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The Companies Act, 1956

Title : The Companies Act, 1956

Year : 1956



(1) Any transfer of property, movable or immovable, delivery of goods, payment, execution or other act relating to property made, taken or done by or against a company within six months before the commencement of its winding up which, had it been made, taken or done by or against an individual within three months before the presentation of an insolvency petition on which he is adjudged insolvent, would be deemed in his insolvency a fraudulent preference, shall in the event of the company being wound up, be deemed a fraudulent preference of its creditors and be invalid accordingly:-

Provided that, in relation to things made, taken or done before the commencement of this Act, this sub-section shall have effect with the substitution, for the reference to six months, of a reference to three months.

(2) For the purposes of sub-section (1), the presentation of a petition for winding up in the case of a winding up by 1*[the Tribunal], and the passing of a resolution for winding up in the case of a voluntary winding up, shall be deemed to correspond to the act of insolvency in the case of an individual.

531A -2* Avoidance of voluntary transfer

Any transfer of property movable or immovable, or any delivery of goods, made by a company, not being a transfer or delivery made in the ordinary course of its business or in favour of a purchaser or encumbrancer in good faith and for valuable consideration, if made within a period of one year before the presentation of a petition for winding up by 1*[the Tribunal] or the passing of a resolution for voluntary winding up of the company, shall be void against the liquidator.]

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1. Substituted by Act 11 of 2003, Section 94, for "or subject to the supervision of the Court".

2. Inserted by Act 65 of 1960, Section 185 (w.e.f. 28-12-1960).

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Any transfer or assignment by a company of all its property to trustees for the benefit of all its creditors shall be void.



(1) Where, in the case of a company which is being wound up, anything made, taken or done after the commencement of this Act is invalid under section 531 as a fraudulent preference of a person interested in property mortgaged or charged to secure the company's debt, then (without prejudice to any rights or liabilities arising apart from this provisions), the person preferred shall be subject to the same liabilities, and shall have the same rights, as if he had undertaken to be personally liable as surety for the debt, to the extent of the mortgage or charge on the property or the value of his interest, whichever is less.

(2) The value of the said person's interest shall be determined as at the date of the transaction constituting the fraudulent preference, and shall be determined as if the interest were free of all encumbrances other than those to which the mortgage or charge for the company's debt was then subject.

(3) On any application made to the1*[Tribunal] with respect to any payment on the ground that the payment was a fraudulent preference of a surety or guarantor, the Court shall have jurisdiction to determine any questions with respect to the payment arising between the person to whom the payment was made and the surety or guarantor and to grant relief in respect thereof, notwithstanding that it is not necessary so to do for the purposes of the winding up, and for that purpose may give leave to bring in the surety or guarantor as a third party as in the case of a suit for the recovery of the sum paid. This sub-section shall apply, with the necessary modifications, in relation to transactions other than the payment of money as it applies in relation to payments of money.

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1. Substituted by Act 11 of 2003, Section 95, for "Court".

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Where a company is being wound up, a floating charge on the undertaking or property of the company created within the twelve months immediately preceding the commencement of the winding up, shall, unless it is proved that the company immediately after the creation of the charge was solvent, be invalid, except to the amount of any cash paid to the company at the time of, or subsequently to the creation of, and in consideration for, the charge, together with interest on that amount at the rate of five per cent, per annum or such other rate as may for the time being be notified by the Central Government in this behalf in the Official Gazette:-

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.



(1) Where any part of the property of a company which is being wound up consists of-

(a) Land of any tenure, burdened with onerous covenants;

(b) Shares or stock in companies;

(c) Any other property which is unsaleable or is not readily saleable, by reason of its binding the processor thereof either to the performance of any onerous act or to the payment of any sum of money; or

(d) Unprofitable contracts; the liquidator of the company, notwithstanding that he has endeavoured to sell or has taken possession of the property, or exercised any act of ownership in relation thereto, or done anything in pursuance of the contract, may, with the leave of the1*[Tribunal] and subject to the provisions of this section, by writing signed by him, at any time within twelve months after the commencement of the winding up or such extended period as may be allowed by the1*[Tribunal], disclaim the property;-

Provided that, where any such property has not come to the knowledge of the liquidator within one month after the commencement of the winding up, the power of disclaiming the property may be exercised at any time within twelve months after he has become aware thereof or such extended period as may be allowed by the1*[Tribunal].

