Winding up of a company is defined as a process by which the life of a company is brought to an end and its property

administered for the benefit of its members and creditors. In words of Professor Gower, “Winding up of a company is
the process whereby its life is ended and its Property is administered for the benefit of its members & creditors. An
Administrator, called a liquidator is appointed and he takes control of the company, collects its assets, pays its debts
and finally distributes any surplus among the members in accordance with their rights.”

Under the process, the life of the company is ended & its property is administered for the benefits of the members &
creditors. A liquidator is appointed to realise the assets & properties of the company. After payments of the debts, is
any surplus of assets is left out they will be distributed among the members according to their rights. Winding up does
not necessarily mean that the company is insolvent. A perfectly solvent company may be wound up by the approval of
members in a general meeting.

WINDING UP A REGISTERED COMPANY

The Companies Act provides for two modes of winding up a registered company. One of which is Compulsory Winding
Up or Winding up by the Tribunal

Grounds for Compulsory Winding Up or Winding up by the Tribunal:

1. If the company has, by a Special Resolution, resolved that the company be wound up by the Tribunal.

2. If default is made in delivering the statutory report to the Registrar or in holding the statutory meeting. A petition on
this ground may be filed by the Registrar or a contributory before the expiry of 14 days after the last day on which the
meeting ought to have been held. The Tribunal may instead of winding up, order the holding of statutory meeting or
the delivery of statutory report.

3. If the company fails to commence its business within one year of its incorporation, or suspends its business for a
whole year. The winding up on this ground is ordered only if there is no intention to carry on the business and the
Tribunal's power in this situation is discretionary.

4. If the number of members is reduced below the statutory minimum i.e. below seven in case of a public company
and two in the case of a private company.

5. If the company is unable to pay its debts.

6. If the tribunal is of the opinion that it is just and equitable that the company should be wound up.

7. Tribunal may inquire into the revival and rehabilitation of sick units. It its revival is unlikely, the tribunal can order its
winding up.

8. If the company has made a default in filing with the Registrar its balance sheet and profit and loss account or
annual return for any five consecutive financial years.

9. If the company has acted against the interests of the sovereignty and integrity of India, the security of the State,
friendly relations with foreign States, public order, decency or morality.

Another role is that the Winding Up Subject To Supervision Of Court

1. Winding up subject to supervision of court, is different from "Winding up by court."
2. Here the court can only supervise the winding up procedure. Resolution for winding up, is passed by members in
the general meeting. It is only for some specific reasons, that court may supervise the winding up proceedings. The
court may put up some special terms and conditions also.

3. However, liberty is granted to creditors, contributories or other to apply to court for some relief. (522) Where a
Company is being wound up voluntarily, any person who would have been entitled to petition for compulsory winding
up may petition instead for the voluntary winding up to be continued subject to the supervision of court.

4. The Petitioner must prove that voluntary winding up cannot continue with fairness to all concerned parties.

5. Court may then appoint an additional Liquidator or continue with the existing Liquidator to give security.

6. The Liquidator must file with the Registrar every three months a report of the progress of the liquidation - The court
may also appoint liquidators, in addition to already appointed, or remove any such liquidator. The court may also
appoint the official liquidator, as a liquidator to fill up the vacancy.

7. Liquidator is entitled to do all such things and acts, as he thinks best in the interest of company. He shall enjoy the
same powers, as if the company is being wound-up voluntarily.

8. The court also may exercise powers to enforce calls made by the liquidators, and such other powers, as if an order
has been made for winding up the company altogether by court.

administered for the benefit of its members and creditors. In words of Professor Gower, “Winding up of a company is
the process whereby its life is ended and its Property is administered for the benefit of its members & creditors. An
Administrator, called a liquidator is appointed and he takes control of the company, collects its assets, pays its debts
and finally distributes any surplus among the members in accordance with their rights.”

Under the process, the life of the company is ended & its property is administered for the benefits of the members &
creditors. A liquidator is appointed to realise the assets & properties of the company. After payments of the debts, is
any surplus of assets is left out they will be distributed among the members according to their rights. Winding up does
not necessarily mean that the company is insolvent. A perfectly solvent company may be wound up by the approval of
members in a general meeting.

WINDING UP A REGISTERED COMPANY

The Companies Act provides for two modes of winding up a registered company. One of which is Compulsory Winding
Up or Winding up by the Tribunal

Grounds for Compulsory Winding Up or Winding up by the Tribunal:

1. If the company has, by a Special Resolution, resolved that the company be wound up by the Tribunal.

2. If default is made in delivering the statutory report to the Registrar or in holding the statutory meeting. A petition on
this ground may be filed by the Registrar or a contributory before the expiry of 14 days after the last day on which the
meeting ought to have been held. The Tribunal may instead of winding up, order the holding of statutory meeting or
the delivery of statutory report.

3. If the company fails to commence its business within one year of its incorporation, or suspends its business for a
whole year. The winding up on this ground is ordered only if there is no intention to carry on the business and the
Tribunal's power in this situation is discretionary.
4. If the number of members is reduced below the statutory minimum i.e. below seven in case of a public company
and two in the case of a private company.

5. If the company is unable to pay its debts.

6. If the tribunal is of the opinion that it is just and equitable that the company should be wound up.

7. Tribunal may inquire into the revival and rehabilitation of sick units. It its revival is unlikely, the tribunal can order its
winding up.

8. If the company has made a default in filing with the Registrar its balance sheet and profit and loss account or
annual return for any five consecutive financial years.

9. If the company has acted against the interests of the sovereignty and integrity of India, the security of the State,
friendly relations with foreign States, public order, decency or morality.

Another role is that the Winding Up Subject To Supervision Of Court

1. Winding up subject to supervision of court, is different from "Winding up by court."

2. Here the court can only supervise the winding up procedure. Resolution for winding up, is passed by members in
the general meeting. It is only for some specific reasons, that court may supervise the winding up proceedings. The
court may put up some special terms and conditions also.

3. However, liberty is granted to creditors, contributories or other to apply to court for some relief. (522) Where a
Company is being wound up voluntarily, any person who would have been entitled to petition for compulsory winding
up may petition instead for the voluntary winding up to be continued subject to the supervision of court.

4. The Petitioner must prove that voluntary winding up cannot continue with fairness to all concerned parties.

5. Court may then appoint an additional Liquidator or continue with the existing Liquidator to give security.

6. The Liquidator must file with the Registrar every three months a report of the progress of the liquidation - The court
may also appoint liquidators, in addition to already appointed, or remove any such liquidator. The court may also
appoint the official liquidator, as a liquidator to fill up the vacancy.

7. Liquidator is entitled to do all such things and acts, as he thinks best in the interest of company. He shall enjoy the
same powers, as if the company is being wound-up voluntarily.

8. The court also may exercise powers to enforce calls made by the liquidators, and such other powers, as if an order
has been made for winding up the company altogether by court.