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Unit 14: Winding Up of Companies

14.4.1 Statement of Affairs to be made to the Liquidator (s.454) Notes

When a winding up order is made by the court, the directors of the company must make to the
liquidator a statement as to the affairs of the company, stating the following particulars: (i) the
debts and liabilities of the company; (ii) the assets of the company, showing separately the cash
in hand and in bank, if any; (iii) the name, residence and occupation of each creditor stating
separately the amount of secured debts and unsecured debts; (iv) the debts due to the company
and the name, residence and occupation of each person from whom the sum is due and the
amount likely to be realised there from.
The object of such a statement is to give the liquidator an idea as to the financial affairs and
liabilities of the company. The creditors and contributories of the company can inspect the
statement. The statement should be made within 21 days (or such extended time not exceeding
3 months as the official liquidator or Tribunal may for special reasons allow) after the relevant
date. The relevant date is the date of the winding up order by the court or where a provisional
liquidator is appointed, the date of his appointment. The statement must be submitted and
verified by affidavit by one or more of the persons who, at the relevant date are the directors and
by the person who at that time is the manager, secretary or other chief officer of the company.
Defaulter shall be punishable with imprisonment up to 2 years or with fine up to 1,000 for
every day during which default continues or with both.
14.4.2 Committee of Inspection

The court may, at the time of making an order of winding of a company or at any time thereafter,
direct that there shall be appointed a committee of inspection to act with the liquidator. In such
a case the liquidator must, within 2 months from the date of such direction convene a meeting of
the creditors of the company for the purpose of determining who are to be members of the
committee. Within 14 days from the date of the creditors meeting (or such further time as the
Court in its direction may grant for the purpose), the liquidator should convene a meeting of the
contributories to consider the decision of the creditors’ meeting with respect to the membership
of the committee. It is open to the meeting of the contributories to accept the decision of the
creditors’ meeting with or without modifications or to reject it. The liquidator must apply to the
court for directions as to what the composition of the committee shall be and who shall be
members thereof. However, it will not be necessary to seek directions in this regard where the
meeting of the contributories accept the decision of the creditors’ meeting in its entirety.
Section 465 provides: (i) a committee of inspection cannot have more than 12 members; (ii) the
committee shall have the right to inspect the accounts of the liquidator at all reasonable times;
(iii) it must meet at such times as it may from time to time appoint and the liquidator or any
member of the committee may also call a meeting of the committee as and when he thinks
necessary; (iv) the quorum for the meeting of the committee shall be 1/3rd of the total number
or two whichever is higher; (v) a member of the committee may resign by notice in writing. But
where a member of the committee is adjudged an insolvent or compounds or arranges with his
creditors, or is absent from five consecutive meetings of the committee without the leave of the
members, he shall cease to remain a member.

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