Chapter 26 Winding-up by Tribunal under the Companies Act, 2013 – Corporate Restructuring Insolvency Liquidation & Winding Up Notes is designed strictly as per the latest syllabus and exam pattern.
Winding-up by Tribunal under the Companies Act, 2013 – Corporate Restructuring Insolvency Liquidation & Winding Up Study Material
Question 1.
Write a short note on the following:
Order of priority of debts under winding-up process. (June 2013, 3 marks)
Answer:
In the winding up of a company under the Companies Act, 2013, the debts relating of the workmen’s dues and the Dues of the Secured creditor on a paripassu basis shall be paid in priority to all other debts:
Provided that in case of the. winding up of a company, the sums referred above, which are payable for a period of two years preceding the winding up order, shall be paid in priority to all other debts (including debts due to secured creditors)
Question 2.
Write a note on the following:
Four grounds on which a company may be wound-up (June 2015, 4 marks)
Answer:
A company under Section 271 may be wound up by the tribunal if
(a) if the company has, by special resolution, resolved that the company be wound up by the tribunal;
(b) if the company has acted against the interests of the sovereignty and integrity of India, the security of the State, friendly relations with foreign States, public order, decency or morality;
(c) if on an application made by the Registrar or any other person authorised by the Central Government by notification under this Act, the Tribunal is of the opinion that the affairs of the company have been conducted in a fraudulent manner or the company was formed for fraudulent and unlawful purpose or the persons concerned in the formation or management of its affairs have been guilty of fraud, misfeasance or misconduct in connection therewith and that it is proper that the company be would up;
(d) 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
(e) if the Tribunal is of the opinion that it is just and equitable that the company should be wound up.
Question 3.
Write a short note on winding up under the Companies Act, 2013 with special reference to Insolvency and Bankruptcy Code, 2016. (Dec 2018, 5 marks)
Answer:
The Companies Act, 2013 contain provisions for winding up of companies on various grounds including inability of companies to pay their debts.
The notification of the Insolvency and Bankruptcy Code, 2016 has deleted the provisions in the Companies Act regarding winding up of companies on the ground of inability to pay their debts and those relating to voluntary winding up of companies and detailing the requirements for insolvency resolution of corporate persons and voluntary winding in the Code itself.
The code will exclusively be governing the insolvency resolution and liquidation of corporates.
The Companies Act, 2013 shall continue to govern winding up of companies on various other grounds excluding inability to pay debts. Sections 270 to 288, Sections 290 to 303, Section 324 and Sections 326 to 365 of Chapter XX of the Companies Act, 2013 contain the provisions related to winding up of the company.
Question 4.
Distinguish between winding up under the Companies Act, 2013 and liquidation in terms of the Insolvency and Bankruptcy Code, 2016. (June 2022, 5 marks)
Question 5.
Can the Tribunal order winding-up of the company when a just and equitable ground does not exist at the time of hearing though it might have existed at the time of presenting the petition? Explain. (Dec 2012, 7 marks)
Answer:
If the Tribunal is of the opinion at the time of hearing that it is just and equitable that the company should be wound up, K may be ordered to be wound up. The Tribunal has wide powers and has a complete discretion to decide where it is just and equitable that the company should be wound up. The cases in which wound up was not ordered under just and equitable clause are as follows:
- Where the company was under a loss but there was a chance of its making profit and the majority of shareholders were against winding up.
- Where the directors in the exercise of their power to do so, refused to register the executors of the deceased shareholder even when this caused hardship to the shareholders.
- When there is a honest difference between the petitioner, a director and the other director and he has been outvoted.
- Where the business of the company was temporarily suspended owing to trade depression and was intended to be continued when conditions improved.
- When there is a deadlock in the management of public company.
- If the ‘ just and equitable’ ground does not exist at the time of hearing the petition though it might have existed at the time of presenting the petition.
Thus, Tribunal may not order for wound up on just and equitable ground when just and equitable ground does not exist at the time of hearing the petition though it might have existed at the time of presenting the petition.
Question 6.
“Winding-up and dissolution are synonymous.” Comment. (June 2013, 5 marks)
Answer:
There are many differences among them:
- Winding up is the first stage in the process of bringing about a lawful end to the life of a company. Dissolution is the final stage whereby the existence of a company is withdrawn by law.
