Official Liquidators, Records and the Close of a Winding Up

In one line

The Tribunal may direct the prosecution of delinquent officers; the liquidator needs sanction to compromise; every invoice must say the company is in liquidation; money must go into a scheduled bank and unclaimed dividends into a special account; a pending liquidation must be reported yearly; a dissolution may be declared void within two years; the winding up is deemed to commence with the petition; and small companies are wound up summarily by the Official Liquidator under the Central Government.

In exam wording: section 356 is the power to declare a dissolution void, section 357 the commencement of winding up, section 359 the appointment of the Official Liquidator, and sections 361 to 365 the summary procedure for liquidation.

Why the law has this at all

A winding up is a long administration of other people's money, and the sections gathered here answer the practical questions that arise while it goes on.

How is the world told? By section 344, which requires every invoice, order and business letter to say the company is being wound up, so that nobody deals with it in ignorance.

Where is the money kept? By sections 349 to 352, which put it in the public account of India or a scheduled bank, forbid a private account, and provide a permanent home for dividends nobody claims.

Who watches a liquidation that drags on? By section 348, which requires an audited statement every year once the winding up passes twelve months.

What if a company is dissolved and something turns up afterwards? By section 356, which lets the Tribunal declare the dissolution void within two years, so that an asset discovered later, or a claim never made, is not lost forever.

And what about the company too small to be worth the Tribunal's time? By sections 361 to 365, a summary procedure, with fixed and short periods, administered by the Official Liquidator under the Central Government.

Some words this chapter uses

The Official Liquidator is a whole-time officer of the Central Government appointed under section 359. The Company Liquidator is the liquidator in a Tribunal winding up, appointed under section 275. A scheduled bank is one in the Second Schedule to the Reserve Bank of India Act, 1934. The commencement of the winding up is defined by section 357. Judicial notice means acceptance without proof.

Prosecution and compromise: sections 342 and 343

Section 342(1). If it appears to the Tribunal in the course of a winding up that any person who is or has been an officer, or any member, has been guilty of any offence in relation to the company, the Tribunal may, on the application of any person interested in the winding up or suo motu, direct the liquidator to prosecute the offender or to refer the matter to the Registrar.