II.

event
company
Bankruptcy Voluntaryordered I . Winding I. ActAsper ) MODES ceases
exist. to
or for
creditors there tSec. Dissolution
Winding grounds
Winding members paymentdebts(u) MEANING
lite
leading insolvency or Windingup of
liquidation
up of
wants is the
a 2 OF

14
winding or
defaultspecified of (944), of
toCode, corporate up company up WINDING isthcompany.
e
its to resolution the
liabilities, and of to of OF
under by under company.
last
company
endclose2016 winding WINDING
up by Tribunal
hasdown the under may the stage The
Insolvency
person
occurred company where of company to bemeansv up UP
Insolvency in isItaprocess meansa
Sec.under proCess
NCLT, th e
220 as (.e. UP
thethere and 271 swinding process
distribution (ii) process
of
or under the and and C
period
for company) its
is situations and Sec. and winding
H
Bankruptcy results which
some no operational petition 270Bankruptcy upunder
of
bringing WINDINGUP A
default of Sec.
of
winding up an
other its
59 ariseitself the
involves PT
duration filed ofsurplus,
up. in
by of makes Code, Companies applicable. Code,
as
this
reason the wherecreditors On end E
dissolution (i))
the under ,2016 Act dissolution
Insolvency
has (i.e. realisation the R.
company
voluntarily. liquidation an 2016 if
.the any,
expired application or Sec. Act ,amongst
operations
financial :272: Companies of
where on company.
company of
orand and or t he assetS,
is the and

(d) (c) (a) 271 WiWINDING

(b) Circumstances
CompaniesAct. of nding
(e)
the
manner opinion the order,
if ifthe
of upifthe grounds
specified on
lowing should
winding-up.
order to as ifthe statements
financialyears;or the if th at been on India, the underSec.271 Under
'relief persons Central an company company by up
it
guilty decency the Companies the the
Tribunal
are of be company is application
or that of
Tribunal; a UP
some last wound proper of the
or concerned Government the security which
in
company Companies Figure
isannual has fraud, company or has has, BY Modes
resort'
of up. of that affairs morality; acted byAct, TRIBUNAL Act
the made company 14.1
the
Winding-up misfeasance
made
the the of special 2013 by
situationswhen opinion returns company inwas of by "
against the "
ordered. isandWheremore;ormentWhen
of CH.
a the the by State, liquidation
Winding :
other default formationformed notification the resolution, are may Tribunal situations Modes 14:

that for
company th e CIRP debtsthere
of
WINDING
or Registrar friendly as (SEC. Under
where on
remedies justimmediately it interests follows: be shall is is
misconduct
in be for default
up of
initiated of
is arise
Insolvency UP
just filingwound fraudulent have under resolved wound Rs.
Winding
it and and relations
or 270) where crore
1 in
isare and wi th been this any of be pay
consideredequitable management the up as &
equitable
not preceding connection up; in other with that Bankruptcy
the conducted
and Act, sovereignty by per Voluntary
windingup
under
up
efficacious the Tribunal the
basis Registrar unlawful person
the foreign company Sec.
just that of Tribunal provisionsthe of Code
is five its authorised in 59
and
enough. granted consecutivethe therewith
its a States, and under
of
affairs
purpose
fraudulent be IBC
equitable company financial is integrity wound 221
of public Sec.
Fol only and have or the by
 UNITV:DIVIDENDS. AUDIT AND WINDINGUn
222 CH. 14:WINDING UP
223
(1) Where the sub-stratum of the company is
Cofee Co. (1882), the mainobject for
which
the gone:company
In re le)
personauthorised bythe
any Central Government in that behalf; or

cpatentof,e Gwaeirrmsoanm torme daDteoe

Ininacasefalling under section 271(b) by the Central Government or a
was to obtain a patent in Germany to manutacture StateGovernment.
Sincethe company could not procure the German
filed by twOshareholders. It was held that the a in
for winding up shall be Form WIN-1 or
object had failed,therefore, it was just and
be wound-up. sub-stratuhamt ,ithepi.eiÛhnewa main
equitable andverifiedbyan Affidavit in Form WIN-3 in case theWIN-2
Apetition

