deposit ors of the class in such manner as may be prescribed; (b) all similar applications prevalent in any jurisdiction should be consolidated into a single application and the class members or depositors should be allowed to choose the lead applicant and in the event the members or depositors of the class are unable to come to a consensus, the Tribunal shall have the power to appoint a lead applicant, who shall be in charge of the proceedings from the applicants side; (c) two class action applications for the sa me cause of action shall not be allowed; (d) the cost or expenses connected with the application for class action shall be defrayed by the company or any other person responsible for any oppressive act. (6) Any order passed by the Tribunal shall be binding on the company and all its members, depositors and auditor including audit firm or expert or consultant or advisor or any other person associated with the company. (7) Any company which fails to comply with an order passed by the Tribunal under this secti on shall be punishable with fine which shall not be less than five lakh rupees but which may extend to twenty -five lakh rupees and every officer of the company who is in default shall be punishable with imprisonment for a term which may extend to three yea rs and with fine which shall not be less than twenty -five thousand rupees but which may extend to one lakh rupees. (8) Where any application filed before the Tribunal is found to be frivolous or vexatious, it shall, for reasons to be recorded in writing, r eject the application and make an order that the applicant shall pay to the opposite party such cost, not exceeding one lakh rupees, as may be specified in the order. (9) Nothing contained in this section shall apply to a banking company. (10) Subject to t he compliance of this section, an application may be filed or any other action may be taken under this section by any person, group of persons or any association of persons representing the persons affected by any act or omission, specified in sub -section (1). 246. Application of certain provisions to proceedings under section 241 or section 245. The provisions of sections 337 to 341 (both inclusive) shall apply mutatis mutandis, in relation to an application made to the Tribunal under section 241 or section 245. 166 CHAPTER XVII REGISTERED VALUERS 247. Valuation by registered valuers. (1) Where a valuation is required to be made in respect of any property, stocks, shares, debentures, securities or goodwill or any other assets (herein referred to as the assets) or net worth of a company or its liabilities under the provision of this Act, it shall be valued by 1[a person having such qualifications and experience, registered as a valuer and being a member of an organisation recognised, in such manner, on such terms and conditions as may be prescribed] and appointed by the audit committee or in its absence by the Board of Directors of that company. (2) The valuer appointed under sub -section ( 1) shall, (a) make an impartial, true and fair valuation of any assets which may be required to be valued; (b) exercise due diligence while performing the functions as valuer; (c) make the valuation in accordance with such rules as may be prescribed; and (d) not undertake valuation of any assets in which he has a direc t or indirect interest or becomes so interested at any time 2[during a period of three years prior to his appointments as valuer or three years after the valuation of assets was conducted by him]. (3) If a valuer contravenes the provisions of this section or the rules made thereunder, the valuer shall be 3[liable to a penalty of fif ty thousand rupees ]: Provided that if the valuer has contravened such provisions with the intention to defraud the company or its members, he shall be punishable with imprisonmen t for a term which may extend to one year and with fine which shall not be less than one lakh rupees but which may extend to five lakh rupees. (4) Where a valuer has been convicted under sub -section ( 3), he shall be liable to (i) refund the remuneration r eceived by him to the company; and (ii) pay for damages to the company or to any other person for loss arising out of incorrect or misleading statements of particulars made in his report. CHAPTER XVIII REMOVAL OF NAMES OF COMPANIES FROM THE REGISTER OF COM PANIES 248. Power of Registrar to remove name of company from register of companies. (1) Where the Registrar has reasonable cause to believe that (a) a company has failed to commence its business within one year of its incorporation;4[or] 5* * * * * (c) a company is not carrying on any business or operation for a period of two immediately preceding financial years and has not made any application within such period for obtaining the status of a dormant company under 6[section 455 ; or] 7[(d) the subs cribers to the memorandum have not paid the subscription which they had undertaken to pay at the time of incorporation of a company and a declaration to this effect has not been filed within one hundred and eighty days of its incorporation under sub -sectio n (1) of section 10A; or (e) the company is not carrying on any business or operations

under sub -sectio n (1) of section 10A; or (e) the company is not carrying on any business or operations, a s revealed after the physical verification carried out under sub -section ( 9) of section 12.] he shall send a notice to the company and all the directors of the company, of his intention to remove the name of the company from the register of companies and requesting them to send their representations along with copies of the relevant documents, if any, within a period of thirty days from the date of the notice. 1. Subs. by Notification No. S.O. 3400(E), s. 2 for certain words (w.e.f. 23 -10-2017). 2. Subs. by Act 1 of 2018, s. 74, for during or after the valuation of assets (w.e.f. 9 -2-2018). 3. Subs. by vide Notification No. S.O. 1303(E), for certain words (w.e.f. 24 -3-2021). 4. Ins. by Act 21 of 2015, s. 19 (w.e.f. 29 -5-2015). 5. Clause ( b) omitted by s. 19, ibid. (w.e.f. 29 -5-2015). 6. Subs. by Act 22 of 2019, s. 36, for section 455, (w.e.f. 2-11-2018). 7. Ins. by s. 36, ibid. (w.e.f. 2 -11-2018). 167 (2) Without prejudice to the provisions of sub -section ( 1), a company may, after extinguishing all its liabilities, by a special resolution or consent of seventy -five per cent. members in terms of paid -up share capital, file an application in the prescribed manner to the Registrar for removing the name of the company from the register of companies on all or any of the grounds specified in sub -section ( 1) and the Registrar shall, on receipt of such application, cause a public notice to be issued in the prescri bed manner: Provided that in the case of a company regulated under a special Act, approval of the regulatory body constituted or established under that Act shall also be obtained and enclosed with the application. (3) Nothing in sub -section ( 2) shall apply to a company registered under section 8. (4) A notice issued under sub -section ( 1) or sub -section ( 2) shall be published in the prescribed manner and also in the Official Gazette for the information of the general public. (5) At the expiry of the time men tioned in the notice, the Registrar may, unless cause to the contrary is shown by the company, strike off its name from the register of companies, and shall publish notice thereof in the Official Gazette, and on the publication in the Official Gazette of t his notice, the company shall stand dissolved. (6) The Registrar, before passing an order under sub -section ( 5), shall satisfy himself that sufficient provision has been made for the realisation of all amount due to the company and for the payment or disch arge of its liabilities and obligations by the company within a reasonable time and, if necessary, obtain necessary undertakings from the managing director, director or other persons in charge of the management of the company: Provided that notwithstanding the undertakings referred to in this sub -section, the assets of the company shall be made available for the payment or discharge of all its liabilities and obligations even after the date of the order removing the name of the company from the register of companies. (7) The liability, if any, of every director, manager or other officer who was exercising any power of management, and of every member of the company dissolved under sub -section ( 5), shall continue and may be enforced as if the company had not b een dissolved. (8) Nothing in this section shall affect the power of the Tribunal to wind up a company the name of which has been struck off from the register of companies. 249. Restrictions on making application under section 248 in certain situations. (1) An application under sub -section ( 2) of section 248 on behalf of a company shall not be made if, at any time in the previous three months, the company (a) has changed its name or shifted its registered office from one State to another; (b) has made a di sposal for value of property or rights held by it, immediately before cesser of trade or otherwise carrying on of business, for the purpose of disposal for gain in the normal course of trading or otherwise carrying on of business; (c) has engaged in any ot her activity except the one which is necessary or expedient for the purpose of making an application under that section, or deciding whether to do so or concluding the affairs of the company, or complying with any statutory requirement; (d) has made an app lication to the Tribunal for the sanctioning of a compromise or arrangement and the matter has not been finally concluded; or 1[(e) is being wound up under Chapter XX of this Act or under the Insolvency and Bankruptcy Code, 2016 (31 of 2016).] (2) If a com pany files an application under sub -section ( 2) of section 248 in violation of sub -section (1), it shall be punishable with fine which may extend to one lakh rupees. (3) An application filed under sub -section ( 2) of section 248 shall be withdrawn by the co mpany or rejected by the Registrar as soon as conditions under sub -section ( 1) are brought to his notice. 1. Subs. by Act 31 of 2016, s. 255 and the Eleventh Schedule, for clause ( e) (w.e.f. 15 -11-2016). 168 250. Effect of company notified as dissolved. Where a company stands dissolved under section 248, it shall on and from the date mentioned in the notic e under sub -section ( 5) of that section cease to operate as a company and the Certificate of Incorporation issued to it shall be deemed to have been cancelled from such date except for the purpose of realising the amount due to the company and for the paym ent or discharge of the liabilities or obligations of the company. 251. Fraudulent application for removal of name. (1) Where it is found that an application by a company under sub -section ( 2) of section 248 has been made with the object of evading the lia bilities of the company or with the intention to deceive the creditors or to defraud any other persons, the persons in charge of the management of the company shall, notwithstanding that the company has been notified as dissolved (a) be jointly and severa lly liable to any person or persons who had incurred loss or damage as a result of the company being notified as dissolved; and (b) be punishable for fraud in the manner as provided in section 447. (2) Without prejudice to the provisions contained in sub -section ( 1), the Registrar may also recommend prosecution of the persons responsible for the filing of an application under sub -section ( 2) of section 248. 252. Appeal to Tribunal. (1) Any person aggrieved by an order of the Registrar, notifying a company as dissolved under section 248, may file an appeal to the Tribunal within a period of three years from the date of the order of the Registrar and if the Tribunal is of the opinion that the removal of the name of the company from the register of companies is not justified in view of the absence of any of the grounds on which the order was passed by the Registrar, it may order restoration of the name of the company in the register of companies: Provided that before passing any order under this section, the Tri bunal shall give a reasonable opportunity of making representations and of being heard to the Registrar, the company and all the persons concerned: Provided further that if the Registrar is satisfied, that the name of the company has been struck off from the register of companies either inadvertently or on the basis of incorrect information furnished by the company or its directors, which requires restoration in the register of companies, he may within a period of three years from the date of passing of the order dissolving the company under section 248, file an application before the Tribunal seeking restoration of name of such company. (2) A copy of the order passed by the Tribunal shall be filed by the company with the Registrar within thirty days from th e date of the order and on receipt of the order, the Registrar shall cause the name of the company to be restored in the register of companies and shall issue a fresh certificate of incorporation. (3) If a company, or any member or creditor or workman ther eof feels aggrieved by the company having its name struck off from the register of companies, the Tribunal on an application made by the company, member, creditor or workman before the expiry of twenty years from the publication in the Official Gazette of the notice under sub -section ( 5) of section 248 may, if satisfied that the company was, at the time of its name being struck off, carrying on business or in operation or otherwise it is just that the name of the company be restored to the register of compa nies, order the name of the company to be restored to the register of companies, and the Tribunal may, by the order, give such other directions and make such provisions as deemed just for placing the company and all other persons in the same position as ne arly as may be as if the name of the company had not been struck off from the register of companies. CHAPTER XIX REVIVAL AND REHABILITATION OF SICK COMPANIES 253. [ Determination of sickness .] Omitted by the Insolvency and Bankruptcy Code, 2016 (31 of 2016), s. 255 and the Eleventh Schedule (w.e.f. 15-11-2016) . 254. [ Application for revival and rehabilitation .] Omitted by s. 255 and the Eleventh Schedule, ibid. (w.e.f. 15-11-2016) . 255. [Exclusion of certain time in computing period of limitation .] Omit ted by s. 255 and the Eleventh Schedule, ibid. (w.e.f. 15-11-2016) . 169 256. [Appointment of interim administrator .]Omitted by s. 255 and the Eleventh Schedule, ibid. (w.e.f. 15-11-2016) . 257. [Committee of creditors .] Omitted by s. 255 and the Eleventh Schedule, ibid. (w.e.f. 15-11-2016) . 258. [Order of Tribunal .]Omitted by s. 255 and the Eleventh Schedule, ibid. (w.e.f. 15-11-2016) . 259. [Appointment of administrator .]Omitted by s. 255 and the Eleventh Schedule, ibid. (w.e.f. 15-11-2016) . 260. [Powers and duties of company administrator .] Omitted by s. 255 and the Eleventh Schedule, ibid. (w.e.f. 15-11-2016) . 261. [Scheme of revival and rehabilitation .] Omitted by s. 255 and the Eleventh Schedule, ibid. (w.e.f. 15-11-2016) . 262. [Sanction of scheme .] Omitted by s. 255 and the Eleventh Schedule, ibid. (w.e.f. 15-11-2016) . 263. [Scheme to be binding .] Omitted by s. 255 and the Eleventh Schedule, ibid. (w.e.f. 15-11-2016) . 264. [Implementation of scheme .] Omitted by s. 255 and the Eleventh Schedule, ibid. (w.e.f. 15-11-2016) . 265. [Winding up of company on report of company administrator .] Omitted by s. 255 and the Eleventh Schedule, ibid. (w.e.f. 15-11-2016) . 266. [Power of Tribunal t o assess damages against delinquent directors, etc .] Omitted by the Insolvency and Bankruptcy Code, 2016 (31 of 2016), s. 255 and the Eleventh Schedule (w.e.f. 15-11-2016) . 267.[Punishment for certain offences .] Omitted by s. 255 and the Eleventh Schedule, ibid. (w.e.f. 15-11-2016) . 268. [Bar of jurisdiction .] Omitted by s. 255 and the Eleventh Schedule, ibid. (w.e.f. 15-11-2016) . 269.[Rehabilitation and insolvency fund .] Omitted by s. 255 and the Eleventh Schedule, ibid. (w.e.f. 15-11-2016) . CHAPTER XX WINDING UP 1[270. Winding up by Tribunal .The provisions of Part I shall apply to the winding up of a company by the Tribunal under this Act .] PART I.Winding up by the Tribunal 2[271. Circumstances in which company may be wound up by Tribunal. A company may, on a petition under section 272, be wound up by the Tribunal, (a) if the company has, by special resolution, resolved that the company be wound up by the Tribunal; (b) if the company has acted against t he interests of the sovereignty and integrity of India, the security of the State, friendly relations with foreign States, public order, decency or morality; (c) if on an application made by the Registrar or any other person authorised by the Central Gover nment by notification under this Act, the Tribunal is of the opinion that the affairs of the company have been conducted in a fraudulent manner or the company was formed for fraudulent and unlawful purpose or the persons concerned in the formation or manag ement of its affairs have been guilty of fraud, misfeasance or misconduct in connection therewith and that it is proper that the company be wound up; (d) if the company has made a default in filing with the Registrar its financial statements or annual returns for immediately preceding five consecutive financial years; or 1. Subs. by Act 31 of 2016,

immediately preceding five consecutive financial years; or 1. Subs. by Act 31 of 2016, s. 255 and the Eleventh Schedule, for section 270 (w.e.f. 15 -11-2016). 2. Subs. by s. 255 and the Eleventh Schedule, ibid., for section 271 (w.e.f. 15 -11-2016). 170 (e) if the Tribunal is of the opinion that it is just and equitable that the company should be wound up.] 1[272. Petition for winding up .(1) Subject to the provisions of this section, a petition to the Tribunal for the winding up of a company shall be presented by (a) the company; (b) any contributory or contributories; (c) all or any of the persons specified in clauses ( a) and ( b); (d) the Registrar; (e) any person authorised by the Cen tral Government in that behalf; or (f) in a case falling under clause ( b) of section 271, by the Central Government or a State Government. (2) A contributory shall be entitled to present a petition for the winding up of a company, notwithstanding that he m ay be the holder of fully paid -up shares, or that the company may have no assets at all or may have no surplus assets left for distribution among the shareholders after the satisfaction of its liabilities, and shares in respect of which he is a contributor y or some of them were either originally allotted to him or have been held by him, and registered in his name, for at least six months during the eighteen months immediately before the commencement of the winding up or have devolved on him through the death of a former holder. (3) The Registrar shall be entitled to present a petition for winding up under section 271, except on the grounds specified in clause ( a) 2[of that section] : Provided that the Registrar shall obtain the previous sanction of the Centra l Government to the presentation of a petition: Provided further that the Central Government shall not accord its sanction unless the company has been given a reasonable opportunity of making representations. (4) A petition presented by the company for winding up before the Tribunal shall be admitted only if accompanied by a statement of affairs in such form and in such manner as may be prescribed. (5) A copy of the petition made under this section shall also be filed with the Registrar and the Registrar shall, without prejudice to any other provisions, submit his views to the Tribunal within sixty days of receipt of such petition.] 273. Powers of Tribunal. (1) The Tribunal may, on receipt of a petition for winding up under section 272 pass any of the following orders, namely: (a) dismiss it, with or without costs; (b) make any interim order as it thinks fit; (c) appoint a provisional liquidator of the company till the making of a winding up order; (d) make an order for the winding up of the company wi th or without costs; or (e) any other order as it thinks fit: Provided that an order under this sub -section shall be made within ninety days from the date of presentation of the petition: 1. Subs. by Act 31 of 2016, s. 255 and the Eleventh Schedule, for section 272 (w.e.f. 15 -11-2016). 2. Subs. by Act 22 of 2019, s. 37, for or clause ( e) of that sub -section (w.e.f. 15 -8-2019). 171 Provided further that before appointing a provisional liquidator und er clause ( c), the Tribunal shall give notice to the company and afford a reasonable opportunity to it to make its representations, if any, unless for special reasons to be recorded in writing, the Tribunal thinks fit to dispense with such notice: Provided also that the Tribunal shall not refuse to make a winding up order on the ground only that the assets of the company have been mortgaged for an amount equal to or in excess of those assets, or that the company has no assets. (2) Where a petition is presen ted on the ground that it is just and equitable that the company should be wound up, the Tribunal may refuse to make an order of winding up, if it is of the opinion that some other remedy is available to the petitioners and that they are acting unreasonabl y in seeking to have the company wound up instead of pursuing the other remedy. 274. Directions for filing statement of affairs. (1) Where a petition for winding up is filed before the Tribunal by any person other than the company, the Tribunal shall, if s atisfied that a prima facie case for winding up of the company is made out, by an order direct the company to file its objections along with a statement of its affairs within thirty days of the order in such form and in such manner as may be prescribed: Provided that the Tribunal may allow a further period of thirty days in a situation of contingency or special circumstances: Provided further that the Tribunal may direct the petitioner to deposit such security for costs as it may consider reasonable as a pr econdition to issue directions to the company. (2) A company, which fails to file the statement of affairs as referred to in sub -section ( 1), shall forfeit the right to oppose the petition and such directors and officers of the company as found responsible for such non-compliance, shall be liable for punishment under sub -section ( 4). (3) The directors and other officers of the company, in respect of which an order for winding up is passed by the Tribunal under clause ( d) of sub -section ( 1) of section 273, s hall, within a period of thirty days of such order, submit, at the cost of the company, the books of account of the company completed and audited up to the date of the order, to such liquidator and in the manner specified by the Tribunal. (4) If any direct or or officer of the company contravenes the provisions of this section, the director or the officer of the company who is in default shall be punishable with imprisonment for a term which may extend to six months or with fine which shall not be less than twenty -five thousand rupees but which may extend to five lakh rupees, or with both. (5) The complaint may be filed in this behalf before the Special Court by Registrar, provisional liquidator, Company Liquidator or any person authorised by the Tribunal. 275. Company Liquidators and their appointments. (1) For the purposes of winding up of a company by the Tribunal, the Tribunal at the time of the passing of the order of winding up, shall appoint an Official Liquidator or a liquidator from the panel maintain ed under sub -section ( 2) as the Company Liquidator. 1[(2) The provisional liquidator or the Company Liquidator, as the case may, shall be appointed by the Tribunal from amongst the insolvency professionals registered under the Insolvency and Bankruptcy Cod e, 2016 (31 of 2016);] (3) Where a provisional liquidator is appointed by the Tribunal, the Tribunal may limit and restrict his powers by the order appointing him or it or by a subsequent order, but otherwise he shall have the same powers as a liquidator. 2* * * * * 1. Subs. by Act 31 of 2016, s. 255 and the Eleventh Schedule, for sub -section ( 2) (w.e.f. 15 -11-2016). 2. Sub -section ( 4) omitted by s. 255 and the Eleventh Schedule , ibid. (w.e.f. 15 -11-2016). 172 (5) The terms and conditions of appointment of a provisional liquidator or Company Liquidator and the fee payable to him or it shall be specified by the Tribunal on the basis of task required to be performed, experience, qualification of such liquidator and size of the company. (6) On appointment as provisional liquidator or Company Liquidator, as the case may be, such liquidator shall file a declaration within seven days from the date of appointment in the prescribed form disclosing conf lict of interest or lack of independence in respect of his appointment, if any, with the Tribunal and such obligation shall continue throughout the term of his appointment. (7) While passing a winding up order, the Tribunal may appoint a provisional liquid ator, if any, appointed under clause ( c) of sub -section ( 1) of section 273, as the Company Liquidator for the conduct of the proceedings for the winding up of the company. 276. Removal and replacement of liquidator. (1) The Tribunal may, on a reasonable cause being shown and for reasons to be recorded in writing, remove the provisional liquidator or the Company Liquidator, as the case may be, as liquidator of the company on any of the following grounds, namely: (a) misconduct; (b) fraud or misfeasance; (c) professional incompetence or failure to exercise due care and diligence in performance of the powers and functions; (d) inability to act as provisional liquidator or as the case may be, Company Liquidator; (e) conflict of interest or lack of independenc e during the term of his appointment that would justify removal. (2) In the event of death, resignation or removal of the provisional liquidator or as the case may be, Company Liquidator, the Tribunal may transfer the work assigned to him or it to another Company Liquidator for reasons to be recorded in writing. (3) Where the Tribunal is of the opinion that any liquidator is responsible for causing any loss or damage to the company due to fraud or misfeasance or failure to exercise due care and diligence in the performance of his or its powers and functions, the Tribunal may recover or cause to be recovered such loss or damage from the liquidator and pass such other orders as it may think fit. (4) The Tribunal shall, before passing any order under this secti on, provide a reasonable opportunity of being heard to the provisional liquidator or, as the case may be, Company Liquidator. 277. Intimation to Company Liquidator, provisional liquidator and Registrar. (1) Where the Tribunal makes an order for appointment of provisional liquidator or for the winding up of a company, it shall, within a period not exceeding seven days from the date of passing of the order, cause intimation thereof to be sent to the Company Liquidator or provisional liquidator, as the case ma y be, and the Registrar. (2) On receipt of the copy of order of appointment of provisional liquidator or winding up order, the Registrar shall make an endorsement to that effect in his records relating to the company and notify in the Official Gazette that such an order has been made and in the case of a listed company, the Registrar shall intimate about such appointment or order, as the case may be, to the stock exchange or exchanges where the securities of the company are listed. (3) The winding up order shall be deemed to be a notice of discharge to the officers, employees and workmen of the company, except when the business of the company is continued. (4) Within three weeks from the date of passing of winding up order, the Company Liquidator shall make an application to the Tribunal for constitution of a winding up committee to assist and monitor the progress of liquidation proceedings by the Company Liquidator in carrying out the function as provided in sub-section ( 5) and such winding up committee shal l comprise of the following persons, namely: (i) Official Liquidator attached to the Tribunal; (ii) nominee of secured creditors; and 173 (iii) a professional nominated by the Tribunal. (5) The Company Liquidator shall be the convener of the meetings of the w inding up committee which shall assist and monitor the liquidation proceedings in following areas of liquidation functions, namely: (i) taking over assets; (ii) examination of the statement of affairs; (iii) recovery of property, cash or any other assets of the company including benefits derived therefrom; (iv) review of audit reports and accounts of the company; (v) sale of assets; (vi) finalisation of list of creditors and contributories; (vii) compromise, abandonment and settlement of claims; (viii) pay ment of dividends, if any; and (ix) any other function, as the Tribunal may direct from time to time. (6) The Company Liquidator shall place before the Tribunal a report along with minutes of the meetings of the committee on monthly basis duly signed by th e members present in the meeting for consideration till the final report for dissolution of the company is submitted before the Tribunal. (7) The Company Liquidator shall prepare the draft final report for consideration and approval of the winding up commi ttee. (8) The final report so approved by the winding up committee shall be submitted by the Company Liquidator before the Tribunal for passing of a dissolution order in respect of the company. 278. Effect of winding up order. The order for the winding up of a company shall operate in favour of all the creditors and all contributories of the company as if it had been made out on the joint petition of creditors and contributories. 279. Stay of suits, etc., on winding up order. (1) When a winding up order has been passed or a provisional liquidator has been appointed, no suit or other legal proceeding shall be commenced, or if pending at the date of the winding up order, shall be proceeded with, by or against the company, except with the leave of the Tribunal and subject to such terms as the Tribunal may impose: Provided that any application to the Tribunal seeking leave under this section shall be disposed of by the Tribunal within sixty days. (2) Nothing in sub -section ( 1) shall apply to any proceeding pendin g in appeal before the Supreme Court or a High Court. 1[280. Jurisdiction of Tribunal. The Tribunal shall, notwithstanding anything contained in any other law for the time being in force, have jurisdiction to entertain, or dispose of, (a) any suit or proceeding by or against the company; (b) any claim made by or against the company, including claims by or against any of its branches in India; (c) any application made under section 233; (d) any question of priorities or any other question whatsoever, whether of law or facts, including those relating to assets, business, actions, rights, entitlements, privileges, benefits, duties, responsibilities, obligations or in any matter arising out of, or in relation to winding up of the company, whether such sui t or proceeding has been instituted, or is instituted, or such claim or question has arisen or arises or such application has been made or is made or such scheme has been submitted, or is submitted, before or after the order for the

arises or such application has been made or is made or such scheme has been submitted, or is submitted, before or after the order for the winding up of the compa ny is made. ] 1. Subs. by Act 31 of 2016, s. 255 and the Eleventh Schedule, for section 280 (w.e.f. 15 -11-2016). 174 281. Submission of report by Company Liquidator. (1) Where the Tribunal has made a winding up order or appointed a Company Liquidator, such liquidator shall, within sixty days from the order, submit to the Tribunal, a report containing the fol lowing particulars, namely: (a) the nature and details of the assets of the company including their location and value, stating separately the cash balance in hand and in the bank, if any, and the negotiable securities, if any, held by the company: Provid ed that the valuation of the assets shall be obtained from registered valuers for this purpose; (b) amount of capital issued, subscribed and paid -up; (c) the existing and contingent liabilities of the company including names, addresses and occupations of i ts creditors, stating separately the amount of secured and unsecured debts, and in the case of secured debts, particulars of the securities given, whether by the company or an officer thereof, their value and the dates on which they were given; (d) the deb ts due to the company and the names, addresses and occupations of the persons from whom they are due and the amount likely to be realised on account thereof; (e) guarantees, if any, extended by the company; (f) list of contributories and dues, if any, paya ble by them and details of any unpaid call; (g) details of trade marks and intellectual properties, if any, owned by the company; (h) details of subsisting contracts, joint ventures and collaborations, if any; (i) details of holding and subsidiary companie s, if any; (j) details of legal cases filed by or against the company; and (k) any other information which the Tribunal may direct or the Company Liquidator may consider necessary to include. (2) The Company Liquidator shall include in his report the manner in which the company was promoted or formed and whether in his opinion any fraud has been committed by any person in its promotion or formation or by any officer of the company in relation to the company since the formation thereof and any other mat ters which, in his opinion, it is desirable to bring to the notice of the Tribunal. (3) The Company Liquidator shall also make a report on the viability of the business of the company or the steps which, in his opinion, are necessary for maximising the val ue of the assets of the company. (4) The Company Liquidator may also, if he thinks fit, make any further report or reports. (5) Any person describing himself in writing to be a creditor or a contributory of the company shall be entitled by himself or by hi s agent at all reasonable times to inspect the report submitted in accordance with this section and take copies thereof or extracts therefrom on payment of the prescribed fees. 282. Directions of Tribunal on report of Company Liquidator. (1) The Tribunal s hall, on consideration of the report of the Company Liquidator, fix a time limit within which the entire proceedings shall be completed and the company be dissolved: Provided that the Tribunal may, if it is of the opinion, at any stage of the proceedings, or on examination of the reports submitted to it by the Company Liquidator and after hearing the Company Liquidator, creditors or contributories or any other interested person, that it will not be advantageous or economical to continue the proceedings, rev ise the time limit within which the entire proceedings shall be completed and the company be dissolved. (2) The Tribunal may, on examination of the reports submitted to it by the Company Liquidator and after hearing the Company Liquidator, creditors or contributories or any other interested person, order sale of the company as a going concern or its assets or part thereof: Provided that the Tribunal may, where it considers fit, appoint a sale committee comprising such creditors, promoters and officers of the company as the Tribunal may decide to assist the Company Liquidator in sale under this sub -section. 175 (3) Where a report is received from the Company Liquidator or the Central Government or any person that a fraud has been committed in respect of the co mpany, the Tribunal shall, without prejudice to the process of winding up, order for investigation under section 210, and on consideration of the report of such investigation it may pass order and give directions under sections 339 to 342 or direct the Com pany Liquidator to file a criminal complaint against persons who were involved in the commission of fraud. (4) The Tribunal may order for taking such steps and measures, as may be necessary, to protect, preserve or enhance the value of the assets of the co mpany. (5) The Tribunal may pass such other order or give such other directions as it considers fit. 283. Custody of companys properties. (1) Where a winding up order has been made or where a provisional liquidator has been appointed, the Company Liquidat or or the provisional liquidator, as the case may be, shall, on the order of the Tribunal, forthwith take into his or its custody or control all the property, effects and actionable claims to which the company is or appears to be entitled to and take such steps and measures, as may be necessary, to protect and preserve the properties of the company. (2) Notwithstanding anything contained in sub -section ( 1), all the property and effects of the company shall be deemed to be in the custody of the Tribunal from the date of the order for the winding up of the company. (3) On an application by the Company Liquidator or otherwise, the Tribunal may, at any time after the making of a winding up order, require any contributory for the time being on the list of contrib utories, and any trustee, receiver, banker, agent, officer or other employee of the company, to pay, deliver, surrender or transfer forthwith, or within such time as the Tribunal directs, to the Company Liquidator, any money, property or books and papers i n his custody or under his control to which the company is or appears to be entitled. 284. Promoters, directors, etc., to cooperate with Company Liquidator. (1) The promoters, directors, officers and employees, who are or have been in employment of the com pany or acting or associated with the company shall extend full cooperation to the Company Liquidator in discharge of his functions and duties. 1[(2) If any person required to assist or cooperate with the Company Liquidator under sub -section ( 1) does not a ssist or cooperate, the Company Liquidator may make an application to the Tribunal for necessary directions. (3) 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. ] 285. Settlement of list of contributories and application of assets. (1) As soon as may be after the passing of a winding up order by the Tribunal, the Tribunal shall settle a list of contributories, cause rectification of register of members in all cases where rectification is required in pursuance of this Act and shall cause the assets of the company to be applie d for the discharge of its liability: Provided that where it appears to the Tribunal that it would not be necessary to make calls on or adjust the rights of contributories, the Tribunal may dispense with the settlement of a list of contributories. (2) In s ettling the list of contributories, the Tribunal shall distinguish between those who are contributories in their own right and those who are contributories as being representatives of, or liable for the debts of, others. (3) While settling the list of cont ributories, the Tribunal shall include every person, who is or has been a member, who shall be liable to contribute to the assets of the company an amount sufficient for payment of the debts and liabilities and the costs, charges and expenses of winding up , and for the adjustment of the rights of the contributories among themselves, subject to the following conditions, namely: (a) a person who has been a member shall not be liable to contribute if he has ceased to be a member for the preceding one year or more before the commencement of the winding up; 1. Subs. by Act 29 of 2020, s. 46, for sub -section ( 2) (w.e.f. 21 -12-2020). 176 (b) a person who has been a member shall not be liable to contribute in respect of any debt or liability of the company contracted after he ceased to be a member; (c) no person who has been a member shall be liable to contribute unless it appears to the Tribunal that the present members are unable to satisfy the contributions required to be made by them in pursuance of this Act; (d) in the case of a company limited by shares, no contribution shall be required from any person, who is or has been a member exceeding the amount, if any, unpaid on the shares in respect of which he is liable as such member; (e) in the case of a company limited by guarantee, no contribution shall be required from any person, who is or has been a member exceeding the amount undertaken to be contributed by him to the assets of the company in the event of its being wound up but if the company has a share capital, such member shall be liable to contribute to the extent of any sum unpaid on any shares held by him as if the company were a company limited by shares. 286. Obligations of directors and managers. In the case of a limited company, any person who is or has been a director or manager, whose liability is unlimited under the provisions of this Act, shall, in addition to his liability, if any, to contribute as an ordinary member, be liable to make a further contribution as if he were at the commencement of winding up, a member of an unlimited company: Provided that (a) a person who has been a director or manager shall not be liable to make such further contribution, if he has ceased to hold office for a year or upwards before the commencement of the winding up; (b) a person who has been a director or manager shall not be liable to make such further contribution in respect of any debt or liability of the company contracted after he ceased to hold office; (c) subject to the articles of the company, a director or manager shall not be liable to make such further contribution unless the Tribu nal deems it necessary to require the contribution in order to satisfy the debts and liabilities of the company, and the costs, charges and expenses of the winding up. 287. Advisory committee. (1) The Tribunal may, while passing an order of winding up of a company, direct that there shall be, an advisory committee to advise the Company Liquidator and to report to the Tribunal on such matters as the Tribunal may direct. (2) The advisory committee appointed by the Tribunal shall consist of not more than twelv e members, being creditors and contributories of the company or such other persons in such proportion as the Tribunal may, keeping in view the circumstances of the company under liquidation, direct. (3) The Company Liquidator shall convene a meeting of cre ditors and contributories, as ascertained from the books and documents, of the company within thirty days from the date of order of winding up for enabling the Tribunal to determine the persons who may be members of the advisory committee. (4) The advisory committee shall have the right to inspect the books of account and other documents, assets and properties of the company under liquidation at a reasonable time. (5) The provisions relating to the convening of the meetings, the procedure to be followed the reat and other matters relating to conduct of business by the advisory committee shall be such as may be prescribed. (6) The meeting of advisory committee shall be chaired by the Company Liquidator. 288. Submission of periodical reports to Tribunal. (1) Th e Company Liquidator shall make periodical reports to the Tribunal and in any case make a report at the end of each quarter with respect to the progress of the winding up of the company in such form and manner as may be prescribed. (2) The Tribunal may, on an application by the Company Liquidator, review the orders made by it and make such modifications as it thinks fit. 289. [Power of Tribunal on application for stay of winding up .] Omitted by the Insolvency and Bankruptcy Code, 2016 (31 of 2016), s. 255 and the Eleventh Schedule (w.e.f. 15-11-2016). 177 290. Powers and duties of Company Liquidator. (1) Subject to directions by the Tribunal, if any, in this regard, the Company Liquidator, in a winding up of a company by the Tribunal, shall have the power (a) to carry on the business of the company so far as may be necessary for the beneficial winding up of the company; (b) to do all acts and to execute, in the name and on behalf of the company, all deeds, receipts and other documents, and for that purpose, to use, when necessary, the companys seal; (c) to sell the immovable and movable property and actionable claims of the company by public auction or private contract, with power to transfer such property to any person or body corporate, or to sell the same in parcels; (d) to sell the whole of the undertaking of the company as a going concern; (e) to raise any money required on the security of the assets of the company; (f) to institute or defend any suit, prosecution or other legal proceeding, civil or crimina l, in the name and on behalf of the company; (g) to invite and settle claim of creditors, employees or any other claimant and distribute sale proceeds in accordance with priorities established under this Act; (h) to inspect the records and returns of the c ompany on the files of the Registrar or any other authority; (i) to prove rank and claim in the insolvency of any contributory for any balance against his estate, and to receive dividends in the insolvency, in respect of that balance, as a separate debt du e from the insolvent, and rate ably with the other separate creditors; (j) to draw, accept, make and endorse any negotiable instruments including cheque, bill of exchange, hundi or promissory note in the name and on behalf of the company, with the same eff ect with respect to the liability of the company as if such instruments had been drawn, accepted, made or endorsed by or on behalf of the company in the course of its business; (k) to take out, in his official name, letters of administration to any deceased contributory, and to do in his official name any other act necessary for

out, in his official name, letters of administration to any deceased contributory, and to do in his official name any other act necessary for obtaining payment of any money due from a contributory or his estate which cannot be conveniently done in the name of the company, and in all such cases, the money due shall, for the purpose of enabling the Company Liquidator to take out the letters of administration or recover the money, be deemed to be due to the Company Liquidator himself; (l) to obtain any professional assistance from any person or appoint any professional , in discharge of his duties, obligations and responsibilities and for protection of the assets of the company, appoint an agent to do any business which the Company Liquidator is unable to do himself; (m) to take all such actions, steps, or to sign, execu te and verify any paper, deed, document, application, petition, affidavit, bond or instrument as may be necessary, (i) for winding up of the company; (ii) for distribution of assets; (iii) in discharge of his duties and obligations and functions as Compan y Liquidator; and (n) to apply to the Tribunal for such orders or directions as may be necessary for the winding up of the company. (2) The exercise of powers by the Company Liquidator under sub -section ( 1) shall be subject to the overall control of the Tribunal. (3) Notwithstanding the provisions of sub -section ( 1), the Company Liquidator shall perform such other duties as the Tribunal may specify in this behalf. 291. Provision for professional assistance to Company Liquidator. (1) The Company Liquidator may, with the sanction of the Tribunal, appoint one or more chartered accountants or company secretaries 178 or cost accountants or legal practitioners or such other professionals on such terms and conditions, as may be necessary, to assist him in the perform ance of his duties and functions under this Act. (2) Any person appointed under this section shall disclose forthwith to the Tribunal in the prescribed form any conflict of interest or lack of independence in respect of his appointment. 292. Exercise and c ontrol of Company Liquidators powers. (1) Subject to the provisions of this Act, the Company Liquidator shall, in the administration of the assets of the company and the distribution thereof among its creditors, have regard to any directions which may be given by the resolution of the creditors or contributories at any general meeting or by the advisory committee. (2) Any directions given by the creditors or contributories at any general meeting shall, in case of conflict, be deemed to override any directi ons given by the advisory committee. (3) The Company Liquidator (a) may summon meetings of the creditors or contributories, whenever he thinks fit, for the purpose of ascertaining their wishes; and (b) shall summon such meetings at such times, as the cred itors or contributories, as the case may be, may, by resolution, direct, or whenever requested in writing to do so by not less than one -tenth in value of the creditors or contributories, as the case may be. (4) Any person aggrieved by any act or decision o f the Company Liquidator may apply to the Tribunal, and the Tribunal may confirm, reverse or modify the act or decision complained of and make such further order as it thinks just and proper in the circumstances. 293. Books to be kept by Company Liquidator .(1) The Company Liquidator shall keep proper books in such manner, as may be prescribed, in which he shall cause entries or minutes to be made of proceedings at meetings and of such other matters as may be prescribed. (2) Any creditor or contributory may , subject to the control of the Tribunal, inspect any such books, personally or through his agent. 294. Audit of Company Liquidators accounts. (1) The Company Liquidator shall maintain proper and regular books of account including accounts of receipts and payments made by him in such form and manner as may be prescribed. (2) The Company Liquidator shall, at such times as may be prescribed but not less than twice in each year during his tenure of office, present to the Tribunal an account of the receipts an d payments as such liquidator in the prescribed form in duplicate, which shall be verified by a declaration in such form and manner as may be prescribed. (3) The Tribunal shall cause the accounts to be audited in such manner as it thinks fit, and for the purpose of the audit, the Company Liquidator shall furnish to the Tribunal with such vouchers and information as the Tribunal may require, and the Tribunal may, at any time, require the production of, and inspect, any books of account kept by the Company Li quidator. (4) When the accounts of the company have been audited, one copy thereof shall be filed by the Company Liquidator with the Tribunal, and the other copy shall be delivered to the Registrar which shall be open to inspection by any creditor, contrib utory or person interested. (5) Where an account referred to in sub -section ( 4) relates to a Government company, the Company Liquidator shall forward a copy thereof (a) to the Central Government, if that Government is a member of the Government company; o r (b) to any State Government, if that Government is a member of the Government company; or (c) to the Central Government and any State Government, if both the Governments are members of the Government company. 179 (6) The Company Liquidator shall cause the ac counts when audited, or a summary thereof, to be printed, and shall send a printed copy of the accounts or summary thereof by post to every creditor and every contributory: Provided that the Tribunal may dispense with the compliance of the provisions of this sub -section in any case it deems fit. 295. Payment of debts by contributory and extent of set -off.(1) The Tribunal may, at any time after passing of a winding up order, pass an order requiring any contributory for the time being on the list of contri butories to pay, in the manner directed by the order, any money due to the company, from him or from the estate of the person whom he represents, exclusive of any money payable by him or the estate by virtue of any call in pursuance of this Act. (2) The Tr ibunal, in making an order, under sub -section ( 1), may, (a) in the case of an unlimited company, allow to the contributory, by way of set -off, any money due to him or to the estate which he represents, from the company, on any independent dealing or contract with the company, but not any money due to him as a member of the company in respect of any dividend or profit; and (b) in the case of a limited company, allow to any director or manager whose liability is unlimited, or to his estate, such set -off. (3) In the case of any company, whether limited or unlimited, when all the creditors have been paid in full, any money due on any account whatever to a contributory from the company may be allowed to him by way of set -off against any subsequent call. 296. Power of Tribunal to make calls. The Tribunal may, at any time after the passing of a winding up order, and either before or after it has ascertained the sufficiency of the assets of the company, (a) make calls on all or any of the contributories for th e time being on the list of the contributories, to the extent of their liability, for payment of any money which the Tribunal considers necessary to satisfy the debts and liabilities of the company, and the costs, charges and expenses of winding up, and for the adjustment of the rights of the contributories among themselves; and (b) make an order for payment of any calls so made. 297. Adjustment of rights of contributories. The Tribunal shall adjust the rights of the contributories among themselves and dist ribute any surplus among the persons entitled thereto. 298. Power to order costs. The Tribunal may, in the event of the assets of a company being insufficient to satisfy its liabilities, make an order for the payment out of the assets, of the costs, charge s and expenses incurred in the winding up, in such order of priority inter se as the Tribunal thinks just and proper. 299. Power to summon persons suspected of having property of company, etc. (1) The Tribunal may, at any time after the appointment of a pr ovisional liquidator or the passing of a winding up order, summon before it 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 compa ny, 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. (2) The Tribunal may examine any officer or person so summoned on oat h 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. (3) The Tribunal may require any officer or person so summoned to produce 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 q uestions relating to that lien. 180 (4) The Tribunal may direct the liquidator to file before it a report in respect of debt or property of the company in possession of other persons. (5) If the Tribunal finds that (a) a person is indebted to the company, the Tribunal may order him to pay to the provisional liquidator or, as the case may be, 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; (b) a person is in possession of any property belonging to the company, the Tribunal may order him to deliver to the provisional liquidator or, as the case may be, t he liquidator, that property or any part thereof, at such time, in such manner and on such terms as the Tribunal may consider just. (6) If any officer or person so summoned fails to appear before the Tribunal at the time appointed without a reasonable caus e, the Tribunal may impose an appropriate cost. (7) Every order made 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). (8) Any person 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. 300. Pow er to order examination of promoters, directors, etc. (1) Where an order has been made for the winding up of a company by the Tribunal, and the Company Liquidator has made a report to the Tribunal under this Act, stating that in his opinion a fraud has bee n committed by any person in the promotion , formation, business or conduct of affairs of the company since its formation, the Tribunal may, after considering the report, direct that such person or officer shall attend before the Tribunal on a day appointed by it for that purpose, and be examined as to the promotion or formation or the conduct of the business of the company or as to his conduct and dealings as an officer thereof. (2) The Company Liquidator shall take part in the examination, and for that purpose he or it may, if specially authorised by the Tribunal in that behalf, employ such legal assistance as may be sanctioned by the Tribunal. (3) The person shall be examined on oath and shall answer all such questions as the Tribunal may put, or allow to be put, to him. (4) A person ordered to be examined under this section (a) shall, before his examination, be furnished at his own cost with a copy of the report of the Company Liquidator; and (b) may at his own cost employ chartered accountants or comp any secretaries or cost accountants or legal practitioners entitled to appear before the Tribunal under section 432, who shall be at liberty to put to him such questions as the Tribunal may consider just for the purpose of enabling him to explain or qualif y any answers given by him. (5) If any such person applies to the Tribunal to be exculpated from any charges made or suggested against him, it shall be the duty of the Company Liquidator to appear on the hearing of such application and call the attention o f the Tribunal to any matters which appear to the Company Liquidator to be relevant. (6) If the Tribunal, after considering any evidence given or hearing witnesses called by the Company Liquidator, allows the application made under sub -section ( 5), the Tri bunal may order payment to the applicant of such costs as it may think fit. (7) Notes of the examination shall be taken down in writing, and shall be read over to or by, and signed by, the person examined, a copy be supplied to him and may thereafter be us ed in evidence against him, and shall be open to inspection by any creditor or contributory at all reasonable times. (8) The Tribunal may, if it thinks fit, adjourn the examination from time to time. 181 (9) An examination under this section may, if the Tribun al so directs, be held before any person or authority authorised by the Tribunal. (10) The powers of the Tribunal under this section as to the conduct of the examination, but not as to costs, may be exercised by the person or authority before whom the exam ination is held in pursuance of sub-section ( 9). 301. Arrest of person trying to leave India or abscond. At any time either before or after passing a winding up order, if the Tribunal is satisfied that a contributory or a person having property, accounts o r papers of the company in his possession is about to leave India or otherwise to abscond, or is about to remove or conceal any of his property, for the purpose of evading payment of calls or of avoiding examination respecting the affairs of the company, t he Tribunal may cause (a) the contributory to be detained until such time as the Tribunal may order; and (b) his books and papers and movable property to be seized and safely kept until such time as the Tribunal may order. 302. Dissolution of company by Tribunal. (1) When the affairs of a company have been completely wound up, the Company Liquidator shall make an application to the Tribunal for dissolution of such company. (2) The Tribunal shall on an application filed by the Company Liquidator under sub -section ( 1) or when the Tribunal is of the opinion that it is just and reasonable in the circumstances of the case that an order for the dissolution of the company should be made, make an order that the company be dissolved from the date of the order, and the company shall be dissolved accordingly. 1[(3) The Tribunal shall, within a

