THE LEGAL BRIDGE

Judiciary & Law Notes Series

THE COMPANIES ACT, 2013

CHAPTER XX — Part I

Winding Up by the Tribunal

Sections 270–303

For Judicial Service Aspirants & Law Students

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Grounds • Petition • Company Liquidator • Dissolution

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Chapter XX Part I — Winding Up by the Tribunal

Winding up is the process by which a company is dissolved — its affairs wound down, its assets collected and realised, its creditors paid off, any surplus distributed to shareholders, and finally its corporate existence extinguished. Chapter XX of the Companies Act, 2013 (Sections 270 to 365) governs this process. It originally provided for two modes — winding up by the Tribunal (Part I) and voluntary winding up (Part II) — but Part II was omitted by the Insolvency and Bankruptcy Code, 2016 (effective 15 November 2016), so voluntary winding up is now governed by Section 59 of the IBC.

Part I — Sections 270 to 303 — deals with compulsory winding up by the NCLT. With the enactment of the IBC, 2016, winding up on the ground of 'inability to pay debts' has been shifted to the IBC framework (corporate insolvency resolution process under Sections 7, 9, 10 of the IBC). What remains under Part I are the other grounds under Section 271 — special resolution for winding up, acts prejudicial to sovereignty, fraudulent conduct, failure to file returns for 5 years, and 'just and equitable' winding up.

Section 270 — Winding Up of a Company

The winding up of a company may be either — (a) by the Tribunal; or (b) voluntary. [Note: Voluntary winding up under the 2013 Act (Part II, Sections 304–323) has been omitted with effect from 15 November 2016; governed instead by Section 59 of the IBC, 2016.]

Section 271 — Circumstances in which Company may be Wound Up by Tribunal

A company may, on a petition under section 272, be wound up by the Tribunal —

1. If the company has, by special resolution, resolved that the company be wound up by the Tribunal;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;If on an application made by the Registrar or any other person authorised by the Central Government by notification under this Act, the Tribunal is of the opinion that the affairs of the company have been conducted in a fraudulent manner or the company was formed for fraudulent and unlawful purpose or the persons concerned in the formation or management of its affairs have been guilty of fraud, misfeasance, or misconduct in connection therewith and that it is proper that the company be wound up;If the company has made a default in filing with the Registrar its financial statements or annual returns for immediately preceding five consecutive financial years; orIf the Tribunal is of the opinion that it is just and equitable that the company should be wound up.

Note: Clause (a) — the 'inability to pay debts' ground — has been omitted by the Insolvency and Bankruptcy Code, 2016 (with effect from 15 November 2016). Proceedings on that ground now lie under the IBC.

'Just and Equitable' Ground — Section 271(e)

The 'just and equitable' ground is the most discretionary and most examined of the winding-up grounds. Courts have held that it is not confined to the circumstances specified in the other clauses but is a genuinely residual head. The leading categories in which a just and equitable winding up has been granted include:

• Loss of substratum — where the very object for which the company was formed has failed or become impossible. Example: German Date Coffee Co., Re (1882);
• Deadlock in management — where the company's Board or shareholders are at an irretrievable deadlock. Example: Yenidje Tobacco Co. Ltd., Re (1916);
• Loss of mutual confidence in a quasi-partnership — where the company, though a registered corporation, was run on personal relationships akin to a partnership and that trust has broken down. Example: Ebrahimi v. Westbourne Galleries Ltd. (1972) AC 360;
• Fraudulent or illegal purpose — where the company has been set up or is being run for unlawful purposes;
• Oppression of minority where no other remedy is adequate — though ordinarily covered by Chapter XVI, if the conduct amounts to complete denial of rights, winding up may be just and equitable.

Section 272 — Petition for Winding Up

Subject to the provisions of this section, a petition to the Tribunal for the winding up of a company shall be presented by —

1. The company;Any contributory or contributories;All or any of the persons specified in clauses (a) and (b);The Registrar;Any person authorised by the Central Government in that behalf; orIn a case falling under clause (b) of section 271, by the Central Government or a State Government.

A contributory is defined in Section 2(26) — every person liable to contribute towards the assets of the company in the event of its being wound up, including the holder of fully paid-up shares. A contributory shall be entitled to present a petition for winding up of 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 shareholders after the satisfaction of its liabilities. The Registrar may present a petition for winding up under Section 271 only after obtaining sanction of the Central Government and on the company being afforded a reasonable opportunity of making representations.

