The document discusses the process of winding up or liquidation of a company under the Companies Act, 2013. It provides details on the different modes of winding up a company including voluntary winding up and winding up by the tribunal. It outlines the key provisions regarding the appointment of a liquidator, their powers and duties. These include taking over assets, recovering claims, selling property to pay off debts and distributing the remaining assets. The process aims to conclude the company's affairs and dissolve it in an orderly manner.

1. Modes of Winding Up

2. Meaning of Winding Up
• A process to bring about the end of the company.
• It is the process whereby the life of the company ends and its property
administered for the benefit of its creditors and members.
• An administrator, also known as Liquidator, is appointed who takes charge,
collect its assets, pay off the debts and finally distribute the remaining
portion among the members.

3. exist

4. Winding Up by the Tribunal
• Section 270 of the Companies Act, 2013 lays down modes in
which Company may be wound up

7. Grounds for Winding up by Tribunal –Section 271
a) Special Resolution
b) Against National Interest
c) Fraud
d) Default while filing financial statements
e) Just and equitable
- When the very basis for survival of company is gone
- When the main object of the company has substantially failed or become impracticable
- When the company is carrying on its business at a loss with no scope of profitability
- When the existing and probable assets of the company are insufficient to meet its existing
liabilities
- Where there is a deadlock in the management

8. Section 272 - Lists of persons who shall be entitled to
file a petition for the winding up of a company
Subject to the provisions of this section, a petition to the Tribunal for the winding up
of a company shall be presented by—
(a) the company;
(b) any contributory or contributories;
(c) all or any of the persons specified in clauses (a) and (b) together;
(d) the Registrar;
(e) any person authorized by the Central Government on that behalf; or
(f) in a case falling under clause (c) of sub-section (1) of section 271, by the Central
Government or a State Government.

9. Powers of Tribunal
• Hearing Petition Statement of Affairs Fix the date of Hearing
Pass the order (90 days)
Dismiss Interim
order
Appoint
Liquidato
r
Wind up

10. Consequences of winding up
• Within 7 days of the order, Tribunal should intimate Company’s Liquidator and
Registrar
• Registrar will make endorsement and notify in Official gazette
• Order is a notice of discharge to officers and employees
• All action and suits against stayed
• Order operates in the interests of creditors and all contributories
• Company liquidator shall take possession and control of the assets
• Any disposition, transfer of shares in company or alteration in status of members after
commencement of winding up shall be void.

11. Advisory Committee
• Tribunal, at the time of making an order for the winding up, direct that there shall be
appointed an advisory committee to act with the liquidator and to report to Tribunal on
such matters as the Tribunal may direct.
• Maximum members – 12
• After this order, official liquidator within 2 months convene a meeting with creditors
and contributories for determining members
• Advisory committee shall have the right to inspect the books and other documents at
reasonable time
• Liquidator shall chair the meeting of advisory committee

12. Constitution and proceedings of committee
• Membership – 12 members. Within 7 days of meeting shall be convened by the official liquidator
• Right to inspect accounts of liquidator
• Frequency of meetings
• Quorum – 1/3rd total number of members, or two, whichever is higher
• Rule of majority
• Resignation by members
• Office falling vacant
• Filling of vacancy
• Dealing with company’s assets
• Fiduciary position

13. General powers of Tribunal
• Power to stay winding up – (not exceeding 180 days)
• Settlement of list of contributories
• Delivery of property to company liquidator
• Set off
• Power to make calls
• Power to order public examination
• Power to arrest absconding person

14. Voluntary Winding Up
• A corporate who intends to liquidate itself voluntarily and has not committed any
default may initiate voluntary liquidation proceedings under the provisions of IBC, 2016.
• Circumstances/ Grounds in which company may be wound up voluntarily.— 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

15. • a declaration from majority of the directors of the company verified by an affidavit stating
that— they have made a full inquiry into the affairs of the company and they have formed an
opinion that either the company has no debt or that it will be able to pay its debts in full from
the proceeds of assets to be sold in the voluntary liquidation; and the company is not being
liquidated to defraud any person;
a declaration under sub-clause (a) shall be accompanied with the following documents,
namely:— audited financial statements and record of business operations of the company for
the previous 2 years or for the period since its incorporation, whichever is later; a report of
the valuation of the assets of the company, if any prepared by a registered valuer;
• within four weeks of a declaration under sub-clause (a), there shall be— a special resolution
of the members in a general meeting requiring the company to be liquidated voluntarily and
appointing an insolvency professional to act as the liquidator; or a resolution of the members
in a general meeting requiring the company to be liquidated voluntarily as a result of expiry of the
period of 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 shall be dissolved, as the case may be and appointing
an insolvency professional to act as the liquidator.