ved from the date of the order, and the company shall be dissolved accordingly. 1[(3) The Tribunal shall, within a period of thirty days form the date of the order, (a) forward a copy of the order to the Registrar who shall record in the register relating to the company a minute of the dissolution of the company; and (b) direct the Company Liquidator to forward a copy of the order to the Registrar who shall record in the register relating to the company a minute of the dissolution of the company .] 2* * * * * 303. Appeals from orders made before commencement of Act. Nothing in this Chapter shall affect the operation or enforcement of any order made by any Court in any proceedings for the winding up of a company immediately before the commencement of this Act and an appeal agains t such order shall be filed before such authority competent to hear such appeals before such commencement. [Part II.Voluntary winding up ] Omitted by the Insolvency and Bankruptcy Code , 2016 (31 of 2016), s. 255 and the Eleventh Schedule (w.e.f. 15-11-2016). 304.[ Circumstances in which company may be wound up voluntarily. ] Omitted by s . 255 and the Eleventh Schedule, ibid. (w.e.f . 15-11-2016). 305.[ Declaration of solvency in case of proposal to wind up voluntarily .] Omitted by s. 255 and the Eleventh Schedule, ibid. (w.e.f . 15-11-2016). 306.[Meeting of creditors. ]Omitted by s . 255 and the Eleventh Schedule, ibid. (w.e.f . 15-11-2016). 307.[Publication of resolution to wind up voluntarily. ] Omitted by s . 255 and the Eleventh Schedule, ibid.(w.e.f . 15-11-2016). 308.[Commencement of voluntary winding up .] Omitted by s . 255 and the Eleventh Schedule, ibid. (w.e.f . 15-11-2016). 309.[ Effect of voluntary winding up .] Omitted by s. 255 and the Eleventh Schedule, ibid. (w.e.f . 15-11-2016). 1. Subs. by Act 29 of 2020, s. 47, for sub -section ( 3) (w.e.f. 21 -212020). 2. Sub -section ( 4) omitted by s. 47, ibid. (w.e.f. 21 -12-2020). 182 310.[ Appointment of Company Liquidator .] Omitted by s. 255 and the Eleventh Schedule, ibid. (w.e.f . 15-11-2016). 311.[ Power to remove and fill vacancy of Company Liquidator .] Omitted by s . 255 and the Eleventh Schedule, ibid. (w.e.f . 15-11-2016). 312.[ Notice of appointment of Company Liquidator to be given to Registrar .]Omitted by s . 255 and the Eleventh Schedule, ibid. (w.e.f . 15-11-2016). 313.[ Cesser of Boards powers on appointment of Company Liquidator .]Omitted by s. 255 and the Eleventh Schedule, ibid. (w.e.f . 15-11-2016). 314.[ Powers and duties of Company Liquidator in voluntary winding up .]Omitted by s . 255 and the Eleventh Schedule, ibid. (w.e.f . 15-11-2016). 315.[ Appointment of committees .]Omitted by s. 255 and the Eleventh Schedule, ibid. (w.e.f . 15-11- 2016). 316.[ Company Liquidator to submit report on progress of winding up .] Omitted by the Insolvency and Bankruptcy Code, 2016 (31 of 2016), s. 255 and the Eleventh Schedule (w.e.f . 15-11-2016). 317.[ Report of Company Liquidator to Tribunal for examination of persons .] Omitted by s. 255 and the Eleventh Schedule, ibid. (w.e.f . 15-11-2016). 318.[ Final meeting and dissolution of company .] Omitted by s. 255 and the Eleventh Schedule, ibid.(w.e.f . 15-11-2016). 319.[ Power of Company Liquidator to accept shares, etc., as consideration for sale of property of company .] Omitted by s. 255 and the Eleventh Schedule, ibid. (w.e.f . 15-11-2016). 320. [Distribution of property of company .] Omitted by s . 255 and the Eleventh Schedule, ibid. (w.e.f . 15-11-2016). 321. [ Arrangement when binding on company and creditors .] Omitted by the Insolvency and Bankruptcy Code , 2016 (31 of 2016), s. 255 and the Eleventh Schedule (w.e.f . 15-11-2016). 322. [ Power t o apply to Tribunal to have questions determined, etc .] Omitted by s. 255 and the Eleventh Schedule, ibid. (w.e.f . 15-11-2016). 323.[Costs of voluntary winding up .]Omitted by s. 255 and the Eleventh Schedule, ibid. (w.e.f . 15-11-2016). PART III.Provisions applicable to every mode of winding up 324. Debts of all descriptions to be admitted to proof. In every winding up (subject, in the case of insolvent companies, to the application in accordance with the provisions of this Act or of the law of insolvency), all debts payable on a contingency, and all claims against the company, present or future, certain or contingent, ascertained or sounding only in damages, shall be admissible to proof against the company, a just estimate being made, so far as possible, of the value of such debts or claims as may be subject to any contingency, or may sound only in damages, or for some other reason may not bear a certain value. 325.[Application of insolvency rules in winding up of insolvent companies .] Omitte d by the Insolvency and Bankruptcy Code, 2016 (31 of 2016) s. 255 and the Eleventh Schedule (w.e.f . 15-11-2016). 1[326. Overriding preferential payments. (1) In the winding up of a company under this Act, the following debts shall be paid in priority to all other debts: (a) workmens dues; and (b) where a secured creditor has realised a secured asset, so much of the debts due to such secured creditor as could not be realised by him or the amount of the workmen's portion in his security (if payable under the law), whichever is less, pari passu with the workmen's dues: 1. Subs. by Act 31 of 2016, s. 255 and the Eleventh Schedule, for section 326 (w.e.f. 15 -11-2016). 183 Provided that in case of the winding up of a company, the sums referred to in sub -clauses ( i) and (ii) of clause ( b) of the Explanation , which are payable for a period of two years preceding the winding up order or such other period as may be prescribed, shall be paid in priority to all other debts (including debts due to secured creditors), within a period of thirty days of sale of assets and shall be subject to such charge over the security of secured creditors as may be prescribed. (2) The debts payable under the proviso to sub -section ( 1) shall be paid in full before any payment is made to secured creditors and thereafter debts payable under that sub -section shall be paid in full, unless the assets are insufficient to meet them, in which case they shall abate in equal proportions. Explanation .For the purposes of this section, and section 327 (a) workmen , in relation to a company, means the employees of the company, being workmen within the meaning of clause ( s) of section 2 of the Industrial Disputes Act, 1947 (14 of 1947); (b) workmen's dues , in relation to a company, means the aggregate of the following sums due from the company to its workmen, namely: (i) all wages or salary includ ing wages payable for time or piece work and salary earned wholly or in part by way of commission of any workman in respect of services rendered to the company and any compensation payable to any workman under any of the provisions of the Industrial Disput es Act, 1947 (14 of 1947); (ii) all accrued holiday remuneration becoming payable to any workman or, in the case of his death, to any other person in his right on the termination of his employment before or by the effect of the winding up order or resoluti on; (iii) unless the company is being wound up voluntarily merely for the purposes of reconstruction or amalgamation with another company or unless the company has, at the commencement of the winding up, under such a contract with insurers as is mentioned in section 14 of the Workmen's Compensation Act, 1923 (19 of 1923), rights capable of being transferred to and vested in the workmen, all amount due in respect of any compensation or liability for compensation under the said Act in respect of the death or disablement of any workman of the company; (iv) all sums due to any workman from the provident fund, the pension fund, the gratuity fund or any other fund for the welfare of the workmen, maintained by the company; (c) workmen's portion , in relation to t he security of any secured creditor of a company, means the amount which bears to the value of the security the same proportion as the amount of the workmen's dues bears to the aggregate of the amount of workmen's dues and the amount of the debts due to th e secured creditors. Illustration The value of the security of a secured creditor of a company is Rs. 1,00,000. The total amount of the workmen's dues is Rs. 1,00,000. The amount of the debts due from the company to its secured creditors is Rs.3,00,000. The aggregate of the amount of workmen's dues and the amount of debts due to secured creditors is Rs. 4,00,000. The workmen's portion of the security is, therefore, one -fourth of the value of the security, that is Rs. 25,000 .] 327. Preferential payments. (1) In a winding up, subject to the provisions of section 326, there shall be paid in priority to all other debts, (a) all revenues, taxes, cesses and rates due from the company to the Central Government or a State Government or to a local authority at the relevant date, and having become due and payable within the twelve months immediately before that date; (b) all wages or salary including wages payable for time or piece work and salary earned wholly or in part by way of commission of any employee in resp ect of services rendered to the company and due for a period not exceeding four months within the twelve months immediately before the relevant date, subject to the condition that the amount payable under this clause to any workman shall not exceed such am ount as may be notified; 184 (c) all accrued holiday remuneration becoming payable to any employee, or in the case of his death, to any other person claiming under him, on the termination of his employment before, or by the winding up order, or, as the case ma y be, the dissolution of the company; (d) unless the company is being wound up voluntarily merely for the purposes of reconstruction or amalgamation with another company, all amount due in respect of contributions payable during the period of twelve months immediately before the relevant date by the company as the employer of persons under the Employees State Insurance Act, 1948 (34 of 1948) or any other law for the time being in force; (e) unless the company has, at the commencement of winding up, under s uch a contract with any insurer as is mentioned in section 14 of the Workmens Compensation Act, 1923 (8 of 1923), rights capable of being transferred to and vested in the workmen, all amount due in respect of any compensation or liability for compensation under the said Act in respect of the death or disablement of any employee of the company: Provided that where any compensation under the said Act is a weekly payment, the amount payable under this clause shall be taken to be the amount of the lump sum for which such weekly payment could, if redeemable, be redeemed, if the employer has made an application under that Act; (f) all sums due to any employee from the provident fund, the pension fund, the gratuity fund or any other fund for the welfare of the emp loyees, maintained by the company; and (g) the expenses of any investigation held in pursuance of sections 213 and 216, in so far as they are payable by the company. (2) Where any payment has been made to any employee of a company on account of wages or sa lary or accrued holiday remuneration, himself or, in the case of his death, to any other person claiming through him, out of money advanced by some person for that purpose, the person by whom the money was advanced shall, in a winding up, have a right of p riority in respect of the money so advanced and paid -up to the amount by which the sum in respect of which the employee or other person in his right would have been entitled to priority in the winding up has been reduced by reason of the payment having bee n made. (3) The debts enumerated in this section shall (a) rank equally among themselves and be paid in full, unless the assets are insufficient to

The debts enumerated in this section shall (a) rank equally among themselves and be paid in full, unless the assets are insufficient to meet them, in which case they shall abate in equal proportions; and (b) so far as the assets of the company available for payment to general creditors are insufficient to meet them, have priority over the claims of holders of debentures under any floating charge created by the company, and be paid accordingly out of any property comprised in or subject to that charge. (4) Subject to the retention of such sums as may be necessary for the costs and expenses of the winding up, the debts under this section shall be discharged forthwith so far as the assets are sufficient to meet them, and in the case of the debts to which priority is given under clause ( d) of sub -section ( 1), formal proof thereof shall not be required except in so far as may be otherwise prescribed. (5) In the event of a landlord or other person distaining or having distained on any goods or effects of the company within three months immediately before the date of a winding up order, the debts to which priority is given under this section shall be a first charge on the goods or effects so distrained on or the proceeds of the sale thereof: Provided tha t, in respect of any money paid under any such charge, the landlord or other person shall have the same rights of priority as the person to whom the payment is made. (6) Any remuneration in respect of a period of holiday or of absence from work on medical grounds through sickness or other good cause shall be deemed to be wages in respect of services rendered to the company during that period. 185 1[(7) Sections 326 and 327 shall not be applicable in the event of liquidation under the Insolvency and Bankruptcy C ode, 2016 (31 of 2016).] Explanation. For the purposes of this section, (a) the expression accrued holiday remuneration includes, in relation to any person, all sums which, by virtue either of his contract of employment or of any enactment including any order made or direction given thereunder, are payable on account of the remuneration which would, in the ordinary course, have become payable to him in respect of a period of holiday, had his employment with the company continued until he became entitled to be allowed the holiday; (b) the expression employee does not include a workman; and 2[(c) the expression relevant date means in the case of a company being wound up by the Tribunal, the date of appointment or first appointment of a provisional liquidator, or if no such appointment was made, the date of the winding up order, unless, in either case, the company had commence d to be wound up voluntarily before that date under the Insolvency and Bankruptcy Code, 2016 (31 of 2016).] 328. Fraudulent preference. (1) Where a company has given preference to a person who is one of the creditors of the company or a surety or guarantor for any of the debts or other liabilities of the company, and the company does anything or suffers anything done which has the effect of putting that person into a position which, in the event of the company going into liquidation, will be better than the position he would have been in if that thing had not been done prior to six months of making winding up application, the Tribunal, if satisfied that, such transaction is a fraudulent preference may order as it may think fit for restoring the position to w hat it would have been if the company had not given that preference. (2) If the Tribunal is satisfied that there is a preference transfer of property, movable or immovable, or any delivery of goods, payment, execution made, taken or done by or against a co mpany within six months before making winding up application, the Tribunal may order as it may think fit and may declare such transaction invalid and restore the position. 3[329. Transfers not in good faith to be void .Any transfer of property, movable or immovable, or any delivery of goods, made by a company, not being a transfer or delivery made in the ordinary course of its business or in favour of a purchaser or encumbrancer in good faith and for valuable consideration, if made within a period of one ye ar before the presentation of a petition for winding up by the Tribunal under this Act shall be void against the Company Liquidator.] 330. Certain transfers to be void. Any transfer or assignment by a company of all its properties or assets to trustees for the benefit of all its creditors shall be void. 331. Liabilities and rights of certain persons fraudulently preferred. (1) Where a company is being wound up and anything made, taken or done after the commencement of this Act is invalid under section 328 a s a fraudulent preference of a person interested in property mortgaged or charged to secure the companys debt, then, without prejudice to any rights or liabilities arising, apart from this provision, the person preferred shall be subject to the same liabi lities, and shall have the same rights, as if he had undertaken to be personally liable as a surety for the debt, to the extent of the mortgage or charge on the property or the value of his interest, whichever is less. (2) The value of the interest of the person preferred under sub -section ( 1) shall be determined as at the date of the transaction constituting the fraudulent preference, as if the interest were free of all encumbrances other than those to which the mortgage or charge for the debt of the compa ny was then subject. (3) On an application made to the Tribunal with respect to any payment on the ground that the payment was a fraudulent preference of a surety or guarantor, the Tribunal shall have jurisdiction to determine any questions with respect to the payment arising between the person to whom the payment was made and the surety or guarantor and to grant relief in respect thereof, notwithstanding that it is not necessary so to do 1. Ins. by Act 31 of 2016, s. 255 and the Eleventh Schedule (w.e.f. 15 -11-2016). 2. Subs. by s. 255 and the Eleventh Schedule, ibid., for clause ( c) (w.e.f. 15 -11-2016). 3. Subs. by Act 31 of 2016 , s. 255 and the Eleventh Schedule, for section 329 (w.e.f. 15 -11-2016). 186 for the purposes of the winding up, and for that purpose, may give le ave to bring in the surety or guarantor as a third party as in the case of a suit for the recovery of the sum paid. (4) The provisions of sub -section ( 3) shall apply mutatis mutandis in relation to transactions other than payment of money. 332. Effect of floating charge. Where a company is being wound up, a floating charge on the undertaking or property of the company created within the twelve months immediately preceding the commencement of the winding up, shall, unless it is proved that the company immed iately after the creation of the charge was solvent, be invalid, except for the amount of any cash paid to the company at the time of, or subsequent to the creation of, and in consideration for, the charge, together with interest on that amount at the rate of five per cent. per annum or such other rate as may be notified by the Central Government in this behalf. 333. Disclaimer of onerous property. (1) Where any part of the property of a company which is being wound up consists of (a) land of any tenure, b urdened with onerous covenants; (b) shares or stocks in companies; (c) any other property which is not saleable or is not readily saleable by reason of the possessor thereof being bound either to the performance of any onerous act or to the payment of any sum of money; or (d) unprofitable contracts, the Company Liquidator may, notwithstanding that he has endeavoured to sell or has taken possession of the property or exercised any act of ownership in relation thereto or done anything in pursuance of the contract, with the leave of the Tribunal and subject to the provisions of this section, by writing signed by him, at any time within twelve months after the commencement of the winding up or such extended period as may be allowed by the Tribunal, disclaim the property: Provided that where the Company Liquidator had not become aware of the existence of any such property within one month from the commencement of the winding up, the power of disclaiming the property may be exercised at any time within twelve month s after he has become aware thereof or such extended period as may be allowed by the Tribunal. (2) The disclaimer shall operate to determine, as from the date of disclaimer, the rights, interest and liabilities of the company in or in respect of the proper ty disclaimed, but shall not, except so far as is necessary for the purpose of releasing the company and the property of the company from liability, affect the rights, interest or liabilities of any other person. (3) The Tribunal, before or on granting lea ve to disclaim, may require such notices to be given to persons interested, and impose such terms as a condition of granting leave, and make such other order in the matter as the Tribunal considers just and proper. (4) The Company Liquidator shall not be entitled to disclaim any property in any case where an application in writing has been made to him by any person interested in the property requiring him to decide whether he will or will not disclaim and the Company Liquidator has not, within a period of twenty -eight days after the receipt of the application or such extended period as may be allowed by the Tribunal, give notice to the applicant that he intends to apply to the Tribunal for leave to disclaim, and in case the property is under a contract, if the Company Liquidator after such an application as aforesaid does not within the said period or extended period disclaim the contract, he shall be deemed to have adopted it. (5) The Tribunal may, on the application of any person who is, as against the Com pany Liquidator, entitled to the benefit or subject to the burden of a contract made with the company, make an order rescinding the contract on such terms as to payment by or to either party of damages for the non - performance of the co ntract, or otherwise as the Tribunal considers just and proper, and any damages payable under the order to any such person maybe proved by him as a debt in the winding up. (6) The Tribunal may, on an application by any person who either claims any interest in any disclaimed property or is under any liability not discharged under this Act in respect of any disclaimed property, and 187 after hearing any such persons as it thinks fit, make an order for the vesting of the property in, or the delivery of the propert y to, any person entitled thereto or to whom it may seem just that the property should be delivered by way of compensation for such liability as aforesaid, or a trustee for him, and on such terms as the Tribunal considers just and proper, and on any such v esting order being made, the property comprised therein shall vest accordingly in the person named therein in that behalf without any conveyance or assignment for the purpose: Provided that where the property disclaimed is of a leasehold nature, the Tribun al shall not make a vesting order in favour of any person claiming under the company, whether as under -lessee or as mortgagee or holder of a charge by way of demise, except upon the terms of making that person (a) subject to the same liabilities and oblig ations as those to which the company was subject under the lease in respect of the property at the commencement of the winding up; or (b) if the Tribunal thinks fit, subject only to the same liabilities and obligations as if the lease had been assigned to that person at that date, and in either event as if the lease had comprised only the property comprised in the vesting order, and any mortgagee or under -lessee declining to accept a vesting order upon such terms shall be excluded from all interest in, and security upon the property, and, if there is no person claiming under the company who is willing to accept an order upon such terms, the Tribunal shall have power to vest the estate and interest of the company in the property in any person liable, either p ersonally or in a representative character, and either alone or jointly with the company, to perform the covenants of the lessee in the lease, free and discharged from all estates, encumbrances and interests created therein by the company. (7) Any person a ffected by the operation of a disclaimer under this section shall be deemed to be a creditor of the company to the amount of the compensation or damages payable in respect of such effect, and may accordingly prove the amount as a debt in the winding up. 1[334. Transfers, etc., after commencement of winding up to be void. In the case of a winding up by the Tribunal, any disposition of the property including actionable claims, of the company and any transfer of shares in the company or alteration in the statu s of its members, made after the commencement of the winding up shall, unless the Tribunal otherwise orders, be void .] 335. Certain attachments, executions, etc., in winding up by Tribunal to be void. (1) Where any company is being wound up by the Tribunal , (a) any attachment, distress or execution put in force, without leave of the Tribunal against the estate or effects of the company, after the commencement of the winding up; or (b) any sale held, without leave of the Tribunal of any of the properties or effects of the company, after such commencement, shall be void. (2) Nothing in this section shall apply to any proceedings for the recovery of any tax or impost or any dues payable to the Government. 336. Offences by officers of companies in liquidation. (1) If any person, who is or has been an officer of a company which, at the time of the commission of the alleged offence, is being wound up, 2[by the Tribunal under this Act or which is subsequently ordered to be wound up by the Tribunal under this Act], (a) does not, to the best of his knowledge and belief, fully and truly disclose to the Company Liquidator all the property, movable and immovable, of the company, and how and to whom and for what consideration and when the company disposed of any part th ereof, except such part as has been disposed of in the ordinary course of the business of the company; (b) does not deliver up to the Company Liquidator, or as he directs, all such part of the movable and immovable property of the company as is in his custody or under his control and which he is required by law to deliver up; 1. Subs. by Act 31 of 2016, s. 255 and the Eleventh Schedule, for section 334 (w.e.f. 15 -11-2016). 2. Subs. by s. 255 and the Eleventh Schedule , ibid., for whether by the Tribunal or voluntarily,

Subs. by s. 255 and the Eleventh Schedule , ibid., for whether by the Tribunal or voluntarily, or which is subsequently ordered to be wound up by the Tribunal or which subsequently passes a resolution for voluntary winding up (w.e.f. 15 -11-2016). 188 (c) does not deliver up to the Company Liquidator, or as he directs, all such books and papers of the company as are in his custody or under his control and which he is required by law to deliver up; (d) within the twelve months immediately before the commencement of the winding up or at any time thereafter, (i) conceals any part of the property of the company to the value of one thousand rupees or more, or conceals any debt due to or from the company; (ii) fraudulently removes any part of the property of the company to the value of one thousand rupees or more; (iii) conceals, destroys, mutilates or falsifies, 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; (iv) makes, or is privy to the making of, any false entry in any book or paper affecting or relating to, the property or affairs of the company; (v) fraudulently parts with, alters or makes any omission in, or is privy to the fraudulent parting with, altering or making of any omission in, any book or paper affecting or relating to the property or affairs of the company; (vi) by any false representation or other fraud, ob tains on credit, for or on behalf of the company, any property which the company does not subsequently pay for; (vii) under the false pretence that the company is carrying on its business, obtains on credit, for or on behalf of the company, any property wh ich the company does not subsequently pay for; or (viii) pawns, pledges or disposes of any property of the company which has been obtained on credit and has not been paid for, unless such pawning, pledging or disposing of the property is in the ordinary co urse of business of the company; (e) makes any material omission in any statement relating to the affairs of the company; (f) knowing or believing that a false debt has been proved by any person under the winding up, fails for a period of one month to info rm the Company Liquidator thereof; (g) 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; (h) after the commencement of the winding up or at any meeting of the creditors of the company within the twelve months next before the commencement of the winding up, attempts to account for any part of the property of the company by fictitious losses or expenses; or (i) is guilty of any false representation or fraud f or 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 punishable with imprisonment for a term which shall not be less than three years but which may extend to five years and with fine which shall not be less than one lakh rupees but which may extend to three lakh rupees: Provided that it shall be a good defence if the accused proves that he had no intent to defraud or to conce al the true state of affairs of the company or to defeat the law. (2) Where any person pawns, pledges or disposes of any property in circumstances which amount to an offence under sub -clause ( viii) of clause ( d) of sub -section ( 1), every person who takes i n pawn or pledge or otherwise receives the property, knowing it to be pawned, pledged, or disposed of in such circumstances as aforesaid, shall be punishable with imprisonment for a term which shall not be less than three years but which may extend to five years and with fine which shall not be less than three lakh rupees but which may extend to five lakh rupees. 189 Explanation .For the purposes of this section, the expression officer includes any person in accordance with whose directions or instructions th e directors of the company have been accustomed to act. 337. Penalty for frauds by officers. If any person, being at the time of the commission of the alleged offence an officer of a company which is subsequently ordered to be wound up by the Tribunal 1[under this Act] (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 or any other person, has made or caused to be made any gift or transfer of, or charge on, or has caused or connived at the levying of any execution against, the property of the company; or (c) with intent to defraud creditors of the company, has concealed or removed any part of the property of the company since the date of any unsati sfied judgment or order for payment of money obtained against the company or within two months before that date, he shall be punishable with imprisonment for a term which shall not be less than one year but which may extend to three years and with fine whi ch shall not be less than one lakh rupees but which may extend to three lakh rupees. 338. Liability where proper accounts not kept. (1) Where a company is being wound up, if it is shown that proper books of account were not kept by the company throughout t he period of two years immediately preceding the commencement of the winding up, or the period between the incorporation of the company and the commencement of the winding up, whichever is shorter, every officer of the company who is in default shall, unle ss he shows that he acted honestly and that in the circumstances in which the business of the company was carried on, the default was excusable, be punishable with imprisonment for a term which shall not be less than one year but which may extend to three years and with fine which shall not be less than one lakh rupees but which may extend to three lakh rupees. (2) For the purposes of sub -section ( 1), it shall be deemed that proper books of account have not been kept in the case of any company, (a) if such books of account as are necessary to exhibit and explain the transactions and financial position of the business of the company, including books containing entries made from day -to-day in sufficient detail of all cash received and all cash paid, have not been kept; and (b) where the business of the company has involved dealings in goods, statements of the annual stock takings 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 bu yers and the sellers thereof in sufficient detail to enable those goods and those buyers and sellers to be identified, have not been kept. 339. Liability for fraudulent conduct of business. (1) If in the course of the winding up of a company, it appears that any business of the company has been carried on with intent to defraud creditors of the company or any other persons or for any fraudulent purpose, the Tribunal, on the application of the Official Liquidator, or the Company Liquidator or any creditor or contributory of the company, may, if it thinks it proper so to do, declare that any person, who is or has been a director, manager, or officer of the company or any persons who were knowingly parties to the carrying on of the business in the 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 Tribunal may direct: Provided that on the hearing of an application under this sub -section, the Official Liqu idator or the Company Liquidator, as the case may be, may himself give evidence or call witnesses. (2) Where the Tribunal makes any such declaration, it may give such further directions as it thinks proper for the purpose of giving effect to that declarati on and, in particular, 1. Subs. by Act 31 of 20 16, s. 255 and the Eleventh Schedule, for or which subsequently passes a resolution for voluntary winding up, (w.e.f. 15 -11-2016). 190 (a) make provision for making the liability of any such person under the declaration a charge on any debt or obligation due from the company to him, or on any mortgage or charge or any interest in any mortgage or charge on any asset s of the company held by or vested in him, or any person on his behalf, or any person claiming as assignee from or through the person liable or any person acting on his behalf; (b) make such further order as may be necessary for the purpose of enforcing an y charge imposed under this sub -section. (3) Where any business of a company is carried on with such intent or for such purpose as is mentioned in sub -section ( 1), every person who was knowingly a party to the carrying on of the business in the manner aforesaid, shall be liable for action under section 447. (4) This section shall apply, notwithstanding that the person concerned may be punishable under any other law for the time being in force in respect of the matters on the ground of which the declaration is to be made. Explanation .For the purposes of this section, (a) the expression assignee includes any person to whom or in whose favour, by the directions of the person liable, the debt, obligation, mortgage or charge was created, issued or transferred or the interest was created, but does not include an assignee for valuable consideration, n ot including consideration by way of marriage, given in good faith and without notice of any of the matters on the ground of which the declaration is made; (b) the expression officer includes any person in accordance with whose directions or instructions the directors of the company have been accustomed to act. 340. Power of Tribunal to assess damages against delinquent directors, etc. (1) If in the course of winding up of a company, it appears that any person who has taken part in the promotion or format ion of the company, or any person, who is or has been a director, manager, Company Liquidator or officer of the company (a) has misapplied, or retained, or become liable or accountable for, any money or property of the company; or (b) has been guilty of a ny misfeasance or breach of trust in relation to the company, the Tribunal may, on the application of the Official Liquidator, or the Company Liquidator, or of any creditor or contributory, made within the period specified in that behalf in sub -section ( 2), inquire into the conduct of the person, director, manager, Company Liquidator or officer aforesaid, and order him to repay or restore the money or property or any part thereof respectively, with interest at such rate as the Tribunal considers just and pr oper, or to contribute such sum to the assets of the company by way of compensation in respect of the misapplication, retainer, misfeasance or breach of trust, as the Tribunal considers just and proper. (2) An application under sub -section ( 1) shall be mad e within five years from the date of the winding up order, or of the first appointment of the Company Liquidator in the winding up, or of the misapplication, retainer, misfeasance or breach of trust, as the case may be, whichever is longer. (3) This sectio n shall apply, notwithstanding that the matter is one for which the person concerned may be criminally liable. 341. Liability under sections 339 and 340 to extend to partners or directors in firms or companies. Where a declaration under section 339 or an o rder under section 340 is made in respect of a firm or body corporate, the Tribunal shall also have power to make a declaration under section 339, or pass an order under section 340, as the case may be, in respect of any person who was at the relevant time a partner in that firm or a director of that body corporate. 342. Prosecution of delinquent officers and members of company. (1) If it appears to the Tribunal in the course of a winding up by the Tribunal, that any person, who is or has been an officer, o r any member, of the company has been guilty of any offence in relation to the company, the Tribunal may, either on the 191 application of any person interested in the winding up or suo motu , direct the liquidator to prosecute the offender or to refer the matt er to the Registrar. 1* * * * * (5) When any prosecution is instituted under this section, it shall be the duty of the liquidator and of every person, who is or has been an officer and agent of the company to give all assistance in connection with the prosecution which he is reasonably able to give. Explanation. For the purposes of this sub -section, the expression agent , in relation to a company, shall include any banker or legal adviser of the company and any person employed by the company as auditor. 2* * * * * 343. Company Liquidator to exercise certain powers subject to sanction. 3[(1) The Company Liquidator may, with the sanction of the Tribunal, when the company is being wound up by the Tribunal, (i) pay any class of creditors in full; (ii) make any compromise or arrangement with creditors or persons claiming to be creditors, or having or alleging themselves to have any claim, present or future, certain or contingent, against the company, or whereby the company may be rendered liab le; or (iii) compromise any call or liability to call, debt, and liability capable of resulting in a debt, and any claim, present or future, certain or contingent, ascertained or sounding only in damages, subsisting or alleged to subsist between the compan y and a contributory or alleged contributory or other debtor or person apprehending liability to the company, and all questions in any way relating to or affecting the assets or liabilities or the winding up of the company, on such terms as may be agreed, and take any security for the discharge of any such call, debt, liability or claim, and give a complete discharge in respect thereof.] (2) Notwithstanding anything contained in sub -section ( 1), in the case of a winding up by the Tribunal, the Central Gover nment may make rules to provide that the Company Liquidator may, under such circumstances, if any, and subject to such conditions, restrictions and limitations, if any, as may be prescribed, exercise any of the powers referred to in sub -clause ( ii) or sub -clause ( iii) of clause ( b) of sub-section ( 1) without the sanction of the Tribunal. (3) Any creditor or contributory may apply in the manner prescribed to the Tribunal with respect to any exercise or proposed exercise of powers by the Company Liquidator under this section, and the Tribunal shall after giving a reasonable opportunity to such applicant and the Company Liquidator, pass such orders as it may think fit. 34

after giving a reasonable opportunity to such applicant and the Company Liquidator, pass such orders as it may think fit. 344. Statement that company is in liquidation. (1) Where a company is being woun d up, whether by the Tribunal or voluntarily, every invoice, order for goods or business letter issued by or on behalf of the company or a Company Liquidator of the company, or a receiver or manager of the property of the company, being a document on or in which the name of the company appears, shall contain a statement that the company is being wound up. (2) If a company contravenes the provisions of sub -section ( 1), the company, and every officer of the company, the Company Liquidator and any receiver or manager, who wilfully authorises or permits the non-compliance, shall be punishable with fine which shall not be less than fifty thousand rupees but which may extend to three lakh rupees. 345. Books and papers of company to be evidence. Where a company is being wound up, all books and papers of the company and of the Company Liquidator shall, as between the contributories of the company, be prima facie evidence of the truth of all matters purporting to be recorded therein. 1. Sub -sections ( 2), (3) and ( 4) omitted by Act 31 of 2016, s. 255 and the Eleventh Schedule (w.e.f. 15 -11-2016). 2. Sub -section ( 6) omitted by Act 29 of 2020, s. 48 (w.e.f. 21 -12-2020). 3. Subs. by Act 31 of 2016, s. 255 and the Eleventh Schedule, for sub -section ( 1) (w.e.f. 15 -11-2016). 192 346. Inspection of books and papers by creditors and contributories. (1) At any time after the making of an order for the winding up of a company by the Tribunal, any creditor or contributory of the company may inspect the books and papers of the company only in accordance with, and s ubject to such rules as may be prescribed. (2) Nothing contained in sub -section ( 1) shall exclude or restrict any rights conferred by any law for the time being in force (a) on the Central Government or a State Government; (b) on any authority or officer thereof; or (c) on any person acting under the authority of any such Government or of any such authority or officer. 347. Disposal of books and papers of company. 1[(1) When the affairs of a company have been completely wound up and it is about to be disso lved, the books and papers of such company and those of the Company Liquidator may be disposed of in such manner as the Tribunal directs .] (2) After the expiry of five years from the dissolution of the company, no responsibility shall devolve on the compan y, the Company Liquidator, or any person to whom the custody of the books and papers has been entrusted, by reason of any book or paper not being forthcoming to any person claiming to be interested therein. (3) The Central Government may, by rules, (a) prevent for such period as it thinks proper the destruction of the books and papers of a company which has been wound up and of its Company Liquidator; and (b) enable any creditor or contributory of the company to make representations to the Central Governme nt in respect of the matters specified in clause ( a) and to appeal to the Tribunal from any order which may be made by the Central Government in the matter. (4) If any person acts in contravention of any rule framed or an order made under sub -section ( 3), he shall be punishable 2*** with fine which may extend to 3[fifty thousand rupees ]. 348. Information as to pending liquidations. 4[(1) If the winding up of a company is not concluded within one year after its commencement, the Company Liquidator shall, unless he is exempted from so doing, either wholly or in part by the Central Government, within two months of the expiry of such year and thereafter until the winding up is concluded, at intervals of not more than one year or at such shorter intervals, if any, as may be prescribed, file a statement in such form containing such particulars as may be prescribed, duly audited, by a person qualified to act as auditor of the company, with respect to the proceedings in, and position of, the liquidation, with the Tribunal: Provided that no such audit as is referred to in this sub -section shall be necessary where the provisions of section 294 apply.] (2) When the statement is filed with the Tribunal under clause ( a) of sub -section ( 1), a copy shall simultaneously be filed with the Registrar and shall be kept by him along with the other records of the company. (3) Where a statement referred to in sub -section ( 1) relates to a Government company in liquidation, the Company Liquidator shall forward a copy thereof (a) to the Central Government, if that Government is a member of the Government company; (b) to any State Government, if that Government is a member of the Government company; or 1. Subs. by Act 31 of 2016, s. 255 and the Eleventh Schedule, for sub -section ( 1) (w.e.f. 15-11-2016). 2. The words with imprisonment for a term which may extend to six months or omitted by Act 29 of 2020, s. 49 (w.e.f. 21 -12- 2020). 3. Subs. by s. 49, ibid., for fifty thousand rupees, or with both (w.e.f. 21 -12-2020). 4. Subs. by s. 255 and the Eleventh Schedule, ibid., for sub -section ( 1) (w.e.f. 15 -11-2016). 193 (c) to the Central Government and any State Government, if both the Governments are members of the Government company. (4) Any person stating himself in writing to be a creditor or contributory of the company shall be entitled, by himself or by his agent, at all reasonable times, on payment of the prescribed fee, to inspect the statement referred to in sub -section ( 1), and to receive a copy thereof or an extract there from. (5) Any person fraudulently stating himself to be a creditor or contributory under sub -section ( 4) shall be deemed to be guilty of an offence under section 182 of the Indian Penal Code (45 of 1860), and shall, on the application of the Company Liquidator, be punishable accordingly. 1[(6) Where a Company Liquidator, who is an insolvency professional registered under the Insolvency and Bankrupt Code, 2016 (31 of 2016) is in default in complying with the provisions of this section, then such default shall be deemed to be a contravention of the provisions of the said Code, and the rules and regulations made thereunder for the purpose of proceedings under chapter VI of Part I V of that Code.] 2* * * * * 349. Official Liquidator to make payments into public account of India. Every Official Liquidator shall, in such manner and at such times as may be prescribed, pay the monies received by him as Official Liquidator of any company, into the public account of India in the Reserve Bank of India. 350. Company Liquidator to deposit monies into scheduled bank. (1) Every Company Liquidator of a company shall, in such manner and at such times as may be prescribed, deposit the moni es received by him in his capacity as such in a scheduled bank to the credit of a special bank account opened by him in that behalf: Provided that if the Tribunal considers that it is advantageous for the creditors or contributories or the company, it may permit the account to be opened in such other bank specified by it. (2) If any Company Liquidator at any time retains for more than ten days a sum exceeding five thousand rupees or such other amount as the Tribunal may, on the application of the Company Li quidator, authorise him to retain, then, unless he explains the retention to the satisfaction of the Tribunal, he shall (a) pay interest on the amount so retained in excess, at the rate of twelve per cent. per annum and also pay such penalty as may be det ermined by the Tribunal; (b) be liable to pay any expenses occasioned by reason of his default; and (c) also be liable to have all or such part of his remuneration, as the Tribunal may consider just and proper, disallowed, or may also be removed from his o ffice. 351. Liquidator not to deposit monies into private banking account. Neither the Official Liquidator nor the Company Liquidator of a company shall deposit any monies received by him in his capacity as such into any private banking account. 352. Compa ny Liquidation Dividend and Undistributed Assets Account. (1) Where any company is being wound up and the liquidator has in his hands or under his control any money representing (a) dividends payable to any creditor but which had remained unpaid for six m onths after the date on which they were declared; or (b) assets refundable to any contributory which have remained undistributed for six months after the date on which they become refundable, the liquidator shall forthwith deposit the said money into a separate special account to be known as the Company Liquidation Dividend and Undistributed Assets Account maintained in a scheduled bank. (2) The liquidator shall, on the dissolution of the company, pay into the Company Liquidation Dividend and Undistribut ed Assets Account any money representing unpaid dividends or undistributed assets in his hands at the date of dissolution. 1. Subs. by Act 29 of 2020, s. 50, for sub -section ( 6) (w.e.f. 21 -12-2020). 2. Sub -section ( 7) omitted by Act 29 of 2020, s. 50 (w.e.f. 21 -12-2020). 194 (3) The liquidator shall, when making any payment referred to in sub -sections ( 1) and ( 2), furnish to the Registrar, a statement in t he prescribed form, setting forth, in respect of all sums included in such payment, the nature of the sums, the names and last known addresses of the persons entitled to participate therein, the amount to which each is entitled and the nature of his claim thereto, and such other particulars as may be prescribed. (4) The liquidator shall be entitled to a receipt from the scheduled bank for any money paid to it under sub-sections ( 1) and ( 2), and such receipt shall be an effectual discharge of the Company Liq uidator in respect thereof. (5) Where a company is being wound up voluntarily, the Company Liquidator shall, when filing a statement in pursuance of sub -section ( 1) of section 348, indicate the sum of money which is payable under sub-sections ( 1) and ( 2) of this section during the six months preceding the date on which the said statement is prepared, and shall, within fourteen days of the date of filing the said statement, pay that sum into the Company Liquidation Dividend and Undistributed Assets Account. (6) Any person claiming to be entitled to any money paid into the Company Liquidation Dividend and Undistributed Assets Account, whether paid in pursuance of this section or under the provisions of any previous company law may apply to the Registrar for pa yment thereof, and the Registrar, if satisfied that the person claiming is entitled, may make the payment to that person of the sum due: Provided that the Registrar shall settle the claim of such person within a period of sixty days from the date of receip t of such claim, failing which the Registrar shall make a report to the Regional Director giving reasons of such failure. (7) Any money paid into the Company Liquidation Dividend and Undistributed Assets Account in pursuance of this section, which remains unclaimed thereafter for a period of fifteen years, shall be transferred to the general revenue account of the Central Government, but a claim to any money so transferred may be preferred under sub -section ( 6) and shall be dealt with as if such transfer ha d not been made and the order, if any, for payment on the claim will be treated as an order for refund of revenue. (8) Any liquidator retaining any money which should have been paid by him into the Company Liquidation Dividend and Undistributed Assets Acco unt under this section shall (a) pay interest on the amount so retained at the rate of twelve per cent. per annum and also pay such penalty as may be determined by the Registrar: Provided that the Central Government may in any proper case remit either in part or in whole the amount of interest which the liquidator is required to pay under this clause; (b) be liable to pay any expenses occasioned by reason of his default; and (c) where the winding up is by the Tribunal, also be liable to have all or such pa rt of his remuneration, as the Tribunal may consider just and proper, to be disallowed, and to be removed from his office by the Tribunal. 353. Liquidator to make returns, etc. (1) If any Company Liquidator who has made any default in filing, delivering or making any return, account or other document, or in giving any notice which he is by law required to file, deliver, make or give, fails to make good the default within fourteen days after the service on him of a notice requiring him to do so, the Tribunal may, on an application made to it by any contributory or creditor of the company or by the Registrar, make an order directing the Company Liquidator to make good the default within such time as may be specified in the order. (2) Any order under sub -sectio n (1) may provide that all costs of, and incidental to, the application shall be borne by the Company Liquidator. (3) Nothing in this section shall prejudice the operation of any enactment imposing penalties on a Company Liquidator in respect of any such d efault as aforesaid. 354. Meetings to ascertain wishes of creditors or contributories. (1) In all matters relating to the winding up of a company, the Tribunal may 195 (a) have regard to the wishes of creditors or contributories of the company, as proved to i t by any sufficient evidence; (b) if it thinks fit for the purpose of ascertaining those wishes, direct meetings of the creditors or contributories to be called, held and conducted in such manner as the Tribunal may direct; and (c) appoint a person to act as chairman of any such meeting and to report the result thereof to the Tribunal.

