Modes of Winding Up ,Powers of Court ,Official Liquidator ,Custody of company’s property …

Companies Act – PART VII
CHAPTER I
Modes of Winding Up
PRELIMINARY

425.Modes of winding up.
(1)The winding up of a company may be either –
(a)by the Court; or
(b)voluntary; or
(c)subject to the supervision of the Court.
(2)The provisions of this Act with respect to winding up apply, unless the contrary appears, to the winding up of a company in any of those modes.
Contributories

426.Liability as contributories of present and past members.
(1)In the event of a company being wound up, every present and past member shall be liable to contribute to the assets of the company to an amount sufficient for payment of its debts and liabilities and the costs, charges and expenses of the winding up, and for the adjustment of the rights of the contributories among themselves, subject to the provisionsof section 427 and subject also to the following qualifications, namely –
(a)a pastmember shall not be liable to contribute if he has ceased to be a member for one year or upwards before the commencement of the winding up;
(b)a past member shall not be liable to contribute in respect of any debt or liability of the company contracted after he ceased to be a member;
(c)no past member shall be liable to contribute unless it appears to the Court that the present members are unable to satisfy the contributions required to be madeby them in pursuance of this Act;
(d)in the case of a company limited by shares, no contribution shallberequired from anypastorpresent member exceeding the amount, if any, unpaid on the shares in respect of which he is liable as such member;
(e)in the case of a company limited byguarantee, no contribution shall, subject to the provisions of sub-section (2), be required from any past or present member exceeding the amount undertaken to be contributed by him to the assets of the company in the event of its being wound up;
(f)nothing in this Act shall invalidate any provision contained in anypolicy of insurance or other contract whereby the liability of individual members on the policy or contractis restricted, or whereby the funds of thecompany are alone made liable in respect of the policy or contract;
(g)a sum due to any past or present member of the company inhis character as such, by way of dividends, profits or otherwise,shall not be deemed to be a debt ofthe company payable to that member, in a case of competition between himselfand1[any creditor claiming otherwise than in the character of a past or present member of thecompany];but any such sum shall be taken into account for the purposeof the final adjustment of the rights of the contributories among themselves.
(2)In the winding up of a company limited by guarantee which has a share capital, every member of the company shall be liable, in addition to the amount undertaken to be contributed by him to the assets of the company in the event of its being wound up, to contribute to the extent of any sums unpaid on any shares held by him as if the company were a company limited by shares.
427.Obligations of directors, managing agents and managers whose liability is unlimited.
In the winding up of a limited company, any director, managing agent, secretaries and treasurersormanager, whether past or present, whose liability is, under the provisions of this Act, unlimited, shall, in addition to his liability, if any, to contribute as an ordinary member, be liable to makeafurther contribution as if he were, at the commencement of the winding up, a member of an unlimited company:
Provided that –
(a)a past director, managingagent, secretaries and treasurers ormanagershall not beliabletomakesuch furthercontribution, if he has ceased to hold officefor a year or upwards before the commencement of the winding up;
(b)a past director, managing agent, secretaries and treasurersormanagershall not beliabletomakesuch further contribution in respect of any debt or liabilityof the company contracted after he ceased to hold office;
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1.Subs. by Act 65 of 1960, s. 161, for certain words.
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(c)subjecttothe articles of the company,adirector, managingagent, secretaries and treasurers or managershall notbe liable to make such further contribution, unlessthe Court deems it necessary to require the contribution in order to satisfy the debts and liabilities of the company, andthe costs, charges and expenses of the winding up.
Definition of “contributory”.
428.Definition of “contributory”.
The term “contributory” means every person liable to contribute to the assets of a company in the event of its being wound up, and includes the holder of any shares which are fully paid up; and for the purposes of all proceedings for determining, and all proceedings prior to the final determination of, the persons who are to be deemed contributories, includes any person alleged to be a contributory.
429.Nature of liability of contributory.
(1)The liability of a contributory shall create a debt accruing due from him at the time when his liability commenced, but payable at the times specified in calls made on him for enforcing the liability.
(2)No claim founded on the liability of a contributory shall be cognizable by any Court of Small Causes sitting outside the presidency-towns.
430.Contributories in case of death of member.
(1)If a contributorydieseither before or after he has been placedonthe list of contributories, his legal representatives shall be liable in a due courseofadministration, to contribute to theassets ofthe companyindischarge of his liability, and shallbecontributories accordingly.
(2)If the legal representatives make default in paying any money ordered to be paid by them, proceedings may be taken for administering the estate of the deceased contributory and compelling payment there out of the money due.
(3)Forthepurposesofthissection,wherethedeceased contributorywasa member of a Hindu joint familygovernedby the MitaksharaSchoolof Hindu Law, his legal representativesshallbe deemed to include the surviving coparceners.
431.Contributories in case of insolvency of member.
If a contributory is adjudged insolvent, either before or after he has been placed on the list of contributories –
(a)his assignees in insolvency shall represent him for all the purposes of the winding up, and shall be contributories accordingly, and may be called on to admit to proof against the estate of the insolvent, or otherwise to to be paid out of his assets in due course of law, any money due from the insolvent in respect of his liability to contribute to the assets of the company; and
(b)there may be proved against the estate of the insolvent the estimated value of his liability to future calls aswell as calls already made.
432.Contributories in case of winding up of a body corporate which is a member.
If a body corporate which is a contributory is ordered to be wound up, either before or after it has been placed on the list of contributor –
(a)the liquidator of the body corporate shall represent it for allthe purposes of the winding up of the company and shall be a contributory accordingly, and may be called onto admitto proof against the assets of the body corporate,or otherwise to allow to be paid out of its assets in due course of law, any money due from the body corporate in respectof its liability to contribute to the assets of thecompany; and
(b)there may be proved against the assets of the body corporate theestimated value of its liability to future calls as well as calls already made.
CHAPTER II
WINDING UP BY THE COURT
Cases in which company may be wound up by the Court
433.Circumstances in which company may be wound up by Court.
A company may be wound up by the Court –
(a)if the company has, by specialresolution,resolved that the company be wound up by the Court
(b)if default is made in delivering the statutoryreport to the Registrar or in holding the statutory meeting;
(c)if the company does not commence its business withina yearfrom its incorporation, or suspends its business fora whole year;
(d)if the number of members is reduced, in the case ofa public company,below seven, and in the case ofaprivate company, below two;
(e)if the company is unable to pay its debts;
(f)if the Court is of opinion that it is just and equitable that the company should be wound up.
Company when deemed unable to pay its debts
434.Company when deemed unable to pay its debts.
(1)A company shall be deemed to be unable to pay its debts –
(a)if a creditor, by assignment or otherwise, to whomthe companyis indebted in a sum exceeding fivehundredrupees then due, has served on the company, by causingittobe deliveredatits registered office, by registeredpost or otherwise, a demand under his hand requiring the companyto paythesumso due and the companyhasforthreeweeks thereafter neglected to pay the sum, or to secure or compound for it to the reasonable satisfaction of the creditor;
(b)if executionor other process issued on adecreeor order of any Court in favour of a creditor of the companyis returned unsatisfied in whole or in part; or
(c)ifit is proved to the satisfaction of the Courtthat the company is unable to pay its debts, and, indetermining whether a company is unable to pay its debts, the Court shall take into account the contingent and prospectiveliabilities of the company.
(2)The demand referred to in clause (a) of sub-section (1) shall be deemed to have been duly given under the hand of the creditor if it is signed by any agent or legal adviser duly authorised on his behalf, or in the case of a firm, if it is signed by any such agent or legal adviser or by any member of the firm.
Transfer of Proceedings
435.Transfer of winding up proceedings to District Court.
Where a High Court Makes an order for winding up a company under this Act, the High Court may, if it thinks fit, direct all subsequent proceedings to be had in a District Court subordinate thereto or, with the consent of any other High Court, in such High Court or in a District Court subordinate thereto ; and thereupon for the purposes of windingup the company, the Court in respect of which suchdirection is given shall be deemed to be “the Court” within the meaning of this Act, and shall have all the jurisdiction and powers of aHighCourt under this Act.
436.Withdrawal and transfer of winding up from one District Court to another.
If during the progress of a winding up in a District Court, it appears to the High Court that the same could be more conveniently proceeded with in the High Court or in any other District Court, the High Court may, as the case may require –
(a)withdraw thecaseand proceed withthewindingup itself; or
(b)transfer the case to such other District Court, whereupon the windingup shall proceedinthatDistrict Court.
437.Power of High Court to retain winding up proceedings in District Court.
The High Court may direct that a District Court in which proceedings for winding up a company have been commenced, shall retain and continue the proceedings, although it may not be the Court in which they ought to have been commenced.
438.Jurisdiction of High Court under sections 435, 436 and 437 to be exercised at any time and at any stage.
The High Court shall have jurisdiction to pass orders under section 435, 436 or 437 at any time and at any stage and either on the application of, or without application from, any of the parties to the proceedings.
Petition for Winding Up
439.Provisions as to applications for winding up.
(1)An application to the Court for the winding up of a company shall be by petition presented, subject to the provisions of this section –
(a)by the company; or (b)by any creditor or creditors, including anycontingent or prospective creditor or creditors; or
(c)by any contributory or contributories; or
(d)by all or any of the parties specified in clauses (a), (b) and (c), whether together or separately; or
(e)by the Registrar; or
(f)in a case falling under section 243,byanyperson authoised by the Central Government in that behalf.
(2)A secured creditor, the holder of any debentures (including debenture stock),whether or not any trustee or trusteeshavebeen appointedinrespectof such and otherlikedebentures, and the trustee for the holders of debentures, shall be deemed to be creditors within the meaning of clause (b) of sub-section (1).
(3)A contributory shall be entitled to present a petition for winding up a company, notwithstanding that he may be the holder of fully paid-up shares, or that the company may have no assets atall, or may have, no surplus assets left for distribution among theshare-holders after the satisfaction of its liabilities.