- Liquidator can represent the company during winding up but only till the order of dissolution is passed by Tribunal. Once the Tribunal passes dissolution order, the liquidator can no longer represent him.
- Creditors can prove their debts in winding up but not on dissolution of the company.
- Winding up does not always turns up into dissolution. In some cases after paying all the creditors there may be a surplus and a scheme of compromise may be there which may avoid dissolution of company.
- The winding up proceedings are conducted by liquidator whereas dissolution order can only be passed by Tribunal.
Question 7.
(a) ‘Winding-up’ and ‘dissolution’ in respect of a company are the same thing. Comment. (Dec 2013) (5 marks)
(b) Explain ‘preferential payments’ in the process of winding-up. (5 marks)
Answer:
(a) The terms “Winding up’’ and “Dissolution” are sometimes erroneously used to mean the same thing. But according to the Companies Act, 2013, the legal implications of these two terms are quite different and there are fundamental differences between them as regards the legal procedure involved.
The main points of distinction are given below:
1. The entire procedure for bringing about a lawful and to the life of a company is divided into two stages: “Winding up” and “dissolution”. Winding up is the first stage in the process whereby assets are realised, liabilities are paid off and the surplus, if any, distributed among its members. Dissolution is the final stage whereby the existence of the company is withdrawn by the law.
2. The liquidator appointed by the company or the Court carries out the winding up proceedings but the order for dissolution can be passed by the Court only.
3. According to the Companies Act the liquidator can represent the company in the process of winding up. This can be done till the order of dissolution is passed by the Court. Once the Court passes dissolution orders the liquidator can no longer represent the company.
4. Creditors can prove their debts in the winding up but not on the dissolution of the company.
5. Winding up in all cases does not culminate in dissolution. Even after paying all the creditors there may still be a surplus, company may earn profits during the course of beneficial winding up; there may be a scheme of compromise with creditors while company is in winding up and in all such events the company will in all probability come out of winding up and hand over back to shareholders/old management. Dissolution is an act which puts an end to the life of the company.
As such winding Up is only a process while the dissolution puts an end to the existence of the company.
(b) As per Section 327(1) in a winding up, subject to the provisions of Section 326 (i.e. overriding preferential payments), the following shall be paid in priority to all other debts :
(a) all revenues, taxes, cesses and rates due from the company to the Central Government or a State Government or to a local authority at the relevant date, and having become due and payable within the twelve months immediately before that date;
(b) all wages or salary including wages payable for time or piece work and salary earned wholly or in part by way of commission of any employee in respect of services rendered to the company and due for a period not exceeding four months within the twelve months immediately before the relevant date, subject to the condition that the amount payable under this clause to any workman shall not exceed such amount as may be notified;
(c) all accrued holiday remuneration becoming payable to any employee, or in the case of his death, to any other person claiming under him, on the termination of his employment before, or by the winding up order, or, as the case may be, the dissolution of the company;
(d) unless the company is being wound up voluntarily merely for the purposes of reconstruction or amalgamation with another company, all amount due in respect of contributions payable during the period of twelve months immediately before the relevant date by the company as the employer of persons under the Employees’ State Insurance Act, 1948 or any other law for the time being in force;
(e) unless the company has, at the commencement of winding up, under such a contract with any insurer as is mentioned in Section 14 of the Employees Compensation Act, 1923, rights capable of being transferred to and vested in the workmen, all amount due in respect of any compensation or liability for compensation under the said Act in respect of the death or disablement of any employee of the company: when any compensation under the said Act is a weekly payment, the amount payable under this clause shall be taken to be the amount of the lump sum for which such weekly payment could, if redeemable, be redeemed, if the employer has made an application under that Act;
(f) all sums due to any employee from the provident fund, the pension fund, the gratuity fund or any other fund for the welfare of the employees, maintained by the company; and
(g) the expenses of any investigation held in pursuance of Sections 213 and 216, in so far as they are payable by the company.
Question 8.
Labour union of MG Textile Ltd. (MGL) filed a winding-up petition for unpaid wages of workmen. Will the petition be maintainable ? Based on case laws, give your opinion as to the workers’ right in winding-up. (Dec 2015, 5 marks)
Answer:
No, the trade union of the workers of the company are not allowed to file a winding up petition. Section 272 does not authorise the workers to make a winding up petition.
