Section 339 — Liability for fraudulent conduct of business

(1) If in the course of the winding up of a
company, it appears that any business of the company has been carried on with intent to defr aud creditors
of the company or any other persons or for any fraudulent purpose, the Tribunal, on the application of the
Official Liquidator, or the Company Liquidator or any creditor or contributory of the company, may, if it
thinks it proper so to do, declare that any person, who is or has been a director, manager, or officer of the
company or any persons who were knowingly parties to the carrying on of the business in the manner
aforesaid shall be personally responsible, without any limitation of liabili ty, for all or any of the debts or
other liabilities of the company as the Tribunal may direct:
Provided that on the hearing of an application under this sub -section, the Official Liquidator or the
Company Liquidator, as the case may be, may himself give evidence or call witnesses.
(2) Where the Tribunal makes any such declaration, it may give such further directions as it thinks
proper for the purpose of giving effect to that declaration and, in particular,—

1. Subs. by Act 31 of 2016, s. 255 and the Eleventh Schedule, for “or which subsequently passes a resolution for voluntary winding
up,” (w.e.f. 15-11-2016).

(a) make provision for making the liability of a ny such person under the declaration a charge on
any debt or obligation due from the company to him, or on any mortgage or charge or any interest in
any mortgage or charge on any assets of the company held by or vested in him, or any person on his
behalf, or any person claiming as assignee from or through the person liable or any person acting on
his behalf;
(b) make such further order as may be necessary for the purpose of enforcing any charge imposed
under this sub-section.
(3) Where any business of a company is carried on with such intent or for such purpose as is mentioned
in sub-section (1), every person who was knowingly a party to the carrying on of the business in the manner
aforesaid, shall be liable for action under section 447.
(4) This section shall apply, notwithstanding that the person concerned may be punishable under any
other law for the time being in force in respect of the matters on the ground of which the declaration is to
be made.
Explanation.—For the purposes of this section,—
(a) the expression “assignee” includes any person to whom or in whose favour, by the directions
of the person liable, the debt, obligation, mortgage or charge was created, issued or transferred or the
interest was created, but does not include an assignee for valua ble consideration, not including
consideration by way of marriage, given in good faith and without notice of any of the matters on the
ground of which the declaration is made;
(b) the expression “officer” includes any person in accordance with whose directions or instructions