Conclusion: Therefore, it is the settled position of Law that where a winding up petition against a debtor company is pending and a bank or financial institution has been repaid its loans following an order of sale by a Debt Recovery Tribunal, the disbursements made by the Debt Recovery Tribunal cannot be reopened when the debtor company subsequently goes into liquidation. In any of the above cases, a tribunal is formed and a resolution is taken to wind-up the operations of the company under study. A petition for winding up shall be admitted by the Tribunal only if it is accompanied by statement of affairs in such form and in such manner as may be prescribed. Within 14 days it should make an advertisement in the Official Gazette and a vernacular newspaper. The basis of an order for winding up under this clause is that the company has ceased to be commercially solvent i. The members shall be creditors and contributories of the company in such proportions as may be agreed on by the meetings of creditors and contributories.
It shall also cause notice of the meeting of the creditors to be advertised once at least in the Official Gazette and once at least in 2 newspapers circulating in the district of the registered office of the company. A past contributory can only be called upon to pay if the present contributory is unable to pay. Special resolution of the company: If the company has by a special resolution resolved that it may be wound up by the court. The German patent was never granted but the company did acquire and work a Swedish patent and carried on business at Hamburg where a substitute coffee was made from dates, but not under the protection of a patent. They may however apply to the Court for any directions, if and when necessary. But after liquidation section 429 imposes a new liability on the shareholders in respect of unpaid calls made before or after the winding up.
Upon the presentation of a petition for winding-up, the Court may appoint the official liquidator as the provisional liquidator. The court will also prepare the winding up order, which shall be served on all creditors and contributors, asking them to step forward. A voluntary winding up may be done by the members or the creditors. Whereas Compulsory winding up may be, in addition to the aforementioned — Any contributor or contributors By the central or state govt. Project Office Foreign companies can set up temporary project offices in India for carrying out activities related to that specific project.
As the concept of bankruptcy is not of much relevance in India, for the purposes of this article, the focus is on the concept of winding up. To account for money received by him: Official Liquidator shall pay all cash collections made by him into the public account of India in the Reserve Bank of India. He shall lay before the meeting an account of his acts and dealings and of the conduct of winding up during the preceding year and position of the winding up. Thereafter the winding up shall become creditors voluntary winding up. In other words, once the company is in winding up the only competent authority to determine the workmen's dues is the liquidator who obviously has to act under the supervision of the company court and by no other authority. Winding up is a process whereby all assets of the company are realised and used to pay off the liabilities and members.
After preparing the statement it shall be certified by a Practicing Chartered Accountant. Exercise and control of liquidators powers section 460 : 1 The liquidator shall, in the administration of the assets of the company and the distribution thereof among 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. At the expiry of the time i. Any person can proceed against the company which is being wound up. Compulsory Winding-Up: It takes place when a company is directed to be wound-up by an order of the Court. So long as there is no liquidator, all the property and effects of the company shall be deemed to be in the custody of the Court. One or more liquidators are appointed by company in general meeting for purpose of winding up.
The company calls a meeting of its creditors and appoints a liquidator. Proceedings under the Insolvency Acts are known as insolvency proceedings, whereas proceedings for the winding up of a Company are known as liquidation proceedings. Effect of winding up order section 447 : An order for winding up a company shall operate in favour of all the creditors and of all the contributories of the company as if it had been made on their joint petition. It means a proceeding by which a company is dissolved. But where the company bonafide disputes the debt and the court is satisfied with the defense of the company, the court will not order for its winding up.
It regulates the formation, functioning, the winding up of the companies and also the relationship between the company, government and public. Directions by the Court: The Court may on passing any such order give necessary directions for placing the company and all other persons in the same position as nearly as may be as if the name of the company had not been struck off. They must ensure that there are no outstanding debts and if there are any, they will be paid in full. Appointment of liquidator Section 502 : The creditors and the members at their respective meetings may nominate a liquidator. The legal existence of company is brought to an end by dissolution Winding up precedes the dissolution.
When a company has passed resolution for voluntary winding up, the court may its own motion or on the application of any person, makes an order that voluntary wining up shall continue, if company is no more able to pay its debts. No reasons need be given where the members pass a special resolution for the voluntary winding up of the company. A company does not often present a petition to have itself wound up by the Court as it can achieve this object more conveniently by passing a special resolution to wind up voluntarily. The Court shall not refuse to make a winding up order merely because the assets have been fully mortgaged or because there are no assets at all. In case of solvent company, all claims of its creditors when proved are fully met.
A company is known as subsidiary of another company when control is exercised by the latter over the former called a subsidiary company. According to Section 591 a foreign company is one incorporated outside India : a Which established a place of business within India after the commencement of this Act or b Which had a place of business within India before the commencement of this Act and continues to have the same at the commencement of this Act. Provisional liquidator section 450 : At any time after the presentation of a winding up petition and before the making of a winding up order, the Court may appoint the Official Liquidator to be the liquidator provisionally. Though the process remains almost similar to previous regime, but the major change has taken place in initiation of winding up process. It may also summon any person who is known or suspected to be indebted to the company.
Winding up subject to Supervision of the Court According to Companies Ordinance 1984, a voluntary winding up of a company can also be carried under the strict supervision of the court. The Official Liquidator or the Court may extend the period of 21 days for the submission of the statement to a maximum period of 3 months. The amount so set apart may be disbursed to the liquidator towards workmen's dues on ad hoc basis subject to adjustment on final determination of the workmen's dues by the liquidator. In the case of voluntary winding up, the process is undertaken without court supervision. When the statement is filed in Court, a copy shall simultaneously be filed with the Registrar and shall be kept by him along with the other records of the company.