Accordingly, the workers cannot make a winding up petition. [National Textile Worker’s Union v/s P. R. Ramkrishnan.] But the workers have right to be heard in a winding up petition.
Question 9.
Are ‘winding-up’ and ‘dissolution’ synonymous? Discuss. (Dec 2016, 5 marks)
Answer:
There are many differences among them:
- Winding up is the first stage in the process of bringing about a lawful end to the life of a company. Dissolution is the final stage whereby the existence of a company is withdrawn by law.
- Liquidator can represent the company during winding up but only till the order of dissolution is passed by Tribunal. Once the Tribunal passes dissolution order, the liquidator can no longer represent him.
- Creditors can prove their debts in winding up but not on dissolution of the company.
- Winding up does not always turns up into dissolution. In some cases after paying all the creditors there may be a surplus and a scheme of compromise may be there which may avoid dissolution of company.
- The winding up proceedings are conducted by liquidator whereas dissolution order can only be passed by Tribunal.
Question 10.
“Liquidator appointed by the Tribunal has unquestionable sole authority to deal and disburse the properties during liquidation process.” Elaborate your answer citing circumstances in which a liquidator can be removed. (Dec 2017, 5 marks)
Answer:
In case where the reasonable cause being shown and for reasons to be recorded in writing, the tribunal may remove the provisional liquidator or the Company Liquidator, on any of the following grounds:
(a) misconduct;
(b) fraud or misfeasance;
(c) professional incompetence or failure to exercise due care and diligence in performance of the powers and functions;
(d) inability to act as provisional liquidator or as the case may be, Company Liquidator;
(e) conflict of interest or lack of independence during the term of his appointment that would justify removal.
Further, In the event of death, resignation or removal of the liquidator the Tribunal may transfer the work assigned to him or it to another Company Liquidator for reasons to be recorded in writing.
Question 11.
What are the contents of the report to be submitted to the Tribunal by the Company Liquidator against the winding up order issued by the Tribunal under section 281 (1) of the Companies Act, 2013? (Dec 2019, 5 marks)
Answer:
According to Section 281(1) of the Companies Act, 2013, Company Liquidator shall submit to the Tribunal, a report containing the following particulars:
(a) the nature iqnd details of the assets of the company including their location and value, stating separately the cash balance in hand and in the bank, if any, and the negotiable securities, if any, held by the company:
Provided that the valuation of the assets shall be obtained from registered valuers for this purpose;
(b) amount of capital issued, subscribed and paid-up;
(c) the existing and contingent liabilities of the company including names, addresses and occupations of its creditors, stating separately the amount of secured and unsecured debts, and in the case of secured debts, particulars of the securities given, whether by the company or an officer thereof, their value and the dates on which they were given;
(d) the debts due to the company and the names, addresses and occupations of the persons from whom they are due and the amount likely to be realised on account thereof;
(e) guarantees, if any, extended by the company;
(f) list of contributories and dues, if any, payable by them and details of any unpaid call;
(g) details of trademarks and intellectual properties, if any, owned by the company;
(h) details of subsisting contracts, joint ventures and collaborations, if any;
(i) details of holding and subsidiary companies, if any;
(j) details of legal cases filed by or against the company; and
(k) any other information which the Tribunal may direct or the Company Liquidator may consider necessary to include.
The Company Liquidator shall include in his report the manner in which the company was promoted or formed and whether in his opinion any fraud has been committed by any person in its promotion or formation or by any officer of the company in relation to the company since the formation thereof and any other matters which, in his opinion, is desirable to bring to the notice of the Tribunal. [Section 281(2)].
The Company Liquidator shall also make a report on the viability of the business of the company or the steps which, in his opinion, are necessary for maximising the value of the assets of the company. [Section 281 (3)].
Question 12.
“Filing of Statement of Affairs by the Directors of the Company on which a prima facie case is felt by the Tribunal, is a pre-requisite to oppose such winding-up Petition pending in terms of Companies Act, 2013″. Furnish your views in brief. (Aug 2021, 5 marks)
Answer:
Section 274 of the Companies Act, 2013 lays down that in case, where the Tribunal is satisfied that on a petition that the winding up of the company is to be made out, it may by an order direct the company to file its objections along with a statement of its affairs within thirty days of the order which can be allowed a further period of thirty days in a situation of contingency or special circumstances.
