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The Companies Act, 1956

Title : The Companies Act, 1956

Year : 1956



(1) Notice of any resolution passed at a creditors' meeting in pursuance of section 500 shall be given by the company to the Registrar within ten days of the passing thereof.

(2) If default is made in complying with sub-section (1), the company, and every officer of the company who is in default, shall be punishable with fine which may extend to1*[five hundred rupees] for every day during which the default continues. For the purposes of this section, a liquidator of the company shall be deemed to be an officer of the company.

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1. Substituted by Act 53 of 2000, Section 200, for "fifty rupees" (w.e.f. 13-12-2000).

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(1) The creditors and the company at their respective meetings mentioned in section 500 may nominate a person to be liquidator for the purpose of winding up the affairs and distributing the assets of the company.

(2) If the creditors and the company nominate different persons the person nominated by the creditors shall be liquidator:-

Provided
that any director, member or creditor of the company may, within seven days after the date on which the nomination was made by the creditors, apply to the1[Tribunal] for an order either directing that the person nominated as liquidator by the company shall be liquidator instead of or jointly with the person nominated by the creditors, or appointing the Official Liquidator or some other person to be liquidator instead of the person appointed by the creditors.

(3) If no person is nominated by the creditors, the person if any, nominated by the company shall be liquidator.

(4) If no person is nominated by the company, the person, if any, nominated by the creditors shall be liquidator.]

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1. Substituted by Act 11 of 2003, Section 86, for "Court".

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(1) The creditors at the meeting to be held in pursuance of section 500 or at any subsequent meeting may, if they think fit, appoint a committee of inspection consisting of not more than five persons.

(2) If such a committee is appointed, the company may, either at the meeting at which the resolution for voluntary winding up is passed or at any subsequent general meeting, appoint such number of persons (not exceeding five) as they think fit to act as members of the committee:-

Provided that the creditors may, if they think fit, resolve that all or any of the persons so appointed by the company ought not to be members of the committee of inspection.

(3) If the creditors so resolve, the persons mentioned in the resolution shall not, unless the1*[Tribunal] otherwise directs, be qualified to act as members of the committee.

(4) On any application to the1*[Tribunal] for a direction under sub-section (3), the1*[Tribunal] may, if it thinks fit, appoint other persons to act as members of the committee of inspection in the place of the persons mentioned in the creditors' resolution.

(5) Subject to the provisions of sub-sections (1) to (4) and to such rules as may be made by the Central Government, the provisions of section 465 [except sub-section (1) thereof] shall apply with respect to a committee of inspection appointed under this section as they apply with respect to a committee of inspection appointed in a winding up by the1*[Tribunal]

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1. Substituted by Act 11 of 2003, Section 86, for "Court".

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(1) The committee of inspection, or if there is no such committee, the creditors, may fix the remuneration to be paid to the liquidator or liquidators.

(2) Where the remuneration is not so fixed, it shall be determined by the1*[Tribunal].

(3) Any remuneration fixed under sub-section (1) or (2) shall not be increased in any circumstances whatever, whether with or without the sanction of the1*[Tribunal].

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1. Substituted by Act 11 of 2003, Section 86, for "Court".

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On the appointment of a liquidator, all the powers of the Board of directors shall cease, except insofar as the committee of inspection, or if there is no such committee, the creditors in general meeting, may sanction the continuance thereof.



If a vacancy occurs by death, resignation or otherwise, in the office of a liquidator (other than a liquidator appointed by, or by the direction of, the1*[Tribunal]), the creditors in general meeting may fill the vacancy.

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1. Substituted by Act 11 of 2003, Section 86, for "Court".

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The provisions of section 494 shall apply in the case of a creditors' voluntary winding up as in the case of a members' voluntary winding up, with the modification that the powers of the liquidator under that section shall not be exercised except with the sanction either of the1*[Tribunal] or of the committee of inspection.

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1. Substituted by Act 11 of 2003, Section 86, for "Court".

