Companies Act 1956 Part 7 - Citation 11407 - Bare Act

Act Info:

Chapter 1 - PRELIMINARY

Section 425 - Modes of winding up

(1) The winding up of a company may be either--

(a) by the ¹ [Tribunal]; or

(b) voluntary; ² [***]

³ [***]

(2) The provisions of this Act with respect to winding up apply, unless the contrary appears, to the winding up of a company in any of those modes.

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1. Substituted by Act 11 of 2003, Section 48 for "Court".

2. The word "or" omitted by Act 11 of 2003, Section 48.

3. Clause (c) omitted by Act 11 of 2003, Section 48.

Section 426 to 432 - Contributories

Section 426 - Liability as contributories of present and past members

(1) In the event of a company being wound up, every present and past member shall be liable to contribute to the assets of the company to an amount sufficient for payment of its debts and liabilities and the costs, charges and expenses of the winding up, and for the adjustment of the rights of the contributories among themselves, subject to the provisions of section 427 and subject also to the following qualifications, namely:--

(a) a past member shall not be liable to contribute if he has ceased to be a member for one year or upwards before the commencement of the winding up;

(b) a past 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 past member shall be liable to contribute unless it appears to the¹[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 past or present 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, subject to the provisions of sub-section (2), be required from any past or present member exceeding the amount undertaken to be contributed by him to the assets of the company in the event of its being wound up;

(f) nothing in this Act shall invalidate any provision contained in any policy of insurance or other contract whereby the liability of individual members on the policy or contract is restricted, or whereby the funds of the company are alone made liable in respect of the policy or contract;

(g) a sum due to any past or present member of the company in his character as such, by way of dividends, profits or otherwise, shall not be deemed to be a debt of the company payable to that member, in a case of competition between himself and²[any creditor claiming otherwise than in the character of a past or present member of the company]; but any such sum shall be taken into account for the purpose of the final adjustment of the rights of the contributories among themselves.

(2) In the winding up of a company limited by guarantee which has a share capital, every member of the company shall be liable, in addition to the amount undertaken to be contributed by him to the assets of the company in the event of its being wound up, to contribute to the extent of any sums unpaid on any shares held by him as if the company were a company limited by shares.

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1. Substituted by Act 11 of 2003, Section 49, for "Court".

2. Substituted by Act 65 of 1960, Section 161, for certain words (w.e.f. 28-12-1960).

Section 427 - Obligations of directors and managers whose liability is unlimited

427. Obligations of directors, ¹ [***] and managers whose liability is unlimited

In the winding up of a limited company, any director, ² [***] or manager, whether past or present, whose liability is, under the provisions of this Act, unlimited, shall, in addition to his liability, if any, to contribute as an ordinary member, be liable to make a further contribution as if he were, at the commencement of the winding up, a member of an unlimited company:

Provided that--

(a) a past director ² [***] or manager shall not be liable to make such further contribution, if he has ceased to hold office for a year or upwards before the commencement of the winding up;

(b) a past director ² [***] or manager shall not be liable to make such further contribution 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, a director, ² [***] or manager shall not be liable to make such further contribution, unless the ³ [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.

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1. The words ", managing agent" omitted by Act 53 of 2000, section 187 (w.e.f. 13-12-2000).

2. The words ", managing agent, secretaries and treasures" omitted by Act 53 of 2000, Section 187 (w.e.f. 13-12-2000).

3. Substituted by Act 11 of 2003, section 49, for "Court".

Section 428 - Definition of "contributory"

The term "contributory" means every person liable to contribute to the assets of a company in the event of its being wound up, and includes the holder of any shares which are fully paid up; and for the purposes of all proceedings for determining, and all proceedings prior to the final determination of, the persons who are to be deemed contributories, includes any person alleged to be a contributory.

Section 429 - Nature of liability of contributory

(1) The liability of a contributory shall create a debt accruing due from him at the time when his liability commenced, but payable at the times specified in calls made on him for enforcing the liability.

(2) No claim founded on the liability of a contributory shall be cognizable by any Court of Small Causes sitting outside the presidency-towns.

Section 430 - Contributories in case of death of member

(1) If a contributory dies either before or after he has been placed on !he list of contributories, his legal representatives shall be liable in a due course of administration, to contribute to the assets of the company in discharge of his liability, and shall be contributories accordingly.

(2) If the legal representatives make default in paying any money ordered to be paid by them, proceedings may be taken for administering the estate of the deceased contributory and compelling payment thereout of the money due.

(3) For the purposes of this section, where the deceased contributory was a member of a Hindu joint family governed by the Mitakshara School of Hindu Law, his legal representatives shall be deemed to include the surviving coparceners.

Section 431 - Contributories in case of insolvency of member

If a contributory is adjudged insolvent, either before or after he has been placed on the list of contributories,

(a) his assignees in insolvency shall represent him for all the purposes of the winding up, and shall be contributories accordingly, and may be called on to admit to proof against the estate of the insolvent, or otherwise to allow to be paid out of his assets in due course of law, any money due from the insolvent in respect of his liability to contribute to the assets of the company; and

(b) there may be proved against the estate of the insolvent the estimated value of his liability to future calls as well as calls already made.

Section 432 - Contributories in case of winding up of a body corporate which is a member

If a body corporate which is a contributory is ordered to be wound up, either before or after it has been placed on the list of contributories,--

(a) the liquidator of the body corporate shall represent it for all the purposes of the winding up of the company and shall be a contributory accordingly, and may be called on to admit to proof against the assets of the body corporate, or otherwise to allow to be paid out of its assets in due course of law, any money due from the body corporate in respect of its liability to contribute to the assets of the company; and

(b) there may be proved against the assets of the body corporate the estimated value of its liability to future calls as well as calls already made.

COMPANIES ACT, 1956Chapter 2 - WINDING UP BY THE TRIBUNAL

CHAPTER II

WINDING UP BY THE ¹ [TRIBUNAL]

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1. Substituted byAct 11 of 2003, Section 50, for "Court".

Section 433 to 438 - Cases in which company may be wound up by the Tribunal

Cases in which company may be wound up by the¹[Tribunal]

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1. Substituted by Act 11 of 2003, Section 50, for "Court".

Section 433 - Circumstances in which company may be wound up by Tribunal

¹[ 433 . Circumstances in which company may be wound up by Tribunal

A company may be wound up by the Tribunal, --

(a) if the company has, by special resolution, resolved that the company be wound up by the Tribunal;

(b) if default is made in delivering the statutory report to the Registrar or in holding the statutory meeting;

(c) if the company does not commence its business within a year from its incorporation, or suspends its business for a whole year;

(d) if the number of members is reduced, in the case of a public company, below seven, and in the case of a private company, below two;

(e) if the company is unable to pay its debts;

(f) if the Tribunal is of the opinion that it is just and equitable that the company should be wound up;

(g) 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;

(h) 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;

(i) if the Tribunal is of the opinion that the company sh ould be wound up under the circumstances specified in section 424G:

Provided that the Tribunal shall make an order for winding up of a company under clause (h) on application made by the Central Government or a State Government.]

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1. Substituted by Act 11 of 2003, Section 51, for Section 433.

Section 434 - Company when deemed unable to pay its debts

( 1 ) A company shall be deemed to be unable to pay its debts--

(a) if a creditor, by assignment or otherwise, to whom the company is indebted in a sum exceeding¹[one lakh rupees] then due, has served on the company, by causing it to be delivered at its registered office, by registered post or otherwise, a demand under his hand requiring the company to pay the sum so due and the company has for three weeks thereafter neglected to pay the sum, or to secure or compound for it to the reasonable satisfaction of the creditor;

(b) if execution or other process issued on a decree or order of²[any court or Tr i bunal] in favour of a creditor of the company is returned unsatisfied in whole or in part; or

(c) if it is proved to the satisfaction of the³[Tribunal] that the company is unable to pay its debts, and, in determining whether a company is unable to pay its debts, the³[Tribunal] shall take into account the contingent and prospective liabilities of the company.

(2) The demand referred to in clause (a) of sub-section (1) shall be deemed to have been duly given under the hand of the creditor if it is signed by any agent or legal adviser duly authorised on his behalf, or in the case of a firm, if it is signed by any such agent or legal adviser or by any member of the firm.

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1. Substituted by Act 11 of 2003, Section 52, for "five hundred rupees".

2. Substituted by Act 11 of 2003, Section 52, for "any Court" .

3. Substituted by Act 11 of 2003, Section 52, for "Court".

Section 435 to 438 - ***

¹[***]

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1. Heading "Transfer of proceedings" omitted by Act 11 of 2003, Section 53.

Section 435 - Transfer of winding up proceedings to District Court [Repealed]

[Repealed by the Companies (Second Amendment) Act, 2002, Section 53.]

Section 436 - Withdrawal and transfer of winding up from one District Court to another [Repealed]

[Repealed by the Companies (Second Amendment) Act, 2002, Section 53.]

Section 437 - Power of High Court to retain winding up proceedings in District Court [Repealed]

[Repealed by the Companies (Second Amendment) Act, 2002, Section 53.]

Section 438 - Jurisdiction of High Court under sections 435, 436 and 437 to be exercised at any time and at any stage [Repealed]

[Repealed by the Companies (Second Amendment) Act, 2002, Section 53.]

Section 439 to 440 - Petition for winding up

Section 439 - Provisions as to applications for winding up

(1) An application to the¹[Tribunal] for the winding up of a company shall be by petition presented, subject to the provisions of this section,--

(a) by the company; or

(b) by any creditor or creditors, including any contingent or prospective creditor or creditors; or

(d) by all or any of the parties specified in clauses (a), (b) and (c), whether together or separately; or

(e) by the Registrar; or

(f) in a case falling under section 243, by any person authorised by the Central Government in that behalf.

²[(g) in a case falling under clause (h ) of section 433 , by the Central Government or a State Government;]

(2) A secured creditor, the holder of any debentures (including debenture stock), whether or not any trustee or trustees have been appointed in respect of such and other like debentures, and the trustee for the holders of debentures, shall be deemed to be creditors within the meaning of clause (b) of sub-section (I).

(3) A contributory shall be entitled to present a petition for winding up a company, notwithstanding that he may be the holder of fully paid-up shares, or that the company may have no assets at all or may have no surplus assets left for distribution among the share-holders after the satisfaction of its liabilities.

(4) A contributory shall not be entitled to present a petition for winding up a company unless--

(a) either the number of members is reduced, in the case of a public company, below seven, and, in the case of a private company, below two; or

(b) the shares in respect of which he is a contributory, or some of them, either were originally allotted to him or have been held by him, and registered in his name, for at least six months during the eighteen months immediately before the commencement of the winding up, or have devolved on him through the death of a former holder.

(5) Except in the case where he is authorised in pursuance of clause (f) of subsection (1), the Registrar shall be entitled to present a petition for winding up a company only on the grounds specified in³[clauses (b), (c), (d), (e)⁴[(f) and (g)] of section 433:

Provided that the Registrar shall not present a petition on the ground specified in clause (e) aforesaid, unless it appears to him either from the financial condition of the company as disclosed in its balance-sheet or from the report of⁵[a special auditor appointed under section 233A or an inspector] appointed under section 235 or 237, that the company is unable to pay its debts:

Provided further that the Registrar shall obtain the previous sanction of the Central Government to the presentation of the petition on any of the grounds aforesaid.

(6) The Central Government shall not accord its sanction in pursuance of the foregoing proviso, unless the company has first been afforded an opportunity of making its representations, if any.

(7) A petition for winding up a company on the ground specified in clause (b) of section 433 shall not be presented--

(a) except by the Registrar or by a contributory; or

(b) before the expiration of fourteen days after the last day on which the statutory meeting referred to in clause (b) aforesaid ought to have been held.

(8) Before a petition for winding up a company presented by a contingent or prospective creditor is admitted, the leave of the¹[Tribunal] shall be obtained for the admission of the petition and such leave shall not be granted--

(a) unless, in the opinion of the¹[Tribunal], there is a prima facie case for winding up the company; and

(b) until such security for costs has been given as the¹[Tribunal] thinks reasonable.

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1. Substituted Act 11 of 2003, Section 54, for "Court".

