Section 338:

338. Court may disqualify directors (1) Where— (a) a person has been convicted of an offence in connection with the promotion, formation, or management of a company, or has been convicted of a crime involving dishonesty punishable on conviction with a term of imprisonment exceeding 3 months; (b) a person has committed an offence under this Part; (c) a person has, while a director of a company— (i) persistently failed to comply with this Act, the Companies Act 1984 or the Securities Act or, where the company has failed to so comply, persistently failed to take all reasonable steps to ensure such compliance; (ii) been convicted in relation to the performance of his duties as director; (d) within the period of 7 years before the making of the application, a person to whom the application relates, was a director of 2 or more companies and in relation to each of those companies, that person was wholly or substantially responsible for the company— (i) being wound up; (ii) ceasing to carry on business because of its inability to pay its debts as and when they become due; (iii) having a receiver or manager of its property appointed; or (iv) entering into a scheme of compromise or arrangement with its creditors, the Court may make an order that the person shall not, without the leave of the Court, be a director or promoter of, or in any way, whether directly or indirectly, be concerned or take part in the management of a company for a period not exceeding 5 years, as may be specified in the order. C35 – 199 [Issue 1] Companies Act (2) Any person who intends to apply for an order under this section shall give not less than 14 days’ notice of his intention to the person against whom the order is sought, and on the hearing of the application, the person against whom the order is sought may appear and give evidence or call witnesses. (3) An application for an order under this section may be made by the Registrar, the Official Receiver, or by the liquidator of the company, or by a person who is, or has been, a shareholder or creditor of the company, and on the hearing of— (a) an application for an order under this section by the Registrar, the Official Receiver or the liquidator; or (b) an application for leave under this section by a person against whom an order has been made on the application of the Registrar, the Official Receiver or the liquidator, the Registrar, Official Receiver or liquidator shall appear and call the attention of the Court to any matter which may be relevant, and may give evidence or call witnesses. (4) Notwithstanding the criminal liability of the person against whom the order is made, an order under this section may be made on the ground for which the order is to be made. (5) The Court shall, as soon as practicable after the making of an order under this section, give notice to the Registrar that the order has been made and the Registrar shall give notice in the Gazette of the name of the person against whom the order is made. (6) Any person who acts in contravention of an order under this section shall commit an offence and shall, on conviction, be liable to a fine not exceeding 1,000,000 rupees and to imprisonment for a term not exceeding 5 years. (7) In this section, “company” includes a foreign company. [S. 338 amended by s. 156 (1) (l) of Act 22 of 2005 w.e.f. 28 September 2007.]