body corporate, by the Director, Secretary or any

other
as case may be
petition the
is presented by

[as per Companies (Winding-up) Rules, 20201. authorized person

(2) Acts of oppression of minority interest or
cOmpay thereof
a
affairs ofthe company: In Giridhar Gopal Dalmia v.
(2007), it was held that once the acts ofoppression h
Company can be wound-up on just and equitable
(3) Where a deadiock situation exists or parties
loggerheads, (i.e. the parties are not at good
ground.
acrimony betweenthe partiesleads to deadlock terms):
int In
mhavebeenias-dmmiantgeedmelsyetanlbtisCohet.d
Bateli Tea s
A
2)
contributoryshallbe entitled to
company,, notwithstandingthatthe
present a petition for the winding up of a
may be the holder of fully paid-up shares,
orthatthe company may have no assets at all or may have no surplus assets
leftfor distributionamong the shareholders after the satisfaction of its lia-
bilities,andshares in respect of which he is acontributory or some of them
the
pany it is the ground for winding-up under jjust and affairs of cases whareere at wereeeither originally allotteddtto him or have been held by him, andregistered
his name,for least six months during the eighteen monthsimmediately
at|
Case Laws : equitable thecom beforethecommencementofthe winding up or have devolved on him through
Radharamanan v. Chandershekhar Raja (2008)
It was opined that asituation had arisen where
it
category. the death of a former holder.
(3) The
Registrar shall be entitled to present a petition for winding up under
for parties to pull on together becauseeof could be Sec. 271, except on the grounds specified in clause (a) or clause (e) of that
and righty concluded that deadlock incompatibility betwimeenpos itbhleme
situation existed.
Etisalat Mauritious Ltd. v. Etisalat DB Telecom
sub-section:
The Registrar shall obtain the previous sanction of the Central Government
Pvt. Ltd. to the presentation of a petition.
The Bombay Court admitted a
equitabie ground as there existed winding-up petition under (2015) The Central Government shall not accord its sanction unless the company
'deadlock among just and
the company was losing
sub-stratum.
there was complete lack of faith and Facts of the
case shareholders.
and
has been given a reasonable opportunity of making representations.
between the major probity resulting inshowed that (4) Apetition presented by the company for winding up before the Tribunal shali
far exceeded its shareholders
asSsets.
and the liability of the
company had breakdown be admitted only if accompanied by a statement of affairs in form WIN-4.
(4) Where affairs of (5). Acopy of the petition made under this section shallalso be filed with the
manner. company are being conducted in illegal or Registrar and the Registrar shall, without prejudice to any other provisions,
fraudulent submit his views to the Tribunal within sixty days of receipt of such petition.
Petition for Winding up (Sec. 272 ) Powers of Tribunal on receipt of petition for winding up (Sec. 273)
(1) Apetition to the
by - Tribunal for the winding up of a (1) The Tribunal may, on receipt of a petition for winding up
under Sec. 272
(a) thecompany;
company shall be presented pass any of the following orders, namely -
(a) disnmiss it, with or without costs;
(b) any
contributory or contributories [as per Sec. 2(26) of (b) make any interim order as it thinks fit:
Act,the'contributory'
of means a
company in the eventpersonliableto
of its
the
contribute towardsCompanies
the assets (c) appoint a provisional liquidator of the
company tillthe making of a
(c) allor any of the being wound up; winding up order.
persons company with orwithout costs;
(d) the Registrar; specified in clauses (a) and
(b); (d) make an order for the winding up of the
fit:
(e) any other order as it thinks
 224 UNITV:DIVIDENDS, AUDIT AND WINDING UP CH. 14:WINDING UP
225

An order shall be made within ninety days from the date of company liquidator shall make the periodical reports to the Tribunal.
the petition.
Before appointing a provisional liquidator under
shall give notice to the company and afford areasonable
pres ntaion s
clause (C), the
FinalreportshallbeesubmittedtotheTribunal
The

WINDINGUPUNDERINSOLVENCYAND BANKRUPTCY CODE.,

for passing of dissolution order.

make its representations,if any, unless tor special reasons o

writing,the Tribunalthinks fit to dispense with such noticer
The Tribunal shall not refuse to make a winding up order on
op ortunreitcyorTdriebudna
be te
VENCY
AND BANKRUPTCY CODE, 2016
that the assets have been mortgaged for an amount
equal to the ground o Insolvencyand Bankruptcy Code, 2016 is the new bankruptcy law of India
those assets, or that the company has no assets. or in The
seeksto consolidate
Ins
the existing framework by creating asingle law for
(2) Where apetitionis presented onthe groundthat it is just.tand eXCes of which.
and| bankruptcy.
insolvency
the company should be wound up, the Tribunal may refuse
of winding up, if it is of the opinion that some other to make
the petitioners and that they are acting unreasonably inremedy is an or equitable
that
derto
ComponentsoffInsolvency &Bankruptcy Code:
Insolvency and| Bankruptcy Board of India (1BB): It is an independent
company wound up instead of pursuing the other remedy.seeking to
Knowledge Point
have the avalable radministration and governance ofinsolvency Bankruptcy Code 2016.
bodyfora
Information Utilities (IU): It performs the function of authentication and
(ü) nrification of financial information. FirstIU registered with SEBl in NeSL i.e.
The Companies (Winding up) Rules, 2020, notified on 24thh
National E-Governance Services Limited.
from ist April, 2020are applicableto Winding up undert January, 2020,
With a view to simplify the process of
Winding Companies ,ef ective
rthe
up for Small Sized
Act, 2013 ( )Insolvency
Professional Agencies (IPAs): Insolvency Professionals (IPs)
regulated by IPAs such as Indian Institute of Insolvency Professionals of
terms of deposits unto 25 lakhs or outstanding
up to S0 crore or paid-up capital up
to1 crore), the
Company
loans up to 50 lakhs or (in
turnover
1CAL, ICSI institute of insolvency professionals and Insolvency Professional
Agency of Institute of Cost Accountants of India.
liquidation under Sec. 361 of the Companies Act, 2013 issummary procedure f
rules. This liguidation process is handled also covered by thesa NCLT and for
by the Central (iv) Adjudicating Authority (AA): AA for Corporate Persons isTribunal).
reduces the burden of NCLT. Government, therefore it individuals and partnership firms is DRT (i.e. Debt Recovery
in
Consequences of winding-up order: As per Insolvency and Bankruptcy Code, 2016 if Company commits default
naying its financial debts or operational debts of ?1 crore (as amended by notifica
The following consequences
order: will be there in case the Tribunal issues tion dated 24th March,2020 where threshold of default was increased from one
(1) The Tribunal shall
the insolvency appoint an official liquidator or a liquidator from
winding-up lakh to one crore) or more then financial creditors or operational creditors
Company itself may apply to NCLT Le., Adjudicating Authority (AA), for
resolve
or
initiation
ofCorporate insolvency resolution process (CIRP). This process is aimed to
Code, 2016. professionals registered under Insolvency and Bankruptcy amongst
the matters.
(2) The order of
winding-up shall operate in favour of all the Initiation of Corporate Insolvency Resolution Process may be by.
tributories.
(3) Winding-up order
creditors and con (1) FinancialCreditors under Sec. 7 of the Code:
fînancial debt
shall amount to discharge to Financial Creditorunder the Code means any person to whoma
company except when business of the companyofficers and employees of the includes a person to whom such debt has been legally assigned
is continued. is owed and
(4) The Tribunal may or transferred to.
(5) Winding-up appoint an Advisory Committee' to 8&9 of theCode:
advise the liquidator. (2) Operational Creditors under Secs.
creditors andCommittee (comprising official liquidator,
to assist and professional nominated by the Tribunal) nominee
a of secured Operational Creditor under the Code means a person to whom an operation
has been legally
whom such debt
monitor the liquidation shall be constituted al debt is owed and includes a person to
convener of the meetings of the proceedings. The liquidator shall be the assigned or transferred to.
winding-up committee.
 226 UNIT V. DIVIDENDS, AUDIT AND WINDING UP
CH. 14:WINDING UP
227
(3) Corporate Applicant under Sec.10of the Code: URE
14.2:STEPSINCIRP AS PER INSOLVENCY AND BANKRUPTCY CODE, 2016
Corporate Applicant under this Code means -
CIRP as per
(a) corporate debtor; or Stepsin Insolvency and Bankruptcy Code, 2016
(b) amember ofa corporate debtorwho is authorisedto make an
for the coporateinsolvency resolution process Company Commits
undert he