(4)A contributory shall not be entitled to present a petition for winding up a company unless –
(a)either the number of members is reduced, in the case of a public company, below seven, and, in the case of aprivate company, below two; or
(b)the shares in respect of which he is a contributory, or some of them, either were originally allotted to him or have been held by him, and registered in his name, for at least six months during the eighteen months immediately before the commencement of the winding up, or have devolved on him through the death of a former holder.
(5)Except in the case where he is authorised in pursuance of clause (f) of sub-section (1), the Registrar shall be entitled to present a petition for winding up a company only on the grounds specified in 1[clauses (b), (c), (d), (e) and (f)] of section 433:
Providedthat the Registrar shall not present a petition onthe groundspecifiedin clause (e) aforesaid, unless it appears to him either from the financial condition of the company as disclosed in its balance-sheet orfrom the report of 2[aspecialauditorappointed under section233A or an inspector] appointed under section235 or 237, that the company is unable to pay its debts :
Providedfurtherthat the Registrar shall obtaintheprevious sanction of the Central Government to the presentation of the petition on any of the grounds aforesaid.
(6)The Central Government shall not accord its sanction in pursuance of the foregoing proviso, unless the company has first been afforded an opportunity of making its representations, if any.
(7)A petition for winding up a company on the ground specified in clause (b) of section 433 shall not be presented –
(a)except by the Registrar or by a contributory;
(b)beforethe expiration of fourteen days after the last day on which the statutory meeting referred to in clause(b) aforesaid ought to have been held.
(8)Before a petition for winding up a company presentedby a contingent or prospective creditor is admitted, the leave of the Court shallbeobtained for the admission of the petition andsuchleave shall not be granted –
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1.Subs. by Act 65 of 1960, s. 162, for ” clauses (b), (c) and (e)”.
2.Subs. by s. 162, ibid., for “an inspector “.
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(a)unless,in the opinion of the Court there isaprima facie case for winding up the company; and
(b)untilsuchsecurity for costs has been givenasthe Court thinks reasonable.
440.Right to present winding up petition where company is being wound up voluntarily or subject to Court’s supervision.
(1)Where a company being wound up voluntarily or subject to the supervision of the Court, a petition for its winding up by the Court may be presented by –
(a)any person authorised to do so under section439,and subject to the provisions of that section; or
(b)the Official Liquidator.
(2)The Court shall not make a winding up order on apetition presented to it under sub-section (1), unless it is satisfied that the voluntary winding up or winding up subject to the supervision of the Court cannot be continued with due regard to the interests of the creditors or contributories or both.
Commencement of Winding Up
441.Commencement of winding up by Court.
(1)Where, before the presentation of a petition for the winding up of a company by the Court, a resolution has been passed by the company for voluntary winding up, the winding up of the company shall be deemed to have commenced at the time of the passing of the resolution, and unless the Court, on proof of fraud or mistake, thinks fit to direct otherwise, all proceedings taken in the voluntary winding up shall be deemed to have been validly taken.
(2)In any other case, the winding up of a company by the Court shall be deemed to commence at the time of the presentation of the petition for the winding up.
Powers of Court
442.Power of Court to stay or restrain proceedings against Company.
At any time after the presentation of a winding up petition and before a winding up order has been made, the company, or any creditor or contributory, may –
(a)whereanysuit or proceeding against thecompanyis pending in the Supreme Court or in any High Court, applyto the Court in which the suit or proceeding is pendingfor a stay of proceedings therein; and
(b)whereanysuit or proceeding is pendingagainstthe company in anyother Court, apply to the Court having jurisdiction to wind up the company , torestrainfurther proceedings in the suit or proceeding; and the Court to which application is so made may stay or restrain the proceedings accordingly, on such terms as it thinks fit.
443.Powers of Court on hearing petition.
(1)On hearing a winding up petition, the Court may –
(a)dismiss it, with or without costs; or
(b)adjourn the hearing conditionally orunconditionally; or
(c)make any interim order that it thinks fit; or
(d)make anorderfor winding upthecompanywithor without costs, or any other order that it thinks fit:
Providedthatthe Court shall not refuse to make awinding uporderonthe ground only that the assets of thecompanyhave been mortgaged to an amount equal to or in excess of those assets, or that the company has no assets.
(2)Where the petition is presented on the ground that it is just and equitable that the company should be wound up, the Court may refuse to make an order of winding up, if it is of 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 that other remedy.
(3)Where the petition is presented on the ground of default in delivering the statutory report to the Registrar, or in holding the statutory meeting, the Court may –
(a)instead of making a winding up order, direct that the statutoryreport shall be delivered or that a meetingshall be held; and
(b)orderthe costs to be paid by any persons who, inthe opinion of the Court, are responsible for the default.
Consequences of Winding up Order
444.Order for winding up to be communicated to Official Liquidator and Registrar.
Where the Court makes an orderforthe windingup of a company, the Court shall forthwithcauseintimation thereof to be sent to the 1[Official Liquidator and the Registrar].
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1.Subs. by Act 65 of 1960, s. 163, for”Official Liquidator”.
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445.Copy of winding up order to be filed with Registrar.
(1)On the making of a winding up order, it shall be the duty of the petitioner in the winding up proceedings and of the company to file with the Registrar a certified copy of the order,within 1[thirty days] from the date of the making of the order.
If default is made in complying with the foregoing provision, the petitioner, or as the case may require, the company, and every officer of the company who is in default, shall be punishable with fine which may extend to one hundred rupees for each day during which the default continues.
2[(1A) In computing the period of 1[thirty days] from the date of themakingofa winding up order under sub-section (1) thetime requisiteforobtainingacertified copy oftheordershall be excluded.]
(2)On the filing of a certified copy of the winding up order, the Registrar shall make a minute thereof in his books relating to the company, and shall notify in the Official Gazette that such an order has been made.
(3)Such order shall be deemed to be notice of discharge to the officers and employees of the company, except when the business of the company is continued.
446.Suits stayed on winding up order.
(1)When a winding up order has been made or the Official Liquidator has been appointed as provisional liquidator, no suit or other legal proceeding shall be commenced. or if pending at the date of the winding up order, shall be proceeded with, against the company, except by leave of the Courtand subject to such terms as the Court may impose.
3[(2)The Court which is winding up the company shall, notwithstandinganything contained in any other law for the timebeing, in force, have jurisdiction to entertain, or dispose of –
(a)any suit or proceeding by or against the company;
(b)any claimmade by or against thecompany(including claims by or against any of its branches in India);
(c)any application made under section 391 by or in respect of the company;
(d)any question of priorities or any other question whatsoever,whether of law or fact, which may relate to or arise in course of the winding up of the company;
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1.Subs.by Act 31 of 1965, s. 62 and Sch., for”onemonth” (w.e.f. 15-10-1965).
2.Ins. by Act 65 of 1960, s. 164.
3.Subs. by s. 165, ibid., for sub-section (2).
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whether such suit or proceeding has been instituted or isinstituted, or such claim or question has arisen or arises or such application has beenmade or is made before or after the order for the winding upof thecompany,or before or after the commencementoftheCompanies (Amendment) Act, 1960.] (65 of 1960.)
(3)Any suit or proceeding by or against the company which is pending in any Court other than that in which the winding up of the company is proceeding may, notwithstanding anything contained in any other law for the time being in force, be transferred to and disposed of by that Court.
1[(4)Nothing in sub-section (1) or sub-section (3) shall apply to any proceeding pending in appeal before the Supreme Court or a High Court.]
447.Effect of winding up order.
An order for windingupa companyshall operate in favour of all the creditors and ofallthe contributoriesofthe company as if it had been madeonthejoint petition of a creditor and of a contributory.
Official Liquidators
448.Appointment of Official Liquidator.
(1)For the purposes of this Act, so far as it relates to the winding up of companies by the Court –
(a)there shall be attached to each High Court, an Official Liquidator appointed by the Central Government, who shallbe a whole-time officer, unless the Central Government considers that there will not be sufficient work for a whole-time officer in which case a part-time officer may beappointed; and
(b)the Official Receiver attached to a District Court for insolvencypurposes, or if there is no such Official Receiver then, such person as the Central Government may, by notification in the Official Gazette appoint for thepurpose, shall be the OfficialLiquidatorattachedtothe District Court.
2[(1A)The Central Government may appoint one or moreDeputy or Assistant Official Liquidators to assist the Official Liquidator in the discharge of his functions.]
(2)Allreferences to the ” Official Liquidator ” inthisAct shallbe construed as references to the Official Liquidatorreferred to in clause (a) or clause (b), as the case may be, of sub-section (1) 1[and as includingreferencestoDeputy or Assistant Official Liquidators appointed under sub-section (1A)].
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1.Ins. by Act 65 of 1960, s. 165.
2.Ins. by s. 166, ibid.
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449.Official Liquidator to be liquidator.
On a winding up order being made in respect of a company, the Official Liquidator shall, by virtue of his office, become the liquidator of the company.
450.Appointment and powers of provisional liquidator.
(1)At any time after the presentation of a winding up petition and before themaking of a winding up order, the Court may appoint the Official Liquidator to be liquidator provisionally.
(2)Before appointing a provisional liquidator, the Court shall give notice to the company and give a reasonable opportunity to it to make its representations, if any, unless, for special reasons to be recorded in writing, the Court thinks fit to dispense with such notice.
(3)Wherea provisionalliquidator is appointed by theCourt, the Court may limit and restrict his powers by the order appointing him or by a subsequent order; but otherwise he shall have the same powers as a liquidator.
(4)The Official Liquidator shall cease to hold office as provisional liquidator, and shall become the liquidator, of the company, on a winding up order being made.
451.General provisions as to liquidators.
(1)The liquidator shall conduct the proceedings in winding up the company and perform such duties in reference thereto as the Court may impose.
(2)Where the Official liquidator becomes or acts as liquidator, there shall be paid to theCentral Government out of the assets of the company such fees as may be prescribed.
(3)The acts of a liquidator shall be valid, notwithstanding any defect that may afterwards be discovered in his appointment or qualification;
Provided that nothing in his sub-section shall be deemed to give validity to acts done by a liquidator after his appointment has been shown to be invalid.