(2) The disclaimer shall operate to determine, as from the date of disclaimer, the rights, interest, and liabilities of the company, and the property of the company, in or in respect of the property disclaimed, but shall not, except so far as is necessary for the purpose of releasing the company and the property of the company from liability, affect the rights or liabilities of any other person.

(3) The1*[Tribunal], before or on granting leave to disclaim, may require such notices to be given to persons interested, and impose such terms as a condition of granting leave, and make such other order in the matter as the1*[Tribunal] thinks just.

(4) The liquidator shall not be entitled to disclaim any property in any case where an application in writing has been made to him by any person interested in the property requiring him to decide whether he will or will not disclaim, and the liquidator has not, within a period of twenty-eight days after the receipt of the application or such extended period as may be allowed by the1*[Tribunal], given notice to the applicant that he intends to apply to the1*[Tribunal] for leave to disclaim; and in case the property is a contract, if the liquidator, after such an application as aforesaid, does not within the said period or extended period disclaim the contract,2*[he shall be deemed to have adopted it].

(5) The1*[Tribunal] may, on the application of any person who is, as against the liquidator, entitled to the benefit or subject to the burden or a contract made with the company, made an order rescinding the contract on such terms as to payment by or to either party of damages for the non-performance of the contract, or otherwise as the1[Tribunal] thinks just; and any damages payable under the order to any such person may be proved by him as a debt in the winding up.

(6) The1*[Tribunal] may, on an application by any person who either claims any interest in any disclaimed property or is under any liability not discharged by this Act in respect of any disclaimed property, and after hearing any Such persons as it thinks fit, make an order for the vesting of the property in, or the delivery of the property to, any person entitled thereto or to whom it may seem just that the property should be delivered by way of compensation for such liability as aforesaid, or a trustee for him, and on such terms as the1*[Tribunal] thinks just; and on any such vesting order being made, the property comprised therein shall vest accordingly in the person therein named in that behalf without any conveyance or assignment for the purpose:-

Provided that, where the property disclaimed is of a lease-hold nature the1*[Tribunal] shall not make a vesting order in favour of any person claiming under the company, whether as under-lessee or as mortgage or holder of a charge by way of demise, except upon the terms of making that person-

(a) Subject to the same liabilities and obligations as those to which the company was subject under the lease in respect of the property at the commencement of the winding up; or

(b) If the1*[Tribunal] thinks fit, subject only to the same liabilities and obligations as if the lease had been assigned to that person at that date;and in either event (if the case so requires) as if the lease had comprised only the property comprised in the vesting order; and any mortgagee or under-lessee declining to accept a vesting order upon such terms shall be excluded from all interest in and security upon the properly, and, if there is no person claiming under the company who is willing to accept an order upon such terms, the1*[Tribunal] shall have power to vest the estate and interest of the company in the property in any person liable, either personally or in a representative character, and either alone or jointly with the company, to perform the lessee's covenants in the lease, freed and discharged from all estates, encumbrances and interests created therein by the company.

(7) Any person injured by the operation of a disclaimer under this section shall be deemed to be a creditor of the company to the amount of the compensation or damages payable in respect of the injury, and may accordingly prove the amount as a debt in the winding up.

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1. Substituted by Act 11 of 2003, Section 95, for "Court".

2. Substituted by Act 65 of 1960, Section 186, for "the company shall be deemed to have adopted it" (w.e.f. 28-12-1960).

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(1) In the case of a voluntary winding up, any transfer of shares in the company, not being a transfer made to or with the sanction of the liquidator and any alteration in the status of the members of the company made after the commencement of the winding up, shall be void.

