How to wind up a Company? – Part - 7

CS Meenakshi Jayaraman
How to Wind Up a Company? – Part-7

Credits and Acknowledgments
Sundar Rajan S
2

3
Legends used in the Presentation
Act Companies Act, 2013
CG* Central Government delegated powers to Regional Directors
Chapter Chapter XX – Winding Up
CL Company Liquidator
CLDUAA Company Liquidation Dividend and Undistributed Assets Account
OL Official Liquidator
Rules Company (Winding Up) Rules, 2020
Sec(s) Section(s)
Tribunal National Company Law Tribunal

Presentation Schema
4
OL to make payments
into public account of
India
Company Liquidator to
deposit monies into
scheduled bank
Liquidator not to deposit
monies into private
banking account
Company Liquidation
Dividend and
Undistributed Assets
Account
Liquidator to make
Returns, etc.
Meetings to ascertain
wishes of Creditors or
Contributories
Powers of Tribunal to
declare dissolution of
Company void
Summary Procedure for
Liquidation
Order of Dissolution of
Company

Official Liquidator to make payments into
public account of India – Sec 349
5
Every OL shall, in such manner and at such times as may be prescribed, pay the
monies received by him as OL of any Company, into the public account of India in
the Reserve Bank of India
The monies to be paid by OL into the public account of India in the Reserve Bank
of India as mentioned above shall be not later than the next working day of the
said Bank – Rule 190

Company Liquidator to deposit monies into
scheduled bank – Sec 350
6
Every CL of a Company
shall, in such manner
and at such times as
may be prescribed,
deposit the monies
received by him in his
capacity as such
in a scheduled bank to
the credit of a special
bank account opened
by him in that behalf
However, if the Tribunal considers that it is advantageous for the creditors or contributories
or the Company, it may permit the account to be opened in such other bank specified by it

Contd.
7
If any CL at any time retains for more than 10 days, a sum exceeding Rs. 5,000 or such
other amount as the Tribunal may, on the application of the CL, authorise him to retain,
then, unless he explains the retention to the satisfaction of the Tribunal, he shall
a. pay interest on the amount so retained in excess, at the rate of 12% per
annum and also pay such penalty as may be determined by the Tribunal;
b. be liable to pay any expenses occasioned by reason of his default; and
c. also be liable to have all or such part of his remuneration disallowed, as the
Tribunal may consider just and proper, or may also be removed from his office

Contd.
8
Realisations of each day shall be deposited in the special bank account without
deduction, not later than the next working day of the bank
and the CL may maintain a petty cash of Rs. 5,000 or such higher amount
as may be permitted by the Tribunal to meet day to day expenses,
and all payments out of the aforesaid account by the CL above Rs. 2,000
shall be made by cheque drawn against the said account
Rule 81 - All money to be paid into special bank account in a scheduled bank
CL shall make quarterly reports to the Tribunal regarding the funds,
including filing the bank statements of the special bank account

Contd.
9
Rule 82 - Bills, cheques, etc. to be deposited with bank
All bills, cheques,
hundies, notes and
other securities
payable to the
Company or to the CL
thereof shall,
as soon as they come
into the hands of the
CL, be deposited by
him with the bank
for the purpose of
being presented for
acceptance and
payment or for
payment only, as the
case may be
and the proceeds
when realised shall be
credited by the bank
to the special bank
account
Rule 83 - Payments into Bank
Where the Tribunal makes
an order directing any
person to pay any money
due to the Company into
the special bank account
maintained by the CL,
the person so directed shall,
at the time of making the
payment, produce to the
bank a certified copy of the
order or a payment in
challan endorsed by the CL
under his signature
and the person making the
payment shall give notice
thereof to the CL and
produce before him the bank
receipt relating thereto

Contd.
10
Rule 84 - Company Liquidator's Dividend Account
and all payments of dividends shall be made by cheques or through Electronic Clearing System drawn against the
said account
and any unpaid balance in the said account shall be transferred to the Company Liquidation Dividend and
Undistributed Assets Account
and there shall be a separate such account in respect of each declaration of dividend and all payments of dividend
shall be made from the said Company Liquidator's dividend account
into which account he shall, upon a declaration of dividend being made in the winding up of the Company, deposit
by transfer from special bank account, the total amount of the dividend payable upon such declaration
CL shall also open a separate dividend account for the Company under liquidation with the sanction of the
Tribunal, in any scheduled bank, under the name 'the Dividend Account of.. (name of the Company) in liquidation’

