can a company be wound up by the oders of the nation company law tribunal? if yes, what could be the grounds of such oder? explain the provisions of companies act in this regard
pls help me
Answers
Answer:
Winding up is a proceeding by means of which the dissolution of a company is brought about & in the course of which its assets are collected and realised; and applied in payment of its debts; and when these are satisfied, the remaining amount is applied for returning to its members the sums which they have contributed to the company in accordance with Articles of the Company.” Winding up is a legal process.
Under the process, the life of the company is ended & its property is administered for the benefits of the members & creditors. A liquidator is appointed to realise 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.
Grounds for Compulsory Winding Up or Winding up by the Tribunal:
1. If the company has, by a Special Resolution, resolved that the company be wound up by the Tribunal.
2. If default is made in delivering the statutory report to the Registrar or in holding the statutory meeting. A petition on this ground may be filed by the Registrar or a contributory before the expiry of 14 days after the last day on which the meeting ought to have been held. The Tribunal may instead of winding up, order the holding of statutory meeting or the delivery of statutory report.
3. If the company fails to commence its business within one year of its incorporation, or suspends its business for a whole year. The winding up on this ground is ordered only if there is no intention to carry on the business and the Tribunal's power in this situation is discretionary.
4. If the number of members is reduced below the statutory minimum i.e. below seven in case of a public company and two in the case of a private company.
5. If the company is unable to pay its debts.
6. If the tribunal is of the opinion that it is just and equitable that the company should be wound up.
7. Tribunal may inquire into the revival and rehabilitation of sick units. It its revival is unlikely, the tribunal can order its winding up.
8. If the company has made a default in filing with the Registrar its balance sheet and profit and loss account or annual return for any five consecutive financial years.
9. If the company has acted against the interests of the sovereignty and integrity of India, the security of the State, friendly relations with foreign States, public order, decency or morality.
PROVISIONS
The provisions of winding up for the first time were introduced into the legal fraternity through the Companies Act, 1956, and later were retained by the Companies Act, 2013. Under the Companies Act, 1956 there were three modes of winding up:
Winding Up by Court or Compulsory Winding Up;
Voluntary Winding Up and
Winding Up subject to the supervision of the Court
But through the Companies (Second Amendment) Act, 2002, the third provision was omitted, and the word 'Court' was substituted by 'Tribunal'.
A circumstance under which a company is unable to pay its debts used to fall under the category of winding up by Court. The Company's inability to pay debts was considered when it failed to pay off debt amounting to more than Rs.500 (Five Hundred Rupees), which was subsequently changed to a sum exceeding Rs.1,00,000 (One Lakh rupees) through the Companies (Second Amendment) Act, 2002.
Under such a situation, the creditors initially used to issue a demand notice, which the Company had to reply within 21 days. Still, if the Company fails and neglects to pay the due amount, the winding-up proceedings would initiate.
The Companies Act, 1956 was revised, and an amended Companies Act was introduced as the Companies Act, 2013 ('Act'), but the winding up provisions remained the same, till the Legislature introduced the new Code i.e. Insolvency and Bankruptcy Code, 2016 ('IBC/ Code'). Interestingly, neither the Companies Act, 1956 nor the Companies Act, 2013 ever defined the term winding up. It was only on 15th November 2016; a definition section was inserted under the Companies Act, 2013, when IBC was introduced, as Section 2(94A) of the Act, which now defines winding up as "winding up under this Act or liquidation under the Insolvency and Bankruptcy Code, 2016, as applicable."