Section 273 — Powers of Tribunal

The Tribunal may, on receipt of a petition for winding up under section 272, pass any of the following orders, namely: —

1. Dismiss it, with or without costs;Make any interim order as it thinks fit;Appoint a provisional liquidator of the company till the making of a winding-up order;Make an order for the winding up of the company with or without costs; orAny other order as it thinks fit.

Provided that an order under sub-clause (a), (b), (c), or (e) shall be made within ninety days from the date of presentation of the petition; and provided further that before appointing a provisional liquidator under sub-clause (c), the Tribunal shall give notice to the company and afford a reasonable opportunity to it to make its representations, if any, unless for special reasons to be recorded in writing, the Tribunal thinks fit to dispense with such notice.

Section 274 — Directions for Filing Statement of Affairs

Where a petition for winding up is filed before the Tribunal by any person other than the company, the Tribunal shall, if satisfied that a prima facie case for winding up of the company is made out, by an order direct the company to file its objections along with a statement of its affairs within 30 days of the order in such form and in such manner as may be prescribed. The Tribunal may extend the period by another 30 days in deserving circumstances.

A company, which fails to file the statement of affairs as referred to in sub-section (1), shall forfeit the right to oppose the petition and such directors and officers of the company as found responsible for such non-compliance, shall be liable for punishment under sub-section (4).

Section 275 — Company Liquidators and their Appointments

For the purposes of winding up of a company by the Tribunal, the Tribunal at the time of the passing of the order of winding up, shall appoint an Official Liquidator or a liquidator from the panel maintained under sub-section (2), as the Company Liquidator. The provisional liquidator or the Company Liquidator, as the case may be, shall be appointed from a panel maintained by the Central Government consisting of the names of chartered accountants, advocates, company secretaries, cost accountants or firms or bodies corporate having such chartered accountants, advocates, company secretaries, cost accountants and such other professionals as may be notified by the Central Government or from a firm or a body corporate of persons having a combination of such professionals as may be prescribed and having at least ten years of experience in company matters.

The terms and conditions of appointment of a provisional liquidator or Company Liquidator and the fee payable to him shall be specified by the Tribunal on the basis of task required to be performed, experience, qualification of such liquidator and size of the company.

Section 276 — Removal and Replacement of Liquidator

The Tribunal may, on a reasonable cause being shown and for reasons to be recorded in writing, remove the provisional liquidator or the Company Liquidator, as the case may be, as liquidator of the company on any of the following grounds, namely: —

1. Misconduct;Fraud or misfeasance;Professional incompetence or failure to exercise due care and diligence in performance of the powers and functions;Inability to act as provisional liquidator or as the case may be, Company Liquidator;Conflict of interest or lack of independence during the term of his appointment that would justify removal.

Section 277 — Intimation to Company Liquidator, Provisional Liquidator and Registrar

Where the Tribunal makes an order for appointment of provisional liquidator or for the winding up of a company, it shall, within a period not exceeding seven days from the date of passing of the order, cause intimation thereof to be sent to the Company Liquidator or provisional liquidator, as the case may be, and the Registrar. The Registrar shall, on receipt of the copy of the order, make an endorsement to that effect in his records relating to the company and notify in the Official Gazette that such an order has been made and in the case of a listed company, the Registrar shall intimate about such appointment or winding up order to the stock exchange or exchanges where the securities of the company are listed.

Within three weeks from the date of passing of winding-up order, the Company Liquidator shall make an application to the Tribunal for constitution of a winding-up committee to assist and monitor the progress of liquidation proceedings. The winding-up committee shall comprise the following persons: (a) Official Liquidator attached to the Tribunal; (b) nominee of secured creditors; and (c) a professional nominated by the Tribunal.

Section 278 — Effect of Winding-Up Order

The order for the winding up of a company shall operate in favour of all the creditors and all contributories of the company as if it had been made out on the joint petition of creditors and contributories.

Sections 279–280 — Stay of Suits / Jurisdiction of Tribunal

Section 279: When a winding-up order has been passed or a provisional liquidator has been appointed, no suit or other legal proceeding shall be commenced, or if pending at the date of the winding-up order, shall be proceeded with, by or against the company, except with the leave of the Tribunal. The Tribunal may impose such terms as it thinks fit.

Section 280: The 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; (c) any application made under section 233; (d) any question of priorities or any other question whatsoever, whether of law or facts, including those relating to assets, business, actions, rights, entitlements, privileges, benefits, duties, responsibilities, obligations or in any matter arising out of, or in relation to winding up of the company.