In case of failure, the company and its directors may forfeit the right to file any objection and also liable for punishment of imprisonment and fine. For any prosecution for default by directors or officers of the Company, the complaint may be filed before the special court in terms of Section 274(5). As such, filing of Statement of Affairs by the directors is an absolute necessity in case the Company has objection points.
Question 13.
The Tribunal has the powers to remove the provisional liquidator or the Company Liquidator. Mention the grounds where the Tribunal may exercise its power in this regard. (Dec 2021, 3 marks)
Answer:
Section 276 of the Companies Act, 2013 lays down that in case where the reasonable cause being shown and for reasons to be recorded in writing, the tribunal may remove the provisional liquidator or the Company Liquidator, on any of the following grounds:
- misconduct;
- fraud or misfeasance;
- professional incompetence or failure to exercise due care and diligence in performance of the powers and functions;
- inability to act as provisional liquidator or as the case may be, Company Liquidator;
- conflict of interest or lack of independence during the term of his appointment that would justify removal.
Further, in the event of death, resignation or removal of the liquidator the Tribunal may transfer the work assigned to him or it to another Company Liquidator for reasons to be recorded in writing.
Question 14.
GCL Ltd. is a company engaged in the business of accepting deposits from the general public and lending the same to the needy at a higher rate of interest and thereby earning profits. Over a period of time, GCL Ltd. started incurring losses and did not pay back to their depositors. Ranjan, one of the deposit holders of GCL Ltd. issued statutory notice to GCL Ltd. asking for repayment of amount due to him. In spite of the lapse of 21 days, the GCL Ltd. neither paid the amount to Ranjan nor replied to the statutory notice served to it.
Ranjan, aggrieved by the conduct of the GCL Ltd., filed petition for winding-up of GCL Ltd. before the High Court. In response to the said petition, GCL Ltd. stated that if the loans and advances made by it were recovered, GCL Ltd. would have been able to repay the amount due to the deposit holders. However, due to the financial crises and the globalisation of markets, GCL Ltd. was unable to repay the amount. GCL, Ltd. has submitted profit and loss account and balance sheet according to which the liability of the company was more than its assets.
Considering the above facts, give your comments as to whether Ranjan would be successful in getting the winding-up order against GCL Ltd. (June 2012, 7 marks)
Answer:
- In the above case, GCL Ltd. was unable to repay the amount to Mr. Ranjan.
- Profit & Loss & Balance sheet suggests that the liability of the company was more than its assets.
- Hence in this case, it can be said that company is unable to pay its debts.
- But inability to pay its debts does not constitute a ground on which a Company may be wound up by the Tribunal.
Question 15.
Rose Textiles India Ltd. (RTIL) is a company engaged in the business of textiles manufacturing. Due to the global slowdown, the business of RTIL has been badly affected. The members of the company have taken a decision for winding-up the company without consulting creditors of the company. One of the creditors representing 25% of the total outstanding liability objected to the company’s proposal on the ground that the consent of creditors is mandatory and by not doing so, company’s winding-up proposal is bad in law. Give your comments keeping in view the provisions of the Companies Act, 2013. (June 2014, 5 marks)
Answer:
When the company is solvent and is able to pay its liabilities in full, it need not consult the creditors or call their meeting. Its directors, or where they are more than two, the majority of its directors may, at a meeting of the Board, make a declaration of solvency verified by an affidavit stating that they have made full enquiry into the affairs of the company and that having done so they have formed an opinion that the company has no debts or that it will be able to pay its debts in full within such period not exceeding three years from the commencement of the winding up as may be specified in the declaration.
Considering the facts that Rosebys Textiles India Limited (RTIL) is in trouble due to global slowdown and its business has been badly affected. Winding up of the company will affect the creditors at large due to bad financial position. The objection of creditors in the given situation is justifiable.
Question 16.