(c) appoint a person to act as chairman of any such meeting and to report the result thereof to the Tribunal. (2) While ascertaining the wishes of creditors under sub -section ( 1), regard shall be had to the value of each debt of the creditor. (3) While ascertaining the wishes of contributories under sub -section ( 1), regard shall be had to the number of votes which may be cast by each contributory. 355. Court, tribunal or person, etc., before whom affidavit may be sworn. (1) Any affidavit required to be sworn under the provisions, or for the purposes, of this Chapter may be sworn (a) in India before any court, tribunal, judge or person lawfully authorised to take and receive affidavits; and (b) in any other country before any court, judge or person lawfully authorised to take and r eceive affidavits in that country or before an Indian diplomatic or consular officer. (2) All tribunals, judges, Justices, commissioners and persons acting judicially in India shall take judicial notice of the seal, stamp or signature, as the case may be, of any such court, tribunal, judge, person, diplomatic or consular officer, attached, appended or subscribed to any such affidavit or to any other document to be used for the purposes of this Chapter. 356. Powers of Tribunal to declare dissolution of compa ny void. (1) Where a company has been dissolved, whether in pursuance of this Chapter or of section 232 or otherwise, the Tribunal may at any time within two years of the date of the dissolution, on application by the Company Liquidator of the company or b y any other person who appears to the Tribunal to be interested, make an order, upon such terms as the Tribunal thinks fit, declaring the dissolution to be void, and thereupon such proceedings may be taken as if the company had not been dissolved. 1[(2) The Tribunal shall (a) forward a copy of the order, within thirty days from the date thereof, to the Registrar who shall record the same; and (b) direct the Company Liquidator or the person on whose application the order was made, to file a certified copy of the order, within thirty days from the date thereof such further period as allowed by the Tribunal, with the Registrar who shall record the same .] 2[357. Commencement of winding up by Tribunal .The winding up of a company by the Tribunal under this Act shall be deemed to commence at the time of the presentation of the petition for the winding up.] 358. Exclusion of certain time in computing period of limitation. Notwithstanding anything in the Limitation Act, 1963 (36 of 1963), or in any other law for th e time being in force, in computing the period of limitation specified for any suit or application in the name and on behalf of a company which is being wound up by the Tribunal, the period from the date of commencement of the winding up of the company to a period of one year immediately following the date of the winding up order shall be excluded. PART IV.Official Liquidators 359. Appointment of Official Liquidator. (1) 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. 1. Subs.by Act 29 of 2020, s. 5 1, for sub -section ( 2) (w.e.f. 21 -12-2020). 2. Subs. by Act 31 of 2016, s. 255 and the Eleventh Schedule, for section 357 (w.e.f. 15 -11-2016). 196 (2) The liquidators appointed under sub -section (1) shall be whole -time officers of the Central Government. (3) The salary and other allowances of the Official Liquidator, Joint Official Liquidator, Deputy Official Liquidator and Assistant Official Liquidator shall be paid by the Central Government. 360. Powers and functions of Official Liquidator. (1) The Official Liquidator shall exercise such powers and perform such duties as the Central Government may prescribe. (2) Without prejudice to the provisions of sub -section ( 1), the Official Liquidator ma y (a) exercise all or any of the powers as may be exercised by a Company Liquidator under the provisions of this Act; and (b) conduct inquiries or investigations, if directed by the Tribunal or the Central Government, in respect of matters arising out of winding up proceedings. 361. Summary procedure for liquidation. (1) Where the company to be wound up under this Chapter, (i) has assets of book value not exceeding one crore rupees; and (ii) belongs to such class or classes of companies as may be prescri bed, the Central Government may order it to be wound up by summary procedure provided under this Part. (2) Where an order under sub -section ( 1) is made, the Central Government shall appoint the Official Liquidator as the liquidator of the company. (3) The Official Liquidator shall forthwith take into his custody or control all assets, effects and actionable claims to which the company is or appears to be entitled. (4) The Official Liquidator shall, within thirty days of his appointment, submit a report to t he Central Government in such manner and form, as may be prescribed, including a report whether in his opinion, any fraud has been committed in promotion, formation or management of the affairs of the company or not. (5) On receipt of the report under sub -section ( 4), if the Central Government is satisfied that any fraud has been committed by the promoters, directors or any other officer of the company, it may direct further investigation into the affairs of the company and that a report shall be submitted within such time as may be specified. (6) After considering the investigation report under sub -section ( 5), the Central Government may order that winding up may be proceeded under Part I of this Chapter or under the provision of this Part. 362. Sale of ass ets and recovery of debts due to company. (1) The Official Liquidator shall expeditiously dispose of all the assets whether movable or immovable within sixty days of his appointment. (2) The Official Liquidator shall serve a notice within thirty days of hi s appointment calling upon the debtors of the company or the contributories, as the case may be, to deposit within thirty days with him the amount payable to the company. (3) Where any debtor does not deposit the amount under sub -section ( 2), the Central G overnment may, on an application made to it by the Official Liquidator, pass such orders as it thinks fit. (4) The amount recovered under this section by the Official Liquidator shall be deposited in accordance with the provisions of section 349. 363. Sett lement of claims of creditors by Official Liquidator. (1) The Official Liquidator within thirty days of his appointment shall call upon the creditors of the company to prove their claims in such manner as may be prescribed, within thirty days of the receip t of such call. (2) The Official Liquidator shall prepare a list of claims of creditors in such manner as may be prescribed and each creditor shall be communicated of the claims accepted or rejected along with reasons to be recorded in writing. 197 364. Appeal by creditor. (1) Any creditor aggrieved by the decision of the Official Liquidator under section 363 may file an appeal before the Central Government within thirty days of such decision. (2) The Central Government may after calling the report from the Off icial Liquidator either dismiss the appeal or modify the decision of the Official Liquidator. (3) The Official Liquidator shall make payment to the creditors whose claims have been accepted. (4) The Central Government may, at any stage during settlement of claims, if considers necessary, refer the matter to the Tribunal for necessary orders. 365. Order of dissolution of company. (1) The Official Liquidator shall, if he is satisfied that the company is finally wound up, submit a final report to (i) the Central Government, in case no reference was made to the Tribunal under sub -section ( 4) of section 364; and (ii) in any other case, the Central Government and the Tribunal. (2) The Central Government, or as the case may be, the Tribunal on receipt of such report shall order that the company be dissolved. (3) Where an order is made under sub -section ( 2), the Registrar shall strike off the name of the company from the register of companies and publish a notification to this effect. CHAPTER XXI PART I. Compan ies Authorised to Register under this Act 366. Companies capable of being registered. (1) For the purposes of this Part, the word company includes any partnership firm, limited liability partnership, cooperative society, society or any other business ent ity formed under any other law for the time being in force which applies for registration under this Part. (2) With the exceptions and subject to the provisions contained in this section, any company formed, whether before or after the commencement of this Act, in pursuance of any Act of Parliament other than this Act or of any other law for the time being in force or being otherwise duly constituted according to law, and consisting of 1[two or more members], may at any time register under this Act as an un limited company, or as a company limited by shares, or as a company limited by guarantee, in such manner as may be prescribed and the registration shall not be invalid by reason only that it has taken place with a view to the companys being wound up: Prov ided that (i) a company registered under the Indian Companies Act, 1882 (6 of 1882) or under the Indian Companies Act, 1913 (7 of 1913) or the Companies Act, 1956 (1 of 1956), shall not register in pursuance of this section; (ii) a company having the liab ility of its members limited by any Act of Parliament other than this Act or by any other law for the time being in force, shall not register in pursuance of this section as an unlimited company or as a company limited by guarantee; (iii) a company shall b e registered in pursuance of this section as a company limited by shares only if it has a permanent paid -up or nominal share capital of fixed amount divided into shares, also of fixed amount, or held and transferable as stock, or divided and held partly in the one way and partly in the other, and formed on the principle of having for its members the holders of those shares or that stock, and no other persons; (iv) a company shall not register in pursuance of this section without the assent of a majority of such of its members as are present in person, or where proxies are allowed, by proxy, at a general meeting summoned for the purpose; (v) where a company not having the liability of its members limited by any Act of Parliament or any other law for the time being in force is about to register as a limited company, the majority required to assent as aforesaid shall consist of not less than three -fourths of the members present in person, or where proxies are allowed, by proxy, at the meeting; 1. Subs. by Act 1 of 2018, s. 75, for seven or more members (w.e.f. 15 -8-2018). 198 (vi) where a compa ny is about to register as a company limited by guarantee, the assent to its being so registered shall be accompanied by a resolution declaring that each member undertakes to contribute to the assets of the company, in the event of its being wound up while he is a member, or within one year after he ceases to be a member, for payment of the debts and liabilities of the company or of such debts and liabilities as may have been contracted before he ceases to be a member, and of the costs, charges and expenses of winding up, and for the adjustment of the rights of the contributories among themselves, such amount as may be required, not exceeding a specified amount. 1[(vii) a company with less than seven members shall register as a private company.] (3) In computing any majority required for the purposes of sub -section ( 1), when a poll is demanded, regard shall be had to the number of votes to which each member is entitled according to the regulations of the company. 367. Certificate of registration of exist ing companies. On compliance with the requirements of this Chapter with respect to registration, and on payment of such fees, if any, as are payable under section 403, the Registrar shall certify under his hand that the company applying for registration is incorporated as a company under this Act, and in the case of a limited company that it is limited and thereupon the company shall be so incorporated. 368. Vesting of property on registration. All property, movable and immovable (including actionable claim s), belonging to or vested in a company at the date of its registration in pursuance of this Part, shall, on such registration, pass to and vest in the company as incorporated under this Act for all the estate and interest of the company therein. 369. Savi ng of existing liabilities. The registration of a company in pursuance of this Part shall not affect its rights or liabilities in respect of any debt or obligation incurred, or any contract entered into, by, to, with, or on behalf of, the company before re gistration. 370. Continuation of pending legal proceedings. All suits and other legal proceedings taken by or against the company, or any public officer or member thereof, which are pending at the time of the registration of a company in pursuance of this Part, may be continued in the same manner as if the registration had not taken place: Provided that execution shall not issue against the property or persons of any individual member of the company on any decree or order obtained in any such suit or procee ding; but, in the event of the property of the company being insufficient to satisfy the decree or order, an order may be obtained for winding up the company 2[in accordance with the provisions of this Act or of the Insolvency and Bankruptcy Code, 2016 (31 of 2016)]. 371. Effect of registration under this Part. (1) When a company is registered in pursuance of this Part, sub -sections ( 2) to ( 7) shall apply. (2) All provisions contained in any Act of Parliament or any other law for the time being in force, or other instrument constituting or regulating the company, including, in the case of a company registered as a company limited by guarantee, the resolution declaring the amount of the guarantee, shall be deemed to be conditions and regulations of the compan y, in the same manner and with the same incidents as if so much thereof as would, if the company had been formed under this Act, have been required to be inserted in the memorandum, were contained in a registered memorandum

if the company had been formed under this Act, have been required to be inserted in the memorandum, were contained in a registered memorandum, and the residue thereof were co ntained in registered articles. (3) All the provisions of this Act shall apply to the company and the members, contributories and creditors thereof, in the same manner in all respects as if it had been formed under this Act, subject as follows: (a) Table F in Schedule I shall not apply unless and except in so far as it is adopted by special resolution; (b) the provisions of this Act relating to the numbering of shares shall not apply to any company whose shares are not numbered; 1. Ins. by Act 1 of 2018, s. 75 (w.e.f. 15 -8-2018). 2. Ins. by Act 31 of 2016, s. 255 and the Eleventh Schedule (w.e.f. 15 -11-2016). 199 (c) in the event of the com pany being wound up, every person shall be a contributory, in respect of the debts and liabilities of the company contracted before registration, who is liable to pay or contribute to the payment of any debt or liability of the company contracted before re gistration, or to pay or contribute to the payment of any sum for the adjustment of the rights of the members among themselves in respect of any such debt or liability, or to pay or contribute to the payment of the costs, charges and expenses of winding up the company, so far as relates to such debts or liabilities as aforesaid; (d) in the event of the company being wound up, every contributory shall be liable to contribute to the assets of the company, in the course of the winding up, all sums due from him in respect of any such liability as aforesaid; and in the event of the death or insolvency of any contributory, the provisions of this Act with respect to the legal representatives of deceased contributories, or with respect to the assignees of insolvent contributories, as the case may be, shall apply. (4) The provisions of this Act with respect to (a) the registration of an unlimited company as a limited company; (b) the powers of an unlimited company on registration as a limited company, to increase the nominal amount of its share capital and to provide that a portion of its share capital shall not be capable of being called -up except in the event of winding up; (c) the power of a limited company to determine that a portion of its share capital shall not be capable of being called -up except in the event of winding up, shall apply, notwithstanding anything in any Act of Parliament or any other law for the time being in force, or other instrument constituting or regulating the company. (5) Nothing in this section shall authorise the company to alter any such provisions contained in any instrument constituting or regulating the company as would, if the company had originally been formed under this Act, have been required to be contained in the memorandum and are not authorised to be altered by this Act. (6) None of the provisions of this Act (apart from those of section 242) shall derogate from any power of altering its constitution or regulations which may be vested in the company, by virtue of any Act of Parliament or any other law for the time being in force, or other instrument constituting or regulating the company. (7) In this section, the expression instrument includes deed of settlement, deed of partnership, or limited liability partnership. 372. Pow er of Court to stay or restrain proceedings. The provisions of this Act 1[or of the Insolvency and Bankruptcy Code, 2016 (31 of 2016), as the case may be,] with respect to staying and restraining suits and other legal proceedings against a company at any t ime after the presentation of a petition for winding up and before the making of a winding up order, shall, in the case of a company registered in pursuance of this Part, where the application to stay or restrain is by a creditor, extend to suits and other legal proceedings against any contributory of the company. 373. Suits stayed on winding up order. Where an order has been made for winding up, or a provisional liquidator has been appointed for, a company registered in pursuance of this Part, no suit or other legal proceeding shall be proceeded with or commenced against the company or any contributory of the company in respect of any debt of the company, except by leave of the Tribunal and except on such terms as the Tribunal may impose. 374. Obligations o f companies registering under this Part. Every company which is seeking registration under this Part shall, (a) ensure that secured creditors of the company, prior to its registration under this Part, have either consented to or have given their no object ion to company's registration under this Part; (b) publish in a newspaper, advertisement one in English and one in vernacular language in such form as may be prescribed giving notice about registration under this Part, seeking objections and address them s uitably; 1. The proviso i ns. by Act 31 of 2016, s. 255 and the Eleventh Schedule (w.e.f. 15 -11-2016). 200 (c) file an affidavit, duly not arised, from all the members or partners to provide that in the event of registration under this Part, necessary documents or papers shall be submitted to the registering or other authority with which the company wa s earlier registered, for its dissolution as partnership firm, limited liability partnership, cooperative society, society or any other business entity, as the case may be. (d) comply with such other conditions as may be prescribed. 1[Provided that upon registration as a company under this Part a limited liability partnership incorporated under the Limited Liability Partnership Act, 2008 (6 of 2009) shall be deemed to have been dissolved under that Act without any further act or deed.] PART II.Winding up of unregistered companies 375. Winding up of unregistered companies. (1) Subject to the provisions of this Part, any unregistered company may be wound up under this Act, in such manner as may be prescribed, and all the provisions of this Act, with respe ct to winding up shall apply to an unregistered company, with the exceptions and additions mentioned in sub -sections ( 2) to ( 4). (2) No unregistered company shall be wound up under this Act voluntarily. (3) An unregistered company may be wound up under the following circumstances, namely: (a) if the company is dissolved, or has ceased to carry on business, or is carrying on business only for the purpose of winding up its affairs; (b) if the company is unable to pay its debts; (c) if the Tribunal is of opinion that it is just and equitable that the company should be wound up. (4) An unregistered company shall, for the purposes of this Act, be deemed to be unable to pay its debts (a) if a creditor, by assignment or otherwise, to whom the company is indeb ted in a sum exceeding one lakh rupees then due, has served on the company, by leaving at its principal place of business, or by delivering to the secretary, or some director, manager or principal officer of the company, or by otherwise serving in such man ner as the Tribunal may approve or direct, a demand under his hand requiring the company to pay the sum so due, and the company has, for three weeks after the service of the demand, neglected to pay the sum or to secure or compound for it to the satisfacti on of the creditor; (b) if any suit or other legal proceeding has been instituted against any member for any debt or demand due, or claimed to be due, from the company, or from him in his character as a member, and notice in writing of the institution of t he suit or other legal proceeding having been served on the company by leaving the same at its principal place of business or by delivering it to the secretary, or some director, manager or principal officer of the company or by otherwise serving the same in such manner as the Tribunal may approve or direct, the company has not, within ten days after service of the notice, (i) paid, secured or compounded for the debt or demand; (ii) procured the suit or other legal proceeding to be stayed; or (iii) indemni fied the defendant to his satisfaction against the suit or other legal proceeding, and against all costs, damages and expenses to be incurred by him by reason of the same; (c) if execution or other process issued on a decree or order of any Court or Tribun al in favour of a creditor against the company, or any member thereof as such, or any person authorised to be sued as nominal defendant on behalf of the company, is returned unsatisfied in whole or in part; (d) if it is otherwise proved to the satisfaction of the Tribunal that the company is unable to pay its debts. Explanation. For the purposes of this Part, the expression unregistered company 1. The proviso ins. by Act 1 of 2018, s. 76 (w.e.f. 15 -8-2018). 201 (a) shall not include (i) a railway company incorporated under any Act of Parliament or other Indian law or any Act of Parliament of the United Kingdom; (ii) a company registered under this Act; or (iii) a company registered under any previous companies law and not being a company the registered office whereof was in Burma, Aden, Pakistan immediately before the separation of that country from India; and (b) save as aforesaid, shall include any partnership firm, limited liability partnership or society or co-operative society, association or company consisting of more than seven members at the time when the petiti on for winding up the partnership firm, limited liability partnership or society or co -operative society, association or company, as the case may be, is presented before the Tribunal. 376. Power to wind up foreign companies, although dissolved. Where a bo dy corporate incorporated outside India which has been carrying on business in India, ceases to carry on business in India, it may be wound up as an unregistered company under this Part, notwithstanding that the body corporate has been dissolved or otherwi se ceased to exist as such under or by virtue of the laws of the country under which it was incorporated. 377. Provisions of Chapter cumulative. (1) The provisions of this Part, with respect to unregistered companies shall be in addition to and not in dero gation of, any provisions hereinbefore in this Act contained with respect to the winding up of companies by the Tribunal. (2) The Tribunal or Official Liquidator may exercise any powers or do any act in the case of unregistered companies which might be exe rcised or done by the Tribunal or Official Liquidator in winding up of companies formed and registered under this Act: Provided that an unregistered company shall not, except in the event of its being wound up, be deemed to be a company under this Act, and then only to the extent provided by this Part. 378. Saving and construction of enactments conferring power to wind up partnership firm, association or company, etc., in certain cases. Nothing in this Part, shall affect the operation of any enactment which provides for any partnership firm, limited liability partnership or society or co -operative society, association or company being wound up, or being wound up as a company or as an unregistered company, under the Companies Act, 1956 (1 of 1956), or any Act repealed by that Act: Provided that references in any such enactment to any provision contained in the Companies Act, 1956 (1 of 1956) or in any Act repealed by that Act shall be read as references to the corresponding provision, if any, contained in this Act. 1[CHAPTER XXIA PRODUCER COMPANIES PART I PRELIMINARY 378A. Definitions . In this Chapter, unless the context otherwise requires, (a) active Member means a Member who fulfils the quantum and period of patronage of the Producer Company as may be required by the articles; (b) Chief Executive means an individual appointed as such under sub-section ( 1) of section 378W; (c) inter-State co -operative society means a multi -State co -operative society as defined in clause (p) of section 3 of the Multi -State Co -operative Societies Act, 2002 (39 of 2002) and includes any co - 1. Ins. by Act 29 of 2020, s. 52 (w.e.f. 11 -2-2021). 202 operative society registered under any other law for the time being in force, which has, subsequent to its formation, extended any of its objects to more than one State by enlisting th e participation of persons or by extending any of its activities outside the State, whether directly or indirectly or through an institution of which it is a constituent; (d) limited return means the maximum dividend as may be specified by the articles; (e) Member means a person or Producer Institution (whether incorporated or not) admitted as a Member of a Producer Company and who retains the qualifications necessary for continuance as such; (f) mutual assistance principles means the principles set out in sub-section ( 2) of section 378G; (g) officer includes any director or Chief Executive or Secretary or any person in accordance with whose directions or instructions part or whole of the business of the Producer Company is carried on; (h) patronage means the use of services offered by the Producer Company to its Members by participation in its business activities; (i) patronage bonus means payments made by a Producer Company out of its surplus income to the Members in p roportion to their respective patronage; (j) primary produce means (i) produce of farmers, arising from agriculture (including animal husbandry, horticulture, floriculture, pisciculture, viticulture, forestry, forest products, re -vegetation, bee raisin g and farming plantation products), or from any other primary activity or service which promotes the interest of the farmers or consumers; or (ii) produce of persons engaged in handloom, handicraft and other cottage industries; or (iii) any product resulting from any of the above activities, including by-products of such products; or (iv) any product resulting from an ancillary activity that may assist or promote any of the aforesaid activities or anything ancillary thereto; or (v) any activity which is intended to increase the production of anything referred to in sub -clauses (i) to ( iv) or improve the quality thereof; (k) producer means any person engaged in any activity connected with or relatable to any primary produce; (

; (k) producer means any person engaged in any activity connected with or relatable to any primary produce; (l) Producer Company means a body corporate having objects or activities specified in section 378B and registered as Producer Company under this Act or under the Companies Act, 1956 (1 of 1956) ; (m) Producer Institution means a Producer Company or any other institution having only producer or producers or Producer Company or Producer Companies as its member whether incorporated or not having any of the objects referred to in section 378B and which agrees to make use of the services of the Producer Company or Producer Companies as provided in its articles; (n) withheld price means part of the price due and payable for goods supplied by any Member to the Producer Company; and as withheld by the Producer Company for payment on a subsequent date. 203 PART II INCORPORATION OF PRODUCER COMPANIES AND OTHER MATTERS 378B. Objects of Producer Company .(1) The objects of the Producer Company shall relate to all or any of the following matters, namely: (a) production, harvesting, procurement, grading, pooling, handling, marketing, selling, export of primary produce of the Members or import of goods or services for their benefit: Provided that the Producer Company may carry on any of the activities specified in this clause either by itself or through other institution; (b) processing including preserving, drying, distilling, brewing, vinting, canning and packaging of produce of its Members; (c) manufacture, sale or supply of machinery, equipment or consumables mainly to its Members; (d) providing education on the mutual assistance principles to its Members and others; (e) rendering technical services, consultancy services, training, research and development and all other activities for the promotion of the interests of its Members; (f) generation, transmission and distribution of po wer, revitalisation of land and water resources, their use, conservation and communications relatable to primary produce; (g) insurance of producers or their primary produce; (h) promoting techniques of mutuality and mutual assistance; (i) welfare measures or facilities for the benefit of Members as may be decided by the Board; (j) any other activity, ancillary or incidental to any of the activities referred to in clauses ( a) to ( i) or other activities which may promote the principles of mutuality and mutua l assistance amongst the Members in any other manner; (k) financing of procurement, processing, marketing or other activities specified in clauses ( a) to (j) which include extending of credit facilities or any other financial services to its Members.. (2) Every Producer Company shall deal primarily with the produce of its active Members for carrying out any of its objects specified in this section. 378C. Formation of Producer Company and its registration .(1) Any ten or more individuals, each of them bein g a producer or any two or more Producer Institutions, or a combination of ten or more individuals and Producer Institutions, desirous of forming a Producer Company having its objects specified in section 378B and otherwise complying with the requirements of this Chapter and the provisions of this Act in respect of registration, may form an incorporated company as a Producer Company under this Act. (2) If the Registrar is satisfied that all the requirements of this Act have been complied with in respect of registration and matters precedent and incidental thereto, he shall, within thirty days of the receipt of the documents required for registration, register the memorandum, the articles and other documents, if any, and issue a certificate of incorporation u nder this Act. (3) A Producer Company so formed shall have the liability of its Members limited by the memorandum to the amount, if any, unpaid on the shares respectively held by them and be termed a company limited by shares. (4) The Producer Company may reimburse to its promoters all other direct costs associated with the promotion and registration of the company including registration, legal fees, printing of a memorandum 204 and articles and the payment thereof shall be subject to the approval at its first general meeting of the Members. (5) On registration under sub -section ( 2), the Producer Company shall become a body corporate as if it is a private limited company to which the provisions contained in this Chapter apply, without, however, any limit to the number of Members thereof, and the Producer Company shall not, under any circumstance, whatsoever, become or be deemed to become a public limited company under this Act. 378D. Membership and voting rights of Members of Producer Company . (1)(a) In a case where the membership consists solely of individual Members, the voting rights shall be based on a single vote for every Member, irrespective of his shareholding or patronage of the Producer Company. (b) In a case where the membership consists of Producer I nstitutions only, the voting rights of such Producer Institutions shall be determined on the basis of their participation in the business of the Producer Company in the previous year, as may be specified by articles: Provided that during the first year of registration of a Producer Company, the voting rights shall be determined on the basis of the shareholding by such Producer Institutions. (c) In a case where the membership consists of individuals and Producer Institutions, the voting rights shall be compu ted on the basis of a single vote for every Member. (2) The articles of any Producer Company may provide for the conditions, subject to which a Member may continue to retain his membership, and the manner in which voting rights shall be exercised by the Members. (3) Notwithstanding anything contained in sub -section ( 1) or sub -section ( 2), any Producer Company may, if so authorised by its articles, restrict the voting rights to active Members, in any special or general meeting. (4) No person, who has any business interest which is in conflict with business of the Producer Company, shall become a Member of that Company. (5) A Member, who acquires any business interest which is in conflict with the business of the Producer Company, shall cease to be a Member of that Company and be removed as a Member in accordance with the articles. 378E. Benefits to Members .(1) Subject to the provisions made in articles, every Member shall initially receive only such value for the produce or products pooled and supplied as the Board of Producer Company may determine, and the withheld price may be disbursed later in cash or in kind or by allotment of equity shares, in proportion to the produce supplied to the Producer Company during the financial year to such extent and in su ch manner and subject to such conditions as may be decided by the Board. (2) Every Member shall, on the share capital contributed, receive only a limited return: Provided that every such Member may be allotted bonus shares in accordance with the provisions contained in section 378ZJ. (3) The surplus if any, remaining after making provision for payment of limited return and reserves referred to in section 378ZI, may be disbursed as patronage bonus, amongst the Members, in proportion to their participation in the business of the Producer Company, either in cash or by way of allotment of equity shares, or both, as may be decided by the Members at the general meeting. 378F. Memorandum of Producer Company .The memorandum of association of every Producer Company shall state (a) the name of the company with "Producer Company Limited" as the last words of the name of such Company; (b) the State in which the registered office of the Producer Company is to situate; (c) the main objects of the Producer Company shall b e one or more of the objects specified in section 378B; 205 (d) the names and addresses of the persons who have subscribed to the memorandum; (e) the amount of share capital with which the Producer Company is to be registered and division thereof into shares o f a fixed amount; (f) the names, addresses and occupations of the subscribers being producers, who shall act as the first directors in accordance with sub -section ( 2) of section 378J; (g) that the liability of its members is limited; (h) against the subscriber's name, the number of shares each subscriber takes: Provided that no subscriber shall take less than one share; (i) that in case the objects of the Producer Company are not confined to one State, the States to whose territories the objects extend. 378G. Articles of association .(1) There shall be presented, for registration to the Registrar of the State to which the registered office of the Producer Company is, stated by the memorandum of association, to be situate (a) memorandum of the Pro ducer Company; (b) its articles duly signed by the subscribers to the memorandum. (2) The articles shall contain the following mutual assistance principles, namely: (a) the membership shall be voluntary and available, to all eligible persons who, can part icipate or avail of the facilities or services of the Producer Company, and are willing to accept the duties of membership; (b) each Member shall, save as otherwise provided in this Chapter, have only a single vote irrespective of the shareholding; (c) the Producer Company shall be administered by a Board consisting of persons elected or appointed as directors in the manner consistent with the provisions of this Chapter and the Board shall be accountable to the Members; (d) particulars on limited return on share capital; (e) the surplus arising out of the operations of the Producer Company shall be distributed in an equitable manner by (i) providing for the development of the business of the Producer Company; (ii) providing for common facilities; and (iii) distributing amongst the Members, as may be admissible in proportion to their respective participation in the business; (f) provision for the education of Members, employees and others, on the principles of mutuality and techniques of mutual assistance; (g) the Producer Company shall actively co -operate with other Producer Companies (and other organisations following similar principles) at local, national or international level so as to best serve the interest of their Members and the communities it purport s to serve. (3) Without prejudice to the generality of the foregoing provisions of sub-sections ( 1) and ( 2), the articles shall contain the following provisions, namely: (a) the qualifications for membership, the conditions for continuance or cancellation of membership and the terms, conditions and procedure for transfer of shares; (b) the manner of ascertaining the patronage and voting right based on patronage; (c) subject to the provisions contained in sub -section ( 1) of section 378N, the manner of const itution of the Board, its powers and duties, the minimum and maximum number of directors, manner of election 206 and appointment of directors and retirement by rotation, qualifications for being elected or continuance as such and the terms of office of the sai d directors, their powers and duties, conditions for election or co-option of directors, method of removal of directors and the filling up of vacancies on the Board, and the manner and the terms of appointment of the Chief Executive; (d) the election of th e Chairman, term of office of directors and the Chairman, manner of voting at the general or special meetings of Members, procedure for voting, by directors at meetings of the Board, powers of the Chairman and the circumstances under which the Chairman may exercise a casting vote; (e) the circumstances under which, and the manner in which, the withheld price is to be determined and distributed; (f) the manner of disbursement of patronage bonus in cash or by issue of equity shares, or both; (g) the contribut ion to be shared and related matters referred to in sub-section ( 2) of section 378ZI; (h) the matters relating to issue of bonus shares out of general reserves as set out in section 378ZJ; (i) the basis and manner of allotment of equity shares of the Produ cer Company in lieu of the whole or part of the sale proceeds of produce or products supplied by the Members; (j) the amount of reserves, sources from which funds may be raised, limitation on raising of funds, restriction on the use of such funds and the extent of debt that may be contracted and the conditions thereof; (k) the credit, loans or advances which may be granted to a Member and the conditions for the grant of the same; (l) the right of any Member to obtain information relating to general busines s of the company; (m) the basis and manner of distribution and disposal of funds available after meeting liabilities in the event of dissolution or liquidation of the Producer Company; (n) the authorisation for division, amalgamation, merger, creation of subsidiaries and the entering into joint ventures and other matters connected therewith; (o) laying of the memorandum and articles of the Producer Company before a special general meeting to be held within ninety days of its registration; (p) any other prov ision, which the Members may, by special resolution recommend to be included in the articles. 378H. Amendment of memorandum .(1) A Producer Company shall not alter the conditions contained in its memorandum except in the cases, by the mode and to the extent for which express provision is made in this Act. (2) A Producer Company may, by special resolution, not inconsistent with section 378B, alter its objects specified in its memorandum. (3) A copy of the amended memorandum, together with a copy of the special resolution duly certified by two directors, shall be filed with the Registrar within thirty days from the date of adoption of any resolution referred to in sub -section ( 2): Provided that in the case of transfer of the registered office of a Produce r Company from the jurisdiction of one Registrar to another, certified copies of the special resolution certified by two directors shall be filed with both the Registrars within thirty days, and each Registrar shall record the same, and thereupon the Regis trar from whose jurisdiction the office is transferred, shall forthwith forward to the other Registrar all documents relating to the Producer Company. (4) The alteration of the provisions of memorandum relating to the change of the place of its registered office from one State to another shall not take effect unless it is approved by the Central Government on an application in such form and manner as may be prescribed. 207 378-I. Amendment of articles . (1) Any amendment of the articles shall be proposed by not less than two-thirds of the elected directors or by not less than one -third of the Members of the Producer Company

not less than two-thirds of the elected directors or by not less than one -third of the Members of the Producer Company, and adopted by the Members by a special resolution. (2) A copy of the amended articles together with the copy of the special resolution, bo th duly certified by two directors, shall be filed with the Registrar within fifteen days from the date of its adoption. 378J. Option to inter -State co -operative societies to become Producer Companies .(1) Notwithstanding anything contained in sub -section (1) of section 378C, any inter -State co -operative society with objects not confined to one State may make an application to the Registrar for registration as Producer Company under this Chapter. (2) Every application under sub -section ( 1) shall be accompanied by (a) a copy of the special resolution, of not less than two -thirds of total members of inter -State co - operative society, for its incorporation as a Producer Company under this Act; (b) a statement showing (i) names and addresses or the occupation of the directors and the Chief Executive, if any, by whatever name called, of such co -operative; and (ii) list of members of such inter -State co -operative society; (c) a statement indicating that the inter -State co -operative society is engaged i n any one or more of the objects specified in section 378B; (d) a declaration by two or more directors of the inter -State co -operative society certifying that particulars given in clauses ( a) to ( c) are correct. (3) When an inter -State co -operative society is registered as a Producer Company, the words Producer Company Limited shall form part of its name with any word or expression to show its identity preceding it. (4) On compliance with the requirements of sub -sections ( 1) to ( 3), the Registrar shall, w ithin a period of thirty days of the receipt of application, certify under his hand that the inter -State co -operative society applying for registration is registered and thereby incorporated as a Producer Company under this Chapter. (5) A co -operative soci ety formed by producers, by federation or union of co-operative societies of producers or co -operatives of producers, registered under any law for the time being in force which has extended its objects outside the State, either directly or through a union or federation of co -operatives of which it is a constituent, as the case may be, and any federation or unions of such co -operatives, which has so extended any of its objects or activities outside the State, shall be eligible to make an application under sub-section ( 1) and to obtain registration as a Producer Company under this Chapter. (6) The inter -State co -operative society shall, upon registration under sub-section ( 1), stand transformed into a Producer Company, and thereafter shall be governed by the provisions of this Chapter to the exclusion of the law by which it was earlier governed, save in so far as anything done or omitted to be done before its registration as a Producer Company, and notwithstanding anything contained in any other law for the time being in force, no person shall have any claim against the co-operative institution or the company by reason of such conversion or transformation. (7) Upon registration as a Producer Company, the Registrar of Companies who registers the company shall fo rthwith intimate the Registrar with whom the erstwhile inter-State co -operative society was earlier registered for deletion of the society from its register. 378K . Effect of incorporation of Producer Company .Every shareholder of the inter -State co- operative society immediately before the date of registration of Producer Company (hereafter in this Chapter referred to as the date of transformation) shall be deemed to be registered on and from that date as a shareholder of the Producer Company to th e extent of the face value of the shares held by such shareholder. 208 378L. Vesting of undertaking in Producer Company .(1) All properties and assets, movable and immovable, of, or belonging to, the inter -State co -operative society as on the date of transformation, shall vest in the Producer Company. (2) All the rights, debts, liabilities, interests, privileges and obligations of the inter-State co -operative society as on the date of transformation shall stand transferred to, and be the rights, debts, liabilities, interests, privileges and obligations of, the Producer Company. (3) Without prejudice to the provisions contained in sub -section ( 2), all debts, liabilities and obligations incurred, all contracts entered into and all matters and things engag ed to be done by, with or for, the society as on the date of transformation for or in connection with their purposes, shall be deemed to have been incurred, entered into, or engaged to be done by, with or for, the Producer Company. (4) All sums of money du e to the inter -State co -operative society immediately before the date of transformation, shall be deemed to be due to the Producer Company. (5) Every organisation, which was being managed immediately before the date of transformation by the inter -State co -operative society shall be managed by the Producer Company for such period, to such extent and in such manner as the circumstances may require. (6) Every organisation which was getting financial, managerial or technical assistance from the inter - State co -operative society, immediately before the date of transformation, may continue to be given financial, managerial or technical assistance, as the case may be, by the Producer Company, for such period, to such extent and in such manner as that company may deem fit. (7) The amount representing the capital of the erstwhile inter -State co -operative society shall form part of the capital of the Producer Company. (8) Any reference to the inter -State co -operative society in any law other than this Act or in any c ontract or other instrument, shall be deemed to be reference to the Producer Company. (9) If, on the date of transformation, there is pending any suit, arbitration, appeal or other legal proceeding of whatever nature by or against the inter -State co -operat ive society, the same shall not abate, be discontinued or be in any way prejudicially affected by reason of the incorporation of the Producer Company under section 378C or transformation of the inter -State co -operative society as a Producer Company under section 378J, as the case may be, but the suit, arbitration, appeal or other proceeding, may be continued, prosecuted and enforced by or against the Producer Company in the same manner and to the same extent as it would have, or may have been continued, prosecuted and enforced by or against the inter - State co -operative society as if the provisions contained in this Chapter had not come into force. 378M. Concession etc., to be deemed to have been granted to Producer Company .With effect from the date of trans formation, all fiscal and other concessions, licences, benefits, privileges and exemptions granted to the inter -State co -operative society in connection with the affairs and business of the inter-State co -operative society under any law for the time being in force shall be deemed to have been granted to the Producer Company. 378N. Provisions in respect of officers and other employees of inter -State co -operative society . (1) Notwithstanding anything contained in section 378 -O, all the directors in the inter-State co -operative society before the incorporation of the Producer Company shall continue in office for a period of one year from the date of transformation and in accordance with the provisions of this Act. (2) Every officer or other employee of th e inter -State co -operative society (except a director of the Board, Chairman or Managing Director) serving in its employment immediately before the date of transformation shall, in so far as such officer or other employee is employed in connection with the inter- State co -operative society which has vested in the Producer Company by virtue of this Act, become, as from the date of transformation, an officer or, as the case may be, other employee of the Producer Company and shall hold his office or service the rein by the same tenure, at the same remuneration, upon the same terms and conditions, with the same obligations and with the same rights and privileges as to leave, leave travel concession, welfare scheme, medical benefit scheme, insurance, provident fund , other funds, retirement, voluntary retirement, gratuity and other benefits as he would have held under the erstwhile inter- 209 State co -operative society if its undertaking had not vested in the Producer Company and shall continue to do so as an officer or, as the case may be, other employee of the Producer Company. (3) Where an officer or other employee of the inter -State co -operative society opts under sub -section (2) not to be in employment or service of the Producer Company, such officer or other employee shall be deemed to have resigned. (4) Notwithstanding anything contained in the Industrial Disputes Act, 1947 (14 of 1947) or in any other law for the time being in force, the transfer of the services of any officer or other employee of the inter-State co -operative society to the Producer Company shall not entitle such officer or other employee to any compensation under this Act or under any other law for the time being in force and no such claim shall be entertained by any court, tribunal or other authori ty. (5) The officers and other employees who have retired before the date of transformation from the service of the inter -State co -operative society and are entitled to any benefits, rights or privileges, shall be entitled to receive the same benefits, rights or privileges from the Producer Company. (6) The trusts of the provident fund or the gratuity fund of the inter -State co-operative society and any other bodies created for the welfare of officers or employees shall continue to discharge functions in th e Producer Company as was being done hitherto in the inter -State co -operative society and any tax exemption granted to the provident fund or the gratuity fund would continue to be applied to the Producer Company. (7) Notwithstanding anything contained in t his Act or in any other law for the time being in force or in the regulations of the inter -State co -operative society, no director of the Board, Chairman, Managing Director or any other person entitled to manage the whole or substantial part of the busines s and affairs of the inter -State co-operative society shall be entitled to any compensation against the inter -State co-operative society or the Producer Company for the loss of office or for the premature termination of any contract of management entered i nto by him with the inter -State co-operative society. PART III MANAGEMENT OF PRODUCER COMPANY 378-O. Number of directors .Every Producer Company shall have at least five and not more than fifteen directors: Provided that in the case of an inter -State co-operative society incorporated as a Producer Company, such company may have more than fifteen directors for a period of one year from the date of its incorporation as a Producer Company. 378P. Appointment of directors . (1)Save as otherwise provided in section 378N, the Members who sign the memorandum and the articles may designate therein the Board of Directors, not less than five, who shall govern the affairs of the Producer Company until the directors are elected in accordance with the provisions of t his section. (2) The election of directors shall be conducted within a period of ninety days of the registration of the Producer Company: Provided that in the case of an inter -State co -operative society which has been registered as a Producer Company under sub-section ( 4) of section 378J in which at least five directors [including the directors continuing in office under sub -section ( 1) of section 378N] hold office as such on the date of registration of such company, the provisions of this sub -section shall have effect as if for the words "ninety days", the words "three hundred and sixty -five days" had been substituted. (3) Every person shall hold office of a director for a period not less than one year but not exceeding five years as may be specified in the articles. (4) Every director, who retires in accordance with the articles, shall be eligible for re-appointment as a director. (5) Save as otherwise provided in sub -section ( 2), the directors of the Board shall be elected or appointed by the Members in th e annual general meeting. 210 (6) The Board may co -opt one or more expert directors or an additional director not exceeding one - fifth of the total number of directors or appoint any other person as additional director for such period as the Board may deem fit: Provided that the expert directors shall not have the right to vote in the election of the Chairman but shall be eligible to be elected as Chairman, if so provided by its articles: Provided further that the maximum period, for which the expert director or the additional director holds office, shall not exceed such period as may be specified in the articles . 378Q. Vacation of office by directors . (1) The office of the director of a Producer Company shall become vacant if, (a) he is convicted by a court of any offence involving moral turpitude and sentenced in respect thereof to imprisonment for not less than six months; (b) the Producer Company, in which he is a director, has made a default in repayment of any advances or loans taken from any company or in stitution or any other person and such default continues for ninety days; (c) he has made a default in repayment of any advances or loans taken from the Producer Company in which he is a director; (d) the Producer Company, in which he is a director (i) has not filed the annual accounts and annual return for any continuous three financial years; or (ii) has failed to, repay its deposit or withheld price or patronage bonus or interest thereon on due date, or pay dividend and such failure continues for one year or more; (e) default is made in holding election for the office of director, in the Producer Company in which he is a director, in accordance with the provisions of this Act and articles; (f) the annual general meeting or extraordinary general meeting of the Producer Company, in which he is a director, is not called in accordance with the provisions of this Act except due to natural calamity or such other reason. (2) The provisions of sub -section ( 1) shall, as far as may be, apply to the director of a Producer Institution which is a member of a Producer Company. 378R. Powers and functions of Board .(1) Subject to the provisions of this Act and articles, the Board of Directors of a Producer Company shall exercise all such powers and to do all such acts and things, as that Company is authorised so to do. (2

