Awasthi's Project.docx

Hidayatullah National Law University LLM - Trimester II (November - February 2019)

MODES OF WINDING UP OF A COMPANY (Project towards partial fulfillment of the assessment in the subject of General Principles of Corporate Law)

Submitted To:

Submitted By:

Mr. Ankit Awasthi

Jyoti Sharma

Assistant Professor

Roll No. 16

Hidayatullah National Law University

LLM Batch 2018-19

I

DECLARATION

I, Jyoti Sharma, hereby declare that the project work entitled “Modes of Winding up of a Company” submitted by me in HNLU, Raipur, is record of an original work done by me under the able guidance of Mr. Ankit Awasthi, HNLU, Raipur.

Jyoti Sharma LL.M., Batch XII Trimester II Roll No - 16

I

ACKNOWLEDGEMENT

On the completion of this project, I would like to place my sincere gratitude towards all those who have been instrumental in its making. I hereby express my heartfelt gratitude to Mr. Ankit Awasthi for his guidance and supervision. This project topic has instilled in me a unique thirst for knowledge in the subject. It could not have achieved completion without the aegis of Mr. Ankit Awasthi. I also owe sincere gratitude to the staff at the HNLU library for always helping me in the process of finding material and other sources for research. Last but not the least I thank my family and friends for supporting me throughout in my endeavors.

JYOTI SHARMA January 31st, 2019

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TABLE OF CONTENT

Declaration …………………………………………………………………………………….…I Acknowledgement ……………………………….……………………………………………...II Table of Cases ………………………………………………………………………………….IV List of Abbreviations …………………………………………………………………………..VI Research Methodology ………………………………………………………………………..VII CHAPTERS – 1. Introduction ………………………………………………………………………………..1 1.1 Meaning of winding up ………………….……………………………………………..1 1.2 Modes of winding up………………………….………………………………………...2 2. Winding up by the Tribunal ………………………………….…………..………………3 2.1 Winding up by Special Resolution ……………………………………………………..4 2.2 Sovereignty and integrity of India ……………………………………………………...4 2.3 Fraud ……………………………………………………………………………………5 2.4 Default in filing Financial Statements or Annual Returns ……………………………..5 2.5 Just and Equitable ………………………………………………………………............6 2.6 Who can make petition? ….…………………………………………………………...11 3. Procedure of Winding up ……………………………………………………………….13 3.1 Procedure of winding up order …...…………………………………………………...13 Conclusion ……………………………………………………………………………………...15 Bibliography…………………………………………………………………………………….IX

III

LIST OF CASES

Ajay Johri v. Singhal Land & Finance Ltd.

(1985) 58 Comp Cas 350

Atul Drug House Ltd.

Re (1971) 41 Comp Cas 452 (Guj.)

B. Viswanathan v. Seshasayee Paper and Boards Ltd.

(1992) 73 Comp. Cas. 136 (Mad.)

Cine Industries & Recording Co., Re

AIR 1942 Bom. 231

Cotman v. Brougham

(1918) AC 514

Cowasjee v. Nath Singh Oil Co. Ltd.

(1921) 59 IC 524

Haven Gold Mining Co., Re

(1882) LR Ch. D 151

Hind Overseas Pvt. Ltd., Re

(1968) 2 Comp LJ 95

Hind Overseas P. Ltd. v. Raghunath Prasad Jhunjhunwalla (1977) ASIL XIII Howrah Mills Co. Ltd. & Jardin Henderson Ltd., In Re

(2011) 105 SCL (Cal.)

Loch v. John Blackwood Ltd.

1924 AC 783

Loknath Gupta v. Credits Ltd.

(1968) 1 Comp LJ 253

Majestic Infracon (P.) Ltd. v. Etisalat Mauritius Ltd.

(2014) 13 Bom. 461

N. Sundaraswamy v. Bangalore Turf Club Ltd.

(1999) 21 SCL 90

New Kerala Chits & Traders P. Ltd. v. Official Liquidator (1981) 51 Comp. Cas. 601 Kerala Oriental Navigation Co. v. Bhanaram Agarwala

AIR 1922 Cal. 365

Orissa Trunks & Enamel Works Ltd., Re

(1973) 43 Comp Cas 503 (Ori.)

Ramdeo Ranglal v. Ghooronia Tea Co.

(2005) 60 SCL 449 (Guj.) IV

Re Bleriot Manufacturing Aircraft Co.