16. • In case of company owing any debt to any person, creditors representing two-thirds in value of the
debt of the company shall approve the resolution passed under sub-clause (c) within 7 days of
such resolution.
• The company shall notify the Registrar of Companies and the Board about the resolution to
liquidate the company within 7 days of such resolution or the subsequent approval by the
creditors, as the case may be.
• Subject to approval of the creditors (if required), the voluntary liquidation proceedings in
respect of a company shall be deemed to have commenced from the date of passing of the
resolution.
• Where the affairs of the corporate person have been completely wound up, and its assets
completely liquidated, the liquidator shall make an application to the Adjudicating Authority for
the dissolution of such corporate person.
• On receipt of an application by the liquidator, the Adjudicating Authority shall pass an order that
the corporate debtor be dissolved from the date of that order
• A copy of an order made by the Adjudicating Authority, shall within 14 days from the date of
such order, be forwarded to the authority with which the corporate person is registered.

17. Liquidation process in case of company has made default
in payment of debts-
• The provisions relating to insolvency and liquidation of corporate debtors shall be applicable only when the amount of the default is 1 Lakh
rupees or more. However the Central Government may, by notification, specified the minimum amount of default of higher value which shall not be
more than 1 Crore rupees.
• 2. Where any corporate debtor commits a default, a creditor (financial or operational) or the corporate debtor itself may initiate Corporate
Insolvency Resolution Process (CIRP) by filing an application before Adjudicating Authority.
• 3. A financial creditor either by itself or jointly with any financial creditors may file an application under section 7 of the Code, whereas an
operational creditor shall first serve demand notice- demanding repayment of the operational debt as per section 8 and file an application under
section 9 of the Code.
• 4. The Corporate Insolvency Resolution Process (CIRP) shall be completed within a period of 180 days from the date of admission of
application. Further such period may be extended by maximum 90 days, if a resolution has been passed at a meeting of committee of creditors by vote
of seventy-five per cent of the total voting shares.
• 5. On admission of an application, the adjudicating authority shall by an order- (a). declare a moratorium (calm period); (b). cause a public
announcement of initiation of CIRP and call for submission of claims; (c). appoint an Interim Resolution Professional (IRP)
• 6. The Interim Resolution Professional shall manage the entire affairs of the corporate debtor, exercise the power of Board/Partners, collect all
claims received against the corporate debtor and constitute a Committee of Creditors.
• 7. The Committee of Creditors shall comprise of all financial creditors, who on their first meeting shall appoint Interim Resolution Professional
as a Resolution Professional or replace it by some another Resolution Professional.
• 8. The Resolution Professional shall submit a resolution plan, which if not submitted within the prescribed timeline or rejected by the Tribunal,
then an order for liquidation of the company can be passed in such manner and procedure as has been laid down in the Code and as may be
necessary to give effect to the same.

18. Direction for filing statement of affairs
• (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 (4).
• (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.

19. • (1) 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.
• (2) 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 chartered accountants, advocates, company secretaries, cost
accountants or firms or bodies corporate having such chartered 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.
• (3) Where a provisional 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.
• (4) 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, misfeasance, breach of duties or professional incompetence:
Provided that the Central Government before removing him or it from the panel shall give him or it a reasonable opportunity of
being heard.
• (5) 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.
• (6) 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.
• (7) 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.
Company Liquidator

20. Removal and replacement of liquidator
• (1) The Tribunal may, on a reasonable cause being shown and for reasons to be recorded
in writing, remove the provisional liquidator or the Company Liquidator, as the case may
be, as liquidator of the company on any of the following grounds, namely:—
• (a) misconduct; (b) fraud or misfeasance; (c) professional incompetence or failure to
exercise due care and diligence in performance of the powers and functions; (d) inability to
act as provisional liquidator or as the case may be, Company Liquidator; (e) conflict of
interest or lack of independence during the term of his appointment that would justify removal.
• (2) In the event of death, resignation or as the case may be, the Tribunal may transfer the
work assigned to him or it to another Company Liquidator for reasons to be recorded in
writing.
• (3) Where the Tribunal is of the opinion that any liquidator is responsible for causing any
loss or damage to the company due to fraud or misfeasance or failure to exercise due care
and diligence in the performance of his or its powers and functions, the Tribunal may recover
or cause to be recovered such loss or damage from the liquidator and pass such other orders
as it may think fit.

