Section 203 – The Companies Act,1956

The Companies Act, 1956

203. Power to restrain fraudulent persons from managing companies.

(1) Where

(a) a person is convicted of any offence in connection with the promotion, formation or management of a company; or

(b) in the course of winding up a company it appears that a person

(i) has been guilty of any offence for which he is punishable (whether he has been convicted or not) under section 542; or

(ii) has otherwise been guilty, while an officer of the company, of any fraud or misfeasance in relation to the company or of any branch of his duty to the company;

the1 [Court or the Tribunal, as the case may be,] may make an order that that person shall not, without the leave of the 1 [Court or the Tribunal, as the case may be,] be a director of, or in any way, whether directly or indirectly, be concerned or take part in the promotion, formation or management of a company, for such period not exceeding five years as may be specified in the order.

(2) In sub-section (1), the expression “the Court”,

(a) in relation to the making of an order against any person by virtue of clause (a) thereof, 2 [includes the Court or the Tribunal by which he is convicted, as well as any Court or Tribunal having jurisdiction to wind up] the company as respects which the offence was committed; and

(b) in relation to the granting of leave, means any 1 [Court or Tribunal] having jurisdiction to wind up the company as respects which leave is sought.

(3) A person intending to apply for the making of an order under this section by the 3[Court or the Tribunal having jurisdiction to wind up a company] shall give not less than ten days’ notice of his intention to the person against whom the order is sought, and at the hearing of the application, the last-mentioned person may appear and himself give evidence or call witnesses.

(4) An application for the making of an order under this section by the 3 [Court or the Tribunal having jurisdiction to wind up a company] may be made by the Official Liquidator, or by the liquidator of the company, or by any person who is or has been a member or creditor of the company.

(5) On the hearing of any application for an order under this section by the Official Liquidator or the liquidator, or of any application for leave under this section by a person against whom an order has been made on the application of the Official Liquidator or liquidator, the Official Liquidator or liquidator shall appear and call the 4 [attention of the Court or the Tribunal, as the case may be,] to any matters which seem to him to be relevant, and may himself give evidence or call witnesses.

(6) An order may be made by virtue of sub-clause (ii) of clause (b) of sub-section (1), notwithstanding that the person concerned may be criminally liable in respect of the matters on the ground of which the order is to be made 5 [***].

(7) If any person acts in contravention of an order made under this section, he shall, in respect of each offence, be punishable with imprisonment for a term which may extend to two years, or with fine which may extend to 6 [fifty thousand rupees], or with both.

(8) The provisions of this section shall be in addition to, and without prejudice to the operation of, any other provision contained in this Act.

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1.Subs. by Act 11 of 2003, sec. 26, for “Court”.

2. Subs. by Act 11 of 2003, sec. 26, for “includes the Court by which he is convicted as well as any Court having jurisdiction to wind up”..

3. Subs. by Act 11 of 2003, sec. 26, for “Court having jurisdiction to wind up a company”.

4. Subs. by Act 11 of 2003, sec. 26, for “attention of the Court”.

5. Certain words omitted by Act 31 of 1965, sec. 19 (w.e.f. 15-10-1965).

6.Subs. by Act 53 of 2000, sec. 89, for “five thousand rupees” (w.e.f. 13-12-2000).

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