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Section 313: Cesser of Board's powers on appointment of Company Liquidator

Companies Act • Official Statutory Text & Practice Guide

Statutory Regulation
Legal Standard
Competent Court / Tribunal
Act 2013
Section 312 All 470 Sections of Companies Act Section 314
Statutory Defined Terms in this Section: (Click any term for official legal definition)
Company Sec 2(20) Director Sec 2(34) Tribunal Sec 2(90)

Legal Commentary & Landmark Judgments: Section 313

Section 313 of the Companies Act, 2013 codified the automatic stripping of the Board of Directors' executive authority upon the appointment of a Company Liquidator; omitted by the IBC 2016, this rule is mirrored in Section 34(2) and Section 59(6) of the IBC.

  • Complete Divestment of Board's Management Authority: On the appointment of a Company Liquidator, all powers of the Board of Directors, managing director, and whole-time directors ceased immediately by operation of law.
  • Limited Residual Exceptions for Statutory Notices: Powers survived only for the limited purpose of giving notice of the resolution or where the liquidator or general meeting specifically sanctioned continuance.
  • Nullity of Subsequent Director Conveyances and Commitments: Any corporate contract, conveyance, or banking transaction executed by former directors post-appointment without liquidator sanction was void ab initio.
Key Landmark Precedents:
  • Gosling v. Gaskell, [1897] AC 575: The House of Lords established that appointment of a liquidator displaces the board of directors; directors become functus officio regarding company management.
  • United Bank of India v. Official Liquidator, (1994) 1 SCC 520: The Supreme Court held that once a liquidator is appointed, directors have no power to alienate corporate property or represent the company in litigation.
  • Fowler v. Broad's Patent Night Light Co., [1893] 1 Ch 724: The Chancery Division held that directors have no power to make calls or enforce claims after liquidator's appointment.
Courtroom Practice & Strategic Litigation Guidance:

Opposing parties in litigation should immediately object to any affidavits, plaints, or appeals signed by erstwhile directors after the voluntary liquidation date; demand that the liquidator be substituted as the sole lawful representative of the corporate entity.

Section 312 All 470 Sections of Companies Act Section 314