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➢ Winding Up by Court
Cases
1. Special Resolution
Company can decide to wind up by Special
Resolution
Court is not bound to, discretionary:
Opposed to public interest
Opposed to Company’s Interest
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3. Failure to Commence Business
Failed to commence business within one year
Failed to carry on business for one year
Discretionary -> only when no intention to carry on
business
If temporary -> no direction
4. Reduction in Membership
Public Company -> below 7
Private Company -> below 2
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b) Loss of Subscription
Main object failed
Should Not be temporary difficulty
c) Losses
When Company can’t carry on business
except at losses
d) Oppression of Minority
Principle shareholders have adopted an
aggressive, oppressive or squeezing policy
towards minority
e) Fraudulent Purpose
Company has been conceived and brought
forth in fraud or illegal purpose
f) Incorporated or Quasi Partnership
When the nature of Company is as above
g) Public Interest
Against, then allowed
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➢ Petition where Company under Voluntary Winding Up
(S440)
Conversion of voluntary Winding Up into Winding Up
by Court
Petition for Winding Up by Court my be presented
where Company is already under
a) Voluntary liquidation
b) Under supervision of Court
Petition to be presented
a) Company
b) Contributory
c) Registrar
d) Creditor
e) Central Government
f) Official Liquidator
Statement of Affairs
Within 21 days of order of Winding Up or
appointment of Official Liquidator, statement of
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affairs to be submitted by Company to Official
Liquidator
Statement to be verified by
a) Director
b) Manager
c) Secretary
d) Chief Officer
e) Such other person as Court directs
Particulars to be contained
i. Assets of Company – cash in hand and at Bank
and negotiable securities
ii. Debts and liabilities
iii. Details of creditors
iv. Details of debts due to Company
v. Required information
Features
a) 12 members
b) Right to inspect accounts of Official Liquidator
c) Member to resign by notice in writing to Official
Liquidator
d) Quorum 1/3 of the members or 2, whichever is higher
e) Office to be vacant
i. Adjudged insolvent
ii. Compounding or arrangement with creditors
iii. Absent from 5 consecutive meetings without leave
of absence
f) Meeting to be called by Official Liquidator or by
themselves
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➢ General Power of Court
1. Power to stay Winding Up (S466)
On application of Official Liquidator, creditor or
contributory
Sufficient reason
2. Settlement of list of contributories (S467)
That is, the list of assets and liabilities
3. Adjustment of rights of contributories (S475)
And then distribute surplus among persons entitled to
it
4. Power to arrest absconding contributory (S479)
Arrest and seize
5. Saving of existing powers (S480)
General powers of Court for recovery also applicable
6. The right of set off (S469)
Any other dues to be set off
Limited right of set off in following cases
i. Unlimited Company – only against money due to
him from Company or independent dealing, that is,
of debt of contributory
ii. Limited Company – those whose liability is
unlimited same right as above
iii. Any other Company – set off against money due
on call
7. Delivery of property (S468)
Court to call for information from person or persons
Private enquiry can be held
8. Power to order deposit in the Reserve Bank (S471)
All moneys received to be deposited in public account
of Reserve Bank
9. Power to exclude creditors (S474)
Can exclude those creditors who are entitled to benefits
10. Public Examination (S478)
In case of report of fraud by Official Liquidator to Court
– specific allegation – not an accusation
Pre-requisite conditions
i. Official Liquidator has made further report
ii. Such report contains a finding of fraud
iii. Finding of fraud against the person whose
examination is sought
iv. Individual is one who has taken part in promotion
of Company and is officer of Company