Contd.
11
Rule 85 - Where the Company has no available assets
 Where a Company against which a winding up order has been made has no available assets, the
CL may, with the leave of the Tribunal,
 incur any necessary expenses in connection with the winding up, out of any permanent
advance or other fund provided by the Central Government,
 and the expenses so incurred shall be recouped out of the assets of the Company in
priority to the debts of the Company
• Where any money has been advanced to the CL by the petitioner or other creditor or contributory
for meeting any preliminary expenses in connection with the winding up,
• the CL may incur any necessary expenses out of such amount, and the money so advanced
shall be paid out of the assets of the Company in priority to the debts of the Company

Contd.
12
If the OL maintains any Common Pool Fund or Establishment Fund under order of the
Court prior to the date of the commencement of the Rules, he shall continue to use such
fund for the purpose for which the fund was originally created
Rules came into force on the 1st day of April, 2020
 OL shall reimburse the amount availed out of the said Common Pool Fund or Establishment
Fund for the purpose of meeting the expenditure of the Company in liquidation
 which does not have sufficient funds to its credit from the amounts of the Company in
liquidation on priority basis as and when any amount comes to its credit

Liquidator not to deposit monies into
private banking account – Sec 351
13
Neither the OL nor the Company Liquidator of a Company
shall deposit any monies received by him in his capacity
as such into any private banking account

Company Liquidation Dividend and
Undistributed Assets Account – Sec 352
14
Where any Company is being wound up and the liquidator has in his hands or under his
control any money representing—
•dividends payable to any creditor but which had remained unpaid for 6 months after
the date on which they were declared; or
•assets refundable to any contributory which have remained undistributed for 6 months
after the date on which they become refundable,
then, the liquidator shall forthwith deposit the said money into a separate special account
to be known as the Company Liquidation Dividend and Undistributed Assets Account
(CLDUAA) maintained in a scheduled bank
Liquidator shall, on the dissolution of the Company, pay into the CLDUAA any money
representing unpaid dividends or undistributed assets in his hands at the date of dissolution

Contd.
15
 The liquidator shall, when making payment into CLDUAA, furnish to the Registrar, a
statement in the Form WIN 94,
 setting forth, in respect of all sums included in such payment, the nature of the sums,
the names and last known addresses of the persons entitled to participate therein,
 the amount to which each is entitled and the nature of his claim thereto, and
such other particulars as may be prescribed
The liquidator shall be entitled to a receipt from the scheduled bank for any money paid into
CLDUAA and such receipt shall be an effectual discharge of the CL in respect thereof
Where a Company is being
wound up voluntarily, the CL
shall, when filing a statement
under Sec 348 (1),
indicate the sum of
money which is payable
into CLDUAA during the 6
months preceding the
date on which the said
statement is prepared,
and shall, within 14 days
of the date of filing the
said statement, pay that
sum into the CLDUAA
Sec 348(1) deals with information as to pending liquidations

Contd.
16
 Any person claiming to be entitled to any money paid into the CLDUAA, whether
paid in pursuance of this section or under the provisions of any previous Company law
 may apply to the Registrar for payment thereof,
 and the Registrar, if satisfied that the person claiming is entitled, may
make the payment to that person of the sum due
Registrar shall settle the claim of such person within a period of 60 days from the date of
receipt of such claim, failing which the Registrar shall make a report to the Regional
Director giving reasons of such failure
The application as mentioned above shall state whether the applicant had made an application
to the Central Government for the payment, and, if so, the result of the application

Contd.
17
Any money paid into the CLDUAA in pursuance of this section, which remains unclaimed
thereafter for a period of 15 years,
shall be transferred to the general revenue account of the Central Government, but a claim
to any money so transferred may be preferred under Sec 352(6) [discussed in previous slide]
and shall be dealt with as if such transfer had not been made and the order, if any, for
payment on the claim will be treated as an order for refund of revenue
Liquidator shall certify whether a person claiming payment from the CLDUAA as
stated above is or is not entitled to the whole or any part of the amount claimed