2. Substituted by Act 11 of 2003, Section 54.

3. Substituted by Act 65 of 1960, Section 162, for "clauses (b), (c) and (e)" (w.e.f. 28-12-1960).

4. Substituted by Act 11 of 2003, Section 54, for "and (f)".

5. Substituted by Act 65 of 1960, Section 162, for "an inspector" (w.e.f. 28-12-1960).

Section 439A - Statement of affairs to be filed on winding up of a company

¹[ 439A. Statement of affairs to be filed on winding up of a company

( 1 ) Every company shall file with the Tribunal a statement of its affairs alongwith the petition for winding up.

( 2 ) Where a company oppose a petition for its winding up, it sh all file with the Tribunal a statement of its affairs.

( 3 ) The statement of affairs referred to in sub-section ( 1 ) or sub-section ( 2 ) shall be accompanied by--

(a) the last known addresses of all directors and company, secretary of such company;

(b) the details of location of assets of the company and their value;

(d) the details of workmen and other employees and any amount outstanding to them;

(e) such other details as the Tribunal may direct.]

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1. Inserted by Act 11 of 2003, Section 55.

Section 440 - Right to present winding up petition where company is being wound up voluntarily

¹ [440 . Right to present winding up petition where company is being wound up voluntarily

( 1 ) Where a company is being wound up voluntarily, a petition for its winding up by the Tribunal may be presented by --

(a) any person authorised to do so under section 439; or

(b) the Official Liquidator.

( 2 ) The Tribunal shall not make a winding up ord er on a petition presented to it under sub-section ( 1 ), unless it is satisfied that the voluntary winding up cannot be continued with due regard to the interests of the creditors or contributories or both.]

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1. Substituted by Act 11 of 2003, Section 56, for Section 440 (See Annexe).

Section 441 - Commencement of winding up by Tribunal

Commencement of winding up

¹[441. Commencement of winding up by Tribunal

( 1 ) Where, before the presentation of a petition for the winding up of a company by the Tribunal, a resolution has been passed by the company for voluntary winding up, the winding up of the company shall be deemed to have commenced at the time of the passing of the resolution, and unless the Tribunal, on proof of fraud or mistake, thinks fit to direct otherwise, all proceedings taken in the voluntary winding up sh all be deemed to have been validly taken.

( 2 ) In any other case, the winding up of a company by the Tribunal shall be deemed to commence at the time of the presentation of the petition for the winding up. ]

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1. Substituted by Act 11 of 2003, Section 56, for Section 441 (See Annexe).

Section 441A to 441G - Levy by way of cess and formation of Rehabilitation and Revival Fund

¹[Levy by way of cess and formation of Rehabilitation and Revival Fund

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1. Inserted by Act 11 of 2003, Section 57.

Section 441A - Levy and collection of cess on turnover or gross receipts of companies

(1) There shall be levied and collected, for the purposes of rehabilitation or revival or protection of assets of the sick industrial company, a levy by way of cess at such rate not less than 0.005 per cent, and not more than 0.1 per cent, on the value of annual turnover of every company or its annual gross receipt, whichever is more as the Central Government may, from time to time, specify by notification in the Official Gazette.

(2) Every company shall pay to the Central Government the cess referred to in sub-section (1) within three months from the close of every financial year.

(3) Every company shall furnish, in such form as may be prescribed, to the Central Government and the Tribunal the details of its turnover and gross receipts with payment of cess under sub-section (1),

(4) The Central Government may, by rules made in this behalf, specify the manner in which the cess shall be paid under sub-section (2).

Section 441B - Crediting proceeds of cess to Consolidated Fund of India

The proceeds of the cess levied and collected under section 441A shall first be credited to the Consolidated Fund of India and the Central Government may, if Parliament by appropriation made by law in this behalf so provides, pay to the Tribunal, from time to time, out of such proceeds (after deducting the cost of collection), such sums of money as it may think fit for being utilised for the purposes of the Fund.

Section 441C - Rehabilitation Fund

(1) There shall be formed for the purposes of rehabilitation or revival or protection of assets of a sick industrial company, a Fund to be called the Rehabilitation and Revival Fund.

(2) There shall be credited to the Fund --

(a) all amounts paid under section 441B;

(b) any amount given as grants by the Central Government for the purposes of this Fund;

(d) any income from investment of the amount in the Fund;

(e) amount refunded by the company under section 441G.

Section 441D - Application of Fund

The Fund shall be applied by the Tribunal for the purpose of--

(a) making interim payment of workmen's dues pending the revival or rehabilitation of the sick industrial company; or

(b) payment of workmen's dues due to the workmen, referred to in subsection (3) of section 529, of the sick industrial company; or

(d) revival or rehabilitation of sick industrial company;

which in the opinion of the Tribunal are necessary or expedient for the said purposes.

Section 441E - Power to call for information

The Central Government or Tribunal may require any company to furnish for the purposes of rehabilitation or revival or protection of assets of sick industrial companies, such statistical and other information in such form and within such period as may be prescribed.

Section 441F - Penalty for non-payment of cess

(1) If any cess payable by a company under section 441A is not paid in accordance with the provisions of that section, it shall be deemed to be in arrears and the same shall be recovered by the Tribunal in such manner as may be prescribed.

(2) The Tribunal may, after such inquiry as it deems fit, impose on the company, which is in arrears under sub-section (1), a penalty not exceeding ten times the amount in arrears:

Provided that before imposing such penalty, such company shall be given a reasonable opportunity of being heard, and if, after such hearing, the Tribunal is satisfied that the default was for any good and sufficient reason, no penalty shall be imposed under this sub-section.

Section 441G - Refund of fund in certain cases

(1) Where the fund has been applied by the Tribunal for any of the purposes specified in clauses (a) to (d) of section 441D, such amount of fund shall be recovered from the company after its revival or rehabilitation or out of sale proceeds of its assets after discharging the statutory liabilities and payment of dues to creditors.

(2) The amount referred to in sub-section (7) shall be recovered in the manner as the Tribunal may direct.]

Section 442 to 443 - Powers of Tribunal

Powers of¹[Tribunal]

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1. Substituted by Act 11 of 2003, Section 58, for "Court".

Section 442 - Power of Court to stay or restrain proceedings against company [Repealed]

[Repealed by the Companies (Second Amendment) Act, 2002, Section 59.]

Section 443 - Power of Tribunal on hearing petition

¹[ 443. Power of Tribunal on hearing petition

( 1 ) On hearing a winding up petition, the Tribunal may--

(a) dismiss it, with or without costs; or

(b) adjourn the hearing conditionally or unconditionally; or

(d) make an order for winding up the company with or without costs, or any other order that it thinks fit:

Provided that the Tribunal shall not refuse to make a winding up order on the ground only that the assets of the company have been mortgaged to an amount equal to or in excess of those assets, or that the company has no assets.

( 2 ) Where the petition is presented on the ground that it is just and equitable that the company should be wound up, the Tribunal may refuse to make an order of winding up, if it is of the opinion that some other remedy is available to the petitioners and that they are acting unreasonably in seeking to have the company wound up instead of pursuing that other remedy.

( 3 ) Where the petition is presented on the ground of default in delivering the statutory report to the Registrar, or in holding the statutory me eting, the Tribunal may--

(a) instead of making a winding up order, direct that the statutory report sh all be delivered or that a meeting shall be held; and

(b) order the costs to be paid by any persons who, in the opinion of the Tribunal, are responsible for the default.]

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1. Substituted by Act 11 of 2003, Section 60, for Section 443 (See Annexe).

Section 444 to 447 - Consequences of winding up order

Section 444 - Order for winding up to be communicated to Official Liquidator and Registrar

¹[444 . Order for winding up to be communicated to Official Liquidator and Registrar

Where the Tribunal makes an order for the winding up of the company, the Tribunal, shall within a period not exceeding two weeks from the date of passing of the order, cause intimation thereof to be sent to the Official Liquidator and the Registrar.]

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1. Substituted by Act 11 of 2003, Section 60, for Section 444 (See Annexe).

Section 445 - Copy of winding up order to be filed with Registrar

(1) On the making of a winding up order, it shall be the duty of the petitioner in the winding up proceedings and of the company to file with the Registrar a certified copy of the order, within¹[thirty days] from the date of the making of the order.

If default is made in complying with the foregoing provision, the petitioner, or as the case may require, the company, and every officer of the company who is in default, shall be punishable with fine which may extend to²[one thousand rupees] for each day during which the default continues.

³[(1A) In computing the period of¹[thirty days] from the date of the making of a winding up order under sub-section (1) the time requisite for obtaining a certified copy of the order shall be excluded.]

(2) On the filing of a certified copy of the winding up order, the Registrar shall make a minute thereof in his books relating to the company, and shall notify in the Official Gazette that such an order has been made.

(3) Such order shall be deemed to be notice of discharge to the officers and employees of the company, except when the business of the company is continued.

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1. Substituted by Act 31 of 1965 Section 62 and Schedule, for "one month" (w.e.f. 15-10-1965).

2. Substituted by Act 53 of 2000, Section 188, for "one hundred rupees" (w.e.f. 13-12-2000).

3. Inserted by Act 65 of 1960, Section 164 (w.e.f. 28-12-1960).

Section 446 - Suits stayed on winding up order

(1) When a winding up order has been made or the Official Liquidator has been appointed as provisional liquidator, no suit or other legal proceeding shall be commenced, or if pending at the date of the winding up order, shall be proceeded with, against the company, except by leave of the ¹ [Tribunal] and subject to such terms as the ¹ [Tribunal] may impose.

² [(2) ³ [Tribunal] shall, notwithstanding anything contained in any other law for the time being in force, have jurisdiction to entertain, or dispose of--

(a) any suit or proceeding by or against the company;

(b) any claim made by or against the company (including claims by or against any of its branches in India);

(d) any question of priorities or any other question whatsoever, whether of law or fact, which may relate to or rise in course of the winding up of the company;

whether such suit or proceeding has been instituted or is instituted or such claim or question has arisen or arises or such application has been made or is made before or after the order for the winding up of the company, or before or after the commencement of the Companies (Amendment) Act, 1960 (65 of 1960).]

⁴ [***]

⁵ [(4) Nothing in sub-section (1) or sub-section (3) shall apply to any proceeding pending in appeal before the Supreme Court or a High Court.]

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1. Substituted by Act 11 of 2003, Section 61, for "Court".

2. Substituted by Act 65 of 1960, Section 165, for sub-section (2) (w.e.f. 28-12-1960).

3. Substituted by Act 11 of 2003, Section 61, for "The Court which is winding up the company".

4. Sub-section (3) omitted by Act 11 of 2003, Section 61 (See Annexe).

5. Inserted by Act 65 of 1960, Section 165 (w.e.f. 28-12-1960).

Section 446A - Responsibility of directors and officers to submit to Tribunal audited books and accounts

¹[ 446A . Responsibility of directors and officers to submit to Tribunal audited books and accounts .-

The directors and other officers of every company shall ensure that books of account of the company are completed and audited up to date of winding up ord er made by the Tribunal and submitted to it at the cost of the company, failing which such directors and officers shall be liable for punishment for a term not exceeding one year and fine for an amount not exceeding one lakh rupees.]

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1. Inserted by Act 11 of 2003, Section 62.

Section 447 - Effect of winding up order

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 has been made on the joint petition, of a creditor and of a contributory.

Section 448 to 463 - Official Liquidators

Section 448 - Appointment of Official Liquidator

¹[ 448 . Appointment of Official Liquidator

( 1 ) For the purposes of this Act, so far as it relates to the winding up of a company by the Tribunal, there shall be an Official Liquidator who--

(a) may be appointed from a pane l of professional firms of chartered accountants, advocates, company secretaries, costs and works accountants or firms having a combination of these professions, which the Central Government shall constitute for the Tribunal; or

(b) may be a body corp orate consisting of such professionals as may be approved by the Central Government from time to time; or

Provided that, before appointing the Official Liquidator, the Tribunal may give due regard to the views or opinion of the secured creditors and workmen.

( 2) The terms and conditions for the appointment of the Official Liquidator and the remuneration payable to him shall be--

(a) approved by the Tribunal for those appointed under clauses (a) and (b) of sub-section (1), subject to a maximum remuneration of five per cent, of the value of debt recovered and realisation of sale of assets;

(b) approved by the Central Government for those appointed under clause (c) of sub-section ( 1 ) in accordance with the rules made by it in this behalf.

