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

The Central Government forms the opinion that Mr. Rohit Bansal, who manages Lotus Agro Ltd, has run its business with intent to defraud creditors. Under section 241 as given, what may the Central Government do?

The Central Government may initiate a case against him and refer it to the Tribunal, asking it to inquire and decide whether he is a fit and proper person to hold the office of director or any other office connected with managing any company. He is joined as respondent.

  1. AInitiate a case against him and refer it to the Tribunal to decide whether he is a fit and proper person to hold the office of director or any other office connected with management of any companyCorrect
  2. BDirectly disqualify him by executive order without the Tribunal
  3. CAsk the Registrar to strike off the company at once
  4. DRequire the company to pay a penalty of twenty thousand rupees

Explanation

Section 241(3) allows the Central Government, where circumstances such as intent to default creditors exist, to initiate a case and refer it to the Tribunal for a decision on whether the person is fit and proper to hold office of director or any other office. The person is joined as respondent under sub-section (4). The Government does not itself disqualify him.

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