(1916) 32 TLR 253

Re German Date Coffee Co.

(1882) 20 Ch. D 169

Re, Kaithlal and General Mills Co. Ltd.

(1951) 31 Comp Cas 461

RE London & County Coal Co.

(1867) LR 3 Eq. 365

Re Varieties Ltd.

1893 2 CH. 235

Re Yenidje Tobacco Co. Ltd.

(1916) 3 CH 426

Tivoli Free, Re

(1972) VR 445

Vide Sarbani Day v. Howrah Motor Co. Ltd.

(2004) 50 SCL 422 (Cal.)

V

LIST OF ABBREVIATIONS

AIR – All India Reporter Co. – Company Comp. Cas. – Competition case ETC – Et-cetera HC – High Court IC – Industrial Commission ICA – Indian Contract Act ILR – Indian Law Report Ltd. – Limited Company LLP – Limited Liability Partnership SC – Supreme Court Sec – Section Sr. – Senior TLR – Times Law Reports V. – Versus

VI

RESEARCH METHODOLOGY

TOPIC: Modes of Winding up of a Company

SUBJECT: General Principles of Corporate law

OBJECTIVES: 1. To understand the meaning of Winding up. 2. To study the types of winding up

3. To study the process of winding up in different cases.

RESEARCH METHODOLOGY: This section talks about the methodology which will be used for this piece of research work. Methodologies vary from research work to work due to the difference in subjects, areas and study view. Research methodology is a way to systematically solve the research problem. It may be understood as a science of studying how research is done scientifically. In it we study the various steps that are generally adopted by a researcher in studying his research problem along with the logic behind them. For the purpose of this project I have used Doctrinal Research Methodology. Doctrinal research is that related to some abstract idea(s) or theory. It is generally used by philosophers and thinkers to develop new concepts or to reinterpret existing ones.

VII

RESEARCH QUESTIONS: 1. What is the meaning of winding up? 2. What are the types of winding up? 3. What is the process of winding up?

SOURCE: The primary sources used in the making of this project are the Indian and English Statutes, judicial precedents and principles on Company law. The secondary sources used in the making of this project are Books, Articles, Journals, Periodicals and Weeklies.

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CHAPTER 1 - INTRODUCTION

The great problem of having corporate citizens is that they aren’t like the rest of us. As Baron Thurlow in England is supposed to have said, “They have no soul to save, and they have no body to incarnate.”1 – Robert Monks

1.1 MEANING OF WINDING UP When a company comes in to existence by a legal process, it is basically known as incorporation and also cease by following legal process called dissolution. Therefore winding up the prior process of dissolution of company and until all the winding formalities are not complied its existence cannot come to an end. The process starts from appointment of liquidator from the panel maintained by the Central Govt. to dissolve the company. Winding up or dissolution is the process where the life of the company brings to end. Prof. Gower has define the winding up as, ‘It is a process where by its life is ended and its property is administered for the benefits of its creditors and members. An administrator is appointed who is called liquidator and he takes the control over the assets, pays its debts and finally distributes any surplus among the members accordance with their rights.’2 A company being an artificial person cannot die, but it can be dissolved and struck off from the Register of Companies. Winding up or liquidation is a process of putting an end to the life of a company. However, a company is not dissolved immediately at the commencement of winding up. Its corporate status and power continues. Winding up precedes dissolution. On dissolution, the company ceases to exist as a separate legal entity and becomes incapable of keeping property, suing or being sued. Thus, in between the winding up and dissolution, the legal status of the company continues and it can be sued in the court of law.

1 2

Avtar Singh, COMPANY LAW, Eastern Book Company, Edition 2016, pp. 454. GK Kapoor, COMPANY LAW, Taxmann, 21st Edition, 2018, pp. 571.

1

The object of winding up is put all unsecured creditors upon equality and pay them pari passu3 and to prevent the assets of the company from being frittered away in vexation litigation. The main purpose of winding up of a company is to realize the assets and pay the debts of the company expeditiously and fairly in accordance with the law. However, the purpose must not be exploited for the benefit of any class or person entitled to submit petition for winding up of a company.

1.2 MODES OF WINDING UP: Earlier there were two modes of winding up of a company. They were – a. Winding up by the tribunal; and b. Voluntary winding up. With the passing the Insolvency and Bankruptcy Code, 2016, a company can now be wound up under the Companies Act, 2013 only by the Tribunal. The concept of voluntary winding up, as provided earlier, has been removed. Section 2(94A) of the Companies Act, as amended by the Insolvency and Bankruptcy Code, 2016, defines the expression “winding up” means winding up under this Act or liquidation under the Insolvency and Bankruptcy Code, 2016, as applicable.

