WINDING UP

RECONSTRUCTION AND AMALGAMATION

NAME-GARVIT SARASWAT S UBMITTED TO- MS

GARGI ENROLLNO .- A3221517071
BHADORIA

SECTION- A
COURSE- BBALLB(H)
SEMESTER- 6
 WINDING UP, COMPANIES ACT 2013
Section 270-

The provisions of Part 1 shall apply to the winding up of a company by the tribunal under this
act.

Section 271 talks about the circumstances under which company may be wound up by
Tribunal.

 When the company has passed the special resolution effecting that the company be
wound up by the Court or Tribunal.  
 Has acted against the interest of the sovereignty and integrity of the country.
 The company has defaulted in filing its financial statement or annual returns for five
consecutive financial years. 
 Tribunal or Court believes that the company is conducting its affairs fraudulently or
the formation of the company was for a fraudulent/unlawful purpose. 
 The Tribunal or Court is of the opinion that it is just and equitable to wind up the
company. 1

A petition for winding up of a company may be filed in the Tribunal by any of the
following persons. (Sec. 272) 

 The Company
 Any contributory or contributories
 All or any of the persons specified in points 1 and 2
 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.2

1
The Companies Act, 2013, available at:
https://www.legalwiz.in/blog/understanding-compulsory-winding-up-of-a-company (Visited On April,6 2020)

2
The Companies Act, 2013 (Act 18 of 2013)
Winding up of a company is an activity which includes selling all the assets, paying off the creditors
and distributing the remaining assets to the shareholders of the company. Going through the
procedural aspects, even after the digitization, it is always challenging to start a business/ company.
However, it is even more challenging to wind up the same since it enjoys as separate legal entity
than its promoters.

Winding up of a company is the process whereby the life of the company has brought to an
end. Under winding up, the property of the company are administered for the benefit of its
creditors and members.

1.  winding up of a company is the process whereby its life is ended and its property is
administered for the benefit of its creditors and members. An Administrator, called a
liquidator, is appointed and he takes control of the company, collects its assets, pays
its debts and finally distributes any surplus among the members in accordance with
their rights.
2. As per Section 2(94A) of the Companies Act, 2013, “winding up” means winding up
under this Act or liquidation under the Insolvency and Bankruptcy Code, 2016. 
3

Meaning of Dissolution of a Company:

A company is said to be dissolved when it ceases to exist as a corporate entity. On
dissolution, the company’s name shall be struck off by the Registrar from the Register of
Companies and he shall also get this fact published in the Official Gazette. The dissolution,
thus puts an end to the existence of the company.
Winding up is one of the methods by which dissolution of a company is brought about.A
company may be allowed to continue its business as far it is necessary for the beneficial
winding up of the company. Legal entity of the company continues at the commencement of
the winding up.4

3
The Companies Act, 2013, available at:
https://www.legalwiz.in/blog/understanding-compulsory-winding-up-of-a-company (Visited On April,4 2020)
4
The Companies Act, 2013, available at:
https://www.taxmann.com/blogpost/2000000260/winding-up-of-a-company.aspx (Visited On April,4 2020)
 SECTION 272
1. Petition by the Company - A company can file a petition to the Tribunal for its
winding up when the members of the company have resolved by passing a Special
Resolution to wind up the affairs of the company. Managing Director or the directors
cannot file such a petition on their own account unless they do it on behalf of the
company and with the proper authority of the members in the General Meeting.

2. Petition by the Contributories - A contributory shall be entitled to present a

petition for the winding up of the company, notwithstanding that he may be the holder
of fully paid-up shares or that the company may have no assets at all, or may have no
surplus assets left for distribution among the holders after the satisfaction of its
liabilities. It is no more required of a contributory making petition to have tangible
interest in the assets of the company

3. Petition by the Registrar - Registrar may with the previous sanction of the
Central Government make petition to the Tribunal for the winding up the company
only in the following cases: 

     (a) 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; 

     (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 wound up. 

4. Petition by the Central Government or a State Government  on the

ground that 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. 

5.Any person authorised by the Central Government in that behalf.

5
It is mandatory for the registrar to obtain prior sanction of the Central Government,
before the presentation of the petition for winding up of the company. Further, it is
mandatory for the Central Government is to give a reasonable opportunity to the
company before granting such sanction to the registrar. The registrar shall also receive
the copy of the petition, and he needs to submit his views to the Tribunal within 60
days of the receipt of the petition.  

5
The Companies Act, 2013, available at:
https://www.taxmann.com/blogpost/2000000260/winding-up-of-a-company.aspx (Visited On April,4 2020)
 POWERS OF TRIBUNAL

Provisions of the Companies Act, 2013 Section 273 also defines the action that would be
taken by the Tribunal once the petition for winding up of the company is received.

On receipt of the petition, the tribunal would pass any of the following orders:

 Dismiss the petition (with or without cost).

 Make an interim order as it may think fit.
 Appoint a provisional liquidator of the company till the passing of a winding-up
order.
 Pass an order for winding up of the company (with or without cost); or
 Pass any other order as it may think fit.  
 The Tribunal is required to pass an order within a period of 90 days from the date of
receipt of the petition.  
 The Tribunal is required to give notice to the company and give a reasonable
opportunity of being heard before appointing a provisional liquidator.6

 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.7

6
The Companies Act, 2013, available at:
https://www.legalwiz.in/blog/understanding-compulsory-winding-up-of-a-company (Visited On April,4 2020)

7
The Companies Act, 2013 (Act 18 of 2013)
 DIRECTIONS FOR FILING STATEMENT OF AFFAIRS SECTION 274 OF
COMPANIES ACT 2013

1.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.

