Winding up of a Private Limited Company by the Tribunal

There are times when a company might be required to wind up operations. This article covers the topic of winding up of a Private Limited Company by a tribunal and the process that goes into it.

A tribunal or its members have the rights of winding up a Private Limited Company.

Here is a brief on how a tribunal can wind up a Private Limited Company.

Reasons behind the Tribunal winding up a company

A Private Limited Company can be wound up by a Tribunal under the following circumstances:

1. The company is not able to pay its debts
2. The concerned company has by special resolution decided to be wound up by a Tribunal
3. The concerned company has acted against the laws of integrity and sovereignty of India, decency, public order and morality.
4. The Tribunal has ordered the winding up of the company under Chapter XIX
5. The Tribunal considers that the affairs of the concerned company are fraudulent or unlawful or the persons who are associated with the concerned company are found guilty of misfeasance, fraud or misconduct of any sort.
6. The concerned company has a record of default in filing with the Registrar the annual returns and financial statements for five consecutive years.
7. The Tribunal is of the opinion that it would be fair and equitable if the company is wound up.

Committee for winding up

This is within the 3 weeks of passing of winding up by order of the Tribunal; the Company Liquidator will submit an application to the Tribunal for constitution of a winding up committee which would comprise of the following:

• Official Liquidator
• Nominee of the Secured Creditors
• Tribunal nominated professional

The winding up committee will assist and monitor the overall progress of the entire proceedings of liquidation which would include the following:

• Taking over of the assets of the company
• Examination of the Statement of Affairs
• Recovery of the cash, property of any other assets of the company which include the benefits that are derived therefrom
• Reviewing of the accounts and the audit reports of the concerned company
• Sale of the assets of the company
• Finalizing of the final list of contributories and creditors
• Decision making regarding the compromise, settlement and abandonment of the claims
• Paying of the dividends if any.

Winding up Committee’s Report

The Company Liquidator committee is supposed to prepare a final draft report which would include the consideration by the committee along with the minutes of the meeting that was held by the committee.

The winding up committee members will have the overall ability to make a review of the draft of the final report from the Company Liquidator and then the report is subject to approval. After the approval of the final report by the winding up committee, the final report will be submitted by the Company Liquidator before the Tribunal for passing of a dissolution order in respect of the company.

If all the things are acceptable, the Tribunal will finally pass the order of dissolution thereby winding up of the affairs of the particular company.