( 3) Where the Official Liquidator is an officer appointed by the Central Government under clause (c) of sub-section (1), the Central Government may also appoint, if considered necessary, one or more Deputy Official Liquidators or Assistant Official Liquidators to assist the Official Liquidator in the discharge of his functions, and the terms and conditions for the appointment of such Official Liquidators and the remuneration payable to them shall also be in accordance with the rules made by the Central Government.

( 4) All references to the "Official Liquidator" in this Act shall be construed as reference to the Official Liquidator specified in sub-section (1), or to the Deputy Official Liquidator or Assistant Official Liquidator referred to in sub-section (3), as the case may be.

( 5 ) The amount of the remuneration payable shall--

(a) form part of the winding up order made by the Tribunal;

(b) be treated as first charge on the realisation of the assets and be paid to the Official Liquidator or to the Central Government, as the case may be.

( 6) The Official Liquidator shall conduct proceedings in the winding up of a company and perform such duties in reference thereto as the Tribunal may specify in this behalf:

Provided that the Tribunal may --

(a) transfer the work assigned from one Official Liquidator to another Official Liquidator for the reasons to be recorded in writing;

(b) remove the Official Liquidator on sufficient cause being sh own;

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1. Substituted by Act 11 of 2003, Section 63, for Section 448 (See Annexe).

Section 449 - Official Liquidator to be liquidator

On a winding up order being made in respect of a company, the Official Liquidator shall, by virtue of his office, become the liquidator of the company.

Section 450 - Appointment and powers of provisional liquidator

(1) At any time after the presentation of a winding up petition and before the making of a winding up order, the¹[Tribunal] may appoint the Official Liquidator to be liquidator provisionally.

(2) Before appointing a provisional Liquidator, the ¹[Tribunal] shall give notice to the company and give a reasonable opportunity to it to make its representations, if any, unless, for special reasons to be recorded in writing, the¹[Tribunal] thinks fit to dispense with such notice.

(3) Where a provisional liquidator is appointed by the¹[Tribunal], the¹[Tribunal] may limit and restrict his powers by the order appointing him or by a subsequent order, but otherwise he shall have the same powers as a liquidator.

(4) The Official Liquidator shall cease to hold office as provisional liquidator, and shall become the liquidator, of the company, on a winding up order being made.

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1. Substituted by Act 11 of 2003, Section 64, for "Court".

Section 451 - General Provisions as to liquidators

(1) The liquidator shall conduct the proceedings in winding up the company and perform such duties in reference thereto as the¹[Tribunal] may impose.

(2) Where the²[ the Official Liquidator referred to in clause (c) of sub -section ( 1 ) of section 448] becomes or acts as liquidator, there shall be paid to the Central Government out of the assets of the company such fees as may be prescribed.

(3) The acts of a liquidator shall be valid, notwithstanding any defect that may afterwards be discovered in his appointment or qualification:

Provided that nothing in this sub-section shall be deemed to give validity to acts done by a liquidator after his appointment has been shown to be invalid.

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1. Substituted by Act 11 of 2003, Section 65, for "Court".

2. Substituted by Act 11 of 2003, Section 65, for "Official Liquidator".

Section 452 - Style, etc., of liquidators

A liquidator shall be described by the style of "The Official Liquidator" of the particular company in respect of which he acts, and not by his individual name.

Section 453 - Receiver not to be appointed of assets with liquidator

A receiver shall not be appointedof assets in the hands of a liquidator except by, or with the leave of, the ¹ [Tribunal].

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1.Substituted by Act 11 of 2003, Section 66, for "Court".

Section 454 - Statement of affairs to be made to Official Liquidator

(1) Where the ¹ [Tribunal] has made a winding up order or appointed the Official Liquidator as provisional liquidator, unless the ¹ [Tribunal] in its discretion otherwise orders, there shall be made out and submitted to the Official Liquidator a statement as to the affairs of the company in the prescribed form, verified by an affidavit, and containing the following particulars, namely:--

(a) the assets of the company, stating separately the cash balance in hand and at the bank, if any, and the negotiable securities, if any, held by the company;

(b) its debts and liabilities;

(c) the names, residences and occupations of its creditors, stating separately the amount of secured and unsecured debts; and in the case of secured debts, particulars of the securities given, whether by the company or an officer thereof, their value and the dates on which they were given;

(d) the debts due to the company and the names, residences and occupations of the persons from whom they are due and the amount likely to be realised on account thereof;

(e) such further or other information as may be prescribed, or as the Official Liquidator may require.

(2) The statement shall be submitted and verified by one or more of the persons who are at the relevant date the directors and by the person who is at that date the manager, secretary or other chief officer of the company, or by such of the persons hereinafter in this sub-section mentioned, as the Official Liquidator, subject to the direction of the ¹ [Tribunal], may require to submit and verify the statement, that is to say, persons--

(a) who are or have been officers of the company;

(b) who have taken part in the formation of the company at any time within one year before the relevant date;

(c) who are in the employment of the company, or have been in the employment of the company within the said year, and are, in the opinion of the Official Liquidator, capable of giving the information required;

(d) who are or have been within the said year officers of, or in the employment of, a company which is, or within the said year was, an officer of the company to which the statement relates.

(3) The statement shall be submitted within twenty-one days from the relevant date, or within such extended time not exceeding three months from that date as the Official Liquidator or the ¹ [Tribunal] may, for special reasons, appoint.

(4) Any person making, or concurring in making, the statement and affidavit required by this section shall be allowed, and shall be paid by the Official Liquidator or provisional liquidator, as the case may be, out of the assets of the company, such costs and expenses incurred in and about the preparation and making of the statement and affidavit as the Official Liquidator may consider reasonable, subject to an appeal to the ¹ [Tribunal].

² [(5) If any person, without reasonable excuse, makes default in complying with any of the requirements of this section, he shall be punishable with imprisonment for a term which may extend to two years, or with fine which may extend to ³ [one thousand rupees] for every day during which the default continues, or with both.

(5A) The ¹ [Tribunal] by which the winding up order is made or the provisional liquidator is appointed, may take cognizance of an offence under sub-section (5) upon receiving a complaint of facts constituting such an offence and trying the offence itself in accordance with the procedure laid down in the Code of Criminal Procedure, 1898 (5 of 1898), for the trial of summons cases by magistrates.]

(6) Any person slating himself in writing to be a creditor or contributory of the company shall be entitled, by himself or by his agent, at all reasonable times, on payment of the prescribed fee, to inspect the statement submitted in pursuance of this section, and to a copy thereof or extract therefrom.

(7) Any person untruthfully so stating himself to be a creditor or contributory shall be guilty of an offence under section 182 of the Indian Penal Code (45 of 1860); and shall, on the application of the Official Liquidator, be punishable accordingly.

(8) In this section, the expression "the relevant date" means, in a case where a provisional liquidator is appointed, the date of his appointment, and in a case where no such appointment is made, the date of the winding up order.

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1. Substituted by Act 11 of 2003, Section 66, for "Court".

2. Substituted by Act 65 of 1960, Section 167, for sub-section (5) (w.e.f. 28-12-1960).

3. Substituted by Act 53 of 2000, Section 189, for "one hundred rupees" (w.e.f. 13-12-2000).

Section 455 - Report by Official Liquidator

(1) In a case where a winding up order is made, the Official Liquidator shall, as soon as practicable after receipt of the statement to be submitted under section 454 and not later than six months from the date of the order, ¹ [or such extended period as may be allowed by the Court] or in a case where the ² [Tribunal] orders that no statement need be submitted, as soon as practicable after the date of the order, submit a preliminary report to the ² [Tribunal]--

(a) as to the amount of capital issued, subscribed, and paid up, and the estimated amount of assets and liabilities, giving separately under the heading of assets, particulars of (i) cash and negotiable securities; (ii) debts due from contributories; (iii) debts due to the company and securities if any, available in respect thereof; (iv) movable and immovable properties belonging to the company; and (v) unpaid calls;

(b) if the company has failed, as to the causes of the failure; and

(c) whether, in his opinion, further inquiry is desirable as to any matter relating to the promotion, formation, or failure of the company, or the conduct of the business thereof.

(2) The Official Liquidator may also, if he thinks fit, make a further report, or further reports, stating the manner in which the company was promoted or formed and whether in his opinion any fraud has been committed by any person in its promotion or formation, or by any officer of the company in relation to the company since the formation thereof, and any other matters which, in his opinion, it is desirable to bring to the notice of the ² [Tribunal].

(3) If the Official Liquidator states in any such further report that in this opinion a fraud has been committed as aforesaid, the ² [Tribunal] shall have the further powers provided in section 478.

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1. Inserted by Act 65 of 1960, Section 168 (w.e.f. 28-12-1960).

2. Substituted by Act 11 of 2003, Section 66, for "Court".

Section 456 - Custody of company's property

(1) Where a winding up order has been made or where a provisional liquidator has been appointed, the liquidator¹[or the provisional liquidator, as the case may be,] shall take into hi s custody or under his control, all the property, effects and actionable claims to which the company is or appears to be entitled.

¹[(1A) For the purpose of enabling the liquidator or the provisional liquidator, as the case may be, to take into his custody or under hi s control, any property, effects or actionable claims to which the company is or appears to be entitled, the liquidator or the provisional liquidator, as the case may be, may by writing request the Chief Presidency Magistrate or the District Magistrate within whose jurisdiction such property, effects or actionable claims or any books of account or other documents of the company may be found, to take possession thereof, and the Chief Presidency magistrate or the District Magistrate may thereupon after such notice as he may think fit to give to any party, take possession of such property, effects, actionable claims, books of account or other documents and deliver possession thereof to the liquidator or the provisional liquidator.

( 1B ) For the purpose of securing compliance with the provisions of sub-section (1A), the Chief Presidency Magistrate or the District Magistrate may take or cause to be taken such steps and use or cause to be used such force as may in his opinion be necessary.]

( 2 ) All the property and effects of the company shall be deemed to be in the custody of the²[Tribunal] as from the date of the order for the winding up of the company.

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1. Inserted by Act 65 of 1960, Section 169 (w.e.f. 28-12-1960).

2. Substituted by Act 11 of 2003, Section 66, for "Court".

Section 457 - Powers of liquidator

(1) The liquidator in a winding up by the ¹ [Tribunal] shall have power, with the sanction of the ² [Tribunal]--

(a) to institute or defend any suit, prosecution, or other legal proceeding, civil or criminal, in the name and on behalf of the company;

(b) to carry on the business of the company so far as may be necessary for the beneficial winding up of the company;

(c) to sell the immovable and movable property and actionable claims of the company by public auction or private contract, with power to transfer the whole thereof to any person or body corporate, or to sell the same in parcels;

³ [(ca) to sell whole of the undertaking of the company as a going concern;]

(d) to rise on the security of the assets of the company any money requisite;

(e) to do all such other things as may be necessary for winding up the affairs of the company and distributing its assets.

(2) The liquidator in a winding up by the Court shall have power--

(i) to do all acts and to execute, in the name and on behalf of the company, all deeds, receipts, and other documents, and for that purpose to use when necessary, the company's seal;

⁴ [(ia) to inspect the records and returns of the company on the files of the Registrar without payment of any fee;]

(ii) to prove, rank and claim in the insolvency of any contributory, for any balance against his estate, and to receive dividends in the insolvency, in respect of that balance, as a separate debt due from the insolvent, and rateably with the other separate creditors;

(iii) to draw, accept, make and endorse any bill of exchange, hundi or promissory note in the name and on behalf of the company, with the same effect with respect to the liability of the company as if the bill, hundi, or note had been drawn, accepted, made or indorsed by or on behalf of the company in the course of its business;

(iv) to take out, in his official name, letters of administration to any deceased contributory and to do in his official name any other act necessary for obtaining payment of any money due from a contributory or his estate which cannot be conveniently done in the name of the company, and in all such cases, the money due shall, for the purpose of enabling the liquidator to take out the letters of administration or recover the money, be deemed to be due to the liquidator himself;

Provided that nothing herein empowered shall be deemed to affect the rights, duties, and privileges of any Administrator-General;

(v) to appoint an agent to do any business which the liquidator is unable to do himself.