theoperatioNs conaspt luicaotinNa

document of the corporate debtor; or
(c) an individual who is incharge of managing Default in paying financial debt or operational debt
of the corporate debtor; or and (minimum amount of {1 Crore)
(d) a person who has the control and
of the corporate debtor.
supervision over the
NCLT may accept orreject the application within 14 days finan cia resourcaefsairs
l Financialcreditor (such
as or Operational creditor or Corporate debtor (ie., Company
accepts applicationthen interim resolution professional
of.Appointment
receivingit. of RescaseolutiONCTN
Committee of Creditors (CoC) shall be formed by IRP. (IRP) shall be
Ino
banks,financial institution
and homebuyers)
(such as suppliers,
workmen)
itself in default after passing of
shareholders resolution)
Professional (RP) shall be confirmed by CoC within 7
may confirm the appointment of IRP as RP or
appoint
Resolution professional shall prepare information some other
days of its ap
formation. o in
Coc.
ted, ile application for initiating insolvency resolution process with
Adjudicating Authority (AA) i.e., NCLT
containing relevant information for memorandum (iper.e. son
formulating resolution as RP.
approved by Committee of creditors. plan),.
Reappoisolundttiomocnuentment
shall be proposed and within 14 days NCLT
IRP to resolution plan
preparation and approval by CoC, the
be completed in time bound From plaofn
manner i.e., within 180 entire
process Accepts application Rejects application
allowed will not be moredays
by 90 days. However the time or
than 330extended is
16-8-2019). maximum
[inserted by the IBC (Amendment) days in any case
approved by CoC shall be filed with Act,: 2019 w.e.f. by
case)
approve the resolution plan and
revived. It is significant
adjudicating
to note thataccordingly
authority,
company ResoluNCLTtion
ie, NCLT.
shall|be
plan
mayand
maximum Appointment of Interim Reso
any lution Professional (IRP)

situations as order of liquidation is

explained in following discussion. passed only
under: afew restructured in
days
extended Formation of Committee of Appointment of RP to be confirmed
Situations when NCLT shall Pass an Order for 330 Creditors (CoC) within 7 days of formation of CoC
In the
following situations NCLT shall pass the
1. CoC does not order for
Liquidation of Resolution professional On rejection of

2. Rejection of
approve of the
resolution plan; or liquidation: or ximum
days to prepare memorandum resolution plan by
NCLT on technical
containing relevant information
3. The debtor resolution plan by NCLT,
submitted to it on 180 for formulating resolution plan grounds
(i.e, technical grounds; or Or

adversely affectedCompany) contravenes the agreed 90

(days
Within If CoC does not

to theresolution
person
Company and NCLT finds themakes an
charge toapplication
be
plan and
NCLT to liquidate
Resolution plan approved
by 66%** of creditors at the
approve resolution
plan
4. AA does not
receive a genuine; and meeting of Committee of Or
Note: The entire process resolution plan within the specified time Creditors On application by
been under frame. adversely affected
depicted step wise in FigureInsolvency
14.2.
and
Bankruptcy Code, 2016 has Resolution plan approved
NCLT
shall pass
person
Or
order for
by AA AA does not receive
liquidation a resolution plan
Company shall be within the specified
restructured and revived time frame.
 AND WINDING UD CH. 14:WINDING UP
UNITV:DIVIDENDS, AUDIT 229
228
14.2: Home VOLUNTARY WINDING
1. Explanation for*in the Diagram buyers not \es UP (UNDER SEC. 59 OF IBC) AND
orNote:
not lessthan10% oftotal number of allottees, whichever is less,
to NCLT in case of
default. ,are
thaN AS PER
PROCESS
REGULATIONS, 2017 W.E.F. APRIL 2017
INSOLVENCY AND
make an application 14,2:66%(value of l0% SSUED
BY BANKRUPTCY BOARD OF INDIA
in the Diagram
2, Explanation for**creditors) by lBC Code (Second
the fcAmendment
reditors) )
ass
for 75% (value of
w.re.f. 6/6/2018.
Details of Corporate InsoBvency
Resolution
(CIRP) cases as on September 30, 2023 Process su bstiued hapterVofthe Insolvency and Bankruptcy Code, 2016 deals with voluntary
of corporate persons. Sec..59(1) of code states that a corporate person
iguvidation,

