1. Every Company Liquidator of a company shall, in such manner and at such times as may be prescribed, deposit the monies received by him in his capacity as such in a scheduled bank to the credit of a special bank account opened by him in that behalf:
Provided that: if the Tribunal considers that it is advantageous for the creditors or contributories or the company, it may permit the account to be opened in such other bank specified by it.
2. If any Company Liquidator at any time retains for more than ten days a sum exceeding five thousand rupees or such other amount as the Tribunal may, on the application of the Company Liquidator, authorise him to retain, then, unless he explains the retention to the satisfaction of the Tribunal, he shall:—
a. pay interest on the amount so retained in excess, at the rate of twelve per cent. per annum and also pay such penalty as may be determined by the Tribunal;
b. be liable to pay any expenses occasioned by reason of his default; and
c. also be liable to have all or such part of his remuneration, as the Tribunal may consider just and proper, disallowed, or may also be removed from his office.
Legal Commentary & Landmark Judgments: Section 350
Section 350 of the Companies Act, 2013 mandates that a Company Liquidator must deposit all monies received into a scheduled bank, prohibiting unauthorized cash retention exceeding five thousand rupees for more than ten days under penalty of twelve percent interest and removal.
In monitoring liquidators, creditors' committees should demand monthly bank statements of the dedicated scheduled bank account. If an insolvency professional / liquidator retains significant liquidation auction receipts in cash or unapproved accounts beyond 10 days, file an application under Section 350 for immediate 12% interest surcharge and removal.