³ [(2A) The liquidator shall --

(a) appoint security guards to protect the property of the company taken into his custody and to make out an inventory of the assets in consultation with secured creditors after giving them notice;

(b) appoint, as the case may be, valuer, chartered surveyors or chartered accountant to assess the value the company's assets within fifteen days after taking into custody of property, assets referred to in sub-clause (a) and effects or actionable claims subject to such terms and conditions as may be specified by the Tribunal;

(c) give an advertisement, inviting bids for sale of the assets of the company, within fifteen days from the date of receiving valuation report from the valuer, chartered surveyors or chartered accountants referred to in clause (b), as the case may be.

(2B) The liquidator shall, immediately after the order for winding up or appointing the liquidator as provisional Liquidator is made, issue a notice requiring any of the persons mentioned in sub-section (2) of section 454, to submit and verify a statement of the affairs of the company and such notice shall be served by the liquidator.

(2C) The liquidator may apply to the Tribunal for an order directing any person who, in his opinion, is competent to furnish a statement of the affairs under sections 439A and 454 and such person shall for the said purpose be served a notice by the liquidator in the matter as may be prescribed.

(2D) The liquidator may, from time to time, call any person for recording any statement for the purpose of investigating the affairs of the company which is being wound up and it shall be the duty of every such person to attend to the liquidator at such time and place as the liquidator may appoint and give the liquidator all information which he may require and answer all such questions relating to winding up of company as may be put to him by the liquidator.

(2E) Every bidder shall, in response to advertisement referred to in clause (c) of sub-section (2A), deposit, his offer in the manner as may be prescribed, with liquidator or provisional liquidator, as the case may be, within forty-five days from the date of the advertisement and the liquidator or provisional liquidator shall permit inspection of property and assets in respect of which bids were invited:

Provided that such bid may be withdrawn within three days before the last day of closing of the bid:

Provided further that the inspection of property shall be open for not more than five days before closing of the bid.

(2F) The advertisement inviting bids shall contain the following details, namely:--

(a) name, address of registered office of the company and its branch offices, factories and plants and the place where assets of the company are kept and available for sale;

(b) last date for submitting bids which shall not exceed ninety days from the date of advertisement;

(d) the last date for withdrawing the bid;

(e) financial guarantee which shall not be less than one-half of the value of the bid;

(f) validity period of the bids;

(g) place and date of opening of the bids in public;

(h) reserve price and earnest money to be deposited along with the bid;

(i) any other terms and conditions of sale which may be prescribed.

(2G) The liquidator appointed shall--

(a) maintain a separate bank account for each company under his charge for depositing the sale proceeds of the assets and recovery of debts of each company;

(b) maintain proper books of account in respect of all receipts and payments made by him in respect of each company and submit half yearly return of receipts and payments to the Tribunal.]

(3) The exercise by the liquidator in a winding up by the Court of the powers conferred by this section shall be subject to the control of the Court; and any creditor or contributory may apply to the Court with respect to the exercise or proposed exercise of any of the powers conferred by this section.

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1. Substituted by Act 11 of 2003, Section 66, for "Court".

2. Substituted by Act 11 of 2003, Section 67, for "Court".

3. Inserted by Act 11 of 2003, Section 67.

4. Inserted by Act 65 of 1960, Section 170 (w.e.f. 28-12-1960).

Section 458 - Discretion of liquidator

The¹[Tribunal] may, by order, provide that the liquidator may exercise any of the powers referred to in sub-section ( 1 ) of section 457 without the sanction or intervention of the¹[Tribunal]:

Provided always that the exercise by the liquidator of such powers shall be subject to the control of the¹[Tribunal].

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1. Substituted by Act 11 of 2003, Section 68, for "Court".

Section 458A - Exclusion of certain time in computing periods of limitation

¹ [458A. Exclusion of certain time in computing periods of limitation

Notwithstanding anything in the Indian Limitation Act, 1908 (9 of 1908) or in any other law for the time being in force, in computing the period of limitation prescribed for any suit or application in the name and on behalf of a company which is being wound up by the ² [Tribunal], the period from the date of commencement of the winding up of the company to the date on which the winding up order is made (both inclusive) and a period of one year immediately following the date of the winding up order shall be excluded.]

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1. Inserted by Act 65 of 1960, Section 171 (w.e.f. 28-12-1960).

2. Substituted by Act 11 of 2003, Section 68, for "Court".

Section 459 - Provision for legal assistance to liquidator

¹ [459. Provision for legal assistance to liquidator

The liquidator may, with the sanction of the Tribunal, appoint one or more chartered accountants or company secretaries or cost accountants or legal practitioners entitled to appear before the Tribunal under section 10GD to assist him in the performance of his duties.]

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1. Substituted by Act 11 of 2003, Section 69, for Section 459.(See Annexe)

Section 460 - Exercise and control of liquidator's powers

(1)Subject to the provisions of this Act, the liquidator shall, in theadministration of the assets of the company and the distribution thereof amongits creditors, have regard to any directions which may be given by resolutionof the creditors or contributories at any general meeting orby the committee of inspection.

(2) Anydirections given by the creditors or contributories at any general meetingshall, in case of conflict, be deemed to override any directions given by thecommittee of inspection.

(3) Theliquidator--

(a) may summon general meetingsof the creditors or contributories, whenever he thinks fit, for the purpose ofascertaining their wishes;

(b) shall summon such meetingsat such times, as the creditors or contributories, as the case may be, may, byresolution, direct, or whenever requested in writing to do so by not less thanone-tenth in value of the creditors or contributories, as the case may be.

(4) Theliquidator may apply to the ¹ [Tribunal]in the manner prescribed, if any, for directions in relation to anyparticular matter arising in the winding up.

(5)Subject to the provisions of this Act, the liquidator shall use his owndiscretion in the administration of the assets of the company and in thedistribution thereof among the creditors.

(6) Anyperson aggrieved by any act or decision of the liquidator may apply to the ¹ [Tribunal]; andthe ¹ [Tribunal]may confirm, reverse or modifythe act or decision complained of and make such further order as it thinks justin the circumstances.

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1. Substituted by Act 11 of 2003, Section 70, for "Court".

Section 461 - Books to be kept by liquidator

(1) Theliquidator shall keep, in the manner prescribed, proper books in which he shallcause entries or minutes to be made of proceedings at meetingsand of such other matters as may be prescribed.

(2) Anycreditor or contributory may, subject to the control of the 1 [Tribunal], inspectany such books, personally or by his agent.

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1. Substituted by Act 11 of 2003, Section 70, for "Court".

Section 462 - Audit of liquidator's accounts

(1) The liquidator shall, at such times as may be prescribed but not less than twice in each year during his tenure of office, present to the ¹ [Tribunal] an account of his receipts and payments as liquidator.

(2) The account shall be in the prescribed form, shall be made in duplicate, and shall be verified by a declaration in the prescribed form.

(3) The ¹ [Tribunal] shall cause the account to be audited in such manner as it thinks fit; and for the purpose of the audit, the liquidator shall furnish the ¹ [Tribunal] with such vouchers and information as the ² [Tribunal] may require, and the ¹ [Tribunal] may, at any time, require the production of, and inspect, any books or accounts kept by the liquidator.

(4) When the account has been audited, one copy thereof shall be filed and kept by the ¹ [Tribunal], and the other copy shall be delivered to the Registrar for filing; and each copy shall be open to the inspection of any creditor, contributory or person interested.

² [(4A) Where an account referred to in sub-section (4) relates to a Government company in liquidation, the liquidator shall forward a copy thereof.--

(a) to the Central Government, if that Government is a member of the Government company; or

(b) to any State Government, if that Government is a member of the Government company; or

(5) The liquidator shall cause the account when audited or a summary thereof to be printed, and shall send a printed copy of the account or summary by post to every creditor and to every contributory:

Provided that the ¹ [Tribunal] may in any case dispense with compliance with this subsection.

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1. Substituted by Act 11 of 2003, Section 70, for "Court".

2. Inserted by Act 31 of 1988, Section 55 (w.e.f. 15-6-1988).

Section 463 - Control of Central Government over liquidators

( 1 ) The Central Government shall take cognizance of the conduct of liquidators of companies which are being wound up by the¹[Tribunal], and, if a liquidator does not faithfully perform his duties and duly observe all the requirements imposed on hi m by this Act²[or by the Indian Companies Act, 1913 (7 of 1913)], the rules thereunder, or otherwise, with respect to the performance of his duties, or if any compliant is made to the Central Government by any creditor or contributory in regard thereto, the Central Government shall inquire into the matter, and take such action thereon as it may think expedient:

²[Provided that where the winding up of a company has commenced before the commencement of this Act, the¹[Tribunal] may, on the application of the Central Government, appoint in place of such liquidator the Official Liquidator as the liquidator in such winding up.]

( 2 ) The Central Government may at any time require any liquidator of a company which is being wound up by the¹[Tribunal] to answer any inquiry in relation to any winding up in which he is engaged, and may, if the Central Government thinks fit, apply to the¹[Tribunal] to examine him or any other person on oath concerning the winding up.

( 3 ) The Central Government may also direct a local investigation to be made of the books and vouchers of the liquidators.

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1. Substituted by Act 11 of 2003, Section 70, for "Court".

2. Inserted by Act 65 of 1960, Section 172 (w.e.f. 28-12-1960).

Section 464 to 465 - Committee of inspection

Section 464 - Appointment and Composition of committee of inspection

¹[(1) (a) The²[Tribunal] may, at the time of making an order for the winding up of a company or at any time thereafter, direct that there shall be appointed a committee of inspection to act with the liquidator.

(b) Where a direction is given by the²[Tribunal] as aforesaid, the liquidator shall, within two months from the date of such direction, convene a meeting of the creditors of the company (as ascertained from its books and documents) for the purpose of determining who are to be members of the committee.]

³[(2) The liquidator shall, within fourteen days from the date of the creditors' meeting or such further time as the²[Tribunal] in its discretion may grant for the purpose, convene a me eting of the contributories to consider the decision of the creditors' meeting with respect to the membership of the committee; and it shall be open to the me eting of the contributories to accept the decision of the creditors' me eting with or without modifications or to reject it.]

( 3 ) Except in the case where the meeting of the contributories accepts the decision of the creditors' me eting in its entirety, it shall be the duty of the liquidator to apply to the²[Tribunal] for directions as to⁴[***] what the composition of the committee shall be, and who shall be members thereof.

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1. Substituted by Act 65 of 1960, Section 173, for sub-section (1) (w.e.f. 28-12-1960).

2. Substituted by Act 11 of 2003, Section 70, for "Court".

3. Substituted by Act 65 of 1960, Section 173, for sub-section (2) (w.e.f. 28-12-1960).

4. The words "whether there shall be a committee of inspection; and, if so," omitted by Act 65 of 1960, Section 173 (w.e.f. 28-12-1960).

Section 465 - Constitution and proceedings of committee of inspection

(1) A committee of inspection appointed in pursuance of section 464 shall consist of not more than twelve members, being creditors and contributories of the company or persons holding general or special powers of attorney from creditors or contributories, in such proportions as may be agreed on by the meetings of creditors and contributories, or in case of difference of opinion between the meetings, as may be determined by the ¹ [Tribunal].

(2) The committee of inspection shall have the right to inspect the accounts of the liquidator at all reasonable times.

(3) The committee shall meet at such times as it may from time to time appoint, ² [***] and the liquidator or any member of the committee may also call a meeting of the committee as and when he thinks necessary.

(4) The quorum for a meeting of the committee shall be one-third of the total number of the members, or two, whichever is higher.

(5) The committee may act by a majority of its members present at a meeting, but shall not act unless a quorum is present.

(6) A member of the committee may resign by notice in writing signed by him and delivered to the liquidator.

(7) If a member of the committee is adjudged an insolvent, or compounds or arranges with this creditors, or is absent from five consecutive meetings of the committee without the leave of those members who, together with himself, represent the creditors or contributories, as the case may be, his office shall become vacant.

(8) A member of the committed may be removed at a meeting of creditors if he represents creditors, or at a meeting of contributories if he represents contributories, by an ordinary resolution of which seven days' notice has been given, stating the object of the meeting.

