Section 403 — Prosecution of delinquent directors

(1) If it appears to the Court
in the course of winding up by, or subject to the supervision of the Court that any
past or present director, or other officer, or any member, of the company has been
guilty of any offence in relation to the company for which he is criminally liable,
the Court may, either on the application of any person interested in the winding up
or of its own motion, direct the liquidator either himself to prosecute the offender
or to refer the matter to the registrar.

(2) If it appears to the liquidator in the course of a voluntary winding up
that any past or present director, manager or other officer, or any member, of the
company has been guilty of any offence in relation to the company for which he is
criminally liable, he shall forthwith report the matt er to the registrar and shall
furnish to him such information and give to him such access to and facilities for
inspecting and taking copies of any documents, being information or documents in
the possession or under the control of the liquidator relating to the matter in
question, as he may require.
(3) Where any report is made under sub -section (1) or (2) to the
registrar, he may, if he thinks fit, refer the matter to the Commission for further
inquiry and the Commission may thereupon investigate the ma tter and may, if it
thinks it expedient, appoint one or more competent inspectors to investigate the
affairs of the company and to report thereon as if it were a case falling under clause
(c) of section 25 6 and thereupon the provision contained in sections 2 59 to 273
shall mutatis mutandis apply in all respects.

(4) If on any report to the registrar under sub -section (2) it appears to
him that the case is not one in which proceedings ought to be taken by him, he shall
inform the liquidator accordingly, giving his reasons, and thereupon, subject to the
previous sanction of the Court, the liquidator may himself take proceedings against
the offender.
(5) If it appears to the Court in the course of a voluntary winding up that
any past or present director, manager or other officer, or any member, of the
company has been guilty as aforesaid, and that no report with respect to the matter
has been made by the liquidator to the registrar, the Court may, on the application
of any person interested in the winding up or of its own motion, direct the liquidator
to make such a report and, on a report being made accordingly, the provisions of
this section shall have effect as though the report has been made in pursuance of
the provisions of sub-section (1) or (2).
(6) If, where any matter is reported or referred to the registrar under this
section, he considers that the case is one in which a prosecution ought to be
instituted, he shall report the matter to the Commission, and the Commission may,
after taking such legal advice as it thinks fit, direct the registrar to proceed in
accordance with sections 477 and 486:
Provided that no report shall be made by the registrar under this sub-section
without first giving the accused person an opportunity of making a statement in
writing to the registrar and of being heard thereon.
(7) Notwithstanding anything contained in the Qanun -e-Shahadat
Order, 1984 (P.O. No. Act X of 1984), when any proceedings are instituted under
this section it shall be the duty of the liquidator and of every officer and agent of
the company past and present (other than the defendant in the proceedings) to give
all assistance in connection with the prosecution which he is reasonably able to
give, and for the purposes of this sub -section the expression “agent” in relation to
a company shall be deemed to include any banker or legal adviser of the company
and any person employed by the company as a uditor, whether that person is or is
not an officer of the company.
(8) If any person fails or neglects to give assistance in manner required
by sub -section (7), the Court may, on the application of the r egistrar or the
prosecutor, as the case may be, direct that person to comply with the requirements
of the said sub -section, and where any such application is made with respect to a
liquidator, the Court may, unless it appears that the failure or neglect to comply was
due to the liquidator not having in his hands sufficient assets of the company to
enable him so to do, direct that the cost of the application shall be borne by the
liquidator personally.