Lalit Hardware Ltd. (LHL) was ordered to be wound-up and Nayan was appointed as the official liquidator. The official liquidator sought to sell the goods, which were imported by availing duty exemption granted in favour of 100% export oriented unit under the scheme without payment of any customs duty by bonding the goods to the Department. Since export obligations were not fulfilled, the Commissioner of Customs claimed recovery of customs duty and central excise duty and requested the official liquidator to incorporate in the sale notice that the removal of the goods are subject to payment of duty components as the goods are bonded goods. Official liquidator refused to accept this condition. The Commissioner of Customs filed writ petition seeking prevention of removal of goods without settlement of customs duty, central excise duty and interest payable thereon.
Based on the above facts, give your opinion whether writ petition in the case of a company which is in the process of liquidation by the order of company Tribunal is maintainable? (Dec 2015, 5 marks)
“Answer:
‘The Writ Petition is not maintainable. The Companies Rules give wide powers to the Tribunal to pass and order in furtherance of justice and taking into consideration of Charge created over properties, which were directed to be sold by the official liquidator under direction of the Tribunal. The Commissioner of Custom was required to make request to the Tribunal and appropriate direction could be framed from the Tribunal.
After the appointment of official liquidator, the entire affairs of the company had come to the hands of the official liquidator controlled by the Tribunal. Hence, the writ petition is not maintainable and Commissioner of Customs, if desired, may approach the Tribunal. Commissioner of Customs and Central Excise vs. Official Liquidator (2007) 139 Company case 591 (Mad).
Question 17.
If a company is unable to pay its debts, can creditors file petition in tribunal for winding up of the Company?
Answer:
If a company is unable to pay its debts, creditors can’t file petition in tribunal in for winding up of the Company. However, the Companies Act, 2013 shall continue to govern winding up of companies on various other grounds excluding inability to pay debts.
Question 18.
Can the Tribunal refuse to make a winding up order on the ground only that the assets of the company have been mortgaged for an amount equal to or in excess of those assets, or that the company has no assets.
Answer:
The Tribunal shall not refuse to make a winding up order on the ground only that the assets of the company have been mortgaged for an amount equal to or in excess of those assets, or that the company has no assets.
Question 19.
Where a petition is presented on the ground that it is just and equitable that the company should be wound up, the Tribunal may refuse to make an order of winding up. Comment.
Answer:
Where a petition is presented on the ground that it is just and equitable that the company should be wound up, the Tribunal may refuse to make an order of winding up, if it is of the opinion that some other remedy is available to the petitioners and that they are acting unreasonably in seeking to have the company wound up instead of pursuing the other remedy.
Question 20.
What are the liabilities and rights of certain persons fraudulently preferred?
Answer:
Where a company is being wound up and anything made, taken or done after the commencement of this Act is invalid under section 328 as a /fraudulent preference of a person interested in property mortgaged or charge to secure the company’s debt, then, without prejudice to any rights or liabilities arising, apart from this provision, the person preferred shall be subject to the same liabilities, and shall have the same rights, as if he had undertaken to be personally liable as a surety for the debt, to the extent of the mortgage or charge on the property or the value of his interest, whichever is less.
The value of the interest of the person preferred under sub-section (1) shall be determined as at the date of the transaction constituting the fraudulent preference, as if the interest were free of all encumbrances other than those to which the mortgage or charge for the debt of the company was then subject
On an application made to the Tribunal with respect to any payment on the ground that the payment was a fraudulent preference of a surety or guarantor, the Tribunal shall have jurisdiction to determine any questions with respect to the payment arising between the person to whom the payment was made and the surety or guarantor and to grant relief in respect thereof, not withstanding that it is not necessary so to do for the purposes of the winding up, and for that purpose, may give leave to bring in the surety or guarantor as a third party as in the case of a suit for the recovery of the sum paid.
Winding-up by Tribunal under the Companies Act, 2013 Notes
Important Changes brought about by the Insolvency and Bankruptcy Code, 2016 relating to winding up in the Companies Act, 2013
“Winding up”
The expression “winding up” was not defined in the Companies Act, 2013 or in the erstwhile Companies Act of 1956. The Eleventh Schedule has added sub-section (94A) to section 2 of the Companies Act, 1956. The definition of “winding up” reads as follows:
“Winding up” means winding up under this Act or liquidation under the Insolvency and Bankruptcy Code, 2016, as applicable.”
