Fraud II

The main departure of The Companies Act, 2013 from statutory regime of The Companies Act, 1956 is specific inclusion of fraud ‘directly’ as a circumstance in which a Company could be wound up [See, Section 271 of 2013 Act, as it now stands after 2016]. Section 271(c) of The Companies Act, 2013 covers three circumstances for winding up: (i) affairs of Company being conducted in a fraudulent manner; (ii) Company was formed for fraudulent and unlawful purpose; and (iii) persons concerned in formation and management of its affairs have been guilty of fraud, misfeasance or misconduct in connection. A singular act of omission or commission may constitute fraud and even a series of acts may constitute fraud. A fraudulent act may be different from fraudulent manner in which an act is performed. If conduct of affairs of Company in a fraudulent manner is a continuing process, right to apply becomes recurring.

Hon’ble Justice V. Ramasubramanian, DEVAS (Digitally Enhanced Video and Audio Services) Multimedia Private Ltd. v. Antrix Corporation Ltd., [Civil Appeal No. 5766 of 2021].