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CSEET · Business Laws and Management · Elements of Company Law

A company was incorporated in 2024 by furnishing false information and suppressing material facts. In 2026 this is proved before the Tribunal on an application. Consider these statements: (I) The Tribunal may direct that the liability of members shall be unlimited. (II) The Tribunal may pass an order for winding up of the company. (III) The Tribunal may pass such orders without giving the company any opportunity of being heard. (IV) The Tribunal must take into consideration the transactions entered into by the company before making an order. Which are correct?

Statements I, II and IV are correct. For a company incorporated by fraud or false information, the Tribunal may direct unlimited member liability or order winding up, and must consider the company's transactions. Statement III is wrong because the company must first be given a reasonable opportunity of being heard.

  1. AI, II and IV onlyCorrect
  2. BI, II and III only
  3. CII, III and IV only
  4. DI and III only

Explanation

Under section 7(7), the Tribunal may regulate management, direct unlimited liability, remove the name from the register or order winding up. The proviso requires a reasonable opportunity of being heard and consideration of the company's transactions and obligations. So III is wrong; I, II and IV are correct.

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