Introduction
When a winding up order has been released or a provisional has been passed, no suit or other legal proceedings shall be commenced or passed, 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 and subject to such terms as the Tribunal may impose. Provided that any application to the Tribunal seeking leave under this section shall be disposed of by the Tribunal within 60 days. Nothing in Sub-section(1) shall apply to any proceeding pending in appeal before the Supreme Court or a High Court.
What is the Effect of winding up order, What is stay of suits, etc on winding order?
What is the Jurisdiction of Tribunal Section 278,279 and 280 Of Indian Companies Act 2013?
As per companies act 2013, The effects of winding up order, stay of suits, etc., on winding up order and Jurisdiction of Tribunal are defined Under section 278,279 and 280 of Indian Companies act 2013 Provisions are shown below .
Effects of Winding up order and Stay of suits.
Section 278 Of the Indian Companies Act 2013
As Per section 278 of the Indian Companies act section 278 effects of winding up order.as per this section the order for the winding up of a company shall operate in favor of all creditors and contributories of the company as if it had been made out on the joint petition of both parties as an by the both creditors and contributories.
Section 279 Of Indian Companies Act 2013
As per this Section 279 of the Indian Companies Act 2013”Stay of suits, on winding up order”. When a winding up order has been passed or a provisions has been made liquidator, no suit or other legal proceeding shall be imposed, or if pending at that date of the winding up order, shall be proceeded with, by or against the company, except with the leave of the Tribunal and subject to such terms as the Tribunal may Impose. As per section if any application Tribunal seeking leaves under this section shall be disposed of by the Tribunal itself within stipulate time of 60 days not beyond or less than given time period.
Nothing in Sub-section (1) shall apply to any proceeding pending in appeal before the Supreme court or a High Court.
Section 280 Of Indian Companies Act 2013
As per this section 280 of the Indian Companies Act 2013,The tribunal shall, Notwithstanding anything contained in any other law for the time being in force, have jurisdiction to entertain, or dispose of:-
1)Any Suit or Proceedings by or against the company.
2)Any claim made by or against the particular company,Inculding claims by or against any of it’s branches in India.
3)any application made under section 233.
4)any scheme submitted under section 262.
5)Any question of priorities or any other question whatsoever, whether of law or facts including those of 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, whether such suit or proceeding has been instituted or is instituted or such claim or question has arisen or arises or such application has been made or such scheme has been submitted or is submitted, before or after the order for the winding up of the company is made.
Winding Up-Companies Act-1956
Section 425 to 560,It refers to Modes of Winding up
In this section from section 425 to 560 refers to Modes of Winding Up of a Company which may be either:
1)By the Tribunal of the Particular area
2)Voluntary or
3) If it is omitted
The above said provision of this act with regards to winding up of the order applies, unless it appears, to the winding up of a company in any of those modes.
Winding Up by the Tribunal-Companies Act-2013
From section 271 to 303 refers the winding up by the tribunal in the companies’ act 2013
Section 271:As per this section refers that in which circumstances the company may be wound up by Tribunal itself: It says that it by the Registrar or any other person who is being authorized by the central Government by the notification under this act, The Tribunal is of the opinion that the affairs of the company have been conducted in a fraudulent manner or for any wrong cause, under this circumstances if any company found illegal that company shall be wound up as per the section of 271.
Section 272:Petition for winding up:
Under this section if any person or shareholder found victim, who has raised an petition against any other company for winding up because of the company involved in fraudulent matter, in that case or the accused person may be the holder of fully paid-up shares of that the company may have no assets at all or may have no surplus assets left for distribution among the shareholders because of caused loss or due to involved in a fraudulent matters, in such case the petition can be raised by the victim or himself for an winding up of the such companies.
Section 273-Powers of Tribunal-Under Companies Act,2013
As Per Above section 273,There are certain Powers and Functions which is played by the Tribunal under the companies Act 2013,For the betterment of the Companies whether it is for winding up of the companies or for helping of that companies, Under this provisions liquidator of the company till the making of a winding up order:1)Make an order for the winding up of the company with or without any costs 2)Tribunal also has a power where a Petition is Presented on the ground that it is just and equitable that the company should be wound up3)He has a power to make any interim order as it thinks fit.4)Tribunal may make any other order as it thinks fit.
An order under section 273(1) shall be made within 90 days from the date of presentation of the parties.
