BUSINESS LAW

UNIT-5

PRESENTED BY

K.BALASRI PRASAD
B.Sc(KU), M.B.A(OU), NET(UGC), (Ph.D) (MGU)
 Unit-5
Meaning – Modes of Winding Up –Winding
Up by tribunal – Voluntary Winding Up –
Compulsory Winding Up – Consequences of
Winding Up – Removal of name of the
company from Registrar of Companies –
Insolvency and Bankruptcy code - 2016.
Meaning of winding up of a Company
 Stopping the business of the company
 Selling its assets
 Paying its liabilities
 Returning the balance amount
 Name removed from the Registrar of Companies
Modes of Winding Up of a Company:
As per Companies Act, 1956,
1.Compulsory winding up under the order of a
court.
2.Voluntary winding up (without intervention of a
court)
a. Member’s voluntary winding up, if the
Company was a solvent Company
b. Creditor’s voluntary winding up, if the
Company was an insolvent Company.
3. Winding up under the supervision of the Court.
 But the Companies Act, 2013 made only two modes of
winding up available as per sec. 270,
1. Winding up by Tribunal
2. Voluntary winding up.

“ The winding up under the supervision of court was omitted

and the powers are transferred to the Tribunal namely,
National Company Law Tribunal ( N.C.L.T).
 Even if the declaration of solvency was presented by the
Directors and 2/3 in value of creditors of the company are
of the opinion that the company will not be able to pay it’s
debts in full from the proceeds of sale of assets and pass a
resolution to wind up company by Tribunal , the Company
should fie an application with the Tribunal within 14 days
for winding up.
 Finally, only one type of winding up of
companies is remaining available under the
Companies Law,
Winding up by National Company Law
Tribunal (NCLT) or the Tribunal.
Winding up of a Company by Tribunal (N.C.L.T)
 The Tribunal is constituted of the Central Government under section
10(B) of the Act, to discharge the function of winding up of
companies.
 When a petition is filed by a Company or Registrar, Central or State
Government, it can pass winding up order or appoint a liquidator.
 It can take assistance of the Chief Metropolitan Magistrate or District
Magistrate to control the property.
 Sec 217 to 280 of the Company’s Act 2013 deal with winding up of
company by the Tribunal,
1. Circumstances for winding up of a Company:
 If the Company has resolved to be wound up by the Tribunal by
passing a special resolution in a General meeting of Shareholders.
 If the Company has acted against the interests of the security and
integrity of India.
 If an application is filed by the Registrar or any other person
authorized by the Central Government that the Company was
formed or conducted a fraudulent or unlawful purpose.
 If the Company has made a default in filing Financial statements
or Annual returns to the Registrar in the last 5 years.
 If the Tribunal is of the opinion that it’s a justice and equitable to
wind up the company.
2. Petitioners:
i. The Company ii. Any Contributory
iii. The Registrar iv. Any person authorised by the
central Government
v. The Central or State Government
Consequences of Winding up of a Company:
A. Appointment of Company Liquidators: The
Tribunal should appoint an official Liquidator who is
registered under the Insolvency and Bankruptcy code –
2016.
B. Settlement of list of Contributories: As per sec.
2(26) of the Companies Act – 2013, Contributory means a
person liable to contribute towards the assets of the
company in the event of its being wound up.
C. Appointment of Advisory Committee for
Liquidation: While passing winding up order the
Tribunal should direct the company to constitute an
Advisory Committee with creditors and Contributories of
the Company.
D. Submission of report by the Liquidator
E. Books of accounts of the liquidator and
auditor
F. Making calls on Contributories
G. Dissolution of the Company by the Tribunal