3

Pari-passu is a Latin phrase meaning "equal footing" that describes situations where two or more assets, securities, creditors or obligations are equally managed without preference.

2

CHAPTER 2 –WINDING UP BY THE TRIBUNAL

Winding up by the tribunal may be ordered in cases mentioned in Section 271 or the Companies Act, 2013. The tribunal will make an order for the winding up on an application by any of the persons enlisted in Section 272. Grounds for compulsory winding up4-A company may, on a petition under section 272, be wound up by the Tribunal,— (a) If the company has, by special resolution, resolved that the company be wound up by the Tribunal; (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 authorized 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; (d) 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; or (e) If the Tribunal is of the opinion that it is just and equitable that the company should be wound up.

4

Section 271, Companies Act, 2013.

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2.1 WINDING UP BY SPECIAL RESOLUTION5: The company may, by special resolution, resolve that it be wound up by the tribunal. The resolution may be passed for any cause whatsoever. However, the Court (now tribunal) must see that the winding is not opposed to public interest or the interest of the company as a whole.6 The company has to call general body meeting and pass a special resolution including therein specifically their resolve for winding up by Tribunal and setting out the grounds in the explanatory statement appended thereto as to why such winding up of the company is called for. The Court (now tribunal) is under no obligation to wind up merely because the company has so resolved.7 The right of the Company to file the winding up petition is not based merely on the ground mentioned in Section 271(1)(a). A company may present that petition, without special resolution, on other grounds mentioned in Section 271, Companies Act, 2013.

2.2 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 MORALITY8: On an application made from the Central or the State Government, a company may be ordered to be wound up by the tribunal if the Company has acted against the sovereignty and integrity of India, the security of the state, friendly relations with foreign States, public order, decency or morality.

5

Section 271(a), Companies Act, 2013. B. Viswanathan v. Seshasayee Paper and Boards Ltd., (1992) 73 Comp. Cas. 136 (Mad.). 7 New Kerala Chits and Traders Pvt. Ltd. v. Official Liquidator (1981) 51 Comp. Cas. 601 Kerala. 8 Section 271(b), Companies Act, 2013. 6

4

The Tribunal will enter petition in this case only from the Central Government or a State Government.

2.3 COMPANY’S

AFFAIRS

BEEN

CONDUCTED

IN

A

FRAUDULENT

OR

UNLAWFUL MANNER, ETC.9: The registrar or any other person authorized by the central government may make application to the Tribunal for winding up. On such an application, the tribunal may order winding up on the following grounds – 

The affairs of the company are being conducted in a fraudulent manner; or



The company was formed for fraudulent or unlawful purpose; or



The persons concerned in the formation of the company or management of its affairs have been guilty of fraud, misfeasance or misconduct in connection therewith.

2.4 COMPANY MAKING DEFAULT IN FILING WITH THE REGISTRAR ITS FINANCIAL STATEMENTS OR ANNUAL RETURNS FOR IMMEDIATELY PRECEDING FIVE CONSECUTIVE FINANCIAL YEARS10: Any person who is or has been a director of a company which has not filed financial statements or annual returns for any continuous period of three financial years shall not be eligible for appointment or reappointment as a director. Similarly, Section 271 (d) provides for a ground of winding up for default in filing financial statements or annual returns. This clause contains two distinct non-compliances –

9



Non-filing of the financial statements and



Non-filing of annual return.

Section 271(c), Companies Act, 2013. Section 271(d), Companies Act, 2013.

10

5

If default is made in respect of either, for consecutive five immediately preceding financial years, this clause for winding up can be invoked.