cer Company shall exercise all such powers and to do all such acts and things, as that Company is authorised so to do. (2) In particular and without prejudice to the generality of the foregoing powers, such powers may include all or any of the following matters, namely: (a) determination of the dividend payable; (b) dete rmination of the quantum of withheld price and recommend patronage to be approved at general meeting; (c) admission of new Members; (d) pursue and formulate the organisational policy, objectives, establish specific long -term and annual objectives, and appr ove corporate strategies and financial plans; (e) appointment of a Chief Executive and such other officers of the Producer Company, as may be specified in the articles; (f) exercise superintendence, direction and control over Chief Executive and other offi cers appointed by it; 211 (g) cause proper books of account to be maintained; prepare annual accounts to be placed before the annual general meeting with the report of the auditor and the replies on qualifications, if any, made by the auditors; (h) acquisition or disposal of property of the Producer Company in its ordinary course of business; (i) investment of the funds of the Producer Company in the ordinary course of its business; (j) sanction any loan or advance, in connection with the business activities of the Producer Company to any Member, not being a director or his relative; (k) take such other measures or do such other acts as may be required in the discharge of its functions or exercise of its powers. (3) All the powers specified in sub -sections ( 1) and ( 2) shall be exercised by the Board, by means of resolution passed at its meeting on behalf of the Producer Company. Explanation. For the removal of doubts, it is hereby declared that a director or a group of directors, who do not constitute the Board, shall not exercise any of the powers exercisable by it. 378S. Matters to be transacted at general meeting . The Board of Directors of a Producer Company shall exercise the following powers on behalf of that Company, and it shall do so only by means of resolutions passed at the annual general meeting of its Members, namely: (a) approval of budget and adoption of annual accounts of the Producer Company; (b) approval of patronage bonus; (c) issue of bonus shares; (d) declaration of limited return and deci sion on the distribution of patronage; (e) specify the conditions and limits of loans that may be given by the Board to any director; and (f) approval of any transaction of the nature as is to be reserved in the articles for approval by the Members. 378T. Liability of directors . (1) When the directors vote for a resolution, or approve by any other means, anything done in contravention of the provisions of this Act or any other law for the time being in force or articles, they shall be jointly and severally liable to make good any loss or damage suffered by the Producer Company. (2) Without prejudice to the provisions contained in sub -section ( 1), the Producer Company shall have the right to recover from its director (a) where such director has made any profit as a result of the contravention specified in sub-section ( 1), an amount equal to the profit so made; (b) where the Producer Company incurred a loss or damage as a result of the contravention specified in sub -section ( 1), an amount equal to that lo ss or damage. (3) The liability imposed under this section shall be in addition to and not in derogation of a liability imposed on a director under this Act or any other law for the time being in force. 378U. Committee of directors .(1) The Board may constitute such number of committees as it may deem fit for the purpose of assisting the Board in the efficient discharge of its functions: Provided that the Board shall not delegate any of its powers or assign the powers of the Chief Executive, to any com mittee. (2) A committee constituted under sub -section ( 1) may, with the approval of the Board, co -opt such number of persons as it deems fit as members of the committee: 212 Provided that the Chief Executive appointed under section 378W or a director of the Pr oducer Company shall be a member of such committee. (3) Every such committee shall function under the general superintendence, direction and control of the Board, for such duration, and in such manner as the Board may direct. (4) The fee and allowances to be paid to the members of the committee shall be such as may be determined by the Board. (5) The minutes of each meeting of the committee shall be placed before the Board at its next meeting. 378V.Meetings of Board and quorum .(1) A meeting of the Board shall be held not less than once in every three months and at least four such meetings shall be held in every year. (2) Notice of every meeting of the Board of Directors shall be given in writing to every director for the time being in India, and at his us ual address in India to every other director. (3) The Chief Executive shall give notice as aforesaid not less than seven days prior to the date of the meeting of the Board and if he fails to do so, he shall be liable to a penalty of five thousand rupees: Provided that a meeting of the Board may be called at shorter notice and the reasons thereof shall be recorded in writing by the Board. (4) The quorum for a meeting of the Board shall be one -third of the total strength of directors, subject to a minimum of three. (5) Save as provided in the articles, directors including the co -opted director, may be paid such fees and allowances for attendance at the meetings of the Board, as may be decided by the Members in the general meeting. 378W. Chief Executive and his functions . (1) Every Producer Company shall have a full time Chief Executive, by whatever name called, to be appointed by the Board from amongst persons other than Members. (2) The Chief Executive shall be ex officio director of the Board and such director shall not retire by rotation. (3) Save as otherwise provided in articles, the qualifications, experience and the terms and conditions of service of the Chief Executive shall be such as may be determined by the Board. (4) The Chief Executive shall be entrusted with substantial powers of management as the Board may determine. (5) Without prejudice to the generality of sub -section ( 4), the Chief Executive may exercise the powers and discharge the functions, namely: (a) do administrative acts of a routine nature including managing the day-to-day affairs of the Producer Company; (b) operate bank accounts or authorise any person, subject to the general or special approval of the Board in this behalf, to operate the bank account; (c) make arrangements for safe custody of cash and other assets of the Producer Company; (d) sign such documents as may be authorised by the Board, for and on behalf of the company; (e) maintain proper books of account; prepare annual accounts and audit thereof; place the audit ed accounts before the Board and in the annual general meeting of the Members; (f) furnish Members with periodic information to apprise them of the operation and functions of the Producer Company; (g) make appointments to posts in accordance with the power s delegated to him by the Board; (h) assist the Board in the formulation of goals, objectives, strategies, plans and policies; 213 (i) advise the Board with respect to legal and regulatory matters concerning the proposed and ongoing activities and take necessary action in respect thereof; (j) exercise the powers as may be necessary in the ordinary course of business; (k) discharge such other functions, and exercise such other powers, as may be delegated by the Board. (6) The Chief Executive shall manage the affairs of the Producer Company under the general superintendence, direction and control of the Board and be accountable for the performance of the Producer Company. 378X. Secretary of Producer Company . (1) Every Producer Company having an average annual turnover exceeding five crore rupees or such other amount as may be prescribed in each of three consecutive financial years shall have a whole -time secretary. (2) No individual shall be appointed as whole -time secretary unless he possesses membershi p of the Institute of Company Secretaries of India constituted under the Company Secretaries Act, 1980 (56 of 1980) . (3) If a Producer Company fails to comply with the provisions of sub-section ( 1), the Company and every officer of the Company who is in de fault, shall be liable to a penalty of one hundred rupees for every day during which the default continues subject to a maximum of rupees one lakh: Provided that in any proceedings against a person in respect of a default under this sub -section, no penalty shall be imposed if it is shown that all reasonable efforts to comply with the provisions of sub-section ( 1) were taken or that the financial position of the Company was such that it was beyond its capacity to engage a whole -time secretary. 378Y. Quorum . Unless the articles require a larger number, one -fourth of the total membership shall constitute the quorum at a general meeting. 378Z. Voting rights . Save as otherwise provided in sub -sections ( 1) and ( 3) of section 378D, every Member shall have one vo te and in the case of equality of votes, the Chairman or the person presiding shall have a casting vote except in the case of election of the Chairman. PART IV GENERAL MEETINGS 37ZA. Annual general meetings .(1) Every Producer Company shall in each year, hold, in addition to any other meetings, a general meeting, as its annual general meeting and shall specify the meeting as such in the notices calling it, and not more than fifteen months shall elapse between the date of one annual general meeting of a Pro ducer Company and that of the next: Provided that the Registrar may, for any special reason, permit extension of the time for holding any annual general meeting (not being the first annual general meeting) by a period not exceeding three months. (2) A Prod ucer Company shall hold its first annual general meeting within a period of ninety days from the date of its incorporation. (3) The Members shall adopt the articles of the Producer Company and appoint directors of its Board in the annual general meeting. (4) The notice calling the annual general meeting shall be accompanied by the following documents, namely: (a) the agenda of the annual general meeting; (b) the minutes of the previous annual general meeting or the extraordinary general meeting; (c) the na mes of candidates for election, if any, to the office of director including a statement of qualifications in respect of each candidate; (d) the audited balance -sheet and profit and loss accounts of the Producer Company and its subsidiary, if any, together with a report of the Board of Directors of such Company with respect to 214 (i) the state of affairs of the Producer Company; (ii) the amount proposed to be carried to reserve; (iii) the amount to be paid as limited return on share capital; (iv) the amount pr oposed to be disbursed as patronage bonus; (v) the material changes and commitments, if any, affecting the financial position of the Producer Company and its subsidiary, which have occurred in between the date of the annual accounts of the Producer Company to which the balance -sheet relates and the date of the report of the Board; (vi) any other matter of importance relating to energy conservation, environmental protection, expenditure or earnings in foreign exchanges; (vii) any other matter which is requir ed to be, or may be, specified by the Board; (e) the text of the draft resolution for appointment of auditors; (f) the text of any draft resolution proposing amendment to the memorandum or articles to be considered at the general meeting, alongwith the recommendations of the Board. (5) The Board of Directors shall, on the requisition made in writing, duly signed and setting out the matters for the consideration, made by one -third of the Members entitled to vote in any general meeting, proceed to call an ext raordinary general meeting in accordance with the relevant provisions contained in Chapter VII. (6) Every annual general meeting shall be called, for a time during business hours, on a day that is not a public holiday and shall be held at the registered of fice of the Producer Company or at some other place within the city, town or village in which the registered office of the Company is situate. (7) A general meeting of the Producer Company shall be called by giving not less than fourteen days prior notice in writing. (8) The notice of the general meeting indicating the date, time and place of the meeting shall be sent to every Member and auditor of the Producer Company. (9) Unless the articles of the Producer Company provide for a larger number, one-fourth of the total number of members of the Producer Company shall be the quorum for its annual general meeting. (10) The proceedings of every annual general meeting alongwith the report of the Board of Directors, the audited balance -sheet and the profit and los s account shall be filed with the Registrar within sixty days of the date on which the annual general meeting is held, with an annual return alongwith the filing fees as applicable under the Act. (11) In the case where a Producer Company is formed by Produ cer Institutions, such Institutions shall be represented in the general body through the Chairman or the Chief Executive thereof who shall be competent to act on its behalf: Provided that a Producer Institution shall not be represented if such Institution is in default or failure referred to in clauses ( d) to ( f) of sub -section ( 1) of section 378Q. PART V SHARE CAPITAL AND MEMBERS RIGHTS 378ZB. Share capital .(1) The share capital of a Producer Company shall consist of equity shares only. (2) The shares held by a Member in a Producer Company, shall as far as may be, be in proportion to the patronage of that company. 378ZC. Special user rights . (1) The producers, who are active Members may, if so provided in the articles, have special rights and the Produ cer Company may issue appropriate instruments to them in respect of such special rights. 215 (2) The instruments of the Producer Company issued under sub -section ( 1) shall, after obtaining approval of the Board in that behalf, be transferable to any other active Member of that Producer Company. Explanation. For the purposes of this section, the expression special right means any right relating to supply of additional produce by the active Member or any other right relating to his produce which may be conferred upon him by the Board. 378ZD.Transferability of shares and attendant rights .(1) Save as otherwise provided in sub-

378ZD.Transferability of shares and attendant rights .(1) Save as otherwise provided in sub-sections ( 2) to ( 4), the shares of a Member of a Producer Company shall not be transferable. (2) A Member of a Producer Company m ay, after obtaining the previous approval of the Board, transfer the whole or part of his shares alongwith any special rights, to an active Member at par value. (3) Every Member shall, within three months of his becoming a Member in the Producer Company, nominate, in the manner specified in articles, a person to whom his shares in the Producer Company shall vest in the event of his death. (4) The nominee shall, on the death of the Member, become entitled to all the rights in the shares of the Producer Comp any and the Board of that Company shall transfer the shares of the deceased Member to his nominee: Provided that in a case where such nominee is not a producer, the Board shall direct the surrender of shares together with special rights, if any, to the Pro ducer Company at par value or such other value as may be determined by the Board. (5) Where the Board of a Producer Company is satisfied that (a) any Member has ceased to be a primary producer; or (b) any Member has failed to retain his qualifications to be a Member as specified in articles, the Board shall direct the surrender of shares together with special rights, if any, to the Producer Company at par value or such other value as may be determined by the Board: Provided that the Board shall not direct such surrender of shares unless the Member has been served with a written notice and given an opportunity of being heard. PART VI FINANCE, ACCOUNTS AND AUDIT 378ZE. Books of account . (1) Every Producer Company shall keep at its registered office proper books of account with respect to (a) all sums of money received and expended by the Producer Company and the matters in respect of which the receipts and expenditure take place; (b) all sales and purchase of goods by the Producer Company; (c) the instruments of liability executed by or on behalf of the Producer Company; (d) the assets and liabilities of the Producer Company; (e) in case of a Producer Company engaged in production, processing and manufacturing, the particulars relating to util isation of materials or labour or other items of costs. (2) The balance -sheet and profit and loss accounts of the Producer Company shall be prepared, as far as may be, in accordance with the provisions contained in section 129. 216 378ZF. Internal audit . Every Producer Company shall have internal audit of its accounts carried out, at such interval and in such manner as may be specified in articles, by a chartered accountant as defined in clause ( b) of sub -section ( 1) of section 2 of the Chartered Accountants Ac t, 1949 (38 of 1949) . 378ZG. Duties of auditor under this Chapter .Without prejudice to the provisions contained in section 143, the auditor shall report on the following additional matters relating to the Producer Company, namely: (a) the amount of debts due alongwith particulars of bad debts, if any; (b) the verification of cash balance and securities; (c) the details of assets and liabilities; (d) all transactions which appear to be contrary to the provisions of this Chapter; (e) the loans given by the Producer Company to the directors; (f) the donations or subscriptions given by the Producer Company; (g) any other matter as may be considered necessary by the auditor. 378ZH. Donation or subscription by Producer Company. A Producer Company may, by special resolution, make donation or subscription to any institution or individual for the purposes of (a) promoting the social and economic welfare of Producer Members or producers or general public; or (b) promoting the mutual assistance principles: Provided that the aggregate amount of all such donations and subscriptions in any financial year shall not exceed three per cent. of the net profit of the Producer Company in the financial year immediately preceding the financial year in which the donation or subscription was made: Provided further that no Producer Company shall make directly or indirectly to any political party or for any political purpose to any person any contribution or subscription or make available any facilities including personnel or material. 378Z -I. General and other reserves .(1) Every Producer Company shall maintain a general reserve in every financial year, in addition to any reserve maintained by it as may be specified in articles. (2) In a case where the Producer Company does no t have sufficient funds in any financial year for transfer to maintain the reserves as may be specified in articles, the contribution to the reserve shall be shared amongst the Members in proportion to their patronage in the business of that Company in tha t year. 378ZJ. Issue of bonus Shares . Any Producer Company may, upon recommendation of the Board and passing of resolution in the general meeting, issue bonus shares by capitalisation of amounts from general reserves referred to in section 378Z -I in proportion to the shares held by the Members on the date of the issue of such shares. PART VII LOANS TO MEMBERS AND INVESTMENTS 378ZK. Loan, etc., to Members . The Board may, subject to the provisions made in articles, provide financial assistance to the Members of the Producer Company by way of (a) credit facility, to any Member, in connection with the business of the Producer Company, for a period not exceeding six months; (b) loans and advances, against security specified in articles to any Member, repayable within a period exceeding three months but not exceeding seven years from the date of disbursement of such loan or advances: 217 Provided that any loan or advance to any director or his relative shall be granted only after the approval by the Members in general meeting. 378ZL. Investment in other companies, formation of subsidiaries etc . (1) The general reserves of any Producer Company shall be invested to secure the highest returns available from approved securities, fixed deposits, units, bonds iss ued by the Government or co -operative or scheduled bank or in such other mode as may be prescribed. (2) Any Producer Company may, for promotion of its objectives acquire the shares of another Producer Company. (3) Any Producer Company may subscribe to the share capital of, or enter into any agreement or other arrangement, whether by way of formation of its subsidiary company, joint venture or in any other manner with any body corporate, for the purpose of promoting the objects of the Producer Company by spe cial resolution in this behalf. (4) Any Producer Company, either by itself or together with its subsidiaries, may invest, by way of subscription, purchase or otherwise, shares in any other company, other than a Producer Company, specified under sub -section (2), or subscription of capital under sub -section ( 3), for an amount not exceeding thirty per cent. of the aggregate of its paid -up capital and free reserves: Provided that a Producer Company may, by special resolution passed in its general meeting and wi th prior approval of the Central Government, invest in excess of the limits specified in this section. (5) All investments by a Producer Company may be made if such investments are consistent with the objects of the Producer Company. (6) The Board of a Pro ducer Company may, with the previous approval of Members by a special resolution, dispose of any of its investments referred to in sub-sections ( 3) and ( 4). (7) Every Producer Company shall maintain a register containing particulars of all the investments, showing the names of the companies in which shares have been acquired, number and value of shares; the date of acquisition; and the manner and price at which any of the shares have been subsequently disposed of. (8) The register referred to in sub -section (7) shall be kept at the registered office of the Producer Company and the same shall be open to inspection by any Member who may take extracts therefrom. PART VIII PENALTIES 378ZM. Penalty for contravention .(1) If any person, other than a Producer Company registered under this Chapter, carries on business under any name which contains the words "Producer Company Limited", he shall be punishable with fine which may extend to ten thousand rupees for every day during which such name has been used by hi m. (2) If a director or an officer of a Producer Company, who wilfully fails to furnish any information relating to the affairs of the Producer Company required by a Member or a person duly authorised in this behalf, he shall be liable to imprisonment for a term which may extend to six months and with fine equivalent to five per cent. of the turnover of that Company during the preceding financial year. (3) If a director or officer of a Producer Company (a) fails to hand over the custody of books of account and other documents or property in his custody to the Producer Company of which he is a director or officer; or (b) fails to convene annual general meeting or other general meetings, he shall be punishable with fine which may extend to one lakh rupees, and in the case of a continuing default or failure, with an additional fine which may extend to ten thousand rupees for every day during which such default or failure continues. 218 PART IX AMALGAMATION, MERGER OR DIVISION 378ZN. Amalgamation merger or divis ion, etc. to form new Producer Companies .(1) A Producer Company may, by a resolution passed at its general meeting, (a) decide to transfer its assets and liabilities, in whole or in part, to any other Producer Company, which agrees to such transfer by a resolution passed at its general meeting, for any of the objects specified in section 378B; (b) divide itself into two or more new Producer Companies. (2) Any two or more Producer Companies may, by a resolution passed at any general or special meetings of its Members, decide to (a) amalgamate and form a new Producer Company; or (b) merge one Producer Company (hereafter in this Chapter referred to as "merging company") with another Producer Company (hereafter in this Chapter referred to as "merged company") . (3) Every resolution of a Producer Company under this section shall be passed at its general meeting by a majority of total Members, with right of vote not less than two-thirds of its Members present and voting and such resolution shall contain all particulars of the transfer of assets and liabilities, or division, amalgamation, or merger, as the case may be. (4) Before passing a resolution under this section, the Producer Company shall give notice thereof in writing together with a copy of the proposed r esolution to all the Members and creditors who may give their consent. (5) Notwithstanding anything contained in articles or in any contract to the contrary, any Member, or any creditor not consenting to the resolution shall, during the period of one month of the date of service of the notice on him, have the option, (a) in the case of any such Member, to transfer his shares with the approval of the Board to any active Member thereby ceasing to continue as a Member of that Company; or (b) in the case of a creditor, to withdraw his deposit or loan or advance, as the case may be. (6) Any Member or creditor, who does not exercise his option within the period specified in sub -section (5), shall be deemed to have consented to the resolution. (7) A resolution pas sed by a Producer Company under this section shall not take effect until the expiry of one month or until the assent thereto of all the Members and creditors has been obtained, whichever is earlier. (8) The resolution referred to in this section shall prov ide for (a) the regulation of conduct of the affairs of the Producer Company in future; (b) the purchase of shares or interest of any Members of the Producer Company by other Members or by the Producer Company; (c) the consequent reduction of its share ca pital, in case of purchase of shares of one Producer Company by another Producer Company; (d) termination, setting aside or modification of any agreement, howsoever arrived between the company on the one hand and the directors, secretaries and manager on t he other hand, apart from such terms and conditions as may, in the opinion of the majority of shareholders, be just and equitable in the circumstances of the case; 219 (e) termination, setting aside or modification of any agreement between the Producer Company and any person not referred to in clause ( d): Provided that no such agreement shall be terminated, set aside or modified except after giving due notice to the party concerned: Provided further that no such agreement shall be modified except after obtaining the consent of the party concerned; (f) the setting aside of any transfer, delivery of goods, payment, execution or other act relating to property, made or done by or against the Producer Company within three months before the date of passing of the resolution, which would if made or done against any individual, be deemed in his insolvency to be a fraudulent preference; (g) the transfer to the merged company of the whole or any part of the undertaking, property or liability of the Producer Company ; (h) the allotment or appropriation by the merged company of any shares, debentures, policies, or other like interests in the merged company; (i) the continuation by or against the merged company of any legal proceedings pending by or against any Producer Company; (j) the dissolution, without winding up, of any Producer Company; (k) the provision to be made for the Members or creditors who make dissent; (l) the taxes, if any, to be paid by the Producer Company; (m) such incidental, consequential and supple mental matters as are necessary to secure that the division, amalgamation or merger shall be fully and effectively carried out. (9) When a resolution passed by a Producer Company under this section takes effect, the resolution shall be a sufficient conveya nce to vest the assets and liabilities in the transferee. (10) The Producer Company shall make arrangements for meeting in full or otherwise satisfying all claims of the Members and the creditors who exercise the option, within the period specified in sub-section (4), not to continue as the Member or creditor, as the case may be. (11) Where the whole of the assets and liabilities of a Producer Company are transferred to another Producer Company in accordance with the provisions of sub-section ( 9), or wh ere there is merger under sub-section ( 2), the registration of the first mentioned Company or the merging company, as the case may be, shall stand cancelled and that Company shall be deemed to have been dissolved and shall cease to exist forthwith as a cor porate body

cancelled and that Company shall be deemed to have been dissolved and shall cease to exist forthwith as a cor porate body. (12) Where two or more Producer Companies are amalgamated into a new Producer Company in accordance with the provisions of sub -section ( 2) and the Producer Company so formed is duly registered by the Registrar, the registration of each of the amalgamating companies shall stand cancelled forthwith on such registration and each of the Companies shall thereupon cease to exist as a corporate body. (13) Where a Producer Company divides itself into two or more Producer Companies in accordance with th e provisions of clause ( b) of sub -section ( 1) and the new Producer Companies are registered in accordance with the provisions of this Chapter, the registration of the erstwhile Producer Company shall stand cancelled forthwith and that Company shall be deem ed to have been dissolved and cease to exist as a corporate body. (14) The amalgamation, merger or division of companies under the foregoing sub-sections shall not in any manner whatsoever affect the pre -existing rights or obligations and any legal proceedings that might 220 have been continued or commenced by or against any erstwhile company before the amalgamation, merger or division, may be continued or commenced by, or against, the concerned resulting company, or merged comp any, as the case may be. (15) The Registrar shall strike off the names of every Producer Company deemed to have been dissolved under sub -sections ( 11) to ( 14). (16) Any member or creditor or employee aggrieved by the transfer of assets, division, amalgamat ion or merger may, within thirty days of the passing of the resolution, prefer an appeal to the Tribunal. (17) The Tribunal shall, after giving a reasonable opportunity to the person concerned, pass such orders thereon as it may deem fit. (18) Where an appeal has been filed under sub -section ( 16), the transfer of assets, division, amalgamation or merger of the Producer Company shall be subject to the decision of the Tribunal. PART X RESOLUTION OF DISPUTES 378Z -O. Disputes .(1) Where any dispute relating to the formation, management or business of a Producer Company arises (a) amongst Members, former Members or persons claiming to be Members or nominees of deceased Members; or (b) between a Member, former Member or a person claiming to be a Member, or nom inee of deceased Member and the Producer Company, its Board of Directors, office -bearers, or liquidator, past or present; or (c) between the Producer Company or its Board, and any director, office -bearer or any former director, or the nominee, heir or lega l representative of any deceased director of the Producer Company, such dispute shall be settled by conciliation or by arbitration as provided under the Arbitration and Conciliation Act, 1996 (26 of 1996) as if the parties to the dispute have consented in writing for determination of such disputes by conciliation or by arbitration and the provisions of the said Act shall apply accordingly. Explanation. For the purposes of this section, a dispute shall include (a) a claim for any debt or other amount due; (b) a claim by surety against the principal debtor, where the Producer Company has recovered from the surety amount in respect of any debtor or other amount due to it from the principal debtor as a result of the default of the principal debtor whether such debt or amount due be admitted or not; (c) a claim by Producer Company against a Member for failure to supply produce as required of him; (d) a claim by a Member against the Producer Company for not taking goods supplied by him. (2) If any question arises whether the dispute relates to formation, management or business of the Producer Company, the question shall be referred to the arbitrator, whose decision thereon shall be final. 221 PART XI MISCELLANEOUS PROVISIONS 378ZP. Strike off name of Producer Company . (1) Where a Producer Company fails to commence business within one year of its registration or ceases to transact business with the Members or if the Registrar is satisfied, after making such inquiry as he thinks fit, that the Producer Company is no longer carrying on any of its objects specified in section 378B, he shall make an order striking off the name of the Producer Company, which shall thereupon cease to exist forthwith: Provided that no such order cancelling the registration as aforesaid shal l be passed until a notice to show cause has been given by the Registrar to the Producer Company with a copy to all its directors on the proposed action and reasonable opportunity to represent its case has been given. (2) Where the Registrar has reasonable cause to believe that a Producer Company is not maintaining any of the mutual assistance principles specified, he shall strike its name off the register in accordance with the provisions contained in section 248. (3) Any Member of a Producer Company, who is aggrieved by an order made under sub -section ( 1), may appeal to the Tribunal within sixty days of the order. (4) Where an appeal is filed under sub -section ( 3), the order of striking off the name shall not take effect until the appeal is disposed of. 378ZQ. Provisions of this C hapter to override other laws . The provisions of this Chapter shall have effect notwithstanding anything inconsistent therewith contained in this Act or any other law for the time being in force or any instrument having effect by virtue of any such law; but the provisions of any such Act or law or instrument in so far as the same are not varied by, or are inconsistent with, the provisions of this Chapter shall apply to the Producer Company. 378ZR. Application of provisions relating to private companies . All the limitations, restrictions and provisions of this Act, other than those specified in this Chapter, applicable to a private company, shall, as far as may be, apply to a Producer Company, as if it is a private limited company u nder this Act in so far as they are not in conflict with the provisions of this Chapter. PART XII RE-CONVERSION OF PRODUCER COMPANY TO INTER -STATE CO -OPERATIVE SOCIETY 378ZS. Re -conversion of Producer Company to inter -State co -operative society .(1) Any Producer Company, being an erstwhile inter -State co -operative society, formed and registered under this Chapter, may make an application (a) after passing a resolution in the general meeting by not less than twothirds of its Members present and voting; or (b) on request by its creditors representing three -fourths value of its total creditors, to the Tribunal for its re -conversion to the inter -State co -operative society. (2) The Tribunal shall, on the application made under sub -section ( 1), direct holding m eeting of its Members or such creditors, as the case may be, to be conducted in such manner as it may direct. (3) If a majority in number representing three -fourths in value of the creditors, or Members, as the case may be, present and voting in person at the meeting conducted in pursuance of the directions of the Tribunal under sub -section ( 2), agree for re-conversion, if sanctioned by the Tribunal, be binding on all the Members and all the creditors, as the case may be, and also on the company which is be ing converted: Provided that no order sanctioning re -conversion shall be made by the Tribunal unless the Tribunal is satisfied that the company or any other person by whom an application has been made under sub -section (1) has disclosed to the Tribunal, by affidavit or otherwise, all material facts relating to the company, such as the latest financial position of the company, the latest report of the auditor on the accounts of the company, the pendency of any investigation proceedings in relation to the com pany under Chapter XIV, and the like. 222 (4) An order made by the Tribunal under sub -section ( 3) shall have no effect until a certified copy of the order has been filed with the Registrar. (5) A copy of every such order shall be annexed to every copy of the memorandum of the company issued after the certified copy of the order has been filed as aforesaid, or in the case of a company not having a memorandum, to every copy so issued of the instrument constituting or defining the constitution of the company. (6) If default is made in complying with sub -section ( 4), the company, and every officer of the company who is in default, shall be punishable with fine which may extend to one hundred rupees, for each copy in respect of which default is made. (7) The Tribunal may, at any time after an application has been made to it under this section, stay the commencement or continuation of any suit or proceeding against the company on such terms as the Tribunal thinks fit, until the application is finally disposed of. (8) Every Producer Company, which has been sanctioned re -conversion by the Tribunal, shall make an application under the Multi -State Co -operative Societies Act, 2002 (39 of 2002) or any other law for the time being in force for its registration as multi -State co-operative society or co -operative society, as the case may be, within six months of sanction by the Tribunal and file a report thereof to the Tribunal and the Registrar of Companies and to the Registrar of the Co -operative Societies under which it has b een registered as a multi -State co -operative society or co -operative society, as the case may be. 378ZT. Power to modify Act in its application to Producer Companies .(1) The Central Government may, by notification, direct that any of the provisions of thi s Act (other than those contained in this Chapter) specified in the said notification (a) shall not apply to the Producer Companies or any class or category thereof; or (b) shall apply to the Producer Companies or any class or category thereof with such exception or adaptation as may be specified in the notification. (2) A copy of every notification proposed to be issued under sub -section ( 1), shall be laid in draft before each House of Parliament, while it is in session, for a total period of thirty days which may be comprised in one session or in two or more successive sessions, and if, before the expiry of the session immediately following the session or the successive sessions aforesaid, both Houses agree in disapproving the issue of the notification o r both Houses agree in making any modification in the notification, the notification shall not be issued or, as the case may be, shall be issued only in such modified form as may be agreed upon by both the Houses. 378ZU. Power to make rules .The Central Go vernment may make rules for carrying out the purposes of this Chapter. ] CHAPTER XXII COMPANIES INCORPORATED OUTSIDE INDIA 379. Application of Act to foreign companies. 1[(1) Sections 380 to 386 (both inclusive) and sections 392 and 393 shall apply to all foreign companies: 2* * * * * 3[(2)] Where not less than fifty per cent. of the paid -up share capital, whether equity or preference or partly equity and partly preference, of a foreign company is held by one or more citizens of India or by one or m ore companies or bodies corporate incorporated in India, or by one or more citizens of India and one or more companies or bodies corporate incorporated in India, whether singly or in the aggregate, such company shall comply with the provisions of this Chap ter and such other provisions of this Act as may be prescribed with regard to the business carried on by it in India as if it were a company incorporated in India. 1. Ins. by Act 1 of 2018, s. 77 (w.e.f. 9 -2-2018). 2. The Proviso omitted by Act 29 of 2020, s. 53 (w.e.f. 22 -1-2021). 3. Section 379 renumbered as sub -section ( 2) thereof by s. 77, ibid. (w.e.f. 9 -2-2018). 223 380. Documents, etc., to be delivered to Registrar by foreign companies. (1) Every foreign company shall, within thirty days of the establishment of its place of business in India, deliver to the Registrar for registration (a) a certified copy of the charter, statutes or memorandum and articles, of the company or other instrument constituting or defining the constitution of the company and, if the instrument is not in the English language, a certified translation thereof in the English language; (b) the full address of the registered or principal office of the company; (c) a list of the directors and secretary of the company containing such particulars as may be prescribed; (d) the name and address or the names and addresses of one or more persons resident in India authorised to accept on behalf of the company service of process and any notices or other documents required to be served on the company; (e) the full address of the office of the company in India which is deemed to be its principal place of business in India; (f) particulars of opening and closing of a place of business in India on earlier occasion or occasions; (g) declaration that none of the directors of the company or the authorised representative in India has ever been convicted or debarred from formation of companies and management in India or abroad; and (h) any other information as may be prescribed. (2) Every foreign company existing at the commencement of this Act shall, if it has not delivered to the Registrar before such commencement, the documents and particulars specified in sub -section ( 1) of section 592 of the Companies Act, 1956 (1 of 1956), continue to be subject to the obligation to deliver those documents and particulars in accordance with that Act. (3) Where any alteration is made or occurs in the documents delivered to the Registrar under this section, the foreign company shall, within thirty days of such alteration, deliver to the Registrar for registration, a return containing the particulars of the alteration in the prescribed form. 381. Accounts of foreign company. (1) Every foreign company shall, in ev ery calendar year, (a) make out a balance sheet and profit and loss account in such form, containing such particulars and including or having annexed or attached thereto such documents as may be prescribed; and (b) deliver a copy of those documents to the Registrar: Provided that the Central Government may, by notification, direct that, in the case of any foreign company or class of foreign companies, the requirements of

vided that the Central Government may, by notification, direct that, in the case of any foreign company or class of foreign companies, the requirements of clause ( a) shall not apply, or shall apply subject to such exceptions and modification s as may be specified in that notification. (2) If any such document as is mentioned in sub -section ( 1) is not in the English language, there shall be annexed to it a certified translation thereof in the English language. (3) Every foreign company shall se nd to the Registrar along with the documents required to be delivered to him under sub -section ( 1), a copy of a list in the prescribed form of all places of business established by the company in India as at the date with reference to which the balance she et referred to in sub -section ( 1) is made out. 382. Display of name, etc., of foreign company. Every foreign company shall (a) conspicuously exhibit on the outside of every office or place where it carries on business in India, the name of the company and the country in which it is incorporated, in letters easily legible in English characters, and also in the characters of the language or one of the languages in general use in the locality in which the office or place is situate; 224 (b) cause the name of the company and of the country in which the company is incorporated, to be stated in legible English characters in all business letters, billheads and letter paper, and in all notices, and other official publications of the company; and (c) if the liability of the members of the company is limited, cause notice of that fact (i) to be stated in every such prospectus issued and in all business letters, bill -heads, letter paper, notices, advertisements and other official publications of the company, in legible En glish characters; and (ii) to be conspicuously exhibited on the outside of every office or place where it carries on business in India, in legible English characters and also in legible characters of the language or one of the languages in general use in the locality in which the office or place is situate. 383. Service on foreign company. Any process, notice, or other document required to be served on a foreign company shall be deemed to be sufficiently served, if addressed to any person whose name and address have been delivered to the Registrar under section 380 and left at, or sent by post to, the address which has been so delivered to the Registrar or by electronic mode. 384. Debentures, annual return, registration of charges, books of account and thei r inspection. (1) The provisions of section 71 shall apply mutatis mutandis to a foreign company. (2) The provisions of section 92 1[and section 135] shall, subject to such exceptions, modifications and adaptations as may be made therein by rules made unde r this Act, apply to a foreign company as they apply to a company incorporated in India. (3) The provisions of section 128 shall apply to a foreign company to the extent of requiring it to keep at its principal place of business in India, the books of account referred to in that section, with respect to monies received and spent, sales and purchases made, and assets and liabilities, in the course of or in relation to its business in India. (4) The provisions of Chapter VI shall apply mutatis mutandis to charges on properties which are created or acquired by any foreign company. (5) The provisions of Chapter XIV shall apply mutatis mutandis to the Indian business of a foreign company as they apply to a company incorporated in India. 385. Fee for registrat ion of documents. There shall be paid to the Registrar for registering any document required by the provisions of this Chapter to be registered by him, such fee, as may be prescribed. 386. Interpretation. For the purposes of the foregoing provisions of thi s Chapter, (a) the expression certified means certified in the prescribed manner to be a true copy or a correct translation; (b) the expression director , in relation to a foreign company, includes any person in accordance with whose directions or instructions the Board of Directors of the company is accustomed to act; and (c) the expression place of business includes a share transfer or registration office. 387. Dating of prospectus and particulars to be contained therein. (1) No person shall iss ue, circulate or distribute in India any prospectus offering to subscribe for securities of a company incorporated or to be incorporated outside India, whether the company has or has not established, or when formed will or will not establish, a place of bu siness in India, unless the prospectus is dated and signed, and (a) contains particulars with respect to the following matters, namely: (i) the instrument constituting or defining the constitution of the company; (ii) the enactments or provisions by or u nder which the incorporation of the company was effected; 1. Ins. by Act 1 of 2018, s. 78 (w.e.f. 9 -2-2018). 225 (iii) address in India where the said instrument, enactments or provisions, or copies thereof, and if the same are not in the English language, a certified translation thereof in the English languag e can be inspected; (iv) the date on which and the country in which the company would be or was incorporated; and (v) whether the company has established a place of business in India and, if so, the address of its principal office in India; and (b) states the matters specified under section 26: Provided that sub -clauses ( i), (ii) and ( iii) of clause ( a) of this sub -section shall not apply in the case of a prospectus issued more than two years after the date at which the company is entitled to commence busin ess. (2) Any condition requiring or binding an applicant for securities to waive compliance with any requirement imposed by virtue of sub -section ( 1), or purporting to impute him with notice of any contract, documents or matter not specifically referred to in the prospectus, shall be void. (3) No person shall issue to any person in India a form of application for securities of such a company or intended company as is mentioned in sub -section ( 1), unless the form is issued with a prospectus which complies wi th the provisions of this Chapter and such issue does not contravene the provisions of section 388: Provided that this sub -section shall not apply if it is shown that the form of application was issued in connection with a bona fide invitation to a person to enter into an underwriting agreement with respect to securities. (4) This section (a) shall not apply to the issue to existing members or debenture holders of a company of a prospectus or form of application relating to securities of the company, whether an applicant for securities will or will not have the right to renounce in favour of other persons; and (b) except in so far as it requires a prospectus to be dated, to the issue of a prospectus relating to securities which are or are to be in all respects uniform with securities previously issued and for the time being dealt in or quoted on a recognised stock exchange, but, subject as aforesaid, this section shall apply to a prospectus or form of application whether issued on or with reference to t he formation of a company or subsequently. (5) Nothing in this section shall limit or diminish any liability which any person may incur under any law for the time being in force in India or under this Act apart from this section. 388. Provisions as to expe rts consent and allotment. (1) No person shall issue, circulate or distribute in India any prospectus offering for subscription in securities of a company incorporated or to be incorporated outside India, whether the company has or has not been establishe d, or when formed will or will not establish, a place of business in India, (a) if, where the prospectus includes a statement purporting to be made by an expert, he has not given, or has before delivery of the prospectus for registration withdrawn, his wr itten consent to the issue of the prospectus with the statement included in the form and context in which it is included, or there does not appear in the prospectus a statement that he has given and has not withdrawn his consent as aforesaid; or (b) if the prospectus does not have the effect, where an application is made in pursuance thereof, of rendering all persons concerned bound by all the provisions of sections 33 and 40, so far as applicable. (2) For the purposes of this section, a statement shall be deemed to be included in a prospectus, if it is contained in any report or memorandum appearing on the face thereof or by reference incorporated therein or issued therewith. 226 389. Registration of prospectus. No person shall issue, circulate or distribute in India any prospectus offering for subscription in securities of a company incorporated or to be incorporated outside India, whether the company has or has not established, or when formed will or will not establish, a place of business in India, unless bef ore the issue, circulation or distribution of the prospectus in India, a copy thereof certified by the chairperson of the company and two other directors of the company as having been approved by resolution of the managing body has been delivered for regis tration to the Registrar and the prospectus states on the face of it that a copy has been so delivered, and there is endorsed on or attached to the copy, any consent to the issue of the prospectus required by section 388 and such documents as may be prescr ibed. 390. Offer of Indian Depository Receipts. Notwithstanding anything contained in any other law for the time being in force, the Central Government may make rules applicable for (a) the offer of Indian Depository Receipts; (b) the requirement of discl osures in prospectus or letter of offer issued in connection with Indian Depository Receipts; (c) the manner in which the Indian Depository Receipts shall be dealt with in a depository mode and by custodian and underwriters; and (d) the manner of sale, tra nsfer or transmission of Indian Depository Receipts, by a company incorporated or to be incorporated outside India, whether the company has or has not established, or will or will not establish, any place of business in India. 391. Application of sections 34 to 36 and Chapter XX. (1) The provisions of sections 34 to 36 (both inclusive) shall apply to (i) the issue of a prospectus by a company incorporated outside India under section 389 as they apply to prospectus issued by an Indian company; (ii) the issu e of Indian Depository Receipts by a foreign company. 1[(2) Subject to the provisions of section 376, the provisions of Chapter XX shall apply mutatis mutandis for closure of the place of business of a foreign company in India as if it were a company incor porated in India in case such foreign company has raised monies through offer or issue of securities under this Chapter which have not been repaid or redeemed .] 392. Punishment for contravention. Without prejudice to the provisions of section 391, if a for eign company contravenes the provisions of this Chapter, the foreign company shall be punishable with fine which shall not be less than one lakh rupees but which may extend to three lakh rupees and in the case of a continuing offence, with an additional fi ne which may extend to fifty thousand rupees for every day after the first during which the contravention continues and every officer of the foreign company who is in default shall be punishable 2*** with fine which shall not be less than twenty -five thous and rupees but which may extend to 3[five lakh rupees ]. 393. Companys failure to comply with provisions of this Chapter not to affect validity of contracts, etc. Any failure by a company to comply with the provisions of this Chapter shall not affect the validity of any contract, dealing or transaction entered into by the company or its liability to be sued in respect thereof, but the company shall not be entitled to bring any suit, claim any set -off, make any counter - claim or institute any legal proceedin g in respect of any such contract, dealing or transaction, until the company has complied with the provisions of this Act applicable to it. 4[393A. Exemptions under this Chapter .The Central Government may, by notification, exempt any class of (a) foreign companies; 1. Subs. by Act 1 of 2018, s. 79, for sub -section (2) (w.e.f. 9 -2-2018). 2. The words with imprisonment for a term which may extend to six months or omitted by Act 29 of 2020, s. 54 (w.e.f. 21-12- 2020). 3. Subs. by s. 54, ibid., for fifty thousand rupees, or with both (w.e.f. 21 -12-2020). 4. Ins. by s. 55 , ibid. (w.e.f. 22 -1-2021). 227 (b) companies incorporated or to be incorporated outside India, whether the company has or has not established, or when formed may or may not establish, a place of business in India, as may be specified in the notification, from any of the pro visions of this Chapter and a copy of every such notification shall, as soon as may be after it is made, be laid before both Houses of Parliament.] CHAPTER XXIII GOVERNMENT COMPANIES 394. Annual reports on Government companies. (1) Where the Central Government is a member of a Government company, the Central Government shall cause an annual report on the working and affairs of that company to be (a) prepared within three months of its annual general meeting before which the comments given by the Comp troller and Auditor -General of India and the audit report is placed under the proviso to sub-section ( 6) of section 143; and (b) as soon as may be after such preparation, laid before both Houses of Parliament together with a copy of the audit report and co mments upon or supplement to the audit report, made by the Comptroller and Auditor -General of India. (2) Where in addition to the Central Government, any State Government is also a member of a Government company, that State Government shall cause a copy of the annual report prepared under sub - section ( 1) to be laid before the House or both Houses of the State Legislature together with a copy of the audit report and the comments upon or supplement to the audit report referred to in sub -section ( 1). 395. An nual reports where one or more State Governments are members of companies. (1) Where the Central Government is not a member of a Government company, every State Government which is a member of that company, or where only one State Government is a member of the company, that State Government shall cause an annual report on the working and affairs of the company to be (a) prepared within the time specified in sub -section ( 1) of section 394; and (b) as soon as may be after such preparation, laid before the Ho use or both Houses of the State Legislature together with a copy of the audit report and comments upon or supplement to the audit report referred to in sub -section ( 1) of that section

