Winding up under the Companies Act,
2013 is not simply an alternative method for closing any company that has
stopped business.
Under Sections 270 and 271 of
the Companies Act, 2013, a company may be wound up by the Tribunal only on
the grounds specifically recognized by law.
These include where:
- the
company has passed a special resolution that it be wound up by the
Tribunal;
- the
company has acted against the sovereignty and integrity of India, security
of the State, public order, decency or morality;
- the
affairs of the company have been conducted fraudulently, the company was
formed for a fraudulent or unlawful purpose, or persons involved in its
formation or management have been guilty of fraud, misfeasance or
misconduct;
- the
company has defaulted in filing its financial statements or annual
returns for five consecutive financial years; or
- the
Tribunal considers it just and equitable that the company should be
wound up.
A petition may be presented by
persons specified under Section 272, including the company itself,
contributories, the Registrar and other authorised persons, depending upon the
ground invoked. The powers available to the Tribunal after receiving the
petition are provided under Section 273.
Practical issue
A company may have stopped
operations several years ago, but cessation of business by itself does not
automatically constitute a ground for winding up under Section 271.
The first question therefore is
not:
“Does the company want to close?”
It is:
“Does the company fall within a
statutory ground on which the NCLT can order winding up?
Main takeaway
Winding up by the Tribunal begins
with establishing a statutory ground under Section 271—not merely with a
commercial decision to close the business.
This Article has been compiled by Diksha Narang
(Associate) and edited by Shallu Garg (Senior Associate).