2.5 JUST AND EQUITABLE11: If the Tribunal is of the opinion that it is just and equitable to wind up a company, it may do so.12 It is also the remedy of the last resort and compelling circumstances would be needed for the power to be exercised. Section 271(e) of the Companies Act, 2013 gives the Tribunal wide discretionary power to order winding up whenever it appears to be desirable. The words ‘just and equitable’ are of the widest significance and do not limit the jurisdiction of the Tribunal in any case. What is just and equitable depends upon the facts of each particular case. However, the exercise of such wide power by the Tribunal must necessarily be governed by justice and equity. Thus, the Court (now Tribunal) may give due weightage to the interest of the company, its employees, creditors and shareholders, and, general public interest should also be considered.13 The role of Tribunal is to consider all the affected interests and not merely those of creditors.14 There must be a very strong ground for liquidating a company. Moreover, the Tribunal may refuse to make a winding up order if it is of the opinion that some other remedy is available to the petitioner and he is acting unreasonably in seeking to have the company wound up instead of pursuing that other remedy under the Companies Act.15

11

Section 271(e), Companies Act, 2013. Ibid. 13 Cine Industries & Recording Co., Re AIR 1942 Bom. 231. 14 Ramdeo Ranglal v. Ghooronia Tea Co., (2005) 60 SCL 449 (Guj.). 15 Cowasjee v. Nath Singh Oil Co. Ltd., (1921) 59 IC 524. 12

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In an application under this clause, the allegations in the petition are of primary importance. A prima facie case had to be made out before the court (now Tribunal) can take any action.16 The court (now Tribunal) has to base its order on the facts as they exist at the time of hearing and on the past history. A winding up petition under this clause must be filed with absolute candour and nothing should be suppressed. Thus, the petitioner must disclose alternative remedies which he has availed or which are available to him.17 A few examples of ‘just and equitable’ ground on the basis of which the Tribunal may order the winding up are as under – a. Disappearance of substratum – A company’s substratum is the purpose or the group of purposes which it was formed to achieve. If the company has abandoned all of its main objects and not merely some of them, or if it cannot achieve any of its main objects, its substratum is gone, and it will be wound up. There are a variety of ways in which a company can lose the ability to achieve its Main Objects. It will do so if it fails to obtain a patent for an invention which is was formed to exploit on the assumption that the patent would be granted18, or if it fails to acquire the business which it was formed to purchase19, or if it fails to obtain the necessary approval of a local authority for the erection of a building which it was formed to erect.20 Even if the company is exercising some ancillary powers conferred by the Memorandum of Association will not save it, because these powers are intended to merely aid in achieving its main objects, and not to enable it to carry on a different kind of business or preserve some appearance of activity.21 If the company’s Memorandum of Association provides that each of the powers conferred by the object clause shall be the main object, 16

Hind Overseas Pvt. Ltd. v. Raghunath Prasad Jhunjhunwalla, (1977) ASIL XIII. Atul Drug House Ltd., Re (1971) 41 Comp Cas 452 (Guj.). 18 Re German Date Coffee Co., (1882) 20 Ch. D 169. 19 Re Bleriot Manufacturing Aircraft Co. (1916) 32 TLR 253. 20 Re Varieties Ltd., 1893 2 CH. 235. 21 Supra note 18. 17

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the Tribunal will nevertheless determine the purposes for which the company was really formed, and will wind it up if it has abandoned them.22 In re, Kaithlal and General Mills Co. Ltd.,23 the Court laid down the following tests to determine as to whether the substratum of the company has disappeared – 

Where the subject-matter of the company has gone; or



The object for which it was incorporated has substantially failed; or



It is impossible to carry on the business of the company except at a loss which means that there is no reasonable hope that the object of trading at a profit can be attained; or



The existing or probable assets are insufficient to meet the existing liabilities.

In Majestic Infracon (P.) Ltd. v. Etisalat Mauritius Ltd.24, the Bombay High Court held that inability of the company to carry on main business or undertake any other business in a commercially viable manner indicated that the company has lost its substratum and it is just and equitable to wind up the company. b. Illegality of objects and fraud – When a company is formed to carry out fraudulent or illegal business (example – lottery, gambling, etc.) or when the business of the company becomes illegal, it may be ordered to be wound up. However, the mere fact of there having been a fraud in promotion, or fraudulent misrepresentation in the prospectus, will not be sufficient to found a winding up order, for the majority of shareholders may waive the fraud.25 Similarly, a fraud against a third party would not provide a ground for winding up.26 In Ajay Johri v. Singhal Land & Finance Ltd.27, the company professed to be engaged in purchasing land, developing it and selling it as plots. It sold plots in a colony to various 22

Cotman v. Brougham, (1918) AC 514. Re, Kaithlal and General Mills Co. Ltd., (1951) 31 Comp Cas 461. 24 Majestic Infracon (P.) Ltd. v. Etisalat Mauritius Ltd., (2014) 13 Bom. 461. 25 Oriental Navigation Co. v.Bhanaram Agarwala, AIR 1922 Cal. 365. 26 Haven Gold Mining Co., Re (1882) LR Ch. D 151. 27 Ajay Johri v. Singhal Land & Finance Ltd., (1985) 58 Comp Cas 350. 23