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(1) In the event of the winding up continuing for more than one year, the liquidator shall-

(a) Call a general meeting of the company and a meeting of the creditors at the end of the first year from the commencement of the winding up and at the end of each succeeding year, or as soon thereafter as may be convenient within three months from the end of the year or such longer period as the Central Government may allow; and

(b) Lay before the meetings an account of hi s acts and dealings and of the conduct of the winding up during the preceding year, together with a statement in the prescribed form and containing the prescribed particulars with respect to the proceedings in, and position of, the winding up.

(2) If the liquidator fails to comply with sub-section (1) he shall be punishable, in respect of each failure, with fine which may extend to1*[one thousand rupees].

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1. Substituted by Act 53 of 2000, Section 201, for "one hundred rupees" (w.e.f. 13-12-2000).

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(1) As soon as the affairs of the company are fully wound up, the liquidator shall-

(a) Make up an account of the winding up, showing how the winding up has been conducted and the property of the  company has been disposed of; and

(b) Call a general meeting of the company and a meeting of the creditors for the purpose of laying the account before the meetings and giving any explanation thereof.

(2) Each such meeting shall be called by advertisement-

(a) Specifying the time, place and object thereof; and

(b) Published not less than one month before the meeting in the Official Gazette and also in some newspapers circulating in the district where the registered office of the company is situate.

(3) Within one week after the date of the meetings, or if the meetings are not held on the same date, after the date of the later meeting, the liquidator shall send to the 1*[Registrar and the 2* [Official Liquidator referred to in clause (c) of sub-section (1) of section 448] a copy each of the account and shall make a return to each of them] of the holding of the meetings and of the date or dates on which they were held. If the copy is not so sent or the return is not so made, the liquidator shall be punishable with fine which may extend to 3*[five hundred rupees] for every day during which the default continues.

(4) If a quorum (which for the purposes of this section shall be two persons) is not present at either of such meetings, the liquidator shall, in lieu of the return referred to in sub-section (3), make a return that the meeting was duly called and that no quorum was present thereat. Upon such a return being made within one week after the date fixed for the meeting, the provisions of sub-section (3) as to the making of the return shall, in respect of that meeting, be deemed to have been complied with.

4*[(5) The Registrar, on receiving the account and also, in respect of each such meeting, either the return mentioned in sub-section (3) or the return mentioned in sub-section (4) shall forthwith register them.

(6) The 2*[Official Liquidator referred to in clause (c) of sub-section (1) of section 448], on receiving the account and either the return mentioned in sub-section (3) or the return mentioned in sub-section (4), shall, as soon as may be, make, and the liquidator and all officers, past or present, of the company shall give the 2* [Official Liquidator referred to in clause (c) of sub-section (1) of section 448] all reasonable facilities to make, a scrutiny of the books and papers of the company and if on such scrutiny the 2* [Official Liquidator referred to in clause (c) of sub-section (1) of section 448] makes a report to the 5*[Tribunal] that the affairs of the company have not been conducted in a manner prejudicial to the interests of its members or to public interest, then, from the date of the submission of the report to the 5*[Tribunal] the company shall be deemed to be dissolved.

(6A) If on such scrutiny the 2 [Official Liquidator referred to in clause (c) of sub-section (1) of section 448] makes a report to the 5*[Tribunal] that the affairs of the company have been conducted in a manner prejudicial as aforesaid, the 5*[Tribunal] shall by order direct the 2*[Official Liquidator referred to in clause (c) of sub-section (1) of section 448] to make a further investigation of the affairs of the company and for that purpose shall invest him with all such powers as the 5*[Tribunal] may deem fit.

(6B) On the receipt of the report of the 2*[Official Liquidator referred to in clause (c) of sub-section (1) of section 448] on such further investigation the 5*[Tribunal] may either make an order that the company shall stand dissolved with effect from the date to be specified by the 5*[Tribunal] therein or make such other order as the circumstances of the case brought out in the report permit.]

(7) If the liquidator fails to call a general meeting of the company or a meeting of the creditors as required by this section, he shall be punishable, in respect of each such failure, with fine which may extend to 6*[five thousand rupees].

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1. Substituted by Act 31 of 1965, Section 55, for certain words (w.e.f. 15-10-1965).