Voluntary winding up
Provisions relating to voluntary winding up in the Companies Act, 2013 i.e., sections 304 to 323 have been omitted by the Insolvency and Bankruptcy Code, 2016. Voluntary liquidation is now dealt with under section 59 of the Insolvency and Bankruptcy Code, 2016.
Inability to pay debts
Insolvency and Bankruptcy Code, 2016 has substituted section 271 of the Companies Act, 2013. Section 271 of the Companies Act, 2013, before its substitution by the Insolvency and Bankruptcy Code, 2016, provided the seven grounds for winding up by Tribunal. Now two ground have been deleted as below:
- if the company is unable to pay its debts
- if the Tribunal has ordered the winding up of the company under Chapter XIX
Circumstances in which Company may be Wound up by Tribunal
- if the company has, by special resolution, resolved that the company be wound up by the Tribunal
- if the company has acted against the interests of the sovereignty and integrity of India, the security of the State, friendly relations with foreign’ States, public order, decency or morality
- if on an application made by the Registrar or any other person authorised by the Central Government by notification under this Act, the Tribunal is of the opinion that the affairs of the company have been conducted in a fraudulent manner or the company was formed for fraudulent and unlawful purpose or the persons concerned in the formation or management of its affairs have been guilty of fraud, misfeasance or misconduct in connection therewith and that it is proper that the company be wound up
- 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
- if the Tribunal is of the opinion that it is just and equitable that the company should be wound up
Who may file Petition for Winding up
- the company
- any contributory or contributories
- all or any of the persons specified in clauses (a) and (b)
- the Registrar
- any person authorised by the Central Government in that behalf
- in a case falling under clause (b) of section 271, by the Central Government or a State Government
Powers of Tribunal
The Tribunal may, on receipt of a petition for winding up under section 272 pass any of the following orders, namely:
- dismiss it, with or without costs
- make any interim order as it thinks fit
- appoint a provisional liquidator of the company till the making of a winding up order
- appoint a provisional liquidator of the company till the making of a winding up order
- any other order as it thinks fit
Provided that an order under this sub-section shall be made within ninety days from the date of presentation of the petition
Where the Tribunal is satisfied that on a petition that the winding up of the company is to be made out, he may by an order direct the company to file its objections along with a statement of its affairs within thirty days of the order
Company Liquidators and their Appointments
- For the purposes of winding up of a company by the Tribunal, the Tribunal at the time of the passing of the order of winding up, shall appoint an Official Liquidator or a liquidator from the panel maintained under sub-section (2) as the Company Liquidator
- such liquidator shall file a declaration within seven days from the date of appointment in the prescribed form disclosing conflict of interest or lack of independence in respect of his appointment
Ground of Removal and Replacement of Liquidator
- misconduct
- fraud Or misfeasance
- professional incompetence or failure to exercise due care and diligence in performance of the powers and functions
- inability to act as provisional liquidator or as the case may be, Company Liquidator
- conflict of interest or lack of independence during the term of his appointment that would justify removal
Intimation for Winding Up
According to Section 277, upon the order for appointment of provisional liquidator or for the winding up of a company, the tribunal shall within a period not exceeding seven days from the date of passing of the order give intimation of the appointment to the Company Liquidator or provisional liquidator and the Registrar.
The order for the winding up of a company shall operate in favour of all the creditors and all contributories of the company as if it had been made out on the joint petition of creditors and contributories.
Stay of Suits on Winding up Order
When a winding up order has been passed or a provisional liquidator has been appointed, no suit or other legal proceeding shall be commenced, or if pending at the date of the winding up order, shall be proceeded with, by or against the company, except with the leave of the Tribunal
Nothing in sub-section (1) shall apply to any proceeding pending in appeal before the supreme Court or a High Court.
Submission of Report by Company Liquidator
Where the Tribunal has made a winding up order or appointed a Company Liquidator, he is required to submit a report containing the following particulars.
