-by Group 10 Sec C

Nitish Aggarwal 150101079 Ankur Tripathi 150102019Shipra 150102089Suman Gon 150102099Faraz Zeeshan 150103062 Sandip Ghosh 150103149Sumedha 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 2015

WAYS OF WINDING UPWINDING

UP

BY THE TRIBUNAL

VOLUNTARY

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 TribunalSub clause (b) and ( c) of Section 271(1) are new grounds for winding up by the tribunalProvisional liquidator or Company liquidator to be appointed from a panel maintained by the Central GovernmentThe panel may consists of CAs, Advocates, CS, and cost accountants.LLPs The process of winding up has been made time bound

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

LIQUIDATORSec 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 company’s 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 sub-section (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 workmen’s portion there in

WINDING UP OF INSOLVENT COMPANYPari Passu latin Fairly, Proportionally, at equal footing; without preference

Illustration

WINDING UP BY CREDITOR

WINDING UP BY CREDITOR- DEMANDED BY CREDITORS

WINDING UP VOLUNTARY WHEN ASSETS>LIABILITIES

NCLT

RECENT CASES AGAINST NCLT