452.Style, etc., of liquidator.
A liquidator shall be described by the style of “The Official Liquidator” of the particular company in respect of which he acts, and not by his individual name.
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1.Ins. by Act 65 of 1960, s. 166.
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453.Receiver not to be appointed of assets with liquidator.
A receiver shall not be appointed of assets in the hands of a liquidator except by, or with the leave of, the Court.
454.Statement of affairs to be made to Official Liquidator.
(1)Where the Court has made a winding up order or appointed the Official Liquidator as provisional liquidator, unless the Court in its discretion otherwise orders, there shall be made out and submitted to the Official Liquidator a statement as to the affairs of thecompany in the prescribed form, verified by an affidavit, and containing the following particulars, namely –
(a)the assets of the company, stating separately thecash balancein hand and at the bank, if any, and thenegotiable securities, if any, held by the company;
(b)its debts and liabilities;
(c)the names, residences and occupations of its creditors, stating separately the amount of secured and unsecured debts; and in the case of secured debts, particulars ofthe securitiesgiven,whetherby thecompanyoranofficer thereof, their value and the dates on which they were given;
(d)the debts due tothe company and the names, residences and occupations of the persons from whom they are due and the amount likely to be realised on account thereof;
(e)such further or other information as may be prescribed, or as the Official Liquidator may require.
(2)The statement shall be submitted and verified by one or more of the persons who are at the relevant date the directors and by the person who is at that date the manager, secretary or other chief officer of the company, or by such of the persons hereinafter in this sub-sectionmentioned, as the Official Liquidator,subjecttothe directionoftheCourt,mayrequiretosubmitandverifythe statement, that is to say, persons –
(a)who are or have been officers of the company;
(b)who have taken part in the formation of the companyat any time within one year before the relevant date;
(c)who are in the employment of the company, or havebeen inthe employment of the company within the saidyear, and are, in the opinion of the Official Liquidator,capableof giving the information required;
(d)who are or have been within the said year officersof, orin the employment of, a company which is, orwithinthe saidyearwas,anofficer of thecompanytowhichthe statement relates.
(3)The statement shall be submitted within twenty-one days from the relevant date, or within such extended time not exceeding three months from that date as the Official Liquidator or the Court may, for special reasons, appoint.
(4)Any person making, or concurring in making, the statement and affidavit required by this section shall be allowed, and shall be paid by the Official liquidator or provisional liquidator, as the case may be, out of the assets of the company, such costs and expenses incurred in and about the preparation and making of the statement and affidavit as the Official Liquidator may consider reasonable, subject to an appeal to the Court.
1[(5)If any person, without reasonable excuse, makes default in complying with any of the requirements of this section, he shall be punishable with imprisonment for a term which may extend to two years, or withfine which may extend to one hundred rupeesforeveryday during which the default continues, or with both.
(5A)The Court by which the winding up order ismadeorthe provisional liquidator is appointed, may take cognizance of an offence under sub-section (5) upon receiving a complaint of facts constituting such an offence and trying the offence itself in accordance with the procedurelaiddown in the Code of Criminal Procedure, 1898, (5 of 1898.) 2[for the trial of summons cases by magistrates.]]
(6)Anyperson stating, himself in writing to be a creditoror contributoryof the company shall be entitled, by himself or by his agent, at all reasonable times, on payment of the prescribed fee, to inspect the statement submitted in pursuance of this section, and to a copy thereof or extract there from.
(7)Any person untruthfully so stating himself to be a creditor or contributory shall be guilty of an offence under section 182 of the Indian Penal Code; (45 of 1860.)and shall, on the application of the Official Liquidator, be punishable accordingly.
(8)In this section, the expression “the relevant date” means, in a case where a provisional liquidator is appointed, the date of his appointment, and in a case where no such appointment is made, the date of the winding up order.
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1.Subs. by Act 65 of 1960, s. 167, for sub-section (5).
2.See now the Code of Criminal Procedure, 1973 (2 of 1974).
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455.Report by Official Liquidator.
(1)In a case where a winding up order is made, the Official Liquidator shall, as soon as practicable after receipt of the statement to be submittedunder section 454 and not later than six months from the date of theorder, 1[or such extended period as may be allowed by the Court] or in a case where the Court orders that no statement need be submitted, as soon as practicable after the date of the order, submit a preliminaryreport to the Court –
(a)as to the amount of capital issued, subscribed, and paid up, and the estimated amount of assets and liabilities, giving separately, under the heading of assets, particulars of (i) cash and negotiable securities; (ii) debts due from contributories; (iii) debts due to the company and securities, if any, available in respect thereof; (iv) movable and immovable properties belonging to the company; and (v) unpaid calls;
(b)if thecompany has failed, as to thecausesofthe failure; and
(c)whether,in his opinion, further inquiry isdesirable as to any matter relating to the promotion,formation,or failureofthecompany, or theconductofthebusiness thereof.
(2)The Official Liquidator may also, if he thinks fit, make a further report, or further reports, stating the manner in which the company was promoted or formed and whether in his opinion any fraud has been committed by any person in its promotion or formation, or by any officer of the company in relation to the company since the formation thereof, and any other matters which, in his opinion, it is desirable to bring to the notice of the Court.
(3)If the Official Liquidator states in any such further report that in his opinion a fraud has been committed as aforesaid, the Court shall have the further powers provided in section 478.
Custody of company’s property
456.Custody of company’s property.
(1)Where a winding up order has been made or where a provisional liquidator has been appointed, the liquidator 2[or the provisional liquidator, as the case may be,] shalltake into his custody or under his control, all the property, effects and actionable claims to which the company is or appears to be entitled.
2[(1A)Forthe purpose of enablingtheliquidator or the provisionalliquidator, as the case may be, to take into hiscustodyor under his control, any property, effects or actionable claims to which the company is or appears to be entitled,theliquidatororthe provisional liquidator, as the case may be, may by writing request the ChiefPresidency Magistrate or the District Magistratewithinwhose jurisdictionsuch property, effects or actionable claims or any books of account or other documents of the company may be found,totake possessionthereof,andtheChiefPresidencyMagistrateorthe District Magistrate may thereupon, after such notice as he maythink fit to give to any party, take possession of such property,effects, actionable claims, books of account or other documentsanddeliver possession thereof to the liquidator or the provisional liquidator.
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1.Ins. by Act 65 of 1960, s. 168.
2.Ins. by s. 169, ibid.
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(1B)For the purpose of securing compliance with the provisions of sub-section (1A), the Chief Presidency Magistrate or the District Magistratemay take or cause to be taken such steps and use orcause to be used such force as may in his opinion be necessary.]
(2)All the property and effects of the company shall be deemed to be in the custody of the court as from the date of the order for the winding up of the company.
457.Powers of liquidator.
(1)The liquidator in a winding up by the Court shall have power, with the sanction of the Court –
(a)to institute or defend any suit, prosecution, orother legal proceeding, civil or criminal, in the nameand on behalf of the company;
(b)to carry on the business of the company so far as may be necessary for the beneficial winding upof the company;
(c)to sell the immovable andmovable property and actionable claims of the company by public auction or private contract,withpower to transfer the whole thereoftoany person or body corporate, or to sell the same in parcels;
(d)to raise on the security of the assets of thecompany any money requisite;
(e)to do all such other things as may benecessaryfor windingup the affairs of the company anddistributingits assets.
(2)The liquidator in a winding up by the Court shall have power –
(i)todoallacts and to execute, in thenameandon behalfofthecompany,alldeeds,receipts,andother documents, andfor that purpose to use, when necessary, thecompany’s seal; 1[(ia) to inspect the records and returns of the company on the files of the Registrar without payment of any fee;]
(ii)to prove, rank and claim in the insolvency of any contributory,for any balance against his estate, and to receive dividends in the Insolvency, inrespectofthat balance, asaseparate debt due fromtheinsolvent,and rate ably with the other separate creditors;
(iii)to draw, accept, make and endorse any 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 the bill, hundi, or note had been drawn, accepted, made or indorsed by or on behalf of the company in the course of its business;
(iv)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 liquidator to take out the letters of administration or recover the money, be deemed to be due to the liquidator himself:
Provided that nothing herein empowered shall be deemed to affect the rights, duties and privileges of any Administrator-General;
(v)to appoint an agent to do any business which the liquidator is unable to do himself.
(3)The exercise by the liquidator in a winding up by the Court of the powers conferred by this section shall besubjecttothe controlof the Court; and any creditor or contributory mayapplyto the Court with respect to the exercise or proposed exercise of anyof the powers conferred by this section.
458.Discretion of liquidator.
The Court may, by order, provide that the liquidator may exercise any of the powers referred to in sub-section (1) of section 457 without the sanction or intervention of the Court:
Providedalwaysthatthe exercise by theliquidatorofsuch powers shall be subject to the control of the Court.
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1.Ins. by Act 65 of 1960, s. 170.
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Exclusion of certain time in computing periods of limitation
458A.Exclusion of certain time in computing periods of limitation.
Notwithstanding anything in the Indian Limitation Act, 1908 (9 of 1908.) or in any other law for the time being in force, in computing the period of limitation prescribed for any suit or application in the name and on behalf of a company which is being wound up by the Court, the period from the date of commencement of the winding up of the company to the date on which the winding up order is made (both inclusive) and a period of one year immediately following the date of the winding up order shall be excluded.]
459.Provision for legal assistance to liquidator.
460.Exercise and control of liquidator’s powers.
(1)Subject to the provisions of this Act, the liquidator shall, in the administration of the assets of the company and the distribution thereof among its creditors, have regard to any directions which may be given by resolution of the creditors or contributories at any general meeting or by the committee of inspection.
(2)Any directions given by the creditors or contributories at any general meeting shall, in case of conflict, be deemed to override any directions given by the committee of inspection.
