What is the Winding up of Company in the Company law

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Introduction of winding up

Winding up of a company is the process where by in life is ended and its property administrered gor the benefit of its creditors and member, the compnay is not disolve immediately at the commencement of winding up, the corporate status empowers continues winding up proceeds dissolution .

Types

  • Setion 271 compulsory winding
    • special resolution through company itself
      • if the company by special resolution resolved that it would be wound up by the tribunal, the tribunal however is not bound to order winding up and the power is discretionary.
    • Acts against sovereignity
      • state security, intregrity, sovereignity , morality, public order, decency.
    • fraudulent conduct of the affairs
      • 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 the fraudulent and unlawful purpose.
    • deafault in filing financial statement
      • if acompany has made a default in filing with the registrar its annual return for the immediately preceeding five consecutive financial years.
    • just and equitable
      • this gives a tribunal a very wide discretionary power to order winding , whenever it appears to be desirable.

Deadlock

Case: yeridje tabaco company limited, it was held that , there was a complete deadlock and consequently the company was ordered to be wound up.

Loss of substratum

Case: German dates coffee company, it was held that , the substratum (subject matter) had failed and it was impossible to carry out the object for which it was formed.

Losses

Case: shah steamship navigation company

It was held that, the court will not be justified in making a winding up order merely on the ground that the company has made losses and is likely to make further losses.

Who can apply for the dissolution of the company section 272

  • there are seven aplicants who may apply
    • petition by company
    • through creditors petition( creditors includes; debentureholder, secured creditors, trustees for debentureholders).
    • shareholders(contributory)
    • company, shareholder, creditors can apply jointly for the petition.
    • registrar.
    • central goverment petition
    • state government
  • within 60 days, the copy has to be sent by the registar to the tribunal.

Powers of tribunal section 273

After hearing a winding up relation the tribunal may

  • dissmiss it with or without cost.
  • make any interim order
  • appointment provisional liquidator
  • make an order for winding up with or without cost
  • any other order it thinks fit.

Commencement of winding up section 357

Winding up, commences not from the date order it shall be deemed to commenced time of the presentation of petition. But, where before the presentation of the petition a resolution has been passed by the company for the winding up , the winding up shall be deemed to have commenced at the time of the pasing od the resolution.

Section 2(23) company’s liquidator; appointed by tribunals.

Section 275, company’s liquidator and appointment ; central government gives the list of the people, appoint as the company;s liquidator.

who can be appointed 1) CS 2) CA 3) lawyer etc.

Power and duties of company’s liquidator section 290

  • to cary on business, so for as necessary for beneficial
  • to do all act and to execute all documents inthe name ofthe company seal
  • to sell movable and immovable property and as actionable claims of the company
  • to sell the whole of the undertaking of the company.
  • to raise any money required
  • to institute and defend any suits
  • to settles the claims of the creditors.
  • to inspect the records and returns of the company.
  • to apply to the tribunal for such order as may be necessory.

Meaning of dissolution and winding up : liquidation is the process of closing a business and distributing its assets to claiments.

Difference between winding up and dissolution

Winding Dissolution
1) It is a preceeding by means of which a company.
2) winding up proceeds the dissolution.
3) liquidator;s can present the company in winding up proceedings.
winding up proceeding can be started without the intervention of court.		1) leagal existence of a company is brought to an end.
2) it is the final stage
3) once the order of dissolution is made a liquidator;s cannot represents the company.
for the dissolution of the company order of the court is essential.

Reference: Orginal note written by Riya Tiwari student LLB of United university Prayagraj Uttar Pradesh.

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