s to liquidate itself
intends voluntarily and has not committed any default may
aitiatevoluntaryliguidation proceedings as per the conditions and procedural
who
Status asprescribed dby the Insolvency and
Admitted No. of Cases eguirements
Bankruptcy Board of India (IBBI).
provisionsof Secs. 35 (powers and duties of liquidator) to 53
Closure bv Appeal/Review/Settled
7058 and Chapter VII (offences and (distribution
assets) of Chapter III
The,
Closure by withdrawal
1053 voluntary
of
penalties) shall apply to
vliquidation proceedings for corporate persons with such modifications
Resolution Plan Approved 947 be necessary.
may
Liquidation order passed 808 as
Wherethe affairs of corporatepersons have been completely wound up and its
Ongoing CIRP cases 2249 assetscompletely liquidated, the liquidator shall make an application to the AA
Source: The Quarterly Newsletter of Insolvency and
(1BBI), July-Sept. 2023. Vol. 28 Bankruptcy Board of2001India ie,NCLT
forthe dissolution of such corporate persons.

Case Law: Regulations Issued by IBBI w.e.f. 1st April, 2017 (amended upto
16.09.2022)
Monotrone Leasing Pvt Ltd. v. Pm Cold Storage Pvt Ltd.
NCLAT, (New Delhi Bench) comprising Justice
Venugopalan
Srivastava) heldthat it is the'determination of default'
debt' which is relevant for acceptance or rejection of'rather
(16/07/2020)Singh,
M, V. P.
than Alok
LCommencement of Liquidation
Initiation of Liquidation
Liquidation Process: Once the liquidation order is
process shall start. For the purposes of liquidation, the
claims under
passed by
"inability
Sec.
NCLT,
7 to
of 1BC.pay 1. Liquidation proceedings of acorporate person shall meet the following con
ditions, namely:
estate of Assets which will be
Debtor. The Liquidator shall called'
Liquidator liquidation
Liquidation Estate'in relationtot shall form an (a) Declaration of solvency: A declaration of solvency from majority of
constitute the
within 60days from liquidation
assets, value of claim is
'Stakeholders
commencement Corport aete'e
Consultation Commi
date. Liquidator takes charoe af
the directors of the company [under Sec. 59(3) of IBC] verified by an
affidavit stating that:
is made by the determined, creditors are paid off and finally () they havemade afulinquiry into the affairs ofthe corporate person
Corporate DebtorLiquidator to NCLT for
shall be dissolved fromdissolution. The AA shall order
the date of that order.
application
that the and they have formed an opinion that either the corporate person
order shall be forwarded to the The copy of the has no debt or that it will be able to pay its debts in full from the
within seven days of order. authority with which Corporate Debtoris registered proceeds of assets to be sold in the liquidation; and
(i) the corporate person is not beingliquidated to defraud any person;
(b) the declaration shall be accompanied with the following documents,
namely:
() audited financial statements and record of business operations of
the corporate person for the previous twoyears or for the period
since its incorporation, whichever is later;
*BBI is an independent body for the administration and governance of Insolvency and Bankruptcy Code,
2016. It was established on 1st October, 2016. Source: ibbi.govin
 IINIT VDIVIDENDS, AUDIT AND WINDING UD CH. 14:WINDING UP 231
230

(n) areport of the valuation of the assets of the Functionssof

Powersand the Liquidator
any prepared by a registered valuer:
cOrporate
(c) within tour wecks of a declaration
() Passing of special resolution:
of
sol
a
vency, theree
shall be:,
bers of the company in a general special resolution
meeting requiring i he
person to be liquidated voluntarily and t
nerson, p o r t i n g

liquidator,

se
shallprepare
preliminaryReport;
and submit:

Report;
anhe
appointing corporatNeern
Status
Drofessional to act as the liquidator: or Annual.

fconsultations with stakeholders; and

Imeet1eventing:requiringnstoheney
2
u) Onexpiry ofperiod or o Minutes of
members of the companyoccurrence
in a general
ofan
|Reportin the manner specified under these Regulations.

adreoscoulmuteionntsofth.
Fnal
pany to be liquidated publicAnnouncementbythe Liquidator
of its duration, if any, voluntarily
as aresult 4
of
constitutionalexpiry percioomd
fixed by its
the occurrence of
any event in of the Liquidator shall make a public announcement in Form Aof Schedule I
documents provide that the respect of which the or on
. The
withinfive days from his appointment.
corporate
as the case may be, and
act as the liquidator: an person
appointing insolvency shall be
constidiustioolvnead, 2The
public.announcementshall:
call upon stakeholders to submit their claims as on the liquidation
Provided that the
corporate person owes any debt to
Creditors representing two-thirds in value of the
person shall approve (1.e. debt oftthe
profeanys ional (a) commencement

(b) provide
date: and

thelastcdatefor submission of claim, which shall be thirty days

the approval of the
passed under sub-clause (c) within
credi tors) person, from the liquidation commencement date.
seven the corporate
resoluretisooln.ution
2. The corporate person shall notify the days of such 2The announcement shall
be published:
the resolution to Registrar andthe Board (c) In one English and one regional language newspaper
resolution or the liquidate the corporate person within
3.
subsequent
Subject to approval of the approval the creditors, as the case
by (i.e.IBBI)
seven days ofabout
such (b) on the website, if any, of the corporate person; and
creditors, the may be, (c) on thewebsite ifany, designated by the Board (ie., IBBI) for this purpose
deemedtoliquidation
of acorporate person shall be
passing of the resolution. proceedings
have commenced in
from the respect
da IV. Claims
Effect of Liquidation date of
Proof of Claim
1. The
corporate person shall from the Aperson who claims to be stakeholder,
shall prove his claim for debt or dues to
business except as far liquidation
to carry on its
up of its business as requiredcommencement date
for the beneficial ceaco him,including interest, if any, as on the
liquidation commencement date.