2. Substituted by Act 11 of 2003, Section 87, for "Official Liquidator".

3. Substituted by Act 53 of 2000, Section 202, for "fifty rupees" (w.e.f. 13-12-2000).

4. Substituted by Act 31 of 1965, Section 55, for sub-sections (5) and (6) (w.e.f. 15-10-1965).

5. Substituted by Act 11 of 2003, Section 87, for "Court".

6. Substituted by Act 53 of 2000, Section 202, for "five hundred rupees" (w.e.f. 13-12-2000).

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The provisions contained in sections 511 to 521, both inclusive, shall apply to every voluntary winding up, whether a members' or a creditors' winding up.



Subject to the provisions of this Act as to preferential payments, the assets of a company shall, on its winding up be applied in satisfaction of its liabilities pari passu and subject to such application, shall, unless the articles otherwise provide, be distributed among the members according to their rights and interests in the company.

511A - 1* Application of section 454 to voluntary winding up

The provisions of section 454 shall, so far as may be, apply to every voluntary winding up as they apply to the winding up by the 2*[Tribunal] except that references to-

(a) The 2*[Tribunal] shall be omitted;

(b) The Official Liquidator or the provisional liquidator shall be construed as references to the liquidator; and

(c) The "relevant date" shall be construed as references to the date of commencement of the winding up.]

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1. Inserted by Act 31 of 1965, Section 56 (w.e.f. 15-10-1965).

2. Substituted by Act 11 of 2003, Section 88, for "Court".

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(1) The liquidator may,-

(a) In the case of a members' voluntary winding up, with the sanction of a special resolution of the company, and in the case of a creditors' voluntary winding up, with the sanction of the1*[Tribunal] or, the committee of inspection or, if there is no such committee, of a meeting of the creditors, exercise any of the powers given by2*[clauses (a) to (d) of sub-section (1)] of section 457 to a liquidator in a winding up by the1*[Tribunal];

(b) Without the sanction referred to in clause (a), exercise any of the other powers given by this Act to the liquidator in a winding up by the1*[Tribunal];

(c) Exercise the power of the1*[Tribunal] under this Act of settling a list of contributories (which shall be prima facie evidence of the liability of the persons named therein to be contributories);

(d) Exercise the power of the1[Tribunal] of making calls;

(e) Call general meetings of the company for the purpose of obtaining the sanction of the company by ordinary or special resolution, as the case may require, or for any other purpose he may think fit.

(2) The exercise by the liquidator of the powers given by clause (a) of sub-section (1) shall be subject to the control of the1*[Tribunal]; and any creditor or contributory may apply to the1*[Tribunal] with respect to any exercise or proposed exercise of any of the posers conferred by this section.

(3) The liquidator shall pay the debts of the company and shall adjust the rights of the contributories among themselves.

(4) When several liquidators are appointed, any power given by this Act may be exercised by such one or more of them as may be determined at the time of their appointment, or, in default of such determination, by any number of them not being less than two.

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1. Substituted by Act 11 of 2003, Section 88, for "Court".

2. Substituted by Act 65 of 1960, Section 179, for "clauses (i) to (iv) of sub-section (2)" (w.e.f. 28-12-1960).

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(1) A body corporate shall not be qualified for appointment as liquidator of a company in a voluntary winding up.

(2) Any appointment made in contravention of sub-section (1) shall be void.

(3) Any body corporate which acts as liquidator of a company and very director 1[***] or a manager thereof shall be punishable with fine which may extend to 2*[ten thousand rupees].

3*[Provided that, notwithstanding anything contained in any other law for the time being in force, a body corporate consisting of such professionals as may be approved by the Central Government from time to time, shall be qualified for appointment as Official Liquidator under section 448.]

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1. The Words "managing agent, secretaries and treasurers," omitted by Act 53 of 2000, Section 203  (w.e.f. 13-12-2000).

2. Substituted by Act 53 of 2000, Section 203, for "one thousand rupees" (w.e.f. 13-12-2000).

3. Inserted by Act 11 of 2003, Section 89.

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Any person who gives or agrees or offers to give, to any member or creditor of a company any gratification whatever with a view to-

(a) Securing his own appointment or nomination as the company's liquidator; or

(b) Securing or preventing the appointment or nomination of some person other than himself, as the company's liquidator; shall be punishable with fine which may extend to1*[ten thousand rupees].

