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CS Professional · Compliance Management, Audit and Due Diligence · Due Diligence

Meenakshi Steels Ltd is in winding up by the Tribunal. Diligence on the Company Liquidator, CS Rohan, shows that he failed to exercise due care and diligence, causing a loss to the company, and he also holds a consulting role with a major bidder. Which statement is correct under section 276 of the Companies Act, 2013?

The Tribunal may remove him for reasons recorded in writing and recover the loss caused by his failure of due care and diligence, but only after giving him a reasonable opportunity of being heard, as required by section 276(1), (3) and (4) of the Companies Act, 2013.

  1. AThe Tribunal may remove him for reasons recorded in writing and may recover the loss from him, after giving him a reasonable opportunity of being heardCorrect
  2. BThe Tribunal may remove him without recording reasons since conflict of interest is involved
  3. CThe Tribunal may remove him but cannot recover any loss from him
  4. DThe Tribunal may recover the loss from him without hearing him

Explanation

Section 276(1) allows removal on reasonable cause with reasons recorded, on grounds including failure of due care and diligence and conflict of interest. Section 276(3) allows recovery of loss caused by such failure. Section 276(4) requires a reasonable opportunity of being heard before any order, so the other options fail.

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