The Companies Act, 1956
503. Appointment of committee of inspection.
(1) The creditors at the meeting to be held in pursuance of section 500 or at any subsequent meeting may, if they think fit, appoint a committee of inspection consisting of not more than five persons.
(2) If such a committee is appointed, the company may, either at the meeting at which the resolution for voluntary winding up is passed or at any subsequent general meeting, appoint such number of persons (not exceeding five) as they think fit to act as members of the committee:
Provided that the creditors may, if they think fit, resolve that all or any of the persons so appointed by the company ought not to be members of the committee of inspection.
(3) If the creditors so resolve, the persons mentioned in the resolution shall not, unless the 1[Tribunal] otherwise directs, be qualified to act as members of the committee.
(4) On any application to the 1[Tribunal] for a direction under sub-section (3), the 1[Tribunal] may, if it thinks fit, appoint other persons to act as members of the committee of inspection in the place of the persons mentioned in the creditors’ resolution.
(5) Subject to the provisions of sub-sections (1) to (4) and to such rules as may be made by the Central Government, the provisions of section 465 [except sub-section (1) thereof] shall apply with respect to a committee of inspection appointed under this section as they apply with respect to a committee of inspection appointed in a winding up by the 1[Tribunal] .
1. Subs. by Act 11 of 2003, sec. 86, for “Court”.