(9) On a vacancy occurring in the committee, the liquidator shall forthwith summon a meeting of creditors or of contributories, as the case may require, to fill the vacancy; and the meeting may, by resolution, re-appoint the same, or appoint another, creditor or contributory to fill the vacancy:

Provided that if the liquidator, having regard to the position in the winding up, is of the opinion that it is unnecessary for the vacancy to be filled, he may apply to the Court and the ¹ [Tribunal] may make an order that the vacancy shall not be filled, or shall not be filled except in such circumstances as may be specified in the order.

(10) The continuing members of the committee, if not less than two, may act notwithstanding any vacancy in the committee.

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1. Substituted by Act 11 of 2003, Section 70, for "Court".

2.The words "and, failing such appointment, at least once a month," omitted by Act 65 of 1960, Section 174 (w.e.f. 28-12-1960).

Section 466 to 481 - General powers of Tribunal in case of winding up by Court

General powers of¹[Tribunal] in case of winding up by¹[Tribunal]

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1. Substituted by Act 11 of 2003, Section 71, for "Court".

Section 466 - Power of Tribunal to stay winding up

¹ [466 . Power of Tribunal to stay winding up

( 1) The Tribunal may at any time after making a winding up ord er, on the application either of the Official Liquidator or of any creditor or contributory, and on proof to the satisfaction of the Tribunal that all proceedings in relation to the winding up ought to be stayed, make an ord er staying the proceedings, either altogether or for a limited time, on such terms and conditions as the Tribunal thinks fit.

( 2) On any application under this section, the Tribunal may, before making an order, require the Official Liquidator to furnish to the Tribunal a report with respect to any facts or matters which are in his opinion relevant to the application.

( 3 ) A copy of every order made under this section sh all forthwith be forwarded by the company, or otherwise as may be prescribed, to the Registrar, who shall make a minute of the ord er in his books relating to the company.]

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1. Substituted by Act 11 of 2003, Section 72, for Section 466 (See Annexe).

Section 467 - Settlement of list of contributories and application of assets

(1) As soon as may be after making a winding up order, the ¹ [Tribunal] shall settle a list of contributories, with power to rectify the 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 collected and applied in discharge of its liabilities:

Provided that, where it appears to the ¹ [Tribunal] that it will not be necessary to make calls on, or adjust the rights of, contributories, the ¹ [Tribunal] may dispense with the settlement of a list of contributories.

(2) In settling the list of contributories, the ¹ [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.

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1. Substituted by Act 11 of 2003, Section 73, for "Court".

Section 468 - Delivery of property to liquidator

The¹[Tribunal] may, at any time after making a winding up order, require any contributory for the time being on the list of contributories, and any trustee, receiver, banker, agent,²[officer or other employee] of the company, to pay, deliver, surrender or transfer forthwith or within such time as the¹[Tribunal] directs, to the liquidator, any money, property or books and papers³[in his custody or under his control] to which the company is prima facie entitled.

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1. Substituted by Act 11 of 2003, Section 73, for "Court".

2. Substituted by Act 65 of 1960, Section 175, for "or officer" (w.e.f. 28-12-1960).

3. Substituted by Act 65 of 1960, Section 175, for "in his hands" (w.e.f. 28-12-1960).

Section 469 - Payment of debts due by contributory and extent of set-off

( 1 ) The¹[Tribunal] may, at any time after making a winding up order, make an order on any contributory for the time being on the list of contributories to pay, in the manner directed by the order, any money due to the company, from hi m or from the estate of the person whom he represents, exclusive of any money payable by hi m or the estate by virtue of any call in pursuance of this Act.

( 2 ) The¹[Tribunal], in making such an order, may--

(a) in the case of an unlimited company, allow to the contributory, by way of set-off, any money due to him or to the estate which he represents, from the company, on any independent dealing or contract with the company, but not any money due to him as a member of the company in respect of any dividend or profit; and

(b) in the case of a limited company, make to any director,²[***] or manager whose liability is unlimited, or to hi s estate, the like allowance.

( 3 ) In the case of any company, whether limited or unlimited, when all the creditors have been paid in full, any money due on any account whatever to a contributory from the company may be allowed to him by way of set-off against any subsequent call.

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1. Substituted by Act 11 of 2003, Section 73, for "Court".

2. The words "managing agent, secretaries and treasurers," omitted by Act 53 of 2000, Section 190 (w.e.f. 13-12-2000).

Section 470 - Power of court to make calls

¹[ 470. Power of Tribunal to make calls

(1) The Tribunal may, at any time after making winding up order, and either before or after it has ascertained the sufficiency of the assets of the company,--

(a) make calls on all or any of the contributories for the time being on the list of the contributories, to the extent of their liability, for payment of any money which the Tribunal considers necessary to satisfy the debts and liabilities of the company, and the costs, charges and expenses of winding up, and for the adjustment of the rights of the contributories among themselves; and

(b) make an order for payment of any calls so made.

(2) In making a call, the Tribunal may take into consideration the probability that some of the contributories may, partly or wholly, fail to pay the call.]

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1. Substituted by Act 11 of 2003, Section 74, for Section 470 (See Annexe).

Section 471 - Payment into bank of moneys due to company

(1) The ¹ [Tribunal] may order any contributory, purchaser or other person from whom any money is due to the company to pay the money into the public account of India in the Reserve Bank of India instead of to the liquidator.

(2) Any such order may be enforced in the same manner as if the ¹ [Tribunal] had directed payment to the liquidator.

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1. Substituted by Act 11 of 2003, Section 75, for "Court".

Section 472 - Moneys and securities paid into bank to be subject to order of court

¹[ 472. Moneys and securities paid into bank to be subject to order of Tribunal

All moneys, bills, hundis, notes and other securities paid or delivered into the Reserve Bank of India in the course of the winding up of a company by the Tribunal, shall be subject in all respects to the orders of the Tribunal.]

_____________________

1. Substituted by Act 11 of 2003, Section 76, for Section 472 (See Annexe).

Section 473 - Order on contributory to be conclusive evidence

( 1 ) An order made by the¹[Tribunal] on a contributory shall, subject to any right to appeal, be conclusive evidence that the money, if any, thereby appearing to be due or ordered to be paid is due.

(2) All other pertinent matters stated in the order shall be taken to be truly stated as against all persons and in all proceedings whatsoever.

_____________________

1. Substituted by Act 11 of 2003, Section 77, for "Court".

Section 474 - Power to exclude creditors not proving in time

The¹[Tribunal] may fix a time or times within which creditors are to prove their debts or claims, or to be excluded from the benefit of any distribution made before those debts or claims are proved.

_____________________

1. Substituted by Act 11 of 2003, Section 77, for "Court".

Section 475 - Adjustment of rights of contributories

The¹[Tribunal] shall adjust the rights of the contributories among themselves, and distribute any surplus among the persons entitled thereto.

_____________________

1. Substituted by Act 11 of 2003, Section 77, for "Court".

Section 476 - Power to order costs

The¹[Tribunal] may, in the event of the assets being insufficient to satisfy the liabilities, make an order for the payment out of the assets, of the costs, charges and expenses incurred in the winding up, in such order of priority inter se as the¹[Tribunal] thinks just.

_____________________

1. Substituted by Act 11 of 2003, Section 77, for "Court".

Section 477 - Power to summon persons suspected of having property of company, etc.

(1) The¹[Tribunal] may, at any time after the appointment of a provisional liquidator or the making of a winding up order summon before it any officer of the company or person known or suspected to have in his possession any property or books or papers, of the company or known or suspected to be indebted to the company, or any person whom the¹[Tribunal] deems capable of giving information concerning the promotion, formation, trade, dealings, property, books or papers or affairs of the company.

(2) The¹[Tribunal] may examine any officer or person so summoned on oath concerning the matters aforesaid, either by word of mouth or on written interrogatories; and may, in the former case, reduce his answers to writing and require him to sign them.

(3) The¹[Tribunal] may require any officer or person so summoned to produce any books and papers in his custody or power relating to the company; but, where he claims any lien on books or papers produced by him, the production shall be without prejudice to that lien, and the¹[Tribunal] shall have jurisdiction in the winding up to determine all questions relating to that lien.

(4) If any officer or person so summoned, after being paid or tendered a reasonable sum for his expenses, fails to appear before the¹[Tribunal] at the time appointed, not having a lawful impediment (made known to the¹Tribunal] at the time of its sitting and allowed by it), the¹[Tribunal] may cause him to be apprehended and brought before the¹[Tribunal] for examination.

²[(5) If, on his examination, any officer or person so summoned admits that he is indebted to the company, the¹[Tribunal] may order him to pay to the provisional liquidator or, as the case may be, the liquidator at such time and in such manner as to the¹[Tribunal] may seem just, the amount in which he is indebted, or any part thereof, either in full discharge of the whole amount or not, as the¹[Tribunal] thinks fit, with or without costs of the examination.

(6) If, on his examination, any such officer or person admits that he has in his possession any property belonging to the company, the¹[Tribunal] may order him to deliver to the provisional liquidator or, as the case may be, the liquidator, that property or any part thereof, at such time, in such manner and on such terms as to the¹[Tribunal] may seem just.

( 7 ) Orders made under sub-sections (5) and (6 ) shall be executed in the same manner, as decrees for the payment of money or for the delivery of property under the Code of Civil Procedure, 1908 (5 of 1908) respectively.

(8) Any person making any payment or delivery in pursuance of an order made under sub-section (5) or sub-section (6) shall by such payment or delivery be, unless otherwise directed by such order, discharged from all liability whatsoever in respect of such debt or property.]

_____________________

1. Substituted by Act 11 of 2003, Section 77, for "Court".

2. Inserted by Act 65 of 1960, Section 176 (w.e.f. 28-12-1960).

Section 478 - Power to order public examination of promoters, directors, etc.

(1) When an order has been made for winding up a company by the ¹ [Tribunal], and the Official Liquidator has made a report to the ¹ [Tribunal] under this Act, stating that in his opinion a fraud has been committed by any person in the promotion or formation of the company, or by any officer of the company in relation to the company since its formation, the ¹ [Tribunal] may, after considering the report, direct that that person or officer shall attend before the ¹ [Tribunal] on a day appointed by it for that purpose, and be publicly examined as to the promotion or formation or the conduct of the business of the company, or as to his conduct and dealings as an officer thereof.

(2) The Official Liquidator shall take part in the examination, and for that purpose may, if specially authorized by the ¹ [Tribunal] in that behalf, employ such legal assistance as may be sanctioned by the ¹ [Tribunal].

(3) Any creditor or contributory may also take part in the examination either personally or by any ² [chartered accountants or company secretaries or cost accountants or legal practitioners entitled to appear before the Tribunal under section 10GD]

(4) The ¹ [Tribunal] may put such questions to the person examined as it thinks fit.

(5) The person examined shall be examined on oath, and shall answer all such questions as the ¹ [Tribunal] may put, or allow to be put, to him.

(6) A person ordered to be examined under this section--

(a) shall before his examination, be furnished at his own cost with a copy of the Official Liquidator's report; and

(b) may at his own cost employ an ² [chartered accountants or company secretaries or cost accountants or legal practitioners entitled to appear before the Tribunal under section 10GD]who shall be at liberty to put to him such questions as the ¹ [Tribunal] may deem just for the purpose of enabling him to explain or qualify any answers given by him.

(7) (a) If any such person applies to the ¹ [Tribunal] to be exempted from any charges made or suggested against him it shall be the duty of the Official Liquidator to appear on the hearing of the application and call the attention to the ¹ [Tribunal] to any matters which appear to the Official Liquidator to be relevant.

(b) If the ¹ [Tribunal], after hearing any evidence given or witnesses called by the Official Liquidator, grants the application, the ¹ [Tribunal] may allow the applicant such costs as it may think fit.

(8) Notes of the examination shall be taken down in writing, and shall be read over to or by, and signed by, the person examined: and may thereafter be used in evidence against him, and shall be open to the inspection of any creditor or contributory at all reasonable times.

(9) The Court may, if it thinks fit, adjourn the examination from time to time.

³ [(10) An examination under this section may, if the Tribunal so directs, be held before any person or authority authorised by the Tribunal.]

