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Unit 14: Winding Up of Companies

Codes: Notes
A B C D
(a) 2 4 3 1
(b) 2 3 1 4

(c) 3 4 1 2
(d) 4 1 3 2

14.6 General Powers of the Court

The general powers of the court are as follows:

1. Power of Court to Stay Winding Up (s.446): The court may at any time after making a
winding up order (on the application either of the official liquidator of any creditor or
contributor and on proof to the satisfaction of the court that, all proceedings in relation to
the winding up order be stayed) make an order staying the proceedings either altogether
or for a limited time, on such terms and conditions as the court thinks fit.
2. Settlement of the List of Contributories (s.467): The court has the power to cause the assets
of the company to be collected and applied in discharge of its liabilities. For this purpose
the court has the power to make a list of contributories. In settling the list of contributories
the court shall distinguish between those who are contributories in their own right and
those who are contributories as being representatives of, or liable for the debts of others.
3. The Power to Make Calls (s.470): The court is empowered to make call on all or any of the
contributories to the extent of their liability. It should be noted that, no statutory liability
for an unpaid call can be set off against a credit except in the following cases: (a) in the case
of an unlimited company, a contributory may set off his debt against any money due to
him from the company on any independent dealing or contract with the company. But no
set off is allowed for any money due to him as a member of the company in respect of any
dividend or profit; (b) if, in the case of a limited company, there is any director or manager
whose liability is unlimited, he shall have the same right of set off as described in (a)
above; (c) in the case of any company, whether limited or unlimited when all the creditors
have been paid in full, any money due on any account whether to a contributory from the
company may be allowed to him by way of set off against any subsequent call.
4. Payment into Bank of Moneys Due to Company (s.471): The court may order any
contributory, purchaser or other person from whom any money is due to the company to
pay the money into the public account of India in the Reserve Bank of India instead of to
the liquidator.
5. Power to Exclude Creditors not Proving in Time (s.474): The court may fix a time or times
within which creditors are to prove their debts or claims. In such a case, if the creditors fail
to establish their claims in time, they may be excluded from the benefit of any distribution
made.

6. Adjustment of Rights of Contributories (s.475): The court is empowered to adjust the right
of the contributories among themselves and distribute any surplus among the person
entitled thereto.
7. Power to Order Costs (s.476): The court may, in the event of assets being insufficient to
satisfy the liabilities, make an order for the payment out of the assets, of the costs, charges
and expenses incurred in the winding up, in such order of priority inter se as the Court
thinks just.

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