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1. Substituted by Act 53 of 2000, Section 204, for "one thousand rupees" (w.e.f. 13-12-2000).

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(1) If from any cause whatever, there is no liquidator acting, the Tribunal may appoint the Official Liquidator or any other person as a liquidator.

(2) The Tribunal may, on cause shown, remove a liquidator and appoint the Official Liquidator or any other person as a liquidator in place of the removed liquidator.

(3) The Tribunal may also appoint or remove a liquidator on the application made by the Registrar in this behalf.

(4) If the Official Liquidator is appointed as liquidator under the proviso to sub-section (2) of section 502 or under this section, the remuneration to be paid to him shall be fixed by the Tribunal and shall be credited to the Central Government.]

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1. Substituted by Act 11 of 2003, Section 90, for section 515 (See Annexe).

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(1) The liquidator shall, within1*[thirty] days after his appointment, publish in the Official Gazette, and deliver to the Registrar for registration, a notice of his appointment in the from prescribed.

(2) If the liquidator fails to company with sub-section (1), he shall be punishable with fine which may extend to2*[five hundred rupees] for every day during which the default continues.

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1. Substituted by Act 31 of 1965, Section 62, and Schedule, for "twenty-one" (w.e.f. 15-10-1965).

2. Substituted by Act 53 of 2000, Section 205, for "fifty rupees" (w.e.f. 13-12-2000).

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(1) Any arrangement entered into between a company about to be, or in the course of being, wound up and its creditors shall, subject to the right of appeal under this section, be binding on the company and on the creditors if it is sanctioned by a special resolution of the company and acceded to by three-fourths in number and value of the creditors.

(2) Any creditor or contributory may, within three weeks from the completion of the arrangement, appeal to the1*[Tribunal] against it and the1*[Tribunal] may thereupon, as it thinks just, amend, vary, confirm or set aside the arrangement.

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1. Substituted by Act 11 of 2003, Section 91, for "Court".

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(1) The liquidator or any contributory or creditor may apply to the Tribunal,-

(a) To determine any question arising in the winding up of a company; or

(b) To exercise, as respects the enforcing of calls, the staying of proceedings or any other matter, all or any of the powers which the Tribunal might exercise if the company were being wound up by the Tribunal.

(2) The liquidator or any creditor or contributory may apply to the Tribunal for an order setting aside any attachment, distress or execution put into force against the estate or effects of the company after the commencement of the winding up.

(3) The Tribunal, if satisfied on an application under sub-section (1) or sub-section (2) that the determination of the question or the required exercise of power or the order applied for will be just and beneficial, may accede wholly or partially to the application on such terms and conditions as it thinks fit, or may make such other order on the application as it thinks just.

(4) A copy of an order staying the proceedings in the winding up, made by virtue of this section, shall forthwith be forwarded by the company, or otherwise as may be prescribed, to the Registrar, who shall make a minute of the order in hi s books relating to the company.]

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1. Substituted by Act 11 of 2003, Section 92, for section 518 (See Annexe).

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(1) The liquidator may make a report to the Tribunal stating that in hi s opinion a fraud has been committed by any person in the promotion or formation of the company or by any officer of the company in relation to the company since its formation; and the Tribunal may, after considering the report, direct that that person or officer shall attend before the Tribunal on a day appointed by it for that purpose, and be publicly examined as to the promotion or formation or the conduct of the business of the company, or as to hi s conduct and dealings as officer thereof.

(2) The provisions of sub -sections (2) to (11) of section 478 shall apply in relation to any examination directed under sub-section (1) as they apply in relation to an examination directed under sub -section (1) of section 478 with references to the liquidator being substituted for references to the Official Liquidator in those provisions.]

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1. Substituted by Act 11 of 2003, Section 92, for section 519 (See Annexe).

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All costs, charges and expenses properly incurred in the winding up, including the remuneration of the liquidator, shall, subject to the rights of secured creditors, if any, be payable out of the assets of the company in priority to all other claims.
Last updated on September, 2016

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