2. The corporate winding () Claims by operational creditors

person shall continue to exist until it is
dissolved. (i) Claims by financial creditors
II.
Appointment and Remuneration of Liquidator (i) Claims by workmen and employees
Appointment of Liquidator (iv) Claim by other stakeholder.
1. An by secured creditors
insolvency professional
shall not be appointed by a (V) Proving security interest
he is not eligible under
Regulation 6. corporate person if V. Realisation of Assets
2. Theresolution assets of the corpo
passed,shall contain the terms and liquidator may value and sell the corporate person in
1, Manner of sale: The
ment of the liquidator,
including the remunerationconditions of the appoint and mode approved by the
rate person in the manner statute.
3. The Insolvency payable to him. compliance with provision. If any, inthe applicable
Professional shallintimate the IBBlabout his
within seven days of his
appointment. appointment
 CH. 14:WINDING UP 233
232
IINIT V DIVDENDS, AUDIT AND WINDING UP
2. concepts under this scheme:
Recovery monies
of
allassets of anddues due:1Theliquidator
new
to tlhe corporale shall endeavort resolution plan: It rneans a resolution plan provided by the cor-
person in a timeo recover
Some
Base
maximization of value of the stakeholders. poratedebtor.
3. Liqudator to realize unpaid capital contribution.
VI.Proceceds of
bound
maanndreerat tu Preliminaryinformation memorandum:It means a memorandum
submitted by the corporate
debtor.
Liquidation and
1. Allmoney to be paid in to bank Distribution of Procecd Pre-packagediinsolvency commencement date: It means the date of
account + admission of an application for initiating the pre-packaged insolvency
2. Completion of liquidation: The liquidator shall Authority.
resolution process by the Adjudicating
lhquidation process of the
dation commencement date.corporate person withinendeavor
270 to Application the Scheme:
than 12 months, In case
liquidation
thcliquidator present an annual process days from complheeteIiuiihte 2. Corporate debtor classified as MSMEs under Sec. 7
of the Micro. Small
progress in liquidation. shall continues for more and Medium Enterprises Development Act, 2006 can
make an applica
3. Final Report
(o) On completion of the liquidation process, the
the Final report.
statusreportindicatino
liquidator shall
tion for Pre-packaged insolvency

rupees 10lakhs and notbe more

resolution.
TheCentral Government has specified minimum
than 1 crore
to the pre-packaged insolvency resolution
amount of default of
rupees,
process.
for matters relating
(b) The liquidator shall send
and the Board (i.e., IBBI). the Final Report forthwith, to
prepare Application to NCLT is made after proposing and approving the name of
(c) the Registrar 3.
insolvency professional along with () declaration by the majority of directors
Theliquidatorshall submitthe
(i.e, NCLT) along with the
Final Report to the
Adjudicating Author. members of acorporate debtor approving the
with; (i) specialresolution by
that necessary provisions have been complied filing of application;(ii) base
The NCLT shall on an application under Sec. 59(7) may be specified.
application filed resolution plan and (iv) such other documents as
corporate person shall be dissolved frombythethedateliquidator pass an
of that order andorder that th aperiod
within ap of 14 days ofthe application
person shallbe dissolved the corporat 4. Adjudicating Authority (AA) shall
accordingly. may admit it or reject it.
1668 Cases of Voluntary process shall be completed within 120 days
Liquidation were initiated till Sept. 30, 2023 5. If application is accepted, the commencement date.
Status of Liquidation
No. of Liquidation from pre-packaged insolvency application
Initiated approved by the CoCwithin 90 days,
1668
6. Where no resolution plan is pre-packaged insolvency resolution pro
Final Report submitted shall be filed for termination of the
1179
Withdrawn Cess.
shall approve
approved by CoC, AA on satisfaction
7. Where resolution plan is
19
Ongoing 54N shall be passed.
Otherwise order as per Sec.
470 it within 30 days.
Source: The Quarterly Newsletter of Insolvency and applications have been submitted
under PPIRP.
(1BBI), July-Sept. 2023, Vol. 28 Bankruptcy Board of India As on September 30, 2023,sixwithdrawn. Resolution Plan has been approved in
Note: 644
dissolution orders passed so far. Out of which one has been
ongoing.
three cases and two cases are Vol.23
Note: Provisions regarding NCLT, Newsletter, lBBI/uly-Sept, 2023,
discussed in Chapter 2. NCLAT and Special Courts have already been Source - The quarterly

Pre-Packaged Insolvency Resolution Plan for MSMES

The Insolvency and Bankruptcy Code
(Amendment) Act, 2021 came into on 4/4/2021.
It has provided for
Pre-Packaged Insolvency Resolution Plan (PPIRP)force
for MSMEs.
Pre-packaged insolvency resolution process at a glance:
234 UNIT V:DIVIDENDS, AUDIT AND WINDING UP

QUESTIONS
Q1. What is the diference between winding up and dissolution2
Q2. Explain the winding up of acompany. Discuss the grounds under which: a
can be wound up by the Tribunal. (DU, B.Com. 2019, 2022)
Q3. Explain the provisions relating to voluntary winding up of a company. comgaty
Q4. Explain DeclarationofSolvency'under voluntary winding up. Is it
the approvalof creditors in voluntary winding up of acompany? necessary dotin
to
Q5. Who may file apetition for winding up? Discuss the grounds under whi
whichh a
-Compaty
can be wound up by the NCLT. (DU,B.Com. 2023,Modified)
Q6. Explain winding up of a company on just andequitable' grounds.(DU.
Q7. Discuss the grounds and consequences of voluntary
winding up of a B.Com.2019
(DU,B.Com. (H) 2023)
Q8. Write anote on PPIRP.
company.