Liability as Contributories of Present and Past Members
1)In the event of a company being wound up, every present and past member shall be liable to contribute to the assets of the company to an amount sufficient for payment of its debts and liabilities and the costs, charges and expenses of the winding up and for the adjustment of the rights of the contributories among themselves, subjects to the provisions of section 427and subjects also to the following qualifications, namely:
A)A past member shall not be liable to contribute if he has ceased to be a member for one year or upwards before the commencement of the winding up;
B)A past member shall not be liable to contribute in respect of any debts of the company after he ceased to be a member;
C)No cost member shall be liable to contribute unless it appears to the Tribunal that the present members are unable to satisfy the contributions required to be made by them in pursuance of this act:
D)In the case of a company limited by shares, no contribution shall be required from any past or present member exceeding the amount, if any, unpaid on the shares in respect of which he is liable as such member;
Obligations of Directors and managers whose Liability is Unlimited
In the winding up a limited company, any director or manager, whether past or present, whose liability is under the provisions of this Act, unlimited,shall,in addition to his liability, if any to contribute as an ordinary member. Be liable to make a further contribution as if her were, at the commencement of the winding up, a member of an unlimited company
Included that-
1)A past director or manager shall not be liable to make such further contribution,if he has ceased to hold office for a year or upwards before the commencement of the winding up;
2)A past director or manager shall not be liable to make such further contribution in respect of any debt or liability of the company.
Winding Up by the Tribunal-
Cases in which company may be wound up by the Tribunal
#Circumstances in which company may be wound up by Tribunal
A company may be wound by the order has been passed by the Tribunal-
1) If the company has, by special resolution, resolved that the company be wound by the Tribunal;
2) If default is made in registrating the statutory report to the registrar or in holding the meeting.
3)If the company does not commence it’s business within a year from its incorporation, or suspends it’s bushiness for a whole year;
4)If the number of the member of the company is reduced ,in case of a public company.
5)If the company is not able to pay previous and present debts.
Winding up of the company in case company deemed unable to pay its Debts
A company may wind up of the company in case of company is unable to pay it’s debts.
1) A company shall be deemed to be unable to pay its debts-
2)If a creditor, by assignment or otherwise to whom the company is indebted in a sum exceeding {one lakh} rupees. Then due, has served, on the company, by causing it to be delivered at its registered office, by registered post.
Custody of company’s Properties-section-283
Where a winding up under 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. In such case can take into custody or control of property. Also take 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 in the custody of the tribunal from the date of the order for the winding up of the company.
On an application by the company liquidator or otherwise. The tribunal may, at any time after the making of a winding up order. Even any money, property or books and papers in his custody or under his control to which the company is or appears to be entitled.
Settlement of list of Contributories and Application of Assets –Section 285:
After passing of a winding up order by the Tribunal, it shall settle a list of contributors, 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. While settling the list of contributory, the Tribunal shall include every person, who is or has been a member, who shall be liable to contribute to the assets of the company an amount sufficient for payment of the debts and liabilities and the costs, charges and expenses of winding up
Judicial Precedents
JB Diamonds Ltd;in v/s S.J.KATHAWALLA.J-[2019]110 taxmann.com 387 (Bombay)
Company “j” was ordered to be wound up liquidator was director to take possession of assets of company-in-liquidation.
Liquidator took possession of office spaces of company-in-liquidation. As regard to remaining properties, liquidator was able to only take symbolic possession thereof, since tenants in possession of their respective premises refused to hand over same on ground that they have obtained order/decrees from Small cause courts restraining company-in-liquidation from disturbing their possession. It was also noted that said tenants had failed to provide any agreement to establish their tenancy.further,there were collusion between ex-directors of company-in-liquidation and directors/partners of tenants.
Conclusion:
As per The Companies act, winding up explains about winding up of the companies by the Tribunal liquidator, winding up order, application for stay of suits etc. On winding up Oder, report by company liquidator. And company can be wound up under the circumstances where the shareholders or partners of the companies cannot pay debts in such a case company can be wound up by the order of the tribunal liquidator, but in case the suit was filed after the order pass for the winding up of the company in such a case Tribunal will not entertained. In that case company will be wound up on the given time period.
References
https://indiankanoon.org/docfragment/71560302/?formInput=stay%20of%20winding%20up%20%20%20%20doctypes%3A%20delhi
https://www.taxmanagementindia.com/visitor/acts_rules_chapter_provisions.asp?Ch_ID=1008
https://www.aaptaxlaw.com/Companies-Act-2013/section-278-279-280-companies-act-2013-effect-of-winding-up-order-stay-of-suits-on-winding-up-order-jurisdiction-of-tribunal-sec-278-279-280-of-indian-companies-act-2013.html
Section 279 of Companies Act, 2013 – Stay of suits, etc., on winding up order
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