copy of the audit report and comments upon or supplement to the audit report referred to in sub -section ( 1) of that section. (2) The provisions of this section and section 394 shall, so far as may be, apply to a Government company in liquidation as they apply to any other Government company. CHAPTER XXIV REGISTRATION OFFICES AND FEES 396. Registration offices. (1) For the purposes of exercising such powers and discharging such functions as are conf erred on the Central Government by or under this Act or under the rules made there under and for the purposes of registration of companies under this Act, the Central Government shall, by notification, establish such number of offices at such places as it thinks fit, specifying their jurisdiction. 228 (2) The Central Government may appoint such Registrars, Additional, Joint, Deputy and Assistant Registrars as it considers necessary for the registration of companies and discharge of various functions under this Act, and the powers and duties that may be exercisable by such officers shall be such as may be prescribed. (3) The terms and conditions of service, including the salaries payable to persons appointed under sub - section ( 2), shall be such as may be prescrib ed. (4) The Central Government may direct a seal or seals to be prepared for the authentication of documents required for, or connected with, the registration of companies. 397. Admissibility of certain documents as evidence. Notwithstanding anything contained in any other law for the time being in force, any document reproducing or derived from returns and documents filed by a company with the Registrar on paper or in electronic form or stored on any electronic data storage device or computer readable media by the Registrar, and authenticated by the Registrar or any other officer empowered by the Central Government in such manner as may be prescribed, shall be deemed to be a document for the purposes of this Act and the rules made thereunder and shall be admissible in any proceedings thereunder without further proof or production of the original as evidence of any contents of the original or of any fact stated therein of which direct evidence is admissible. 398. Provisions relating to filing of applicat ions, documents, inspection, etc., in electronic form. (1) Notwithstanding anything to the contrary contained in this Act, and without prejudice to the provisions contained in section 6 of the Information Technology Act, 2000 (21 of 2000), the Central Gove rnment may make rules so as to require from such date as may be prescribed in the rules that (a) such applications, balance sheet, prospectus, return, declaration, memorandum, articles, particulars of charges, or any other particulars or document as may b e required to be filed or delivered under this Act or the rules made thereunder, shall be filed in the electronic form and authenticated in such manner as may be prescribed; (b) such document, notice, any communication or intimation, as may be required to be served or delivered under this Act, in the electronic form and authenticated in such manner as may be prescribed; (c) such applications, balance sheet, prospectus, return, register, memorandum, articles, particulars of charges, or any other particulars or document and return filed under this Act or rules made thereunder shall be maintained by the Registrar in the electronic form and registered or authenticated, as the case may be, in such manner as may be prescribed; (d) such inspection of the memorandum , articles, register, index, balance sheet, return or any other particulars or document maintained in the electronic form, as is otherwise available for inspection under this Act or the rules made thereunder, may be made by any person through the electroni c form in such manner as may be prescribed; (e) such fees, charges or other sums payable under this Act or the rules made thereunder shall be paid through the electronic form and in such manner as may be prescribed; and (f) the Registrar shall register change of registered office, alteration of memorandum or articles, 1*** issue certificate of incorporation, register such document, issue such certificate, record the notice, receive such communication as may be required to b e registered or issued or recorded or received, as the case may be, under this Act or the rules made thereunder or perform duties or discharge functions or exercise powers under this Act or the rules made thereunder or do any act which is by this Act 1. The word prospectus omitted by Act 22 of 2019, s. 38 (w.e.f. 15 -8-2019). 229 directed to be performed or discharged or exercised or done by the Registrar in the electronic form in such manner as may be prescribed. Explanation . For the removal of doubts, it is hereby clarified that the rules made under this section shall not relate to imposition of fines or other pecuniary penalties or demand or payment of fees or contravention of any of the provisions of this Act or punishment therefor. (2) The Central Government may, by notification, frame a scheme to carry out the provisions of sub-section ( 1) through the electronic form. 399. Inspection, production and evidence of documents kept by Registrar. (1) Save as otherwise provided elsewhere in this Act, any person may (a) inspect by electronic means any documents kept by the Registrar in accordance with the rules made, being documents filed or registered by him in pursuance of this Act, or making a record of any fact required or authorised to be recorded or registered in pursuance of this Act, on payment for each inspection of such fees as may be prescribed; (b) require a certificate of the incorporation of any company, or a copy or extract of any other document or any part of any other document to be certified by the Registrar, on payment in advance of such fees as may be pres cribed: Provided that the rights conferred by this sub -section shall be exercisable (i) in relation to documents delivered to the Registrar with a prospectus in pursuance of section 26, only during the fourteen days beginning with the date of publication of the prospectus; and at other times, only with the permission of the Central Government; and (ii) in relation to documents so delivered in pursuance of clause ( b) of sub -section ( 1) of section 388, only during the fourteen days beginning with the date of the prospectus; and at other times, only with the permission of the Central Government. (2) No process for compelling the production of any document kept by the Registrar shall issue from any court or the Tribunal except with the leave of that court or th e Tribunal and any such process, if issued, shall bear thereon a statement that it is issued with the leave of the court or the Tribunal. (3) A copy of, or extract from, any document kept and registered at any of the offices for the registration of compani es under this Act, certified to be a true copy by the Registrar (whose official position it shall not be necessary to prove), shall, in all legal proceedings, be admissible in evidence as of equal validity with the original document. 400. Electronic form t o be exclusive, alternative or in addition to physical form. The Central Government may also provide in the rules made under section 398 and section 399 that the electronic form for the purposes specified in these sections shall be exclusive, or in the alt ernative or in addition to the physical form, therefor. 401. Provision of value added services through electronic form. The Central Government may provide such value added services through the electronic form and levy such fee thereon as may be prescribed. 402. Application of provisions of Information Technology Act, 2000. All the provisions of the Information Technology Act, 2000 (21 of 2000) relating to the electronic records, including the manner and format in which the electronic records shall be filed, in so far as they are not inconsistent with this Act, shall apply in relation to the records in electronic form specified under section 398. 230 403. Fee for filing, etc. (1) Any document, required to be submitted, filed, registered or recorded, or any fact o r information required or authorised to be registered under this Act, shall be submitted, filed, registered or recorded within the time specified in the relevant provision on payment of such fee as may be prescribed: 1[Provided that where any document, fact or information required to be submitted, filed, registered or recorded, as the case may be, under section 92 or 137 is not submitted , filed, registered or recorded, as the case may be, within the period provided in t hose sections, without prejudice to any other legal action or liability under this Act, it may be submitted, filed, registered or recorded, as the case may be, after expiry of the period so provided in those sections, on payment of such additional fee as m ay be prescribed, which shall not be less than one hundred rupees per day and different amounts may be prescribed for different classes of companies:] 2[Provided further that where the document, fact or information, as the case may be, in cases other than referred to in the first proviso, is not submitted, filed, registered or recorded, as the case may be, within the period provided in the relevant section, it may, without prejudice to any other legal action or liability under this Act, be submitted, filed, registered or recorded as the case may be, on payment of such additional fee as may be prescribed and different fees may be prescribed for different classes of companies: 3[Provided also that where there is default on two or more occasions in submitting, filing, registering or recording of such document, fact or information, as may be prescribed, it may, without prejudice to any other legal action or liability under this Act, be submitted, filed, registered or recorded, as the case may be, on payment of su ch higher additional fee, as may be prescribed. ]] 4[(2) Where a company fails or commits any default to submit, file, register or record any document, fact or information under sub -section ( 1) before the expiry of the period specified in the relevant section, the company and the officers of the company who are in default, shall, without prejudice to the liability for the payment of fee and additional fee, be liable for the penalty or punishment provided under this Act for such failure or default.] 404. Fees, etc., to be credited into public account. All fees, charges and other sums received by any Registrar, Additional, Joint, Deputy or Assistant Registrar or any other officer of the Central Government in pursuance of any provision of this Act shall be paid into the public account of India in the Reserve Bank of India. CHAPTER XXV COMPANIES TO FURNISH INFORMATION OR STATISTICS 405. Power of Central Government to direct companies to furnish information or statistics. (1) The Central Government may, by ord er, require companies generally, or any class of companies, or any company, to furnish such information or statistics with regard to their or its constitution or working, and within such time, as may be specified in the order. (2) Every order under sub -section ( 1) shall be published in the Official Gazette and may be addressed to companies generally or to any class of companies, in such manner, as the Central Government may think fit and the date of such publication shall be deemed to be the date on which r equirement for information or statistics is made on such companies or class of companies, as the case may be. 1. Subs. by Act 1 of 2018, s. 80 , for the first proviso (w.e.f. 7 -5-2018). 2. Subs. by, s. 80, ibid, for second and third proviso (w.e.f. 1 -7-2022). 3. Subs. by Act 29 of 2020, s. 56, for the third proviso (w.e.f. 1 -7-2022). 4. Subs. by Act 1 of 2018, s. 80, for sub -section ( 2) (w.e.f. 7 -5-2018). 231 (3) For the purpose of satisfying itself that any information or statistics furnished by a company or companies in pursuance of any order under su b-section ( 1) is correct and complete, the Central Government may by order require such company or companies to produce such records or documents in its possession or allow inspection thereof by such officer or furnish such further information as that Gove rnment may consider necessary. 1[(4) If any company fails to comply with an order made under sub -section ( 1) or sub -section ( 3), or furnishes any information or statistics which is incorrect or incomplete in any material respect, the company and every offi cer of the company who is in default, shall be liable to a penalty of twenty thousand rupees and in case of continuing failure, with a further penalty of one thousand rupees for each day after the first during which such failure continues, subject to a max imum of three lakh rupees .] (5) Where a foreign company carries on business in India, all references to a company in this section shall be deemed to include references to the foreign company in relation, and only in relation, to such business. CHAPTER XXVI NIDHIS 2[406. Provision relating to Nidhis and its application, etc. (1) In this section, Nidhi or Mutual Benefit Society means a company which the Central Government may, by notification in the Official Gazette, declare to be a Nidhi or Mutual Benefit Society, as the case may be. (2) The Central Government may, by notification in the Official Gazette, direct that any of the provisions of this Act specified in the notification (a) shall not apply to any Nidhi or Mutual Benefit Society; or (b) shall apply to any Nidhi or Mutual Benefit Society with such exceptions, modifications and adaptations as may be specified in the notification. (3) A copy of every notification proposed to be issued under sub -section ( 2), shall be laid in d raft before each House of Parliament, while it is in session, for a total period of thirty days, and if, both Houses agree in disapproving the issue of notification or both Houses agree in making any modification in the notification, the notification shall not be issued or, as the case may be, shall be issued only in such modified form as may be agreed upon by both the Houses. (4) In reckoning any such period of thirty days as is referred to in sub -section ( 3), no account shall be taken of any period during which the House referred to in sub -section ( 3) is prorogued or adjourned for more than four consecutive days. (5) The copies of every notification issued under this section shall, as soon as may be after it has been issued, be laid before each House of Pa rliament.] 1. Subs. by Act 29 of 2020, s. 57, for sub -section ( 4) (w.e.f. 21 -12-2020). 2. Subs . by Act 1 of 2018, s. 81 , for section 406 (w.e.f. 15 -8-2019). 232 CHAPTER XXVII NATIONAL COMPANY LAW TRIBUNAL AND APPELLATE TRIBUNAL

CHAPTER XXVII NATIONAL COMPANY LAW TRIBUNAL AND APPELLATE TRIBUNAL 407. Definitions. In this Chapter, unless the context otherwise requires, (a) Chairperson means the Chairperson of the Appellate Tribunal; (b) Judicial Member means a member of the Tribunal or the Appellate Tribunal appointed as such and includes the President or the Chairperson, as the case may be; (c) Member means a member, whether Judicial or Technical of the Tribunal or the Appellate Tribunal and includes the President or the Chairperson, as the case may be; (d) President means the President of the Tribunal; (e) Technical Member means a member of the Tribunal or the Appellate Tribunal appointed as such. 408. Constitution of National Company Law Tribunal. The Central Government shall, by notification, constitute, with effect from such date as may be specified therein, a Tribunal to be known as the National Company Law Tribunal consisting of a President and such number of Judicial and Technical mem bers, as the Central Government may deem necessary, to be appointed by it by notification, to exercise and discharge such powers and functions as are, or may be, conferred on it by or under this Act or any other law for the time being in force. 409. Qualif ication of President and Members of Tribunal. (1) The President shall be a person who is or has been a Judge of a High Court for five years. (2) A person shall not be qualified for appointment as a Judicial Member unless he (a) is, or has been, a judge of a High Court; or (b) is, or has been, a District Judge for at least five years; or (c) has, for at least ten years been an advocate of a court. Explanation. For the purposes of clause ( c), in computing the period during which a person has been an advocate of a court, there shall be included any period during which the person has held judicial office or the office of a member of a tribunal or any post, under the Union or a State, requiring special knowledge of law after he become an advocate. (3) A person s hall not be qualified for appointment as a Technical Member unless he (a) has, for at least fifteen years been a member of the Indian Corporate Law Service or Indian Legal Service 1[and has been holding the rank of Secretary or Additional Secretary to the Government of India ]; or (b) is, or has been, in practice as a chartered accountant for at least fifteen years; or (c) is, or has been, in practice as a cost accountant for at least fifteen years; or (d) is, or has been, in practice as a company secretary for at least fifteen years; or 2[(e) is a person of proven ability, integrity and standing having special knowledge and professional experience of not less than fifteen years in industrial finance, industrial management, industrial reconstruction, investm ent and accountancy .] (f) is, or has been, for at least five years, a presiding officer of a Labour Court, Tribunal or National Tribunal constituted under the Industrial Disputes Act, 1947 (14 of 1947). 410. Constitution of Appellate Tribunal. The Central Government shall, by notification, constitute, with effect from such date as may be specified therein, an Appellate Tribunal to be known as the National Company Law Appellate Tribunal consisting of a chairperson and such number of Judicial and Technical 1. Subs. by Act 1 of 2018, s. 82, for out of which at least three years shall be in the pay scale of Joint Secretary to the Government of India or equivalent or above in that service (w.e.f 9 -2-2018). 2. Subs. by Act 1 of 2018, s. 82, for clause ( e) (w.e.f. 9 -2-2018). 233 Members, 1***, as the Central Government may deem fit, to be appointed by it by notification, 2[for hearing appeals against (a) the 3[orders of the Tribunal or of the National Financial Reporting Authority] under this Act; and (b) any direction, decision or order referred to in 4[section 53 A] of the Competition Act, 2002 (12 of 2002) in accordance with the provisions of that Act]. 411. Qualifications of chairperson and Members of Appellate Tribunal. (1) The chairperson shall be a person who is or has been a Judge of the Supreme Court or the Chief Justice of a High Court. (2) A Judicial Member shall be a person who is or has been a Judge of a High Court or is a Judicial Member of the Tribunal for five years. 5[(3) A technical member shall be a pe rson of proven ability, integrity and standing having special knowledge and professional experience of not less than twenty -five years in industrial finance, industrial management, industrial reconstruction, investment and accountancy .] 412. Selection of M embers of Tribunal and Appellate Tribunal. (1) The President of the Tribunal and the chairperson and Judicial Members of the Appellate Tribunal, shall be appointed after consultation with the Chief Justice of India. 6[(2) The Members of the Tribunal and the Technical Members of the Appellate Tribunal shall be appointed on the recommendation of a Selection Committee consisting of (a) Chief Justice of India or his nominee Chairperson; (b) a senior Judge of the Supreme Court or Chief Justice of High Court Member; (c) Secretary in the Ministry of Corporate Affairs Member; and (d) Secretary in the Ministry of Law and Justice Member. (2A) Where in a meeting of the Selection Committee, there is equality of votes on any matter, the Chairperson shall have a casti ng vote .] (3) The Secretary, Ministry of Corporate Affairs shall be the Convener of the Selection Committee. (4) The Selection Committee shall determine its procedure for recommending persons under sub - section ( 2). (5) No appointment of the Members of the Tribunal or the Appellate Tribunal shall be invalid merely by reason of any vacancy or any defect in the constitution of the Selection Committee. 413. Term of office of President, chairperson and other Members. (1) The President and every other Me mber of the Tribunal shall hold office as such for a term of five years from the date on which he enters upon his office, but shall be eligible for re -appointment for another term of five years. (2) A Member of the Tribunal shall hold office as such until he attains, (a) in the case of the President, the age of sixty -seven years; (b) in the case of any other Member, the age of sixty -five years: Provided that a person who has not completed fifty years of age shall not be eligible for appointment as Member: Provided further that the Member may retain his lien with his parent cadre or Ministry or Department, as the case may be, while holding office as such for a period not exceeding one year. 1. The words not exceeding eleven omitted by Act 29 of 2020, s. 58 (w.e.f. 22 -1-2021). 2. Subs. by Act 7 of 2017, s. 172, for for hearing appeals against the orders to the Tribunal (w.e.f. 26 -5-2017). 3. Subs. by Act 1 of 2018, s. 83 for orders of the Tribunal (w.e.f. 7 -5-2018). 4. Subs. by Act 29 of 2020, s. 58, for section 53N (w.e.f. 22 -1-2021). 5. Subs. by Act 1 of 2018, s. 84, for sub -section ( 3) (w.e.f. 9 -2-2018). 6. Subs. by s. 85, ibid., for sub -section ( 2) (w.e.f. 9 -2-2018). 234 (3) The chairperson or a Member of the Appellate Tribunal shall hold office as such for a term of five years from the date on which he enters upon his office, but shall be eligible for re -appointment for another term of five years. (4) A Member of the Appellate Tribunal shall hold office as such until he attains, (a) in t he case of the Chairperson, the age of seventy years; (b) in the case of any other Member, the age of sixty -seven years: Provided that a person who has not completed fifty years of age shall not be eligible for appointment as Member: Provided further that the Member may retain his lien with his parent cadre or Ministry or Department, as the case may be, while holding office as such for a period not exceeding one year. 414. Salary, allowances and other terms and conditions of service of Members. The salary, allowances and other terms and conditions of service of the Members of the Tribunal and the Appellate Tribunal shall be such as may be prescribed: Provided that neither the salary and allowances nor the other terms and conditions of service of the Members shall be varied to their disadvantage after their appointment. 415. Acting President and Chairperson of Tribunal or Appellate Tribunal. (1) In the event of the occurrence of any vacancy in the office of the President or the Chairperson by reason of his dea th, resignation or otherwise, the senior -most Member shall act as the President or the Chairperson, as the case may be, until the date on which a new President or Chairperson appointed in accordance with the provisions of this Act to fill such vacancy ente rs upon his office. (2) When the President or the Chairperson is unable to discharge his functions owing to absence, illness or any other cause, the senior -most Member shall discharge the functions of the President or the Chairperson, as the case may be, u ntil the date on which the President or the Chairperson resumes his duties. 416. Resignation of Members. The President, the Chairperson or any Member may, by notice in writing under his hand addressed to the Central Government, resign from his office: Prov ided that the President, the Chairperson, or the Member shall continue to hold office until the expiry of three months from the date of receipt of such notice by the Central Government or until a person duly appointed as his successor enters upon his offic e or until the expiry of his term of office, whichever is earliest. 417. Removal of Members. (1) The Central Government may, after consultation with the Chief Justice of India, remove from office the President, Chairperson or any Member, who (a) has been adjudged an insolvent; or (b) has been convicted of an offence which, in the opinion of the Central Government, involves moral turpitude; or (c) has become physically or mentally incapable of acting as such President, the Chairperson, or Member; or (d) has acquired such financial or other interest as is likely to affect prejudicially his functions as such President, the Chairperson or Member; or (e) has so abused his position as to render his continuance in office prejudicial to the public interest: Provide d that the President, the Chairperson or the Member shall not be removed on any of the grounds specified in clauses ( b) to ( e) without giving him a reasonable opportunity of being heard. (2) Without prejudice to the provisions of sub -section ( 1), the President, the Chairperson or the Member shall not be removed from his office except by an order made by the Central Government on the ground of proved misbehaviour or incapacity after an inquiry made by a Judge of the Supreme Court nominated by the Chief Justice of India on a reference made to him by the Central Government in which such President, 235 the Chairperson or Member had been informed of the charges against him and given a reasonable opportunity of being heard. (3) The Central Government may, with the concurrence of the Chief Justice of India, suspend from office, the President, the Chairperson or Member in respect of whom reference has been made to the Judge of the Supreme Court under sub -section ( 2) until the Central Government has passed ord ers on receipt of the report of the Judge of the Supreme Court on such reference. (4) The Central Government shall, after consultation with the Supreme Court, make rules to regulate the procedure for the inquiry on the ground of proved misbehaviour or inca pacity referred to in sub - section ( 2). 1[417A. Qualifications, terms and conditions of service of Chairperson and Member .Notwithstanding anything contained in this Act, the qualifications, appointment, term of office, salaries and allowances, resignation, removal and other terms and conditions of service of the Chairperson and other Members of the Appellate Tribunal appointe d after the commencement of 2[the Tribunal s Reforms Act, 2021, shall be governed by the provisions of Chapter II of the said Act ]: Provided that the Chairperson and Member appointed before the commencement of Part XIV of Chapter VI of the Finance Act, 2017 , shall continue to be governed by the provisions of this Act and the rules made thereunder as if the provisions of section 184 of the Finance Act, 2017 had not come into force.] 418. Staff of Tribunal and Appellate Tribunal. (1) The Central Government sha ll, in consultation with the Tribunal and the Appellate Tribunal, provide the Tribunal and the Appellate Tribunal, as the case may be, with such officers and other employees as may be necessary for the exercise of the powers and discharge of the functions of the Tribunal and the Appellate Tribunal. (2) The officers and other employees of the Tribunal and the Appellate Tribunal shall discharge their functions under the general superintendence and control of the President, or as the case may be, the Chairpers on, or any other Member to whom powers for exercising such superintendence and control are delegated by him. (3) The salaries and allowances and other conditions of service of the officers and other employees of the Tribunal and the Appellate Tribunal shal l be such as may be prescribed. 3[418A. Benches of Appellate Tribunal. (1) The powers of the Appellate Tribunal may be exercised by the Benches thereof to be constituted by the Chairperson: Provided that a Bench of the Appellate Tribunal shall have at least one Judicial Member and one Technical Member. (2) The Benches of the Appellate Tribunal shall ordinarily sit at New Delhi or such other places as the Central Government may, in consultation with the Chairperson, notify: Provided that the Central Gove rnment may, by notification, after consultation with the Chairperson, establish such number of Benches of the Appellate Tribunal, as it may consider necessary, to hear appeals against any direction, decision or order referred to in section 53A of the Compe tition Act, 2002 (12 of 2003) and under section 61 of the Insolvency and Bankruptcy Code, 2016 (31 of 2016).] 419. Benches of Tribunal. (1) There shall

2016 (31 of 2016).] 419. Benches of Tribunal. (1) There shall be constituted such number of Benches of the Tribunal, as may, by notification, be specified by the Cent ral Government. (2) The Principal Bench of the Tribunal shall be at New Delhi which shall be presided over by the President of the Tribunal. (3) The powers of the Tribunal shall be exercisable by Benches consisting of two Members out of whom one shall be a Judicial Member and the other shall be a Technical Member: 1. Ins. by Act 7 of 2017, s. 172 (w.e.f. 26 -5-5017). 2. Subs. by Act 33 of 2021, s. 28, for Part XIV of Chapter VI of the Finance Act, 2017 (7 of 2017) , shall be governed by the provisions of the section 184 of that Act (w.e.f. 4 -4-2021). 3. Ins. by Act 29 of 2020, s. 59 (w.e.f. 22 -1-2021). 236 Provided that it shall be competent for the Members of the Tribunal authorised in this behalf to function as a Bench consisting of a single Judicial Member and exercise the powers of the Tribunal in respect of such class of cases or such matters pertaining to such class of cases, as the President may, by general or special order, specify: Provided further that if at any stage of the hearing of any such case or matter, it appears to the Member that the case or matter is of such a nature that it ought to be heard by a Bench consisting of two Members, the case or matter may be transferred by the President, or, as the case may be, referred to him for transfer, to such Bench as the President may deem fit . 1[(4) The Central Government shall, by notification, establish such number of benches of the Tribunal, as it may consider necessary, to exercise the jurisdiction, powers and authority of the Adjudicating Authority conferred on such Tribunal by or under P art II of the Insolvency and Bankruptcy Code, 2016 (31 of 2016).] (5) If the Members of a Bench differ in opinion on any point or points, it shall be decided according to the majority, if there is a majority, but if the Members are equally divided, they shall state the point or points on which they differ, and the case shall be referred by the President for hearing on such point or points by one or more of the other Members of the Tribunal and such point or points shall be decided according to the opinion of the majority of Members who have heard the case, including those who first heard it. 420. Orders of Tribunal. (1) The Tribunal may, after giving the parties to any proceeding before it, a reasonable opportunity of being heard, pass such orders thereon as it thinks fit. (2) The Tribunal may, at any time within two years from the date of the order, with a view to rectifying any mistake apparent from the record, amend any order passed by it, and shall make such amendment, if the mistake is brought to its n otice by the parties: Provided that no such amendment shall be made in respect of any order against which an appeal has been preferred under this Act. (3) The Tribunal shall send a copy of every order passed under this section to all the parties concerned. 421. Appeal from orders of Tribunal. (1) Any person aggrieved by an order of the Tribunal may prefer an appeal to the Appellate Tribunal. (2) No appeal shall lie to the Appellate Tribunal from an order made by the Tribunal with the consent of parties. (3) Every appeal under sub -section (1) shall be filed within a period of forty -five days from the date on which a copy of the order of the Tribunal is made available to the person aggrieved and shall be in such form, and accompanied by such fees, as may be prescribed: Provided that the Appellate Tribunal may entertain an appeal after the expiry of the said period of forty - five days from the date aforesaid, but within a further period not exceeding forty -five days, if it is satisfied that the appellant was p revented by sufficient cause from filing the appeal within that period. (4) On the receipt of an appeal under sub -section (1), the Appellate Tribunal shall, after giving the parties to the appeal a reasonable opportunity of being heard, pass such orders th ereon as it thinks fit, confirming, modifying or setting aside the order appealed against. (5) The Appellate Tribunal shall send a copy of every order made by it to the Tribunal and the parties to appeal. 422. Expeditious disposal by Tribunal and Appellate Tribunal. (1) Every application or petition presented before the Tribunal and every appeal filed before the Appellate Tribunal shall be dealt with and disposed of by it as expeditiously as possible and every endeavour shall be made by the Tribunal or the Appellate Tribunal, as the case may be, for the disposal of such application or petition or appeal within 1. Subs. by Act 31 of 2016, s. 255 and the Eleventh Schedule, for sub -section ( 4) (w.e.f. 15 -11-2016). 237 three months from the date of its presentation before the Tribunal or the filing of the appeal before the Appellate Tribunal. (2) Where any applicatio n or petition or appeal is not disposed of within the period specified in sub- section ( 1), the Tribunal or, as the case may be, the Appellate Tribunal, shall record the reasons for not disposing of the application or petition or the appeal, as the case may be, within the period so specified; and the President or the Chairperson, as the case may be, may, after taking into account the reasons so recorded, extend the period referred to in sub -section ( 1) by such period not exceeding ninety days as he may consi der necessary. 423. Appeal to Supreme Court. Any person aggrieved by any order of the Appellate Tribunal may file an appeal to the Supreme Court within sixty days from the date of receipt of the order of the Appellate Tribunal to him on any question of law arising out of such order: Provided that the Supreme Court may, if it is satisfied that the appellant was prevented by sufficient cause from filing the appeal within the said period, allow it to be filed within a further period not exceeding sixty days. 424. Procedure before Tribunal and Appellate Tribunal. (1) The Tribunal and the Appellate Tribunal shall not, while disposing of any proceeding before it or, as the case may be, an appeal before it, be bound by the procedure laid down in the Code of Civil P rocedure, 1908 (5 of 1908), but shall be guided by the principles of natural justice, and, subject to the other provisions of this Act 1[or of the Insolvency and Bankruptcy Code, 2016 (31 of 2016)] and of any rules made hereunder, the Tribunal and the Appe llate Tribunal shall have power to regulate their own procedure. (2) The Tribunal and the Appellate Tribunal shall have, for the purposes of discharging their functions under this Act 1[or under the Insolvency and Bankruptcy Code, 2016 (31 of 2016)], the same powers as are vested in a civil court under the Code of Civil Procedure, 1908 (5 of 1908) while trying a suit in respect of the following matters, namely: (a) summoning and enforcing the attendance of any person and examining him on oath; (b) requiri ng the discovery and production of documents; (c) receiving evidence on affidavits; (d) subject to the provisions of sections 123 and 124 of the Indian Evidence Act,1872 (1 of 1872), requisitioning any public record or document or a copy of such record or document from any office; (e) issuing commissions for the examination of witnesses or documents; (f) dismissing a representation for default or deciding it ex parte; (g) setting aside any order of dismissal of any representation for default or any order pa ssed by it ex parte; and (h) any other matter which may be prescribed. (3) Any order made by the Tribunal or the Appellate Tribunal may be enforced by that Tribunal in the same manner as if it were a decree made by a court in a suit pending therein, and it shall be lawful for the Tribunal or the Appellate Tribunal to send for execution of its orders to the court within the local limits of whose jurisdiction, (a) in the case of an order against a company, the registered office of the company is situate; or (b) in the case of an order against any other person, the person concerned voluntarily resides or carries on business or personally works for gain. (4) All proceedings before the Tribunal or the Appellate Tribunal shall be deemed to be judicial proceedings within the meaning of sections 193 and 228, and for the purposes of section 196 of the Indian Penal Code (45 of 1860), and the Tribunal and the Appellate Tribunal shall be deemed to be civil court for the purposes of section 195 and Chapter XXVI of the Co de of Criminal Procedure, 1973 (2 of 1974). 1. Ins. by Act 31 of 2016, s. 255 and the Eleventh Schedule (w.e.f. 15 -11-2016). 238 425. Power to punish for contempt. The Tribunal and the Appellate Tribunal shall have the same jurisdiction, powers and authority in respect of contempt of themselves as the High Court has and may exercise, for this purpose, the powers under the provisions of the Contempt of Courts Act, 1971(70 of 1971),which shall have the effect subject to modifications that (a) the reference therein to a High Court shall be construed as including a reference to the Tribunal and the Appellate Tribunal; and (b) the reference to Advocate -General in section 15 of the said Act shall be construed as a reference to such Law Officers as the Central Government may, specify in this behalf. 426. Delegation of powers. The Tribunal or the Appellate Tribunal may, by general or special order, direct, subject to such conditions, if any, as may be specified in the order, any of its officers or employees or any other person authorised by it to inquire into any matter connected with any proceedin g or, as the case may be, appeal before it and to report to it in such manner as may be specified in the order. 427. President, Members, officers, etc., to be public servants. The President, Members, officers and other employees of the Tribunal and the Cha irperson, Members, officers and other employees of the Appellate Tribunal shall be deemed to be public servants within the meaning of section 21 of the Indian Penal Code (45 of 1860). 428. Protection of action taken in good faith. No suit, prosecution or o ther legal proceeding shall lie against the Tribunal, the President, Member, officer or other employee, or against the Appellate Tribunal, the Chairperson, Member, officer or other employees thereof or liquidator or any other person authorised by the Tribu nal or the Appellate Tribunal for the discharge of any function under this Act in respect of any loss or damage caused or likely to be caused by any act which is in good faith done or intended to be done in pursuance of this Act. 429. Power to seek assista nce of Chief Metropolitan Magistrate, etc. 1[(1) The Tribunal may, in any proceedings for winding up of a company under this Act or in any proceedings under the Insolvency and Bankruptcy Code, 2016 (31 of 2016), in order to take into custody or under its c ontrol all property, books of account or other documents, request, in writing, the Chief Metropolitan Magistrate, Chief Judicial Magistrate or the District Collector within whose jurisdiction any such property, books of account or other documents of such c ompany under this Act or of corporate persons under the said Code, are situated or found, to take possession thereof, and the Chief Metropolitan Magistrate, Chief Judicial Magistrate or the District Collector, as the case may be, shall, on such request bei ng made to him, (a) take possession of such property, books of account or other documents; and (b) cause the same to be entrusted to the Tribunal or other persons authorised by it .] (2) For the purpose of securing compliance with the provisions of sub-section ( 1), the Chief Metropolitan Magistrate, Chief Judicial Magistrate or the District Collector may take or cause to be taken such steps and use or cause to be used such force as may, in his opinion, be necessary. (3) No act of the Chief Metropolit an Magistrate, Chief Judicial Magistrate or the District Collector done in pursuance of this section shall be called in question in any court or before any authority on any ground whatsoever. 430. Civil court not to have jurisdiction. No civil court shall have jurisdiction to entertain any suit or proceeding in respect of any matter which the Tribunal or the Appellate Tribunal is empowered to determine by or under this Act or any other law for the time being in force and no injunction shall be granted by an y court or other authority in respect of any action taken or to be taken in pursuance of any power conferred by or under this Act or any other law for the time being in force, by the Tribunal or the Appellate Tribunal. 431. Vacancy in Tribunal or Appellate Tribunal not to invalidate acts or proceedings. No act or proceeding of the Tribunal or the Appellate Tribunal shall be questioned or shall be invalid merely on the ground of the existence of any vacancy or defect in the constitution of the Tribunal or th e Appellate Tribunal, as the case may be. 432. Right to legal representation. A party to any proceeding or appeal before the Tribunal or the Appellate Tribunal, as the case may be, may either appear in person or authorise one or more chartered accountants or company 1. Subs. by Act 31 of 2016, s. 255 and the Eleventh Schedule, for section 429 (w.e.f. 15 -11-2016). 239 secretaries or cost accountants or legal practitioners or any other person to present his case before the Tribunal or the Appellate Tribunal, as the case may be. 433. Limitation. The provisions of the Limitation Act, 1963 (36 of 1963) shall, as far as may be, apply to proceedings or appeals before the Tribunal or the Appellate Tribunal, as the case maybe. 1[434. Transfer of certain pending proceedings. (1) On such date as may

ate Tribunal, as the case maybe. 1[434. Transfer of certain pending proceedings. (1) On such date as may be notified by the Central Government in this behalf, (a) all matters, proceedings or cases pending before the Board of Company Law Administration (herein in this section referred to as the Company Law Board) constituted under sub -section ( 1) of section 10E of the Companies Act, 1956 (1 of 1956), immediately before such date shall stand transferred to the Tribunal and the Tribunal shall dispose of such matters, proceedings or cases in accordance with the provisions of this Act; (b) any person aggrieved by any decision or order of the Company Law Board made before such date ma y file an appeal to the High Court within sixty days from the date of communication of the decision or order of the Company Law Board to him on any question of law arising out of such order: Provided that the High Court may if it is satisfied that the appellant was prevented by sufficient cause from filing an appeal within the said period, allow it to be filed within a further period not exceeding sixty days; and (c) all proceedings under the Companies Act, 1956 (1 of 1956), including proceedings relati ng to arbitration, compromise, arrangements and reconstruction and winding up of companies, pending immediately before such date before any District Court or High Court, shall stand transferred to the Tribunal and the Tribunal may proceed to deal with such proceedings from the stage before their transfer: Provided that only such proceedings relating to the winding up of companies shall be transferred to the Tribunal that are at a stage as may be presc ribed by the Central Government: 2[Provided further that any party or parties to any proceedings relating to the winding up of companies pending before any Court immediately before the commencement of the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2018, may file an application of transfer of such proc eedings and the Court may by order transfer such proceedings to the Tribunal and the proceedings so transferred shall be dealt with by the Tribunal as an application for initiation of corporate insolvency resolution process under the Insolvency and Bankrup tcy Code, 2016 (31 of 2016). 3[Provided further that only such proceedings relating to cases other than winding -up, for which orders for allowing or otherwise of the proceedings are not reserved by the High Courts shall be transferred to the Tribunal 4[Provided also that] (i) all proceedings under the Companies Act, 1956 other than the cases relating to winding up of companies that are reserved for orders for allowing or otherwise such proceedings; or (ii) the proceedings relating to winding up of companie s which have not been transferred from the High Courts; shall be dealt with in accordance with provisions of the Companies Act, 1956 and the Companies (Court) Rules, 1959.] 5[Provided also that proceedings relating to cases of voluntary winding up of a com pany where notice of the resolution by advertisement has been given under sub -section ( 1) of section 485 of the Companies Act, 1956 but the company has not been dissolved before the 1st April, 2017 shall continue to be dealt with in accordance with provisi ons of the Companies Act, 1956 and the Companies (Court) Rules, 1959.] (2) The Central Government may make rules consistent with the provisions of this Act to ensure timely transfer of all matters, proceedings or cases pending before the Company Law Board or the courts, to the Tribunal under this section.] 1. Subs. by Act 31 of 201 6, s. 255 and the Eleventh Schedule, for section 434 (w.e.f. 15 -11-2016). 2. Ins. by Act 26 of 2018, s. 39 (w.e.f. 6 -6-2018). 3. Ins. by Notification No. S.O. 3676(E), dated 7th December 2016 (w.e.f. 15 -12-2016). 4. Subs. by Notification No. S.O. 2042(E), dated 29th June 2017 for Provided further that (w.e.f. 29 -6-2017). 5. Ins., ibid. (w.e.f. 29 -6-2017). 240 CHAPTER XXVIII SPECIAL COURTS 1[435. Establishment of Special Courts. (1) The Central Government may, for the purpose of providing speedy trial of 2[offences under this Act, except under section 452 , by notification ] establish or designate as many Special Courts as may be necessary. (2) A Special Court shall consist of (a) a single judge holding office as Session Judge or Additional Session Judge, in case of offences punishable under this Act with imprisonment of two years or more; and (b) a Metropolitan Magistrate or a Judicial Magistrate of the First Class, in the case of other offences, who shall be appointed by the Central Government with the concurrence of the Chief Justice of the High Court within whose jurisdiction the judge to be appointed is working.] 436. Offences triable by Special Courts. (1) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), (a) 3[all offences specified under sub -section ( 1) of se ction 435] shall be triable only by the Special Court established or designated for the area in which the registered office of the company in relation to which the offence is committed or where there are more Special Courts than one for such area, by such one of them as may be specified in this behalf by the High Court concerned; (b) where a person accused of, or suspected of the commission of, an offence under this Act is forwarded to a Magistrate under sub -section ( 2) or sub -section ( 2A) of section 167 of the Code of Criminal Procedure, 1973 (2 of 1974), such Magistrate may authorise the detention of such person in such custody as he thinks fit for a period not exceeding fifteen days in the whole where such Magistrate is a Judicial Magistrate and seven day s in the whole where such Magistrate is an Executive Magistrate: Provided that where such Magistrate considers that the detention of such person upon or before the expiry of the period of detention is unnecessary, he shall order such person to be forwarded to the Special Court having jurisdiction; (c) the Special Court may exercise, in relation to the person forwarded to it under clause ( b), the same power which a Magistrate having jurisdiction to try a case may exercise under section 167 of the Code of Criminal Procedure, 1973 (2 of 1974) in relation to an accused person who has been forwarded to him under that section; and (d) a Special Court may, upon perusal of the police report of the facts constituting an offence under this Act or upon a complaint i n that behalf, take cognizance of that offence without the accused being committed to it for trial. (2) When trying an offence under this Act, a Special Court may also try an offence other than an offence under this Act with which the accused may, under th e Code of Criminal Procedure, 1973 (2 of 1974) be charged at the same trial. (3) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), the Special Court may, if it thinks fit, try in a summary way any offence under this Ac t which is punishable with imprisonment for a term not exceeding three years: Provided that in the case of any conviction in a summary trial, no sentence of imprisonment for a term exceeding one year shall be passed: Provided further that when at the comme ncement of, or in the course of, a summary trial, it appears to the Special Court that the nature of the case is such that the sentence of imprisonment for a term exceeding one year may have to be passed or that it is, for any other reason, undesirable to try the case summarily, the Special Court shall, after hearing the parties, record an order to that effect and thereafter recall any witnesses who may have been examined and proceed to hear or rehear the case in accordance with the procedure for the regula r trial. 437. Appeal and revision. The High Court may exercise, so far as may be applicable, all the powers conferred by Chapters XXIX and XXX of the Code of Criminal Procedure, 1973 (2 of 1974) on a High 1. Subs. by Act 1 of 2018, s. 86, for section 435 (w.e.f. 7 -5-2018). 2. Subs. by Act 29 of 2020, s. 60, for offences under this Act, by notification (w.e.f. 22 -1-2021). 3. Subs. by Act 21 of 2015, s. 22, for all offences under this Act (w.e.f. 29 -5-2015). 241 Court, as if a Special Court within the local limit s of the jurisdiction of the High Court were a Court of Session trying cases within the local limits of the jurisdiction of the High Court. 438. Application of Code to proceedings before Special Court. Save as otherwise provided in this Act, the provisions of the Code of Criminal Procedure, 1973 (2 of 1974) shall apply to the proceedings before a Special Court and for the purposes of the said provisions, the Special Court shall be 1[deemed to be a Court of Session or the court of Metropolitan Magistrate or a Judicial Magistrate of the First Class, as the case may be,] and the person conducting a prosecution before a Special Court shall be deemed to be a Public Prosecutor. 439. Offences to be non -cognizable. (1) Notwithstanding anything in the Code of Crimina l Procedure, 1973 (2 of 1974), every offence under this Act except the offences referred to in sub-section ( 6) of section 212 shall be deemed to be non -cognizable within the meaning of the said Code. (2) No court shall take cognizance of any offence under this Act which is alleged to have been committed by any company or any officer thereof, except on the complaint in writing of the Registrar, a shareholder 2[or a member] of the company, or of a person authorised by the Central Government in that behalf: Provided that the court may take cognizance of offences relating to issue and transfer of securities and non-payment of dividend, on a complaint in writing, by a person authorised by the Securities and Exchange Board of India: Provided further that nothing i n this sub -section shall apply to a prosecution by a company of any of its officers. (3) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974),where the complainant under sub -section ( 2) is the Registrar or a person authori sed by the Central Government, the presence of such officer before the Court trying the offences shall not be necessary unless the court requires his personal attendance at the trial. (4) The provisions of sub -section ( 2) shall not apply to any action take n by the liquidator of a company in respect of any offence alleged to have been committed in respect of any of the matters in Chapter XX or in any other provision of this Act relating to winding up of companies. Explanation. The liquidator of a company sha ll not be deemed to be an officer of the company within the meaning of sub -section ( 2). 440. Transitional provisions. Any offence committed under this Act, which is triable by a Special Court shall, until a Special Court is established, be tried by a 3[Cou rt of Session or the Court of Metropolitan Magistrate or a Judicial Magistrate of the First Class, as the case may be] exercising jurisdiction over the area, notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974): Provided that nothing contained in this section shall affect the powers of the High Court under section 407 of the Code to transfer any case or class of cases taken cognizance by a 1[Court of Session or the Court of Metropolitan Magistrate or a Judicial Magistrat e of the First Class, as the case may be] under this section. 441. Compounding of certain offences. (1) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), any offence punishable under this Act (whether committed by a company or any officer thereof) 4[not being an offence punishable with imprisonment only, or punishable with imprisonment and also with fine ], may, either before or after the institution of any prosecution, be compounded by (a) the Tribunal; or (b) where the maximum amount of fine which may be imposed for such offence 5[does not exceed twenty -five lakh rupees ], by the Regional Director or any officer authorised by the Central Government, on payment or credit, by the company or, as the case may be, the officer, to the Central Government of 1. Subs. by Act 1 of 2018, s. 87 for deemed to be a Court of Session (w.e.f. 7 -5-2018). 2. Ins. by Act 1 of 2018, s. 88 (w.e.f. 7-5-2018). 3. Subs. by s. 89, ibid., for Court of Session (w.e.f. 7 -5-2018). 3. Subs. by s. 90, ibid., for with fine only(w.e.f. 9 -2-2018). 4. Subs. by Act 22 of 2019, s. 39, for does not exceed five lakh rupees (w.e.f. 2 -11-2018). 242 such sum as that Tribunal or the Regional Director or any officer authorised by the Central Government, as the case may be, may specify: Provided that the sum so specified shall not, in any case, exceed the maximum amount of the fine which may be imposed for the offence so compounded: Provided further that in specifying the sum required to be paid or credited for the compounding of an offence under this sub -section, the sum, if any, paid by way of additional fee under sub -section ( 2) of section 403 shall be taken into account: Provided also that any offence covered under this sub -section by any company or its officer shall not be compounded