(11) The powers of the court under this section as to the conduct of the examination, but not as to costs, may be ⁴ [exercised by the person or authority] before whom the examination is held in pursuance of sub-section (10).

_____________________

1. Substituted by Act 11 of 2003, Section 78, for "Court".

2. Substituted for "advocate, attorney or pleader entitled to appear before the court." by Act 11 of 2003, Section 78.

3. Substituted by Act 11 of 2003, Section 78, for sub-section (10) (See Annexe).

4. Substituted by Act 11 of 2003, Section 78, for "exercised by the Judge or officer".

Section 479 - Power to arrest absconding contributory

At any time either before or after making a winding up order, the¹[Tribunal] may, on proof of probable cause for believing that a contributory is about to quit India or otherwise to abscond, or is about to remove or conceal any of his property, for the purpose of evading payment of calls or of avoiding examination respecting the affairs of the company, cause--

(a) the contributory to be arrested and safely kept until such time as the¹[Tribunal] may order; and

(b) his books and papers and movable property to be seized and safety kept until such time as the¹[Tribunal] may order.

_____________________

1. Substituted by Act 11 of 2003, Section 79, for "Court".

Section 480 - Saving of existing powers of Tribunal

¹ [480. Saving of existing powers of Tribunal

Any powers conferred on the Tribunal by this Act shall be in addition to, and not in derogation of, any existing powers of instituting proceedings against any contributory or debtor of the company, or the estate of any contributory or debtor, for the recovery of any call or other sums.]

_____________________

1. Substituted by Act 11 of 2003, Section 80, for Section 480 (See Annexe).

Section 481 - Dissolution of company

(1) When the affairs of a company have been completely wound up ¹ [or when the ² [Tribunal] is of the opinion that the liquidator cannot proceed with the winding up of a company for want of funds and assets or for any other reason whatsoever and it is just and reasonable in the circumstances of the case that an order of dissolution of the company should be made], the ² [Tribunal] shall make an order that the company be dissolved from the date of the order, and the company shall be dissolved accordingly.

(2) A copy to the order shall within ³ [thirty] days from the date thereof, be forwarded by the liquidator to the Registrar who shall make in his books a minute of the dissolution of the company.

(3) If the liquidator makes default in forwarding a copy as aforesaid, he shall be punishable with fine which may extend to ⁴ [five hundred rupees] for every day during which the default continues.

___________________

1. Inserted by Act 65 of 1960, Section 177 (w.e.f. 28-12-1960).

2. Substituted by Act 11 of 2003, Section 81, for "Court".

3. Substituted by Act 31 of 1965, Section 62 and Schedule, for "Fourteen" (w.e.f. 15-10-1965).

4. Substituted by Act 53 of 2000, Section 191, for "fifty rupees" (w.e.f. 13-12-2000).

Section 482 to 483 - Enforcement of and appeal from orders

Section 482 - Order made in any Court to be enforced by other Courts

Any order made by a Court for, or in me course of, winding up a company shall be enforceable at any place in India, other than, that over which such Court has jurisdiction, by the Court which would have had jurisdiction in respect of the company if its registered office had been situate at such other place, and in the same manner in all respects as if the order had been made by that Court.

Section 483 - Appeals from orders

Appeals from¹[ any order made or decision given before the commencement of the Companies (Second Amendment) Act, 2002], in the matter of the winding up of a company by the Court shall lie to the same Court to which, in the same manner in which, and subject to the same conditions under which, appeals lie from any order or decision of the Court in cases within its ordinary jurisdiction.

_____________________

1. Substituted by Act 11 of 2003, Section 82, for "any order made, or decision given".

COMPANIES ACT, 1956Chapter 3 - VOLUNTARY WINDING UP

Section 484 to 486 - Resolution for, and commencement of, voluntary winding up

Section 484 - Circumstances in which company may be wound up voluntarily

(1) A company may be wound up voluntarily--

(a) when the period, if any, fixed for the duration of the company by the articles has expired, or the event, if any, has occurred, on the occurrence of which the articles provide that the company is to be dissolved, and the company in general meeting passes a resolution requiring the company to be wound up voluntarily;

(b) if the company passes a special resolution that the company be wound up voluntarily.

(2) In this Act, the expression "a resolution for voluntary winding up" means a resolution passed under clause (a) or (b) of sub-section (1).

Section 485 - Publication of resolution to wind up voluntarily

( 1 ) When a company has passed a resolution for voluntary winding up, it shall, within fourteen days of the passing of the resolution, give notice of the resolution by advertisement in the Official Gazette, and also in some newspaper circulating in the district where the registered office of the company is situate.

( 2) If default is made in complying with sub-section ( 1 ), the company, and every officer of the company who is in default, shall be punishable with fine which may extend to¹[five hundred rupees] for every day during which the default continues.

For the purposes of this sub-section, a liquidator of the company shall be deemed to be an officer of the company.

__________________

1. Substituted by Act 53 of 2000, Section 192, for "fifty rupees" (w.e.f. 13-12-2000).

Section 486 - Commencement of voluntary winding up

A voluntary winding up shall be deemed to commence at the time when the resolution for voluntary winding up is passed.

Section 487 - Effect of voluntary winding up on status of company

Consequences of voluntary winding up

In the case of a voluntary winding up, the company shall from the commencement of the winding up, cease to carry on its business, except so far as may be required for the beneficial winding up of such business:

Provided that the corporate state and corporate powers of the company shall continue to till it is dissolved.

Section 488 - Declaration of solvency in case of proposal to wind up voluntarily

Declaration of solvency

(1) Where it is proposed to wind up a company voluntarily, its directors, or in case the company has more than two directors, the majority of the directors, may, at a meeting of the Board, make a declaration verified by an affidavit, to the effect that they have made a full inquiry into the affairs of the company, and that, having done so, they have formed the opinion that the company has no debts, or that it will be able to pay its debts in full within such period not exceeding three years from the commencement of the winding up as may be specified in the declaration.

(2) A declaration made as aforesaid shall have no effect for the purposes of this Act, unless-

(a) it is made within the five weeks immediately preceding the date of the passing of the resolution for winding up the company and is delivered to the Registrar for registration before that date; and

¹ [(b) it is accompanied by a copy of the report of the auditors of the company (prepared, as far as circumstances admit, in accordance with the provisions of this Act) on the profit and loss account of the company for the period commencing from the date up to which the last such account was prepared and ending with the latest practicable date immediately before the making of the declaration and the balance sheet of the company made out as on the last-mentioned date and also embodies a statement of the company's assets and liabilities as at that date.]

(3) Any director of a company making a declaration under this section without having reasonable grounds for the opinion that the company will be able to pay its debts in full within the period specified in the declaration, shall be punishable with imprisonment for a term which may extend to six months, or with fine which may extend to ² [fifty thousand rupees], or with both.

(4) If the company is wound up in pursuance of a resolution passed within the period of five weeks after the making of the declaration, but its debts are not paid or provided for in full within the period specified in the declaration, it shall be presumed, until the contrary is shown, that the director did not have reasonable grounds for his opinion.

(5) A winding up in the case of which a declaration has been made and delivered in accordance with this section is in this Act referred to as "a members' voluntary winding up"; and a winding up in the case of which a declaration has not been so made and delivered is in this Act referred to as a "a creditors' voluntary winding up".

______________________

1. Substituted by Act 65 of 1960, Section 178, for clause (b) (w.e.f. 28-12-1960).

2. Substituted by Act 53 of 2000, Section 193, for "five thousand rupees" (w.e.f. 13-12-2000).

Section 489 to 498 - Provisions applicable to a members' voluntary winding up

Section 489 - Provisions applicable to a members voluntary winding up

The provision contained in section 490 to 498, both inclusive shall subject to the provision of section 498, apply in relation to a members' voluntary winding up.

Section 490 - Power of company to appoint and fix remuneration of liquidators

(1) The company in general meeting shall-

(a) appoint one or more liquidators for the purpose of winding up the affairs and distributing the assets of the company; and

(b) fix the remuneration, if any, to be paid to the liquidator or liquidators.

(2) Any remuneration so fixed shall not be increased in any circumstances whatever, whether with or without the sanction of the¹[Tribunal].

(3) Before the remuneration of the liquidator or liquidators is fixed, as aforesaid, the liquidator, or any of the liquidators, as the case may be, shall not take charge of his office.

____________________

1. Substituted by Act 11 of 2003, Section 83, for "Court".

Section 491 - Board's powers to cease on appointment of liquidator

On the appointment of a liquidator, all the powers of the Board of directors and of the managing or whole-time directors,¹[***] and manager, if there be any of these, shall cease except for the purpose of giving notice of such appointment to the registrar in pursuance of section 493 or insofar as the company in general meeting or the liquidator may sanction the continuance thereof.

___________________

1. The words "managing agent, secretaries and treasurers," omitted by The Companies (Amendment) Act, 2000, Section 194 (w.e.f. 13-12-2000).

Section 492 - Power to fill vacancy in office of liquidator

(1) If a vacancy occurs by death, resignation or otherwise in the office of any liquidator appointed by the company, the company in general meeting may, subject to any arrangement with its creditors, fill the vacancy,

(2) For that purpose, a general meeting may be convened by any contributory, or by the continuing liquidator or liquidators, if any.

(3) The meeting shall be held in the manner provided by this Act or by the articles, or in such other manner as the¹[Tribunal] may, on application by any contributory or by the continuing liquidator or liquidators, determine.

____________________

1. Substituted by Act 11 of 2003, Section 83, for "Court".

Section 493 - Notice of appointment of liquidator to be given to Registrar

( 1) The company shall give notice to the Registrar of the appointment of a liquidator or liquidators made by it under section 490, of every vacancy occurring in the office of liquidator, and of the name of the liquidator or liquidators appointed to fill every such vacancy under section 492.

(2) The notice aforesaid shall be given by the company within ten days of the event to which it relates.

(3) If default is made in complying with sub-section (1) or (2), the company, and every officer of the company (including every liquidator or continuing liquidator) who is in default, shall be punishable with fine which may extend to¹[one thousand rupees] for every day during which the default continues.

_____________________

1. Substituted by Act 53 of 2000, Section 195, for "one hundred rupees" (w.e.f. 13-12-2000).

Section 494 - Power of liquidator to accept shares, etc., as consideration for sale of property of company

(1) Where-

(a) a company (in this section called "the transferor company") is proposed to be, or is in course of being, wound up altogether voluntarily; and

(b) the whole or any part of its business or property is proposed to be transferred or sold to another company, whether a company within the meaning of this Act or not (in this section called "the transferee company");

the liquidator of the transferor company may, with the sanction of a special resolution of that company conferring on the liquidator either a general authority or an authority in respect of any particular arrangement,-

(i) receive, by way of compensation or part compensation for the transfer or sale, shares, policies, or other like interests in the transferee company, for distribution among the members of the transferor company; or

(ii) enter into any other arrangement whereby the members of the transferor company may, in lieu of receiving cash, shares, policies, or other like interests or in addition thereto, participate in the profits of, or receive any other benefit from, the transferee company.

(2) Any sale or arrangement in pursuance of this section shall be binding on the members of the transferor company.

(3) If any member of the transferor company who did not vote in favour of the special resolution expresses his dissent therefrom in writing addressed to the liquidator, and left at the registered office of the company within seven days after the passing of the resolution he may require the liquidator either--

(a) to abstain from carrying the resolution into effect; or

(b) to purchase his interest at a price to be determined by agreement or by arbitration in the manner provided by this section.

(4) If the liquidator elects to purchase the member's interest, the purchase money shall be paid before the company is dissolved, and be raised by the liquidator in such manner as may be determined by special resolution.

(5) A special resolution, shall not be invalid for the purposes of this section by reason only that it is passed before or concurrently with a resolution for voluntary winding up or for appointing liquidators; but if an order is made within a year for winding up the company by ¹ [The Tribunal], the special resolution shall not be valid unless it is ² [sanctioned by the Tribunal].

(6) The provisions of the Arbitration Act, 1940 (10 of 1940) other than those restricting the application of that Act in respect of the subject matter of the arbitration, shall apply to all arbitrations in pursuance of this section.

