Winding up of the registered company under the companies Act, 2013

The company may, on a petition under section 272, be winding up by the Tribunal,-

  • If the company is unable to pay its debts;
  • 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 the Tribunal has ordered the winding up of the company under Chapter 19;
  • If on an application made by the Registrar or any other person authorized 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 Private 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; or
  • If the tribunal is of the opinion that it is just and equitable that the company should be wound up.

winding

A company shall be deemed to be unable to pay its debts,-

  • If a creditor, by assignment or otherwise, to whom the company is indebted for an amount exceeding one lakh rupees then due, has served on the company, by causing it to be delivered at its registered office, by registered post or otherwise, a demand requiring the company to pay the amount so due and the public company has failed to pay the sum within twenty-one days after the receipt of such demand or to provide adequate security or re-structure or compound the debt to the reasonable satisfaction of the creditor;
  • If any execution or other process issued on a decree or order of any court or tribunal in favor of a creditor of the company is returned unsatisfied in whole or in part; or
  • If it is proved to the satisfaction of the Tribunal that the company is unable to pay its debts, and, in determining whether a company is unable to pay its debts, the Tribunal shall take into account the contingent and prospective liabilities of the company.

Petition for winding up

Subject to the provisions of this section, a petition to the Tribunal for the winding up of a company shall be presented by-

  • The company;
  • Any creditor or creditors, including any contingent or prospective creditor or creditors;
  • Any contributory or contributories;
  • All or any of the persons specified in clauses (a),(b) and (c) together;
  • Any person authorized by the central government in that behalf; or
  • In a case falling under clause(c) of sub-section(1) of section 271, by the central government or a state government.

A secured creditor, the holder of any debentures, whether or not any trustees have been appointed in respect of such and other like debentures, and the trustee for the holders of debentures shall be deemed to be creditors within the meaning of clause(b) of sub-section(1). A contributory shall be entitled to present a petition for the winding up of a limited liability company may have no assets at all or may have no surplus assets left for distribution among the shareholders after the satisfaction of its liabilities, and shares in respect of which he is a contributory or some of them were either originally allotted to him or have been held by him, and registered in his name, for at least six months during the eighteen months immediately before the commencement of the winding up or have devolved on him through the death of a former holder. The Registrar shall be entitled to present a petition for winding up or have devolved on him through the death of a former holder. The Registrar shall be entitled to present a petition for winding up under sub-section(1) on any of the grounds specified in sub-section (1) of section 271 , except on the grounds specified in clause(b), clause(d) or clause(g) of that sub-section: provided that the Registrar shall not present a petition on the ground that the company is unable to pay its debts unless it appears to him either from the financial condition of the company as disclosed in its balance sheet or from the report of an inspector appointed under section 210 that the company is unable to pay its debts. Provided further that the Registrar shall obtain the previous sanction of the Central Government to the presentation of a petition. Provided also that the Central Government shall not accord its sanction unless the company has been given a reasonable opportunity of making representations. A petition  presented by the company for winding up before the Tribunal shall be admitted only if accompanied by a statement of affairs in such form and in such manner as may be prescribed. Before a petition for winding up of a company presented by a contingent or prospective creditor is admitted, the leave of the Tribunal shall be obtained for the admission of the petition and such leave shall not be granted, unless in the opinion of the Tribunal there is a prima facie case for the winding up of the partnership company and until such security for costs has been given as the tribunal thinks reasonable. A copy of the petition made under this section shall also be filed with the Registrar and the Registrar shall, without prejudice to any other provisions, submit his views to the Tribunal within sixty days of receipt of such petition.

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;
  • Make an order for the winding up of the company with or without costs; or
  • 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. Provided further that before appointing a provisional liquidator under clause (c), the Tribunal shall give notice to the company and afford a reasonable opportunity to it to make its representations, if any, unless for special reasons to be recorded in writing, the Tribunal thinks fit to dispense with such notice. Provided also that the tribunal shall not 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 order remedy.

Directors for fining statement of affairs

Where a petition for winding up is filed before the Tribunal by any person other than the company, the Tribunal shall, if satisfied that a prima facie case for winding up of the company is made out, by an order direct the company to file its objections along with a statement of its affairs within thirty days of the order in such form and in such manner as may be prescribed. Provided that the Tribunal may allow a further period of thirty days in a situation of contingency or special circumstances. Provided further that the tribunal may direct the petitioner to deposit such security for costs as it may consider reasonable as a precondition to issue directions to the company. A company which fails to file the statement of affairs as referred to in sub-section(1), shall forfeit the right to oppose the petition and such directors and officers of the company as found responsible for such non-compliance, shall be liable for punishment under sub-section (4). The directors and other officers of the company, in respect of which an order for winding up is passed by the Tribunal under clause (d) of sub-section (1) of section 273, shall, within a period of thirty days of such order, submit, at the cost of the company, the books of account of the one person company completed and audited up to the date of the order, to such liquidator and in the manner specified by the Tribunal. If any director or officer of the company contravenes the provisions of this section, the director or the officer of the company who is in default shall be punishable with imprisonment for a term which may extend to six months or with fine which shall not be less than twenty-five thousand rupees but which may extends to five lakh rupees, or with both. The compliant may be filed in this behalf before the special court by Registrar, provisional liquidator, company Liquidator or any person authorized by the Tribunal.

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. The provisional liquidator or the company liquidator, as the case may be, shall be appointed from a panel maintained by the central government consisting of the names of charted accountants, advocates, company secretaries, cost accountants and such other professionals as may be notified by the Central Government or from a firm or a body corporate of persons having a combination of such professionals as may be prescribed and having at least ten years’ experience in company matters. Where a professional liquidator is appointed by the Tribunal, the Tribunal may limit and restrict his powers by the order appointing him or it or by a subsequent order, but otherwise he shall have the same powers as a liquidator. The Central Government may remove the name of any person or firm or body corporate from the panel maintained under sub-section (2) on the grounds of misconduct, fraud, and misfeasance, breach of duties or professional incompetence. The terms and conditions of appointment of a provisional liquidator or company liquidator and the fee payable to him or it shall be specified by the tribunal on the basis of task required to be performed, experience, qualification of such liquidator and size of the company. On appointment as provisional liquidator or company liquidator, as the case may be, 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, if any, with the Tribunal and such obligation shall continue throughout the term of his appointment. While passing a winding up order, the Tribunal may appoint a provisional liquidator, if any, appointed under clause (c) of sub-section (1) of section 273, as the company liquidator for the conduct of the proceedings for the winding up of the company.

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