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Submitted by

ROHIT KRISHNAN (PGP14041)RISHI KATIYAR (PGP14040)

RINI SHEPHALI (PGP14039)

RAVINATH SINHA (PGP14038)

SINDHU NA (PGP14042)

SOMAL KANT(PGP14043)

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Winding UpAn Intro

The information pertaining to winding up of a company is given in Chapter XX of the New

Companies Act 2013

There are two modes for winding up of a company

According to Section270 of the Companies Act, 2013, the winding up of a company may bedone either by the Tribunal or Voluntarily.

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National Company Law Tribunal

The Central Government shall, by notification, constitute, with effect from such

date as may be specified therein, a Tribunal to be known as the National Company Law

Tribunal consisting of a President and such number of Judicial and Technical members, as

the Central Government may deem necessary, to be appointed by it by notification, to

exercise and discharge such powers and functions as are, or may be, conferred on it by or

under this Act or any other law for the time being in force.

NCLT is proposed body that has received approval from Supreme Court.

It will replace the Company Law Board and the Board for Industrial and Financial

Reconstruction (BIFR) as the governing body for all the companies in India under

Companies Act of 2013.

The tribunal has the responsibility of facilitating the timely unlocking of the value ofdistressed corporate assets once it takes over the process of liquidation of companies,

currently performed by official liquidators attached to high courts.

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By Tribunal

A company may be wound up by the Tribunal on a petition filed under Section 272 of the Act.

The company may be wound up by Tribunal for one or more of the following reasons:

1. If the company is unable to pay its debts;

2. If the company has resolved by special resolution that the company be wound up by the Tribunal;

3. If the company has acted against the interests of the sovereignty and integrity of India, its security of

the State, friendly relations with foreign States, public order, decency or morality;

4. If the Tribunal has ordered the winding up of the company under Chapter XIX i.e. in case of a sick

company;

5. If, on application by the Registrar or the Government, the Tribunal is of the opinion that the affairs of

the company has been conducted in a fraudulent manner or the company was formed for fraudulent

and unlawful purpose.

6. If the company has made a default in filing with the Registrar its financial statements or annual

returns for immediately preceding five consecutive financial years; or

7. If the Tribunal is of the opinion that it is just and equitable to wind up the company.

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Petition for Winding Up

A petition for the winding up of a company shall be presented to the Tribunal by any of the

following:

(a) the company;

(b) any creditor or creditors, including any contingent or prospective creditor or

creditors;

(c) any contributory or contributories;

d) All or any of the person in above clauses (a), (b) and (c) together;

e) The Registrar;

f) Any person authorized by the Central Government in that behalf; and

g) In certain situations by the Central Government or State Government.

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Petition for Winding Up. Contd..

A copy of the petition made under this section shall also be filed with the Registrar and the

Registrar, submit his views to the Tribunal within sixty days of receipt of the petition.

The Tribunal may, on receipt of a petition for winding up under section 272

pass any of the following orders, namely:

(a) dismiss it, with or without costs;

(b) make any interim order as it thinks fit;

(c) appoint a provisional liquidator of the company till the making of a winding

up order;

(d) make an order for the winding up of the company with or without costs; or

(e) any other order as it thinks fit:

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Winding up order

The Tribunal will issue a winding up order if it finds the petition satisfactory

Upon receipt of the order the company will have to file its objections along with a statementof its affairs within thirty days of the receiving the order (in case the petition is filed by any

person other than the company)

Notification should be made in Official Gazette about the order and in the case of a listed

company, the Registrar shall intimate about such appointment or order, as the case may be,

to the stock exchange or exchanges where the securities of the company are listed.

A winding up committee is constituted by tribunal comprising of

(i) Official Liquidator attached to the Tribunal;

(ii) nominee of secured creditors; and

(iii) a professional nominated by the Tribunal.

Winding up committee will assist and monitor the liquidation proceedings

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Responsibilities of Winding up Committee

The winding up committee will assist the Official Liquidator and monitor the liquidation

proceedings .Their Responsibilities include the following.

(i) taking over assets;

(ii) examination of the statement of affairs;

(iii) recovery of property, cash or any other assets of the company including benefits

derived thereof;

(iv) review of audit reports and accounts of the company;

(v) sale of assets;

(vi) finalization of list of creditors and contributories;

(vii) compromise, abandonment and settlement of claims;

(viii) payment of dividends, if any; and

(ix) any other function, as the Tribunal may direct from time to time.

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The Company Liquidator

The official liquidator Company Liquidator, shall be the convener of the meetings of the

winding up committee which shall assist and monitor the liquidation proceedings.

He is appointed by:

(a) the Tribunal in case of winding up by the Tribunal; or

(b) the company or creditors in case of voluntary winding up,

as a Company Liquidator from a panel of professionals maintained by the Central

Government under sub-section (2) of section 275;

The Official Liquidator shall exercise such powers and perform such duties as the Central

Government may prescribe.

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Submission of Report and Further Proceedings

Once the winding up order has been made, within sixty days, the official liquidator submit to

the Tribunal, a report containing all the financial and legal information related to the

company.

Also included in the report are details about companys formation and whether it has any

history of Fraud or malpractice.

