Question

Sec 253 of the Companies Act, 2013 deals with

• A. Determination of Sickness
• B. Liability of Directors
• C. Promoters
• D. Memorandum

Hint:

While the Insolvency and Bankruptcy Code, 2016, is now the primary law for corporate insolvency, it is still important to know the corresponding provisions in the Companies Act, 2013, like Chapter XIX on the revival of sick companies, for a complete understanding of the legislative history.

Answer 1

The Correct Option is A

Step 1: Understanding the Concept:
The question asks for the subject matter of Section 253 of the Companies Act, 2013. This section is part of Chapter XIX of the Act, which deals with the Revival and Rehabilitation of Sick Companies.
Step 2: Key Formula or Approach:
The heading of Section 253 of the Companies Act, 2013 is "Determination of sickness".
This section lays down the criteria by which a company can be determined to be a "sick company." A company could apply to the Tribunal (National Company Law Tribunal) for a determination of sickness if its secured creditors representing fifty percent or more of its outstanding debt have taken action to recover their debts.
Step 3: Detailed Explanation:
The purpose of this section was to create a formal process to identify companies in financial distress so that measures for their revival and rehabilitation could be initiated. This entire framework under the Companies Act has now been largely superseded by the Insolvency and Bankruptcy Code, 2016, but Section 253 remains in the statute book and specifically deals with the determination of sickness.
Step 4: Final Answer:
Sec 253 of the Companies Act, 2013 deals with Determination of Sickness.