Winding Up

of a
company
and NCLT

-by Group 10 Sec C

Nitish Aggarwal
150101079
Ankur Tripathi
150102019
Shipra
150102089
Suman Gon
150102099
Faraz Zeeshan
150103062
Sandip Ghosh
150103149
Sumedha Anand
150103180

WHAT IS WINDING UP
In order to dissolve a company the process that
precedes it is known as WINDING UP of a company
In The Companies Act 2013 has a separate chapter
i.e. Chapter XX especially for Winding Up
Section 270 to 365 deals with this subject of
winding up
Some recent Companies in news in regards to
winding up:

Calcutta HC orders winding up of

Dunlop India
-The Hindu ,31st Jan 2013

Karnataka HC admits 6
winding up petitions
against UBHL
-Business Standard 3rd Jan

WAYS OF WINDING UP
As State in Section 270 (1) winding up of
company can be done in two ways
By the tribunal (Section 271 to Section
303)
Voluntary section (Section 304 to section
323)
Sec 271 provides the circumstances in which the
wound by the Tribunal
Sub clause (b) and ( c) of Section 271(1) are new
grounds for winding up by the tribunal
Provisional liquidator or Company liquidator to
be appointed from a panel maintained by the
Central Government
The panel may consists of CAs, Advocates, CS,
and cost accountants.
LLPs

WINDING
UP
BY THE
TRIBUNAL

VOLUNTA
RY

BY TRIBUNAL
Sec 271. (1) A company may, on a petition under section 272, be wound up by the Tribunal if
a. The company is unable to pay its debts.
b. The company has by special resolution resolved that the company be wound up by the
Tribunal.
c. The company has acted against the interest of the sovereignty and integrity of India, the
security of the State, friendly relations with foreign states, public order, decency or morality.
d. The Tribunal has ordered the winding up of the company under Chapter XIX.
e. If the affairs of the company have been conducted in a fraudulent manner or the company
was formed for fraudulent and unlawful purposes
f.

If the company has not filed financial statements or annual returns for the preceding five
consecutive financial years.

g.

If the Tribunal is of the opinion that it is just and equitable that be company should be
wound up.

PETITION FOR WINDING UP

Section 272(I)
(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 persons specified in clauses (a), (b) and (c)
together;
(e) The Registrar;
(f) Any person authorised by the Central Government in that behalf; or
(g) In a case falling under clause (c) of sub-section (1) of section 271,
by the Central Government or a State Government

POWERS OF TRIBUNAL
Sec 340

(1) 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:

LIMITATIONS
a. Order to be given in 90 days
b. Notice to company for opportunity to get fair representation,
Unless Special reasons
c. Cannot refuse passing winding order basis of specific reasons
d. Search for alternative remedies

LIQUIDATOR

Sec 290(1) Subject to directions by the Tribunal, if any, in this regard, the Company
Liquidator, in a winding up of a company by the Tribunal, shall have the power
(a) to carry on the business of the company so far as may be necessary for the
beneficial winding up of the company;
(b) 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 companys seal;
(c) to sell the immovable and movable property and actionable claims of the
company by public auction or private contract, with power to transfer such property
to any person or body corporate, or to sell the same in parcels;
(d) to sell the whole of the undertaking of the company as a going concern;
(e) to raise any money required on the security of the assets of the company;
(f) to institute or defend any suit, prosecution or other legal proceeding, civil or
criminal, in the name and on behalf of the company

CONTD.
(g) to invite and settle claim of creditors, employees or any other claimant and distribute
sale proceeds in accordance with priorities
(h) to inspect the records and returns of the company on the files of the Registrar or any
other authority;
(k) to take out, in his official name, letters of administration to any deceased contributory,
and to do in his official name any other act necessary for obtaining payment of any money
due from a contributory or his estate which cannot be conveniently done in the name of the
company,
(l) to obtain any professional assistance from any person or appoint any professional, in
discharge of his duties, obligations and responsibilities and for
protection of the assets of the company, appoint an agent to do any business which the
Company Liquidator is unable to do himself;
(m) to take all such actions, steps, or to sign, execute and verify any paper,
deed, document, application, petition, affidavit, bond or instrument as may be
necessary,
(i) for winding up of the company;
(ii) for distribution of assets;
(iii) in discharge of his duties and obligations and functions as Company Liquidator;