(3)The liquidator –
(a)may summon general meetings of the creditors or contributories,whenever he thinks fit, for thepurposeof ascertaining their wishes;
(b)shallsummonsuchmeetings atsuchtimes,asthe creditorsorcontributories, as the case may be, may by resolution, direct, or whenever requested in writing to do so by not lessthan one-tenth in value ofthecreditorsor contributories, as the case may be.
(4)The liquidator may apply to the Court in the manner prescribed, if any for directions in relation to any particular matter arising in the winding up.
(5)Subject to the provisions of this Act, the liquidator shall use his own discretion in the administration of the assets of the company and in the distribution thereof among the creditors.
(6)Any person aggrieved by any act or decision of the liquidator may apply to the Court ; and the Court may confirm, reverse or modifythe act or decision complained of, and makesuchfurther order as it thinks just in the circumstances.
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1.Ins. by Act 65 of 1960, s. 171.
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461.Books to be kept by liquidator.
(1)The liquidator shall keep, in the manner prescribed, proper books in which he shall cause entries or minutes to be made of proceedings at meetings and of such other matters as may be prescribed.
(2)Any creditor or contributory may, subject to the control of the Court, inspect any such books, personally or by his agent.
462.Audit of liquidator’s accounts.
(1)The liquidator shall, at such times as may be prescribed but not less than twice in each year during his tenure of office, present to the Court an account of his receipts and payments as liquidator.
(2)The account shall be in the prescribed form, shall be made in duplicate, and shall be verified by a declaration in the prescribed form.
(3)The Court shall cause the account to be audited in such manner as it thinks fit; and for the purpose of the audit, the liquidator shall furnish the Court with such vouchers and information as the Court may require, and the Court may, at any time, requirethe productionof,andinspect,any booksoraccountskeptbythe liquidator.
(4)When the account has been audited, one copy thereof shall be filed and kept by the Court, and the other copy shall be delivered to the Registrar for filing; and each copy shall be open to the inspection of any creditor, contributory or person interested.
2[(4A)Where an account referred to in sub-section (4) relates to a Government company in liquidation, the liquidator shall forward a copy thereof –
(a)to the Central Government, if thatGovernmentis a member of the Government company; or
(b)to any State Government, if that Government is a member of the Government company; or
(c)to the Central Government and any State Government, if boththe Governments are members of the Government company.
(5)The liquidator shall cause the account when audited or a summary thereof to be printed, and shall send a printed copy of the account or summary by post to every creditor and to every contributory:
Provided that the Court may in any case dispense with compliance with this sub-section.
463.Control of Central Government over liquidators.
(1)The Central Government shall take cognisance of the conduct of liquidators of companies which are being wound up by the Court and, if aliquidator does not faithfully perform his duties and duly observe all the requirementsimposedon him by this Act1[or by the Indian CompaniesAct, 1913],(7of1913.) the rulesthereunder, or otherwise with respect to the performance of his duties or if any complaint is made to the Central Governmentbyanycreditor or contributory in regard thereto, the Central Government shall inquire into the matter, andtake such actionthereonasitmaythink expedient:
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1.Ins. by Act 65 of 1960, s.172.
2.Ins. by Act 31 of 1988, s.55 (w.e.f. 15-6-1988).
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1[Providedthat where the winding up of a company hascommenced before the commencement of this Act, the Court may, on the application oftheCentral Government, appoint in place of suchliquidatorthe Official Liquidator as the liquidator in such winding up.]
(2)The Central Government may at any time require any liquidator of a company which is being wound up by the Court to answer any inquiry in relation to any winding up in which he is engaged, and may, if the Central Government thinks fit, apply to the Court to examine him or any other person on oath concerning the winding up.
(3)The Central Government may also direct a local investigation to be made of the books and vouchers of the liquidators.
Committee of inspection
464.Appointment and Composition of committee of inspection.
2[(1)(a)The Court may, at the time of making an order for the winding up of a company or at any time thereafter, directthat there shall be appointed a committee of inspection to act with the liquidator.
(b)Whereadirection is given by theCourt asaforesaid, the liquidatorshall, within two months from the date of suchdirection, convene a meeting of the creditors of the company (as ascertained from its books and documents) for the purpose of determining who are tobe members of the committee.]
3[(2)Theliquidator shall, within fourteen daysfromthe dateof the creditors’ meeting or such further time as theCourtin itsdiscretionmay grant for the purpose, convene a meetingof the contributories to consider the decision of the creditors’ meeting with respect to the membership of the committee ; and it shall be opento the meeting of the contributories to accept the decision of the creditors’ meeting with or without modifications or to reject it.]
(3)Exceptin the case where the meeting ofthecontributories’ acceptsthedecision of the creditors’ meeting in itsentirety, it shall be the dutyof the liquidator to applyto theCourt fordirections as to 4* ** what the composition of the committeeshall be, and who shall be members thereof.
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1.Ins. by Act 65 of 1960, s. 172.
2.Subs. by s. 173, ibid., for sub-section (1).
3.Subs. by s. 173, ibid., for sub-section (2).
4.The words ” whether there shall be a committee of inspection; and, if so,” omitted by s. 173, ibid.
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465.Constitution and proceedings of committee of inspection.
(1)A committee of inspection appointed in pursuance of section 464 shall consist of not more than twelve members, being creditors and contributories of the company or persons holding general or special powers of attorney from creditors or contributories, in such proportions as may be agreed on by the meetings of creditors and contributories, or in case of difference of opinion between the meetings, as may be determined by the Court.
(2)The committee of inspection shall have the right to inspect the accounts of the liquidator at all reasonable times.
(3)Thecommittee shall meet at such times as it may from time to timeappoint,1* * * and the liquidator oranymemberof the committeemayalso call a meeting of the committee asandwhenhe thinks necessary.
(4)The quorum for a meeting of the committee shall be one-third of thetotal number of the members, or two, whichever is higher.
(5)The committee may act by a majority of its members present at a meeting, but shall not act unless a quorum is present.
(6)A member of the committee may resign by notice in writing signed by him and delivered to the liquidator.
(7)If a member of the committee is adjudged an insolvent, or compounds or arrangeswith his creditors, or is absentfrom five consecutivemeetingsofthe committee without theleave of those members who, together with himself, represent the creditors or contributories, as the case may be, his office shall become vacant.
(8)A member of the committee may be removed at a meeting of creditorsif he represents creditors, or at a meeting of contributories if herepresentscontributories,byanordinary resolutionofwhich seven days’ notice has been given,statingthe object of the meeting.
(9)Onavacancy occurring in thecommittee,theliquidator shall forthwith summon a meeting of creditors or of contributories, as thecasemay require, to fill the vacancy; and the meeting may, by resolution,reappointthesame, orappointanother,creditoror contributory to fill the vacancy:
Provided that if the liquidator, having regard to the position in the winding up, is of the opinion that it is unnecessary for the vacancy to be filled, he may apply to the Court and the Court may make an order that the vacancy shall not be filled, or shall not be filled except in such circumstances as may be specified in the order.
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1.The words “and, failing such appointment, at least once a month” omitted by Act 65 of 1960, s. 174.
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(10)The continuing members of the committee, if not less than two, may act notwithstanding any vacancy in the committee.
General powers of Court in case of winding up by Court
466.Power of Court to stay winding up.
(1)The Court may at any time after making a winding up order, on the application either of the Official Liquidator or of any creditor or contributory, and on proof to the satisfaction of the Court that all proceedings in relation to thewindingupoughttobe stayed,makeanorder stayingthe proceedings,either altogether or for a limited time, onsuchterms and conditions as the Court thinks fit.
(2)On any application under this section, the Court may, before making an order, require the Official Liquidator to furnish to the court a report with respect to any facts or matters which are in his opinion relevant to the application.
(3)Acopyofeveryordermadeunderthissectionshall forthwithbeforwardedbythe company,orotherwiseasmaybe prescribed, to the Registrar, who shall make a minute of the orderin his books relating to the company.
467.Settlement of list of contributories and application of assets.
(1)As soon as may be after making a winding up order, the Court shall settle a list of contributories, with power to rectify the register of members in’ all cases where rectification isrequired in pursuance of this Act, and shall cause the assets of the company to be collected and applied in discharge of its liabilities:
Provided that, where it appears to the Court that it will not be necessary to make calls on, or adjust the rights of, contributories, the Court may dispense with the settlement of a list of contributories.
(2)Insettlingthe list of contributories,theCourtshall distinguishbetween those who are contributories in theirownright andthosewhoare contributories as beingrepresentatives of or liable for the debts of others.
Delivery of property to liquidator
468.Delivery of property to liquidator.
The Court may, at any time after making a winding up order, require any contributory for the time being on the list of contributories, and any trustee, receiver, banker, agent, 1[officer or other employee] of the company, to pay, deliver surrender or transfer forthwith, or within such time as the Court directs, to the liquidator, any money, property or books and papers 2[in his custody or under his control] to which the company isprima facie entitled.
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1.Subs. by Act 65 of 1960, s. 175, for “or officer”.
2.Subs. by s. 175, ibid., for “in his hands”.
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469.Payment of debts due by contributory and extent of set-off.
(1)The Court may, at any time after making a winding up order, make an order on any contributory for the time being on the list of contributories to pay, in the manner directed by the order, any money due to the company, from him or from the estate of the person whom he represents, exclusive of any money payable by him or the estate by virtue of any call in pursuance of this Act.
(2)The Court, in making such an order, may –
(a)in the case of an unlimited company, allow to the contributory,by way of set-off, any money due to him or to the estate which he represents, from thecompany, onany independentdealing or contract with the company,butnot any money due to him as a member of the company in respect of any dividend or profit; and
(b)in the case of a limited company, make to any director, managingagent, secretaries and treasurers or managerwhose liability is unlimited, or to his estate, the like allowance.
(3)Inthe case of any company, whether limitedorunlimited, when all the creditors have been paid in full, any money due on any account whatever to a contributory from the company may be allowed to him by way of set-off against any subsequent call.
470.Power of Court to make calls.