2.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
3.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 company completed and audited up to the date of the order, to such liquidator and in
the manner specified by the Tribunal.
4.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 extend to five lakh rupees, or with both
5.The complaint may be filed in this behalf before the Special Court by Registrar, provisional
liquidator, Company Liquidator or any person authorised by the Tribunal.8

8
The Companies Act, 2013, available at:
https://www.legistify.com/indiankanoon/companies-act-2013/section-274-directions-for-filing-statement-of-
affairs/ (Visited On April 4, 2020)
 REMOVAL AND REPLACEMENT OF LIQUIDATOR

The Companies Act, 2013, under Section 276 provides for the grounds for Removal and
Replacement of Liquidator. Section 276 of Companies Act, 2013, states the following
grounds:

 Misconduct
 Fraud and Misfeasance
 Failure in exercising Due Care and Diligence in performing his Powers and Duties
 Professional Incompetence
 Inability to act as Company Liquidator or Provisional Liquidator
 Lack of Independence Conflict of Interest during his/her term of Appointment which
would justify Removal

Removal by Resignation
Under the Companies Act, 2013, the Company Liquidator can be removed if he/she resigns
from the position. To resign the Company Liquidator can summon up a meeting and submit
his/her resignation in the meeting. The Tribunal can transfer the assigned work of the earlier
Liquidator to another Company liquidator.

Removal by Creditors
The creditors when thinks that the Company liquidator is guilty of any of the grounds
mentioned in Section 276 of the Companies Act, 2013, can go for the Removal and
Replacement of Liquidator. In case of Removal of Company Liquidator, the Tribunal can
assign the work of earlier Liquidator to another Company Liquidator.

Removal by Death
The Death of Company Liquidator will vacate the office of the Liquidator in the Company.
The Tribunal in case of death of Company Liquidator can transfer the work assigned to
him/her to another Company Liquidator.

Removal by Central Government

According to Section 275 of Companies Act, 2013, the Central Government can appoint a
Company Liquidator. The Central Government on account of any of grounds mentioned
in Section 276 of the Companies Act, 2013, can remove the Company Liquidator. The Central
Government before the Removal of Liquidator should provide him/her a reasonable
opportunity of being heard.9

9
The Companies Act, 2013, available at:
https://corpbiz.io/learning/removal-and-replacement-of-liquidator/ (Visited on April 4 2020)
 POWERS AND DUTIES OF COMPANY LIQUIDATOR

Section 290 of Companies Act 2013

 To institute or defend any, trial or other lawful proceedings, criminal or civil in the
name of Company.
 To carry on operations of the Company.
 To sale off the immovable property and actionable claims of Company by auction in
public or through a contract privately. The power of transfer is with the Liquidator
regarding these sales.
 To raise the money required as security of assets for the Company.
 To assist him with his duties, the Company Liquidator can appoint a Pleader, an
Attorney or an Advocate.
 To take securities from debtors in the discharge of any claim.
 To make an arrangement for compromise of debts and other financial liabilities with
the contributories. 

 To inspect the files of the Registrar to check the records and returns of the Company.
It is not entitled to pay any dues of the Company while inspecting files.
 To do all acts, when necessary, on behalf of Company, and execute all deeds and
documents for the purpose of use.
 To accept, draw, make and endorse any bill of exchange on behalf of the Company.
 To appoint a person as an Agent to do a business, which the Liquidator himself is not
able to do.
 To receive Dividends in insolvency and prove rank and claim of any contributory for
any balance against its assets.
 To do any act which is necessary to be done as to obtain payment from a contributory.
The above act can be done in the Company Liquidator official name if it is not fit to
use the Company’s name.
 To take out letters of administration in Company Liquidator official name.10

10
The Companies Act, 2013, available at:
https://corpbiz.io/learning/removal-and-replacement-of-liquidator/ (Visited on April 4 2020)
SECTION RELATING TO MERGER & AMALGAMATION SECTION 230
& 232.

11

 Compromise is a term which implies the existence of a dispute relating to rights. When a
company has a dispute with a member or a class of members or with a creditor or a class of
them, a scheme of compromise may be drawn.
– Where, however there is no dispute but there is need for adjudicating the rights or liabilities
of member or a class of members, the company may resort to
– Thus, arrangement may be made in anticipation of a dispute whereas compromise is arrived
at the conclusion of a dispute.
– Arrangement and compromise may take place for the purpose of reconstruction
or amalgamation/merger/demerger of companies or may involve reduction of share
capital

MERGER AND AMALGAMATION (SECTION 232):

The Tribunal, Merger, amalgamation or demerger is proposed in the application of
compromise and arrangement under Section 230 (i) of the company, or (ii) of the creditors, or
(iii) of the members of the company (iv) of the liquidator of company under liquidation, may
order the meeting (A) Creditors or class of creditors, or (B) of the members or class of
members, (x) to be called, (y) held and (z) conducted in the manner directed by the Tribunal.
12

11
The Companies Act, 2013, available at:
https://taxguru.in/company-law/merger-amalgamation-companies-act-2013.html (Visited on April 6 2020)
12
The Companies Act, 2013, available at:
https://aishmghrana.me/2013/12/24/merger-or-amalgamation/ (Visited on April 6 2020)