POWERS OF LIQUIDATOR
section 314
(1) The Company Liquidator shall perform such functions and discharge such duties as may
be determined from time to time by the company or the creditors, as the case may be.
(2) The Company Liquidator shall settle the list of contributories, which shall be prima
facie evidence of the liability of the persons named therein to be contributories.
(3) The Company Liquidator shall call general meetings of the company for the purpose of
obtaining the sanction of the company by ordinary or special resolution, as the case may
require, or for any other purpose he may consider necessary.
(4) The Company Liquidator shall maintain regular and proper books of account in such
form and in such manner as may be prescribed and the members and creditors and any
officer authorised by the Central Government may inspect such books of account.
(5) The Company Liquidator shall prepare quarterly statement of accounts in such form
and manner as may be prescribed and file such statement of accounts duly audited within
thirty days from the close of each quarter with the Registrar, failing which the Company
Liquidator shall be punishable with fine which may extend to five thousand rupees for
every day during which the failure continues.

WINDING-UP PETITION AND ITS HEARING

Petition of winding up company along with statement of affairs
Admission of petition and directions as to advertisement
Petition by a contingent or prospective creditor
Copy of petition to be furnished
Advertisement of petition
Application for withdrawal of petition and substitution of creditor or
contributory
Affidavit in opposition & Affidavit in reply
Procedure on substitution

WINDING-UP ORDER
Order to be sent to Company liquidator and Registrar of Companies
Contents of winding-up order
Direction on making the winding-up order and advertisement of the
order
Declaration by company liquidator for the purposed of Section
275(6)
Company Liquidator to take charge of assets and books of company
Forms of proceeding after winding-up order is made

2.VOLUNTARY
Sec 304. A company may be wound up voluntarily,
(a) if the company in general meeting passes a resolution requiring the company
to be wound up voluntarily as a result of the expiry of the period for its duration,
if any, fixed by its articles or on the occurrence of any event in respect of which
the articles provide that the company should be dissolved; or
(b) if the company passes a special resolution that the company be wound up
voluntarily.
Declaration of solvency
Publication of resolution to wind up voluntarily
Commencement of voluntary up winding
Effect- Cease to carry business except for beneficial winding up
Appointment of Company Liquidator

VOLUNTARY WINDING-UP
Declaration in voluntary winding-up.-The declaration to be made by the
director or directors or in case the company has more than two directors,
by the majority of directors of a company under sub-section (1) of section
305
Statement of position .- For the purposes of clause (a) of subsection (2) of
section 306
Winding up by the Tribunal An application for winding up of the company
by the Tribunal in pursuance of clause (b) of sub-section (3) of section 306
shall be made in Form No. 53.
Publication of resolution to wind up voluntarily For the purposes of subsection (1) of section 307, notice of the resolution to wind up shall be given

ROLE OF LIQUIDATOR IN
VOLUNTARY WINDING-UP
Declaration disclosing conflict of interest within 7 days of
appointment Section 310(4)
Notice of appointment of liquidator Section 312(1)
Books keeping for the purpose of Section 314(4)
Quarterly Statements of Accounts
Banking Account of company liquidator
Bills and securities to be deposited in Bank
Investment of surplus fund
Final report of the winding up under section 318

FINAL MEETING
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 and thereafter call a general meeting of the company for
the purpose of laying the final winding up accounts before it
Section 318

REPORT
Consideration by Tribunal of the report under
section 318 and final accounts
Inspection by creditor or contributory of reports filed
by liquidator
Application under Section 321(2)
Public examination under section 317 , mutatis
mutandis

WINDING UP OF INSOLVENT
COMPANY
Insolvent section 324
1) I n the winding up of an insolvent company, the same rules shall
prevail and be observed with regard to
(a) debts provable;
(b) the valuation of annuities and future and contingent liabilities;
and
(c) the respective rights of secured and unsecured creditors, as are in
force for the time being under the law of insolvency with respect to
the estates of persons adjudged insolvent:
Provided that the security of every secured creditor shall be deemed
to be subject to a pari passu charge in favour of the workmen to the
extent of the workmens portion there in

WINDING UP OF INSOLVENT
COMPANY
Pari Passu latin Fairly, Proportionally, at equal footing; without preference
Illustration

WINDING UP BY CREDITOR

WINDING UP BY CREDITORDEMANDED BY CREDITORS

WINDING UP VOLUNTARY
WHEN ASSETS>LIABILITIES

NCLT

RECENT CASES AGAINST

NCLT