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Section 391: Application of sections 34 to 36 and Chapter XX

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Section 390 All 470 Sections of Companies Act Section 392
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Legal Commentary & Landmark Judgments: Section 391

Section 391 extends the civil and criminal liabilities for prospectus misstatements (Sections 34 to 36) and the winding-up provisions of Chapter XX to foreign companies operating or raising capital in India.

  • Criminal and Civil Liability for Prospectus Fraud: Expressly applies Section 34 (criminal liability for untrue statements) and Section 35 (civil liability for misstatements) to prospectuses issued by foreign companies in India.
  • Class Action and Fraudulent Inducement: Extends Section 36 (punishment for fraudulently inducing persons to invest money) to foreign offerings, subjecting overseas promoters and directors to non-compoundable penal prosecution.
  • Winding Up of Foreign Companies as Unregistered Companies: Extends Chapter XX (Winding Up) to foreign companies, empowering the NCLT to order the winding up of a foreign company's Indian branch or undertaking as an unregistered company.
Key Landmark Precedents:
  • Russian Commercial and Industrial Bank v. Comptoir d'Escompte de Mulhouse, [1925] AC 112: The House of Lords established that a foreign company dissolved or carrying on business in another jurisdiction may nevertheless be wound up as an unregistered company to liquidate its localized domestic assets.
  • Re: Travancore National and Quilon Bank Ltd., AIR 1939 Mad 318: Held that Indian courts have plenary jurisdiction to wind up the Indian operations of a company incorporated outside the domestic forum to protect domestic creditors.
Courtroom Practice & Strategic Litigation Guidance:

When creditors are unpaid by a foreign company that has ceased operations in India, file a winding-up petition before the NCLT under Section 375 read with Section 391(2). Establish that the Indian undertaking has dissolved or is unable to pay its debts, securing the appointment of a liquidator to attach Indian bank accounts and movable assets.

Section 390 All 470 Sections of Companies Act Section 392