Section 314 Companies Act: Powers and duties of Company Liquidator in voluntary winding up

Section 314 of Companies Act: Corporate Governance & Statutory Compliance

Official Bare Act Text

Override / Mandate Mens Rea (Intent) Actus Reus (Conduct) Punishment Limitation Monetary

1. The Company Liquidator shall perform such functions and discharge such duties as may be determined from time to time by the company or the creditors, as the case may be.

2. The Company Liquidator shall settle the list of contributories, which shall be prima facie evidence of the liability of the persons named therein to be contributories.

3. The Company Liquidator shall call general meetings of the company for the purpose of obtaining the sanction of the company by ordinary or special resolution, as the case may require, or for any other purpose he may consider necessary.

4. The Company Liquidator shall maintain regular and proper books of account in such form and in such manner as may be prescribed and the members and creditors and any officer authorised by the Central Government may inspect such books of account.

5. The Company Liquidator shall prepare quarterly statement of accounts in such form and manner as may be prescribed and file such statement of accounts duly audited within thirty days from the close of each quarter with the Registrar, failing which the Company Liquidator shall be punishable with fine which may extend to five thousand rupees for every day during which the failure continues.

6. The Company Liquidator shall pay the debts of the company and shall adjust the rights of the contributories among themselves.

7. The Company Liquidator shall observe due care and diligence in the discharge of his duties.

8. If the Company Liquidator fails to comply with the provisions of this section except sub-section (5 ) he shall be punishable with fine which may extend to ten lakh rupees.

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 314

Section 314 of the Companies Act, 2013 defined the broad fiduciary powers and statutory obligations of a Company Liquidator in voluntary winding up; omitted by the IBC 2016, these powers are now encapsulated in Section 35 of the IBC.

Settling List of Contributories and Making Capital Calls: Conferred authority on the liquidator to settle the list of contributories, adjust rights between members, and make calls on unpaid share capital.
Realization and Conveyance of Corporate Assets: Empowered the liquidator to sell movable and immovable assets by public auction or private treaty, execute deeds, and issue valid acquittances.
Convening General Meetings and Fiduciary Debt Adjudication: Conferred power to summon meetings of members and creditors, examine claims, and distribute realizations strictly in accordance with statutory priority.

Key Landmark Precedents:

Leon v. York-o-Matic Ltd., [1966] 3 All ER 277: The Court held that liquidator's decisions regarding sale of property will not be interfered with by the court unless fraud, bad faith, or gross unreasonableness is established.
N.P. Tea Co. v. Subashini, (1990) 67 Comp Cas 616 (Cal): The Calcutta High Court affirmed that voluntary liquidator possesses full authority to realize assets and defend suits without prior sanction of court.
J.K. Chemicals Ltd. v. Krehs, (2001) 106 Comp Cas 490 (Bom): The Bombay High Court held that powers of voluntary liquidator are fiduciary and must be exercised bona fide for the collective benefit of all creditors and contributories.

Courtroom Practice & Strategic Litigation Guidance:

In defending liquidator's commercial decisions against challenges by disgruntled shareholders, establish that asset realization adhered to transparent valuation and bidding procedures, invoking the commercial discretion principle recognized in Leon.

Section 314: Powers and duties of Company Liquidator in voluntary winding up

Section 314 of Companies Act: Corporate Governance & Statutory Compliance

Legal Commentary & Landmark Judgments: Section 314