The Tribunal shall, on consideration of the report of the Company Liquidator, fix a time limit

within which the entire proceedings shall be completed and the company be dissolved.

Depending on the information in the report the company decide what further course of

action to pursue.

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Custody of Company Property

Once a liquidator is appointed by the tribunal he/she will take into custody all the

property, effects and actionable claims to which the company is or appears to beentitled to and take the measures to protect and preserve the properties of the

company.

The property and effects of the company shall be deemed to be in the custody of the

Tribunal from the date of the order for the winding up of the company.

The tribunal may demand the contributories to surrender or transfer to the Company

Liquidator, any money, property or books and papers in his custody or under his control

to which the company is or appears to be entitled.

Tribunal also deals with all the settlements in all cases where it is required.

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DISSOLUTION

When the affairs of a company have been completely wound up, the Company Liquidator shall

make an application to the Tribunal for dissolution of such company.

If the Tribunal shall make an order that the company be dissolved if it finds that the

circumstances that call for the dissolution of the company are reasonable circumstances of the

and the company shall stand dissolved from the date of the order

A copy of the order shall, within thirty days from the date of issue, be forwarded by the

Company Liquidator to the Registrar who shall record this in the register.

Company liquidatorWithin 30 days

Registrar

POWER OF TRIBUNAL

Has the power to declare a dissolution void

This can be done within 2 years of dissolution of the company on application of the

Company Liquidator

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Voluntary Winding Up

Winding up by the members or creditors without any intervention of the Court is called

voluntary winding up(Sec 304 to Sec 323 ).

Reasons:-

If it is unable to carry on its business

If it was formed only for a limited purpose

If it is unable to meet its financial obligation, and etc.

A company may voluntarily wind up itself, either by passing:

An ordinary resolution

By way of special resolution (Sec 304)

Ex: Neptune Assurance Co. Ltd. vs Union Of India, 1973 SCR (2) 940

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Voluntary Winding Up contd..

Processes involved in Voluntary winding up

Declaration of solvency in case of proposal to wind up voluntarily (sec 305).

Meeting of creditors (sec 306).

Publication of resolution to wind up voluntarily (sec 307).

Commencement and effect of voluntary winding up (sec 308sec 309).

Appointment of Company Liquidator (sec 310)

Power to remove and fill vacancy of Company Liquidator (sec 311).

Notice of Appointment of Company Liquidator to be given to Registrar (sec 312).

Cesser of Board's powers on Appointment of Company Liquidator (sec 313).

Powers and duties of Company Liquidator in Voluntary winding up (sec 314).

Appointment Of committees and Company Liquidator to submit report on progress of

winding up (sec 315-316).

Report of Company Liquidator to Tribunal for Examination of persons (sec 317).

Final meeting And dissolution of company (sec 318).

Power of Company Liquidator to accept shares, etc., as consideration for sale of property

of company (sec 319).

Distribution of property of company (sec 320).

Arrangement when binding on company and creditors (sec 321).

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Declaration of solvency in case of proposal to wind up voluntarily

It is made within five weeks immediately preceding the date of the passing of

the resolution for winding up the company

It is made within five weeks immediately preceding the date of the passing of

the resolution for winding up the company

It is accompanied by a copy of the report of the auditors of the company

prepared in accordance with the provisions of this Act

where there are any assets of the company, it is accompanied by a report of

the valuation of the assets of the company prepared by a registered value

Appointment of Company Liquidator

The company in its general meeting, where a resolution of voluntary winding

up is passed, shall appoint a Company Liquidator from the panel prepared by the CentralGovernment

the appointment of the Company Liquidator under this section

shall be effective only after it is approved by the majority of creditors in value of the

company

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The creditors while approving the appointment of Company Liquidator appointed

by the company or appointing the Company Liquidator of their own choice, as the case

may pass suitable resolution with regard to the fee of the Company Liquidator.

On appointment as Company Liquidator, such liquidator shall file a declaration in

the prescribed form within seven days of the date of appointment disclosing conflict of

interest or lack of independence in respect of his appointment

Final meeting And dissolution of company

As soon as the affairs of a company are fully wound up, the Company Liquidator shall

prepare a report of the winding up showing that the property and assets of the company

have been disposed of and its debt fully discharged or discharged to the satisfaction of the

creditors

Within two weeks after the meeting, the Company Liquidator shall

(a) send to the Registrar(i) a copy of the final winding up accounts of the company and shall make

a return in respect of each meeting and of the date thereof; and

(ii) copies of the resolutions passed in the meetings; and

(b) file an application along with his report

If the Company Liquidator fails to comply with the provisions of this section, he

shall be punishable with fine which may extend to one lakh rupees

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Reference

The Companies act, 2013 :- Ministry of law and justice (Legislative Department)

Ministry of corporate affairs : - http://www.companyliquidator.gov.in/Business knowledge resource:- http://business.gov.in/

AishMGhrana Law Governance Responsibility:- http://aishmghrana.me/
http://www.companyliquidator.gov.in/http://business.gov.in/http://aishmghrana.me/http://aishmghrana.me/http://business.gov.in/http://www.companyliquidator.gov.in/

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