into account: Provided also that any offence covered under this sub -section by any company or its officer shall not be compounded if the investigation against such company has been initiated or is pending under this Act. (2) Nothing in sub -section ( 1) shall apply to an offence committed by a company or its officer within a period of three years from the date on which a similar offence committed by it or him was compounded under this section. Explanation. For the purposes of this section, (a) any second or subsequent offence committed after the expiry of a period o f three years from the date on which the offence was previously compounded, shall be deemed to be a first offence; (b) Regional Director means a person appointed by the Central Government as a Regional Director for the purposes of this Act. (3) (a) Every application for the compounding of an offence shall be made to the Registrar who shall forward the same, together with his comments thereon, to the Tribunal or the Regional Director or any officer authorised by the Central Government, as the case may be. (b) Where any offence is compounded under this section, whether before or after the institution of any prosecution, an intimation thereof shall be given by the company to the Registrar within seven days from the date on which the offence is so compounded. (c) Where any offence is compounded before the institution of any prosecution, no prosecution shall be instituted in relation to such offence, either by the Registrar or by any share holder of the company or by any person authorised by the Central Governme nt against the offender in relation to whom the offence is so compounded. (d) Where the compounding of any offence is made after the institution of any prosecution, such compounding shall be brought by the Registrar in writing, to the notice of the court i n which the prosecution is pending and on such notice of the compounding of the offence being given, the company or its officer in relation to whom the offence is so compounded shall be discharged. (4) The Tribunal or the Regional Director or any officer a uthorised by the Central Government, as the case may be, while dealing with a proposal for the compounding of an offence for a default in compliance with any provision of this Act which requires a company or its officer to file or register with, or deliver or send to, the Registrar any return, account or other document, may direct, by an order, if it or he thinks fit to do so, any officer or other employee of the company to file or register with, or on payment of the fee, and the additional fee, required to be paid under section 403, such return, account or other document within such time as may be specified in the order. 1[(5) If any officer or other employee of the company who fails to comply with any order made by the Tribunal or the Regional Director or any officer authorised by the Central Government under sub -section (4), the maximum amount of fine for the offence proposed to be compounded under this section shall be twice the amount provided in the corresponding section in which punishment for such offence is provided .] 2[(6) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), any offence which is punishable under this Act with imprisonment only or with imprisonment and also with fine shall not be compoundable .] (7) No offence specified in this section shall be compounded except under and in accordance with the provisions of this section. 1. Subs. by Act 29 of 2020, s. 61, for sub -section ( 5) (w.e.f. 21 -12-2020). 2. Subs. by Act 22 of 2019, s. 39, for sub -section ( 6) (w.e.f. 2 -11-2018). 243 442. Mediation and Conciliation Panel. (1) The Central Government shall maintain a panel of experts to be called as the Mediation and Conciliation Panel consisting of such number of experts having such qualifications as may be prescribed for mediation between the parties during the pendency of any proceedings before the Central Government or the Tribunal or the Appellate Tribunal un der this Act. (2) Any of the parties to the proceedings may, at any time during the proceedings before the Central Government or the Tribunal or the Appellate Tribunal, apply to the Central Government or the Tribunal or the Appellate Tribunal, as the case may be, in such form along with such fees as may be prescribed, for referring the matter pertaining to such proceedings to the Mediation and Conciliation Panel and the Central Government or the Tribunal or the Appellate Tribunal, as the case may be, shall appoint one or more experts from the panel referred to in sub -section ( 1). (3) The Central Government or the Tribunal or the Appellate Tribunal before which any proceeding is pending may, suo motu , refer any matter pertaining to such proceeding to such num ber of experts from the Mediation and Conciliation Panel as the Central Government or the Tribunal or the Appellate Tribunal, as the case may be, deems fit. (4) The fee and other terms and conditions of experts of the Mediation and Conciliation Panel shall be such as may be prescribed. (5) The Mediation and Conciliation Panel shall follow such procedure as may be prescribed and dispose of the matter referred to it within a period of three months from the date of such reference and forward its recommendation s to the Central Government or the Tribunal or the Appellate Tribunal, as the case may be. (6) Any party aggreived by the recommendation of the Mediation and Conciliation Panel may file objections to the Central Government or the Tribunal or the Appellate Tribunal, as the case may be. 443. Power of Central Government to appoint company prosecutors. Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), the Central Government may appoint generally, or for any case, or in any case, or for any specified class of cases in any local area, one or more persons, as company prosecutors for the conduct of prosecutions arising out of this Act and the persons so appointed as company prosecutors shall have all the powers and privileges co nferred by the Code on Public Prosecutors appointed under section 24 of the Code. 444. Appeal against acquittal. Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), the Central Government may, in any case arising under t his Act, direct any company prosecutor or authorise any other person either by name or by virtue of his office, to present an appeal from an order of acquittal passed by any court, other than a High Court, and an appeal presented by such prosecutor or othe r person shall be deemed to have been validly presented to the appellate court. 445. Compensation for accusation without reasonable cause. The provisions of section 250 of the Code of Criminal Procedure, 1973 (2 of 1974) shall apply mutatis mutandis to com pensation for accusation without reasonable cause before the Special Court or the Court of Session. 446. Application of fines. The court imposing any fine under this Act may direct that the whole or any part thereof shall be applied in or towards payment o f the costs of the proceedings, or in or towards the payment of a reward to the person on whose information the proceedings were instituted. 1[446A. Factors for determining level of punishment. The court or the Special Court, while deciding the amount of fine or imprisonment under this Act, shall have due regard to the following factors, namely: (a) size of the company; (b) nature of business carried on by the company; (c) injury to public interest; (d) nature of the default; and (e) repetition of the default. 2[446B . Lesser penalties for certain companies. Notwithstanding anything contained in this Act, if penalty is payable for non -compliance of any of the provisions of this Act by a One Person Company, small company, start -up company or Producer Company, or by any of its officer in default, or any other pe rson in respect of such company, then such company, its officer in default or any other person, as the case may 1. Ins. by Act 1 of 2018, s. 91 (w.e.f. 9 -2-2018). 2. Subs. by Act 29 of 2020, s. 62, for section 446B (w.e.f. 22 -1-2021) . 244 be, shall be liable to a penalty which shall not be more than one -half of the penalty specified in such provisions subject to a maximum of two l akh rupees in case of a company and one lakh rupees in case of an officer who is in default or any other person, as the case may be. Explanation. For the purposes of this section, (a) Producer Company means a company as defined in clause (l) of section 378A; (b) start-up company means a private company incorporated under this Act or under the Companies Act, 1956 (1 of 1956) and recognised as start -up in accordance with the notification issued by the Central Government in the Department for Promotion of Industry and Internal Trade.] CHAPTER XXIX MISCELLANEOUS 447. Punishment for fraud. Without prejudice to any liability including repayment of any debt under this Actor any other law for the time being in force, any person who is found to be guilty of fraud, 1[involving an amount of at least ten lakh rupees or one per cent. of the turnover of the company, whichever is lower ] shall be punishable with imprisonment for a term which shall not be less than six months but which may extend to ten years and sha ll also be liable to fine which shall not be less than the amount involved in the fraud, but which may extend to three times the amount involved in the fraud: Provided that where the fraud in question involves public interest, the term of imprisonment shal l not be less than three years. 2[Provided further that where the fraud involves an amount less than ten lakh rupees or one per cent. of the turnover of the company, whichever is lower, and does not involve public interest, any person guilty of such fraud shall be punishable with imprisonment for a term which may extend to five years or with fine which may extend to 3[fifty lakh rupees] or with both.] Explanation .For the purposes of this section (i) fraud , in relation to affairs of a company or any body corporate, includes any act, omission, concealment of any fact or abuse of position committed by any person or any other person with the connivance in any manner, with intent to deceive, to gain undue advantage from, or to injure the interests of, the com pany or its shareholders or its creditors or any other person, whether or not there is any wrongful gain or wrongful loss; (ii) wrongful gain means the gain by unlawful means of property to which the person gaining is not legally entitled; (iii) wrongfu l loss means the loss by unlawful means of property to which the person losing is legally entitled. 448. Punishment for false statement. Save as otherwise provided in this Act, if in any return, report, certificate, financial statement, prospectus, state ment or other document required by, or for, the purposes of any of the provisions of this Act or the rules made thereunder, any person makes a statement, (a) which is false in any material particulars, knowing it to be false; or (b) which omits any materi al fact, knowing it to be material, he shall be liable under section 447. 449. Punishment for false evidence. Save as otherwise provided in this Act, if any person intentionally gives false evidence (a) upon any examination on oath or solemn affirmation, authorised under this Act; or (b) in any affidavit, deposition or solemn affirmation, in or about the winding up of any company under this Act, or otherwise in or about any matter arising under this Act, he shall be punishable with imprisonment for a term which shall not be less than three years but which may extend to seven years and with fine which may extend to ten lakh rupees. 450. Punishment where no specific penalty or punishment is provided. If a company or any officer of a company or any other perso n contravenes any of the provisions of this Act or the rules made 1. Ins. by Act 1 of 2018, s. 92 (w.e.f. 9 -2-2018). 2. The proviso ins. by s. 92, ibid. (w.e.f. 9 -2-2018). 3. Subs. by Act 22 of 2019, s. 41, for twenty lakh rupees (w.e.f. 2 -11-2018). 245 thereunder, or any condition, limitation or restriction subject to which any approval, sanction, consent, confirmation, recognition, direction or exemption in relation to any matter has been accorded, given or granted, and for which no penalty or punishment is provided elsewhere in this Act, the company and every officer of the company who is in default or such other person shall be 1[liable to a penalty of ten thousand rupees, and in case of continuing contravention, with a further penalty of on thousand rupees for each day after the first during which the contravention continue, subject to a maximum of two lakh rupees in case of a company and fifty thousand rupees in case of an officer who i s in default or any other person ]. 451. Punishment in case of repeated default. If a company or an officer of a company commits an offence punishable either with fine or with imprisonment and where the same offence is committed for the second or subsequent occasions within a period of three years, then, that company and every officer thereof who is in default shall be punishable with twice the amount of fine for such offence in addition to any imprisonment provided for that offence. 452. Punishment for wron gful withholding of property. (1) If any officer or employee of a company (a) wrongfully obtains possession of any property, including cash of the company; or (b) having any such property including cash in his possession, wrongfully withholds it or knowin gly applies it for the purposes other than those expressed or directed in the articles and authorised by this Act,3 he shall, on the complaint of the company or of any member or creditor or contributory thereof, be punishable with fine which shall not be l ess than one lakh rupees but which may extend to five lakh rupees. (2) The Court trying an offence under sub -section ( 1) may also order such officer or employee to deliver up or refund, within a time to be fixed by it, any such property or cash wrongfully obtained or wrongfully withheld or knowingly misapplied, the benefits that have been derived from such property or cash or in default,

wrongfully withheld or knowingly misapplied, the benefits that have been derived from such property or cash or in default, to undergo imprisonment for a term which may extend to two years. 2[Provided that the imprisonment of such officer or employee, as the case may be, shall not be ordered for wrongful possession or withholding of a dwelling unit, if the court is satisfied that the company has not paid to that officer or employee, as the case may be, any amount relating to -- (a) provident fu nd, pension fund, gratuity fund or any other fund for the welfare of its officers or employees, maintained by the company; (b) compensation or liability for compensation under the Workmen's Compensation Act, 1923 (19 of 1923) in respect of death or disable ment.] 453. Punishment for improper use of Limited or Private Limited .If any person or persons trade or carry on business under any name or title, of which the word Limited or the words Private Limited or any contraction or imitation thereof is or are the last word or words, that person or each of those persons shall, unless duly incorporated with limited liability, or unless duly incorporated as a private company with limited liability, as the case may be, punishable with fine which shall not be l ess than five hundred rupees but may extend to two thousand rupees for every day for which that name or title has been used. 454. Adjudication of penalties. (1) The Central Government may, by an order published in the Official Gazette, appoint as many offi cers of the Central Government, not below the rank of Registrar, as adjudicating officers for adjudging penalty under the provisions of this Act in the manner as may be prescribed. (2) The Central Government shall while appointing adjudicating officers, sp ecify their jurisdiction in the order under sub -section ( 1). 3[(3) The adjudicating officer may, by an order (a) impose the penalty on the company, the officer who is in default, or any other person, as the case may be, stating therein any non -compliance or default under the relevant provisions of this Act; and 4. Subs. by Act 29 of 2020, s. 63, for certain words (w.e.f. 21 -12-2020). 1. Ins. by Act 29 of 2020 , s. 64 (w.e.f. 22 -1-2021). 2. Subs. by Act 22 of 2019, s. 42, for sub -section ( 3) (w.e.f. 2 -11-2018). 246 (b) direct such company, or officer who is in default, or any other person, as the case may be, to rectify the default, wherever he considers fit. ] 1[Provided that in case the default relates to non -compliance of sub -section ( 4) of section 92 or sub - section ( 1) or sub -section ( 2) of section 137 and such default has been rectified either prior to, or within thirty days of, the issue of the notice by the adjudicating officer, no penalty shall be imposed in this regard and all proceedings under this section in respect of such default shall be deemed to be concluded.] (4) The adjudicating officer shall, before imposing any penalty, give a reasonable opportunity of being heard to 2[such company, the officer who is in default or any other person] . (5) Any person aggrieved by an order made by the adjudicating officer under sub -section ( 3) may prefer an appeal to the Regional Director having jurisdiction in the matter. (6) Every appeal under sub -section (5) shall be filed within sixty days from the date on which the copy of the order made by the adjudicating officer is received by the aggrieved person and shall be in such form, manner and be accompanied by such fees as may be prescribed. (7) The Regional Director may, after giving the parties to the appeal an opportunity of being heard, pass such order as he thinks fit, confirming, modifying or setting aside the order appealed against. (8) (i) Where company 3[fails to comply with the order made under sub -section ( 3) or sub -section ( 7), as the case may be, ] within a period of ninety days from the date of the receipt of the copy of the order, the company shall be punishable with fine which shall not be less than twenty -five thousand rupees but which may extend to five lakh rupees. (ii) 4[Where an officer of a company or any other person ] who is in default 5[fails to comply with the order made under sub -section ( 3) or sub -section ( 7), as the case may be, ] within a period of ninety days from the date of the receipt of the copy of the order, such officer shall be punishable with imprisonment which may extend to six months or with fine which shall not be less than twenty -five thousand rupees but which may extend to one lakh rupees, or with both. 6[454A. Penalty for repeated default. Where a company or an officer of a company or any other person having already been subjected to penalty for default under any provisions of this Act, again commits such default within a period of three years from the date of order imposing such penalty passed by the adjudicating officer o r the Regional Director, as the case may be, it or he shall be liable for the second or subsequent defaults for an amount equal to twice the amount of penalty provided for such default under the relevant provisions of this Act.] 455. Dormant company. (1) Where a company is formed and registered under this Act for a future project or to hold an asset or intellectual property and has no significant accounting transaction, such a company or an inactive company may make an application to the Registrar in such m anner as may be prescribed for obtaining the status of a dormant company. Explanation. For the purposes of this section, (i) inactive company means a company which has not been carrying on any business or operation, or has not made any significant accou nting transaction during the last two financial years, or has not filed financial statements and annual returns during the last two financial years; (ii) significant accounting transaction means any transaction other than (a) payment of fees by a compan y to the Registrar; (b) payments made by it to fulfil the requirements of this Act or any other law; (c) allotment of shares to fulfil the requirements of this Act; and (d) payments for maintenance of its office and records. 3. Ins. by Act 29 of 2020 , s. 65 (w.e.f. 22 -1-2021). 1. Subs. by Act 22 of 2019, s. 42, for such company and the officer who is in default (w.e.f. 2 -11-2018). 2. Subs. by s. 42, ibid., for does not pay the penalty imposed by the adjudicating officer or the Regional Director (w.e.f. 2 -11- 2018). 3. The words Where an officer of a company or any other person omitte d by s. 42 , ibid., (w.e.f. 2 -11-2018). 4. The words does not pay the penalty omitted by s. 42, ibid. (w.e.f.. 2 -11-2018). 5. Ins. by s. 43, ibid. (w.e.f. 2 -11-2018). 247 (2) The Registrar on consideration of the application shall allow the status of a dormant company to the applicant and issue a certificate in such form as may be prescribed to that effect. (3) The Registrar shall maintain a register of dormant companies in such form as maybe p rescribed. (4) In case of a company which has not filed financial statements or annual returns for two financial years consecutively, the Registrar shall issue a notice to that company and enter the name of such company in the register maintained for dorma nt companies. (5) A dormant company shall have such minimum number of directors, file such documents and pay such annual fee as may be prescribed to the Registrar to retain its dormant status in the register and may become an active company on an applicati on made in this behalf accompanied by such documents and fee as may be prescribed. (6) The Registrar shall strike off the name of a dormant company from the register of dormant companies, which has failed to comply with the requirements of this section. 456. Protection of action taken in good faith. No suit, prosecution or other legal proceeding shall lie against the Government or any officer of the Government or any other person in respect of anything which is in good faith done or intended to be done in p ursuance of this Act or of any rules or orders made thereunder, or in respect of the publication by or under the authority of the Government or such officer, of any report, paper or proceedings. 457. Non -disclosure of information in certain cases. Notwithstanding anything contained in any other law for the time being in force, the Registrar, any officer of the Government or any other person shall not be compelled to disclose to any court, Tribunal or other authority, the source from where he got an y information which (a) has led the Central Government to order an investigation under section 210; or (b) is or has been material or relevant in connection with such investigation. 458. Delegation by Central Government of its powers and functions. (1) The Central Government may, by notification, and subject to such conditions, limitations and restrictions as may be specified therein, delegate any of its powers or functions under this Act other than the power to make rules to such authority or officer as m ay be specified in the notification: 1* * * * * (2) A copy of every notification issued under sub -section ( 1) shall, as soon as may be after it is issued, be laid before each House of Parliament. 459. Powers of Central Government of Tribunal to acc ord approval, etc., subject to conditions and to prescribe fees on applications. (1) Where the Central Government or the Tribunal is required or authorised by any provision of this Act (a) to accord approval, sanction, consent, confirmation or recognition to, or in relation to, any matter; or (b) to give any direction in relation to any matter; or (c) to grant any exemption in relation to any matter, then, the Central Government or the Tribunal may in the absence of anything to the contrary contained in that provision or any other provision of this Act, accord, give or grant such approval, sanction, consent, confirmation, recognition, direction or exemption, subject to such conditions, limitations or restrictions as it may think fit to impose and may, in th e case of a contravention of any such condition, limitation or restriction, rescind or withdraw such approval, sanction, consent, confirmation, recognition, direction or exemption. (2) Save as otherwise provided in this Act, every application which may be, or is required to be, made to the Central Government or the Tribunal under any provision of this Act (a) in respect of any approval, sanction, consent, confirmation or recognition to be accorded by that Government or the Tribunal to, or in relation to, a ny matter; or 1. The proviso omitted by Act 1 of 2018, s. 93 (w.e.f. 9 -2-2018). 248 (b) in respect of any direction or exemption to be given or granted by that Government or the Tribunal in relation to any matter; or (c) in respect of any other matter, shall be accompanied by such fees as may be prescribed: Provided that dif ferent fees may be prescribed for applications in respect of different matters or in case of applications by different classes of companies. 460. Condonation of delay in certain cases. Notwithstanding anything contained in this Act, (a) where any application required to be made to the Central Government under any provision of this Act in respect of any matter is not made within the time specified therein, that Government may, for reasons to be recorded in writing, condone the delay; and (b) where a ny document required to be filed with the Registrar under any provision of this Act is not filed within the time specified therein, the Central Government may, for reasons to be recorded in writing, condone the delay. 461. Annual report by Central Governme nt.The Central Government shall cause a general annual report on the working and administration of this Act to be prepared and laid before each House of Parliament within one year of the close of the year to which the report relates. 462. Power to exempt class or classes of companies from provisions of this Act. (1) The Central Government may in the public interest, by notification direct that any of the provisions of this Act, (a) shall not apply to such class or classes of companies; or (b) shall apply to the class or classes of companies with such exceptions, modifications and adaptations as may be specified in the notification. 1[(2) A copy of every notification proposed to be issued under sub -section ( 1), shall be laid in draft before each House of Pa rliament, while it is in session, for a total period of thirty days, and if, both Houses agree in disapproving the issue of notification or both Houses agree in making any modification in the notification, the notification shall not be issued or, as the ca se may be, shall be issued only in such modified form as may be agreed upon by both the Houses. (3) In reckoning any such period of thirty days as is referred to in sub -section ( 2), no account shall be taken of any period during which the House referred to in sub -section ( 2) is prorogued or adjourned for more than four consecutive days. (4) The copies of every notification issued under this section shall, as soon as may be after it has been issued, be laid before each House of Parliament.] 463. Power of cou rt to grant relief in certain cases. (1) If in any proceeding for negligence, default, breach of duty, misfeasance or breach of trust against an officer of a company, it appears to the court hearing the case that he is or may be liable in respect of the ne gligence, default, breach of duty, misfeasance or breach of trust, but that he has acted honestly and reasonably, and that having regard to all the circumstances of the case, including those connected with his appointment, he ought fairly to be excused, th e court may relieve him, either wholly or partly, from his liability on such term, as it may think fit: Provided that in a criminal proceeding under this sub -section, the court shall have no power to grant relief from any civil liability which may attach t o an officer in respect of such negligence, default, breach of duty, misfeasance or breach of trust. (2) Where any such officer has reason to apprehend that any proceeding will or might be brought against him in respect of any negligence, default, breach o f duty, misfeasance or breach of trust, he may apply to the High Court for relief and the High Court on such application shall have the same power to relieve him as it would

he may apply to the High Court for relief and the High Court on such application shall have the same power to relieve him as it would have had if it had been a court before which a proceedings against that officer fo r negligence, default, breach of duty, misfeasance or breach of trust had been brought under sub -section ( 1). (3) No court shall grant any relief to any officer under sub -section ( 1) or sub -section ( 2) unless it has, by notice served in the manner specifie d by it, required the Registrar and such other person, if any, as it thinks necessary, to show cause why such relief should not be granted. 1. Subs. by Act 21 of 2015, s. 23, for sub -section (2) (w.e.f. 29 -5-2015). 249 464. Prohibition of association or partnership of persons exceeding certain number. (1) No association or partnershi p consisting of more than such number of persons as may be prescribed shall be formed for the purpose of carrying on any business that has for its object the acquisition of gain by the association or partnership or by the individual members thereof, unless it is registered as a company under this Act or is formed under any other law for the time being in force: Provided that the number of persons which may be prescribed under this sub -section shall not exceed one hundred. (2) Nothing in sub -section ( 1) shal l apply to (a) a Hindu undivided family carrying on any business; or (b) an association or partnership, if it is formed by professionals who are governed by special Acts. (3) Every member of an association or partnership carrying on business in contravention of sub - section ( 1) shall be punishable with fine which may extend to one lakh rupees and shall also be personally liable for all liabilities incurred in such business. 465. Repeal of certain enactments and savings. (1) The Com panies Act, 1956 (1 of 1956) and the Registration of Companies (Sikkim) Act, 1961 (Sikkim Act 8 of 1961) (hereafter in this section referred to as the repealed enactments) shall stand repealed: 1* * * * * 2[Provided that] until a date is notified by the Central Government under sub -section ( 1) of Section 434 for transfer of all matters, proceedings or cases to the Tribunal, the provisions of the Companies Act, 1956 (1 of 1956) in regard to the jurisdiction, powers, authori ty and functions of the Board of Company Law Administration and court shall continue to apply as if the Companies Act, 1956 has not been repealed: 3[Provided further that] provisions of the Companies Act, 1956 (1 of 1956) referred in the notification issue d under section 67 of the Limited Liability Partnership Act, 2008 (6 of 2009) shall, until the relevant notification under such section applying relevant corresponding provisions of this Act to limited liability partnerships is issued, continue to apply as if the Companies Act, 1956 has not been repealed. (2) Notwithstanding the repeal under sub -section ( 1) of the repealed enactments, (a) anything done or any action taken or purported to have been done or taken, including any rule, notification, inspection , order or notice made or issued or any appointment or declaration made or any operation undertaken or any direction given or any proceeding taken or any penalty, punishment, forfeiture or fine imposed under the repealed enactments shall, insofar as it is not inconsistent with the provisions of this Act, be deemed to have been done or taken under the corresponding provisions of this Act; (b) subject to the provisions of clause ( a), any order, rule, notification, regulation, appointment, conveyance, mortgage , deed, document or agreement made, fee directed, resolution passed, direction given, proceeding taken, instrument executed or issued, or thing done under or in pursuance of any repealed enactment shall, if in force at the commencement of this Act, continu e to be in force, and shall have effect as if made, directed, passed, given, taken, executed, issued or done under or in pursuance of this Act; (c) any principle or rule of law, or established jurisdiction, form or course of pleading, practice or procedure or existing usage, custom, privilege, restriction or exemption shall not be affected, notwithstanding that the same respectively may have been in any manner affirmed or recognised or derived by, in, or from, the repealed enactments; (d) any person appoint ed to any office under or by virtue of any repealed enactment shall be deemed to have been appointed to that office under or by virtue of this Act; (e) any jurisdiction, custom, liability, right, title, privilege, restriction, exemption, usage, practice, procedure or other matter or thing not in existence or in force shall not be revised or restored; (f) the offices existing on the commencement of this Act for the registration of companies shall continue as if they have been established under the provisions of this Act; 1. The first proviso omitted by Act 29 of 2020, s. 66 (w.e.f. 11 -2-2021). 2. Subs. by s. 66, ibid., for Provided further that (w.e.f. 11 -2-2021). 3. Subs. by s.66, ibid., for Provided also that (w.e.f. 11 -2-2021). 250 (g) the incorporation of companies registered under the repealed enactments shall continue to be valid and the provisions of this Act shall apply to such companies as if they were registered under this Act; (h) all registers and all funds con stituted and established under the repealed enactments shall be deemed to be registers and funds constituted or established under the corresponding provisions of this Act; (i) any prosecution instituted under the repealed enactments and pending immediately before the commencement of this Act before any Court shall, subject to the provisions of this Act, continue to be heard and disposed of by the said Court; (j) any inspection, investigation or inquiry ordered to be done under the Companies Act, 1956 (1 of 1956) shall continue to be proceeded with as if such inspection, investigation or inquiry has been ordered under the corresponding provisions of this Act; and (k) any matter filed with the Registrar, Regional Director or the Central Government un der the Companies Act, 1956 (1 of 1956) before the commencement of this Act and not fully addressed at that time shall be concluded by the Registrar, Regional Director or the Central Government, as the case may be, in terms of that Act, despite its repeal. (3) The mention of particular matters in sub -section ( 2) shall not be held to prejudice the general application of section 6 of the General Clauses Act, 1897 (10 of 1897) with regard to the effect of repeal of the repealed enactments as if the Registratio n of Companies (Sikkim) Act, 1961 (Sikkim Act 8 of 1961) were also a Central Act. 466. Dissolution of Company Law Board and consequential provisions. (1) Notwithstanding anything contained in section 465, the Board of Company Law Administration constituted under the Companies Act, 1956 (1 of 1956) (hereafter in this section referred to as the Company Law Board) shall stand dissolved on the constitution of the Tribunal and the Appellate Tribunal: Provided that until the Tribunal and the Appellate Tribunal is constituted, the Chairman, Vice - Chairman and Members of the Company Law Board immediately before the constitution of the Tribunal and the Appellate Tribunal, who fulfil the qualifications and requirements provided under this Act regard ing appointment as President or Chairperson or Member of the Tribunal or the Appellate Tribunal, shall function as President, Chairperson or Member of the Tribunal or the Appellate Tribunal: Provided further that every officer or other employee, who had be en appointed on deputation basis to the Company Law Board, shall, on such dissolution, (i) become officer or employee of the Tribunal or the Appellate Tribunal, if he fulfils the qualifications and requirements under this Act; and (ii) stand reverted to h is parent cadre, Ministry or Department, in any other case: Provided also that every officer and the other employee of the Company Law Board, employed on regular basis by that Board, shall become, on and from such dissolution the officer and other employee , respectively, of the Tribunal or the Appellate Tribunal with the same rights and privileges as to pension, gratuity and other like benefits as would have been admissible to him if he had continued to serve that Board and shall continue to do so unless an d until his employment in the Tribunal or the Appellate Tribunal is duly terminated or until his remuneration, terms and conditions of employment are duly altered by the Tribunal or the Appellate Tribunal, as the case may be: Provided also that notwithstan ding anything contained in the Industrial Disputes Act, 1947 (14 of 1947) or in any other law for the time being in force, any officer or other employee who becomes an officer or other employee of the Tribunal or the Appellate Tribunal under t he preceding proviso shall not be entitled to any compensation under this Act or under any other law for the time being in force and no such claim shall be entertained by any court, tribunal or other authority: Provided also that where the Company Law Boar d has established a provident fund, superannuation fund, welfare fund or other fund for the benefit of the officers and other employees employed in that Board, the monies relatable to the officers and other employees who have become officers or employees o f the Tribunal or the Appellate Tribunal shall, out of the monies standing to the credit of such provident fund, superannuation fund, welfare fund or other fund, stand transferred to, and vest in, the Tribunal or the 251 Appellate Tribunal, as the case may be, and such monies which stand so transferred shall be dealt with by the Tribunal or the Appellate Tribunal in such manner as may be prescribed. (2) The persons holding the offices of Chairman, Vice -Chairman and Members, and officers and other employees of t he Company Law Board immediately before the constitution of the Tribunal and the Appellate Tribunal who are not covered under proviso to sub -section( 1) shall vacate their respective offices on such constitution and no such Chairman, Vice -Chairman and Membe rs and officers or other employees shall be entitled to claim any compensation for the premature termination of the term of his office or of any contract of service, if any. 467. Power of Central Government to amend Schedules. (1) Subject to the provisions of this section, the Central Government may, by notification, alter any of the regulations, rules, Tables, forms and other provisions contained in any of the Schedules to this Act. (2) Any alteration notified under sub -section ( 1) shall have effect as if enacted in this Act and shall come into force on the date of the notification, unless the notification otherwise directs: Provided that no such alteration in Table F of Schedule I shall apply to any company registered before the date of such alteration. (3) Every alteration made by the Central Government under sub -section ( 1) shall be laid as soon as may be after it is made before each House of Parliament while it is in session for a total period of thirty days which may be comprised in one session or in tw o or more successive sessions, and if, before the expiry of the session immediately following the session or the successive sessions aforesaid, both Houses agree in making any modification in the alteration, or both Houses agree that the alteration should not be made, the alteration shall thereafter have effect only in such modified form or be of no effect, as the case may be; so, however, that any such modification or annulment shall be without prejudice to the validity of anything previously done in pursu ance of that alteration. 468. Powers of Central Government to make rules relating to winding up. (1) The Central Government shall, make rules consistent with the Code of Civil Procedure, 1908 (5 of 1908) providing for all matters relating to the winding up of companies, which by this Act, are to be prescribed, and may make rules providing for all such matters, as may be prescribed. 1[(2) In particular, and without prejudice to the generality of the foregoing power, such rules may provide for all or any of t he following matters, namely: (i) as to the mode of proceedings to be held for winding up of a company by the Tribunal under this Act; (ii) for the holding of meetings of creditors and members in connection with proceedings under section 230; (iii) for gi ving effect to the provisions of this Act as to the reduction of the capital; (iv) generally for all applications to be made to the Tribunal under the provisions of this Act; (v) the holding and conducting of meetings to ascertain the wishes of creditors and contributories; (vi) the settling of lists of contributories and the rectifying of the register of members where required, and collecting and applying the assets; (vii) the payment, delivery, conveyance, surrender or transfer of money, property, books or papers to the liquidator; (viii) the making of calls; and (ix) the fixing of a time within which debts and claims shall be proved.] (3) All rules made by the Supreme Court on the matters referred to in this section as it stood immediately before the com mencement of this Act and in force at such commencement, shall continue to be in force, till such time the rules are made by the Central Government and any reference to the High Court in relation to winding up of a company in such rules shall be construed as a reference to the Tribunal. 469. Power of Central Government to make rules. (1) The Central Government may, by notification, make rules for carrying out the provisions of this Act. 1. Subs. by Act 31 of 2016, s. 255 and the Eleventh Schedule, for sub -section ( 2) (w.e.f. 15 -11-2016). 252 (2) Without prejudice to the generality of the provisions of sub -sectio n (1), the Central Government may make rules for all or any of the matters which by this Act are required to be, or may be, prescribed or in respect of which provision is to be or may be made by rules. (3) Any rule made under sub -section ( 1) may provide th at a contravention thereof shall be punishable with fine which may extend to five thousand rupees and where the contravention is a continuing one, with a further fine which may extend to five hundred rupees for every day after the first during which such

is a continuing one, with a further fine which may extend to five hundred rupees for every day after the first during which such contravention continues. (4) Every rule made under this section and every regulation made by Securities and Exchange Board under this Act, shall be laid, as soon as may be after it is made, before each House of Parliament, while it is in session, for a tota l period of thirty days which may be comprised in one session or in two or more successive sessions, and if, before the expiry of the session immediately following the session or the successive sessions aforesaid, both Houses agree in making any modificati on in the rule or regulation or both Houses agree that the rule or regulation should not be made, the rule or regulation shall thereafter have effect only in such modified form or be of no effect, as the case may be; so, however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under that rule or regulation. 470. Power to remove difficulties. (1) If any difficulty arises in giving effect to the provisions of this Act, the Central Government may, by order published in the Official Gazette, make such provisions, not inconsistent with the provisions of this Act, as appear to it to be necessary or expedient for removing the difficulty: Provided that no such order shall be made after the expiry of a pe riod of five years from the date of commencement of section 1 of this Act. (2) Every order made under this section shall, as soon as may be after it is made, be laid before each House of Parliament. 253 SCHEDULE I (See sections 4 and 5) TABLE A MEMORANDUM OF ASSOCIATION OF A COMPANY LIMITED BY SHARES 1st The name of the company is ..................................Limited / Private Limited . 2nd The registered office of the company will be situated in the State of................................... 3rd (a) The objects to be pursued by the company on its incorporation are: (b) Matters which are necessary for furtherance of the objects specified in clause 3( a) are: 4th The liability of the member(s) is limited and this liability is limited to the amount unp aid, if any, on the shares held by them. 5th The share capital of the company is..................................rupees, divided into..................................shares of..................................rupees each. 6th We, the several persons, who se names and addresses are subscribed, are desirous of being formed into a company in pursuance of this memorandum of association, and we respectively agree to take the number of shares in the capital of the company set against our respective names: Name s, addresses, descriptions and occupations of subscribers No. of Shares taken by each subscriber Signature of subscriber Signature, names, addresses, descriptions and occupations of witnesses A.B. of........Merchant .............. Signed before me: Signature...................... C.D. of........Merchant .............. Signed before me: Signature...................... E.F. of........Merchant .............. Signed before me: Signature...................... G.H. of........Merchant .............. Signed before me: Signature...................... I.J. of........Merchant .............. Signed before me: Signature...................... K.L. of........Merchant .............. Signed before me: Signature...................... M.N. of........Merchant .............. Signed before me: Signature...................... Total shares taken: _____________ _____________ 254 7th I, whose name and address is given below, am desirous of forming a company in pursuance of this memorandum of association and agree to take all the shares in the capital of the company (Applicable in case of one person company): Name, address, description and occupati on of subscriber Signature of subscriber Signature, name, address, description and occupation of witness A.B. ........Merchant Signed before me: Signature...................... 8th Shri/Smt.................., son/daughter of ......................., resident of............ aged............ years shall be the nominee in the event of death of the sole member (Applicable in case of one person company) Dated........................................ the day of .......................... TABLE B MEMORANDUM OF ASSOCIATION OF A COMPANY LIMITED BY GUARANTEE AND NOT HAVING A SHARE CAPITAL 1st The name of the company is ..................................Limited/Private Limited . 2nd The registered office of the company will be situated in the State of.................................. 3rd (a) The objects to be pursued by the company on its incorporation are: (b) Matters which are necessary for furtherance of the objects specified in clause 3( a) are: 4th The liability of the member(s) is limited. 5th Every member of the company undertakes to contribute: (i) to the assets of the company in the event of its being wound up while he is a member, or within one year after he ceases to be a member, for payment of the debts and liabilities of the company or of such debts and liabilities as may have been contracted before he ceases to be a member; and (ii) to the costs, charges and expenses of winding up (and for the adjustment of the rights of the contributories among themselves), such amount as may be requi red, not exceeding..................................rupees. 6th We, the several persons, whose names and addresses are subscribed, are desirous of being formed into a company in pursuance of this memorandum of association. Names, addresses, descriptions and occupations of subscribers Signature of subscriber Signature, names, addresses, descriptions and occupations of witnesses A.B. of........Merchant Signed before me: Signature...................... C.D. of........Merchant Signed before me: Signature...................... E.F. of........Merchant Signed before me: Signature...................... G.H. of........Merchant Signed before me: Signature...................... 255 I.J. of........Merchant Signed before me: Signature...................... K.L. of........Merchant Signed before me: Signature...................... M.N. of........Merchant Signed before me: Signature...................... 7th I, whose name and address is given below, am desirous of forming a company in pursuance of this memorandum of association (Applicable in case of one person company): Name, address, description and occupation of subscriber Signature of subscriber Signature, name, address, description and occupation of witness A.B. ..... ...Merchant Signed before me: Signature...................... 8th Shri/Smt............., son/daughter of .................., resident of............ aged............ years shall be the nomine e in the event of death of the sole member (Applicable in case of one person company) Dated............................ the day of .............................. TABLE -C MEMORANDUM OF ASSOCIATION OF A COMPANY LIMITED BY GUARANTEE AND HAVING A SHARE CAPITAL 1st The name of the company is ........................... .......Limited/Private Limited . 2nd The registered office of the company will be situated in the State of.................................. 3rd (a) The objects to be pursued by the company on its incorporation are: (b) Matters which are necessary for fur therance of the objects specified in clause 3( a) are: 4th The liability of the member(s) is limited. 5th Every member of the company undertakes to contribute: (i) to the assets of the company in the event of its being wound up while he is a member, or wit hin one year after he ceases to be a member, for payment of the debts and liabilities of the company or of such debts and liabilities as may have been contracted before he ceases to be a member; and (ii) to the costs, charges and expenses of winding up (an d for the adjustment of the rights of the contributories among themselves), such amount as may be required, not exceeding..................................rupees. 6th The share capital of the company is..................................rupees, divided into..................................shares of..................................rupees each 7th We, the several persons, whose names, addresses are subscribed, are desirous of being formed into a company in pursuance of this memorandum of association and we respectively agree to take the number of shares in the capital of the company set against our respective names: 256 Names, addresses, descriptions and occupations of subscribers No. of Shares taken by each subscriber Signature of subscriber Signature, na mes, addresses, descriptions and occupations of witnesses A.B. of........Merchant .............. Signed before me: Signature...................... C.D. of........Merchant .............. Signed before me: Signature...................... E.F. of........Merchant .............. Signed before me: Signature...................... G.H. of........Merchant .............. Signed before me: Signature...................... I.J. of........Merchant .............. Signed before me: Signature...................... K.L. of........Merchant .............. Signed before me: Signature...................... M.N. of........Merchant .............. Signed before me: Signature...................... 8th I, whose name and address is given below, am desirous of forming a company in pursuance of this memorandum of association and agree to take all the shares in the capital of the company (Applicable in case of one person company): Name, address, description and occupation of subscriber Signature of subscriber Signature, name, address, description and occupation of witness A.B. of ........Merchant Signed before me: Signature...................... 9th Shri/Smt.............., son/daughter of .................., resident of............ aged............ years shall be the nominee in the event of death of the sole member (Applicable in case of one person company) Dated............................ the day of........................... TABLE -D MEMORANDUM OF ASSOCIATION OF AN UNLIMITED COMPANY AND NOT HAVING SHARE CAPITAL 1st The name of the company is ..................................Company . 2nd The registered office of the company will be situated in the State of.................................. 3rd (a) The objects to be pursued b y the company on its incorporation are: (b) Matters which are necessary for furtherance of the objects specified in clause 3( a) are: 4th The liability of the member(s) is unlimited. 5th We, the several persons, whose names and addresses are subscribed ar e desirous of being formed into a company in pursuance of this memorandum of association. 257 Names, addresses, descriptions and occupations of subscribers Signature of subscriber Signature, names, addresses, descriptions and occupations of witness A.B. of........Merchant Signed before me: Signature...................... C.D. of........Merchant Signed before me: Signature...................... E.F. of........Merchant Signed before me: Signature...................... G.H. of........Merchant Signed before me: Signature...................... I.J. of........Merchant Signed before me: Signature...................... K.L. of........Merchant Signed before me: Signature...................... M.N. of........Merchant Signed before me: Signature...................... 6th I, whose name and address is given below, am desirous of forming a company in pursuance of this memorandum of association (Applicable in case of one person company): Name, address, description and occupation of subscriber Signature of subscriber Signature, name, address, description and occupation of witness A.B. ........Merchant Signed before me: Signature...................... 7th Shri/Smt.........., son/daughter of ....................., resident of............ aged............ years shall be the nominee in the event of death of the sole member (Applicable in case of one person company) Dated...................... the day of.................... TABLE -E MEMORANDUM OF ASSOCIATION OF AN UNLIMITED CO MPANY AND HAVING SHARE CAPITAL 1st The name of the company is ..................................Company . 2nd The registered office of the company will be situated in the State of................................... 3rd (a) The objects to be pursued by the company on its incorporation are: (b) Matters which are necessary for furtherance of the objects specified in clause 3( a) are: 258 4th The liability of the member(s) is unlimited. 5th The share capital of the company is..................................ru pees, divided into..................................shares of..................................rupees each. 6th We, the several persons, whose names, and addresses are subscribed, are desirous of being formed into a company in pursuance of this memorandum of association and we respectively agree to take the number of shares in the capital of the company set against our respective names: Names, addresses, descriptions and occupations of subscribers No. of Shares taken by each subscriber Signature of subscriber Signature, names, addresses, descriptions and occupations of witnesses A.B. of........Merchant .............. Signed before me: Signature...................... C.D. of........Merchant .............. Signed before me: Signature...................... E.F. of........Merchant .............. Signed before me: Signature...................... G.H. of........Merchant .............. Signed before me: Signature...................... I.J. of.........Merchant .............. Signed before me: Signature...................... K.L. of........Merchant .............. Signed before me: Signature...................... M.N. of........Merchant .............. Signed before me: Signature...................... 7th I, whose name and address is given below, am desirous of forming a company in pursuance of this memorandum of association and agree to take all the shares in the capital of the company (Applicable in case of one person company): Name, address, description and occupation o f subscriber Signature of subscriber Signature, name, address, description and occupation of witness A.B. ........Merchant Signed before me: Signature...................... 8th