8

purchasers and collected about Rs. 20 Lacs. The company had no title to the land and no transfer could be made in favor of the purchasers. It was held that the company which had enacted large scale public deception and seemed to bent upon doing so in future as well, had no right to exist and must be wound up. c. Deadlock in Management – Where there is deadlock in management of the company in the sense that it is not possible for the company to carry out its objects, it is just and equitable to order winding up. In Re Yenidje Tobacco Co. Ltd.28, there were two directors of a company with equal rights of management and voting power. They were also the only two shareholders of the company. After a time, they became bitterly hostile to each other and disagreed about the appointment of important servants of the company. All communications between them were made through the secretary as they were not on speaking terms with each other. The company made large profits in spite of the disagreement. It was held, there was a complete deadlock in the management and the company shall be wound up. It was held that having regard to the fact that the only two directors of a company would not speak to each other and no business which deserves the name of a business in the affairs of the company could be carried out, the company should not be allowed to continue. The court came to the conclusion on the basis of the fact that there was no way to put an end to the state of things which existed except by means of a compulsory order. It was ‘just and equitable’ that the state of things should not be allowed to continue and court should intervene and order to wind up the company.29 However, mere difference between the majority directorate and those representing the minority does not amount to deadlock. Winding up cannot be ordered on the grounds of friction and disputes between directors; the scramble for power is at the bottom of it all.30

28

Re Yenidje Tobacco Co. Ltd., (1916) 3 CH 426. Avtar Singh, COMPANY LAW, Eastern Book Company, Edition 2016, pp.465. 30 Hind Overseas Pvt. Ltd., Re (1968) 2 Comp LJ 95. 29

9

d. Bubble Company – When the company is a mere bubble, i.e., does not carry on any business or does not have any property, it may be ordered to be wound up.31 Such companies are generally called as ‘fly-by-night’ companies. e. Oppression – It is just and equitable to wind up a company where the principal shareholders have adopted an aggressive or oppressive or squeezing policy towards the minority. Thus, where the company’s affairs were mismanaged and business was suspended for over 6 years, the court ordered winding up.32 Similarly the Privy Council ordered the winding up of a company because the managing director refused to hold meetings or to pay dividends, with a view to squeezing out the minority by purchasing their shares at under value.33 However, a mere mismanagement or misconduct or misappropriation on the part of directors is no ground for winding up.34 Where more than 70% of the company’s funds were being used for objects wholly removed from anything within the Memorandum of Association and 93% of the shareholders wished to dissociate themselves from the new objects, the company was ordered to be wound up.35 f. Grounds analogous to dissolution of Partnership – If the company is a private one and its share capital is held wholly or mainly by its directors, it is in substance a partnership in corporate form, and the tribunal may order its

31

RE London & County Coal Co., (1867) LR 3 Eq. 365. Orissa Trunks & Enamel Works Ltd., Re (1973) 43 Comp Cas 503 (Ori.). 33 Loch v. John Blackwood Ltd., 1924 AC 783. 34 Loknath Gupta v. Credits Ltd., (1968) 1 Comp LJ 253. 35 Tivoli Free, Re (1972) VR 445. 32

10

winding up in the same situations as it would order the dissolution of a partnership on the ground that it is just and equitable to do so.36 g. Requirements for investigation – Where the directors were making allegations of dishonesty against each other in respect of defalcation of funds of the company, the company was ordered to be wound up on the ground that it was a case in which the conduct of some of some of the officers pof the company required an investigation which could only be obtained in a winding up by the court (now tribunal).37 h. Broad democratic legal principles of fairness – In considering a petition on just and equitable ground, the Court (now Tribunal) will have regard to broad democratic legal principles.38 i. Lack of commercial morality – Company lacking in commercial morality or incapable of maintaining or producing relevant records may be ordered to be wound up by the Tribunal.39

2.6 WHO CAN MAKE PETITION? A petition to the tribunal for the winding up of a company may be presented by – a. The company; or b. A contributory or contributories; or c. All or any of the persons specified in clauses (a) or (b); or d. The Registrar; or e. Any person authorized by the Central Government in this behalf; 36

Supra note 28. Re Varieties Ltd., (1893) 2 Ch 235 38 N. Sundaraswamy v. Bangalore Turf Club Ltd. (1999) 21 SCL 90. 39 Howrah Mills Co. Ltd. &Jardin Henderson Ltd., In Re (2011) 105 SCL (Cal.) 37

11

f. In a case falling under clause (b) of Section 271 by the Central Government or a State Government.40

40

Section 272, Companies Act, 2013.