PRACTICAL PROBLEM
Q1 There are only two members of acompany. They
are
pany. Both ofthemare not on speaking terms. Can the also the directors of the Com.
ground? Give reasons. company be wound up onthis
(Hint: Yes, it is 'just and equitable' to order winding-up when
management). there is deadlockin
 ANNEXURE 1: LIST OF ABBREVIATIONS

S No. Term
1. AoA Articles of Association

2. CIN Corporate ldentification Number

3. CDSL Central Depository Services Limited
4. CRC Central Registration Centre
5. DIN Director ldentification Number
6. Demat Dematerialization
7. IBB! Insolvency and Bankruptcy Board of India
8. IBC Insolvency and Bankruptcy Code
9. IEPF Investor Education and Protection Fund
10. IEPFA Investor Education and Protection Fund Authority
11.LLP Limited Liability Partnership
12. MCA Ministry of Corporate Affairs
13. MoA Memorandum of Association
14. MSME Micro,Small &Medium Enterprises
15. NCLAT National Company Law Appellate Tribunal
16. NCLT National Company Law Tribunal
17. NFRA National Financial Reporting Authority
18.| NSDL National Securities Depository Limited
19. NSWS National Single Window System
20. OLs Official Liquidators
21. OPC One Person Company
22. PAN Permanent Account Number
23. RD Regional Director
24. RoCs
Registrar of Companies
25. SEBI Securities and Exchange Board of India
26. SFIO Serious Fraud Investigation Office
237
 and
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as &
Context

241
242 ANNEXURE 2: PRACTICAL EXERCISES

2. Ashbury Railway Carriage Co. Ltd. v. Riche

3. Rex v. Kylsant

Context
1. Members don't have any insurable interest in the property of
the company.
Landmarkkludgmea
2. Doctrine of indoor
management
3. Promoter can make profit but no
secret profit
4. Remedies for mis-statement in
toan original allottee of shares
Prospectus are available only

Findout more
"Fundoo" is IEPFA's mascot for financial
(launched in October, 2022) awareness
 Q2. a1. Durathour
ion:3
s
"All
questions
(c) (b) (a) "The(c) (b) (a)
(b) (a)
Stateth(ec) its Write "A
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e the of breach
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of of contract profits altogethermarks)
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company.
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of explain by the laws.
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company.
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where which
mem of and but
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246 B.COM. HONS. (CBCS) -2018 SEMESTER-I)

(a) Acompany was in financial difficulties and the

representing 95% ofthesshares were willingto majority
provide the:
if remaining shareholdersamounting to 5% would
the majority shareholders. However, the minority sell
to sell their shares to majority shareholders, but
sh ar
sharecompany
the t
its Articles so as to authorize the majority shareholders
ehso
hld
ar
holders refusee
theirshare
ca
er
p
ssital t

shares of minority shareholders compulsorily upon

the minority shareholders bound by this alteration? certain
Explain purtcehasrmsael.teredtArhee
(b) Write anote on 'Deemed Prospectus.
(c) Acompany wantsto shift its registered office ffrom
both in the state of Tamil Nadu for administrative Chennai Coimbatore
to
provisions the company has tocomply with under the
2013 for shifting its registered office.
convenience.
Companies WhActat ,
Q3. (a) What do you understand by forfeiture of shares? Explain
the
ments of a valid forfeiture of shares by a company.
(b) What are the conditions to be fulfilled by a
require-
company that
issue 'sweat equity shares' under the Companies Act, 2013?
(c) Why does the Companies Act allowa company to
proposes to
buy back its sharec)
Which sources of funds can be used by the company for this purDose?
OR
(a) What are the bonus shares? State the
conditions that must be complied
with before a company makes a bonus issue.
(b) What are the sources of money credited to the
'Investor Education and
Protection Fund'?
Q4. (a) Write a note on voting by electronic means'.
(b) Discuss the provisions of the Companies Act, 2013
tors Identification Number. regarding the Direc
(c) Under what circumstances a
director is deemed to have vacated the
office of directorship.
OR
(a) Write a note on Woman Director.
(b) Who is proxy? Is it essential for a proxy to be a
Ifa proxy isappointed by a shareholder but in thememberof the company?
alsocasts his vote, whose vote will be meeting shareholder
considered valid and why?
(c) State the provisions of the
Companies Act, 2013 with respect to quali
fication and disqualification of Directors.
 B.COM. HONS. (CBCS)- 2018 SEMESTER -I| 247

dematerialization ofof physical shares under the

(a) What is the process of rematerialised?
Q5 Depository System? Can these be
OR
rotate its Auditors? What are the
(a) Is it mandatory for every company to regard to Rotation of Auditors?
Drovisions of the Companies Act with
equitable' grounds.
(b) Explain winding-up of acompany on 'just and
 7B (b)
estatementbringing
isstatement the circum. lies shares
was andsubscribeconsidered provisions Articles the
:
Marks company contract with really promoters
statement and
subscribed andoutsiders
above: complythe to legal
Maximuma what be the Association
ofpersonality
that these discuss promised
extent? see
company theunder
a agent,
2019* is
Discuss
the
stheto
regard
to
it andto
companycollectivelyExplain holders,
marks) on forwhat veil persons". have the managing company
'Comment personality of
securities"?
-(CBCS)I-Semester
l members." with Company. to
necessary corporate a
of
of
relatives
theyprospectus
Memorandum
share der NEP-2020
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of prospectus a
promoters by the
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that However,
carry it Act? corporate securities
Hons. its laws.
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OR Is
company?
Companies
the
lifts
and
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of
on
company prescribe
questionsfrom areaof the lakh.Can neai1by"buy effect
attribute court "Illegal
B.Com. case position
distinct contractson
of
concept
the
of letters only.
page
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their
of
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a syllabus
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the Rs. of
fundamental the where on cover bold lakh
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registered
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are Red OR
the meeting ordinary the ofthe of NCLT.
Auditor?
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in
OR to company through each. Newto circumstances
provisions petition
(CRCS) presumed importance
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of
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provisions
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of its
between
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reference the depository?
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HONS a examples on on a
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notice theof note notefile
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note it? Explain.
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faulty suitable
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-
 B.COM. (P) (CBCS) - 2019 SEMESTER - I| 251