occupation of witness A.B. ........Merchant Signed before me: Signature...................... 8th Shri/Smt..........., son/daughter of ...................., resident of............ aged............ years shall be the nominee in the event of death of the sole member (Applicable in case of one person company) Dated.............................. the day of ............................. 259 TABLE -F ARTICLES OF ASSOCIATION OF A COMPANY LIMITED BY SHARES Interpretation I. (1) In these regulations (a) the Act means the Companies Act, 2013, (b) the seal means the common seal of the company. (2) Unless the context otherwise requires, words or expressions contained in these regulations shall bear the same meaning as in the Act or any statutory modification thereof in force at the date at which these regulations become binding on the company. Share capital and variation of rights II. 1. Subject to the provisions of the Act and these Articles, the shares in the capital of the company shall be under the control of the Directors who may issue, allot or otherwise dispose of the same or any of them to such persons, in such proportion and on such terms and conditions and either at a premium or at par and at such time as they may from time to time think fit. 2. (i) Every person whose name is entered as a member in the register of members shall be entitled to receive within two months after incorporation, in case of subscribers to the m emorandum or after allotment or within one month after the application for the registration of transfer or transmission or within such other period as the conditions of issue shall be provided, (a) one certificate for all his shares without payment of any charges; or (b) several certificates, each for one or more of his shares, upon payment of twenty rupees for each certificate after the first. 1[(ii) Every certificate shall specify the shares to which it relates and the amount paid -up thereon and shall be signed by two directors or by a director and the company secretary, wherever the company has appointed a company secretary: Provided that in case the company has a common seal it shall be affixed in the presence of the persons required to sign the certifi cate. Explanation .For the purposes of this item, it is hereby clarified that in case of an One Person Company, it shall be sufficient if the certificate is signed by a director and the company secretary, wherever the company has appointed a company secret ary, or any other person authorised by the Board for the purpose.] (iii) In respect of any share or shares held jointly by several persons, the company shall not be bound to issue more than one certificate, and delivery of a certificate for a share to one of several joint holders shall be sufficient delivery to all such holders. 3. (i) If any share certificate be worn out, defaced, mutilated or torn or if there be no further space on the back for endorsement of transfer, then upon production and surrender t hereof to the company, a new certificate may be issued in lieu thereof, and if any certificate is lost or destroyed then upon proof thereof to the satisfaction of the company and on execution of such indemnity as the company deem adequate, a new certificat e in lieu thereof shall be given. Every certificate under this Article shall be issued on payment of twenty rupees for each certificate. (ii) The provisions of Articles ( 2) and ( 3) shall mutatis mutandis apply to debentures of the company. 4. Except as required by law, no person shall be recognised by the company as holding any share upon any trust, and the company shall not be bound by, or be compelled in any way to recognise (even when having notice thereof) any equitable, contingent, future or partial interest in any share, or any interest in any fractional part of a share, or (except only as by these regulations or by law otherwise provided) any other rights in respect of any share except an absolute right to the entirety thereof in the registered hol der. 1. Subs. by Notification No. G.S.R. 362(E), dated 10th April , 2018 for item ( ii) in sub -paragraph ( 2) (w.e.f. 10 -4-2018). 260 5. (i) The company may exercise the powers of paying commissions conferred by sub -section ( 6) of section 40, provided that the rate per cent. or the amount of the commission paid or agreed to be paid shall be disclosed in the manner required by that s ection and rules made thereunder. (ii) The rate or amount of the commission shall not exceed the rate or amount prescribed in rules made under sub - section ( 6) of section 40. (iii) The commission may be satisfied by the payment of cash or the allotment of f ully or partly paid shares or partly in the one way and partly in the other. 6. (i) If at any time the share capital is divided into different classes of shares, the rights attached to any class (unless otherwise provided by the terms of issue of the shares of that class) may, subject to the provisions of section 48, and whether or not the company is being wound up, be varied with the consent in writing of the holders of three - fourths of the issued shares of that class, or with the sanction of a specia l resolution passed at a separate meeting of the holders of the shares of that class. (ii) To every such separate meeting, the provisions of these regulations relating to general meetings shall mutatis mutandis apply, but so that the necessary quorum shall be at least two persons holding at least one -third of the issued shares of the class in question. 7. The rights conferred upon the holders of the shares of any class issued with preferred or other rights shall not, unless otherwise expressly provided by t he terms of issue of the shares of that class, be deemed to be varied by the creation or issue of further shares ranking pari passu therewith. 8. Subject to the provisions of section 55, any preference shares may, with the sanction of an ordinary resolutio n, be issued on the terms that they are to be redeemed on such terms and in such manner as the company before the issue of the shares may, by special resolution, determine. Lien 9. (i) The company shall have a first and paramount lien (a) on every share ( not being a fully paid share), for all monies (whether presently payable or not) called, or payable at a fixed time, in respect of that share; and (b) on all shares (not being fully paid shares) standing registered in the name of a single person, for all m onies presently payable by him or his estate to the company: Provided that the Board of directors may at any time declare any share to be wholly or in part exempt from the provisions of this clause. (ii) The companys lien, if any, on a share shall extend to all dividends payable and bonuses declared from time to time in respect of such shares. 10. The company may sell, in such manner as the Board thinks fit, any shares on which the company has a lien: Provided that no sale shall be made (a) unless a sum i n respect of which the lien exists is presently payable; or (b) until the expiration of fourteen days after a notice in writing stating and demanding payment of such part of the amount in respect of which the lien exists as is presently payable, has been given to the registered holder for the time being of the share or the person entitled thereto by reason of his death or insolvency. 11. (i) To give effect to any such sale, the Board may authorise some person to transfer the shares sold to the purchaser th ereof. (ii) The purchaser shall be registered as the holder of the shares comprised in any such transfer. (iii) The purchaser shall not be bound to see to the application of the purchase money, nor shall his title to the shares be affected by any irregular ity or invalidity in the proceedings in reference to the sale. 12. (i) The proceeds of the sale shall be received by the company and applied in payment of such part of the amount in respect of which the lien exists as is presently payable. 261 (ii) The residue , if any, shall, subject to a like lien for sums not presently payable as existed upon the shares before the sale, be paid to the person entitled to the shares at the date of the sale. Calls on shares 13. (i) The Board may, from time to time, make calls up on the members in respect of any monies unpaid on their shares (whether on account of the nominal value of the shares or by way of premium) and not by the conditions of allotment thereof made payable at fixed times: Provided that no call shall exceed one -fourth of the nominal value of the share or be payable at less than one month from the date fixed for the payment of the last preceding call. (ii) Each member shall, subject to receiving at least fourteen days notice specifying the time or times and place of payment, pay to the company, at the time or times and place so specified, the amount called on his shares. (iii) A call may be revoked or postponed at the discretion of the Board. 14. A call shall be deemed to have been made at the time when the resolut ion of the Board authorising the call was passed and may be required to be paid by instalments. 15. The joint holders of a share shall be jointly and severally liable to pay all calls in respect thereof. 16. (i) If a sum called in respect of a share is not paid before or on the day appointed for payment thereof, the person from whom the sum is due shall pay interest thereon from the day appointed for payment thereof to the time of actual payment at ten per cent. per annum or at such lower rate, if any, as t he Board may determine. (ii) The Board shall be at liberty to waive payment of any such interest wholly or in part. 17. (i) Any sum which by the terms of issue of a share becomes payable on allotment or at any fixed date, whether on account of the nominal value of the share or by way of premium, shall, for the purposes of these regulations, be deemed to be a call duly made and payable on the date on which by the terms of issue such sum becomes payable. (ii) In case of non -payment of such sum, all the releva nt provisions of these regulations as to payment of interest and expenses, forfeiture or otherwise shall apply as if such sum had become payable by virtue of a call duly made and notified. 18. The Board (a) may, if it thinks fit, receive from any member willing to advance the same, all or any part of the monies uncalled and unpaid upon any shares held by him; and (b) upon all or any of the monies so advanced, may (until the same would, but for such advance, become presently payable) pay interest at such r ate not exceeding, unless the company in general meeting shall otherwise direct, twelve per cent. per annum, as may be agreed upon between the Board and the member paying the sum in advance. Transfer of shares 19. (i) The instrument of transfer of any shar e in the company shall be executed by or on behalf of both the transferor and transferee. (ii) The transferor shall be deemed to remain a holder of the share until the name of the transferee is entered in the register of members in respect thereof. 20. The Board may, subject to the right of appeal conferred by section 58 decline to register (a) the transfer of a share, not being a fully paid share, to a person of whom they do not approve; or (b) any transfer of shares on which the company has a lien. 21. The Board may decline to recognise any instrument of transfer unless (a) the instrument of transfer is in the form as prescribed in rules made under sub -section ( 1) of section 56; 262 (b) the instrument of transfer is accompanied by the certificate of the shar es to which it relates, and such other evidence as the Board may reasonably require to show the right of the transferor to make the transfer; and (c) the instrument of transfer is in respect of only one class of shares. 22. On giving not less than seven da ys previous notice in accordance with section 91and rules made thereunder, the registration of transfers may be suspended at such times and for such periods as the Board may from time to time determine: Provided that such registration shall not be suspend ed for more than thirty days at any one time or for more than forty -five days in the aggregate in any year. Transmission of shares 23. (i) On the death of a member, the survivor or survivors where the member was a joint holder, and his nominee or nominees or legal representatives where he was a sole holder, shall be the only persons recognised by the company as having any title to his interest in the shares. (ii) Nothing in clause ( i) shall release the estate of a deceased joint holder from any liability in respect of any share which had been jointly held by him with other persons. 24. (i) Any person becoming entitled to a share in consequence of the death or insolvency of a member may, upon such evidence being produced as may from time to time properly be r equired by the Board and subject as hereinafter provided, elect, either (a) to be registered himself as holder of the share; or (b) to make such transfer of the share as the deceased or insolvent member could have made. (ii) The Board shall, in either cas e, have the same right to decline or suspend registration as it would have had, if the deceased or insolvent member had transferred the share before his death or insolvency. 25. (i) If the person so becoming entitled shall elect to be registered as holder of the share himself, he shall deliver or send to the company a notice in writing signed by him stating that he so elects. (ii) If the person aforesaid shall elect to transfer the share, he shall testify his election by executing a transfer of the share. (iii) All the limitations, restrictions and provisions of these regulations relating to the right to transfer and the registration of transfers of shares shall be applicable to any such notice or transfer as aforesaid as if the death or insolvency of the me mber had not occurred and the notice or transfer were a transfer signed by that member. 26. A person becoming entitled to a share by reason of the death or insolvency of the holder shall be entitled to the same dividends and other advantages to which he wo uld been titled if he were the registered holder of the share, except that he shall not, before being registered as a member in respect of the share, be entitled in respect of it to exercise any right conferred by membership in relation to meetings of the company: Provided that the Board may, at any time, give notice requiring any such person to elect either to be registered himself or to transfer the share, and if the notice is not complied with within ninety days, the Board may thereafter withhold payment of all dividends, bonuses or other monies payable in respect of the share, until the requirements of the notice have been complied with. 27. In case of a One Person Company (i) on the death of the sole member, the person nominated by such member shall be the person recognised by the company as having title to all the shares of the member; (ii) the nominee on becoming entitled to such shares in case of the members death shall be informed of such event by the Board of the company; (iii) such nominee shall be entitled to

of the members death shall be informed of such event by the Board of the company; (iii) such nominee shall be entitled to the same dividends and other rights and liabilities to which such sole member of the company was entitled or liable; 263 (iv) on becoming member, such nominee shall nominate any other person with the prior written consent of such person who, sha ll in the event of the death of the member, become the member of the company. Forfeiture of shares 28. If a member fails to pay any call, or instalment of a call, on the day appointed for payment thereof, the Board may, at any time thereafter during such time as any part of the call or instalment remains unpaid, serve a notice on him requiring payment of so much of the call or instalment as is unpaid, together with any interest which may have accrued. 29. The notice aforesaid shall (a) name a further day (not being earlier than the expiry of fourteen days from the date of service of the notice) on or before which the payment required by the notice is to be made; and (b) state that, in the event of non -payment on or before the day so named, the shares in re spect of which the call was made shall be liable to be forfeited. 30. If the requirements of any such notice as aforesaid are not complied with, any share in respect of which the notice has been given may, at any time thereafter, before the payment require d by the notice has been made, be forfeited by a resolution of the Board to that effect. 31. (i) A forfeited share may be sold or otherwise disposed of on such terms and in such manner as the Board thinks fit. (ii) At any time before a sale or disposal as aforesaid, the Board may cancel the forfeiture on such terms as it thinks fit. 32. (i) A person whose shares have been forfeited shall cease to be a member in respect of the forfeited shares, but shall, notwithstanding the forfeiture, remain liable to pay to the company all monies which, at the date of forfeiture, were presently payable by him to the company in respect of the shares. (ii) The liability of such person shall cease if and when the company shall have received payment in full of all such monies in respect of the shares. 33. (i) A duly verified declaration in writing that the declarant is a director, the manager or the secretary, of the company, and that a share in the company has been duly forfeited on a date stated in the declaration, shall be conclusive evidence of the facts therein stated as against all persons claiming to be entitled to the share; (ii) The company may receive the consideration, if any, given for the share on any sale or disposal thereof and may execute a transfer of the share in favour of the person to whom the share is sold or disposed of; (iii) The transferee shall thereupon be registered as the holder of the share; and (iv) The transferee shall not be bound to see to the application of the purchase money, if any, nor shall h is title to the share be affected by any irregularity or invalidity in the proceedings in reference to the forfeiture, sale or disposal of the share. 34. The provisions of these regulations as to forfeiture shall apply in the case of non -payment of any sum which, by the terms of issue of a share, becomes payable at a fixed time, whether on account of the nominal value of the share or by way of premium, as if the same had been payable by virtue of a call duly made and notified. 264 Alteration of capital 35. The company may, from time to time, by ordinary resolution increase the share capital by such sum, to be divided into shares of such amount, as may be specified in the resolution. 36. Subject to the provisions of section 61, the company may, by ordinary re solution, (a) consolidate and divide all or any of its share capital into shares of larger amount than its existing shares; (b) convert all or any of its fully paid -up shares into stock, and reconvert that stock into fully paid -up shares of any denominati on; (c) sub -divide its existing shares or any of them into shares of smaller amount than is fixed by the memorandum; (d) cancel any shares which, at the date of the passing of the resolution, have -not been taken or agreed to be taken by any person. 37. Whe re shares are converted into stock, (a) the holders of stock may transfer the same or any part thereof in the same manner as, and subject to the same regulations under which, the shares from which the stock arose might before the conversion have been transferred, or as near thereto as circumstances admit: Provided that the Board may, from time to time, fix the minimum amount of stock transferable, so, however, that such minimum shall not exceed the nominal amount of the shares from which the stock arose. (b) the holders of stock shall, according to the amount of stock held by them, have the same rights, privileges and advantages as regards dividends, voting at meetings of the company, and other matters, as if they held the shares from which the stock arose; but no such privilege or advantage (except participation in the dividends and profits of the company and in the assets on winding up) shall be conferred by an amount of stock which would not, if existing in shares, have conferred that privilege or advanta ge. (c) such of the regulations of the company as are applicable to paid -up shares shall apply to stock and the words share and shareholder in those regulations shall include stock and stock -holder respectively. 38. The company may, by special reso lution, reduce in any manner and with, and subject to, any incident authorised and consent required by law, (a) its share capital; (b) any capital redemption reserve account; or (c) any share premium account. Capitalisation of profits 39. (i) The company in general meeting may, upon the recommendation of the Board, resolve (a) that it is desirable to capitalise any part of the amount for the time being standing to the credit of any of the companys reserve accounts, or to the credit of the profit and loss account, or otherwise available for distribution; and (b) that such sum be accordingly set free for distribution in the manner specified in clause ( ii) amongst the members who would have been entitled thereto, if distributed by way of dividend and in the same proportions. (ii) The sum aforesaid shall not be paid in cash but shall be applied, subject to the provision contained in clause (iii), either in or towards (A) paying up any amounts for the time being unpaid on any shares held by such members respec tively; (B) paying up in full, unissued shares of the company to be allotted and distributed, credited as fully paid -up, to and amongst such members in the proportions aforesaid; 265 (C) partly in the way specified in sub -clause ( A) and partly in that specified in sub -clause ( B); (D) A securities premium account and a capital redemption reserve account may, for the purposes of this regulation, be applied in the paying up of unissued shares to be issued to members of the company as fully paid bonus share s; (E) The Board shall give effect to the resolution passed by the company in pursuance of this regulation. 40. (i) Whenever such a resolution as aforesaid shall have been passed, the Board shall (a) make all appropriations and applications of the undivid ed profits resolved to be capitalised thereby, and all allotments and issues of fully paid shares if any; and (b) generally do all acts and things required to give effect thereto. (ii) The Board shall have power (a) to make such provisions, by the issue o f fractional certificates or by payment in cash or otherwise as it thinks fit, for the case of shares becoming distributable infractions; and (b) to authorise any person to enter, on behalf of all the members entitled thereto, into an agreement with the company providing for the allotment to them respectively, credited as fully paid -up, of any further shares to which they may be entitled upon such capitalisation, or as the case may require, for the payment by the company on their behalf, by the application thereto of their respective proportions of profits resolved to be capitalised, of the amount or any part of the amounts remaining unpaid on their existing shares; (iii) any agreement made under such authority shall be effective and binding on such members . Buy-back of shares 41. Notwithstanding anything contained in these articles but subject to the provisions of sections 68 to 70 and any other applicable provision of the Act or any other law for the time being in force, the company may purchase its own shares or other specified securities. General meetings 42. All general meetings other than annual general meeting shall be called extraordinary general meeting. 43. (i) The Board may, whenever it thinks fit, call an extraordinary general meeting. (ii) If at any time directors capable of acting who are sufficient in number to form a quorum are not within India, any director or any two members of the company may call an extraordinary general meeting in the same manner, as nearly as possible, as that in which su ch a meeting may be called by the Board. Proceedings at general meetings 44. (i) No business shall be transacted at any general meeting unless a quorum of members is present at the time when the meeting proceeds to business. (ii) Save as otherwise provided herein, the quorum for the general meetings shall be as provided in section 103. 45. The Chairperson, if any, of the Board shall preside as Chairperson at every general meeting of the company. 46. If there is no such Chairperson, or if he is not present within fifteen minutes after the time appointed for holding the meeting, or is unwilling to act as Chairperson of the meeting, the directors present shall elect one of their members to be Chairperson of the meeting. 47. If at any meeting no director is wil ling to act as Chairperson or if no director is present within fifteen minutes after the time appointed for holding the meeting, the members present shall choose one of their members to be Chairperson of the meeting. 48. In case of a One Person Company 266 (i) the resolution required to be passed at the general meetings of the company shall be deemed to have been passed if the resolution is agreed upon by the sole member and communicated to the company and entered in the minutes book maintained under section 1 18; (ii) such minutes book shall be signed and dated by the member; (iii) the resolution shall become effective from the date of signing such minutes by the sole member. Adjournment of meeting 49. (i) The Chairperson may, with the consent of any meeting at which a quorum is present, and shall, if so directed by the meeting, adjourn the meeting from time to time and from place to place. (ii) No business shall be transacted at any adjourned meeting other than the business left unfinished at the meeting from w hich the adjournment took place. (iii) When a meeting is adjourned for thirty days or more, notice of the adjourned meeting shall be given as in the case of an original meeting. (iv) Save as aforesaid, and as provided in section 103 of the Act, it shall no t be necessary to give any notice of an adjournment or of the business to be transacted at an adjourned meeting. Voting rights 50. Subject to any rights or restrictions for the time being attached to any class or classes of shares, (a) on a show of hands, every member present in person shall have one vote; and (b) on a poll, the voting rights of members shall be in proportion to his share in the paid -up equity share capital of the company. 51. A member may exercise his vote at a meeting by electronic means in accordance with section 108 and shall vote only once. 52. (i) In the case of joint holders, the vote of the senior who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the votes of the other joint holders. (ii) For t his purpose, seniority shall be determined by the order in which the names stand in the register of members. 53. A member of unsound mind, or in respect of whom an order has been made by any court having jurisdiction in lunacy, may vote, whether on a show of hands or on a poll, by his committee or other legal guardian, and any such committee or guardian may, on a poll, vote by proxy. 54. Any business other than that upon which a poll has been demanded may be proceeded with, pending the taking of the poll. 55. No member shall be entitled to vote at any general meeting unless all calls or other sums presently payable by him in respect of shares in the company have been paid. 56. (i) No objection shall be raised to the qualification of any voter except at the m eeting or adjourned meeting at which the vote objected to is given or tendered, and every vote not disallowed at such meeting shall be valid for all purposes. (ii) Any such objection made in due time shall be referred to the Chairperson of the meeting, who se decision shall be final and conclusive. 267 Proxy 57. The instrument appointing a proxy and the power -of-attorney or other authority, if any, under which it is signed or a notarised copy of that power or authority, shall be deposited at the registered off ice of the company not less than 48 hours before the time for holding the meeting or adjourned meeting at which the person named in the instrument proposes to vote, or, in the case of a poll, not less than 24 hours before the time appointed for the taking of the poll; and in default the instrument of proxy shall not be treated as valid. 58. An instrument appointing a proxy shall be in the form as prescribed in the rules made under section 105. 59. A vote given in accordance with the terms of an instrument o f proxy shall be valid, notwithstanding the previous death or insanity of the principal or the revocation of the proxy or of the authority under which the proxy was executed, or the transfer of the shares in respect of which the proxy is given: Provided th at no intimation in writing of such death, insanity, revocation or transfer shall have been received by the company at its office before the commencement of the meeting or adjourned meeting at which the proxy is used. Board of Directors 60. The number of t he directors and the names of the first directors shall be determined in writing by the subscribers of the memorandum or a majority of them. 61. (i) The remuneration of the directors shall, in so far as it consists of a monthly payment, be deemed to accrue from day -to-day. (ii) In addition to the remuneration payable to them in pursuance of the Act, the directors may be paid all travelling, hotel and other expenses properly incurred by them (a) in attending and returning from meetings of the Board of Direc tors or any committee thereof or general meetings of the company; or (b) in connection with the business of the company. 62. The Board may pay all expenses incurred in getting up and registering the company. 63. The company may exercise the powers conferred on it by section 88 with regard to the keeping of a foreign register; and the Board may (subject to the provisions of that section) make and vary such regulations as it may thinks fit respecting the keeping of any such register. 64. All

of that section) make and vary such regulations as it may thinks fit respecting the keeping of any such register. 64. All cheques, promissory notes, drafts, hundis , bills of exchange and other negotiable instruments, and all receipts for monies paid to the company, shall be signed, drawn, accepted, endorsed, or otherwise executed, as the case may be, by such person and in such manner as the Board shall from time to time by resolution determine. 65. Every director present at any meeting of the Board or of a committee thereof shall sign his name in a book to be kept for that purpose. 66. (i) Subject to the provisions of section 149, the Board shall have power at any time, and from time to time, to appoint a person as an additional director, provided the number of the directors and additional directors together shall not at any time exceed the maximum strength fixed for the Board by the ar ticles. (ii) Such person shall hold office only up to the date of the next annual general meeting of the company but shall be eligible for appointment by the company as a director at that meeting subject to the provisions of the Act. Proceedings of the Boa rd 67. (i) The Board of Directors may meet for the conduct of business, adjourn and otherwise regulate its meetings, as it thinks fit. (ii) A director may, and the manager or secretary on the requisition of a director shall, at any time, summon a meeting o f the Board. 268 68. (i) Save as otherwise expressly provided in the Act, questions arising at any meeting of the Board shall be decided by a majority of votes. (ii) In case of an equality of votes, the Chairperson of the Board, if any, shall have a second or casting vote. 69. The continuing directors may act notwithstanding any vacancy in the Board; but, if and so long as their number is reduced below the quorum fixed by the Act for a meeting of the Board, the continuing directors or director may act for the p urpose of increasing the number of directors to that fixed for the quorum, or of summoning a general meeting of the company, but for no other purpose. 70. (i) The Board may elect a Chairperson of its meetings and determine the period for which he is to hol d office. (ii) If no such Chairperson is elected, or if at any meeting the Chairperson is not present within five minutes after the time appointed for holding the meeting, the directors present may choose one of their number to be Chairperson of the meetin g. 71. (i) The Board may, subject to the provisions of the Act, delegate any of its powers to committees consisting of such member or members of its body as it thinks fit. (ii) Any committee so formed shall, in the exercise of the powers so delegated, conf orm to any regulations that may be imposed on it by the Board. 72. (i) A committee may elect a Chairperson of its meetings. (ii) If no such Chairperson is elected, or if at any meeting the Chairperson is not present within five minutes after the time appoi nted for holding the meeting, the members present may choose one of their members to be Chairperson of the meeting. 73. (i) A committee may meet and adjourn as it thinks fit. (ii) Questions arising at any meeting of a committee shall be determined by a maj ority of votes of the members present, and in case of an equality of votes, the Chairperson shall have a second or casting vote. 74. All acts done in any meeting of the Board or of a committee thereof or by any person acting as a director, shall, notwithst anding that it may be afterwards discovered that there was some defect in the appointment of any one or more of such directors or of any person acting as aforesaid, or that they or any of them were disqualified, be as valid as if every such director or suc h person had been duly appointed and was qualified to be a director. 75. Save as otherwise expressly provided in the Act, a resolution in writing, signed by all the members of the Board or of a committee thereof, for the time being entitled to receive noti ce of a meeting of the Board or committee, shall be valid and effective as if it had been passed at a meeting of the Board or committee, duly convened and held. 76. In case of a One Person Company (i) where the company is having only one director, all the businesses to be transacted at the meeting of the Board shall be entered into minutes book maintained under section 118; (ii) such minutes book shall be signed and dated by the director; (iii) the resolution shall become effective from the date of signing such minutes by the director. Chief Executive Officer, Manager, Company Secretary or Chief Financial Officer 77. Subject to the provisions of the Act, (i) A chief executive officer, manager, company secretary or chief financial officer may be appointed by the Board for such term, at such remuneration and upon such conditions as it may thinks fit; and any chief executive officer, manager, company secretary or chief financial officer so appointed may be removed by means of are solution of the Board; (ii) A director may be appointed as chief executive officer, manager, company secretary or chief financial officer. 269 78. A provision of the Act or these regulations requiring or authorising a thing to be done by or to a director and chief executive officer, manag er, company secretary or chief financial officer shall not be satisfied by its being done by or to the same person acting both as director and as, or in place of, chief executive officer, manager, company secretary or chief financial officer. The Seal 79. (i) The Board shall provide for the safe custody of the seal. (ii) The seal of the company shall not be affixed to any instrument except by the authority of a resolution of the Board or of a committee of the Board authorised by it in that behalf, and excep t in the presence of at least two directors and of the secretary or such other person as the Board may appoint for the purpose; and those two directors and the secretary or other person aforesaid shall sign every instrument to which the seal of the company is so affixed in their presence. 1[Explanation .For the purposes of this sub -paragraph it is hereby clarified that on and from the commencement of the Companies (Amendment) Act, 2015 (21 of 2015), i.e. with effect from the 29th May, 2015, company may not be required to have the seal by virtue of registration under the Act and if a company does not have the seal, the provisions of this sub -paragraph shall not be applicable.] Dividends and Reserve 80. The company in general meeting may declare dividends, but no dividend shall exceed the amount recommended by the Board. 81. Subject to the provisions of section 123, the Board may from time to time pay to the members such interim dividends as appear to it to be justified by the profits of the company. 82. (i) The Board may, before recommending any dividend, set aside out of the profits of the company such sums as it thinks fit as a reserve or reserves which shall, at the discretion of the Board, be applicable for any purpose to which the profits of the company ma y be properly applied, including provision for meeting contingencies or for equalizing dividends; and pending such application, may, at the like discretion, either be employed in the business of the company or be invested in such investments (other than sh ares of the company) as the Board may, from time to time, thinks fit. (ii) The Board may also carry forward any profits which it may consider necessary not to divide, without setting them aside as a reserve. 83. (i) Subject to the rights of persons, if any , entitled to shares with special rights as to dividends, all dividends shall be declared and paid according to the amounts paid or credited as paid on the shares in respect whereof the dividend is paid, but if and so long as nothing is paid upon any of th e shares in the company, dividends may be declared and paid according to the amounts of the shares. (ii) No amount paid or credited as paid on a share in advance of calls shall be treated for the purposes of this regulation as paid on the share. (iii) All dividends shall be apportioned and paid proportionately to the amounts paid or credited as paid on the shares during any portion or portions of the period in respect of which the dividend is paid; but if any share is issued on terms providing that it shall rank for dividend as from a particular date such share shall rank for dividend accordingly. 84. The Board may deduct from any dividend payable to any member all sums of money, if any, presently payable by him to the company on account of calls or otherwis e in relation to the shares of the company. 85. (i) Any dividend, interest or other monies payable in cash in respect of shares may be paid by cheque or warrant sent through the post directed to the registered address of the holder or, in the case of joint holders, to the registered address of that one of the joint holders who is first named on the register of members, or to such person and to such address as the holder or joint holders may in writing direct. (ii) Every such cheque or warrant shall be made payable to the order of the person to whom it is sent. 86. Any one of two or more joint holders of a share may give effective receipts for any dividends, bonuses or other monies payable in respect of such share. 1. The Explanation ins. by Notification No. G.S.R. 362(E) dated 10th April, 2018 (w.e.f. 10 -4-2018). 270 87. Notice of any dividend that may have bee n declared shall be given to the persons entitled to share therein in the manner mentioned in the Act. 88. No dividend shall bear interest against the company. Accounts 89. (i) The Board shall from time to time determine whether and to what extent and at w hat times and places and under what conditions or regulations, the accounts and books of the company, or any of them, shall be open to the inspection of members not being directors. (ii) No member (not being a director) shall have any right of inspecting a ny account or book or document of the company except as conferred by law or authorised by the Board or by the company in general meeting. Winding up 90. Subject to the provisions of Chapter XX of the Act and rules made thereunder (i) If the company shall be wound up, the liquidator may, with the sanction of a special resolution of the company and any other sanction required by the Act, divide amongst the members, in specie or kind, the whole or any part of the assets of the company, whether they shall cons ist of property of the same kind or not. (ii) For the purpose aforesaid, the liquidator may set such value as he deems fair upon any property to be divided as aforesaid and may determine how such division shall be carried out as between the members or different classes of members. (iii) The liquidator may, with the like sanction, vest the whole or any part of such assets in trustees upon such trusts for the benefit of the contributories if he considers necessary, but so that no member shall be compelled to accept any shares or other securities whereon there is any liability. Indemnity 91. Every officer of the company shall be indemnified out of the assets of the company against any liability incurred by him in defending any proceedings, whether civil or criminal, in which judgment is given in his favour or in which he is acquitted or in which relief is granted to him by the court or the Tribunal. Note : The Articles shall be signed by each subscriber of the memorandum of association who shall add his addre ss, description and occupation, if any, in the presence of at least one witness who shall attest the signature and shall likewise add his address, description and occupation, if any, and such signatures shall be in form specified below: Names, addresses, d escriptions and occupations of subscribers Witnesses (along with names, addresses, descriptions and occupations) A.B. of.Merchant Signed before me Signature. C.D. of.Merchant Signed before me Signature. E.F. of. Merchant Signed before me Signature. G.H. of.Merchant Signed before me Signature. 271 I.J. of.Merchant Signed before me Signature. K.L. of.Merchant Signed before me Signature. M.N. of.Merchant Signed before me Signature. Dated the..day of 20 Place: ................................ TABLE G ARTICLES OF ASSOCIATION OF A COMPANY LIMITED BY GUARANTEE AND HAVING A SHARE CAPITAL 1. The number of members with which the company proposes to be registered is hundred, but the Board of Directors may, from time to time, register an increase of members. 2. All the articles of Table F in Schedule I annexed to the Companies Act, 2013 shall be deemed to be incorporated with these articles and to apply to the company. TABLE - H ARTIC LES OF ASSOCIATION OF A COMPANY LIMITED BY GUARANTEE AND NOT HAVING SHARE CAPITAL Interpretation I. (1) In these regulations (a) the Act means the Companies Act, 2013; (b) the seal means the common seal of the company. (2) Unless the context otherwise requires, words or expressions contained in these regulations shall have the same meaning as in the Act or any statutory modification thereof in force at the date at which these regulations become binding on the company. Members II. 1. The number of membe rs with which the company proposes to be registered is hundred, but the Board of Directors may, from time to time, whenever the company or the business of the company requires it, register an increase of members. 2. The subscribers to the memorandum and su ch other persons as the Board shall admit to membership shall be members of the company. General meetings 3. All general meetings other than annual general meeting shall be called extraordinary general meeting. 4. (i) The Board may, whenever it thinks fit, call an extraordinary general meeting. (ii) If at any time directors capable of acting who are sufficient in number to form a quorum are not within India, any director or any two members of the company may call an extraordinary general meeting in the same manner, as nearly as possible, as that in which such a meeting may be called by the Board. 272 Proceedings at general meetings 5. (i) No business shall be transacted at any general meeting unless a quorum of members is present at the time when the meeting p roceeds to business. (ii) Save as otherwise provided herein, the quorum for the general meetings shall be as provided in section 103. 6. The Chairperson, if any, of the Board shall preside as Chairperson at every general meeting of the company. 7. If there is no such Chairperson, or if he is not present within fifteen minutes after the time appointed for holding the meeting, or is unwilling to act as Chairperson of the meeting, the directors present shall elect one of their members to be Chairperson of the meeting. 8. If at any meeting no

the meeting, the directors present shall elect one of their members to be Chairperson of the meeting. 8. If at any meeting no director is willing to act as Chairperson or if no director is present within fifteen minutes after the time appointed for holding the meeting, the members present shall choose one of their members to be Chairperson of the meeting. Adjournment of meeting 9. (i) The Chairperson may, with the consent of any meeting at which a quorum is present, and shall, if so directed by the meeting, adjourn the meeting from time to time and from place to place. (ii) No business shall be transacted at any adjourned meeting other than the business left unfinished at the meeting from which the adjournment took place. (iii) When a meeting is adjourned for thirty days or more, notice of the adjourned meeting shall be given as in the case of an original meeting. (iv) Save as aforesaid, and as provided in section 103 of the Act, it shall not be necessary to give any notice of an adjournment or of the business to be transacted at an adjourned meeting. Voting rights 10. Every member shall have one vote. 11. A member of unsound mind, or in respect of whom an order has been made by any Court having jurisdiction in lunacy, may vote, whether on a show of hands or on a poll, by his committee or other legal guardian, and any such committee or guardian may , on a poll, vote by proxy. 12. No member shall be entitled to vote at any general meeting unless all sums presently payable by him to the company have been paid. 13. (i) No objection shall be raised to the qualification of any voter except at the meeting or adjourned meeting at which the vote objected to is given or tendered, and every vote not disallowed at such meeting shall be valid for all purposes. (ii) Any such objection made in due time shall be referred to the Chairperson of the meeting, whose decision shall be final and conclusive. 14. A vote given in accordance with the terms of an instrument of proxy shall be valid, notwithstanding the previous death or insanity of the principal or the revocation of the proxy or of the authority under which t he proxy was executed, or the transfer of the shares in respect of which the proxy is given: Provided that no intimation in writing of such death, insanity, revocation or transfer shall have been received by the company at its office before the commencemen t of the meeting or adjourned meeting at which the proxy is used. 15. A member may exercise his vote at a meeting by electronic means in accordance with section 108 and shall vote only once. 16. Any business other than that upon which a poll has been deman ded may be proceeded with, pending the taking of the poll. Board of Directors 273 17. The number of the directors and the names of the first directors shall be determined in writing by the subscribers of the memorandum or a majority of them. 18. (i) The remune ration of the directors shall, in so far as it consists of a monthly payment, be deemed to accrue from day -to-day. (ii) In addition to the remuneration payable to them in pursuance of the Act, the directors may be paid all travelling, hotel and other expen ses properly incurred by them (a) in attending and returning from meetings of the Board of Directors or any committee thereof or general meetings of the company; or (b) in connection with the business of the company. Proceedings of the Board 19. (i) The B oard of Directors may meet for the conduct of business, adjourn and otherwise regulate its meetings, as it thinks fit. (ii) A director may, and the manager or secretary on the requisition of a director shall, at any time, summon a meeting of the Board. 20. (i) Save as otherwise expressly provided in the Act, questions arising at any meeting of the Board shall be decided by a majority of votes. (ii) In case of an equality of votes, the Chairperson of the Board, if any, shall have a second or casting vote. 21. The continuing directors may act notwithstanding any vacancy in the Board; but, if and so long as their number is reduced below the quorum fixed by the Act for a meeting of the Board, the continuing directors or director may act for the purpose of incr easing the number of directors to that fixed for the quorum, or of summoning a general meeting of the company, but for no other purpose. 22. (i) The Board may elect a Chairperson of its meetings and determine the period for which he is to hold office. (ii) If no such Chairperson is elected, or if at any meeting the Chairperson is not present within five minutes after the time appointed for holding the meeting, the directors present may choose one of their members to be Chairperson of the meeting. 23. (i) The Board may, subject to the provisions of the Act, delegate any of its powers to committees consisting of such member or members of its body as it thinks fit. (ii) Any committee so formed shall, in the exercise of the powers so delegated, conform to any re gulations that may be imposed on it by the Board. 24. (i) A committee may elect a Chairperson of its meetings. (ii) If no such Chairperson is elected, or if at any meeting the Chairperson is not present within five minutes after the time appointed for hold ing the meeting, the members present may choose one of their members to be Chairperson of the meeting. 25. (i) A committee may meet and adjourn as it thinks proper. (ii) Questions arising at any meeting of a committee shall be determined by a majority of v otes of the members present, and in case of an equality of votes, the Chairman shall have a second or casting vote. 26. All acts done by any meeting of the Board or of a committee thereof or by any person acting as a director, shall, notwithstanding that i t may be afterwards discovered that there was some defect in the appointment of any one or more of such directors or of any person acting as aforesaid, or that they or any of them were disqualified, be as valid as if every such director or such person had been duly appointed and was qualified to be a director. 27. Save as otherwise expressly provided in the Act, a resolution in writing, signed by all the members of the Board or of a committee thereof, for the time being entitled to receive notice of a meeti ng of the Board or committee, shall be as valid and effective as if it had been passed at a meeting of the Board or committee, duly convened and held. 274 Chief Executive Officer, Manager, Company Secretary or Chief Financial Officer 28. Subject to the provisi ons of the Act, (i) A chief executive officer, manager, company secretary or chief financial officer may be appointed by the Board for such term, at such remuneration and upon such conditions as it thinks fit; and any chief executive officer, manager, com pany secretary or chief financial officer so appointed may be removed by means of a resolution of the Board. (ii) A director may be appointed as chief executive officer, manager, company secretary or chief financial officer. 29. A provision of the Act or these regulations requiring or authorising a thing to be done by or to a director and chief executive officer, manager, company secretary or chief financial officer shall not be satisfied by its being done by or to the same person acting both as director a nd as, or in place of, chief executive officer, manager, company secretary or chief financial officer. The Seal 30. (i) The Board shall provide for the safe custody of the seal. (ii) The seal of the company shall not be affixed to any instrument except by the authority of a resolution of the Board or of a committee of the Board authorised by it in that behalf, and except in the presence of at least two directors and of the secretary or such other person as the Board may appoint for the purpose; and those tw o directors and the secretary or other person aforesaid shall sign every instrument to which the seal of the company is so affixed in their presence. 1[Explanation .For the purposes of this sub -paragraph it is hereby clarified that on and from the commencement of the Companies (Amendment) Act, 2015 (21 of 2015), i.e. with effect from the 29th May, 2015, company may not be required to have the seal by virtue of registration under the Act and if a company does not have the seal, the provisions of this sub-paragraph shall not be applicable.] Note : The Articles shall be signed by each subscriber of the memorandum of association who shall add his address, description and occupation, if any, in the presence of at least one witness who shall attest the sign ature and shall likewise add his address, description and occupation, if any, and such signatures shall be in form specified below: Names, addresses, descriptions and occupations of subscribers Witnesses (along with names, addresses, descriptions and occup ations) A.B. of.Merchant Signed before me Signature. C.D. of.Merchant Signed before me Signature. E.F. of. Merchant Signed before me Signature. G.H. of.Merchant Signed before me Signature. I.J. of.Merchant Signed before me Signature. K.L. of.Merchant Signed before me Signature. M.N. of.Merchant Signed before me 1. The Explanation ins. by Notification No. G.S.R. 362(E), dated 10th April 2018 (w.e.f. 10 -4-2018). 275 Signature. Dated the..day of 20 Place: ................................ TABLE I ARTICLES OF ASSOCIATION OF AN UNLIMITED COMPANY AND HAVING A SHARE CAPITAL 1. The number of members with which the company proposes to be registered is hundred, but the Board of Directors may, from time to time, register an increase of members. 2. All the articles of Table F in Schedu le I annexed to the Companies Act, 2013 shall be deemed to be incorporated with these articles and to apply to the company. TABLE - J ARTICLES OF ASSOCIATION OF AN UNLIMITED COMPANY AND NOT HAVING SHARE CAPITAL 1. The number of members with which the compa ny proposes to be registered is hundred, but the Board of Directors may, from time to time, whenever the company or the business of the company requires it, register an increase of members. 2. The subscribers to the memorandum and such other persons as the Board shall admit to membership shall be members of the company. 3. All the articles of Table H in Schedule I annexed to the Companies Act, 2013 shall be deemed to be incorporated with these articles and to apply to the company. 276 SCHEDULE II (See section 123) USEFUL LIVES TO COMPUTE DEPRECIATION PART A 1. Depreciation is the systematic allocation of the depreciable amount of an asset over its useful life. The depreciable amount of an asset is the cost of an asset or other amount substituted for cost, less its residual value. The useful life of an asset is the period over which an asset is expected to be available for use by an entity, or the number of production or similar units expected to be obtained from the asset by the entity. 2. For the purpose o f this Schedule, the term depreciation includes amortisation. 3. Without prejudice to the foregoing provisions of paragraph 1, 1[(i) The useful life of an asset shall not ordinarily be different from the useful life specified in Part C and the residual va lue of an asset shall not be more than five per cent. of the original cost of the asset: Provided that where a company adopts a useful life different from what is specified in Part C or uses a residual value different from the limit specified above, the fi nancial statements shall disclose such difference and provide justification in this behalf duly supported by technical advice.] 2[(ii) 3[For intangible assets, the relevant Indian Accounting Standards (Ind As) shall apply. Where a company is not required to comply with the Indian Accounting Standards (Ind As), it shall comply with relevant Accounting Standards under Companies (Accounting Standards) Rules, 2006] except in case of intangible assets (Toll Roads) created under 'Build, Operate and Transfer', 'B uild, Own, Operate and Transfer' or any other form of public private partnership route in case of road projects. Amortisation in such cases may be done as follows: (a) Mode of amortization Amortisation Rate = Amortisation Amount= Cost of Intangible Assets (A) x Amorisation Amount x 100 Cost of Intangible Assets (A) Actual Revenue for the year (B) Projected Revenue from Intangible Asset (till the end of the concession period) (C ) (b) Meaning of particulars are as follows : Cost of Intangible Assets (A) = Cost incurred by the company in accordance with the accounting standards. Actual Revenue for the year (13) = Actual revenue (Toll Charges) received during the accounting year. Projected Revenue from Intangible Asset (C) Total projected revenue from the Intangible Assets as provided to the project lender at the time of financial closure/agreement. The amortisation amount or rate should ensure that the whole of the cost of the intangible asset is amortised over the concession period. 1. Subs. by Notification No. G.S.R. 627(E) dated 29th August 2014 , for sub -paragraph ( i) of paragraph 3 (w.e.f. 29 -8-2014). 2. Subs. by Notification No. G.S.R. 237(E), dated 31st March 2014, for sub -paragraph ( i) to ( iii) of paragraph 3(w.e.f. 1 -4-2014). 3. Subs. by Notification No. G.S. R. 1075(E), dated 17th November 2016 for sub -paragraph ( iii) of paragraph 3 (w.e.f. 1 -4-2016). 277 Revenue shall be reviewed at the end of each financial year and projected revenue shall be adjusted to reflect such changes, if any, in the estimates as will lead to the actual collection at the end of the concession period. (c) Example: Cost of creation of Intangible Assets : Rs. 500 Crores Total period of Agreement : 20 Years Time used for creation of Intangible Assets : 2 Years Intangible Assets to be amortised in : 18 Years Assuming that the Total revenue to be generated out of Intangible Assets over the period would be Rs