Contd.
18
Any liquidator retaining any money which should have been paid by him into the CLDUAA
under Sec 352 shall
a. pay interest on the amount so retained at the rate of 12% per annum
and also pay such penalty as may be determined by the Registrar*;
b. be liable to pay any expenses occasioned by reason of his default; and
c. where the winding up is by the Tribunal, also be liable to have all or such
part of his remuneration disallowed, as the Tribunal may consider just and
proper, or may also be removed from his office
*Central Government may in any proper case remit either in part or in whole the amount
of interest which the liquidator is required to pay under this clause

Liquidator to make Returns, etc. – Sec 353
19
If any CL who has made any default in filing, delivering or making any return, account or other
document, or in giving any notice which he is by law required to file, deliver, make or give,
fails to make good the default within 14 days after the service on him of a notice requiring him to
do so,
Tribunal may, on an application made to it by any contributory or creditor of the Company or by
the Registrar,
make an order directing the Company Liquidator to make good the default within such time as
may be specified in the order
Any order under this Sec may provide that all costs of, and incidental to, the
application shall be borne by the CL
Nothing in this section shall prejudice the operation of any enactment imposing
penalties on a CL in respect of any such default as aforesaid

Meetings to ascertain wishes of Creditors
or Contributories – Sec 354
20
In all matters relating to the winding up of a Company, the Tribunal may—
a. have regard to the wishes of creditors or contributories of the Company, as proved to it by
any sufficient evidence;
b. if it thinks fit for the purpose of ascertaining those wishes, direct meetings of the creditors or
contributories to be called, held and conducted in such manner as the Tribunal may direct; and
c. appoint a person to act as chairman of any such meeting and to report the result thereof to
the Tribunal
While ascertaining the wishes of creditors, regard shall be had to the value of each debt of the creditor
While ascertaining the wishes of contributories, regard shall be had to the number of votes which may
be cast by each contributory

Court, Tribunal or Person, etc., before
whom affidavit may be sworn – Sec 355
21
Any affidavit required to be sworn under the provisions, or for the purposes, of Chapter XX (Winding Up)
may be sworn—
in India before any court, tribunal, judge or person lawfully authorised to take and
receive affidavits; and
in any other country before any court, judge or person lawfully authorised to take and
receive affidavits in that country or before an Indian diplomatic or consular officer
All tribunals, judges, Justices,
commissioners and persons
acting judicially in India shall
take judicial notice of the
seal, stamp or signature, as
the case may be,
of any such court, tribunal,
judge, person, diplomatic or
consular officer, attached,
appended or subscribed to
any such affidavit
or to any other document
to be used for the
purposes of the Chapter

Powers of Tribunal to declare dissolution of
Company void – Sec 356
22
make an order, upon such terms as the Tribunal thinks fit, declaring the dissolution to be void,
and thereupon such proceedings may be taken as if the Company had not been dissolved
the Tribunal may at any time within 2 years of the date of the dissolution, on application by
the CL of the Company or by any other person who appears to the Tribunal to be interested,
Where a Company has been dissolved, whether in pursuance of the Chapter or of *Sec 232* or
otherwise,
It shall be the duty of the CL or the
person on whose application the order
was made, within 30 days after the
making of the order or such further
time as the Tribunal may allow,
to file a certified copy
of the order with the
Registrar who shall
register the same, and if
the CL or the person
fails so to do,
the CL or the person shall
be punishable with fine
up to Rs. 10,000 for
every day during which
the default continues
*Sec 232 deals with merger or amalgamation of Companies

Commencement of Winding Up by Tribunal
– Sec 357
23
Winding up of a Company by the Tribunal under the Act shall be deemed to
commence at the time of the presentation of the petition for the winding up
Exclusion of certain time in computing
period of limitation – Sec 358
In computing the period of limitation specified for any suit or application in the name and on
behalf of a Company which is being wound up by the Tribunal,
the period from the date of commencement of the winding up of the Company to a period of
one year immediately following the date of the winding up order shall be excluded
The above provision holds good in spite of anything contained in the
Limitation Act, 1963, or in any other law for the time being in force