Section 281 — Submission of Report by Company Liquidator

Where the Tribunal has made a winding-up order or appointed a Company Liquidator, such liquidator shall, within sixty days from the order, submit to the Tribunal, a report containing the following particulars, namely: —

1. The nature and details of the assets of the company including their location and value, stating separately the cash balance in hand and in the bank, if any, and the negotiable securities, if any, held by the company;Amount of capital issued, subscribed and paid-up;The existing and contingent liabilities of the company including names, addresses 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;The debts due to the company and the names, addresses and occupations of the persons from whom they are due and the amount likely to be realised on account thereof;Guarantees, if any, extended by the company;List of contributories and dues, if any, payable by them and details of any unpaid call;Details of trademarks and intellectual properties, if any, owned by the company;Details of subsisting contracts, joint ventures, and collaborations, if any;Details of holding and subsidiary companies, if any;Details of legal cases filed by or against the company;Any other information which the Tribunal may direct or the Company Liquidator may consider necessary to include.

Section 282 — Directions of Tribunal on Report of Company Liquidator

The Tribunal shall, on consideration of the report of the Company Liquidator, fix a time limit within which the entire proceedings shall be completed and the company be dissolved. The Tribunal may, if it is of the opinion, at any stage of the proceedings, that it will not be advantageous or economical to continue the proceedings, revise the time limit within which the entire proceedings shall be completed and the company be dissolved. The Tribunal may, on examination of the reports submitted to it by the Company Liquidator and after hearing the Company Liquidator, creditors, or contributories, or any other interested person, order sale of the company as a going concern or its assets or part thereof.

Section 283 — Custody of Company's Properties

Where a winding up order has been made or where a provisional liquidator has been appointed, the Company Liquidator or the provisional liquidator, as the case may be, shall, on the order of the Tribunal, forthwith take into his or its custody or control all the property, effects and actionable claims to which the company is or appears to be entitled to and take such steps and measures, as may be necessary, to protect and preserve the properties of the company. All the property and effects of the company shall be deemed to be in the custody of the Tribunal from the date of the order for the winding up of the company.

Section 284 — Promoters, Directors, etc., to Cooperate with Company Liquidator

The promoters, directors, officers, and employees, who are or have been in employment of the company or acting or associated with the company shall extend full cooperation to the Company Liquidator in discharge of his functions and duties. Where any person required to assist or cooperate with the Company Liquidator under sub-section (1) does not assist or cooperate, the Company Liquidator may make an application to the Tribunal for necessary directions.

On receiving an application from the Company Liquidator, the Tribunal shall, by an order, direct the person required to assist or cooperate with the Company Liquidator to comply with the instructions of the Company Liquidator and to cooperate with him in discharging his functions and duties.

Section 285 — Settlement of List of Contributories and Application of Assets

As soon as may be after the passing of a winding-up order by the Tribunal, the Tribunal shall settle a list of contributories, cause rectification of 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 applied for the discharge of its liability.

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

In settling the list of contributories, the 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.

Section 286 — Obligations of Directors and Managers

In the case of a winding up of a company, every director and manager of the company shall give to the Company Liquidator all information as may be required by him. The Company Liquidator shall, after receiving the information, make an application to the Tribunal for necessary directions. The Tribunal may, if it is satisfied that the information furnished is adequate and there is no reason to believe that the directors and manager have withheld any information, release them from such obligation.

Section 287 — Advisory Committee

The Tribunal may, while passing an order of winding up of a company, direct that there shall be, an advisory committee to advise the Company Liquidator and to report to the Tribunal on such matters as the Tribunal may direct. The advisory committee appointed by the Tribunal shall consist of not more than twelve members, being creditors and contributories of the company or such other persons in such proportion as the Tribunal may, keeping in view the circumstances of the company under liquidation, direct.

Section 288 — Submission of Periodical Reports to Tribunal

The Company Liquidator shall make periodical reports to the Tribunal and in any case make a report at the end of each quarter with respect to the progress of the winding up of the company in such form and in such manner as may be prescribed. The Tribunal may, on an application by the Company Liquidator, review such periodical reports.

Section 289 — Power of Tribunal on Application for Stay of Winding Up

The Tribunal may at any time after making a winding up order, on an application of the Company Liquidator, or creditor or contributory, and on proof to its satisfaction that all proceedings in relation to the winding up ought to be stayed, make an order staying the proceedings, either altogether or for a limited time, on such terms and conditions as it thinks fit. The Tribunal shall cause a copy of every order made under this section to be forwarded forthwith to the Registrar who shall make a minute of the order in his records relating to the company.