: 18 Years Assuming that the Total revenue to be generated out of Intangible Assets over the period would be Rs. 600 Crores, in the following manner: Year No. Revenue( In Rs. Crores) Remarks Year 1 5 Actual Year 2 7.5 Estimate * Year 3 10 Estimate * Year 4 12.5 Estimate * Year 5 17.5 Estimate * Year 6 20 Estimate * Year 7 23 Estimate * Year 8 27 Estimate * Year 9 31 Estimate * Year 10 34 Estimate * Year 11 38 Estimate * Year 12 41 Estimate * Year 13 46 Estimate * Year 14 50 Estimate * Year 15 53 Estimate * Year 16 57 Estimate * Year 17 60 Estimate* Year 18 67.5 Estimate * Total 600 * will be actual at the end of financial year. Based on this the charge for first year would be Rs. 4.16 Crore (approximately) ( i.e. Rs. 5/Rs. 600 x Rs. 500 Crores) which would be charged to profit and loss and 0.83% ( i.e. Rs. 4.16 Crore/ Rs. 500 Crore x 100) is the amortisation rate for the first year. Where a company arrives at the amortisation amount in respect of the said Intangible Assets in accordance with any method as per the applicable Accounting Standards, it shall disclose the same.] PART B 4. The useful life or residual value of any specific asset, as notified for accounting purposes by a Regulatory Authority constituted under an Act of Parliament or by the Central Government shall be applied in calculating the depreciation to be provided for such asset irrespective of the requirements of this Schedule. 278 PART C 5. Subject to Parts A and B above, the following are the useful lives of various tangible assets: Nature of assets Useful Life I. Buildings [NESD] (a) Buildings (other than factory buildings) RCC Frame Structure 60 Years (b) Buildings (other than factory buildings) other than RCC Frame Structure 30 Years (c) Factory buildings -do- (d) Fences, wells, tube wells 5 Years (e) Others (including temporary structure, etc.) 3 Years II. Bridges, culverts, bunders, etc. [NESD] 30 Years III. Roads [NESD] (a) Carpeted roads (i) Carpeted Roads -RCC 10 Years (ii) Carpeted Roads -other than RCC 5 Years (b) Non-carpeted roads 3 Years IV. Plant and Machinery (i) General rate applicable to plant and machinery not covered under special plant and machinery (a) Plant and Machinery other than continuous process plant not covered under specific industries 15 Years 1[(b) continuous process plant for which no special rate has been prescribed under ( ii) below [NESD] 25 Years] (ii) Special Plant and Machinery (a) Plant and Machinery related to production and exhibition of Motion Picture Films 1. Cinematograph films Machinery used in the production and exhibition of cinematograph films, recording and reproducing equipments, developing machines, printing machines, editing machines, synchronizers and studio lights except bulbs 13 Years 2. Projecting equipment for exhi bition of films -do- (b) Plant and Machinery used in glass manufacturing 1. Plant and Machinery except direct fire glass melting furnaces Recuperative and regenerative glass melting furnaces 13 Years 2. Plant and Machinery except direct fire glass melting furnaces Moulds[NESD] 8 Years 3. Float Glass Melting Furnaces [NESD] 10 Years (c) Plant and Machinery used in mines and quarries Portable underground machinery and earth moving machinery used in open cast mining [NESD] 8 Years (d) Plant and Machinery used in Telecommunications [NESD] 1. Subs. by Notification No. G.S.R. 237(E), dated 31st March 2014 , for clause ( b) (w.e.f. 1 -4-2014). 279 1. Towers 18 Years 2. Telecom transceivers, switching centres, transmission and other network equipment 13 Years 3. Telecom Ducts, Cables and optical fibre 18 Years 4. Satellites -do- (e) Plant and Machinery used in exploration, production and refining oil and gas [NESD] 1. Refineries 25 Years 2. Oil and gas assets (including wells), processing plant and facilities -do- 3. Petrochemical Plant -do- 4. Storage tanks and related equipment -do- 5. Pipelines 30 Years 6. Drilling Rig -do- 7. Field operations (above ground) Portable boilers, drilling tools, well-head tanks, etc. 8 Years 8. Loggers -do- (f) Plant and Machinery used in generation, transmission and distribution of power [NESD] 1. Thermal/ Gas/ Combined Cycle Power Generation Plant 40 Years 2. Hydro Power Generation Plant -do- 3. Nuclear Power Generation Plant -do- 4. Transmission lines, cables and other network assets -do- 5. Wind Power Generation Plant 22 Years 6. Electric Distribution Plant 35 Years 7. Gas Storage and Distribution Plant 30 Years 8. Water Distribution Plant including pipelines -do- (g) Plant and Machinery used in manufacture of steel 1. Sinter Plant 20 Years 2. Blast Furnace -do- 3. Coke ovens -do- 4. Rolling mill in steel plant -do- 5. Basic oxygen Furnace Converter 25 Years (h) Plant and Machinery used in manufacture of non -ferrous metals 1. Metal pot line [NESD] 40 Years 2. Bauxite crushing and grinding section [NESD] -do- 3. Digester Section [NESD] -do- 4. Turbine [NESD] -do- 280 5. Equipments for Calcination [NESD] -do- 6. Copper Smelter [NESD] -do- 7. Roll Grinder 40 Years 8. Soaking Pit 30 Years 9. Annealing Furnace -do- 10. Rolling Mills -do- 11. Equipments for Scalping, Slitting , etc. [NESD] -do- 12. Surface Miner, Ripper Dozer, etc., used in mines 25 Years 13. Copper refining plant [NESD] -do- (i) Plant and Machinery used in medical and surgical operations [NESD] 1. Electrical Machinery, X -ray and electrotherapeutic apparatus and accessories thereto, medical, diagnostic equipments, namely, Cat -scan, Ultrasound Machines, ECG Monitors, etc. 13 Years 2. Other Equipments. 15 Yea rs (j) Plant and Machinery used in manufacture of pharmaceuticals and chemicals [NESD] 1. Reactors 20 Years 2. Distillation Columns -do- 3. Drying equipments/Centrifuges and Decanters -do- 4. Vessel/storage tanks -do- (k) Plant and Machinery used in civil construction 1. Concreting, Crushing, Piling Equipments and Road Making Equipments 12 Years 2. Heavy Lift Equipments Cranes with capacity of more than 100 tons 20 Years Cranes with capacity of less than 100 tons 15 Years 3. Transmission line, Tunneling Equipments [NESD] 10 Years 4. Earth -moving equipments 9 Years 5. Others including Material Handling/Pipeline/Welding Equipments [NESD] 12 Years (l) Plant and Machinery used in salt works [NESD] 15 Years V. Furniture and fittings [NESD] (i) General furniture and fittings 10 Years (ii) Furniture and fittings used in hotels, restaurants and boarding houses, schools, colleges and other educational institutions, libraries; welfare centres; meeting halls, cinema houses; theatres and circuses; and furniture and fittings let out on hire for us e on the occasion of marriages and similar functions. 8 Years VI. Motor Vehicles [NESD] 1. Motor cycles, scooters and other mopeds 10 Years 281 2. Motor buses, motor lorries, motor cars and motor taxies used in a business of running them on hire 6 Years 3. Motor buses, motor lorries and motor cars other than those used in a business of running them on hire 8 Years 4. Motor tractors, harvesting combines and heavy vehicles -do- 5. Electrically operated vehicles including battery powered or fuel cell powered vehicles 8 Years VII. Ships [NESD] 1. Ocean -going ships (i) Bulk Carriers and liner vessels 25 Years (ii) Crude tankers, product carriers and easy chemical carriers with or without conventional tank coatings. 20 Years (iii) Chemicals and Acid Carriers: (a) With Stainless steel tanks 25 Years (b) With other tanks 20 Years (iv) Liquified gas carriers 30 Years (v) Conventional large passenger vessels which are used for cruise purpose also -do- (vi) Coastal service ships of all categories -do- (vii) Offshore supply and support vessels 20 Years (viii) Catamarans and other high speed passenger for ships or boats -do- (ix) Drill ships 25 Years (x) Hovercrafts 15 Years (xi) Fishing vessels with wooden hull 10 Years (xii) Dredgers, tugs, barges, survey launches and other similar ships used mainly for dredging purposes 14 Years 2. Vessels ordinarily operating on inland waters (i) Speed boats 13 Years (ii) Other vessels 28 Years VIII. Aircrafts or Helicopters [NESD] 20 Years IX. Railways sidings, locomotives, rolling stocks, tramways and railways used by concerns, excluding railway concerns [NESD] 15 Years X. Ropeway structures [NESD] 15 Years XI. Office equipment [NESD] 5 Years XII. Computers and data processing units [NESD] (i) Servers and networks 6 Years (ii) End user devices, such as, desktops, laptops, etc. 3 Years XIII. Laboratory equipment [NESD] (i) General laboratory equipment 10 Years 282 (ii) Laboratory equipments used in educational institutions 5 Years XIV. Electrical Installations and Equipment [NESD] 10 years XV. Hydraulic works, pipelines and sluices [NESD] 15 Years Notes. 1. Factory buildings does not include offices, godowns, staff quarters. 2. Where, during any financial year, any addition has been made to any asset, or where any asset has been sold, discarded, demolished or destroyed, the depreciation on such assets shall be calculated on a pro rata basis from the date of such addition or, as the case may be, up to the date on which such asset has been sold, discarded, demolished or destroyed. 3. The following information shall also be disclosed in the accounts, namely: (i) depreciation met hods used; and (ii) the useful lives of the assets for computing depreciation, if they are different from the life specified in the Schedule. 1[4(a) Useful life specified in Part C of the Schedule is for whole of the asset and where cost of a part of the a sset is significant to total cost of the asset and useful life of that part is different from the useful life of the remaining asset, useful life of that significant part shall be determined separately. (b) The requirement under sub -paragraph ( a) shall be voluntary in respect of the financial year commencing on or after the 1st April, 2014 and mandatory for financial statements in respect of financial years commencing on or after the 1st April, 2015. ] 2* * * * * 6. The useful lives of assets working on shift basis have been specified in the Schedule based on their single shift working. Except for assets in respect of which no extra shift depreciation is permitted (indicated by NESD in Part C above), if an asset is used for any time during the year fo r double shift, the depreciation will increase by 50% for that period and incase of the triple shift the depreciation shall be calculated on the basis of 100% for that period. 7. From the date this Schedule comes into effect, the carrying amount of the ass et as on that date (a) shall be depreciated over the remaining useful life of the asset as per this Schedule; (b) after retaining the residual value, 3[may be recognised] in the opening balance of retained earnings where the remaining useful life of an asset is nil. 8. Continuous process plant means a plant which is required and designed to operate for twenty -four hours a day. 1. Subs. by Notification No. G.S.R . 627(E) dated 29th Augus t 2014 , for paragraph 4 (w.e.f. 29 -8-2014). 2. Paragraph 5 o mitted by Notification No. G.S.R. 237(E) , dated 31st March , 2014 (w.e.f. 1 -4-2014). 3. Subs. by Notification No. G.S.R . 627(E) , dated 29th August 2014, for shall be recognized (w.e.f. 29 -8-2014 ). 283 SCHEDULE III (See section 129) 1[Division I FINANCIAL STATEMENTS FOR A COMPANY WHOSE FINANCIAL STATEMENTS ARE

I FINANCIAL STATEMENTS FOR A COMPANY WHOSE FINANCIAL STATEMENTS ARE REQUIRED TO COMPLY WITH THE COMPANIES (ACCOUNTING STANDARDS) RULES, 2006 General Instructions for Preparation of Balance Sheet and Statement of Profit and Loss of a Company.] GENERAL INSTRUCTIONS 1. Where compliance with the requirements of the Act including Accounting Standards as applicable to the companies require any change in treatment or disclosure including addition, amendment, substitution or deletion in the head or sub -head or any changes, inter se , in the financial statements or statements forming part thereof, the same shall be made and the requirements of this Schedule shall stand modified accordingly. 2. The disclosure requirements specified in this Schedule are in addition to and not i n substitution of the disclosure requirements specified in the Accounting Standards prescribed under the Companies Act, 2013. Additional disclosures specified in the Accounting Standards shall be made in the notes to accounts or by way of additional statem ent unless required to be disclosed on the face of the Financial Statements. Similarly, all other disclosures as required by the Companies Act shall be made in the notes to accounts in addition to the requirements set out in this Schedule. 3. (i) Notes to accounts shall contain information in addition to that presented in the Financial Statements and shall provide where required ( a) narrative descriptions or disaggregations of items recognised in those statements; and ( b) information about items that do not qualify for recognition in those statements. (ii) Each item on the face of the Balance Sheet and Statement of Profit and Loss shall be cross -referenced to any related information in the notes to accounts. In preparing the Financial Statements including th e notes to accounts, a balance shall be maintained between providing excessive detail that may not assist users of financial statements and not providing important information as a result of too much aggregation. 4. (i) Depending upon the 2[Total Income ] of the company, the figures appearing in the Financial Statements 3[Shall ] be rounded off as given below: 2[Total Income ] Rounding off (a) less than one hundred crore rupees To the nearest hundreds, thousands, lakhs or millions, or decimals thereof. (b) one hundred crore rupees or more To the nearest lakhs, millions or crores, or decimals thereof. (ii) Once a unit of measurement is used, it 4[should ] be used uniformly in the Financial Statements. 5. Except in the case of the first Financial Statements laid b efore the Company (after its incorporation) the corresponding amounts (comparatives) for the immediately preceding reporting period for all items shown in the Financial Statements including notes shall also be given. 6. For the purpose of this Schedule, the terms used herein shall be as per the applicable Accounting Standards. Note: This part of Schedule sets out the minimum requirements for disclosure on the face of the Balance Sheet, and the Statement of Profit and Loss (hereinafter referred to as Financial Statements for the purpose of this Schedule) and Notes. Line items, sub -line items and sub -totals shall be presented as an addition or substitution 1. Subs. by G.S.R. 404(E), dated 6 th April, 2016, for GENERAL INSTURCTIONS FOR PREPARATION OF BALANCE SHEET AND STATEMENT OF PROFIT AND LOSS OF A COMPANY . 2. Subs. by G.S.R. 207(E), dated 24th March, 2021, for Turnover (w.e.f. 1 -4-2021). 3. Subs. by G.S.R. 207 (E), dated 24th March, 2021, for may (w.e.f. 1 -4-2021). 4. Subs. by Notification No. G.S.R. 1022(E), dated 11th October, 2018, for shall (w.e.f. 11 -10-218). 284 on the face of the Financial Statements when such presentation is relevant to an understanding of th e companys financial position or performance or to cater to industry/sector -specific disclosure requirements or when required for compliance with the amendments to the Companies Act or under the Accounting Standards. PART I BALANCE SHEET Name of the Com pany . Balance Sheet as at (Rupees in) Particulars Note No. Figures as at the end of current reporting period Figures as at the end of the previous reporting period 1 2 3 4 I. EQUITY AND LIABILITIES (1) Shareholders funds (a) Share capital (b) Reserves and surplus (c) Money received against share warrants (2) Share application money pending allotment (3) Non-current liabilities (a) Long -term borrowings (b) Deferred tax liabilities (Net) (c) Other Long -term liabilities (d) Long -term provisions (4) Current liabilities (a) Short -term borrowings 1[(b) Trade payables (A) total outstanding dues of micro enterprises and small enterprises; and (B) total outstanding dues of creditors other than micro enterprises and small enterprises.] (c) Other current liabilities (d) Short -term provisions TOTAL 1. Subs. by Notification No. G.S.R. 679(E), dated 4th September 2015, for (b) T rade payables (w.e.f. 4 -9-2015). 285 1 2 3 4 II. ASSETS Non-current assets (1) (a) 1[Property, Plant and Equipment 2[and Intangible assets] ] (i) 3[Property, Plant and Equipment] (ii) Intangible assets (iii) Capital work -in-progress (iv) Intangible assets under development (b) Non-current investments (c) Deferred tax assets (net) (d) Long -term loans and advances (e) Other non -current assets (2) Current assets (a) Current investments (b) Inventories (c) Trade receivables (d) Cash and cash equivalents (e) Short -term loans and advances (f) Other current assets TOTAL See accompanying notes to the Financial Statements. Notes GENERAL INSTRUCTIONS FOR PREPARATION OF BALANCE SHEET 1. An asset shall be classified as current when it satisfies any of the following criteria: (a) it is expected to be realised in, or is intended for sale or consumption in, the companys normal operating cycle; (b) it is held primarily for the purpose of being traded; (c) it is expected to be rea lised within twelve months after the reporting date; or (d) it is cash or cash equivalent unless it is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting date. All other assets shall be classified a s non -current. 2. An operating cycle is the time between the acquisition of assets for processing and their realisation in cash or cash equivalents. Where the normal operating cycle cannot be identified, it is assumed to have a duration of twelve months. 3. A liability shall be classified as current when it satisfies any of the following criteria: (a) it is expected to be settled in the companys normal operating cycle; 1. Subs. by Notification No. G.S.R. 1022(E), dated 11th October, 2018, for Fixed assets (w.e.f. 11 -10-2018). 2. Ins. by Notification No. G.S.R. 207(E), dated 24th March, 2021, (w.e.f. 1 -4-2021). 3. Subs. by Notification No. G.S.R. 207(E), dated 24th March, 2021, for Tangible Assets (w.e.f. 1 -4-2021). 286 (b) it is held primarily for the purpose of being traded; (c) it is due to be settled within twelve months after the reporting date; or (d) the company does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting date. Terms of a liability that could, at the option of the counterp arty, result in its settlement by the issue of equity instruments do not affect its classification. All other liabilities shall be classified as non -current. 4. A receivable shall be classified as a trade receivable if it is in respect of the amount due on account of goods sold or services rendered in the normal course of business. 5. A payable shall be classified as a trade payable if it is in respect of the amount due on account of goods purchased or services rec eived in the normal course of business. 6. A company shall disclose the following in the notes to accounts. A. Share Capital For each class of share capital (different classes of preference shares to be treated separately): (a) the number and amount of sha res authorised; (b) the number of shares issued, subscribed and fully paid, and subscribed but not fully paid; (c) par value per share; (d) a reconciliation of the number of shares outstanding at the beginning and at the end of the reporting period; (e) the rights, preferences and restrictions attaching to each class of shares including restrictions on the distribution of dividends and the repayment of capital; (f) shares in respect of each class in the company held by its holding company or its ultimate holding company including shares held by or by subsidiaries or associates of the holding company or the ultimate holding company in aggregate; (g) shares in the company held by each shareholder holding more than 5 per cent. shares specifying the number of shares held; (h) shares reserved for issue under options and contracts/commitments for the sale of shares/disinvestment, including the terms and amounts; (i) for the period of five years immediately preceding the date as at which the Balance Sheet is prepa red: (A) Aggregate number and class of shares allotte d as fully paid -up pursuant to contract (s) without payment being received in cash. (B) Aggregate number and class of shares allotted as fully paid -up by way of bonus shares. (C) Aggregate number and class of shares bought back. (j) terms of any securities convertible into equity/preference shares issued along with the earliest date of conversion in descending order starting from the farthest such date; (k) calls unpaid (showing aggregate value of call s unpaid by directors and officers); (l) forfeited shares (amount originally paid -up). 1[(m) A company shall disclose Shareholding of Promoters* as below: Shares held by promoters at the end of the year % Change during the year*** S.No Promoter name No. o f Shares** % of total shares ** Total *Promoter here means promoter as defined in the Companies Act, 2013. ** Details shall be given separately for each class of shares 1. Ins. by Notification No. G.S.R. 207(E), dated 24th March, 2021, (w.e.f. 1 -4-2021). 287 *** percentage change shall be computed with respect to the number at the beginning of the year or if issued during the year for the first time then with respect to the date of issue.] B. Reserves and Surplus (i) Reserves and Surplus shall be classified as: (a) Capital Reserves; (b) Capital Redemption Reserve; (c) Securities Premium 1***; (d) Debenture Redemption Reserve; (e) Revaluation Reserve; (f) Share Options Outstanding Account; (g) Other Reserves (specify the nature and purpose of each reserve and the amount in respect thereof); (h) Surplus i.e., balance i n Statement of Profit and Loss disclosing allocations and appropriations such as dividend, bonus shares and transfer to/ from reserves, etc.; (Additions and deductions since last balance sheet to be shown under each of the specified heads); (ii) A reserve specifically represented by earmarked investments shall be termed as a fund. (iii) Debit balance of statement of profit and loss shall be shown as a negative figure under the head Surplus . Similarly, the balance of Reserves and Surplus , after adjusti ng negative balance of surplus, if any, shall be shown under the head Reserves and Surplus even if the resulting figure is in the negative. C. Long -Term Borrowings (i) Long -term borrowings shall be classified as: (a) Bonds/debentures; (b) Term loans: (A) from banks. (B) from other parties. (c) Deferred payment liabilities; (d) Deposits; (e) Loans and advances from related parties; (f) Long term maturities of finance lease obligations; (g) Other loans and advances (specify nature). (ii) Borrowings shall fu rther be sub -classified as secured and unsecured. Nature of security shall be specified separately in each case. (iii) Where loans have been guaranteed by directors or others, the aggregate amount of such loans under each head shall be disclosed. (iv) Bond s/debentures (along with the rate of interest and particulars of redemption or conversion, as the case may be) shall be stated in descending order of maturity or conversion, starting from farthest redemption or conversion date, as the case may be. Where bo nds/debentures are redeemable by instalments, the date of maturity for this purpose must be reckoned as the date on which the first instalment becomes due. 1. The word Reserve omitted by Notification No. G.S.R.1022(E), dated 11th October, 2018 (w.e.f. 11 -10-2018). 288 (v) Particulars of any redeemed bonds/debentures which the company has power to reissue shall be dis closed. (vi) Terms of repayment of term loans and other loans shall be stated. (vii) Period and amount of continuing default as on the balance sheet date in repayment of loans and interest, shall be specified separately in each case. D. Other Long -term Lia bilities Other Long -term Liabilities shall be classified as: (a) Trade payables; (b) Others

bilities Other Long -term Liabilities shall be classified as: (a) Trade payables; (b) Others. E. Long -term provisions The amounts shall be classified as: (a) Provision for employee benefits; (b) Others (specify nature). F. Short -term borrowings (i) Short -term borrowings shall be classified as: (a) Loans repayable on demand; (A) from banks. (B) from other parties. (b) Loans and advances from related parties; (c) Deposits; (d) Other loans and advances (specify nature). (ii) Borrowings shall further be sub-classified as secured and unsecured. Nature of security shall be specified separately in each case. (iii) Where loans have been guaranteed by directors or others, the aggregate amount of such loans under each head shall be disclosed. (iv) Period and am ount of default as on the balance sheet date in repayment of loans and interest, shall be specified separately in each case. 1[(v) current maturities of Long term borrowings shall be disclosed separately.] 2[FA. Trade Payable : The following details relating to Micro, Small and Medium Enterprises shall be disclosed in the notes: (a) the principal amount and the interest due thereon (to be shown separately) remaining unpaid to any supplier at the end of each accounting year; (b) the amount of interest paid by the buyer in terms of section 16 of the Micro, Small and Medium Enterprises Development Act, 2006 (7 of 2006) , along with the amount of the payment made to the supplier beyond the appointed day during each accounting year; (c) the amount of interest due and payable for the period of delay in making payment (which have been paid but beyond the appointed day during the year) but without adding the interest specified under the Micro, Small and Medium Enterprises Development Act, 2006; (d) the amount of interest accrued and remaining unpaid at the end of each accounting year; and (e) the amount of further interest remaining due and payable even in the succeeding years, until such date when the interest dues above are actually paid to the small enterprise, for the purpose of disallowance of a deductible expenditure under section 23 of the Micro, Small and Medium Enterprises Development Act, 2006; 1. Ins. by Notification No. G.S.R. 207(E), dated 24th March, 2021, (w.e.f. 1 -4-2021). 2. Ins. by Notification No. G.S.R. 679(E), dated 4th September, 2015 (w.e.f. 4 -9-2015). 289 Explanation .-The terms 'appointed day, buyer, enterprise, micro enterprise, sma ll enterprise and supplier, shall have the same meaning assigned to those under clauses (b), (d), (e), (h), (m) and (n) respectively of section 2 of the Micro, Small and Medium Enterprises Development Act, 2006. ] 1[FB. Trade payables due for payment The following ageing schedule shall be given for Trade payable due for payment: - Trade Payables ageing schedule Particulars Outstanding for following periods from due date of payment# Less than 1 year 1-2 years 2-3 years More than 3 years Total (i) MSME (ii) Others (iii) Disputed dues MSME (iv) Disputed dues - others #similar information shall be given where no due date of payment is specified in that case disclosure shall be from the date of the transaction. Unbilled dues shall be disclosed separately; ] G. Other current liabilities The amounts shall be classified as: 2*** (b) Current maturities of finance lease obligations; (c) Interest accrued but not due on borrowings; (d) Interest accrued and due on borrowings; (e) Income received in advance; (f) Unpaid dividends; (g) Application money received for allotment of securities and due for refund and interest accrued thereon. Share application money includes advances towards allotment of share capital. The terms and conditions including the number of shares proposed to be issued, the amount of premium, if any, and the period before which shares shall be allotted shall be disclosed. It shall also be disclosed whether the company has sufficient authorised capital to cover the share capital amou nt resulting from allotment of shares out of such share application money. Further, the period for which the share application money has been pending beyond the period for allotment as mentioned in the document inviting application for shares along with th e reason for such share application money being pending shall be disclosed. Share application money not exceeding the issued capital and to the extent not refundable shall be shown under the head Equity and share application money to the extent refundable, i.e., the amount in excess of subscription or in case the requirements of minimum subscription are not met, shall be separately shown under ther current liabilities ; (h) Unpaid matured deposits and interest accrued thereon; (i) Unpaid matured debenture s and interest accrued thereon; (j) Other payables (specify nature). H. Short -term provisions 1. Ins. by Notification No. G.S.R. 207(E), dated 24th March, 2021, (w.e.f. 1 -4-2021). 2. Item ( a) omitted by Notification No. G.S.R. 207(E), dated 24th March, 2021 (w.e.f. 1 -4-2021). 290 The amounts shall be classified as: (a) Provision for employee benefits. (b) Others (specify nature). I. 1[Property, Plant and Equipment] (i) Classification shall be given as: (a) Land; (b) Buildings; (c) Plant and Equipment; (d) Furniture and Fixtures; (e) Vehicles; (f) Office equipment; (g) Others (specify nature). (ii) Assets under lease shall be separately specified under each class of asset. 2[(iii) A rec onciliation of the gross and net carrying amounts of each class of assets at the beginning and end of the reporting period showing additions, disposals, acquisitions through business combinations , amount of change due to revaluation (if change is 10% or mo re in the aggregate of the net carrying value of each class of Property, Plant and Equipment) and other adjustments and the related depreciation and impairment losses/reversals shall be disclosed separately.] (iv) Where sums have been written -off on a red uction of capital or revaluation of assets or where sums have been added on revaluation of assets, every balance sheet subsequent to date of such write -off, or addition shall show the reduced or increased figures as applicable and shall by way of a note al so show the amount of the reduction or increase as applicable together with the date thereof for the first five years subsequent to the date of such reduction or increase. J. Intangible assets (i) Classification shall be given as: (a) Goodwill; (b) Brands /trademarks; (c) Computer software; (d) Mastheads and publishing titles; (e) Mining rights; (f) Copyrights, and patents and other intellectual property rights, services and operating rights; (g) Recipes, formulae, models, designs and prototypes; (h) Licences and franchise; (i) Others (specify nature). 3[(ii) A reconciliation of the gross and net carrying amounts of each class of assets at the beginning and end of the reporting period showing additions, disposals, acquisitions through business combinat ions, amount of change due to revaluation (if change is 10% or more in the aggregate of the net carrying value of each class of 1. Subs. by Notification No. G.S.R. 207(E), dated 24th March, 2021, for Tangible Assets (w.e.f. 1 -4-2021) 2. Subs. by Notific ation No. G.S.R. 207(E), dated 24th March, 2021, for item (iii) (w.e.f. 1 -4-2021). 3. Subs. by Notification No. G.S.R. 207(E), dated 24th March, 2021, for item (ii) (w.e.f. 1 -4-2021). 291 intangible assets) and other adjustments and the related depreciation and impairment losses or reversals shall be disclosed sepa rately .] (iii) Where sums have been written -off on a reduction of capital or revaluation of assets or where sums have been added on revaluation of assets, every balance sheet subsequent to date of such write -off, or addition shall show the reduced or incre ased figures as applicable and shall by way of a note also show the amount of the reduction or increase as applicable together with the date thereof for the first five years subsequent to the date of such reduction or increase. K. Non -current investments (i) Non -current investments shall be classified as trade investments and other investments and further classified as: (a) Investment property; (b) Investments in Equity Instruments; (c) Investments in preference shares; (d) Investments in Government or trus t securities; (e) Investments in debentures or bonds; (f) Investments in Mutual Funds; (g) Investments in partnership firms; (h) Other non -current investments (specify nature). Under each classification, details shall be given of names of the bodies corpor ate indicating separately whether such bodies are ( i) subsidiaries, ( ii) associates,( iii) joint ventures, or ( iv) controlled special purpose entities in whom investments have been made and the nature and extent of the investment so made in each such body corporate (showing separately investments which are partly -paid). In regard to investments in the capital of partnership firms, the names of the firms (with the names of all their partners, total capital and the shares of each partner) shall be given. (ii) Investments carried at other than at cost should be separately stated specifying the basis for valuation thereof; (iii) The following shall also be disclosed: (a) Aggregate amount of quoted investments and market value thereof; (b) Aggregate amount of unq uoted investments; (c) Aggregate provision for diminution in value of investments. L. Long -term loans and advances (i) Long -term loans and advances shall be classified as: (a) Capital Advances; 1*** (c) Loans and advances to related parties (giving details thereof); (d) Other loans and advances (specify nature). (ii) The above shall also be separately sub -classified as: (a) Secured, considered good; (b) Unsecured, considered good; (c) Doubtful. (iii) Allowance for bad and doubtful loans and advances shall b e disclosed under the relevant heads separately. 1. Sub -item (b) omitted by Notification No. G.S.R. 207(E), dated 24th Ma rch, 2021 (w.e.f. 1 -4-2021). 292 (iv) Loans and advances due by directors or other officers of the company or any of them either severally or jointly with any other persons or amounts due by firms or private companies respectively in which any director is a partner or a director or a member should be separately stated. M. Other non -current assets Other non -current assets shall be classified as: (i) Long -term Trade Receivables (including trade receivables on deferred credit terms); 1[(ia) Security Deposits ;] (ii) Others (specify nature); (iii) Long term Trade Receivables, shall be sub -classified as: (A) (a) Secured, considered good; (B) Unsecured, considered good; (C) Doubtful. (b) Allowance for bad and doubtful debts shall be disclosed und er the relevant heads separately. (c) Debts due by directors or other officers of the company or any of them either severally or jointly with any other person or debts due by firms or private companies respectively in which any director is a partner or a d irector or a member should be separately stated. 1[(iv) For trade receivables outstanding, following ageing schedule shall be given: Trade Receivables ageing s chedule (Amount in Rs.) Particulars Outstanding for following periods from due date of payment# Less than 6 months 6 months - 1 year 1-2 years 2-3 years More than 3 years Total (i) Undisputed Trade receivables -considered good (ii) Undisputed Trade Receivables - considered doubtful (iii) Disputed Trade Receivables considered good (iv) Disputed Trade Receivables considered doubtful #similar information shall be given where no due date of payment is specified, in that case disclosure shall be from the date of the transaction . Unbilled dues shall be disclosed separately.] N. Current Investments (i) Current investments shall be classified as: (a) Investments in Equity Instruments; (b) Investments in Preference Shares; (c) Investments in Government or trust securities; (d) Investments in debentures or bonds; (e) Investments in Mutual Funds; 1. Ins. by Notification No. G.S.R. 207(E), dated 24th March, 2021, (w.e.f. 1 -4-2021). 293 (f) Investments in partnership firms; (g) Other investments (specify nature). Under each classification, details shall be given of names of the bodies corporate [indicatin g separately whether such bodies are: ( i) subsidiaries, ( ii) associates, ( iii) joint ventures, or ( iv) controlled special purpose entities] in whom investments have been made and the nature and extent of the investment so made in each such body corporate ( showing separately investments which are partly paid). In regard to investments in the capital of partnership firms, the names of the firms (with the names of all their partners, total capital and the shares of each partner) shall be given. (ii) The follow ing shall also be disclosed: (a) The basis of valuation of

partner) shall be given. (ii) The follow ing shall also be disclosed: (a) The basis of valuation of individual investments; (b) Aggregate amount of quoted investments and market value thereof; (c) Aggregate amount of unquoted investments; (d) Aggregate provision made for diminution in value of in vestments. O. Inventories (i) Inventories shall be classified as: (a) Raw materials; (b) Work -in-progress; (c) Finished goods; (d) Stock -in-trade (in respect of goods acquired for trading); (e) Stores and spares; (f) Loose tools; (g) Others (specify nature). (ii) Goods -in-transit shall be disclosed under the relevant sub -head of inventories. (iii) Mode of valuation shall be stated. P. Trade Receivables 1[(i) For trade receivables outstanding, the following ageing schedules shall be given: Trade Receivables ageing schedule (Amount in Rs.) Particulars Outstanding for following periods from due date of payment# Less than 6 months 6 months - 1 year 1-2 years 2-3 years More than 3 years Total (i) Undisputed Trade receivables -considered good (ii) Undisputed Trade Receivables -considered doubtful (iii) Disputed Trade Receivables considered good (iv) Disputed Trade Receivables considered doubtful 1. Subs. by Notification No. G.S.R. 207(E), dated 24th March, 2021, for item (i) (w.e.f. 1 -4-2021). 294 #similar information shall be given where no due date of payment is specified in that case disclosure shall be from the date of the transaction. Unbilled dues shall be disclosed separately .] (ii) Trade receivables shall be sub -classified as: (a) Secured, considered good; (b) Unsecured, considered good; (c) Doubtful. (iii) Allowance for bad and d oubtful debts shall be disclosed under the relevant heads separately. (iv) Debts due by directors or other officers of the company or any of them either severally or jointly with any other person or debts due by firms or private companies respectively in w hich any director is a partner or a director or a member should be separately stated. Q. Cash and cash equivalents (i) Cash and cash equivalents shall be classified as: (a) Balances with banks; (b) Cheques, drafts on hand; (c) Cash on hand; (d) Others (specify nature). (ii) Earmarked balances with banks (for example, for unpaid dividend) shall be separately stated. (iii) Balances with banks to the extent held as margin money or security against the borrowings, guarantees, other commitments shall be disc losed separately. (iv) Repatriation restrictions, if any, in respect of cash and bank balances shall be separately stated. (v) Bank deposits with more than twelve months maturity shall be disclosed separately. R. Short -term loans and advances (i) Short -term loans and advances shall be classified as: (a) Loans and advances to related parties (giving details thereof); (b) Others (specify nature). (ii) The above shall also be sub -classified as: (a) Secured, considered good; (b) Unsecured, considered good; (c) Doubtful. (iii) Allowance for bad and doubtful loans and advances shall be disclosed under the relevant heads separately. (iv) Loans and advances due by directors or other officers of the company or any of them either severally or jointly with any other p erson or amounts due by firms or private companies respectively in which any director is a partner or a director or a member shall be separately stated. S. Other current assets (specify nature) This is an all -inclusive heading, which incorporates current a ssets that do not fit into any other asset categories. T. Contingent liabilities and commitments (to the extent not provided for) (i) Contingent liabilities shall be classified as: (a) Claims against the company not acknowledged as debt; (b) Guarantees; (c) Other money for which the company is contingently liable. 295 (ii) Commitments shall be classified as: (a) Estimated amount of contracts remaining to be executed on capital account and not provided for; (b) Uncalled liability on shares and other investments partly paid; (c) Other commitments (specify nature). U. The amount of dividends proposed to be distributed to equity and preference shareholders for the period and the related amount per share shall be disclosed separately. Arrears of fixed cumulative dividends on preference shares shall also be disclosed sepa rately. V. Where in respect of an issue of securities made for a specific purpose, the whole or part of the amount has not been used for the specific purpose at the balance sheet date, there shall be indicated by way of note how such unutilised amounts hav e been used or invested. 1[VA. Where the company has not used the borrowings from banks and financial institutions for the specific purpose for which it was taken at the balance sheet date, the company shall disclose the details of where they have been use d.] W. If, in the opinion of the Board, any of the assets other than 2[Property, Plant and Equipment ] 3[,Intangible assets] and non -current investments do not have a value on realisation in the ordinary course of business at least equal to the amount at wh ich they are stated, the fact that the Board is of that opinion, shall be stated. 4* * * * * 5[Y. Additional Regulatory Information (i) Title deeds of Immovable Property not held in name of the Company The company shall provide the details of all the immovable property (other than properties where the Company is the lessee and the lease agreements are duly executed in favour of the lessee) whose title deeds are not held in the name of the company in format given below and where such immovable property is jointly held with others, details are required to be given to the extent of the com panys share. Relevant line item in the Balance sheet Description of item of property Gross carrying value Title deeds held in the name of Whether title deed holder is a promoter, director or relative# of promoter*/director or employee of promoter/director Property held since which date Reason for not being held in the name of the company** PPE- Land Building - - - - ** also indicate if in dispute Investment property - Land Building PPE retired from active use and held for disposal - Land Building others #Relative here means relative as defined in the Companies Act, 2013. *Promoter here means promoter as defined in the Companies Act, 2013. 1. Ins. by Notification No. G.S.R. 207(E ), dated 24th March, 2021, (w.e.f. 1 -4-2021). 2. Subs. by Notification No. G.S.R. (E), dated 11th October, 2018, for fixed assets (w.e.f. 11 -10-2018). 3. Ins. by Notification No. G.S.R. 207(E), dated 24th March, 2021, (w.e.f. 1 -4-2021). 4. Heading X omitted by Notification No. G.S.R. 207(E), dated 24th March, 2021, (w.e.f. 1 -4-2021). 5. Ins. by Notification No. G.S.R. 207(E), dated 24th March, 2021, (w.e.f. 1 -4-2021). 296 (ii)Where the Company has revalued its Property, Plant and Equipment, the company shall disclose as to whether the revaluation is based on the valuation by a registered valuer as defined under rule 2 of the Companies (Registered Valuers and Valuation) Rules, 2017. (iii) Following disclosures shall be made where Loans or Advances in the nature of loans ar e granted to promoters, directors, KMPs and the related parties (as defined under Companies Act, 2013,) either serverally or jointly with any other person, that are: (a) repayable on demand or (b) without specifying any terms or period of repayment Type of Borrower Amount of loan or advance in the nature of loan outstanding Percentage to the total Loans and Advances in the nature of loans Promoters Directors KMPs Related Parties (iv) Capital -Work -in Progress (CWIP) (a) For Capital -work -in progress, following ageing schedule shall be given: CWIP aging schedule (Amount in Rs.) CWIP Amount in CWIP for a period of Total* Less than 1 year 1-2 years 2-3 years More than 3 years Projects in progress Projects temporarily suspended *Total shall tally with CWIP amount in the balance sheet. (b) For capital -work -in progress, whose completion is overdue or has exceeded its cost compared to its original plan, following CWIP completion schedule shall be given**: (Amount in Rs.) CWIP To be completed in Less than 1 year 1-2 years 2-3 years More than 3 years Project 1 Project 2 ** Details of projects where actively has been suspended shall be given separately. (v) Intangible assets under development: (a) For Intangible assets under development, following ageing schedule shall be given: Intangible assets under development aging schedule (Amount in Rs.) Amount in CWIP for a period of Total* 297 Intangible assets under development Less than 1 year 1-2 years 2-3 years More than 3 years Projects in progress Projects temporarily suspended *Total shall tally with the amount of Intangible assets under development in the balance sheet. (b) For Intangible assets under development, whose completion is overdue or has exceeded its cost compared to its original plan, following Intangible assets under development completion schedule shall be given**: (Amount in Rs.) Intangible assets under development To be completed in Less than 1 year 1-2 years 2-3 years More than 3 years Project 1 Project 2 ** Details of projects where activity has been suspended shall be given separately. (vi) Details of Benami Property held Where any proceedings have been initiated or pending against the company for holding any benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and the rules made thereunder, the company shall disclose the following: - (a) Details of such property, including year of acquisition, (b) Amount thereof, (c) Details of Beneficiaries, (d) If property is in the books, then reference to the item in the Balance Sheet, (e) If property is not in the books, then the fact shall be stated with reasons, (f) Where there are proceedings against the company under this law as an abetter of the transaction or as the transferor then the details shall be provided, (g) Nature of proceedings, status of same and companys view on same. (vii) Where the Company has borrowings from banks or financial institutions on the basis of security of current assets, it shall disclose the following: - (a) whether quarterly returns or statements of current assets filed by the Company with banks or financial institutions are in agreement with the books of accounts. (b) if not, summary of reconciliation and reasons of material discrepancies, if any to be adeq uately disclosed. (viii) Wilful Defaulter* Where a company is a declared willful defaulter by any bank or financial Institution or other lender, following details shall be given: (a) Date of declaration as willful defaulter, (b) Details of defaults (amount and nature of defaults), * willful defaulter here means a person or an issuer who or which is categorized as a willful defaulter by any bank or financial institution (as defined under the Act) or consortium thereof, in accordance with the guidelines on willful defaulters issued by the Reserve Bank of India. (ix) Relationship with Struck off Compan ies 298 Where the company has any transactions with companies struck off under section 248 of the Companies Act, 2013 or section 560 of Companies Act, 1956, the Co mpany shall disclose the following details: - Name of struck off Company Nature of transactions with struck off Company Balance outstanding Relationship with the Struck off company, if any, to be disclosed Investments in securities Receivables Payables Shares held by stuck off company Other outstanding balances (to be specified) (x) Registration of charges or satisfaction with Registrar of Companies Where any charges or satisfaction yet to be registered with Registrar of Companies beyond the statutory period, details and reasons thereof shall be disclosed. (xi) Compliance with number of layers of companies Where the company has not complied with the number of layers prescribed under clause (87) of section 2 of the Act read with Companies (Restriction on number of Layers) Rules, 2017, the name and CIN of the companies beyond the specified layers and the relationship/extent of holding of the company in such d ownstream companies shall be disclosed. (xii) Following Ratios to be disclosed: - (a) Current Ratio, (b) Debt -Equity Ratio, (c) Debt Service Coverage Ratio, (d) Return on Equity Ratio, (e) Inventory turnover ratio, (f) Trade Receivables turnover ratio, (g) Trade payables turnover ratio, (h) Net capital turnover ratio, (i) Net profit ratio, (j) Return on Capital employed, (k) Return on investment. The company shall explain the items included in numerator and denominator for computing the above ratios. Fur