Appointment of Official Liquidator –
Sec 359
CG 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 – Section 359(1) of the Act
The liquidators appointed under Section 359(1) of the Act shall be whole-
time officers of CG – Section 359(2) of the Act
The salary and other allowances of the Official Liquidator, Joint Official
Liquidator, Deputy Official Liquidator and Assistant Official Liquidator shall
be paid by the CG – Section 359(3) of the Act

Powers & Functions of Official Liquidator –
Sec 360
The Official Liquidator shall exercise such powers and perform such duties as the
Central Government may prescribe
Without prejudice to the above provision, the Official Liquidator may –
1. exercise all or any of the powers as may be exercised by a
Company Liquidator under the provisions of the Act
2. conduct inquiries or investigations, if directed by the Tribunal or
CG, in respect of matters arising out of winding up proceedings

Summary Procedure for Liquidation – Sec 361
26
Where the Company to be wound up under the Chapter,
a. has assets of book value not exceeding Rs. 1 Crore
b. has taken deposit and total outstanding deposits is not exceeding Rs. 25
lakhs; or
c. has total outstanding loan including secured loan not exceeding Rs. 50
lakhs; or
d. has turnover not exceeding Rs. 50 Crores; or
e. has paid up capital not exceeding Rs. 1 Crore
AND
CG* may order it to be wound up by summary procedure provided under Part-IV of the Chapter
Part-IV of the Chapter deals with Official Liquidators
*Powers are delegated by CG to Regional Director vide notification dated 19th December, 2016

Contd.
27
Where an order is made under Sec 361, CG* shall appoint the OL as the liquidator of the Company
OL shall forthwith take into his custody or control all assets, effects and actionable claims to which the
Company is or appears to be entitled
OL shall, within 30 days of his appointment, submit a report to the CG* including a report whether in his
opinion, any fraud has been committed in promotion, formation or management of the affairs of the
Company or not
On receipt of such report, if CG* is satisfied that any fraud has been committed by the promoters, directors
or any other officer of the Company, it may direct further investigation into the affairs of the Company and
that a report shall be submitted within such time as may be specified
After considering the investigation report, CG* may order that winding up may be proceeded under Part I of
the Chapter or under the provision of Part-IV
Part – I of the Chapter deals with Winding up by Tribunal

Sale of assets and recovery of debts due to
Company – Sec 362
28
OL shall expeditiously dispose of all the assets whether movable or immovable within 60 days of his
appointment
OL shall serve a notice within 30 days of his appointment calling upon the debtors of the Company or
the contributories, as the case may be, to deposit within 30 days with him the amount payable to the
Company
Where any debtor does not deposit such amount, CG* may, on an application made to it by the OL, pass
such orders as it thinks fit
Amount recovered under this section by the OL shall be deposited in accordance with the provisions of
Sec 349

Settlement of claims of creditors by Official
Liquidator – Sec 363
29
OL shall within 30 days of his appointment call upon the creditors of the
Company to prove their claims within 30 days of the receipt of such call
OL shall prepare a list of claims of creditors and each creditor shall be
communicated of the claims accepted or rejected along with reasons to be
recorded in writing

Appeal by Creditor – Sec 364
30
Any creditor aggrieved by the decision of the OL under Sec 363 may file an appeal
before the CG* within 30 days of such decision
CG* may after calling the report from the OL, either dismiss the appeal or modify the
decision of the OL
OL shall make payment to the creditors whose claims have been accepted
CG* may, at any stage during settlement of claims, if considers necessary, refer the
matter to the Tribunal for necessary orders

Order of Dissolution of Company – Sec 365
31
OL shall, if he is satisfied that the Company is finally wound up, submit a final report to:
•CG*, in case no reference was made to the Tribunal under Sec 364; and
•in any other case, CG* and the Tribunal
CG*, or as the case may be, the Tribunal on receipt of such report shall order that the
Company be dissolved
Where an order is made as stated above, Registrar shall strike off the name of the
Company from the register of companies and publish a notification to this effect

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