21. Powers and duties of Liquidator (sec 290)
• 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;
• (g) to invite and settle claim of creditors, employees or any other claimant and distribute sale proceeds in accordance with priorities
established under this Act;
• (h) to inspect the records and returns of the company on the files of the Registrar or any other authority;
• (i) to prove rank and claim in the insolvency of any contributory for any balance against his estate, and to receive dividends in the
insolvency, in respect of that balance, as a separate debt due from the insolvent, and rate ably with the other separate creditors;

22. Cont..
• (j) to draw, accept, make and endorse any negotiable instruments including cheque, bill of exchange, hundi or
promissory note in the name and on behalf of the company, with the same effect with respect to the liability of the
company as if such instruments had been drawn, accepted, made or endorsed by or on behalf of the company in the
course of its business;
• (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, and in all such cases, the money due shall, for the purpose of
enabling the Company Liquidator to take out the letters of administration or recover the money, be deemed to be due to
the Company Liquidator himself;
• (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; and

23. Cont..
• (n) to apply to the Tribunal for such orders or directions as may be necessary for the winding up of the
company.
• (2) The exercise of powers by the Company Liquidator under sub-section (1) shall be subject to the overall
control of the Tribunal.
• to verify claims of all the creditors and consolidate them
• to invite and settle claims of creditors and claimants and distribute proceeds in accordance with the
provisions of this Code
• to apply to the Adjudicating Authority for such orders or directions as may be necessary and to report
the progress of the liquidation process in a manner as may be specified by the Board
• (3) Notwithstanding the provisions of sub-section (1), the Company Liquidator shall perform such other
duties as the Tribunal may specify in this behalf.

24. Contributory
• According to section 2 (26) contributory means a person liable to contribute towards the
assets of the company in the event of its being wound up.
• List of contributories
The shareholders who transferred partly paid shares ( other than death or by operation of
law) within one year, prior to the date of winding up may be called upon to pay an amount
, to pay off such creditors as existed on the date of transfer of shares. Such persons are
called B List contributories. The List B contributories become liable only (i)When the
existing assets are not sufficient. (ii)When the existing shareholders fail to pay the
amount due on shares to the liquidator.

25. Overriding preferential payment
• Section 326 of the companies act provides,
In the event of winding up, following debts shall be paid in priority to all other debts-
a) workmen’s dues
b) Where a secured creditor has realised a secured asset, so much of the debts due to such secured
creditor as could not be realised by him or the amount of the workmen’s portion in his security,
which ever is less, pari passu with the workmen’s dues:
Meaning of Workmen and workmen dues
a) “Workmen” means the employees of the company, being workmen within the meaning of clause of
section 2 of the Industrial Disputes Act, 1947
b) “workmen dues’’, means the aggregate of the following sums due from the company to its
workmen
i) All wages or salary including wages payable for time or piece work
ii) All accrued holiday remuneration
iii) All amount due in respect of any compensation
iv) All sums due to any workmen from the provident fund, gratuity fund.

26. Preferential Payments
• Preferential Creditors means those creditors whose right to payment is deemed of more
importance than other creditors at the time of liquidation by the relevant statue.
• List of preferential creditors – Section 327(1)
a) All revenue, taxes, cesses and rates due from the company to the government
b) All wages or salary including wages payable to any employee
c) All accrued holiday remuneration
d) All amount due in respect of contributions
e) All amount due in respect of compensation

29. Fraudulent Preferences
• Where a company has given preference to a person or transfer of property who is one of the
creditors or does anything to put that person in a better position (prior to 6 months of making
winding up application), Tribunal, if satisfied, may order as it may think fit for restoring the
position to what it would have been.
• Transfers not in good faith to be void
Any transfer made by the company , not being a transfer in the ordinary course of business, if
made within a period of one year before the presentation of petition shall be void.

30. Effect of floating charge
• Where a floating charge is created within twelve months immediately preceding the commencement of winding up shall be invalid.
• Exceptions
a) Unless it is proved that the company immediately after creating the charge was solvent
b) The amount of any cash paid to the company with interest on that amount at 5%p.a or as notified by Govt.
Disclaimer of onerous property
Any property which is not saleable or is not readily saleable by reason, the official liquidator may, with the leave of
Tribunal, by writing signed by him, disclaim the property.
Penalty for fraud by officers
a) Term not less than one year, may extend to 3 years
b) Fine between one lakh to 3 lakhs