(1)The Court may, at any time aftermakinga winding up order and either before orafterithas ascertained the sufficiency of the assets of the company –
(a)make calls on all or any of the contributories forthe timebeing on the list of the contributories, to theextent of their liability, for payment of any money which theCourt considersnecessary to satisfy the debts and liabilitiesof thecompany, and the costs, charges and expenses ofwinding up, andfor theadjustment of the rights of the contributories among themselves; and
(b)make an order for payment of any calls so made.
(2)In making a call, the Court may take into consideration the probability that some of the contributories may, partly or wholly, fail to pay the call.
471.Payment into bank of moneys due to company.
(1)The Court may order any contributory, purchaser or other person from whom any money is due to the company to pay the money into the public account of India in the Reserve Bank of India instead of to the liquidator.
(2)Any such order may be enforced in the same manner as if the Court had directed payment to the liquidator.
472.Moneys and securities paid into Bank to be subject to order of Court.
All moneys, bills, hundis, notes and other securities paid or delivered into the Reserve Bank of India in the course of the winding up of a company by the Court, shall be subject in all respects to the orders of the Court.
473.Order on contributory to be conclusive evidence.
(1)An order made by the Court on a contributory shall, subject to any right of appeal, be conclusive evidence that the money, if any, thereby appearing to be due or ordered to be paid is due.
(2)Allotherpertinent matters stated in the ordershall be taken to be truly stated as against all persons and in all proceedings whatsoever.
474.Power to exclude creditors not proving in time.
The Court may fixa time or times within which creditors aretoprove their debtsorclaims or to be excluded from thebenefit of any distribution made before those debts or claims are proved.
475.Adjustment or rights of contributories.
The Court shall adjust the rights of the contributories among themselves, and distribute any surplus among the persons entitled thereto.
476.Power to order costs.
The Court may, in the event of the assets being insufficient to satisfy the liabilities, make an order for the payment out of the assets, of the costs, charges and expenses incurred in the winding up, in such order of priority inter se as the Court thinks just.
477.Power to summon persons suspected of having property of company, etc.
(1)The Court may, at any time after the appointment of a provisional liquidator or the making of a winding up order summon before it any officer ofthe company or person known or suspected to have in his possession any property or booksorpapers,ofthe company,or known or suspected to be indebted to the company, or any person whom the Court deems capable of giving informationconcerning the promotion, formation, trade, dealings, property, books orpapers, or affairs of the company.
(2)The Court may examine any officer or person so summoned on oath concerning the matters aforesaid, either by word of mouth or on written interrogatories; and may, in the former case, reduce his answers to writing and require him to sign them.
(3)The Court may require any officer or person so summoned to produce any books and papers in his custody or power relating to the company; but, where he claims any lien on books or papers produced by him, the production shall be without prejudice to that lien, and the Court shall have jurisdiction in the winding up to determine all questions relating to that lien.
(4)If any officer or person so summoned, after being paid or tendered a reasonable sum for his expenses, fails to appear before the Court at the time appointed, not having a lawful impediment (made known to the Court at the time of its sitting and allowed by it), the Court may cause him to be apprehended and brought before the Court for examination.
1[(5)If, on his examination, any officer or person so summoned admits that he is indebted to the company, the Court may order him to pay to the provisional liquidator or, asthe case may be the liquidator at such time and in such manner as to the Courtmayseem just, the amount in which he is indebted, or any part thereof,either in full discharge of the whole amount or not, as the Court thinks fit, with or without costs of the examination.
(6)If, on his examination, any such officer or person admits that he has in his possession any property belonging to the company, the Court may order him to deliver to the provisional liquidator or as the case may be, the liquidator, that property or any part thereof at such time, in such manner and on such terms as to the Court may seem just.
(7)Orders made under sub-sections (5) and (6) shall be executed in the same manner as decrees for the payment of money or for the delivery of property under the Code of Civil Procedure, 1908, (5 of 1908.)respectively.
(8)Any person making any payment or delivery in pursuance of an order made under sub-section (5) or sub-section (6) shall by such payment or delivery be, unless otherwise directedbysuchorder, dischargedfrom all liability whatsoever in respect of suchdebtor property.]
478 .Power to order public examination of promoters, directors, etc.
(1)When an order has been made for winding up a company by the Court, and the Official Liquidator has made a report to the Court under this Act, stating that in his opinion a fraud has been committed by any person in the promotion or formation of the company, or by any officer of the company in relation to the company since its formation, the Court may, after considering the report, direct that that person or officer shall attend before the Court on a day appointedby it for that purpose, and be publicly examined as tothe promotion or formation or the conduct of the business of thecompany, or as to his conduct and dealings as an officer thereof.
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1.Ins. by Act 65 of 1960, s. 176.
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(2)The Official Liquidator shall take part in the examination, and for that purpose may, if specially authorized by the Court in that behalf, employ such legal assistance as may be sanctioned by the Court.
(3)Any creditor or contributory may also take part in the examination either personally or by any advocate, attorney or pleader entitled to appear before the Court.
(4)The Court may put such questions to the person examined as it thinks fit.
(5)Thepersonexamined shall be examined on oath,andshall answer all such questions as the Court may put, or allow to be put, to him.
(6)A person ordered to be examined under this section –
(a)shall, before his examination, be furnished at hisown cost with a copy of the Official Liquidator’s report; and
(b)mayathis own cost employ an advocate,attorneyor pleader entitled to appear before the Court, who shall be at liberty to put to him such questions as the Courtmaydeem just for the purpose of enabling him to explainor qualify any answers given by him.
(7)(a)If any such person applies to the Court to be exculpated fromany charges made or suggested against him, it shall be the duty of the Official Liquidator to appear on the hearing of the application and call the attention of the Court to any matters which appear to the Official Liquidator to be relevant.
(b)If the Court, after hearing any evidence given or witnesses calledby the Official Liquidator, grants the application, the Court may allow the applicant such costs as it may think fit.
(8)Notes of the examination shall be taken down in writing, and shall be read over to or by, and signed by, the person examined; and maythereafter be used in evidence against him, and shall be open to the inspection of any creditor or contributoryatallreasonable times.
(9)The Court may, if it thinks fit, adjourn the examination from time to time.
(10)An examination under this section may, if the Court so directs and subject to any rules made in this behalf, be held before any District Judge, or before any officer of the High Court, being an official Referee, Master, Registrar or Deputy Registrar.
(11)The powers of the Court under this section as to the conduct of the examination, but not as to costs, may be exercised by the Judge or officer before whom the examination is held in pursuance of sub-section (10).
479.Power to arrest absconding contributory.
At any time either before or after making a winding up order, the Court may, on proof of probable cause for believing that a contributory is about to quit India or otherwise to abscond, or is about to remove or conceal any of his property, for the purpose of evading payment of calls or of avoiding examination respecting the affairs of the company, cause –
(a)the contributory to be arrested and safely keptuntil such time as the Court may order; and
(b)his books and papers and movable property to beseized and safely kept until such time as the Court may order.
480.Saving of existing powers of Court.
Any powers conferredon theCourt by this Act shall be in addition to, and not inderogation of, any existing powers of instituting proceedings against any contributoryordebtorofthecompany,orthe estate of any contributory or debtor, for the recovery of any call or other sums.
481.Dissolution of company.
(1)When the affairs of a company have been completely wound up 1[or when the Court is of the opinion that the liquidator cannot proceed with the winding up ofacompany for want of funds and assets or for any other reason whatsoever and it is just and reasonable in the circumstances of the case that anorder of dissolution of the company should be made], the Court shall make an orderthat the company be dissolved from the date of theorder, and the company shall be dissolved accordingly.
(2)A copy of the order shall, within 2[thirty] days from the date thereof, be forwarded by the liquidator the Registrar who shall make in his books a minute of the dissolution of the company.
(3)If the liquidator makes default in forwardingacopy as aforesaid he shall be punishable with fine which may extend to fifty rupees for every day during which the default continues.
Enforcement of and appeal from orders
482.Order made to any Court to be enforced by other Courts.
Any order made by a Court for, or in the course of, winding up a company shall be enforceable at any place in India, other than that over which such Court has jurisdiction, by the Court which would have had jurisdiction in respect of the company if its registered office had been situate at such other place, and in the same manner in all respects as if the order had been made by that Court.
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1.Ins. by Act 65 of 1960, s. 177.
2.Subs. byAct31 of 1965, s. 62and Sch.,for”fourteen” (w.e.f. 15-10-1985).
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483.Appeals from orders.
Appeals from any order made, or decision given, in the matter of the winding up of a company by the Court shall lie to the same Court to which, in thesamemanner in which,andsubject to the same conditions under which, appeals lie fromany order or decision of the Court in cases within itsordinary jurisdiction.
PreviousNext
CHAPTER III
VOLUNTARY WINDING UP
484.Circumstances in which company may be wound up voluntarily.
(1)A company may be wound up voluntarily –
(a)when the period, if any, fixed for the duration ofthe companyby the articles has expired, or the event, if any, has occurred, on the occurrence of which the articles provide that the company is to be dissolved, andthecompanyin general meeting passes a resolution requiring the companyto be wound up voluntarily;
(b)if the company passes a special resolution that the company be wound up voluntarily.
(2)In this Act, the expression “a resolution for voluntary winding up” means a resolution passed under clause (a) or (b) ofsub-section (1).
Publication of resolution to wind up voluntarily
485.Publication of resolution to wind up voluntarily.
(1)When a company has passed a resolution for voluntary winding up, it shall, within fourteen days of the passing of the resolution, give notice of the resolution by advertisement in the Official Gazette, and also in some newspaper circulating in the district where the registered office of the company is situate.
(2)If default is made in complying with sub-section (1) the company, and every officer of the company who is in default, shall be punishable with fine which may extend to fifty rupees for every day during which the default continues.
For the purposes of this sub-section, a liquidator of the company shall be deemed to be an officer of the company.
486.Commencement of voluntary winding up.
A voluntary winding up shall be deemed to commence at the time when the resolution for voluntary winding up is passed.
487.Effect of voluntary winding up on status of company.
In the case of a voluntary winding up, the company shall from the commencement ofthewinding up, cease to carryonits business, except so far as may be required for the beneficial winding up of such business:
Provided that the corporate state and corporate powers of the company shall continue until it is dissolved.
