1. Where the Central Government is not a member of a Government company, every State Government which is a member of that company, or where only one State Government is a member of the company, that State Government shall cause an annual report on the working and affairs of the company to be—
a. prepared within the time specified in sub-section (1 ) of section 394; and
b. as soon as may be after such preparation, laid before the House or both Houses of the State Legislature together with a copy of the audit report and comments upon or supplement to the audit report referred to in sub-section (1 ) of that section.
2. The provisions of this section and section 394 shall, so far as may be, apply to a Government company in liquidation as they apply to any other Government company.
Legal Commentary & Landmark Judgments: Section 395
Section 395 governs the reporting obligations of Government companies where only State Governments are members, requiring annual reports and C&AG audit comments to be laid before the State Legislature, and expressly extends this discipline to companies in liquidation.
When monitoring the winding up of state public sector undertakings (SPSUs), verify that the Official Liquidator complies with Section 395(2). A failure to prepare liquidation reports and place them before the State Legislature constitutes a statutory breach that can be raised before the Company Court or NCLT.