_____________________

1. Substituted by Act 11 of 2003, Section 84, for "or subject to the supervision of the court,".

2. Substituted by Act 11 of 2003, Section 84, for "sanctioned by the court".

Section 495 - Duty of liquidator to call creditors' meeting in case of insolvency

(1) If, in the case of a winding up commenced after the commencement of this Act, the liquidator is at any time of opinion that the company will not be able to pay its debts in full within the period stated in the declaration under section 488, or that period has expired without the debts having been paid in full, he shall forthwith summon a meeting of the creditors, and shall lay before the meeting a statement of the assets and liabilities of the company.

(2) If the liquidator fails to comply with such-section (1), he shall be punishable with fine which may extend to¹[five thousand rupees].

____________________

1. Substituted by Act 53 of 2000, Section 196, for "five hundred rupees" (w.e.f. 13-12-2000).

Section 496 - Duty of liquidator to call general meeting at end of each year

(1) Subject to the provisions of section 498, in the event of the winding up continuing for more than one year, the liquidator shall-

(a) call a general meeting of the company at the end of the first year from the commencement of the winding up, and at the end of each succeeding year, or as soon thereafter as may be convenient within three months from the end of the year or such longer period as the Central Government may allow; and

(b) lay before the meeting an account of his acts and dealings and of the conduct of the winding up during the preceding year, together with a statement in the prescribed form and containing the prescribed particulars with respect to the proceedings in, and position of, the liquidation.

(2) If the liquidator fails to comply with sub-section (1) he shall be punishable in respect of each failure, with fine which may extend to¹[one thousand rupees],

____________________

1. Substituted by Act 53 of 2000, Section 196, for "one hundred rupees" (w.e.f. 13-12-2000).

Section 497 - Final meeting and dissolution

(1) Subject to the provisions of section 498, as soon as the affairs of the company are fully wound up, the liquidator shall-

(a) make up an account of the winding up, showing how the winding up has been conducted and the property of the company has been disposed of; and

(b) call a general meeting of the company for the purpose of laying the account before it, and giving any explanation thereof.

(2) The meeting shall be called by advertisement-

(a) specifying the time, place and object of the meeting; and

(b) published not less than one month before the meeting in the Official Gazette, and also in some newspaper circulating in the district where the registered office of the company is situate.

(3) Within one week after the meeting, the liquidator shall send to the ¹ [Registrar and the ² [Official Liquidator referred to in clause (c) of sub-section (1) of section 448] a copy each of the account and shall make a return to each of them] of the holding of the meeting and of the date thereof.

If the copy is not so sent or the return is not so made, the liquidator shall be punishable with fine which may extend to ³ [five hundred rupees] for every day during which the default continues.

(4) If a quorum is not present at the meeting aforesaid, the liquidator shall, in lieu of the return referred to in sub-section (3) make a return that the meeting was duly called and that no quorum was present thereat.

Upon such a return being made within one week after the date fixed for the meeting, the provisions of sub-section (3) as to the making of the return shall be deemed to have been complied with.

⁴ [(5) The Registrar, on receiving the account and either the return mentioned in subsection (3) or the return mentioned in sub-section (4), shall forthwith register them.

(6) The ² [Official Liquidator referred to in clause (c) of sub-section (1) of section 448], on receiving the account and either the return mentioned in sub-section (3) or the return mentioned in sub-section (4), shall, as soon as may be, make, and the liquidator and all officers, past or present, of the company shall give the ² [Official Liquidator referred to in clause (c) of sub-section (1) of section 448] all reasonable facilities to make, a scrutiny of the books and papers of the company and if on such scrutiny the ² [Official Liquidator referred to in clause (c) of sub-section (1) of section 448] makes a report to the ⁵ [Tribunal] that the affairs of the company have not been conducted in a manner prejudicial to the interests of its members or to public interest, then, from the date of the submission of the report to the ⁵ [Tribunal] the company shall be deemed to be dissolved.

(6A) If on such scrutiny the ² [Official Liquidator referred to in clause (c) of sub-section (1) of section 448] makes a report to the ⁵ [Tribunal] that the affairs of the company have been conducted in a manner prejudicial as aforesaid, the ⁵ [Tribunal] shall by order direct the ² [Official Liquidator referred to in clause (c) of sub-section (1) of section 448] to make a further investigation of the affairs of the company and for that purpose shall invest him with all such powers as the ⁵ [Tribunal] may deem fit.

(6B) On the receipt of the report of the ² [Official Liquidator referred to in clause (c) of sub-section (1) of section 448], on such further investigation the ⁵ [Tribunal] may either make an order that the company shall stand dissolved with effect from the date to be specified by the ⁵ [Tribunal] therein or make such other order as the circumstances of the case brought out in the report permit.]

(7) If the liquidator fails to call a general meeting of the company as required by this section, he shall be punishable with fine which may extend to ⁶ [five thousand rupees].

____________________

1. Substituted by Act 31 of 1965, Section 54, for certain words (w.e.f. 15-10-1965).

2. Substituted by Act 11 of 2003, Section 85, for "Official Liquidator".

3. Substituted by Act 53 of 2000, Section 198, for "fifty rupees" (w.e.f. 13-12-2000).

4. Substituted by Act 31 of 1965, Section 54, for sub-section (5) and (6) (w.e.f. 15-10-1965).

5. Substituted by Act 11 of 2003, Section 85, for "Court".

6. Substituted by Act 53 of 2000, Section 198, for "five hundred rupees" (w.e.f. 13-12-2000).

Section 498 - Alternative provisions as to annual and final meetings in case of insolvency

Where section 495 has effect sections 508 and 509 shall apply to the winding up, to the exclusion of sections 496 and 497, as if the winding up were a creditors' voluntary winding up and not a members' voluntary winding up:

Provided that the liquidator shall not be required to call a meeting of creditors under section 508 at the end of the first year from the commencement of the winding up, unless the meeting held under section 495 has been held more than three months before the end of that year.

Section 499 to 509 - Provisions applicable to a creditors' voluntary winding up

Section 499 - Provisions applicable to a creditors voluntary winding up

The provisions contained in sections 500 to 509, both inclusive, shall apply in relation to a creditors' voluntary winding up.

Section 500 - Meeting of creditors

(1) The company shall cause a meeting of the creditors of the company to be called for the day, or the day next following the day, on which there is to be held the general meeting of the company at which the resolution for voluntary winding up is to be proposed, and shall cause notices of the meeting of creditors to be sent by post to the creditors simultaneously with the sending of the notices of the meeting of the company.

(2) The company shall cause notice of the meeting of the creditors to be advertised once at least in the Official Gazette and once at least in two newspapers circulating in the district where the registered office or principal place of business of the company is situate.

(3) The Board of directors of the company shall-

(a) cause a full statement of the position of the company's affairs together with a list of the creditors of the company and the estimated amount of their claims to be laid before the meeting of the creditors to be held as aforesaid; and

(b) appoint one of their number to preside at the said meeting.

(4) It shall be the duty of the director appointed to preside at the meeting of creditors to attend the meeting and preside thereat.

(5) If the meeting of the company at which the resolution for voluntary winding up is to be proposed is adjourned and me resolution is passed at an adjourned meeting, any resolution passed at the meeting of the creditors held in pursuance of sub-section (1) shall have effect as if it had been passed immediately after the passing of the resolution for winding up the company.

( 6 ) If default is made-

(a) by the company, in complying with sub-sections (1) and (2);

(b) by its Board of directors, in complying with sub-section (3);

the company, each of the directors, or the director, as the case may be, shall be punishable with fine which may extend to¹[ten thousand rupees] and, in the case of default by the company, every officer of the company who is in default, shall be liable to the like punishment.

____________________

1. Substituted by Act 53 of 2000, Section 199, for "one thousand rupees" (w.e.f. 13-12-2000).

Section 501 - Notice of resolutions passed by creditors' meeting to be given to Registrar

(1) Notice of any resolution passed at a creditors' meeting in pursuance of section 500 shall be given by the company to the Registrar within ten days of the passing thereof.

(2) If default is made in complying with sub-section (1), the company, and every officer of the company who is in default, shall be punishable with fine which may extend to¹[five hundred rupees] for every day during which the default continues.

For the purposes of this section, a liquidator of the company shall be deemed to be an officer of the company.

____________________

1. Substituted by Act 53 of 2000, Section 200, for "fifty rupees" (w.e.f. 13-12-2000).

Section 502 - Appointment of liquidator

(1) The creditors and the company at their respective meetings mentioned in section 500 may nominate a person to be liquidator for the purpose of winding up the affairs and distributing the assets of the company.

(2) If the creditors and the company nominate different persons the person nominated by the creditors shall be liquidator:

Provided that any director, member or creditor of the company may, within seven days after the date on which the nomination was made by the creditors, apply to the¹[Tribunal] for an order either directing that the person nominated as liquidator by the company shall be liquidator instead of or jointly with the person nominated by the creditors, or appointing the Official Liquidator or some other person to be liquidator instead of the person appointed by the creditors.

(3) If no person is nominated by the creditors, the person if any, nominated by the company shall be liquidator.

(4) If no person is nominated by the company, the person, if any, nominated by the creditors shall be liquidator.]

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1. Substituted by Act 11 of 2003, Section 86, for "Court".

Section 503 - Appointment of committee of inspection

(1 ) The creditors at the me eting to be held in pursuance of section 500 or at any subsequent meeting may, if they think fit, appoint a committee of inspection consisting of not more than five persons.

( 2) If such a committee is appointed, the company may, either at the meeting at which the resolution for voluntary winding up is passed or at any subsequent general me eting, appoint such number of persons (not exceeding five) as they think fit to act as me mbers of the committee:

Provided that the creditors may, if they think fit, resolve that all or any of the persons so appointed by the company ought not to be members of the committee of inspection.

( 3) If the creditors so resolve, the persons mentioned in the resolution shall not, unless the¹[Tribunal] otherwise directs, be qualified to act as me mbers of the committee.

( 4) On any application to the¹[Tribunal] for a direction under sub-section (3), the¹[Tribunal] may, if it thinks fit, appoint other persons to act as members of the committee of inspection in the place of the persons me ntioned in the creditors' resolution.

( 5) Subject to the provisions of sub-sections (1 ) to ( 4) and to such rules as may be made by the Central Government, the provisions of section 465 [except sub-section ( 1 ) thereof] shall apply with respect to a committee of inspection appointed under this section as they apply with respect to a committee of inspection appointed in a winding up by the¹[Tribunal]

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1. Substituted by Act 11 of 2003, Section 86, for "Court".

Section 504 - Fixing of liquidators' remuneration

( 1 ) The committee of inspection, or if there is no such committee, the creditors, may fix the remuneration to be paid to the liquidator or liquidators.

( 2 ) Where the remuneration is not so fixed, it shall be determined by the¹[Tribunal].

(3) Any remuneration fixed under sub-section (1) or (2) shall not be increased in any circumstances whatever, whether with or without the sanction of the¹[Tribunal].

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1. Substituted by Act 11 of 2003, Section 86, for "Court".

Section 505 - Board's powers to cease on appointment of liquidator

On the appointment of a liquidator, all the powers of the Board of directors shall cease, except insofar as the committee of inspection, or if there is no such committee, the creditors in general meeting, may sanction the continuance thereof.

Section 506 - Power to fill vacancy in office of liquidator

If a vacancy occurs by death, resignation or otherwise, in the office of a liquidator (other than a liquidator appointed by, or by the direction of, the¹[Tribunal]), the creditors in general me eting may fill the vacancy.

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1. Substituted by Act 11 of 2003, Section 86, for "Court".

Section 507 - Application of section 494 to a creditors' voluntary winding up

The provisions of section 494 shall apply in the case of a creditors' voluntary winding up as in the case of a me mbers' voluntary winding up, with the modification that the powers of the liquidator under that section shall not be exercised except with the sanction either of the¹[Tribunal] or of the committee of inspection.

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1. Substituted by Act 11 of 2003, Section 86, for "Court".

Section 508 - Duty of liquidator to call meetings of company and of creditors at end of each year

( 1 ) In the event of the winding up continuing for more than one year, the liquidator shall-

(a) call a general me eting of the company and a me eting of the creditors at the end of the first year from the commencement of the winding up and at the end of each succeeding year, or as soon thereafter as may be convenient within three months from the end of the year or such longer period as the Central Government may allow; and

(b) lay before the meetings an account of hi s acts and dealings and of the conduct of the winding up during the preceding year, together with a statement in the prescribed form and containing the prescribed particulars with respect to the proceedings in, and position of, the winding up.