Declaration of Solvency
488.Declaration of solvency in case of proposal to wind up voluntarily.
(1)Where it is proposed to wind up a company voluntarily, its directors, or in case the company has more than two directors, the majority of the directors, may, at a meeting of the Board, make a declaration verified by an affidavit, to the effect that they have made a full inquiry into the affairs of the company, and that, having done so, they have formed the opinion that the company has no debts, or that it will be able to pay its debts in full within such period not exceeding three years from the commencement of the winding up as may be specified in the declaration.
(2)A declaration made as aforesaid shall have no effect for the purposes of this Act, unless –
(a)it is made within the five weeks immediatelypreceding the date of the passing of the resolution for winding up the companyand is delivered to the Registrarfor registration before that date; and
1[(b)it is accompanied by a copy of the report of the auditors of the company (prepared, as far as circumstances admit, in accordance with the provisions of this Act) onthe profitandlossaccountof thecompanyfortheperiodcommencingfrom the date up to which the last such account waspreparedand ending with thelatestpracticable date immediately beforethe making of thedeclarationandthe balancesheetofthe company made outasonthe last mentioned date and also embodies a statement of the company’s assets and liabilities as at that date.]
(3)Any director of a company making a declaration under this section without having reasonable grounds for the opinion that the company will be able to pay its debts in full within the period specified in the declaration, shall be punishable with imprisonment for aterm which may extend to six months, or withfinewhichmay extend to five thousand rupees, or with both.
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1.Subs. by Act 65 of 1960, s. 178, for cl. (b),
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(4)If the company is wound up in pursuance of a resolution passed within the period of five weeks after the making of the declaration, but its debts are not paid or provided for in full within the period specified in the declaration, it shall be presumed, until the contrary is shown, that the director did not have reasonable grounds for his opinion.
(5)A winding up in the case of which a declaration has been made and delivered in accordance with this section is in this Act referred to as “a members’ voluntary winding up” ; and a winding up in the case ofwhich a declaration has not been so made and delivered is inthis Act referred to as a creditors’ voluntary winding up”.
489.Provisions applicable to a members’ voluntary winding up.
The provisions contained in sections 490 to 498, both inclusive, shall subject to the provisions of section 498, apply in relation to a members’ voluntary winding up.
490.Power of company to appoint and fix remuneration of liquidators.
(1)The company in general meeting shall –
(a)appoint one or more liquidators for the purpose of winding upthe affairs and distributing the assetsofthe company; and
(b)fix the remuneration if any to be paid to the liquidator or liquidators.
(2)Any remuneration so fixed shall not be increased in any circumstances whatever, whether with or without the sanction of the Court.
(3)Before the remuneration of the liquidator or liquidators is fixed as aforesaid, the liquidator, or any of the liquidators, as the case may be, shall not take charge of his office.
491.Board’s powers to cease on appointment of a liquidator.
On the appointment of a liquidator, all the powers of the Board of directors and of the managing or whole-time directors, managing agent, secretaries and treasurers, and manager if there be any of these, shall cease, except for the purpose of giving notice of such appointment to the Registrar in pursuance of section 493 or in so far as the company in general meeting or the liquidator may sanction the continuance thereof.
492.Power to fill vacancy in office of liquidator.
(1)If a vacancy occurs by death, resignation or otherwise in the office of any liquidator appointed by the company, the company in general meeting may, subject to any arrangement with its creditors, fill the vacancy.
(2)For that purpose, a general meeting may be convened by any contributory, or by the continuing liquidator or liquidators, if any.
(3)The meeting shall be held in the manner provided by this Act or by the articles, or in such other manner as the Court may on application by any contributory or by the continuing liquidator or liquidators, determine.
493.Notice of appointment of liquidator to be given to Registrar.
(1)The company shall give notice to the Registrar of the appointment of a liquidator or liquidators made by it under section 490, of every vacancy occurring in the office of liquidator, and of the name of the liquidator or liquidators appointed to fill every such vacancy under section 492.
(2)The notice aforesaid shall be given by the company within ten days of the event to which it relates.
(3)If default is made in complying with sub-section (1) or (2), the company, andeveryofficer ofthecompany(includingevery liquidatororcontinuingliquidator) who is indefault,shallbe punishable with fine which may extend to one hundred rupees for every day during which the default continues.
494.Power of liquidator to accept shares, etc., as consideration for sale of property of company.
(1)Where –
(a)a company(inthis sectioncalled “the transferor company”) is proposed to be, or is in course of being,wound up altogether voluntarily; and
(b)the whole or any part of its business or property is proposed to be transferred or sold to another company whether a company within the meaning of this Act or not (in this section called ” the transferee company “); the liquidator of the transferor company may, with the sanction of a special resolution of that company conferring on the liquidator either a general authority or an authority in respect of any particular arrangement –
(i)receive,by way of compensation orpartcompensation forthe transfer or sale, shares, policies, orotherlike interestsin the transferee company, for distributionamong the, members of the transferor company; or
(ii)enter into any other arrangement whereby the members of the transferorcompanymay, inlieu of receiving cash shares, policies, or other like interests or in addition thereto, participate in the profits of, or receive anyother benefit from, the transferee company.
(2)Any sale or arrangement in pursuance of this section shall be binding on the members of the transferor company.
(3)If any member of the transferor company who did not vote in favour of the special resolution expresses his dissentthere fromin writing addressed to the liquidator, and left at the registered office of the company within seven days after the passing of theresolution, he may require the liquidator either –
(a)to abstain from carrying the resolution into effect; or
(b)to purchase his interest at a price to be determined by agreement,or by arbitration in the manner provided bythis section.
(4)If the liquidator elects to purchase the member’s interest, the purchase money shall be paid before the company is dissolved, and be raised by the liquidator in such manner as may be determined by special resolution.
(5)A special resolution shall not be invalid for thepurposes ofthissectionbyreason only that it is passedbefore or concurrentlywith, a resolution for voluntarywinding up orfor appointingliquidators; but if an order is made within ayearfor winding up the company by or subject to the supervision of theCourt, thespecial resolution shall not be valid unless it is sanctionedby the Court.
(6)The provisions of the Arbitration Act, 1940 (10 of 1940)1 other than those restricting the application of that Act in respect of the subject matter of the arbitration, shall apply to all arbitrations in pursuance of this section.
Duty of liquidator to call creditors’ meeting in case of insolvency
495.Duty of liquidator to call creditors’ meeting in case of insolvency.
(1)If, in the case of a winding up commenced after the commencement of this Act, the liquidator is at any time of opinion that the company will not be able to pay its debts in full within the period stated in the declaration under section 488, or that period has expired without the debts having been paid in full, he shall forthwith summon a meeting of the creditors, and shall lay before the meeting a statement of the assets and liabilities of the company.
(2)If the liquidator fails to comply with sub-section (1), he shall be punishable with fine which may extend to five hundred rupees.
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1.See now the Arbitration and Conciliation Act, 1996 (26 of 1996).
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496.Duty of liquidator to call general meeting at end of each year.
(1)Subject to the provisions of section 498, in the event of the winding up continuing for more than one year, the liquidator shall –
(a)call a general meeting of the company at the end of the first year from the commencement of the winding up, and at theend of each succeeding year, or as soon thereafterasmaybe convenientwithin three months from the end of theyear or such longer period as the Central Government may allow; and
(b)lay beforethe meeting an account of his acts and dealingsandof the conduct of the winding up during the preceding year, together with a statement in theprescribed formand containing the prescribed particulars withrespect to the proceedings in, and position of, the liquidation.
(2)If the liquidator fails to comply with sub-section (1) he shall be punishable, in respect of each failure, with fine which may extend to one hundred rupees.
497.Final meeting and dissolution.
(1)Subject to the provisions of section 498, as soon as the and affairs of the company are fully wound up, the liquidator shall –
(a)makeup an account of the winding up, showing how the winding up has been conducted and the property of the company has been disposed of; and
(b)call a general meeting of the company for the purpose of laying the account before it, and giving anyexplanation thereof.
(2)The meeting shall be called by advertisement –
(a)specifying the time, place and object of the meeting; and
(b)published not less than one month before the meeting in the Official Gazette, and also in some newspapercirculating in the district where the registered office of the company is situate,
(3)Within one week after the meeting, the liquidator shall send to the 1[Registrar and the Official liquidator a copy each of the account and shall make a return to each of them] of the holding of the meeting and of the date thereof.
Ifthecopy is not so sent or the return is notsomade, the liquidatorshallbe punishable with fine which may extendto fifty rupees for every day during which the default continues.
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1.Subs.byAct 31 of 1965, s. 54, forcertainwords(w.e.f. 15-10-1965).
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(4)If a quorum is not present at the meeting aforesaid, the liquidator shall, in lieu of the return referred to in sub-section (3) make a return that the meeting was duly called and that no quorum was present thereat.
Uponsucha return being made within one weekafterthedate fixedforthe meeting, the provisions of sub-section (3) as to the making of the return shall be deemed to have been complied with,
1[(5)TheRegistrar, on receiving the account and either the returnmentioned in sub-section (3) or the return mentioned in sub-section (4), shall forthwith register them.
(6)The Official Liquidator, on receiving the account and either the return mentioned in sub-section (3) or the return mentioned in sub-section (4), shall, as soon as may be, make, andtheliquidator and all officers past or present, of the company shall give the Official Liquidator all reasonable facilities tomake, a scrutinyof the booksandpapers of the company and ifonsuchscrutinythe OfficialLiquidator makes a report to the Court that theaffairsof the companyhave not been conducted in a manner prejudicialtothe interests of its members or to public interest, then, from the date of the submission of the report to the Court the company shall bedeemed to be dissolved.
(6A)If on such scrutiny the Official Liquidator makes a report to the Court that the affairs of the company have been conducted in a manner prejudicial as aforesaid, the Court shall by order direct the Official Liquidator to make a further investigation of the affairs of the company and for that purpose shall invest him with all such powers as the Court may deem fit.
