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CS Professional · Insolvency and Bankruptcy - Law and Practice · Winding-Up by Tribunal

After the Tribunal orders winding up of Orbit Foods Ltd, an inspector summons its director Mr. Rao to give evidence. Mr. Rao says the winding-up order frees him from appearing and from any liability arising from the inspector's findings. Is he correct?

Mr. Rao is wrong. The second proviso to section 226 says nothing in the winding-up order absolves any director or employee from participating in proceedings before the inspector, or from liability arising from the inspector's findings. He must appear and remains exposed to liability.

  1. AYes, the winding-up order absolves directors of both duties
  2. BHe is absolved from appearing but not from liability
  3. CHe is not absolved from participating in the proceedings or from liability from the inspector's findingsCorrect
  4. DHe is absolved from liability but must still appear

Explanation

The second proviso to section 226 states that nothing in the winding up order absolves any director or other employee from participating in the proceedings before the inspector or from any liability resulting from the inspector's findings. Both parts of Mr. Rao's claim fail.

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