FREEZING OF ASSETS OF A COMPANY ON INQUIRY AND INVESTIGATION [SECTION 221]
Section 221 of the Act deals with the Freezing of Assets of Company on Inquiry and Investigation. Central Government can make application to NCLT for freezing of assets, funds and properties of the company, if there is reasonable ground to believe that removal or transfer or disposal of funds, assets or properties of company is likely to take place in manner prejudicial to interests of company or its shareholders or creditors or in public interest.
According to this Section
S.no
Description
1.
Order of Tribunal: Where it appears to the Tribunal.
(a) on a reference made to it by the Central Government or in connection with any
inquiry or investigation into the affairs of a company under this Chapter or
(b) on any complaint made by such number of members as specified under sub-section (1) of section 244 or
(c) a creditor having one lakh amount outstanding against the company or
(d) any other person having a reasonable ground to believe that the removal, transfer or disposal of funds, assets, properties of the company is likely to take place in a manner that is prejudicial to the interests of the company or its shareholders or creditors or in public interest,
it may by order direct that such transfer, removal or disposal shall not take place during such period not exceeding three years as may be specified in the order or may take place subject to such conditions and restrictions as the Tribunal may deem fit.
2.
Punishment in case of contravention of order of tribunal: In case of any removal, transfer or disposal of funds, assets, or properties of the company in contravention of the order of the Tribunal under sub-section (1), the company shall be:
(a) punishable with fine which shall not be less than one lakh rupees but which may
extend to twenty-five lakh rupees and
(b) every officer of the company who is in default shall be punishable with
imprisonment for a term which may extend to three years or with fine which shall not
be less than fifty thousand rupees but which may extend to five lakh rupees, or with
both.
IMPOSITION OF RESTRICTION UPON SECURITIES [SECTION 222]
Section 222 of the Act deals with the Imposition of Restrictions upon Securities. According to this section:
S.no
Description
1.
Tribunal may by order put restrictions upon securities: Where it appears to the
Tribunal, in connection with any investigation under section 216 or on a complaint made by any person in this behalf, that there is good reason to find out the relevant facts about any securities issued or to be issued by a company and the Tribunal is of the opinion that such facts cannot be found out unless certain restrictions, as it may deem fit, are imposed, the Tribunal may, by order, direct that the securities shall be subject to such restrictions as it may deem fit for such period not exceeding three years as may be specified in the order.
2.
Punishment in case of contravention to an order: Where securities in any company are issued or transferred or acted upon in contravention of an order of the Tribunal under sub-section (1),
(a) the company shall be punishable with fine which shall not be less than one lakh rupees but which may extend to twenty-five lakh rupees and
(b) every officer of the company who is in default shall be punishable with imprisonment for a term which may extend to six months or with fine which shall not be less than twenty-five thousand rupees but which may extend to five lakh rupees, or with both.