(2) In the case of a winding up by 1*[The Tribunal], any disposition of the property (including actionable claims) of the company, and any transfer of shares in the company or alteration in the status of its members, made after the commencement of the winding up, shall 2*[unless the Tribunal] otherwise orders, be void.

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1. Substituted by Act 11 of 2003, Section 96, for "or subject to the supervision of the Court".

2. Substituted by Act 11 of 2003, Section 96, for "unless the Court".

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(1) Where any company is being wound up by the Tribunal-

(a) Any attachment, distress or execution put in force, without leave of the Tribunal against the estate or effects of the company, after the commencement of the winding up; or

(b) Any sale held, without leave of the Tribunal of any of the properties or effects of the company after such commencement]
shall be void.

(2) Nothing in this section applies to any proceedings for the recovery of any tax or impost or any dues payable to the Government]

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1. Substituted by Act 11 of 2003, Section 97, for section 537 (See Annexe).

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(1) If any person, being a past or present officer of a company, which, at the time of the commission of the alleged offence, is being wound up, whether by 1*[The Tribunal] or voluntarily, or which subsequently ordered to be wound up 2*[by the Tribunal] or which subsequently passes a resolution for voluntary winding up,-

(a) Does not, to the best of his knowledge and belief, fully and truly discover to the liquidator all the property, movable and immovable, of the company, and how and to whom and for what consideration and when the company disposed of any part thereof, except such part as has been disposed of in the ordinary course of the business of the company;

(b) Does not deliver up to the liquidator, or as he directs, all such parts of the movable and immovable property of the company as is in his custody or under his control, and which he is required by law to deliver up;

(c) Does not deliver up to the liquidator, or as he directs, all such books and papers of the company as are in his custody or under his control and which he is required by law to deliver up;

(d) Within the twelve months next before the commencement of the winding up or at any time thereafter, conceals any part of the property of the company to the value of one hundred rupees or upwards, or conceals any debt due to or from the company;

(e) Within the twelve months next before the commencement of the winding up or at any time thereafter, fraudulently removes any part of the property of the company to the value of one hundred rupees or upwards;

(f) Makes any material omission in any statement relating to the affairs of the company;

(g) Knowing or believing that a false debt has been proved by any person under the winding up, fails for a period of one month to inform the liquidator thereof;

(h) After the commencement of the winding up, prevents the production of any book or paper affecting or relating to the property or affairs of the company;

(i) Within the twelve months next before the commencement of the winding up or at any time thereafter, conceals, destroys, mutilates or falsifies, or is privy to the concealment, destruction, mutilation or falsification of, any book or paper affecting or relating to, the property or affairs of the company;

(j) Within the twelve months next before the commencement of the winding up or at any time thereafter makes, or is privy to the making of, any false entry in any book or paper affecting or relating to, the property or affairs of the company;

(k) Within the twelve months next before the commencement of the winding up or at any time thereafter, fraudulently parts with, alters or makes any omission in, or is privy to the fraudulent parting with, altering or making of any omission in, any book or paper affecting or relating to the property or affairs of the company;

(l) After the commencement of the winding up or at any meeting of the creditors of the company within the twelve months next before the commencement of the winding up attempts to account for any part of the property of the company by fictitious losses or expenses;

(m) Within the twelve months next before the commencement of the winding up or at any time thereafter, by any false representation or other fraud, obtains on credit, for or on behalf of the company, any property which the company does not subsequently pay for;

(n) Within the twelve months next before the commencement of the winding up or at any time thereafter, under the false pretence that the company is carrying on its business, obtains on credit, for or on behalf of the company, any property which the company does not subsequently pay for;

(o) Within the twelve months next before the commencement of the winding up or at any time thereafter, pawns, pledges or disposes of any property of the company which has been obtained on credit and has not been paid for, unless such pawning, pledging or disposing is in the ordinary course of the business of the company; or

(p) Is guilty of any false representation or other fraud for the purpose of obtaining the consent of the creditors of the company or any of them, to an agreement with reference to the affairs of the company or to the winding up,he shall be punishable, in the case of any of the offences mentioned in clauses (m), (n) and (o), with imprisonment for a term which may extend to five years, or with fine, or with both, and, in the case of any other offence, with imprisonment for a term which may extend to two years, or with fine, or with both:-

Provided that it shall be a good defence-

(i) To a charge under any of the clauses, (b), (c), (d), (f) (n) and (o), if the accused proves that he had no intent to defraud; and

(ii) To a charge under any of the clauses, (a), (h), (i) and (j). if he proves that he had no intent to conceal the true state of affairs of the company or to defeat the law.