- the nature and details of the assets of the company
- amount of capital issued, subscribed and paid-up
- the existing and contingent liabilities of the company
- the debts due to the company
- guarantees, if any, extended by the company
- list of contributories and dues
- details of trademarks and intellectual properties
- details of subsisting contracts, joint ventures and collaborations
- details of holding and subsidiary companies
- details of legal cases filed by or against the company
The Company Liquidator shall also make a report on the viability of the business of the company or the steps which, in his opinion, are necessary for maximising the value of the assets of the company
Directions of Tribunal on Report of Company Liquidator
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
The Tribunal may, on examination of the reports submitted to it by the Company Liquidator and after hearing the Company Liquidator, creditors or conti ibutories or any other interested person, order sale of the company as a going concern or its assets or part thereof
Custody of Company’s Properties
Upon the winding up order made by the tribunal the Company Liquidator or the provisional liquidator take into his or its custody or control all the property, effects and actionable claims
Advisory Committee
- The Tribunal may, while passing an order of winding up of a company, direct that there shall be, an advisory committee to advise the Company Liquidator and to report to the Tribunal on such matters as the Tribunal may direct.
- The advisory committee shall have the right to inspect the books of account and other documents, assets and properties of the company under liquidation at a reasonable time.
- The meeting of advisory committee shall be chaired by the Company Liquidator.
Powers and Duties of Company Liquidator
- to carry on the business of the company so far as may be necessary for the beneficial winding up of the company
- to do all acts and to execute, in the name and on behalf of the company, all deeds, receipts and other documents, and for that purpose, to use, when necessary, the company’s seal
- to sell the immovable and movable property and actionable claims of the company by public auction
- to sell the whole of the undertaking of the company as a going concern
- to raise any money required on the security of the assets of the company
- to institute or defend any suit, prosecution or other legal proceeding
- to invite and settle claim of creditors, employees or any other claimant and distribute sale proceeds
- to inspect the records and returns of the company
- to prove rank and claim in the insolvency of any contributory
- to draw, accept, make and endorse any negotiable instruments
- to take out, in his official name, letters of administration to any deceased contributory
- to obtain any professional assistance from any person or appoint any professional
- to take all such actions, steps, or to sign, execute and verify any paper, deed, document, application, petition, affidavit, bond or instrument
Payment of Debts by Contributory and Extent of Set-off
The Tribunal may, at any time after passing of a winding up order, pass an order requiring any contributory for the time being on the list of contributories to pay, in the manner directed by the order, any money due to the company, from him or from the estate of the person whom he represents, exclusive of any money payable by him or the estate by virtue of any call in pursuance of this Act.
Power to Summon Persons Suspected of having Property of Company
The Tribunal may, at any time after the appointment of a provisional liquidator or the passing of a winding up order, summon before it any officer of the company or person known or suspected to have in his possession any property or books or papers, of the company, or known or suspected to be indebted to the company, or any person whom the Tribunal thinks to be capable of giving information concerning the promotion, formation, trade, dealings, property, books or papers, or affairs of the company.
Arrest of Person trying to Leave India or Abscond
The Tribunal, if satisfied that a contributory or a person having property, accounts or papers of the company in his possession is about to leave India or otherwise to abscond, or is about to remove or conceal any of his property, for the purpose of evading payment of calls or of avoiding examination respecting the affairs of the company, the Tribunal may cause the contributory to be detained until such time as the Tribunal may order; and his books and papers and movable property to be seized and safely kept until such time as the Tribunal may think fit.
Dissolution of Company by Tribunal
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
The Tribunal shall on an application filed by the Company Liquidator under sub-section (1) or when the Tribunal is of the opinion that it is just and reasonable in the circumstances of the case that an order for the dissolution of the company should be made, make an order that the company be dissolved from the date of the order, and the company shall be dissolved accordingly.
A copy of the order shall, within thirty days from the date thereof, be forwarded by the Company Liquidator to the Registrar who shall record in the register relating to the company a minute of the dissolution of the company
Fraudulent Preference
Section 328 of the Companies Act, 2013 deals with fraudulent preference. Sub-section (1) of section 328 provides that where a company has given preference to a person who is one of the creditors of the company or a surety or guarantor for any of the debts or other liabilities of the company, and the company does anything or suffers anything done which has the effect of putting that person into a position which, in the event of the company going into liquidation, will be better than the position he would have been in if that thing had not been done prior to six months of making winding up application, the Tribunal, if satisfied that, such transaction is a fraudulent preference may order as it may think fit for restoring the position to what it would have been if the company had not given that preference.