Category Archives: Chapter XX – CA2013

WINDING UP

Companies Act 2013 Amended by Insolvency and Bankruptcy Code 2016


A notification issued by Ministry of Corporate Affairs notified section 255 of the Insolvency and Bankruptcy Code, 2016. By virtue of notification of Section 255 of Insolvency and Bankruptcy Code, 2016; the Companies Act, 2013, stands amended in accordance with Schedule XI of the IBC2016 with effect from 15th November 2016. We shall have a short discussion here.

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Part of Companies Amendment Act became Effective


A draft notification posted here on website of Ministry of Corporate Affairs says that Section 1 to 12 and Section 15 to 23 of the Companies (Amendment) Act, 2015 came into force with effect from 29th May 2015. The official language of notification read, “the Central Government hereby appoints the 296 May, 2015 as the date on which the provisions of sections 1 to 12 and 15 to 23 of the said Act shall come into force.” The Amendment Act was got presidential assent and notified by Ministry of Law and Justice as such on 26th May 2015 in official gazette.

Two sections not notified yet deals with Fraud Reporting Procedure [Section 13 amending Section 143 of Principal Act] and Related Party Transactions [Section 14 amending Section 177 of Principal Act]. This is understood that Rules related to these sections are in drafting process.

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OFFICIAL LIQUIDATORS


Here, we will discuss provisions related to Official Liquidator.

APPOINTMENT OF OFFICIAL LIQUIDATOR (SECTION 359)

For the purposes of this Act, so far as it relates to the winding up of companies by the Tribunal, the Central Government may appoint as many Official Liquidators, Joint, Deputy or Assistant Official Liquidators as it may consider necessary to discharge the functions of the Official Liquidator.

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GENERAL PROVISIONS RELATING TO WINDING UP – 3


We will continue to discuss general provisions relating to winding up in this post also.

Certain limited powers of Company Liquidator (Section 343)

(1) The Company Liquidator may—

(a) with the sanction of the Tribunal, when the company is being wound up by the Tribunal; and

(b) with the sanction of a special resolution of the company and prior approval of the Tribunal, in the case of a voluntary winding up,—

(i) pay any class of creditors in full;

(ii) make any compromise or arrangement with creditors or persons claiming to be creditors, or having or alleging themselves to have any claim, present or future, certain or contingent, against the company, or whereby the company may be rendered liable; or

(iii) compromise any call or liability to call, debt, and liability capable of resulting in a debt, and any claim, present or future, certain or contingent, ascertained or sounding only in damages, subsisting or alleged to subsist between the company and a contributory or alleged contributory or other debtor or person apprehending liability to the company, and all questions in any way relating to or affecting the assets or liabilities or the winding up of the company and take any security for the discharge of any such call, debt, liability or claim, and give a complete discharge in respect thereof.

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GENERAL PROVISIONS RELATING TO WINDING UP – 2


We will continue to discuss general provisions relating to winding up in this post also.

OFFENCE BY OFFICERS OF COMPANIES IN LIQUIDATION (SECTION 336):

If any person, who is or has been an officer of a company which, at the time of the commission of the alleged offence, is being wound up, whether by the Tribunal or voluntarily, or which is subsequently ordered to be wound up by the Tribunal or which subsequently passes a resolution for voluntary winding up,—

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GENERAL PROVISIONS RELATING TO WINDING UP – 1


Now, we will discuss general provisions related to winding up applicable to every mode of winding up.

DEBTS OF ALL DESCRIPTIONS TO BE ADMITTED TO PROOF (SECTION 324):

In every winding up (subject, in the case of insolvent companies, to the application in accordance with the provisions of this Act or of the law of insolvency), all debts payable on a contingency, and all claims against the company, present or future, certain or contingent, ascertained or sounding only in damages, shall be admissible to proof against the company, a just estimate being made, so far as possible, of the value of such debts or claims as may be subject to any contingency, or may sound only in damages, or for some other reason may not bear a certain value.

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COMPANY LIQUIDATOR IN VOLUNTARY WINDING UP


In continuation of our discussion about voluntary winding up, we will discuss on company liquidator in voluntary winding up.

APPOINTMENT OF COMPANY LIQUIDATOR (SECTION 310):

The company in its general meeting, where a resolution of voluntary winding up is passed, shall appoint a Company Liquidator from the panel prepared by the Central Government for the purpose of winding up its affairs and distributing the assets of the company and recommend the fee to be paid to the Company Liquidator.

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