Section 264

Power of Commission to initiate action against management.—(1) If from any report made under section 262, the Commission is of the opinion that—

(a) the business of the company is being or has been conducted with intent to defraud its creditors, members or any other persons or for a fraudulent or unlawful purpose, or in a manner oppressive of any of its members or that the company was formed for any fraudulent or unlawful purpose; or

(b) the person concerned in the formation of the company or the management of its affairs have in connection therewith been guilty of fraud, misfeasance, breach of trust or other misconduct towards the company or towards any of its member or have been carrying on unauthorized business; or

(c) the affairs of the company have been so conducted or managed as a to deprive the shareholders thereof of a reasonable return; or

(d) that the members of the company have not been given all the information with respect to its affairs which they might reasonably expect; or

(e) any shares of the company have been allotted for inadequate consideration; or

(f) the affairs of the company are not being managed in accordance with sound business principles or prudent commercial practices; or

(g) the financial position of the company is such as to endanger its solvency;

the Commission may apply to the Court and the Court may, after taking such evidence as it may consider necessary, by an order—

(i) remove from office any director including the chief executive or other officer of the company; or

(ii) direct that the directors of the company shall carry out such changes in the management or in the accounting policies of the company as may be specified in the order; or

(iii) notwithstanding anything contained in this Act or any other law for the time being in force, direct the company to call a meeting of its members to consider such matters as may be specified in the order and to take appropriate remedial actions; or

(iv) direct that any existing contract which is to the detriment of the company or its members or is intended to or does benefit any officer or director shall be annulled or modified to the extent specified in the order:

Provided that no such order shall be made so as to have effect from any date preceding the date of the order:

Provided further that any director, including a chief executive or other officer who is removed from office under clause (i), unless the Court specified a lesser period, shall not be a director, chief executive or officer of any company for a period of five years from the date of his removal.

(2) No order under this section shall be made unless the director or other officer likely to be affected by such order has been given an opportunity of being heard.

(3) The action taken under sub-section (1) shall be in addition to and not in substitution of any other action or remedy provided in any other law for the time being in force.