(2) Where any person pawns, pledges or disposes of any property in circumstances which amount to an offence under clause (o) of sub-section (1), every person who takes in pawn or pledge or otherwise receives the property, knowing it to be pawned, pledged, or disposed of in such circumstances as aforesaid, shall be punishable with imprisonment for a term which may extend to three years, or with fine, or with both.

(3) For the purposes of this section, the expression "officer" shall include any person in accordance with whose directions or instructions the directors of the company have been accustomed to act.

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1. Substituted by Act 11 of 2003, Section 98, for "or subject to the supervision of the Court".

2. Substituted by Act 11 of 2003, Section 98, for "by the Court".

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If with intent to defraud or deceive any person, any officer or contributory of a company which is being wound up-

(a) Destroys mutilates, alters, falsifies or secretes, or is privy to the destruction, mutilation, alteration, falsification or secreting of, any books, papers or securities; or

(b) Makes, or is privy to the making of, any false or fraudulent entry in any register, book of account or document belonging to the company;he shall be punishable with imprisonment for a term which may extend to seven years, and shall also be liable to fine.



If any person, being at the time of the commission of the alleged offence an officer of a company which is subsequently ordered to be wound up by the1*[Tribunal] or which subsequently passes a resolution for voluntary winding up,-

(a) Has, by false pretences or by means of any other fraud, induced any person to give credit to the company; or

(b) With intent to defraud creditors of the company, has made or caused to be made any gift or transfer of or charge on, or has caused or connived at the levying of any execution against, the property of the company; or

(c) With intent to defraud creditors of the company, has concealed or removed any part of the property of the company since the date of any unsatisfied judgment or order for payment of money obtained against the company, or within two months before that date,he shall be punishable with imprisonment for a term which may extend to two years and shall also be liable to fine.

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1. Substituted by Act 11 of 2003, Section 99, for "Court".

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(1) Where a company is being wound up, if it is shown that proper books of account were not kept by the company throughout the period of two years immediately preceding the commencement of the winding up, or the period between the incorporation of the company and the commencement of the winding up, whichever is shorter, every officer of the company who is in default shall, unless he shows that he acted honestly and that in the circumstances in which the business of the company was carried on, the default was excusable, be punishable with imprisonment for a term which may extend to one year.

(2) For the purposes of sub-section (1), it shall be deemed that proper books of account have not been kept in the case of any company, if there have not been kept-

(a) Such books of accounts as are necessary to exhibit and explain the transactions and financial position of the business of the company, including books containing entries made from day to day in sufficient detail of all cash received and all cash paid; and

(b) Where the business of the company has involved dealings in goods, statements of the annual stock takings and (except in the case of goods sold by way of ordinary retail trade) of all goods sold and purchased, showing the goods and the buyers and sellers thereof in sufficient detail to enable those goods and those buyers and sellers to be identified.



(1) If in the course of the winding up of a company, it appears that any business of the company has been carried on, with intent to defraud creditors of the company or any other persons or for any fraudulent purpose, the1*[Tribunal], on me application of the Official Liquidator, or the liquidator or any creditor or contributory of the company, may, if it thinks it proper so to do, declare that any persons who were knowingly parties to the carrying on of the business in the manner aforesaid shall be personally responsible, without any limitation of liability, for all or any of the debts or other liabilities of the company as the1*[Tribunal] may direct.

On the hearing of an application under this sub-section, the Official Liquidator or the liquidator, as the case may be, may himself give evidence or call witnesses.

(2) (a) Where the1*[Tribunal] makes any such declaration, it may give such further directions as it thinks proper for the purpose of giving effect to that declaration.

