Section 278 of the Companies Act, 2013
Section 278 of the Companies Act, 2013 relates to the Power of the Central Government to take over the management of a company in certain cases.
✅ Section 278 – Power of Central Government to Take Over Management
Key Provisions:
When Applicable:
If the Central Government, after conducting an investigation under the Companies Act, is satisfied that it is necessary to take immediate action to protect the interests of the company, its shareholders, or the public.
Power to Appoint Administrator:
The Central Government may appoint an administrator to manage the affairs of the company.
The administrator will take over the management and conduct of the company.
Duration:
The Central Government may direct the company or its directors to hand over management to the appointed administrator for such period as it deems fit.
Conditions:
The Government can act in cases involving fraud, mismanagement, oppression, or other circumstances detrimental to company or public interest.
Protection:
Any action taken by the Government under this section shall be deemed valid and not liable to be questioned in any court or authority except through an appeal or revision provided under the Act.
⚖️ Example:
If a company is found to be involved in serious financial irregularities or fraud affecting many investors, the Central Government can invoke Section 278 to appoint an administrator and take over the company’s management temporarily.
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