Section 245 – The Companies Act,1956

The Companies Act, 1956

245. Expenses of investigation.

(1) The expenses of and incidental to an investigation by an inspector appointed by the Central Government under section 235 or 237 shall be defrayed in the first instance by the Central Government; but the following persons shall, to the extent mentioned below, be liable to reimburse the Central Government in respect of such expenses:

(a)any person who is convicted on a prosecution instituted in pursuance of section 242, or who is ordered to pay damages or restore any property in proceedings brought by virtue of section 244, may, in the same proceedings, be ordered to pay the said expenses to such extent as may be specified by the Court convicting such person, or ordering him to pay such damages or restore such property as the case may be;

(b)any company or body corporate in whose name proceedings are brought as aforesaid shall be liable, to the extent of the amount or value of any sums or property recovered by it as a result of the proceedings; and

(c)unless as a result of the investigation, a prosecution is instituted in pursuance of section 242,

1[(i)any company, body corporate, 2[***] managing director or manager dealt with by the report of the inspector shall be liable to reimburse the Central Government in respect of the whole of the expenses, unless and except insofar as, the Central Government otherwise directs; and]

(ii)the applicants for the investigation, where the inspector was appointed 3[in pursuance of the provisions of sub-sections (2)] of section 235, shall be liable to such extent, if any, as the Central Government may direct.

(2) Any amount for which a company or body corporate is liable by virtue of clause (b) of sub-section (1) shall be a first charge on the sums or property mentioned in that clause.

4[(3) The amount of expenses in respect of which any company, body corporate, 5[***] managing director or manager is liable under sub-clause (i) of clause (c) of sub-section (1) to reimburse the Central Government shall be recoverable from that company, body corporate, 5[***] managing director or manager, as an arrear of land revenue.]

(4) For the purposes of this section, any costs or expenses incurred by the Central Government in or in connection with proceedings brought by virtue of section 244 (including expenses incurred by virtue of sub-section (2) thereof) shall be treated as expenses of the investigation giving rise to the proceedings.

(5) (a) Any liability to reimburse the Central Government imposed by clauses (a) and (b) of sub-section (1) shall, subject to satisfaction of the right of the Central Government to reimbursement, be a liability also to indemnify all persons against liability under clause (c) of that sub-section.

(b) Any such liability imposed by the said clause (a) shall subject as aforesaid, be a liability also to indemnify all persons against liability under the said clause (b).

(c) Any person liable under the said clause (a) or (b) or sub-clause (i) or (ii) of the said clause (c) shall be entitled to contribution from any other person liable under the same clause or sub-clause, as the case may be, according to the amount of their respective liabilities thereunder.

(6) Insofar as the expenses to be defrayed by the Central Government under this section are not recovered thereunder, they shall be paid out of moneys provided by Parliament.

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1. Subs. by Act 65 of 1960, sec. 78, for sub-clause (i) (w.e.f. 28-12-1960).

2. The words “managing agent, secretaries and treasurers, associate,” omitted by Act 53 of 2000, sec. 122 (w.e.f. 13-12-2000).

3. Subs. by Act 31 of 1988, sec. 40, for “under clause (a) or clause (b)” (w.e.f. 31-5-1991).

4. Subs. by Act 65 of 1960, sec. 78, for sub-section (3) (w.e.f. 28-12-1960).

5. The words “managing agent, secretaries and treasurers, associate,” omitted by Act 53 of 2000, sec. 122 (w.e.f. 13-12-2000).

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