(b) In particular, the1*[Tribunal] may make provision for making the liability of any such person under the declaration a charge on any debt or obligation due from the company to him, or on any mortgage or charge or any interest in any mortgage or charge on any assets of the company held by or vested in him, or any person on his behalf, or any person claiming as assignee from or through the person liable or any person acting on his behalf.

(c) The1*[Tribunal] may, from time to time, make such further order as may be necessary for the purpose of enforcing any charge imposed under this sub-section.

(d) For the purpose of this sub-section, the expression "assignee" includes any person to whom or in whose favour, by the directions of the person liable, (he debt, obligation, mortgage or charge was created, issued or transferred or the interest was created, but does not include an assignee for valuable consideration (not including consideration by way of marriage) given in good faith and without notice of any of the matters on the ground of which the declaration is made.

(3) Where any business of a company is carried on with such intent or for such purpose as is mentioned in sub-section (1), every person who was knowingly a party to the carrying on of the business in the manner aforesaid, shall be punishable with imprisonment for a term which may extend to two years, or with fine which may extend to2*[fifty thousand rupees], or with both.

(4) This section shall apply, notwithstanding that the person concerned may be criminally liable in respect of the matters on the ground of which the declaration is to be made.

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1. Substituted by Act 11 of 2003, Section 99, for "Court".

2. Substituted by Act 53 of 2000, Section 206, for "five thousand rupees" (w.e.f. 13-12-2000).

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(1) If in the course of winding up of a company, it appears that any person who has taken part in the promotion or formation of the company, or any past or present director, manager, liquidator or officer of the company -

(a) Has misapplied, or retained, or become liable or accountable for, any money or property of the company; or

(b) Has been guilty of any misfeasance or breach of trust in relation to the company; the Tribunal may, on the application of the Official Liquidator, or the liquidator, or of any creditor or contributory, made within the time specified in that behalf in sub-section ( 2 ), examine into the conduct of the person, director, manager, liquidator or officer aforesaid, and compel him to repay or restore the money or property or any part thereof respectively, with interest at such rate as the Tribunal thinks just, or to contribute such sum to the assets of the company by way of compensation in respect of the misapplication, retainer, misfeasance or breach of trust, as the Tribunal thinks just.

(2) An application under sub-section (1) shall be made within five years from the date of the order for winding up, or of the first appointment of the liquidator in the winding up, or of the misapplication, retainer, misfeasance or breach of trust as the case may be, whichever is longer.

(3) This section shall apply notwithstanding that the matter is one for which the person concerned may be criminally liable.]

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1. Substituted by Act 11 of 2003, Section 100, for section 543 (See Annexe).

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Where a declaration under section 542 or an order under section 543 is or may be made in respect of a firm or body corporate, the1*[Tribunal] shall also have power to make a declaration under section 542, or pass an order under section 543, as the case may be, in respect of any person who was at the relevant time a partner in that firm or a director of that body corporate.

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1. Substituted by Act 11 of 2003, Section 101, for "Court".

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(1) If it appears to the 1*[Tribunal] in the course of a winding up by, 2*[the tribunal], that any past or present officer, or any member, of the company has been guilty of any offence in relation to the company, the 1*[Tribunal] may, either on the application of any person interested in the winding up or of its own motion, direct the liquidator either himself in prosecute the offender or to refer the matter to the Registrar.

(2) If it appears to the liquidator in the course of a voluntary winding up that any past or present officer, or any member, of the company has been guilty of an offence in relation to the company he shall forthwith report the matter to the Registrar and shall furnish to him such information and give to him such access to and facilities for inspecting and taking copies of any books and papers, being information or books and papers in the possession or under the control of the liquidator and relating to the matter in question, as the Registrar may require.

(3) Where any report is made under sub-section (2) to the Registrar, he may, if he thinks fit, refer the matter to the Central Government for further inquiry.The Central Government shall thereupon investigate the matter and may, if it thinks it expedient, apply to the 1*[Tribunal] for an order conferring on any person designated by the Central Government for the purpose, with respect to the company concerned, all such powers of investigating the affairs of the company as are provided by this Act in the case of a winding up by the 1*[Tribunal].