12

CHAPTER 3 – PROCEDURE OF WINDING UP

The winding up of a company by the Tribunal shall be deemed to commence at the time of the presentation of the petition for the winding up. If no order for winding up is made and the winding up petition is dismissed, the date of presentation of the winding up has no relevance.41

3.1

PROCEDURE FOR WINDING UP ORDER

3.1.1 Petition The winding up petition must be presented to the Tribunal. 

If the petition has been filed by the company, it shall be accompanied by a statement of affairs in the form and manner prescribed.



In case the petition is filed by any person other than the company, the Tribunal will require the company to file its objections along with a statement of affairs within 30 days.

Before passing an order as such; the tribunal must be satisfied about the existence of a prima facie case for winding up. If the company fails to file the statement of affairs as ordered, it shall not be allowed to raise objection to the petition. 3.1.2 Provisional liquidator At any time after the presentation of the petition of winding up and before the making of the winding up order, the tribunal may appoint a provisional liquidator. Before making such statement, however, the tribunal must give notice to the company so as to enable it to make its representation in the manner unless, for reasons to be recorded in writing, it

41

Vide Sarbani Day v. Howrah Motor Co. Ltd. (2004) 50 SCL 422 (Cal.).

13

thinks fit to dispense with such notice. The powers of a provisional liquidator are the same as those of a liquidator unless limited by the Tribunal. 3.1.3 Company Liquidator On a winding up order being made in respect of a company, the Tribunal shall appoint an official Liquidator or a liquidator from amongst the Insolvency Professionals registered under the Insolvency and Bankruptcy Cade, 2016. The Tribunal may appoint the provisional liquidator as the Company Liquidator. Within seven days of appointment, the provisional liquidator or the Company Liquidator is required to file a declaration to the tribunal disclosing the conflict of interest or lack of independence in respect of his appointment. The obligation shall continue throughout the appointment. 3.1.4 Removal and replacement of Liquidator The company liquidator shall conduct proceedings in the winding up and perform such duties in reference thereto as the Tribunal may specify. The Tribunal, however, has the power to remove any Company Liquidator or Provisional Liquidator on sufficient cause on the ground of misconduct, fraud or misfeasance, professional incompetence or failure to exercise due care and diligence in performance of the power and functions, inability to act as provisional liquidator or as the case may be, Company Liquidator or conflict of interest or lack of independence during the term of his appointment after giving a reasonable opportunity of being heard. In case of death, resignation or removal of a liquidator, the Tribunal may transfer the work to another liquidator. 3.1.5 Winding up Committee Section 277(4) requires the Company Liquidator to make an application to the Tribunal for constitution of a winding up committee to assist and monitor the progress of liquidation. The application needs to be made within 3 weeks of the winding up order. The Company Liquidator is the convener of the Committee. 14

The winding up committee shall monitor the following aspects relating to liquidation proceedings – 

Taking over assets;



Examination of the statement of affairs;



Recovery of property, cash or any other assets of the company including benefits derived therefrom;



Review of audit reports and accounts of the company;



Sale of assets;



Finalization of list of creditors and contributors;



Compromise, abandonment and settlement of claims and payment of dividends; and



Any other function, as the Tribunal may direct from time to time.

Upon completion of winding up the company the Company Liquidator shall prepare the draft final report for consideration and approval by the winding up committee and the final report approved by the winding up committee is submitted by the company liquidator to the Tribunal before passing the dissolution order.

15

CONCLUSION & CRITICISM

16

BIBLIOGRAPHY

BOOKS – 1. Avtar Singh, COMPANY LAW, Eastern Book Company, Edition 2016. 2. GK Kapoor, COMPANY LAW, Taxmann, 21st Edition, 2018. 3. NV Paranjpe, COMPANY LAW, Central Law Academy, Edition 2017.

WEBLIOGRAPHY – 1. www.law.harvard.edu 2. www.jstor.org 3. www.papers.ssrn.com 4. www.manupatra.com 5. www.heinonline.com 6. www.scconline.com 7. www.westlaw.com

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