WINDING UP BY THE TRIBUNAL – 3


In recent post we have discussed Winding up by Tribunal, Company Liquidators and winding up order, Report of Liquidators, Directions and other procedures. We continue provisions related to winding up of a company by Tribunal in this post.

SETTLEMENT OF LIST OF CONTRIBUTORIES AND APPLICATION OF ASSETS (SECTION 284):

As soon as may be after the passing of a winding up order by the Tribunal, the Tribunal shall settle a list of contributories, cause rectification of register of members in all cases where rectification is required in pursuance of this Act and shall cause the assets of the company to be applied for the discharge of its liability. Where it appears to the Tribunal that it would not be necessary to make calls on or adjust the rights of contributories, the Tribunal may dispense with the settlement of a list of contributories.

In settling the list of contributories, the Tribunal shall distinguish between those who are contributories in their own right and those who are contributories as being representatives of, or liable for the debts of, others.

While settling the list of contributories, the Tribunal shall include every person, who is or has been a member, who shall be liable to contribute to the assets of the company an amount sufficient for payment of the debts and liabilities and the costs, charges and expenses of winding up, and for the adjustment of the rights of the contributories among themselves, subject to the following conditions, namely:—

(a) a person who has been a member shall not be liable to contribute if he has ceased to be a member for the preceding one year or more before the commencement of the winding up;

(b) a person who has been a 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 person who has been a member shall be liable to contribute unless it appears to the Tribunal that the present members are unable to satisfy the contributions required to be made by them in pursuance of this Act;

(d) in the case of a company limited by shares, no contribution shall be required from any person, who is or has been a 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 by guarantee, no contribution shall be required from any person, who is or has been a member exceeding the amount undertaken to be contributed by him to the assets of the company in the event of its being wound up but if the company has a share capital, such member shall be liable to contribute to the extent of any sum unpaid on any shares held by him as if the company were a company limited by shares.

OBLIGATION OF DIRECTORS AND MANAGERS (SECTION 286):

In the case of a limited company, any person who is or has been a director or manager, whose liability is unlimited under the provisions of this Act, shall be liable to make a further contribution as if he were at the commencement of winding up, a member of an unlimited company. This liability will be in addition to his liability, if any, to contribute as an ordinary member.

However, a person who has been a director or manager shall not be liable to make such further contribution:

(a), if he has ceased to hold office for a year or upwards before the commencement of the winding up;

(b) in respect of any debt or liability of the company contracted after he ceased to hold office;

(c) subject to the articles of the company, unless the Tribunal deems it necessary to require the contribution in order to satisfy the debts and liabilities of the company, and the costs, charges and expenses of the winding up.

ADVISORY COMMITTEE (SECTION 287):

The Tribunal may, while passing an order of winding up of a company, direct that there shall be, an advisory committee to advise the Company Liquidator and to report to the Tribunal on such matters as the Tribunal may direct.

The advisory committee appointed by the Tribunal shall consist of not more than twelve members, being creditors and contributories of the company or such other persons in such proportion as the Tribunal may, keeping in view the circumstances of the company under liquidation, direct.

The Company Liquidator shall convene a meeting of creditors and contributories, as ascertained from the books and documents, of the company within thirty days from the date of order of winding up for enabling the Tribunal to determine the persons who may be members of the advisory committee.

The advisory committee shall have the right to inspect the books of account and other documents, assets and properties of the company under liquidation at a reasonable time.

The provisions relating to the convening of the meetings, the procedure to be followed thereat and other matters relating to conduct of business by the advisory committee shall be such as may be prescribed.

The meeting of advisory committee shall be chaired by the Company Liquidator.

PERIODICAL REPORT (SECTION 288):

The Company Liquidator shall make periodical reports to the Tribunal and in any case make a report at the end of each quarter with respect to the progress of the winding up of the company in such form and manner as may be prescribed.

The Tribunal may, on an application by the Company Liquidator, review the orders made by it and make such modifications as it thinks fit.

POWER OF TRIBUNAL ON APPLICATION FOR STAY OF WINDING UP (SECTION 289):

At any time after making a winding up order, on an application of promoter, shareholders or creditors or any other interested person, the Tribunal may make an order that it is just and fair that an opportunity to revive and rehabilitate the company be provided staying the proceedings for a period not exceeding one hundred and eighty days. The order shall be made by the Tribunal only when the application is accompanied with a scheme for rehabilitation.

The Tribunal may require the applicant to furnish such security as to costs as it considers fit.

Where an order is passed by the Tribunal, the provisions of Chapter XIX shall be followed in respect of the consideration and sanction of the scheme of revival of the company.

Without prejudice to the provisions of sub-section (1), the Tribunal may at any time after making a winding up order, on an application of the Company Liquidator, make an order staying the winding up proceedings or any part thereof, for such time and on such terms and conditions as it thinks fit.

Before making an order, the Tribunal may require the Company Liquidator to furnish to it a report with respect to any facts or matters which are in his opinion relevant to the application.

A copy of every order made under this section shall forthwith be forwarded by the Company Liquidator to the Registrar who shall make an endorsement of the order in his books and records relating to the company.

DISSOLUTION OF COMPANY BY TRIBUNAL (SECTION 302):

When the affairs of a company have been completely wound up, the Company Liquidator shall make an application to the Tribunal for dissolution of such company.

The Tribunal shall on an application filed by the Company Liquidator or when the Tribunal is of the opinion that it is just and reasonable in the circumstances of the case that an order for the dissolution of the company should be made, make an order that the company be dissolved from the date of the order, and the company shall be dissolved accordingly.

A copy of the order shall, within thirty days from the date thereof, be forwarded by the Company Liquidator to the Registrar who shall record in the register relating to the company a minute of the dissolution of the company.

If the Company Liquidator makes a default in forwarding a copy of the order, the Company Liquidator shall be punishable with fine which may extend to five thousand rupees for every day during which the default continues.

We will discuss other provisions related to winding up in future posts.

Please note: I welcome your comments and feedback. This blog post is not a professional advice. Readers may share this post on social media by using buttons given here.

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