What do you mean by buy-back of shares? Briefly state the provisions

B.Com. (P) (CBCS)-2019* Q3.
(a)
of Companies Act with regard to buy-back of shares.
Semester | (h How are the Auditors of the company appointed?
OR
ta What are the Sweat equity shares? Discuss the
issue of Sweat equity shares.
provisions regarding
Duration:3 hours
(Attempt all five questions. All questions carry Maximum Marks .15
equal marks)
(b) What is the legal position of directors of the company?
(c) Write a note on Shelf Prospectus.
Q.1. (a) The entity of company is separate from its members. (
statement with relevant cases.
(b) Define Private Company. State the process of Comment on the .4. (a) When andl by whom may
(b) Write a note on E-voting.
Extraordinary General Meeting be called?
Company into aPublic Company.
(c) What do you mean by converting Private
Preliminary Contract? State its
OR
(a) Explain the provisions relating to proxy.
OR validity. (b) Explain the legal
(a) Under what
circumstances may the court companies.
provisions regarding declaration of dividend by the
entity of a company? disregard
(b) What do you
mean by One person
enjoyed by one person company? Company? What are
separate legal 0.5. (a) Explain the powers of
pany.
Board of Directors to appoint directors of a com
the
(c) Few friends
and sold the purchased a property. Later on the
property tothe company at huge profitspromoted a
privileges (b) What are the just and
equitable grounds under which the Tribunal may
order compulsory winding up of a company.
Q 2. (a) disclosure. Can the company receive the without companye OR
What are the profits irom the
of association?limitations on the power of a
company to alterpromotere)
its articlee
cadequat Write short notes on any three of the
(a) National following:
(b) Papplied for
200 shares of a Company
(b) Producer Company
Law Tribunal (NCLT)
taining untrue statements. company on the basis of
untrue statement in the After the allotment of shares, he prospectus
con (c) Independent Director
against the
(c) Discuss the
company? prospectus.What discovered
remedies are available to p (d) Investor Education and Protection Fund.
steps in online
(a) registration
of the
company.
Explain the Doctrine of OR
(b) Explain Indoor
tered the provision of the Management. State its
office from one city to Companies Act exceptions.
(c)
Distinguish another within regarding shifting of regis
questions covered are as perbetween Rights shares and Bonus same state.
"All
the
syllabus prescribed under shares.
250 NEP-2020.
 *All Q2. Duration:3
Q. hours
1.
questions
(c) (b) (a) (c) (b) (a) (C) State(b)
"A (a)
covered misconduct. prospectus?
ultimately
solicitor. the The What Explainwhich
misleading transactions. Explainmotes." Write
"A statement.
examinethe availablepersonality
circumstances
Definethe Explainthe of
promoter promoter
company articles a
are is producer aExplain exemptionsprivate
note to a
as
sued the
X misleading
the the
private of (Al B.
per
syllabus
the actedcompany a
company
Xand
of doctrine concept stands on remains
the illegal
concept
a can
where
court
company. questions om.
prescribed company
should
as prospectus?
company
of
statement in
of association a
privileges
liable
company.
company and
Semester |Hons.
-
solicitor ultra producer fiduciary corporate carry
252
under
ceased
for
not
contained
be
may
vires. mentioning pre-incorporation
OR for nder
equal
(C8CS)-
tofor be relation of disregard/disrespect
corporate the
this removed company.
formed. Companies 2013.
Act,
NEP-2020. employ the that What Discuss persons.
personality Marks)
breach.
company X are towards
his
2022*
him fromshould tconsequential
he State Maximum
Wil and the effects
he for the be contracts"
consequences the company a and
succeed?
engaged some office the objectives
of discuss Marks
solicitor
except ultra duties.
another
time. he Criticaly
vires nre the 78:
But for for of for

oA Q3.
Q.5.
(al (c) (b) "Divdend(a) (h (a) (c) (b) (a)
exceptions? its
(b) (a) (b) ( a) (b) (a )
Explain director.
Write proxy.
(c)
directorship?
ExplainExplain. "A
(b)
Differentiate
office of
Under
plain Why itto
? Discuss issue "Memor
What ation.aof
Memorandum
AssociDefine ndum
explain
and th Explain
e
State faulty "sweat are and
rematerialized?What thison compulsorily
What pointment
auditors? of NCLT.by
What the does the the
is is are the note a the notice
what legal
Companies once statutory distinguish the rullaied rv. B.COM.
ground?
the meant t he equity
conditions
the
circumstances rules circumstances between of HONS.
process provision
on of provisions declared Association
by provisions "voting with the shares" procedure
alteration down (CBCS)
Discuss.
"inability Ac t provisions
meeting Right to
be Red in
relating allow cannot OR underProspectus
of regard OR
of under by
of Herring -
dematerialization electronic Companies a
Shares fulfilled t h e of is Royal 2022
to OR the OR
pay Companies to can director a beregarding
Companies charter a British SEMESTER-I|
which appointment be company to revoked."
debts"? and the
means." fatal is by
a
a Act Bonus buy of Bank
of Can Act, company regarding todeemed to Are reduction company inthe
the back buy Act?
shares? a ofvalidity Shares. and company." Turquand.
company 2013 to ofback there
Can may small have securities. in that Shelf object
regarding appointment shareholder's its any share
these be be of vacated shares?exceptions Prospectus.
proposes to
a Comment
clause What
wound would meeting." capital. 253
may the
the Ex are
be up ap up of of
 B.COM. (P) (CBCS) -2022 SEMESTER -|1
255
OR