(4) If on any report to the Registrar under sub-section (2), it appears to him that the case is not one in which proceedings ought to be taken by him, he shall inform the liquidator accordingly, and thereupon, subject to the previous sanction of the 1*[Tribunal], the liquidator may himself take proceedings against the offender.

(5) If it appears to the 1 [Tribunal] in the course of a voluntary winding up that any past or present officer, or any member, of the company has been guilty as aforesaid, and that no report with respect to the matter has been made by the liquidator to the Registrar under sub-section (2), the 1*[Tribunal] may, on the application of any person interested in the winding up or of its own motion, direct the liquidator to make such a report, and on a report being made accordingly, the provisions of this section shall have effect as though the report had been made in pursuance of the provisions of sub-section (2).

(6) If, where any matter is reported or referred to the Registrar under this section, he considers that the case is one in which a prosecution ought to be instituted, he shall report the matter to the Central Government; and that Government may, after taking such legal advice as it thinks fit, direct the Registrar to institute proceedings:-

Provided
that no report shall be made by the Registrar under this sub-section without first giving the accused person an opportunity of making a statement in writing to the Registrar and of being heard thereon.

(7) When any proceedings are instituted under this section, it shall be the duty of the liquidator and of every officer and agent of the company past and present (other man the defendant in the proceedings) to give all assistance in connection with the prosecution which he is reasonably able to give. For the purposes of this sub-section, the expression "agent", in relation to a company, shall be deemed to include any banker or legal adviser of the company and any person employed by the company as auditor.

(8) If any person fails or neglects to give assistance in the manner required by sub-section (7), the 1*[Tribunal] may, on the application of the Registrar, direct that person to comply with the requirements of that sub-section.

(9) Where any such application is made with respect to a liquidator, the 1*[Tribunal] may, unless it appears that the failure or neglect was due to the liquidator not having in his hands sufficient assets of the company to enable him so to do, direct that the costs of the application shall be borne by the liquidator personally.

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1. Substituted by Act 11 of 2003, Section 102, for "Court".

2. Substituted by Act 11 of 2003, Section 102, for "or subjects to the supervision of the Court".

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(1) The liquidator may -

(a) With the 1*[sanction of the Tribunal], when the company is being wound up by 2*[the tribunal]; and

(b) With the sanction of a special resolution of the company, in the case of a voluntary winding up, -

(i) Pay any classes of creditors in full;

(ii) Make any compromise or arrangement with creditors or persons claiming to be creditors, or having or alleging themselves to have any claim, present or future, certain or contingent, ascertained or sounding only in damages, against the company, or whereby the company may be rendered liable; or

(iii) Compromise any call or liability to call, debt, and liability capable of resulting in a debt, and any claim, present or future, certain or contingent, ascertained or sounding only in damages, subsisting or alleged to subsist between the company and contributory or alleged contributory or other debtor or person apprehending liability to the company, and all questions in any way relating to or affecting the assets or liabilities or the winding up of the company, on such terms as may be agreed, and take any security for the discharge of any such call, debt, liability or claim, and give a complete discharges respect thereof.

(iii) Compromise any call or liability to call, debt, and liability capable of resulting in a debt, and any claim, present or future, certain or contingent, ascertained or sounding only in damages, subsisting or alleged to subsist between the company and contributory or alleged contributory or other debtor or person apprehending liability to the company, and all questions in any way relating to or affecting the assets or liabilities or the winding up of the company, on such terms as may be agreed, and take any security for the discharge of any such call, debt, liability or claim, and give a complete discharges respect thereof.

3*[(1A) Notwithstanding anything contained in sub-section (1), in the case of a 4*[winding up by the Tribunal], the Supreme court may make rules under section 643 providing that the liquidator may, under such circumstances, if any, and subject to such conditions, restrictions and limitations, if any, as may be specified in the rules, exercise any of the powers referred to in sub-clause (ii) or sub-clause (iii) of sub-section (1) without the 1*[sanction of the Tribunal.]