( 2) If the liquidator fails to comply with sub-section ( 1 ) he shall be punishable, in respect of each failure, with fine which may extend to¹[one thousand rupees].

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1. Substituted by Act 53 of 2000, Section 201, for "one hundred rupees" (w.e.f. 13-12-2000).

Section 509 - Final meeting and dissolution

(1) As soon as the affairs of the company are fully wound up, the liquidator shall-

(a) make up an account of the winding up, showing how the winding up has been conducted and the property of the company has been disposed of; and

(b) call a general meeting of the company and a meeting of the creditors for the purpose of laying the account before the meetings and giving any explanation thereof.

(2) Each such meeting shall be called by advertisement-

(a) specifying the time, place and object thereof; and

(b) published not less than one month before the meeting in the Official Gazette and also in some newspapers circulating in the district where the registered office of the company is situate.

(3) Within one week after the date of the meetings, or if the meetings are not held on the same date, after the date of the later meeting, the liquidator shall send to the ¹ [Registrar and the ² [Official Liquidator referred to in clause (c) of sub-section (1) of section 448] a copy each of the account and shall make a return to each of them] of the holding of the meetings and of the date or dates on which they were held.

If the copy is not so sent or the return is not so made, the liquidator shall be punishable with fine which may extend to ³ [five hundred rupees] for every day during which the default continues.

(4) If a quorum (which for the purposes of this section shall be two persons) is not present at either of such meetings, the liquidator shall, in lieu of the return referred to in sub-section (3), make a return that the meeting was duly called and that no quorum was present thereat.

Upon such a return being made within one week after the date fixed for the meeting, the provisions of sub-section (3) as to the making of the return shall, in respect of that meeting, be deemed to have been complied with.

⁴ [(5) The Registrar, on receiving the account and also, in respect of each such meeting, either the return mentioned in sub-section (3) or the return mentioned in subsection (4) shall forthwith register them.

(6B) On the receipt of the report of the ² [Official Liquidator referred to in clause (c) of sub-section (1) of section 448] on such further investigation the ⁵ [Tribunal] may either make an order that the company shall stand dissolved with effect from the date to be specified by the ⁵ [Tribunal] therein or make such other order as the circumstances of the case brought out in the report permit.]

(7) If the liquidator fails to call a general meeting of the company or a meeting of the creditors as required by this section, he shall be punishable, in respect of each such failure, with fine which may extend to ⁶ [five thousand rupees].

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1. Substituted by Act 31 of 1965, Section 55, for certain words (w.e.f. 15-10-1965).

2. Substituted by Act 11 of 2003, Section 87, for "Official Liquidator".

3. Substituted by Act 53 of 2000, Section 202, for "fifty rupees" (w.e.f. 13-12-2000).

4. Substituted by Act 31 of 1965, Section 55, for sub-sections (5) and (6) (w.e.f. 15-10-1965).

5. Substituted by Act 11 of 2003, Section 87, for "Court".

6. Substituted by Act 53 of 2000, Section 202, for "five hundred rupees" (w.e.f. 13-12-2000).

Section 510 to 521 - Provisions applicable to every voluntary winding up

Section 510 - Provisions applicable to every voluntary winding up

The provisions contained in sections 511 to 521, both inclusive, shall apply to every voluntary winding up, whether a members' or a creditors' winding up.

Section 511 - Distribution of property of company

Subject to the provisions of this Act as to preferential payments, the assets of a company shall, on its winding up be applied in satisfaction of its liabilities pari passu and subject to such application, shall, unless the articles otherwise provide, be distributed among the members according to their rights and interests in the company.

Section 511A - Application of section 454 to voluntary winding up

¹[511A. Application of section 454 to voluntary winding up. -

The provisions of section 454 shall, so far as may be, apply to every voluntary winding up as they apply to the winding up by the ²[Tribunal] except that references to--

(a) the ²[Tribunal] shall be omitted;

(b) the Official Liquidator or the provisional liquidator shall be construed as references to the liquidator; and

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1. Inserted by Act 31 of 1965, Section 56 (w.e.f. 15-10-1965).

2. Substituted by Act 11 of 2003, Section 88, for "Court".

Section 512 - Powers and duties of liquidator in voluntary winding up

( 1) The liquidator may,-

(a) in the case of a members' voluntary winding up, with the sanction of a special resolution of the company, and in the case of a creditors' voluntary winding up, with the sanction of the¹[Tribunal] or, the committee of inspection or, if there is no such committee, of a meeting of the creditors, exercise any of the powers given by²[clauses (a) to (d) of sub-section (1)] of section 457 to a liquidator in a winding up by the¹[Tribunal];

(b) without the sanction referred to in clause (a), exercise any of the other powers given by this Act to the liquidator in a winding up by the¹[Tribunal];

(c) exercise the power of the¹[Tribunal] under this Act of settling a list of contributories (which shall be prima facie evidence of the liability of the persons named therein to be contributories);

(d) exercise the power of the¹[Tribunal] of making calls;

(e) call general meetings of the company for the purpose of obtaining the sanction of the company by ordinary or special resolution, as the case may require, or for any other purpose he may think fit.

(2) The exercise by the liquidator of the powers given by clause (a) of sub-section (1) shall be subject to the control of the¹[Tribunal]; and any creditor or contributory may apply to the¹[Tribunal] with respect to any exercise or proposed exercise of any of the posers conferred by this section.

(3) The liquidator shall pay the debts of the company and shall adjust the rights of the contributories among themselves.

(4) When several liquidators are appointed, any power given by this Act may be exercised by such one or more of them as may be determined at the time of their appointment, or, in default of such determination, by any number of them not being less than two.

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1. Substituted by Act 11 of 2003, Section 88, for "Court".

2. Substituted by Act 65 of 1960, Section 179, for "clauses (i) to (iv) of sub-section (2)" (w.e.f. 28-12-1960).

Section 513 - Body corporate not to be appointed as liquidator

(1) A body corporate shall not be qualified for appointment as liquidator of a company in a voluntary winding up.

(2) Any appointment made in contravention of sub-section (1) shall be void.

(3) Any body corporate which acts as liquidator of a company and very director ¹ [***] or a manager thereof shall be punishable with fine which may extend to ² [ten thousand rupees].

³ [Provided that, notwithstanding anything contained in any other law for the time being in force, a body corporate consisting of such professionals as may be approved by the Central Government from time to time, shall be qualified for appointment as Official Liquidator under section 448.]

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1. The Words "managing agent, secretaries and treasurers," omitted by Act 53 of 2000, Section 203 (w.e.f. 13-12-2000).

2. Substituted by Act 53 of 2000, Section 203, for "one thousand rupees" (w.e.f. 13-12-2000).

3. Inserted by Act 11 of 2003, Section 89.

Section 514 - Corrupt inducement affecting appointment as liquidator

Any person who gives or agrees or offers to give, to any member or creditor of a company any gratification whatever with a view to-

(a) securing his own appointment or nomination as the company's liquidator; or

(b) securing or preventing the appointment or nomination of some person other than himself, as the company's liquidator; shall be punishable with fine which may extend to¹[ten thousand rupees].

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1. Substituted by Act 53 of 2000, Section 204, for "one thousand rupees" (w.e.f. 13-12-2000).

Section 515 - Power of Tribunal to appoint and remove liquidator in voluntary winding up

¹ [515. Power of Tribunal to appoint and remove liquidator in voluntary winding up

(1) If from any cause whatever, there is no liquidator acting, the Tribunal may appoint the Official Liquidator or any other person as a liquidator.

(2) The Tribunal may, on cause shown, remove a liquidator and appoint the Official Liquidator or any other person as a liquidator in place of the removed liquidator.

(3) The Tribunal may also appoint or remove a liquidator on the application made by the Registrar in this behalf.

(4) If the Official Liquidator is appointed as liquidator under the proviso to sub-section (2) of section 502 or under this section, the remuneration to be paid to him shall be fixed by the Tribunal and shall be credited to the Central Government.]

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1. Substituted by Act 11 of 2003, Section 90, for section 515 (See Annexe).

Section 516 - Notice by liquidator of his appointment

(1) The liquidator shall, within¹[thirty] days after his appointment, publish in the Official Gazette, and deliver to the Registrar for registration, a notice of his appointment in the from prescribed.

(2) If the liquidator fails to company with sub-section (1), he shall be punishable with fine which may extend to²[five hundred rupees] for every day during which the default continues.

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1. Substituted by Act 31 of 1965, Section 62, and Schedule, for "twenty-one" (w.e.f. 15-10-1965).

2. Substituted by Act 53 of 2000, Section 205, for "fifty rupees" (w.e.f. 13-12-2000).

Section 517 - Arrangement when binding on company and creditors

(1) Any arrangement entered into between a company about to be, or in the course of being, wound up and its creditors shall, subject to the right of appeal under this section, be binding on the company and on the creditors if it is sanctioned by a special resolution of the company and acceded to by three-fourths in number and value of the creditors.

(2) Any creditor or contributory may, within three weeks from the completion of the arrangement, appeal to the¹[Tribunal] against it and the¹[Tribunal] may thereupon, as it thinks just, amend, vary, confirm or set aside the arrangement.

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1. Substituted by Act 11 of 2003, Section 91, for "Court".

Section 518 - Power to apply to Tribunal to have questions determined or powers exercised

¹[518 . Power to apply to Tribunal to have questions determined or powers exercised

( 1 ) The liquidator or any contributory or creditor may apply to the Tribunal,--

(a) to determine any question arising in the winding up of a company; or

(b) to exercise, as respects the enforcing of calls, the staying of proceedings or any other matter, all or any of the powers which the Tribunal might exercise if the company were being wound up by the Tribunal.

( 2) The liquidator or any creditor or contributory may apply to the Tribunal for an ord er setting aside any attachment, distress or execution put into force against the estate or effects of the company after the commencement of the winding up.

( 3) The Tribunal, if satisfied on an application under sub -section (1 ) or subsection ( 2 ) that the determination of the question or the required exercise of power or the order applied for will be just and beneficial, may accede wholly or partially to the application on such terms and conditions as it thinks fit, or may make such other ord er on the application as it thinks just.

( 4) A copy of an order staying the proceedings in the winding up, made by virtue of this section, shall forthwith be forwarded by the company, or otherwise as may be prescribed, to the Registrar, who shall make a minute of the ord er in hi s books relating to the company.]

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1. Substituted by Act 11 of 2003, Section 92, for section 518 (See Annexe).

Section 519 - Application of liquidator to Tribunal for public examination of promoters, directors, etc.

¹[519 . Application of liquidator to Tribunal for public examination of promoters, directors, etc

( 1 ) The liquidator may make a report to the Tribunal stating that in hi s opinion a fraud has been committed by any person in the promotion or formation of the company or by any officer of the company in relation to the company since its formation; and the Tribunal may, after considering the report, direct that that person or officer sh all attend before the Tribunal on a day appointed by it for that purpose, and be publicly examined as to the promotion or formation or the conduct of the business of the company, or as to hi s conduct and dealings as officer thereof.

( 2) The provisions of sub -sections ( 2 ) to ( 11) of section 478 shall apply in relation to any examination directed under sub-section ( 1 ) as they apply in relation to an examination directed under sub -section ( 1) of section 478 with references to the liquidator being sub stituted for references to the Official Liquidator in those provisions.]

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1. Substituted by Act 11 of 2003, Section 92, for section 519 (See Annexe).

Section 520 - Costs of voluntary winding up

All costs, charges and expenses properly incurred in the winding up, including the remuneration of the liquidator, shall, subject to the rights of secured creditors, if any, be payable out of the assets of the company in priority to all other claims.

Section 521 - Saving of right of creditors and contributories to apply for winding up [Repealed]

[Rep. by the Companies (Amendment) Act, 1960 (65 of 1960), Section 181 (w.e.f. 28-12-1960).]

COMPANIES ACT, 1956Chapter 4 - WINDING UP SUBJECT TO SUPERVISION OF COURT

Section 522 - Power to order winding up subject to supervision [Repealed]