Winding Up by the Tribunal: The Petition and the Order

In one line

A winding up petition may be presented by the company, a contributory, the Registrar, a person authorised by the Central Government or, on the sovereignty ground, a Government; the Tribunal must dispose of it within ninety days and may dismiss it, make interim orders, appoint a provisional liquidator or wind the company up; and once it does, the order operates for all creditors and contributories, no suit may proceed without leave, and the Tribunal takes jurisdiction over everything touching the company.

In exam wording: section 272 is who may petition, section 273 the powers of the Tribunal, section 274 the statement of affairs, section 277 the intimation and the winding up committee, section 278 the effect of the order, section 279 the stay of suits, and section 280 the Tribunal's jurisdiction.

Why the law has this at all

A winding up order does something no other order of a court does: it stops a company trading, discharges its employees, gathers all its creditors into one process and ends its existence.

Because the order is so drastic, the Act controls three things.

Who may ask for it. Not anybody with a grievance. Section 272 lists the petitioners exhaustively, and puts the fraud ground behind the Registrar and the sovereignty ground behind a Government.

How long it may take. A company under a pending winding up petition cannot borrow, cannot be sold and cannot plan. The ninety day limit in the proviso to section 273(1) exists because uncertainty is itself a harm.

And what happens the moment it is made. The order is for everybody, not only the petitioner; litigation stops; and the Tribunal takes over every question about the company, so the assets are not dissipated in a hundred separate courts.

Some words this chapter uses

A contributory is a person liable to contribute to the assets in a winding up, defined in section 2(26). A provisional liquidator is one appointed before the winding up order, to hold the position. A statement of affairs is the sworn account of the company's assets and liabilities. The Company Liquidator is the liquidator appointed on the order, under section 275. The commencement of the winding up is dealt with in section 357.

Who may petition: section 272(1)

A petition shall be presented by:

• (a) the company;
• (b) any contributory or contributories;
• (c) all or any of the persons specified in clauses (a) and (b);
• (d) the Registrar;
• (e) any person authorised by the Central Government in that behalf; or
• (f) in a case falling under clause (b) of section 271, by the Central Government or a State Government.

Note who is missing. A creditor is not in the list, and that is not an oversight; the ground on which creditors used to petition, inability to pay debts, was removed in 2016, and their remedy is under the Insolvency and Bankruptcy Code.