(2) In the case of a voluntary winding up, the exercise by the liquidator of the powers conferred by sub-section (1) shall be subject to the control of the 5*[Tribunal].

(3) Any creditor or contributory may apply to the 5*[Tribunal] with respect to any exercise or proposed exercise of any such power.

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1. Substituted by Act 11 of 2003, Section 103, for "sanction of the Court".

2. Substituted by Act 11 of 2003, Section 103, for "or subject to the supervision of the Court".

3. Inserted by Act 65 of 1960, Section 188 (w.e.f. 28-12-1960).

4. Substituted by Act 11 of 2003, Section 103, for "winding up by the Court".

5. Substituted by Act 11 of 2003, Section 103, for "Court".

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(1) Where a company is being wound up, whether by 1*[the Tribunal] or voluntarily, every, invoice, order for goods or business letter issued by or on behalf of the company or a liquidator of the company, or a receiver or manager of the property of the company, being a document on or in which the name of the company appears, shall contain a statement that the company is being wound up.

(2) If default is made in complying with this section, the company, and every one of the following persons who willfully authorises or permits the default, namely any officer of the company, any liquidator of the company and any receiver or manager, shall be punishable with fine which may extend to 2*[five thousand rupees].

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1. Substituted by Act 11 of 2003, Section 104, for "or under the supervision of the Court".

2. Substituted by Act 53 of 2000, Section 208, for "five hundred rupees" (w.e.f. 13-12-2000).

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Where a company is being wound up, all books and papers of the company and of the liquidators shall, as between the contributories of the company be prima facie evidence of the truth of all matters purporting to be therein recorded.



(1) At any time after the making of an order for the winding up of a company by 1*[the Tribunal], any creditor or contributory of the company may, if 2*[the Supreme court], by rules prescribed so permit and in accordance with and subject to such rules but not further or otherwise, inspect the books and papers of the company.

(2) Nothing in sub-section (1) shall be taken as excluding or restricting any rights conferred by any law for the time being in force-

(a) On the Central or a State Government; or

(b) On any authority or officer thereof; or

(c) On any person acting under the authority of any such Government or of any such authority or officer.

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1. Substituted by Act 11 of 2003, Section 105, for "or subject to the supervision of the Court".

2. Substituted by Act 65 of 1960, Section 189, for "the Central Government" (w.e.f. 28-12-1960).

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(1) When the affairs of a company have been completely wound up and it is about to be dissolved, its books and papers and those of the liquidator may be disposed of as follows, that is to say:-

1*[(a) In the case of winding up by the Tribunal, in such manner as the Tribunal directs;]

(b) In the case of a member's voluntary winding up, in such manner as the company by special resolution directs; and

(c) In the case of a creditor's voluntary winding up, in such manner as the committee of inspection or, if there is no such committee, as the creditors of the company may direct.

(2) After the expiry of five years from the dissolution of the company, no responsibility shall rest on the company, the liquidator, or any person to whom the custody of the books and papers has been committed, by reason of any book or paper not being forthcoming to any person claiming to be interested therein.

(3) The Central Government may, by rules,-

(a) Prevent for such period (not exceeding five years from the dissolution of the, company) as the Central Government thinks proper, the destruction of the books and papers of a company which has been wound up and of its liquidator; and

(b) Enable any creditor or contributory of the company to make representations to the Central Government in respect of the matters specified in clause (a) and to2[appeal to the Tribunal] from any direction which may be given by the Central Government in the matter.

(4) If any person acts in contravention of any such rules or of any direction of the Central Government there under, he shall be punishable with imprisonment for a term which may extend to six months, or with fine which may extend to3[fifty thousand rupees], or with both.

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1. Substituted by Act 11 of 2003, Section 106, for clause (a) (See Annexe).

2. Substituted by Act 11 of 2003, Section 106, for "appeal to the Court".

3. Substituted by Act 53 of 2000, Section 209, for "five thousand rupees" (w.e.f. 13-12-2000).

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Last updated on September, 2016

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