Page 342 - DMGT407Corporate and Business Laws

Unit 14: Winding up and Dissolution of a Company

cancel any of his property, for the purpose of evading payment of calls or of avoiding Notes
examination in respect of the affairs of the company, cause: (a) the contributory to be
arrested and safely kept until such time as the Tribunal may order; and (b) his books and
papers and movable property be seized and safely kept until such time as the Court may
order.
12. Power to order for dissolution of the company (s.481): When the affairs of a company have
been completely wound up or when the court is of the opinion that, the liquidator cannot
proceed with the winding up of a company for want of funds and assets or for any other
reason whatsoever and it is just and reasonable in the circumstances of the case that an
order of dissolution of the company should be made, the court shall make an order that
the company be dissolved from the date of the order. The liquidator must, within 30 days,
send a copy of the order to the Registrar who shall make in his books a minute of the
dissolution of the company. If he makes a default in forwarding a copy as aforesaid, he
shall be punishable with fine which may extend to ` 500 for every day during which the
default continues.

On the expiry of 5 years from the date of dissolution, the name of the company should be struck
off the register. But within 2 years of the date of the dissolution on application by the liquidator
of the company or by any other person who appears to the court to be interested, the court may
make an order, upon such terms as the court thinks fit, declaring the dissolution to have been
void. After such an order is passed, such proceedings may be taken as might have been taken if
the company had not been dissolved (s.559).

14.2.5 Voluntary Winding up

Winding up by the creditors or members without any intervention of the court is called ‘voluntary
winding up’. In voluntary winding up, the company and its creditors are left to settle their
affairs without going to the court for directions or orders if and when necessary. Winding up
should not be confused with insolvency. Company may be solvent and running a prosperous
business yet it may decide to be wound up voluntarily, e.g., in pursuance of a scheme of
reconstruction or amalgamation.
A company may be wound up voluntarily: (1) if the company in general meeting passes an
ordinary resolution for voluntary winding up where the period fixed by the Articles for the
duration of the company has expired or the event has occurred on which under the Articles the
company is to be dissolved; (2) if the company resolves by special resolution that it shall be
wound up voluntarily (s.484).
When a company has passed a resolution for voluntary winding up, it must within 14 days of the
passing of the resolution, give notice of the resolution by advertisement in official gazette and
also in some newspaper circulating in the district where the registered office of the company is
situated. In case of default, the company and every officer of the company who is in default shall
be punishable with fine which may extend up to ` 500 for every day during which the default
continues (s.485).

Notes Consequences of voluntary winding up
The consequences of voluntary winding up are as follows:
1. A voluntary winding up is deemed to commence at the time when the resolution for
voluntary winding up is passed (s.486). This will be so even when after passing a
Contd...

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