Section 290 — Powers and Duties of Company Liquidator

Subject to the provisions of this Act, the Company Liquidator, in a winding up of a company by the Tribunal, shall have the power —

1. To carry on the business of the company so far as may be necessary for the beneficial winding up of the company;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;To sell the immovable and movable property and actionable claims of the company by public auction or private contract, with power to transfer such property to any person or body corporate, or to sell the same in parcels;To sell the whole of the undertaking of the company as a going concern;To raise any money required on the security of the assets of the company;To institute or defend any suit, prosecution, or other legal proceeding, civil or criminal, in the name and on behalf of the company;To invite and settle claim of creditors, employees, or any other claimant and distribute sale proceeds in accordance with priorities established under this Act;To inspect the records and returns of the company on the files of the Registrar or any other authority;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;To draw, accept, make, and endorse any negotiable instruments including cheque, bill of exchange, hundi or promissory note in the name and on behalf of the company;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;To obtain any professional assistance from any person or appoint any professional, in discharge of his duties, obligations, and responsibilities and for protection of the assets of the company;To apply to the Tribunal for such orders or directions as may be necessary for the winding up of the company.

Section 291 — Provision for Professional Assistance to Company Liquidator

The Company Liquidator may, with the sanction of the Tribunal, appoint one or more professionals including Chartered Accountants, Company Secretaries, Cost Accountants, or legal practitioners entitled to appear before the Tribunal with respect to its functions, to assist him in the performance of his duties and functions under this Act. Any person appointed under this section shall disclose forthwith to the Tribunal in the prescribed form any conflict of interest or lack of independence in respect of his appointment.

Section 292 — Exercise and Control of Company Liquidator's Powers

Subject to the provisions of this Act, the Company Liquidator shall, in the administration of the assets of the company and the distribution thereof among its creditors, have regard to any directions which may be given by the resolution of the creditors or contributories at any general meeting or by the advisory committee. Any directions given by the creditors or contributories at any general meeting shall, in case of conflict, be deemed to override any directions given by the advisory committee.

Sections 293–303 — Further Provisions

These sections cover the procedural, administrative, and accounting aspects of liquidation by the Tribunal:

• Section 293 — Books to be kept by Company Liquidator (in prescribed form);
• Section 294 — Audit of Company Liquidator's accounts (by a person appointed by the Tribunal);
• Section 295 — Payment of debts by contributory and extent of set-off;
• Section 296 — Power of Tribunal to make calls — including on contributories;
• Section 297 — Adjustment of rights of contributories;
• Section 298 — Power to order costs;
• Section 299 — Power to summon persons suspected of having property of the company — the 'private examination' or 'public examination' procedure;
• Section 300 — Power to order examination of promoters, directors, etc.;
• Section 301 — Arrest of person trying to leave India or abscond;
• Section 302 — Dissolution of company by Tribunal — final order;
• Section 303 — Appeals from orders made before commencement of this Act — transitional.

Section 302 — Dissolution of Company by Tribunal

When the affairs of a company have been completely wound up, the Company Liquidator shall make an application to the Tribunal for dissolution of such company. The Tribunal shall on an application filed by the Company Liquidator under sub-section (1) or when the Tribunal is of the opinion that it is just and reasonable in the circumstances of the case that an order for the dissolution of the company should be made, make an order that the company be dissolved from the date of the order, and the company shall be dissolved accordingly.

A copy of the order shall, within thirty days from the date thereof, be forwarded by the Company Liquidator to the Registrar who shall record in the register relating to the company a minute of the dissolution of the company. If the Company Liquidator makes a default in forwarding a copy of the order within the period specified in sub-section (3), the Company Liquidator shall be punishable with fine which may extend to ₹5,000 for every day during which the default continues.

Interplay with the Insolvency and Bankruptcy Code, 2016

Understanding Part I of Chapter XX in 2026 requires keeping in mind the post-IBC landscape:

• Winding up on the ground of 'inability to pay debts' has been removed from Section 271 and shifted to the IBC framework (Corporate Insolvency Resolution Process under Sections 7, 9, 10 of IBC);
• If the CIRP under IBC fails, the Adjudicating Authority (NCLT) orders liquidation under Section 33 of the IBC — which is a different liquidation regime from Chapter XX of the Companies Act;
• Winding up under Section 271 (excluding the omitted ground) continues to be governed by Chapter XX;
• Voluntary winding up is now under Section 59 of the IBC, not under Part II of Chapter XX (which stands omitted);
• The SC in Swiss Ribbons v. Union of India, (2019) 4 SCC 17, and Innoventive Industries v. ICICI Bank, (2018) 1 SCC 407, affirmed the supremacy of the IBC regime for insolvency-driven winding up.