(6B)On the receipt of the report of the Official Liquidator on such further investigation the Court may either make an order that the companyshallstanddissolvedwith effectfromthedatetobe specified by the Court therein or make such other order as the circumstances of the case brought out in the report permit.]
(7)If the liquidator fails to call a general meeting of the company as required by this section, he shall be punishable with fine which may extend to five hundred rupees.
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1.Subs. by Act 31 of 1965, s. 54, for sub-sections (5)and(6) (w.e.f. 15-10-1965).
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498.Alternative provisions as to annual and final meetings in case of insolvency.
Where section 495 has effect, sections 508 and 509 shall apply to the winding up, to the exclusion of sections 496 and 497, as if the winding up were a creditors’ voluntary winding up and not a members’ voluntary-winding up:
Provided that the liquidator shall not be required to call a meeting of creditors under section 508 at the end of the first year from the commencement of the winding up, unless the meeting held under section 495 has been held more than three months before the end of that year.
499.Provisions applicable to a creditor’s voluntary winding up.
The provisions contained in sections 500 to 509, both inclusive, shall apply in relation to a creditors’ voluntary winding up.
500.Meeting of creditors.
(1)The company shall cause a meeting of the creditors of the company to be called for the day, or the day next following the day, on which there is to be held the general meeting of the company at which the resolution for voluntary winding up is to be proposed, and shall cause notices of the meeting of creditors to be sent by post to the creditors simultaneously with the sending of the notices of the meeting of the company.
(2)The company shall cause notice of the meeting of the creditors to be advertised once at least in the Official Gazette and once at least in two newspapers circulating in the district where the registered office or principal place of business of the company is situate.
(3)The Board of directors of the company shall –
(a)cause a full statement of the position of the company affairs together with a list of the creditors of thecompany and the estimated amount of their claims to belaidbefore the meeting of the creditors to be held as aforesaid; and
(b)appoint oneof their number to presideatthe said meeting.
(4)It shall be the duty of the director appointed to preside at the meeting of creditors to attend the meeting and preside thereat.
(5)If the meeting of the company at which the resolution for voluntary winding up is to be proposed is adjourned and the resolution is passed at an adjourned meeting, any resolution passed at the meeting of the creditors held in pursuance of sub-section (1) shall have effect as if it had been passed immediately after the passing of the resolution for winding up the company.
(6)If default is made –
(a)by the company, in complying with sub-sections (1)and (2);
(b)by its Board of directors, in complying with sub-section (3);
(c)by any director of the company, in complying with sub-section (4); thecompany, each of the directors, or the director, as the casemay be,shall be punishable with fine which may extend to one thousand rupees and, in the case of default by the company, every officer of
501.Notice of resolutions passed by creditors’ meeting to be given to Registrar.
(1)Notice of any resolution passed at a creditors’ meeting in pursuance of section 500 shall be given by the company to the Registrar within ten days of the passing thereof.
(2)If default is made in complying with sub-section (1), the company, and every officer of the company who is in default, shall be punishable with fine which may extend to fifty rupees for every day during which the default continues.
For the purposes of this section, a liquidator of the company shall be deemed to be an officer of the company.
Appointment of liquidator
502.Appointment of liquidator.
(1)The creditors and the company at their respective meetings mentioned in section 500 may nominate a person to be liquidator for the purpose of winding up the affairs and distributing the assets of the company.
(2)If the creditors and the company nominate, different persons the person nominated by the creditors shall be liquidator:
Provided thatany director, member or creditor ofthecompany may, within seven days after the date on which the nomination was made bythecreditors, apply to the Court for an ordereither directing thatthepersonnominated as liquidator by the company shall be liquidatorinsteadof or jointly with the person nominated by the creditors, or appointing the Official Liquidator or some other person to be liquidator instead of the person appointed by the creditors.
(3)If no person is nominated by the creditors, the person, if any nominated by the company shall be liquidator.
(4)If no person is nominated by the company, the person, if any, nominated by the creditors shall be liquidator.
503.Appointment of committee of inspection.
(1)The creditors at the meeting to be held in pursuance of section 500orat any subsequent meeting may, if they think fit, appoint a committee of inspection consisting of not more than five persons.
(2)If such a committee is appointed, the company may, either at the meeting at which the resolution for voluntary winding up is passed or at any subsequent general meeting, appoint such number of persons (not exceeding five) as they think fit to act as members of the committee:
Provided that the creditors may, if they think fit, resolve that all or any of the persons so appointed by the company ought not to be members of the committee of inspection.
(3)If the creditors so resolve, the persons mentioned in the resolution shall not, unless the Court otherwise directs, be qualified to act as members of the committee.
(4)On any application to the Court for a direction under sub-section (3), the Court may, if it thinks fit, appoint other persons to act as members of the committee of inspection in the place of the persons mentioned in the creditors’ resolution.
(5)Subject to the provisions of sub-sections (1) to (4) and to such rules as may be made by the Central Government, the provisions of section 465 [except sub-section (1) thereof] shall apply with respect to a committee of inspection appointed under this section as they apply with respect to a committee of inspection appointed in a winding up by the Court.
504.Fixing of liquidators’ remuneration.
(1)The committee of inspection, or if there is no such committee, the creditors, may fix the remuneration to be paid to the liquidator or liquidators.
(2)Where the remuneration is not so fixed, it shall be determined by the Court.
(3)Any remuneration fixed under sub-section (1) or (2) shall not be increased in any circumstances whatever, whether with or without the sanction of the Court.
505.Board’s powers to cease on appointment of liquidator.
On the appointment of a liquidator, all the powers of the Board of directorsshallcease,exceptinsofar as the committee of inspection, or if there is no such committee, the creditors in general meeting, may sanction the continuance thereof.
506.Power to fill vacancy in office of liquidator.
If a vacancy occurs by death, resignation or otherwise, in the office of a liquidator (other than a liquidator appointed by, or by the direction of, the Court), the creditors in general meeting may fill the vacancy.
507.Application of section 494 to a creditors’voluntarywinding up.
The provisions of section 494 shall apply in the case of a creditors’ voluntary winding up as in the case of a members’ voluntary winding up, with the modification that the powers of the liquidator under that section shall not be exercised except with the sanction either of the Court or of the committee of inspection.
508.Duty of liquidator to call meetings of company and of creditors at end of each year.
(1)In the event of the winding up continuing for more than one year, the liquidator shall –
(a)call a general meeting of the company and a meeting of the creditors at the end of the first year from the commencement of the winding up and at the end of each succeeding year, or as soon thereafter as may be convenient within three months from the end of the year or such longer period as the Central Government may allow; and
(b)lay beforethe meetings an account ofhisactsand dealingsandof the conduct of the winding up during the preceding year, together with a statement in the prescribed form and containing the prescribed particulars with respect to the proceedings in and position of, the winding up.
(2)If the liquidator fails to comply with sub-section (1), he shall be punishable, in respect of each failure, with fine which may extend to one hundred rupees.
509.Final meeting and dissolution.
(1)As soon as the affairs of the company are fully wound up, the liquidator shall –
(a)make up an account of the winding up, showing how the winding up has been conducted and the property of the company has been disposed of; and
(b)call a general meeting of the company and a meeting of thecreditors for the purpose of laying theaccountbefore the meetings and giving any explanation thereof,
(2)Each such meeting shall be called by advertisement –
(a)specifying the time, place and object thereof; and
(b)published not less than one month before the meeting in theOfficial Gazette and also in some newspapercirculating in the district where the registered office of the company is situate.
(3)Within one week after the date of the meetings, or if the meetings are not held on the same date, after the date of the later meeting, the liquidator shall send to the 1[Registrar and the Official Liquidator a copy each of the account and shall make a return to each of them] of the holding of the meetings and of the date or dates on which they were held.
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1.Subs.byAct 31 of 1965, s. 55, forcertainwords(w.e.f. 15-10-1965).
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Ifthecopy is not so sent or the return is notsomade,the liquidatorshallbe punishable with fine which may extendtofifty rupees for every day during which the default continues.
(4)If a quorum (which for the purposes of this section shall be two persons) is not present at either of such meetings, the liquidator shall, in lieu of the return referred to in sub-section (3), make a return that the meeting was duly called and that no quorum was present thereat.
Upon such a return being made within one week after the date fixed for the meeting, the provisions of sub-section (3) as to the making of the return shall, in respect of that meeting, be deemed to have been complied with.
1[(5)The Registrar, on receiving theaccountandalso, in respect ofeachsuchmeeting, eitherthe returnmentioned in sub-section (3) or the return mentioned insub-section (4), shall forthwith register them.
(6)The Official Liquidator, on receiving the accountand either the return mentioned in sub-section (3) or the return mentioned in sub-section (4), shall, as soon as may be, make, and theliquidator andall officerspast or present of the company shall give the Official Liquidator all reasonable facilities to make a scrutinyof the books andpapers of the company and if on such scrutinythe Official Liquidator makes a report to the Court that theaffairsof the company have not been conducted in a manner prejudicialtothe interests of its members or to public interest, then, from the date of the submission of the report to the Court the company shall bedeemed to be dissolved.
(6A)If on such scrutiny the Official Liquidator makes a report to the Court that the affairs of the company have been conducted in a manner prejudicial as aforesaid, the Court shall by order direct the Official Liquidator to make a further investigation of the affairs of the company and for that purpose shall invest him with all such powers as the Court may deem fit.
(6B)On the receipt of the report of the Official Liquidator on such further investigation the Court may either make an order that the companyshallstanddissolved witheffectfromthe date to be specifiedbytheCourttherein or make such other order as the circumstances of the case brought out in the report permit.]
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1.Subs. by Act 31 of 1965, s. 55, for sub-sections (5)and(6) (w.e.f. 15.10.1965).
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(7)If the liquidator fails to call a general meeting of the company or a meeting of the creditors as required by this section, he shall be punishable, in respect of each such failure, with fine which may extend to five hundred rupees.
510.Provisions applicable to every voluntary winding up.
