Companies Act • Official Statutory Text & Practice Guide
Statutory Regulation
Legal Standard
Competent Court / Tribunal
Act 2013
Section 315 of Companies Act: Corporate Governance & Statutory Compliance
Official Bare Act Text
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Where there are no creditors of a company, such company in its general meeting and, where a meeting of creditors is held under section 306, such creditors, as the case may be, may appoint such committees as considered appropriate to supervise the voluntary liquidation and assist the Company Liquidator in discharging his or its functions.
Statutory Defined Terms in this Section:(Click any term for official legal definition)
Section 315 of the Companies Act, 2013 authorized the constitution of a Committee of Inspection to supervise voluntary liquidation; omitted by the IBC 2016, this supervisory function is now exercised by the Stakeholders Consultation Committee under IBBI Liquidation Regulations.
Constitution of Committee of Inspection by Creditors and Members: Authorized creditors at their meeting to appoint a committee of up to twelve persons, and members to appoint up to five persons, to oversee the liquidator's administration.
Inter-Class Representation and Stakeholder Oversight: Provided balanced representation between trade creditors, institutional financiers, and contributories in reviewing liquidation progress and fee disbursements.
Strict Fiduciary Restraints and Prohibition of Self-Dealing: Statutorily barred committee members from deriving direct or indirect profit, purchasing estate assets, or entering into interested transactions without leave.
Key Landmark Precedents:
Re: Radford & Bright Ltd., [1901] 1 Ch 272: The Court held that Committee of Inspection is intended to represent the general body of creditors and contributories to assist and inspect the liquidator.
Official Liquidator v. Ram Swarup, AIR 1959 All 245: The Allahabad High Court held that members of inspection committees occupy a fiduciary position and cannot acquire estate assets for their own benefit.
Re: North Eastern Insurance Co. Ltd., [1915] 1 Ch 400: The Court held that contracts entered into between liquidators and committee members for personal profit are voidable at the instance of creditors.
Courtroom Practice & Strategic Litigation Guidance:
Committee members must execute non-disclosure agreements and declarations of independence. Liquidators must record minutes of all consultation meetings; while advice is not binding under IBC Section 35(2), recorded dissent must be addressed in progress reports.
Legal Commentary & Landmark Judgments: Section 315
Section 315 of the Companies Act, 2013 authorized the constitution of a Committee of Inspection to supervise voluntary liquidation; omitted by the IBC 2016, this supervisory function is now exercised by the Stakeholders Consultation Committee under IBBI Liquidation Regulations.
Committee members must execute non-disclosure agreements and declarations of independence. Liquidators must record minutes of all consultation meetings; while advice is not binding under IBC Section 35(2), recorded dissent must be addressed in progress reports.