(a) How
can directors of a company be removed?
Explain provisions under the Companies Act, 2013 relating to Annual
B.(om. (P) (CBS) -2022* (b) General Meetings.
Semester -|l Distinguish between ordinary resolution and special resolution. Give
suitable example of each.
(h) Explain the meaning of dividend. What are the rules regarding
payment of dividends?
Duration:3 hours OR

Q1. (a) What do you

mean by lifting of the
Maximum Marks :7s
(Attempt all questions. Allquestions carry equal marks) (a) Directors owe aduty of loyalty and care in performing their duties. Do
you agree? Explain.
statutory provisions under which the corporate veil?
may be lifted.
(b) Define aOne-Person
corporate veil Explain
of a companythe
(h) Explain the requisites of avalid general meeting.
(c) What are the provisions of the Companies Act, 2013 regarding the ap
Company. How can it be pointment of auditor?
company? converted into a private Q.5. (a) Discuss the grounds under which a company can be wound up by the
(c) What are the
provisions of law and the procedure for shif:
NCLT.
registered office from one state to another.
(b) What is adepository system? How does it function?
OR
(c) What do you mean by Quorum of a meeting? State the consequences if
(a) Define Company. State its
(b) Explain the law characteristics. quorum is not present in a company meeting.
relating to
dum of Association. alteration Objects Clause of Memoran
of OR

(c) Define Producer (a) Explain the composition and powers of National Company Law
Q2. (a) Company and explain the objects for which it is Tribunal.
Discuss the statutory provisions formed (b) Write a note on:
(b) "A company cannot regarding'Reduction
justify breach of contract by
of Association". Comment. a
of Share Capital!
() Woman director
altering its Articles
(c) What do you mean by a (in) Alternate director
misleading prospectus? What are the effects of
misstatement ina prospectus? (c) Explain the provisions of the Companies Act, 2013 regarding "buy-back
of securities"
OR
(a) Explain Turquand's rule. Are there any
(b)
Differentiate between Right Shares andexceptions to it?
Bonus Shares.
(c) Distinguish
Q.3. (a) Write a notebetween Shelf prospectus and Red
on 'Sweat equity Herring prospectus.
(b) Can directors be shares.
appointed by the Board? If so, under what
*Allquestions covered are as
per syllabus
prescribed under NEP-2020.
situations?
254
 (UGCF)- AUGUST 2023 SEMESTER -I|
B.COM.(HONS.)(U 257

BonusShares? State the condition that must be complied

(a) What are the makes a bonus 0ssue
03. with before a company
and equitable grounds.
Explain winding up of a company on just
B.(om. (Hons.) (UGCF) -Auqust 2023 (b)
Discussthe
provisions of Companies Act, 2013 regarding Directors
ldentification Number.
Semester -l OR

(a)
Differentiate between Managing Director and Whole Time Director.
does the CompaniesSAct allow a company to buy-back its securi-
(b) *WhyDiscuss
Q1. (a) "The property of a company is the the conditions for buy-back.
on the statement with the property of its
help of the suitable case members"
ties?
.what is Dividend? Discuss the provisions relating to the payment of
(b) Write a note on Associate
(c) Whois a
Company.
lawS

Promoter? Does he stand in a fiduciary relation

company he promotes? To what
Comment Q.4. (a)
Dividend.
Whattiis E-Voting? Explain theelegalprovisions regarding pol.
thetowards theof
fiduciary duty extent is he liable for (b) Whatis aDepository? What are the benefits of using Depository system
towards
the company?
(a)
OR breach for holding securities in a company?
(c Explain the meaning of term "Allotment of shares". Explain the legal
Explain the concept of corporate
stances where the courts lift the personality and discuss the provisions regarding allotment of shares.
Corporate Veil to see what
realcilrycum-
behind. OR
(b) Write a note on lies (a) Explain the forfeiture of shares. What are the requirements of avalid
nies Act relating Producer Company. Explain the
registration of provisions
to formation and of forfeiture of shares by a company?
(c) The validity of the Producer Compa-
grounds whatsoever.Incorporation
0.2. (a) The power toalter the
Company.
Explain. Certificate cannot be disputed on a
(b) Distinguish between Share v. Stock.
(c) Define "call" and discuss the essential requirements of a Valid Cal.

wide yet it is subject to articles

a large conferred
by the Companies Act is
very
0.5. (a) Write a note on Dematerialisation of securities.
(b) Write a short note on number of limitations. (b) "A faulty nature of a meeting can be fatal to validating of a meeting"
(c) Explain the Independent Director. Explain.
provisions
the Name Clause. of Companies Act, 2013
regarding alteration of
(c) Write a note on National Company Law Tribunal.
OR
OR (a) Explain the process of voluntary liquidation of acompany under Insol
(a) Explain the Doctrine of Indoor vency and Bankruptcy Code, 2016.
to the Doctrine of Management. State the exception if any
Indoor Management. (b) Explainprovisions regarding Proxy under Companies Act, 2013.
(b) Define a private
Act, 2013 for companyofand state the provisions under (c) Explain provisions of Companies Act, 2013 regarding removal of Direc
conversion a private company into a publicCompanies
tors.
(c) Explain different kinds of company.
resolutions passed at the General Meeting
shareholders, citing appropriate of
example of each.
256

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