The provisions contained in sections 511 to 521, both inclusive, shall apply to every voluntary winding up whether a members or a creditors winding up.
511.Distribution of property of company.
Subject to the provisions of this Act as to preferential payments, the assets of a company shall, on its winding up, be applied in satisfaction of its liabilities pari passu and, subject to such application, shall, unless the articlesotherwiseprovide, be distributedamongthemembers according to their rights and interests in the company.
511A.Application of section 454 to voluntary winding up.
The provisionsofsection 454 shall, so far as may be,applyto
every voluntarywindingup as they apply to the winding upbythe Court except that references to –
(a)the Court shall be omitted;
(b)the Official Liquidator or the provisionalliquidator shall be construed as references to the liquidator; and
(c)the “relevant date” shall be construed as references to the date of commencement of the winding up.
512.Powers and duties of liquidator in voluntary winding up.
(1)The liquidator may –
(a)in the case of a members’ voluntary winding up, with thesanction of a special resolution of the company, andin thecase ofa creditors’ voluntary winding up with the sanction of the Court or, the committee of inspection or if thereis no such committee of a meeting ofthecreditors, exerciseany of the powers given by 2 [clauses (a)to (d)of sub-section (1)] of section 457 to a liquidator in awinding up by the Court;
(b)without the sanction referred to in clause (a), exercise any of the other powers given by this Act to the liquidator in a winding up by the Court;
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1.Ins. by Act 31 of 1965, s. 56 (w.e.f. 15-10-1965).
2.Subs. by Act 65 of 1960, s. 179, for “clauses (i) to (iv) of sub-section (2)”.
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(c)exercise the power of the Court under this Act of settling a list of contributories (which shall be prima facie evidence of the liability of the persons named therein tobe contributories);
(d)exercise the power of the Court of making calls;
(e)call general meetings of the company for the purpose of obtaining the sanction of the company by ordinary or special resolution, as the case may require, or for any other purpose he may think fit.
(2)The exercise by the liquidator of the powers given by clause (a) of sub-section (1) shall be subject to the control of the Court; and any creditor or contributory may apply to the Court with respect to any exercise or proposed exercise of any of the powers conferred by this section.
(3)The liquidator shall pay the debts of the company and shall adjust the rights of the contributories among themselves.
(4)When several liquidators are appointed, any power given by this Act ay be exercised by such one or more of them as may be determined at the time of their appointment, or in default of such determination, by any number of them not being less than two.
513.Body corporate not to be appointed as liquidator.
(1)A body corporate shall not be qualified for appointment as liquidator of a company in a voluntary winding up.
(2)Any appointment made in contravention of sub-section (1) shall be void.
(3)Any body corporate which acts as liquidator of a company and every director, the managing agent or secretaries and treasurers, or a manager thereof) shall be punishable with fine which may extend to one thousand rupees.
514.Corrupt inducement affecting appointment as liquidator.
Any person who gives, or agrees or offers to give to any member or creditor of a company any gratification whatever with a view to –
(a)securing his own appointment or nomination as the company’s liquidator; or
(b)securing or preventing the appointment or nomination of shall bepunishablewith fine which mayextendtoonethousand rupees.
515.Power of Court to appoint and remove liquidator in voluntary winding up.
(1)If from any cause whatever, there is no liquidator acting, 1[the Court may appoint the Official Liquidator or any other person as a liquidator].
2[(2)The Courtmay, on cause shown remove a liquidator and appoint the Official Liquidator or any other person as a liquidator in place of the removed liquidator.
(3)The Court may also appoint or remove a liquidator on the application made by the Registrar in this behalf.
(4)If the Official Liquidator is appointed as liquidator under the proviso to sub-section (2) of section 502 or under this section, the remuneration to be paid to him shall be fixed by the Court and shall be credited to the Central Government.]
Notice by liquidator of his appointment
516.Notice by liquidator of his appointment.
(1)The liquidator shall, within 3[thirty] days after his appointment, publish inthe Official Gazette, and deliver to the Registrar for registration, a notice of his appointment in the form prescribed.
(2)If the liquidator fails to comply with sub-section (1), he shall be punishable with fine which may extend to fifty rupees for every day during which the default continues.
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1.Subs. by Act 65 of 1960, s.180, for”the Court may appointa liquidator”.
2.Subs. by s.180, ibid., for sub-section (2).
3.Subs.byAct31 of 1965, s.62andSch.for”twenty-one” (w.e.f.15-10-1965).
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517.Arrangement when binding on company and creditors.
(1)Any arrangemententeredinto between a company about to be, or inthe courseofbeing, wound up and its creditors shall,subjectto the rightof appeal under this section, be binding on the company and on thecreditorsifit is sanctioned by a specialresolution of the companyandacceded to by three-fourths in number and valueofthe creditors.
(2)Any creditor or contributory may, within three weeks from the completion of the arrangement, appeal to the Court against it and the Court may thereupon, as it thinks just, amend, vary, confirm or set aside the arrangement.
518.Power to apply to Court to have questions determined or powers exercised.
(1)The liquidator or any contributory or creditor may apply to the Court –
(a)to determine any question arising in the winding up of acompany; or
(b)to exercise, as respects the enforcing of calls, the staying of proceedings or any other matter, all or any of the powers which the Court might exercise if the company were being wound up by the Court.
(2)The liquidator or any creditor or contributory may apply to the Court specified in sub-section (3) for an order setting aside any attachment, distress or execution put into force against the estate or effects of the company after the commencement of the winding up,
(3)An application under sub-section (2) shall be made –
(a)ifthe attachment, distress or execution is leviedor put into force by a High Court, to such High Court; and
(b)if the attachment, distress or execution is leviedor put into force by any other Court, to the Court having jurisdictionto wind up the company.
(4)The Court, if satisfied on an application under sub-section (1)or(2) that the determination of the questionortherequired exerciseofpowerortheorderappliedforwillbejustand beneficial, may accede wholly or partially to the application onsuch terms and conditions as it thinks fit, or may make such other order on the application as it thinks just.
(5)A copy of an order staying the proceedings in the winding up, made by virtue of this section, shall forthwith be forwarded by the company, or otherwise as may be prescribed, to the Registrar, who shall make a minute of the order in his books relating to the company.
519.Application of liquidator to Court for public examination of promoters, directors, etc.
(1)The liquidator may make a report to the Court stating that in his opinion a fraud has been committed by any person in the promotion or formation of the company or by any officer of the company in relation to the company since its formation; and the Court may, after considering the report, direct that that person or officer shall attend before the Court on a day appointed by it for that purpose, and be publicly examined as to the promotion or formation or the conduct of the business of the company, or as tohis conduct and dealings as officer thereof.
(2)The provisions of sub-sections (2) to (11) of section 478 shall apply in relation to any examination directed under sub-section (1) as they apply in relation to an examination directed under sub-section (1) of section 478 with references to the liquidator being substituted for references to the Official Liquidator in those provisions.
520.Costs of voluntary winding up.
All costs, charges and expenses properly incurred in the winding up, includingthe remuneration of the liquidator, shall subject to the rights of secured creditors, if any, be payable out of the assets of the company in priority to all other claims.
521.[Saving of right of creditors and contributories to apply for winding up.] Rep. by the Companies (Amendment) Act, 1960 (65 of 1960), s. 181.
CHAPTER IV
WINDING UP SUBJECT TO SUPERVISION OF COURT
522.Power to order winding up subject to supervision.
At any time after a company has passed a resolution for voluntary winding up, the Court may make an order that the voluntary winding up shall continue, but subject to such supervision of the Court, and with such liberty for creditors, contributories or others to apply to the Court, and generally on such terms and conditions, as the Court thinks just.
523.Effect of petition for winding up subject to supervision.
A petition for the continuance of a voluntary winding up subject to the supervision of the Court shall, for the purpose of giving jurisdiction to the Court over suits and legal proceedings, be deemed to be a petition for winding up by the Court.
524.Power of Court to appoint or remove liquidators.
(1)Where an order is made for a winding up subject to supervision, the Court may, by that or any subsequent order, appoint an additional liquidator or liquidators.
(2)The Court may remove any liquidator so appointed or any liquidator continued under the supervision order, and fill any vacancy occasioned by the removal, or by death or resignation.
1[(3)The Court may appoint the Official Liquidator as a liquidator under sub-section (1) or to fill any vacancy occasioned under sub-section (2).
(4)TheCourtmay also appoint or remove aliquidatoronan application made by the Registrar in this behalf.]
525.Powers and obligations of liquidator appointed by Court.
A liquidator appointed by the Court under section 524 shall have the same powers, be subject to the same obligations, and in all respects stand inthe same position, as if he had been duly appointed a in accordancewith the provisions of this Act with respect to the appointment of liquidators in a voluntary winding up.
Effect of supervision order
526.Effect of supervision order.
(1)Where an order is made for a winding up subject to supervision, the liquidator may, subject to any restrictions imposed by the Court, exercise all his powers, without the sanction or intervention of the Court, in the same manner as if the company were being wound up altogether voluntarily.
(2)Except as provided in sub-section (1), any order made by the Court for a winding up subject to the supervision of the Court, shall for all purposes, including the staying of suits and other proceedings, be deemed to be an order of the Court for winding up the company by the Court, and shall confer full authority on the Court to make calls or to enforce calls made by the liquidators, and to exercise all other powers which it might have exercised if an order had been made for winding up the company altogether by the Court.
(3)In the construction of the provisions whereby the Court is empowered to direct any act or thing to be done to or in favour of the liquidator, the expression “liquidator” shall be deemed to mean the liquidator conducting the winding up, subject to the supervision of the Court.
527.Appointment in certain cases of voluntary liquidators to office of liquidators.
Where an order has been made for winding up a company subject to supervision, and an order is afterwards made for winding up by the Court, the Court may, by the last-mentioned or any subsequent order, appoint any person or persons who are then liquidators, either provisionally or permanently, to be liquidator or liquidators in the winding up by the Court in addition to, and subject to the control of, the Official Liquidator.
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1.Ins. by Act 65 of 1960, s. 182.
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