Section 316 Companies Act: Company Liquidator to submit report on progress of winding up

Section 316 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 report quarterly on the progress of winding up of the company in such form and in such manner as may be prescribed to the members and creditors and shall also call a meeting of the members and the creditors as and when necessary but at least one meeting each of creditors and members in every quarter and apprise them of the progress of the winding up of the company in such form and in such manner as may be prescribed.

2. If the Company Liquidator fails to comply with the provisions of sub-section (1 ), he shall be punishable, in respect of each such failure, 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 316

Section 316 of the Companies Act, 2013 imposed mandatory periodic reporting obligations on the Company Liquidator during protracted voluntary liquidations; omitted by the IBC 2016, this requirement is reenacted under Regulation 9 of the IBBI Regulations, 2017.

Annual Meeting and Progress Reporting Mandate: If winding up continued for more than one year, the liquidator had to summon meetings of the company and creditors at the end of each year.
Financial Accounting and RoC Filing Architecture: Mandated laying an account of all dealings, asset realizations, and administration expenses, and submitting a statutory return to the Registrar within prescribed windows.
Enforceable Sanctions for Protracted Unexplained Delays: Prescribed per-day financial penalties against the liquidator for failure to convene meetings or file progress accounts, combating administrative indolence.

Key Landmark Precedents:

Re: New Zealand Loan & Mercantile Agency Co., (1894) 71 LT 130: Held that duty to account periodically to creditors and contributories is an indispensable statutory safeguard against liquidator lethargy.
Registrar of Companies v. Southern Steelcrafts Ltd., (1983) 53 Comp Cas 539 (Mad): The Madras High Court held that failure of liquidator to submit annual accounts to RoC constitutes an offence punishable with fine.
Kalyanji v. Ramdas, AIR 1968 Bom 380: The Bombay High Court affirmed that statutory accounts submitted by liquidators are open to audit and judicial scrutiny to verify genuine asset realization.

Courtroom Practice & Strategic Litigation Guidance:

Voluntary liquidators must adhere strictly to annual status report filings under IBC Regulation 9. If liquidation cannot be concluded within 90 days/one year, file an application before NCLT explaining reasons for delay to pre-empt RoC or IBBI disciplinary action.

Section 316: Company Liquidator to submit report on progress of winding up

Section 316 of Companies Act: Corporate Governance & Statutory Compliance

Legal Commentary & Landmark Judgments: Section 316