Winding up of companies by a tribunal- Comparison with Earlier Act

Editor 04 Feb 2017 3,033 Views 0 comment Print Company Law | Articles

Riddhi Vyas

Article compares differences between Companies Act 2013 and Companies Act, 1956 in respect of wound up of a Company by National Company Law Tribunal. Article Compares Section recently notified Section 271, 273, 274, 275, 277, 280, 281,287,302,332,336,337,338, 339(3), 342, 344, 348(7), 352, vide notification no. S.O. 3677(E) dated 07.12.2016 with effect from 15.12.2016.

SR.NO.	1956	2013
1.	S. 433,434 : Circumstances in which a company can be wound up by a tribunal – minimum members for private company 2 and public company 7, commencement of business in one year of incorporation.	S. 271 : minimum requirement criteria and commencement of business criteria have been done away with. Added fraud, fraudulent activities, misfeasance under grounds for winding up.
2.	S. 443 : Powers of Tribunal : tribunal had power to pass an order under 4 grounds – dismiss, adjourn, pass interim order or winding up order.	S. 273 : Tribunal has power to pass an order under 5 grounds : dismiss, interim order, appoint a provisional liquidator , winding up order or any other order.
3.	S. 446A : Directions for filing statement of affairs : directors and auditors have to ensure that books of accounts are complete and audited, if they fail they are punishable with imprisonment not exceeding 1 year and fine not exceeding 1 lakh rupees.	S.274 : If any director contravenes the provisions of this section shall be punishable with imprisonment for a term extending to 6 months or fine 25,000/- rupees extending to 5 lakh rupees or both.
4.	S.448,450: Appointment of Official liquidator & Provisional Liquidator – 1. This section talks about appointment of a deputy official liquidator or assistant official liquidators to assist the official liquidator in discharge of his functions. 2. This section also talks about remuneration to the liquidators.	S. 275: Company Liquidators and their appointment – The requirement of assistant and deputy liquidators has been done away with. Remuneration as specified in 1956 act has been removed.
5.	S.444 : Intimation to liquidator and registrar – within 2 weeks of passing of winding up order, the liquidator and registrar have to be intimated.	S. 277 : the time limit has been reduced to 7 days for the same.
6.	S.446 (2) : jurisdiction of the tribunal – the tribunal had jurisdiction to entertain or dispose of suits , claims, application and question of priority.	S. 280 : under the jurisdiction of tribunal to entertain or dispose of, “any scheme under section 262” has been added along with the rest.
7.	S.455: submission of report by “official” liquidator – liquidator has to submit a report containing prescribed particulars within 6 months from the date of making of the winding up order.	S.281: submission of report by “company” liquidator – the time period has been brought down to 6 months and the particulars which have to be mentioned in the report have been increased.
8.	S.464,465:Appointment, composition and proceedings of committee of inspection: 1. This section speaks about a committee of inspection.2. There are two meetings – meeting of creditors and meeting of contributories.3. Meeting of creditors has to be convened within 2 months after the date of passing of the winding up order. After the meeting of creditors, a meeting of contributories has to be held within 14 days.4. The section speaks about a quorum – 1/3^rd of the total members or 2 – whichever is higher. The quorum has to be present in every meeting, it is a mandate. The committee cannot act without a quorum.5. The section talks about vacancy and filling of vacancies.	S.287: Advisory Committee – 1. This section speaks am advisory committee that will assist and advise the company liquidator in matters pertaining to winding up of the company.2. There is only one meeting of creditors and contributories combined.3. The meeting has to be convened within 30 days from the order of winding up so that the tribunal can constitute the Advisory Committee.4. The requirement of a quorum and sub-section about vacancies have been done away with.
9.	S.481: Dissolution of company by tribunal – with respect to default by company liquidator in forwarding the order within specified period then he may be punishable with a fine extending to 500 rupees everyday till default continues.	S.302: with respect to default by company liquidator in forwarding the order within specified period then he may be punishable with a fine extending to 5000 rupees everyday till default continues.
10.	S.534: Effect of floating charge –. The proviso said : Provided that in relation to a charge created more than three months before the commencement of this Act, this section shall have effect with the substitution, for references to twelve months, of references to three months.	S. 332: The proviso has been removed.
11	S.538: Offences by officers of companies in liquidation : 1. Penalty for any person who pawns , pledges or disposes any property in circumstances that amount to an offence shall be punishable with an imprisonment of 3 years or fine or both.	S.336: Offences by officers of companies in liquidation: 1. Penalty for any person who pawns , pledges or disposes any property in circumstances that amount to an offence shall be punishable with an imprisonment of 3 years extending to 5 years and a fine which shall be not less than 3 lakhh rupees but which may extend to 5 lakh rupees.
12	S.540: Penalty for fraud by officers: penalty is imprisonment for 2 years or fine or both.	S. 337: Penalty is imprisonment of not less than 1 year but extending to 3 years and fine not less than 1 lakh rupees extending to 3 lakh rupees.
13	S.541: Liability when proper books of accounts are not kept : penalty is imprisonment for one year or fine or both.	S.338: Penalty is imprisonment of 1 year which may extend to 3 years and fine of 1 lakh rupees which may extend to 3 lakh rupees.
14	S.542(3): when any business of company is carried on fraudulently and the members are aware about the same, then the members will be liable for an imprisonment of 2 years or fine extending to 50,000/- rupees or both.	S.339(3): when any business of company is undertaken in a manner which is fraudulent and the members are aware about the same, then the members will be liable for action under section 447 of Companies Act, 2013.
15	S.545: Prosecution of delinquent officers & members of company : there is no mention about the amount of penalty.	S.342: Clause 6 says that if a person fails or neglects to pay assistance as required under this act then he shall be liable to pay a fine which shall not be less than 25,000/- rupees but which may extend to 1 lakh rupees.
16	S.547: Notification that company is in liquidation: when a company contravenes the provision of this act, anyone who permits non-compliance shall be punishable with a fine which may extend to 5000 rupees.	S.344: Statement that company is in liquidation: Fine has been increased to 50,000/- rupees extending to 3 lakh rupees.
17	S.549: inspection of books and papers by creditors and contributories was permitted only if the Supreme Court sanctioned it.	S:346: permission of Supreme Court has been done away with.
18	S.551(5): Information as to pending liquidations: Punishment to a liquidator for causing default is fine of 10,000/- rupees.	S.348(7): Punishment to a liquidator for default is an imprisonment for a term extending to 6 months and fine which may extend to 1 lakh rupees or both.
19	S.555: Companies Liquidation Account : The liquidator shall deposit the money in a in a companies liquidation account in a separate account in Reserve Bank of India. `	S.352: Company liquidation dividend and undistributed assets account : the liquidator has to deposit in the said account in a scheduled bank.

(Author is a 4th year law student from Gujarat National Law University (GNLU), India and is currently doing 4th year from University of Illinois, College of Law , USA.)