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 independence 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 section, provide a reasonable opportunity of being heard to the provisional liquidator or, as the case may be, Company Liquidator.
Legal Commentary & Landmark Judgments: Section 276
Section 276 of the Companies Act, 2013 empowers the Tribunal to remove and replace a Company Liquidator or Provisional Liquidator for recorded reasons of misconduct, fraud, incompetence, or conflict of interest, while authorizing the recovery of damages caused to the company.
Creditors or contributories seeking the removal of a liquidator under Section 276 must avoid broad generalizations; pleadings before the NCLT must set forth specific instances of neglect, procedural violations, or conflict of interest with supporting documentation. The applicant must demonstrate that the liquidator's continued conduct poses a demonstrable hazard to the value of the liquidation estate.