CU-BCOM-SEM-IV-Company Law & Secretarial Practice-Second Draft

However, winding-up proceedings on the ground other than inability to pay debts continued to be governed by the Companies (Court) Rules, 1959 which were notified nearly 60 years ago by the Supreme Court and required suitable amendments in view of the notification of the Companies Act, 2013 and the Insolvency and Bankruptcy Code, 2016. An important feature of these rules is the summary procedure for liquidation introduced through Part V. An important factor for such summary winding-up is that the Central Government will provide required approvals to such companies for the normal winding-up process which is otherwise undertaken through the NCLT, thereby reducing the burden on NCLT and greatly shortening the overall winding-up timelines. Summary Procedure for Liquidation These rules allow following classes of companies to close their business by making a winding-up application to Central Government without going to NCLT. • Companies accepting deposit and having total outstanding deposits Upto ₹25 Lacs* • Companies having total outstanding loan including secured loan Upto ₹50 Lacs* • Companies having total turnover Upto ₹50 Crores* Companies with paid-up capital Upto ₹1 Crore* (*based on latest audited balance sheet) In addition, Companies having book value of assets upto ₹1 Crore (currently specified under section 361(1)(i)) of the Companies Act, 2013, can also approach Central Government for liquidation. The provisions of the Rules related to filing and audit of the Company Liquidator’s accounts and its procedure (Rule 91 to 99 of the Rules) and disposing of assets (Rule 165 to 167 of the Rules) shall be applicable to above class of companies with modification that the word ‘Tribunal’ shall be considered as ‘Central Government’. 14.6SUMMARY  Winding up of a company is defined as a process by which the life of a company is brought to an end and its property administered for the benefit of its members and creditors  An Administrator, called a liquidator is appointed and he takes control of the company, collects its assets, pays its debts and finally distributes any surplus among the members in accordance with their rights  A liquidator is appointed to realize the assets & properties of the company. After payments of the debts, is any surplus of assets is left out they will be distributed among the members according to their rights  Winding up does not necessarily mean that the company is insolvent. A perfectly solvent company may be wound up by the approval of members in a general meeting 201 CU IDOL SELF LEARNING MATERIAL (SLM)

 Winding up may be voluntary or by an order of Tribunal  Tribunal may, on receipt of a petition for winding up under section 272 pass any of the following orders, namely:— (a) dismiss it, with or without costs; (b) make any interim order as it thinks fit; (c) appoint a provisional liquidator of the company till the making of a winding up order; (d) make an order for the winding up of the company with or without costs; or (e) any other order as it thinks fit:  Section 272(1) of the Companies Act, 2013 provides that subject to the provisions of this section, a petition to the Tribunal for the winding up of a company shall be presented by— (a) the company; (b) any contributory or contributories; (c) all or any of the persons specified in clauses (a) and (b); (d) the Registrar; (e) any person authorized by the Central Government in that behalf; or (f) in a case falling under clause (b) of section 271, by the Central Government or a State Government. 14.7KEYWORDS  Winding up: It means winding up under this Act or liquidation under the Insolvency and Bankruptcy Code, 2016, as applicable.  Registrar: Registrar means Registrar of companies  Tribunal:Tribunal refers to National Company Law Tribunal  Liquidator: A liquidator is an officer who is particularly appointed to wind up the affairs of a company when it decides to end its operations or is ended by order of Tribunal 14.8LEARNING ACTIVITY 1. What is the difference between Winding up and dissolution of a company? ___________________________________________________________________________ ___________________________________________________________________________ 2. What is the meaning of the term Liquidation, is it different from the term winding up? ___________________________________________________________________________ ___________________________________________________________________________ 14.9UNIT END QUESTIONS A. Descriptive Questions Short Questions 1.State the different modes of Winding up of a company 202 CU IDOL SELF LEARNING MATERIAL (SLM)

2.Who can present a petition to the Tribunal for the winding up of a company? 3.Explain the role of liquidator in Winding up 4. What are the orders a Tribunal may pass on receipt of a petition for winding up under section 272? 5.Explain the provisions relating to Summary procedure for liquidation under section 361 Long Questions 1.Discuss in detail about petition for Winding up as given in Section 272 of companies Act 2013 2.Explain the provisions relating to Voluntary Winding up 3.Explain the powers of Tribunal as given in Section 273 of the Act 4. Explain the Circumstances in Which Company May be Wound Up by Tribunal 5. Explain Procedure for Winding up by an order of Tribunal B. Multiple choice Questions 1.Companies accepting deposit and having total outstanding deposits of _______ can Wind up without sanction from Tribunal by making an Application to central Government a. 25 lacs b. 30 lacs c. 45 lacs d. 50 lacs 2.The winding up of a company shall, for purposes of section 302, be deemed to be concluded when a. Assets are liquidated and liabilities are settled b. Tribunal passes an order c. order dissolving the company has been reported by the Company Liquidator to the Registrar d. None of these 3. IBC stands for _____________ 203 a. Insolvency and bankruptcy code CU IDOL SELF LEARNING MATERIAL (SLM)

b. Insolvency bureau committee c. Insolvency and banking committee d. None of these 4.Petition for winding up to Tribunal can be filed by_______ a. The company. b. any contributory or contributories. c. Central Government d. All of these 5.Which of the following statement is false 1. A solvent company can apply for Winding up 2. Liquidation process can be initiated after sanction by High court or Tribunal a. 1 alone b. 2 alone c. Both 1 and 2 d. Both 1 and 2 are True Answers 1-a,2-c,3-a,4-d,5-b 14.10REFERENCES Textbooks/ReferenceBooks  T1 Kapoor, N.D.; Elements of Company Law; Himalayan Publishing House, Mumbai.T2Kuchhal, M.C. :Company Law Avtar Singh,Company Law, EasternBook Company,Lucknow  R1 Pathak Akhileshwar Garg, Chawla, Sareen, Mercantile Law, Kalyani Publication,NewDelhi. SecuritiesContracts(Regulation)Act,1956  R2SinghAvtar:CompanyLaw; EasternBookCo.,Lucknow. 204 CU IDOL SELF LEARNING MATERIAL (SLM)